As filed with the Securities and Exchange Commission on APRIL 27, 2000
1933 Act File No. 33-61314
1940 Act File No. 811-7654
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933 [x]
POST-EFFECTIVE AMENDMENT NO. 9 [x]
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 10 [x]
The Wright Managed Blue Chip Series Trust
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(Exact Name of Registrant as Specified in Charter)
255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Offices)
617-482-8260
-------------------------------
(Registrant's Telephone Number)
Alan R. Dynner
255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On (date) pursuant to paragraph (a)(1)
[x] On May 1, 2000 pursuant to paragraph (b
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On (date) pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE WRIGHT MANAGED BLUE CHIP SERIES TRUST
PROSPECTUS
May 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined whether the information
in this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.
<PAGE>
TABLE OF CONTENTS
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Page
THE WRIGHT MANAGED BLUE CHIP SERIES TRUST:
OVERVIEW AND INFORMATION ABOUT THE FUNDS
Wright Selected Blue Chip Portfolio............................2
Wright International Blue Chip Portfolio.......................4
INFORMATION ABOUT YOUR ACCOUNT
How the Funds Value Their Shares...............................6
Purchase and Redemption of Shares..............................6
DIVIDENDS AND TAXES.....................................................7
MANAGING THE FUNDS......................................................8
FINANCIAL HIGHLIGHTS...................................................10
Wright Selected Blue Chip Portfolio...........................10
Wright International Blue Chip Portfolio......................11
HOW TO USE THIS PROSPECTUS:
Reading this prospectus will help you decide if investing in the Wright funds is
right for you. Please keep this prospectus for future reference. Included in
this prospectus are descriptions telling you about each fund's:
(Graphic -- ship's wheel)
OBJECTIVE: what the fund seeks to achieve.
(Graphic -- compass)
PRINCIPAL INVESTMENT STRATEGY: how the fund intends to achieve its objective
and the strategies used by Wright Investors' Service, the funds' investment
adviser.
(Graphic -- life preserver)
PRINCIPAL RISKS: the risks associated with the fund's primary investments.
(Graphic -- assorted nautical flags)
WHO MAY WANT TO INVEST: decide if the fund is a suitable investment for you.
(Graphic -- ship's log)
PAST PERFORMANCE:the total return on your investment, including income from
dividends and interest, and the increase or decrease in price over various
periods.
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST:
OVERVIEW AND INFORMATION ABOUT THE FUNDS
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This prospectus offers funds that are available for purchase only by insurance
company separate accounts that fund certain variable annuity and variable life
insurance contracts. You should read this prospectus together with the
prospectus for those contracts.
WRIGHT INVESTORS SERVICE, INC.
AND THE APPROVED WRIGHT INVESTMENT LIST
Using bottom-up fundamental analysis, Wright Investors' Service systematically
identifies those companies in the Worldscope(R) database that meet minimum
standards of prudence and thus are suitable for investment by fiduciary
investors. These companies are then subjected to extensive analysis and
evaluation to identify those which meet Wright's standards of investment quality
or are leaders in their industry. These standards focus on liquidity, financial
strength, stability of profits and growth.
Only those companies meeting or exceeding this criteria are eligible for
selection by the Wright Investment Committee for inclusion on an Approved Wright
Investment List (AWIL). There are separate AWILs for U.S. companies, non-U.S.
companies and small companies. Slightly different standards may apply to each
list. For example, smaller companies may have a lower market capital requirement
but a higher standard of profitability and growth. All the companies on the
Lists are considered by Wright to be "Blue Chips." This means that the companies
have established records of earnings profitability and equity growth. All these
companies have established investment acceptance and active, liquid markets.
Securities are selected from the various approved Lists to meet the objectives
and strategies of each fund.
- -----SIDE BAR TEXT-----
Fundamental Analysis
The analysis of company financial statements to forecast future price
movements using past records of assets, earnings, sales, products, management
and markets. It differs from technical analysis which relies on price and volume
movements of stocks and does not concern itself with financial statistics.
"Bottom-Up" Approach to Investing
The analysis of company information before considering the impact of
industry and economic trends. It differs from the "top-down" approach which
looks first at the economy, then the industry and lastly the company.
"Blue Chip"
Financial dictionaries define Blue Chip as a common stock of a company that has
a long record of profit growth and dividend payment and a reputation for quality
management, products and services. Wright further defines this to include only
securities issued by companies that meet its qualitative standards.
- -----END SIDE BAR TEXT-----
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO
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CUSIP: 98235A504
(Graphic -- ship's wheel)
OBJECTIVE
The fund seeks to provide long-term capital appreciation and, secondarily,
current income.
(Graphic --compass)
PRINCIPAL INVESTMENT STRATEGIES
The fund invests at least 80% of its net assets in the equity securities of
well-established quality companies on an AWIL. Wright focuses on individual
stock selection instead of trying to predict which industries or sectors will
perform best. Wright selects only those companies whose current operations
reflect defined, quantified characteristics which Wright believes are likely to
provide comparatively superior total investment return.
Wright considers recent valuations and price/earnings momentum when deciding
which companies present the best value in terms of current price, and current
and forecasted earnings. Selected companies may or may not currently pay
dividends on their shares. The fund's investments are equally weighted. At
the end of 1999, the fund's median market capitalization was that of a mid cap
portfolio. Professional investment personnel characterize the fund as a growth
fund with a value bias.
Typically, the fund sells an individual security when its value
exceeds two times its target position based on equal weighting, the security is
no longer eligible for inclusion in the AWIL, or it ceases to meet the
investment criteria.
When the market is unfavorable, the fund's assets may be held in cash
or invested without limit in short-term obligations. Although the fund
would do this to reduce losses, defensive investments may conflict with and
hurt the fund's efforts to achieve its investment objective.
The fund's objective may be changed by the trustees without shareholder
approval.
(Graphic -- life preserver)
PRINCIPAL RISKS
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing:
o market risk: when the price of a security falls, the value of the fund's
investments may fall and you could lose money on your investment.
o management risk: the adviser's strategy may not produce the expected
results, causing losses.
In addition to normal market and management risks, fund performance will be
adversely affected if:
o Mid cap stocks fall out of favor with the market and returns trail the
overall stock market
o Selected companies remain undervalued.
The fund cannot eliminate risk or assure achievement of its objectives. You
may lose money if the risks are realized when you sell your shares.
(Graphic -- assorted nautical flags)
WHO MAY WANT TO INVEST
You may be interested in the fund if you are seeking an actively managed common
stock investment for total investment return consisting of price appreciation
plus income and intend to make a long-term investment commitment.
<PAGE>
(Graphic -- ship's log)
PAST PERFORMANCE
The information below shows the fund's performance for the life of the fund
through December 31, 1999. These returns include reinvestment of all dividends
and capital gain distributions, and reflect fund expenses. Performance figures
do not reflect expenses incurred from investing through an insurance company
variable contract. Please refer to the contract prospectus for more information
on expenses. As with all mutual funds, past performance does not guarantee
future results.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been for each full calendar year for the
life of the fund.
Year-by-Year Total Return as of December 31
40% 32.08%
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30%
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20% 26.25% 22.80% 13.97%
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10%
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0%
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(10)% -6.19% -2.65%
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20)%
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1994 1995 1996 1997 1998 1999
Best quarter: 16.57%(4th quarter 1998) Worst quarter: -20.93% (3rd quarter 1998)
The fund's average annual return is compared with that of the Standard &
Poor's 400 Mid Cap Index (S&P 400). While the fund does not seek to match the
returns of the S&P 400, this unmanaged index is a good indicator of mid-cap
stock market performance. The S&P 400, unlike the fund, does not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1999
Since Inception
1 Year 5 Years 1/6/94
- -------------------------------------------------------------------------------
Selected Blue Chip Portfolio 13.97% 17.84% 13.47%
S&P Mid-Cap 400 14.67% 22.99% 17.93%
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
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CUSIP: 98235A603
(Graphic -- ship's wheel)
OBJECTIVE
The fund seeks long-term capital appreciation.
(Graphic -- compass)
PRINCIPAL INVESTMENT STRATEGIES
The fund invests at least 80% of its net assets in the equity securities of
well-established non-U.S. companies. The fund only invests in securities on the
International Approved Wright Investment List (IAWIL). Wright focuses on
individual stock selection instead of trying to predict which country or
industry will perform best.
Wright systematically reviews about 13,000 non-U.S. companies from 54
countries contained in Wright's Worldscope(R) database to identify those which
meet minimum standards for consideration for fiduciary investment. These
companies must have at least five years of audited records and show a record of
profitability over the last three years.
Wright selects well-established and profitable non-U.S. companies which
have their principal business activities in at least three different countries.
These companies can be of any size that qualifies for trading on the securities
market of the country where the company is located, other foreign exchanges or
for trading in the U.S. through American Depositary Receipts (ADRs). ADRs
represent interests in an underlying security. Companies may or may not
currently pay dividends on their shares.
Individual securities which no longer meet the standard for the IAWIL or
Wright's investment criteria are sold.
When international security or currency markets are unfavorable, the fund's
assets may be held in cash or invested in short-term obligations without limit .
Although the fund would do this to avoid losses, these measures may conflict
with and hurt the fund's efforts to achieve its investment objective.
The fund's objective may be changed by the trustees without shareholder
approval.
(Graphic -- life preserver)
PRINCIPAL RISKS
Before you invest in any mutual fund, you should understand the risks
involved. Two basic risks are prevalent in mutual fund investing:
o MARKET RISK--when the price of a security falls, the value of the fund's
investments may fall and you could lose money on your investment
o MANAGEMENT RISK--the adviser's strategy may not produce the expected
results, causing losses.
In addition to market and management risks, the fund is subject to
additional risks in connection with investing in foreign securities. These
include:
o currency risk (changes in foreign currency rates reducing the value of the
fund's assets)
o seizure, expropriation or nationalization of a company's assets
o less publicly available information
o the impact of political, social or diplomatic events.
The European countries have adopted the Euro as their common currency. Existing
national currencies of these countries are sub-currencies of the Euro until July
1, 2002, when the old currencies disappear entirely. The introduction of the
Euro presents some possible risks, which could adversely affect the value of
securities held by the fund, as well as possible adverse tax consequences. There
could be unpredictable effects on trade and commerce, resulting in increased
volatility for all financial markets.
The fund can not eliminate risk or assure achievement of its objectives.
You may lose money if the risks are realized when you sell your shares.
<PAGE>
(Graphic -- assorted nautical flags)
WHO MAY WANT TO INVEST
The fund may be suitable for investors seeking a diversified portfolio of
quality non-U.S. equities offering ownership in some of the leading companies
throughout the world who are not adverse to the risks associated with
international investing. Also, because foreign stock prices may not move in
concert with U.S. market prices, the fund may be a useful way to diversify your
investments.
(Graphic -- ship's log)
PAST PERFORMANCE
The information below shows the fund's performance for the life of the fund
through December 31, 1999. These returns include reinvestment of all dividends
and capital gain distributions, and reflect fund expenses. Performance figures
do not reflect expenses incurred from investing through an insurance company
variable contract. Please refer to the contract prospectus for more information
on expenses. As with all mutual funds, past performance does not guarantee
future results.
The bar chart shows how volatile the fund's performance has been by illustrating
the differences for each full calendar year for the life of the fund.
Year-by-Year Total Return as of December 31
40% 32.12%
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30%
- -------------------------------------------------------------------------------
20%
- -------------------------------------------------------------------------------
10% 10.07% 17.40%
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0% 5.67% 8.45%
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(10)% -8.55%
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(20)%
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1994 1995 1996 1997 1998 1999
Best quarter:32.50% (4th quarter 1999) Worst quarter: -17.27% (3rd quarter 1998)
The fund's average annual return is compared with that of the FT/S&P
Actuaries World ex U.S. Index. While the fund does not seek to match the returns
of the index, this unmanaged index is a good indicator of foreign stock market
performance. The index, unlike the fund, does not incur fees or charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1999
Since Inception
1 Year 5 Years 1/4/94
- -------------------------------------------------------------------------------
International Blue
Chip Portfolio 32.12% 14.37% 10.20%
FT/S&P Actuaries
World ex U.S. Index 31.83% 12.67% 10.60%
<PAGE>
INFORMATION ABOUT YOUR ACCOUNT
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HOW THE FUND'S VALUE THEIR SHARES
The price at which you buy, sell or exchange fund shares is the net asset per
share price or NAV. This share price is determined by adding the value of the
fund's investments, cash and other assets, deducting liabilities, and then
dividing that amount by the total number of shares outstanding.
The NAV for each fund is calculated at the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m. New York time) each day the Exchange
is open. It is not calculated on days the Exchange is closed. The price for a
purchase, redemption or exchange of fund shares is the next NAV calculated after
you order is received in proper form.
When the funds calculate their share price, they value their portfolio
securities at the last current sales price on the market where the security is
normally traded. market. Securities which cannot be valued at these closing
prices are valued by Wright at fair value in accordance with procedures adopted
by the trustees. For example, this could happen if an event after the close of
the market seemed likely to have a major impact on the price of securities
traded on the market.
The value of all assets and liabilities expressed in foreign currencies is
converted into U.S. dollars at the most recent market rates quoted by one or
more major banks shortly before the close of the Exchange. Foreign securities
trade during hours and on days that the Exchange is closed and the International
Blue Chip fund's NAV is not calculated. Although that fund's NAV may be
affected, you will not be able to purchase or redeem shares on these days.
PURCHASE AND REDEMPTION OF SHARES
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through their
separate accounts. The variable insurance products may or may not make
investments in each fund described in this prospectus.
Each fund credits investments to an insurance company's separate account at
the NAV next determined after acceptance of the investment by the fund. Each
fund may suspend the offer of its shares and reserves the right to reject any
specific purchase order. A fund may refuse a purchase order if, in the adviser's
opinion, the order is of a size that would disrupt the management of a fund.
The redemption price of the shares of each fund will be the NAV determined
next after receipt by the fund of a redemption order from a separate account,
which may be more or less than the price paid for the shares. Each fund redeems
its shares on any business day. Redemptions are effected at the NAV per share
next determined after the fund receives and accepts the redemption request. Each
fund forwards redemption proceeds to the redeeming insurance company within
seven days after receipt of the redemption request. Under unusual circumstances,
a fund may suspend redemptions, as permitted by federal securities laws.
<PAGE>
DIVIDENDS AND TAXES
- -------------------------------------------------------------------------------
DIVIDENDS AND TAXES
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company, each
fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at NAV and are includable in gross income of the separate accounts
holding such shares. Each fund expects most distributions to be from capital
gains. See the accompanying contract prospectus for information regarding the
federal income tax treatment of distributions to the separate accounts and to
holders of the contracts.
<PAGE>
MANAGING THE FUNDS
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Wright Investors' Service,Inc. is a leading independent international
investment management and advisory firm with more than 35 years experience.
Wright manages about $4 billion of assets in portfolios of all sizes and
styles as well as a family of mutual funds. The company developed Worldscope(R),
one of the world's largest and most complete databases of financial information,
which currently includes more than 23,000 corporations in 54 nations. Wright is
located at 440 Wheelers Farms Road, Milford, CT 06460.
Wright is entitled to receive a monthly advisory fee for its services.
However, during the fiscal year ended December 31, 1999, Wright voluntarily
agreed to limit each fund's total annual operating expenses. As a result of that
agreement, Wright did not receive any advisory fee from either fund. Wright may
not continue this agreement in the future. If there had not been such an
agreement, Wright would have received fees at the rate (as a percentage of daily
net assets) of 0.65 % for the Selected Blue Chip Portfolio and 0.80% for the
International Blue Chip Portfolio.
INVESTMENT COMMITTEE
An investment committee of senior officers controls the investment selections,
policies and procedures of the funds. These officers are experienced analysts
with different areas of expertise, and have over 195 years of combined service
with Wright. The investment committee consists of the following members:
<TABLE>
<CAPTION>
Committee Member Title Joined Wright in
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter M. Donovan, CFA President and Chief Executive Officer 1966
Judith R. Corchard Chairman of the investment committee 1960
Executive Vice President - Investment Management
Jatin J. Mehta, CFA Executive Vice President 1969
Michael F. Flament, CFA Senior Vice President - Investment and Economic Analysis 1972
James P. Fields, CFA Senior Vice President - Fixed Income Investments 1982
Amit S. Khandwala Senior Vice President - International Investments 1986
Charles T. Simko, Jr., CFA Senior Vice President - Investment Research 1985
Patricia J. Pierce, CFA Senior Vice President - Equities 1999
George F. Faherty, CFA Vice President - Equities 2000
</TABLE>
ADMINISTRATOR
Eaton Vance Management serves as the funds' administrator and is
responsible for managing their daily business affairs. Eaton Vance's services
include operations of the funds' order room, recordkeeping, preparation and
filing of documents required to comply with federal and state securities laws,
supervising the activities of the funds' custodian and transfer agent, providing
assistance in connection with the trustees' and shareholders' meetings and other
necessary administrative services.
USE BY MULTIPLE INSURANCE PRODUCTS
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations. The
funds currently do not foresee any disadvantages to investors arising from the
fact that each fund may offer its shares to different insurance company separate
accounts that serve as the investment medium for their variable annuity and
variable life products. Nevertheless, the trustees intend to monitor events to
identify any material irreconcilable conflicts which may arise, and to determine
what action, if any, should be taken in response to these conflicts. If a
conflict were to occur, one or more insurance companies' separate accounts might
be required to withdraw their investments in a fund and shares of another fund
may be substituted. In addition, the sale of shares may be suspended or
terminated if required by law or regulatory authority or is in the best
interests of the funds' shareholders.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights will help you understand each fund's financial
performance for the past 5 years. Certain information reflects financial results
for a single fund share. Total return shows how much your investment increased
or decreased during the period, assuming you reinvested all dividends and
distributions. Deloitte & Touche LLP, independent certified public accountants,
audited this information. Their reports, along with the funds' financial
statements, are included in the funds' annual report, which is available upon
request.
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>
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>
<PAGE>
FOR MORE INFORMATION
Additional information about the funds' investments is available in the funds'
semi-annual and annual reports to shareholders. The funds' annual report
contains a discussion of the market conditions and investment strategies that
affected the funds' performance over the past year.
You may want to read the statement of additional information (SAI) for more
information on the funds and the securities they invest in. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the semi-annual and annual reports and the SAI,
request other information or get answers to your questions about the funds by
writing or calling:
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, CT 06460
(800) 888-9471
E-mail: [email protected]
Copies of documents and application forms can be viewed and downloaded from
Wright's website: www.wrightinvestors.com.
Text-only versions of fund documents can be viewed online or downloaded
from the SEC's web site at http://www.sec.gov. You can also obtain copies by
visiting the SEC's Public Reference Room in Washington DC. For information on
the operation of the Public Reference Room, call (800) SEC-0330. Copies of
documents may also be obtained by sending your request and the appropriate
duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-0102
or by electronic mail at [email protected].
Investment Company Act File Number...................................811-07654
<PAGE>
CATHOLIC VALUES EQUITY INVESTMENT PORTFOLIO
PROSPECTUS
MAY 1, 2000
o A Series of The Wright Managed Blue Chip Series Trust
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined whether the information
in this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.
<PAGE>
TABLE OF CONTENTS
Page
Catholic Values Equity Investment Portfolio:
Overview of Principal Strategies and Information About the Fund.... 1
Objective..................................................... 2
Principal Investment Strategies............................... 2
Principal Risks............................................... 2
Who May Want to Invest........................................ 2
General Information
Determining Share Price (NAV)................................. 3
Purchase and Redemption of Shares............................. 3
Dividends and Taxes........................................... 3
Managing the Fund ................................................ 4
How to Use this Prospectus:
Reading this prospectus will help you decide if investing in the fund is right
for you. Please keep this prospectus for future reference. Included in this
prospectus are descriptions telling you about the fund's:
(Graphic -- ship's wheel)
OBJECTIVE: what the fund seeks to achieve.
(Graphic -- compass)
PRINCIPAL INVESTMENT STRATEGIES: how the fund intends to achieve its objective
and the strategies used by Wright Investors'Service, the fund's investment
adviser.
(Graphic -- life preserver)
PRINCIPAL RISKS: the risks associated with the fund's primary investments.
(Graphic -- assorted nautical flags)
WHO MAY WANT TO INVEST: decide if the fund is a suitable investment for you.
<PAGE>
CATHOLIC VALUES EQUITY INVESTMENT PORTFOLIO- OVERVIEW OF PRINCIPAL STRATEGIES
AND INFORMATION ABOUT THE FUND
- -------------------------------------------------------------------------------
Catholic Values Equity Investment Portfolio offers an investment opportunity
that combines the fundamental security selection process with a review by a
Catholic Advisory Board. This process insures companies that offer products,
services or engage in activities that are contrary to the core values of the
Roman Catholic Church are not included. The fund is available for purchase only
by insurance company separate accounts that fund certain variable annuity and
variable life insurance contracts. You should read this prospectus together with
the prospectus for those contracts.
THE SECURITY SELECTION PROCESS - THE APPROVED WRIGHT INVESTMENT LIST (AWIL)
Using fundamental investment analysis techniques, Wright Investors'
Service, the fund's investment adviser, systematically identifies those
companies in the Worldscope(R) database that meet minimum standards of prudence
and thus are suitable for consideration by fiduciary investors. Wright considers
companies meeting these requirements to be "investment grade." These companies
are then extensively analyzed and evaluated to identify those which meet
Wright's standards of investment quality.
These standards measure the investment acceptance, financial strength,
profitability, stability and growth of a company. Companies meeting or exceeding
these standards are eligible for inclusion on an AWIL.
There are separate AWILs for U.S. companies, non-U.S. companies and small
companies. All the companies on the AWILs are soundly financed "Blue Chips" .
This means that the companies have established records of earnings profitability
and equity growth. All have established investment acceptance and active, liquid
markets.
- ------ SIDE BAR TEXT-------
Fundamental Analysis and
"Bottom-up" Approach
to Investing
Fundamental analysis is the analysis of company financial statements to
forecast future price movements using past records of assets, earnings, sales,
products, management and markets. It differs from technical analysis which
relies on price and volume movements of stocks and does not concern itself with
financial statistics.
Bottom-up investing is the analysis of company information before
considering the impact of industry and economic trends. It differs from the
"top-down" approach which looks first at the economy, then the industry and last
the company.
Blue Chip
Financial dictionaries define Blue Chip as the common stock of a company that
has a long record of profit growth and dividend payment and a reputation for
quality management, products and service. Wright further refines this to include
only securities issued by companies that meet its qualitative standards.
- ------ END SIDE BAR TEXT ------
THE CATHOLIC ADVISORY BOARD
The fund's proposed portfolio and any subsequent additions are reviewed by
the Catholic Advisory Board ensuring that the companies offer products and
services and undertake activities that are consistent with the core teachings of
the Catholic Church.
The Catholic Advisory Board is comprised of independent lay members
familiar with the basic tenets and core teachings of the Roman Catholic Church.
The Catholic Advisory Board identifies companies whose products, services and/or
activities are substantially consistent with the core Catholic Church teachings,
based on the best publicly available information obtained by Wright and
information received from shareholders and other interested sources. Its members
are guided by the magisterium of the Catholic Church and seek the counsel and
advice of ecclesiastics in determining which companies meet the fund's religious
criteria.
<PAGE>
CATHOLIC VALUES EQUITY INVESTMENT PORTFOLIO
(Graphic -- ship's wheel)
OBJECTIVE
The fund seeks long-term growth of capital and reasonable current income
from investments consistent with the core values of the Catholic Church.
Reasonable income means the income that can be achieved from an equity
portfolio.
(Graphic -- compass)
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the fund invests at least 80% of its net assets
in the equity securities of well-established companies. These securities are
included on the quality oriented Approved Wright Investment Lists (AWILs). Up to
30% of the fund's investments may be in foreign securities or American
Depositary Receipts (ADRs). ADRs represent interests in an underlying security.
Using a bottom-up fundamental approach, Wright evaluates a company's recent
valuation and price/earnings momentum to determine whether it presents the best
value in terms of current price, and current and forecasted earnings. The
investment process at Wright is directed and controlled by an investment
committee of experienced analysts. The committee's selection suggestions
are reviewed by the Catholic Advisory Board.
Typically, the fund sells an individual security when it no longer
meets Wright's investment criteria or the Catholic Advisory Board's
religious criteria.
For temporary defensive purposes, the fund may hold cash or invest in
short-term debt securities without limit. Although the fund would do this to
reduce losses, defensive investments mayconflict with and hurt the fund's
efforts to achieve its objective.
The fund's objective may be changed by the trustees without shareholder
approval.
(Graphic -- life preserver)
PRINCIPAL RISKS
The Catholic Advisory Board has sole discretion in determining which
companies meet the fund's religious criteria. When a company violates core
Catholic teachings, the board asks Wright to remove it from the portfolio. This
policy may lead to the sale of a security at a disadvantageous time causing a
loss to the fund.
Because the fund only considers securities that meet its investment and
religious criteria, the fund's return may be lower than if the fund considered
only investment criteria when selecting investments.
In addition to market and management risk, there are risks associated with
investing in foreign countries. These include currency risk (changes in foreign
currency rates reducing the value of the fund's assets), seizure, expropriation
or nationalization of a company's assets, and the impact of political, social or
diplomatic events.If an ADR is not sponsored by the issuer of the underlying
security, there may be reduced access to information about the issuer.
The fund cannot eliminate risk or assure achievement of its objective. If
the risks above are realized you may lose money.
- ------ SIDE BAR TEXT------
A Word About Risk
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing in common stocks,
such as the fund. They are:
o market risk: When the price of stock falls, the value of the
fund's investments may fall and you could lose money on your
investment.
o management risk: Wright's strategy may not produce the expected
results, causing losses.
- ------ END SIDE BAR TEXT--------
(Graphic -- assorted nautical flags)
WHO MAY WANT TO INVEST
The fund is designed for individuals, dioceses, parishes, other
institutions and organizations seeking a long-term growth fund that does
not invest in companies whose products, services and activities violate the
core values and teachings of the Roman Catholic Church.
Past Performance
No past performance information is available for the fund.
<PAGE>
GENERAL INFORMATION
- ------------------------------------------------------------------------------
DETERMINING SHARE PRICE (NAV)
The price at which you buy, sell or exchange fund shares is the net asset
per share price or NAV. This share price is determined by adding the value
of the fund's cash and other assets, deducting liabilities, and then
dividing that amount by the total number of shares outstanding.
The NAV for the fund is calculated at the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m. New York time) each day the
Exchange is open. It is not calculated on days the Exchange is closed. The
price for a purchase, redemption or exchange of fund shares is the next NAV
calculated after your order is received.
When the fund calculates its NAV, it values its portfolio securities at the
last current sales price on the market where the security is normally
traded. Securities that cannot be valued at these prices will be
valued by Wright at fair value in accordance with procedures adopted by
the trustees. For example, this may happen when an event occurs that
affects the value of a security at a time it is not trading, such as
during a weekend, or after the close of the Exchange, or if the security
is illiquid.
Foreign securities may trade during hours and on days that the Exchange is
closed and the fund's NAV is not calculated. Although the fund's NAV may be
affected, you will not be able to purchase or redeem shares on these days.
PURCHASE AND REDEMPTION OF SHARES
Shares of the fund are available only through the purchase of variable
annuity or variable life insurance contracts issued by insurance companies
through their separate accounts. The fund credits investments to an
insurance company's separate account at the NAV next determined after
acceptance of the investment by the fund. The fund may suspend the offer of
its shares and reserves the right to reject any specific purchase order.
The fund may refuse a purchase order if, in Wright's opinion, the order is
of a size that would disrupt the management of the fund.
The redemption price of the shares of the fund will be the NAV determined
next after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The
fund redeems its shares on any business day. Redemptions are effected at
the NAV per share next determined after the fund receives and accepts the
redemption request. The fund forwards redemption proceeds to the redeeming
insurance company within seven days after receipt of the redemption
request. Under unusual circumstances, the fund may suspend redemptions as
permitted by Federal securities laws. The fund reserves the right to
distribute portfolio securities to a redeeming shareholder.
DIVIDENDS AND TAXES
The fund intends to qualify and be taxed as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"), as amended. In order to qualify to be taxed as a regulated
investment company, the fund must meet certain income and diversification
tests and distribution requirements. As a regulated investment company
meeting these requirements, the fund will not be subject to federal income
tax on its net investment income and net capital gains that it distributes
to its shareholders. All income and capital gain distributions are
automatically reinvested in additional shares of the fund at NAV and are
includable in gross income of the separate accounts holding such shares.
The fund expects most distributions to be from capital gains. See the
accompanying contract prospectus for information regarding the federal
income tax treatment of distributions to the separate accounts and to
holders of the contracts.
<PAGE>
MANAGING THE FUND
- -------------------------------------------------------------------------------
Wright Investors' Service, Inc. is a leading independent international
investment management and advisory firm with more than 35 years experience.
Wright manages about $4 billion of assets in portfolios of all sizes and
styles as well as a family of mutual funds. The company developed
Worldscope(R), one of the world's largest and most complete databases of
financial information, which currently includes more than 23,000
corporations in 54 nations.
Wright manages the fund's investments. Wright is located at 440 Wheelers
Farms Road, Milford, CT 06460. Wright's advisory fee is 0.75% of the fund's
average daily net assets.
INVESTMENT COMMITTEE
An investment committee of senior officers controls the investment
selections, policies and procedures of the fund. These officers are all
experienced analysts with different areas of expertise and over 195 years
of combined service with Wright. The investment committee consists of the
following members:
<TABLE>
<CAPTION>
Committee Member Title Joined Wright in
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter M. Donovan, CFA President and Chief Executive Officer 1966
Judith R. Corchard Chairman of the investment committee
Executive Vice President Investment Management 1960
Jatin J. Mehta, CFA Executive Vice President 1969
Michael F. Flament, CFA Senior Vice President Investment and Economic Analysis 1972
James P Fields, CFA Senior Vice President Fixed Income Investments 1982
Amit S. Khandwala Senior Vice President International Investments 1986
Charles T. Simko, Jr., CFASenior Vice President Investment Research 1985
Patricia J. Pierce, CFA Senior Vice President Equities 1999
George F. Faherty, CFA Vice President Equities 2000
</TABLE>
Catholic Advisory Board
The Catholic Advisory Board reviews the investments selected by Wright. The
members of the Catholic Advisory Board are:
Board Member Title
- -------------------------------------------------------------------------------
Thomas P. Melady Chairman of the Advisory Board, Former U.S.
Ambassador to the Holy See, Uganda and Burundi,
President Emeritus of Sacred Heart University
Margaret M. Heckler Former U.S. Representative from Massachusetts
10th district, former Secretary of Health and Human
Services, former Ambassador to Ireland
Bowie K. Kuhn Former Commissioner of Baseball
Timothy J. May Senior Partner, Patton Boggs, LLP
Thomas S. Monaghan Former President, CEO and Chairman of Domino's
Pizza, Inc.
William A. Wilson Former (and first) U.S. Ambassador to the Holy See
Although he is not in any way connected with the fund, His Eminence John
Cardinal O'Connor is the ecclesiastical advisor to the Catholic Advisory
Board.
Each member of the board is involved in various Catholic
organizations and activities while in contact with numerous Catholic
institutions and clergy.
- ------ SIDE BAR TEXT-----
Administrator
Eaton Vance Management serves as the fund's administrator and is responsible for
managing its daily business affairs. Eaton Vance's services include operating
the fund's order room, recordkeeping, preparing and filing documents required to
comply with federal and state securities laws, supervising the activities of the
fund's custodian and transfer agent, providing assistance in connection with the
trustees' and shareholders' meetings and other necessary administrative
services.
- ------ END SIDE BAR TEXT -------
<PAGE>
USE BY MULTIPLE INSURANCE PRODUCTS
The interests of different variable insurance products investing in the
fund could conflict due to differences of tax treatment and other
considerations. The fund currently does not foresee any disadvantages to
investors arising from the fact that the fund may offer its shares to
different insurance company separate accounts that serve as the investment
medium for their variable annuity and variable life products. Nevertheless,
the trustees intend to monitor events to identify any material
irreconcilable conflicts which may arise, and to determine what action, if
any, should be taken in response to these conflicts. If a conflict were to
occur, one or more insurance companies' separate accounts might be required
to withdraw their investments in the fund and shares of another fund may be
substituted. In addition, the sale of shares may be suspended or terminated
if required by law or regulatory authority or is in the best interests of
the fund's shareholders.
<PAGE>
Additional information about the fund's investments is available in the
fund's semi-annual and annual reports to shareholders. The fund's annual
report contains a discussion of the market conditions and investment
strategies that affected the fund's performance over the past year.
You may want to read the statement of additional information (SAI) for more
information on the fund and the securities it invests in. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the semi-annual and annual reports and the SAI,
request other information or get answers to your questions about the funds by
writing or calling:
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, CT 06460
(800) 888-9471
E-mail: [email protected]
Text-only versions of fund documents can be viewed online or downloaded
from the SEC's web site at http://www.sec.gov. You can also obtain copies
by visiting the SEC's Public Reference Room in Washington DC. For
information on the operation of the Public Reference Room, call (800)
SEC-0330. Copies of documents may also be obtained by sending your request
and the appropriate duplicating fee to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by electronic mail at [email protected].
Investment Company Act File Number.......................811-07654
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Wright Managed Blue Chip Series Trust
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus dated May 1, 2000, as supplemented from
time to time, which is incorporated herein by reference, for Wright Selected
Blue Chip Portfolio and Wright International Blue Chip Portfolio, each a series
of The Wright Managed Blue Chip Series Trust (the "Trust"). The Prospectus may
be obtained from Wright Investors' Service Distributors, Inc., 440 Wheelers
Farms Road, Milford, CT 06460 (Telephone: 800-888-9471). Unless otherwise
defined herein, capitalized terms have the meanings given to them in the
Prospectus.
TABLE OF CONTENTS
Page
THE FUNDS AND THEIR INVESTMENT POLICIES......................2
GENERAL INFORMATION..........................................6
INVESTMENT RESTRICTIONS......................................6
PERFORMANCE INFORMATION......................................7
Total Return..........................................7
Yield.................................................8
PORTFOLIO TRANSACTIONS.......................................9
MANAGEMENT OF THE TRUST.....................................10
Officers and Trustees................................10
The Investment Adviser...............................12
The Administrator....................................12
Custodian and Transfer Agent.........................13
Independent Certified Public Accountants.............13
Legal Matters........................................13
NET ASSET VALUE.............................................13
PURCHASE AND REDEMPTION OF SHARES...........................14
TAXES.......................................................15
Federal Income Taxes.................................15
FINANCIAL STATEMENTS........................................16
APPENDIX....................................................17
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by the
current Prospectus of The Wright Managed Blue Chip Series Trust (the "Trust")
offering shares of Wright Selected Blue Chip Portfolio and Wright
International Blue Chip Portfolio, dated May 1, 2000, as supplemented from time
to time, which is incorporated herein by reference. This Statement of Additional
Information should be read in conjunction with the Prospectus. A copy of the
Prospectus may be obtained without charge from Wright Investors' Service
Distributors, Inc., 440 Wheelers Farms Road, Milford, CT 06460 (Telephone:
888-974-9471).
The date of this Statement of Additional Information is May 1, 2000.
<PAGE>
THE FUNDS AND THEIR INVESTMENT POLICIES
Each fund is a diversified, open-end management investment company.
Capitalized terms not defined here have the meaning given in the Prospectus.
Each fund's investment objective is set forth in the Prospectus.
WRIGHT SELECTED BLUE CHIP PORTFOLIO
Under normal market conditions, Wright Selected Blue Chip Portfolio
("WSBCP") invests at least 80% of its net assets in selected equity securities,
including common stocks, preferred stocks and convertible securities. Securities
selected for WSBCP are drawn from an investment list prepared by the investment
adviser and known as The Approved Wright Investment List (the "AWIL").
APPROVED WRIGHT INVESTMENT LIST. The investment adviser maintains a
proprietary database on approximately 10,000 U.S. companies. The investment
adviser reviews such companies to identify those which meet the minimum
standards of prudence (e.g. the value of each company's assets and shareholders'
equity exceeds certain minimum standards) and thus are suitable for
consideration by fiduciary investors. Companies which meet these requirements
may be large or small, have their securities traded on exchanges or in the
over-the-counter market, and include companies not currently paying dividends on
their shares.
These companies are then subjected to extensive analysis and evaluation in
order to identify those which meet the investment adviser's standards of
investment quality or are leaders in their industry. Only those companies which
meet or exceed all of these criteria are eligible for selection by the Wright
Investment Committee for inclusion in the AWIL. See the Appendix herein for a
more detailed description of the investment adviser's standards for investment
quality and the AWIL. All companies on the AWIL are, in the opinion of the
investment adviser, soundly financed "True Blue Chips" with established records
of earnings, profitability and equity growth and active, liquid markets for
their publicly held equity securities. The AWIL normally includes approximately
350 companies.
The equity securities in which WSBCP invests are limited to those companies
on the AWIL whose current operations reflect characteristics which have been
identified by the investment adviser as being likely to provide comparatively
superior total investment return over the intermediate term. WSBCP purchases
securities which meet WSBCP's investment criteria and increases the amount of
current investments in companies the market values of which are below their
target values. Portfolio securities are generally considered for sale if the
value of such securities exceeds 2 1/2 times their normal weighing in the
portfolio, or if such securities are no longer included in the AWIL or no longer
meet WSBCP's investment criteria.
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
Under normal market conditions, Wright International Blue Chip Portfolio
("WIBCP") invests at least 80% of its net assets in equity securities, including
common stocks, preferred stocks and convertible securities. Securities selected
for WIBCP are limited to those included on an investment list prepared by the
investment adviser and known as the International Approved Wright Investment
List (the "International AWIL").
THE INTERNATIONAL APPROVED WRIGHT INVESTMENT LIST. The investment adviser
maintains a proprietary database on approximately 13,000 non-U.S. companies from
over 54 countries. The investment adviser reviews such companies to identify
those which meet the minimum standards of prudence (e.g. the value of a
company's assets and shareholders' equity exceeds certain minimum standards) and
thus are suitable for consideration by fiduciary investors. Companies which meet
these requirements may be large or small, have their securities traded on
exchanges or in the over-the-counter market, and include companies not currently
paying dividends.
These companies are then subjected to extensive analysis and evaluation in
order to identify those which meet the investment adviser's standards of
investment quality. Only those companies which meet or exceed all of those
standards are eligible for selection for inclusion in the International AWIL.
See the Appendix herein for a more detailed description of the investment
adviser's standards for investment quality and the International AWIL. All
companies on the International AWIL are, in the opinion of the investment
adviser, soundly financed "True Blue Chips" with established records of
earnings, profitability and equity growth and active, liquid markets for their
publicly held equity securities.
WIBCP intends to maintain investments in a minimum of three foreign
countries. WIBCP purchases securities which meet WIBCP's investment criteria and
increases the amount of current investments in companies the market values of
which are below their target values. Portfolio securities are generally
considered for sale if they are no longer included in the International AWIL or
<PAGE>
no longer meet WIBCP's investment criteria. WIBCP may purchase equity securities
traded on foreign securities exchanges, or it may purchase American Depositary
Receipts (ADRs) traded in the United States. Shares of WIBCP are suitable for
investors wishing to diversity their portfolios by investment in non-U.S.
companies or for investors who simply wish to participate in non-U.S.
investments. Although the net asset value of WIBCP's shares will be stated in
U.S. dollars, fluctuations in foreign currency exchange rates may affect the
value of an investment in WIBCP.
WIBCP is intended to provide investors with the opportunity to invest in a
portfolio of securities of non-U.S. companies located throughout the world. In
making the allocation of assets among the various countries and geographic
regions, the investment adviser ordinarily considers such factors as prospects
for relative economic growth between foreign countries; expected levels of
inflation and interest rates; government policies influencing business
conditions; the range of individual investment opportunities available to
international investors; and other pertinent financial, tax, social, political
and national factors -- all in relation to the prevailing prices of the
securities in each country or region.
U.S. GOVERNMENT, AGENCY AND INSTRUMENTALITY SECURITIES -- U.S. Government
securities are issued by the Treasury and include bills, certificates of
indebtedness, notes, and bonds. Agencies and instrumentalities of the U.S.
Government are established under the authority of an act of Congress and
include, but are not limited to, the Government National Mortgage Association
("GNMA"), the Tennessee Valley Authority, the Bank for Cooperatives, the Farmers
Home Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks, and the Federal National Mortgage Association. Except for
U.S. Government obligations, the securities issued or guaranteed by U.S.
agencies and instrumentalities may or may not be backed by the full faith and
credit of the United States. If the obligation is not backed by the full faith
and credit of the United States, the fund must look principally to the agency or
instrumentally issuing or guaranteeing the obligation for its repayment and may
not be able to assert a claim against the United States itself in the event that
the agency or instrumentality does not meet its obligations. The U.S. Government
does not guarantee the yield or value of any fund's investments or shares.
CORPORATE OBLIGATIONS -- As described in the Prospectus, each fund may
invest, subject to certain limitations, in corporate debt obligations. Rated
obligations must be rated in the two highest rating categories by a nationally
recognized statistical rating organization for money market instruments in any
portfolio, "AA" by Moody's or "Aa" by S&P. Unrated obligations must be
determined by the investment adviser to be of comparable quality.
REPURCHASE AGREEMENTS -- Each fund may enter into repurchase agreements in
order to earn income on temporarily uninvested cash. A repurchase agreement is
an agreement under which the seller of a security agrees to repurchase and the
relevant fund agrees to resell, such security at a specified time and price. A
fund may enter into repurchase agreements only with large, well-capitalized
banks or government securities dealers that meet specified credit standards. In
addition, such repurchase agreements will provide that the value of the
collateral underlying the repurchase agreement will always be at least equal to
the repurchase price, including any accrued interest earned under the repurchase
agreement. In the event of a default or bankruptcy by a seller under a
repurchase agreement, the fund will seek to liquidate such collateral. However,
the exercise of the right to liquidate such collateral could involve certain
costs, delays and restrictions and is not ultimately assured. To the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the fund could suffer a loss. Repurchase agreements
are considered to be loans under the Investment Company Act of 1940.
FOREIGN SECURITIES -- WIBCP may invest in foreign securities. Investing in
securities issued by companies whose principal business activities are outside
the United States may involve significant risks not associated with domestic
investments. For example, there is generally less publicly available information
about foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing and financial reporting
requirements comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in exchange
control regulations, expropriation or confiscatory taxation, limitation on
removal of funds or other assets of WIBCP, political or financial instability or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the U.S.
It is anticipated that in most cases, the best available market for foreign
securities will be on exchanges or in over-the-counter markets located outside
the U.S. Foreign stock markets, while growing in volume and sophistication, are
generally not as developed as those in the U.S. Securities of some foreign
issuers (particularly those located in developing countries) may be less liquid
and more volatile than securities of comparable U.S. companies. In addition,
foreign brokerage commissions are generally higher than commissions on
securities traded in the U.S. and may be non-negotiable. In general, there is
less overall governmental supervision and regulation of securities exchanges,
brokers and listed companies than in the U.S. These considerations generally are
of greater concern in developing countries.
<PAGE>
Because investment in foreign issuers will usually involve currencies of
foreign countries, and because WIBCP may be exposed to currency fluctuations
independent of its securities exposure, the value of the assets of the WIBCP as
measured in U.S. dollars will be affected by changes in foreign currency
exchange rates.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS -- WIBCP may engage in foreign
currency exchange transactions. Investments in securities of foreign companies
whose principal business activities are located outside of the United States
will frequently involve currencies of foreign countries. In addition, assets of
WIBCP may temporarily be held in bank deposits in foreign currencies during the
completion of investment programs. Therefore, the value of WIBCP's assets, as
measured in U.S. dollars, may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Although WIBCP
values its assets daily in U.S. dollars, it does not intend to convert its
holdings of foreign currencies into U.S. dollars on a daily basis. WIBCP may
conduct its foreign currency exchange transactions on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency exchange market. WIBCP will
convert currency on a spot basis from time to time and will incur costs in
connection with such currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to WIBCP at one rate, while offering a lesser rate of exchange should WIBCP
desire to resell that currency to the dealer. WIBCP does not intend to speculate
in foreign currency exchange rates.
As an alternative to spot transactions, WIBCP may enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts") or
purchase currency call or put options. A forward contract involves an obligation
to purchase or sell a specific currency at a future date and price fixed by
agreement between the parties at the time of entering into the contract. These
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. Although a forward
contract generally involves no deposit requirement and no commissions are
charged at any stage for trades, WIBCP will use segregated accounts for forward
purchase transactions. WIBCP intends to enter into such contracts only on net
terms. The purchase of a put or call option is an alternative to the purchase or
sale of forward contracts and will be used if the option premiums are less then
those in the forward contract market.
WIBCP may enter into forward contracts or purchase currency options only
under two circumstances. First, when WIBCP enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to "lock in" the U.S. dollar price of the security. This is accomplished by
entering into a forward contract for the purchase or sale, for a fixed amount of
U.S. dollars, of the amount of foreign currency involved in the underlying
security transaction ("transaction hedging"). Such forward contract transactions
will enable WIBCP to protect itself against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date the security is purchased or
sold and the date of payment for the security.
Second, when the investment adviser believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, WIBCP may enter into a forward contract to sell, for a fixed amount of
U.S. dollars, the amount of foreign currency approximating the value of some or
all of the securities denominated in such foreign currency. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible. The future value of such securities in foreign
currencies will change as a consequence of fluctuations in the market value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of currency exchange rates and the
implementation of a short-term hedging strategy are highly uncertain.
WIBCP's will place cash or liquid securities in a segregated
account. The amount of such segregated assets will be at least equal to the
value of WIBCP's total assets committed to the consummation of forward contracts
involving the purchase of forward currency. If the value of the securities
placed in the segregated account declines, additional cash or securities will be
placed in the account on a daily basis so that the value of the amount will
equal the amount of WIBCP's commitments with respect to such contracts.
At the maturity of a forward contract, WIBCP may elect to sell the
portfolio security and make delivery of the foreign currency. Alternatively,
WIBCP may retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an identical offsetting contract from
the same currency trader.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward contract. Accordingly, it may be
necessary for WIBCP to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if WIBCP intends to sell the security
and the market value of the security is less than the amount of foreign currency
that WIBCP is obligated to deliver. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
that WIBCP is obligated to deliver.
<PAGE>
If WIBCP retains the portfolio security and engages in an offsetting
transaction, WIBCP will incur a gain or a loss (as described below) to the
extent that there has been a change in forward contract prices. If WIBCP engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the foreign currency. Should forward contract prices decline
during the period between the date WIBCP enters into a forward contract for the
sale of the foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, WIBCP will realize a gain to the
extent that the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward contract prices increase,
WIBCP will suffer a loss to the extent that the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
WIBCP will not speculate in forward contracts and will limit its
transactions in such contracts to those described above. Of course, WIBCP is not
required to enter into such transactions with respect to portfolio securities
quoted or denominated in a foreign currency and will not do so unless deemed
appropriate by its investment adviser. This method of protecting the value of
WIBCP's securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which WIBCP can achieve at some future time.
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also tend to limit any
potential gain which might be realized if the value of such currency increases.
Each fund's transactions in foreign currency exchange contracts may be
limited by the requirements of the Internal Revenue Code for qualification as a
regulated investment company.
LENDING PORTFOLIO SECURITIES -- Each fund may seek to increase its total
return by lending portfolio securities to broker-dealers or other institutional
borrowers. Such loans are continuously secured by collateral in cash or liquid
securities held by the fund's custodian and maintained on a current basis at an
amount at least equal to the market value of the securities loaned, which will
be marked to market daily. During the existence of a loan, the fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and will also receive a fee, or all or a portion
of the interest on investment of the collateral, if any. However, the fund may
at the same time pay a transaction fee to such borrowers and administrative
expenses, such as finders fees to third parties. As with other extensions of
credit there are risks of delay in recovery or even loss of rights in the
securities loaned if the borrower of the securities fails financially. However,
the loans will be made only to organizations deemed by the investment adviser to
be of good standing and when, in the judgment of the investment adviser, the
consideration which can be earned from securities loans of this type justifies
the attendant risk. If the investment adviser decides to make securities loans
on behalf of a fund, it is intended that the value of the securities loaned
would not exceed 30% of such fund's total assets.
A fund would have the right to call a loan and obtain the securities loaned
at any time on up to five business days' notice. A fund would not have the right
to vote any securities having voting rights during the existence of a loan, but
would call the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or withholding of their consent on a
material matter affecting the investment.
BORROWINGS -- Each fund may borrow money in an amount equal to 1/3 of its
net assets for temporary or emergency purposes or for the clearance of
transactions. A fund will not purchase additional securities while such
borrowings exceed 5% of such fund's total assets.
DEFENSIVE INVESTMENTS -- During periods of unusual market conditions, when
the investment adviser believes that investing for temporary defensive purposes
is appropriate, all or a portion of the assets of either fund may be held in
cash or invested in short-term obligations, including but not limited to
short-term obligations issued or guaranteed as to interest and principal by the
U.S. Government or any agency or instrumentality thereof (including repurchase
agreements collateralized by such securities); commercial paper which at the
date of investment is rated A-1 by S&P or P-1 by Moody's, or, if not rated, is
determined by the investment adviser pursuant to procedures established by the
Trustees to be of comparable quality; short-term corporate obligations and other
debt instruments which at the date of investment are rated AA or better by S&P
or Aa or better by Moody's or, if unrated, are determined by the investment
adviser pursuant to procedures established by the Trustees to be of comparable
quality; and certificates of deposit, bankers' acceptances and time deposits of
domestic and foreign banks the debt obligations of which satisfy the foregoing
rating criteria. Each fund may invest in instruments and obligations of banks
that have other relations with the Trust, Wright or Eaton Vance. No preference
will be shown towards investing in banks which have such relationships.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES -- Each fund may purchase
when-issued securities and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. A fund entering
into such a transaction is required to maintain in a segregated account until
the settlement date cash or liquid securities in an amount sufficient to meet
the purchase price. Alternatively, the fund may enter into offsetting contracts
for the forward sale of other securities that it owns. Securities purchased or
sold on a when-issued or forward commitment basis involve a risk of loss if the
value of the securities to be purchased declines
<PAGE>
prior to the settlement date or if the value of the security to be sold
increases prior to the settlement date. Although a fund would generally purchase
securities on a when-issued or forward commitment basis with the intention of
acquiring securities for its portfolio, the fund may dispose of a when-issued
security or forward commitment prior to settlement if the investment adviser
deems it appropriate to do so.
GENERAL INFORMATION
The Trust's Declaration of Trust may be amended with the affirmative vote
of a majority of the outstanding shares of the Trust or, if only the interests
of a particular fund are affected, a majority of such fund's outstanding shares.
The Trustees are authorized to make amendments to the Declaration of Trust that
do not have a material adverse effect on the interests of shareholders. The
Trust may be terminated (i) upon the sale of the Trust's assets to another
investment company, if approved by the holders of two-thirds of the outstanding
shares of the Trust, except that if the Trustees recommend such sale of assets,
the approval by the vote of a majority of the Trust's outstanding shares will be
sufficient, or (ii) upon liquidation and distribution of the assets of the
Trust, if approved by a majority of its Trustees or by the vote of a majority of
the Trust's outstanding shares. If not so terminated, the Trust may continue
indefinitely.
The Trust's Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law; however,
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.
The Trust is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. The Trust's Declaration of Trust contains an express
disclaimer of shareholder liability in connection with the Trust property or the
acts, obligations or affairs of the Trust. The Declaration of Trust also
provides for indemnification out of the Trust property of any shareholder held
personally liable for the claims and liabilities to which a shareholder may
become subject by reason of being or having been a shareholder. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Trust has been advised by counsel that the risk of any
shareholder incurring any liability for the obligations of a Trust is extremely
remote. The Trust's investment adviser does not consider this risk to be
material.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust on
behalf of each fund and may be changed only by the vote of a majority of a
fund's outstanding voting securities, as defined in the 1940 Act. Accordingly,
each fund may not:
(1) Borrow money in excess of 1/3 of the current market value of the net
assets of such fund (excluding the amount borrowed) and then only if
such borrowing is incurred as a temporary measure for extraordinary or
emergency purposes or to facilitate the orderly sale of portfolio
securities to accommodate redemption requests; or issue any securities
other than its shares of beneficial interest except as appropriate to
evidence indebtedness which such fund is permitted to incur;
(2) Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings. For purposes of this restriction, collateral arrangements
with respect to options, futures contracts and options on futures
contracts shall not be deemed to be a mortgage, pledge or
hypothecation);
(3) Invest more than 5% of its total assets taken at current market value
in the securities of any one issuer or purchase more than 10% of the
voting securities of any one issuer;
(4) Purchase or retain securities of any issuer if 5% of the issuer's
securities are owned by those officers and Trustees of the Trust or its
investment adviser who own individually more than 1/2 of 1% of the
issuer's securities;
(5) Purchase securities on margin or make short sales, except that such
fund may make short sales against the box;
<PAGE>
(6) Buy or sell real estate, commodities, or commodity contracts unless
acquired as a result of ownership of securities; except that the fund
may purchase and sell futures contracts on securities, indices,
currency and other financial instruments and options on futures
contracts;
(7) Purchase any securities which would cause more than 25% of the market
value of such fund's total assets at the time of such purchase to be
invested in the securities of issuers having their principal business
activities in the same industry, provided that there is no limitation
in respect to investments in obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities;
(8) Underwrite securities issued by other persons except insofar as the
Trust may technically be deemed an underwriter under the Securities Act
of 1933 in selling a portfolio security;
(9) Make loans, except (i) through the loan of a portfolio security, (ii)
by entering into repurchase agreements and (iii) to the extent that the
purchase of debt instruments for the fund in accordance with the fund's
investment objective and policies may be deemed to be loans;
(10) Purchase from or sell to any of its Trustees and officers, its
administrator, investment adviser, or principal underwriter, if any, or
the officers and directors of said administrator, investment adviser or
principal underwriter, portfolio securities; or
(11) Issue senior securities, except as permitted under (1).
In addition to the foregoing fundamental investment restrictions, each fund
has adopted the following nonfundamental policies which reflect the intentions
of the Trustees under current circumstances. Unlike the fundamental investment
restrictions, these policies may be changed at any time by the Trustees without
shareholder approval. Each fund will not invest more than 15% of its net assets
in illiquid investments.
Except for each fund's restriction on borrowing,if a percentage restriction
contained in the fund's investment restrictions or policies is adhered to at the
time of investment, a later increase or decrease in the percentage resulting
from a change in the value of portfolio securities or the fund's net assets will
not be considered a violation of such restrictions. If such a change causes the
fund to exceed its percentage limitiation on illiquid investments, the fund will
reduce these investments, in an orderly manner, to a level that does not exceed
this limitation.
PERFORMANCE INFORMATION
Each fund may from time to time report its yield and total return in
advertisements, reports to shareholders and other sales material. Total return
and yield will be computed as described below.
Total Return
The average annual total return of each fund is determined for a particular
period by calculating the actual dollar amount of investment return on a $1,000
investment in the fund made at the maximum public offering price (i.e. net asset
value) at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year is equal to the actual return of the fund during that period.
This calculation assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period. The formula can be
expressed as follows:
Ending Value 1/n
-----------------------
Average Annual Total Return = [ ( Starting Value ) - 1 ] x 100
where Starting Value equals $1,000 and n = number of years.
<PAGE>
In addition, each fund may provide total return information for other
designated periods, such as for the most recent six months or most recent 12
months. This total return information is computed as described above except that
no annualization is made.
The average annual total return of each fund for the one-year period ended
December 31, 1999 and from inception to December 31, 1999 are shown in the table
below:
<TABLE>
<CAPTION>
One Year Ended Inception to Inception
12/31/99 12/31/99 Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wright Selected Blue Chip Portfolio 13.97% 13.47% 1/6/94
Wright International Blue Chip Portfolio 32.12% 10.20% 1/6/94
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the periods ended December 31, 1999, the operating expenses of the funds
were reduced either by a reduction of the investment adviser fee, the
administrator fee, or the allocation of expenses to the investment adviser, or a
combination of these. Had such actions not been undertaken, the funds would have
had lower returns.
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.
YIELD
The yield of each fund is computed by dividing its net investment income
per share earned during a recent 30-day period by the maximum offering price
(i.e. net asset value) per share on the last day of the period and annualizing
the resulting figure. Net investment income per share is equal to the dividends
and interest earned on a fund's assets during the period, with the resulting
number being divided by the average daily number of shares outstanding and
entitled to receive dividends during the period. The formula is as follows:
6
Yield = 2[ ( a--b + 1) - 1 ]
----
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (after reductions).
c = the average daily number of accumulation units outstanding
during the period.
d = the maximum offering price per accumulation unit on the last
day of the period.
NOTE: "a" is calculated for stocks by dividing the stated dividend rate for
each security held during the period by 360. "a" is estimated for debt
securities other than mortgage certificates by dividing the year-end market
value times the yield to maturity by 360. "a" for mortgage securities, such as
GNMAs, is the actual income earned. Neither discount nor premium has been
amortized.
For the 30-day period ended December 31, 1999, the yield of WSBCP was
0.1774%.
Total return, yield and effective yield are based on historical earnings
and are not intended to indicate future performance. Total return and yield will
vary based on changes in market conditions and the level of expenses.
A fund's yield or total return may be compared to the Consumer Price Index
and various domestic securities indices. A fund's yield or total return and
comparisons with these indices may be used in advertisements and in information
furnished to present or prospective shareholders.
From time to time, evaluations of a fund's performance made by independent
sources may be used in advertisements and in information furnished to present or
prospective shareholders. These include the rankings prepared by Lipper
Analytical Services, Inc., an independent service which monitors the performance
of mutual funds. The Lipper performance analysis includes the reinvestment of
dividends and capital gain distributions, but does not take sales charges into
consideration and is prepared without regard to tax consequences.
<PAGE>
PORTFOLIO TRANSACTIONS
The investment adviser places the security transactions for each fund,
which in some cases may be effected in block transactions which include other
accounts managed by the investment adviser. The investment adviser provides
similar services directly for bank trust departments and other investment
companies. In some instances, allocation of the securities to be purchased or
sold, and the expenses in connection with such transaction, is made in a manner
the investment adviser considers to be most equitable and consistent with its
fiduciary obligations to the Trust and such other clients. Such allocation may
adversely affect the size of the position obtainable by a fund.
The investment adviser seeks to execute fund security transactions on the
most favorable terms and in the most effective manner possible. In seeking best
execution, the investment adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the nature
and character of the markets for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
experience and financial condition of the broker-dealer and the value and
quality of service rendered by the broker-dealer in other transactions, and the
reasonableness of the brokerage commission or markup, if any.
It is expected that on frequent occasions there will be many broker-dealer
firms which will meet the foregoing criteria for a particular transaction. In
selecting among such firms, the funds may give consideration to those firms
which supply brokerage and research services, quotations and statistical and
other information to the investment adviser for use in servicing their accounts
or firms which purchase its investment services. The term "brokerage and
research services" includes advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). Such services and information may be useful
and of value to the investment adviser in servicing all or less than all of its
accounts and the services and information furnished by a particular firm may not
necessarily be used in connection with the account which paid brokerage
commissions to such firm. The advisory fee paid by the funds to the investment
adviser is not reduced as a consequence of its receipt of such services and
information. While such services and information are not expected to reduce the
investment adviser's normal research activities and expenses, the investment
adviser would, through use of such services and information, avoid the
additional expenses which would be incurred if it attempted to develop
comparable services and information through its own staff.
Under the Investment Advisory Contract, the investment adviser has the
authority to pay commissions on portfolio transactions for brokerage and
research services exceeding that which other brokers or dealers might charge
provided certain conditions are met. The Investment Advisory Contract expressly
authorizes the selection of a broker or dealer which charges a fund a commission
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if it is determined in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services which have been provided.
Subject to the requirement that the investment adviser use its best
efforts to seek to execute each fund's security transactions at advantageous
prices and at reasonably competitive commission rates, the investment adviser,
as indicated above, is authorized to consider as a factor in the selection of
any broker-dealer firm with whom a fund's orders may be placed the fact that
such firm has sold or is selling shares of the fund or of other investment
companies sponsored by the investment adviser.
During the fiscal years ended December 31, 1999, 1998 and 1997, the funds
paid the following amounts on brokerage commissions:
1999 1998 1997
- -------------------------------------------------------------------------------
WSBCP $4,351 $3,934 $3,558
WIBCP $5,977 $6,096 $8,692
- -------------------------------------------------------------------------------
<PAGE>
MANAGEMENT OF THE TRUST
Officers and Trustees
The officers and Trustees of the Trust are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. Those Trustees who are "interested
persons," as defined in the 1940 Act, of the Trust, Wright, The Winthrop
Corporation ("Winthrop"), Eaton Vance, Eaton Vance's wholly owned subsidiary,
Boston Management and Research ("BMR"), or Eaton Vance's parent company, Eaton
Vance Corp. ("EVC"), or Eaton Vance's Trustee, Eaton Vance, Inc. ("EV"), by
virtue of their affiliation with the Trust, Wright, Winthrop, Eaton Vance, EVC
or EV, are indicated by an asterisk (*).
PETER M. DONOVAN (57), President and Trustee*
President, Chief Executive Officer and Director of Wright and Winthrop; Vice
President, Treasurer and a Director of Wright Investors' Service Distributors,
Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
H. DAY BRIGHAM, JR. (73), Vice President, Secretary and Trustee*
Retired Vice President, Chairman of the Management Committee and Chief Legal
Officer of Eaton Vance, EVC, BMR and EV and Director, EVC and EV; Director of
Wright and Winthrop since February, 1997.
Address: 92 Reservoir Avenue, Chestnut Hill, MA 02467
JUDITH R. CORCHARD (61), Vice President and Trustee*
Executive Vice President, Investment Management: Senior Investment Officer;
Chairman of the Investment Committee and Director Wright and Winthrop. Ms.
Corchard was appointed a Trustee of the Trust on December 10, 1997.
Address: 440 Wheelers Farms Road, Milford, CT 06460
DORCAS R. HARDY (53), Trustee
President, Dorcas R. Hardy & Associates (a public policy and government
relations firm), Spotsylvania, VA; Director, The Options Clearing Corporation
and First Coast Service Options, Jacksonville, FL (FL Blue Cross Blue Shield
subsidiary); 1996-1998 - Chairman and CEO of Work Recovery, Inc. (an advanced
rehabilitation technology firm), Tucson, AZ; 1986-1989 - U.S. Commissioner of
Social Security. Ms. Hardy was elected a Trustee on December 9, 1998.
Address: 11407 Stonewall Jackson Drive, Spotsylvania, VA 22553
LELAND F. MILES (76), Trustee
President Emeritus, University of Bridgeport (1987-Present); President
University of Bridgeport (1974-1987); Director, United Illuminating Company. Mr.
Miles as appointed a Trustee of the Trust on June 17, 1997.
Address: 332 North Cedar Road, Fairfield, CT 06430
A.M. MOODY III (63), Vice President & Trustee*
Senior Vice President, Wright and Winthrop; President, Wright Investors
Service Distributors, Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
LLOYD F. PIERCE (81), Trustee
Retired Vice Chairman (prior to 1984 - President), People's Bank, Bridgeport,
CT; Member, Board of Trustees, People's Bank, Bridgeport, CT; Board of
Directors, Southern Connecticut Gas Company; Chairman, Board of Directors,
COSINE.
Address: 140 Snow Goose Court, Daytona Beach, FL 32119
RICHARD E. TABER (51), Trustee
Chairman and Chief Executive Officer of First County Bank, Stamford, CT
(1989-present). Mr.Taber was appointed as a Trustee of the Trust on
March 18, 1997.
Address: 117 Prospect Street, Stamford, CT 06901
<PAGE>
RAYMOND VAN HOUTTE (75), Trustee
President Emeritus and Counselor of The Tompkins County Trust Co., Ithaca,
NY (since January 1989); President and Chief Executive Officer, The Tompkins
County Trust Company (1973-1988); President, New York State Bankers Association
(1987-1988); Director, McGraw Housing Company, Inc., Deanco, Inc., Evaporated
Metal Products and Tompkins County Area Development, Inc.
Address: One Strawberry Lane, Ithaca, NY 14850
JAMES L. O'CONNOR (55), Treasurer
Vice President of Eaton Vance and EV. Officer of various investment companies
managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
JANET E. SANDERS (64), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance and EV. Officer of various investment companies
managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
WILLIAM J. AUSTIN, JR. (48), Assistant Treasurer
Assistant Vice President of Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
A. JOHN MURPHY (37), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since March 1, 1994; employee of Eaton
Vance since March 1993. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on June
21, 1995.
Address: 255 State Street, Boston, MA 02109
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of Eaton Vance since February 1993. Officer of various
investment companies managed by Eaton Vance or BMR. Mr.
Woodbury was elected Assistant Secretary of the Trust on June 21, 1995.
Address: 255 State Street, Boston, MA 02109
All of the Trustees and officers hold identical positions with The Wright
Managed Income Trust, The Wright Managed Equity Trust, The Wright EquiFund
Equity Trust, Catholic Values Investment Trust, The Wright Asset Allocation
Trust and The Wright Blue Chip Master Portfolio Trust. The fees and expenses of
those Trustees (Messrs. Miles, Pierce, Taber, Van Houtte and Ms. Hardy) who are
not "interested persons" of the Trust and of Mr. Brigham are paid by the funds.
They also receive additional payments from other investment companies for which
Wright provides investment advisory services. The Trustees who are employees of
Wright receive no compensation from the Trust. The Trust does not have a
retirement plan for its Trustees. For Trustee compensation from the Trust for
the fiscal year ended December 31, 1999 and for the total compensation paid to
the Trustees from the Wright fund complex for the fiscal year ended December 31,
1999, see the following table.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Compensation Pension Estimated Total Compensation
from The Wright Managed Benefits Annual Paid from Fund and
Trustees Blue Chip Series Trust Accrued Benefits Funds' Complex(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. Day Brigham, Jr. $1,750 None None $11,250
Dorcas Hardy 1,750 None None 11,250
Leland Miles 1,750 None None 11,250
Lloyd F. Pierce 1,750 None None 11,250
Richard E. Taber 1,750 None None 11,250
Raymond Van Houtte 1,250 None None 8,250
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total compensation paid is from The Wright Managed Blue Chip Series Trust (2
Portfolios) and the other funds in the Wright fund complex for a total of 22
funds.
The Trust's Board of Trustees has established an Independent Trustees'
Committee and an Audit Committe, each consisting of all of the Independent
Trustees who are Messrs. Miles, Pierce (Chairman), Taber, Van Houtte and Ms.
Hardy. The responsibilities of the Independent Trustees' Committee include those
of a nominating committee for additional or replacement trustees of the Trust
and a contract review committee for consideration of renewals or changes in the
investment advisory agreements, distribution agreements and distribution plans
<PAGE>
and other agreements as appropriate. The responsibilities of the Audit Committee
are: (a) to oversee the Trusts' accounting and financial reporting practices,
their internal controls and, as appropriate, the internal controls of certain
service providers; (b) to oversee the quality and objectivity of the Trusts'
financial statements and the independent audit thereof; and (c) to act as a
liaison between the Trusts' independent auditors and the full Board of Trustees.
THE INVESTMENT ADVISER
The Trust has engaged Wright to act as the fund's investment adviser
pursuant to an Investment Advisory Contract. Wright furnishes each fund with
investment advice and management services. The Trustees of the Trust are
responsible for the general oversight of the conduct of each fund's business.
The School for Ethical Education, 440 Wheelers Farms Road, Milford, CT 06460,
may be considered a controlling person of Wright's parent, Winthrop, and Wright
by reason of its ownership of more than 25% of the outstanding shares of
Winthrop.
Pursuant to the Investment Advisory Contract, Wright will carry out the
investment and reinvestment of the assets of the funds, will furnish
continuously an investment program with respect to the funds, will determine
which securities should be purchased, sold or exchanged, and will implement such
determinations. Wright will furnish to the funds investment advice and
management services, office space, equipment and clerical personnel, and
investment advisory, statistical and research facilities. In addition, Wright
has arranged for certain members of the Eaton Vance and Wright organizations to
serve without salary as officers or Trustees of the Trust. In return for these
services, each fund is obligated to pay a monthly advisory fee calculated at the
rates set forth in the fund's current Prospectus.
The investment adviser and each Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Wright employees
may purchase and sell securities subject to certain pre-clearance and reporting
requirements and other procedures. These Codes of Ethics are on public file
with, and available from, the Securities and Exchange Commission.
The following table sets forth the net assets of each fund at December 31,
1999, and the advisory fee earned during the fiscal years ended December 31,
1999, 1998 and 1997.
<TABLE>
<CAPTION>
Net For the Fiscal For the Fiscal For the Fiscal
Assets Year Ended Year Ended Year Ended
PORTFOLIOS 12/31/99 12/31/99 12/31/98 12/31/97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Wright Selected Blue Chip Portfolio (WSBCP) (1) $2,277,038 $16,556 $22,530 $19,920
Wright International Blue Chip Portfolio (WIBCP) (2) $920,342 $7,336 $11,781 $11,960
- --------------------------------------------------------------------------------------------------------------------------------
(1) For the fiscal year ended December 31, 1999, Wright made a reduction in its
advisory fee by the full amount of $16,556 and made an assumption of $15,491
of expenses of the Portfolio. For the fiscal year ended December 31, 1998,
Wright made a reduction in its advisory fee by the full amount of $22,530
and made an assumption of $6,500 of expenses of the Portfolio. For the
fiscal year ended December 31, 1997, WSBCP made a reduction of its advisory
fee in the amount of $15,717
(2) For the fiscal year ended December 31, 1999, Wright made a reduction in its
advisory fee by the full amount of $7,336 and made an assumption of $43,210
of expenses of the Portfolio. For the fiscal year ended December 31, 1998,
Wright made a reduction in its advisory fee by the full amount of $11,781
and made an assumption of $33,800 of expenses of the Portfolio. For the
fiscal years ended December 31, 1997, Wright made a reduction of its
advisory fee in the full amount of such fee and Wright was allocated $21,630
of expenses related to the operation of such fund.
</TABLE>
THE ADMINISTRATOR
The Trust has engaged Eaton Vance to act as the administrator for each
fund. For its services under the Administration Agreement, Eaton Vance receives
monthly administration fees based on the net assets of each fund. The following
table sets forth the administration fees that would have been earned, absent a
fee reduction, from each fund for the fiscal years ended December 31, 1999, 1998
and 1997.
<TABLE>
<CAPTION>
Fee paid as a % of average Administration Fees Paid
daily net assets for for the Fiscal Year Ended December 31
fiscal year ended 12/31/99 --------------------------------------------
PORTFOLIOS 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wright Selected Blue Chip Portfolio (WSBCP) 0.05% $1,279 $1,734 $1,532
Wright International Blue Chip Portfolio (WIBCP) 0.05% $458(1) $803(1) $ 747(1)
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Eaton Vance made a reduction of the administration fee in the full amount.
</TABLE>
<PAGE>
Eaton Vance is a business trust organized under Massachusetts law. Eaton
Vance, Inc. ("EV") serves as trustee of Eaton Vance. Eaton Vance and EV are
wholly owned subsidiaries of Eaton Vance Corporation ("EVC"), a Maryland
corporation and publicly held holding company. EVC through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities.
The Trust's Investment Advisory Contract and Administration Agreement will
remain in effect until February 28, 2001. The Trust's Investment Advisory
Contract may be continued with respect to a fund from year to year thereafter so
long as such continuance after February 28, 2001 is approved at least annually
(i) by the vote of a majority of the Trustees who are not "interested persons"
of the Trust, Eaton Vance or Wright cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Trust or by vote of a majority of the outstanding shares of that
fund. The Trust's Administration Agreement may be continued from year to year
after February 28, 2001 so long as such continuance is approved annually by the
vote of a majority of the Trustees. Each agreement may be terminated as to a
fund at any time without penalty on sixty (60) days' written notice by the Board
of Trustees or Directors of either party, or by vote of the majority of the
outstanding shares of that fund, and each agreement will terminate automatically
in the event of its assignment. Each agreement provides that, in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties to the Trust under such agreement on the part of Eaton
Vance or Wright, Eaton Vance or Wright will not be liable to the Trust for any
loss incurred.
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
Massachusetts, acts as custodian and transfer agent for each of the funds. IBT,
directly or through subcustodians, has the custody of all cash and securities of
the funds, maintains the funds' general ledgers and computes daily the net asset
value per share of each fund. In such capacity it attends to details in
connection with the sale, exchange, substitution, transfer or other dealings
with the funds' investments, receives and disburses all funds and performs
various other ministerial duties upon receipt of proper instructions from the
funds.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 200 Berkeley Street, Boston, MA 02116-5022 are the
Trust's independent certified public accountants, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
LEGAL MATTERS
Certain legal matters are passed on for the Trust by Hale and Dorr LLP, 60
State Street, Boston, Massachusetts 02109.
NET ASSET VALUE
Portfolio securities for which the primary market is on a domestic or
foreign exchange or which are traded over-the-counter and quoted on the NASDAQ
System will be valued at the last sale price on the day of valuation or, if
there was no sale that day, at the last reported bid price, using prices as of
the close of trading. Portfolio securities not quoted on the NASDAQ System that
are actively traded in the over-the-counter market, including listed securities
for which the primary market is believed to be the over-the-counter market, will
be valued at the most recently quoted bid price provided by the principal market
makers.
With respect to WIBCP, foreign securities traded outside the United States
are generally valued as of the time their trading is completed, which is usually
different from the close of the New York Stock Exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the New York Stock Exchange that will not be reflected in the
computation of WIBCP's net asset value. If events materially affecting the value
of such securities occur during such period, these securities will be valued at
<PAGE>
their fair value according to procedures decided upon in good faith by the
Trustees. All securities and other assets of WIBCP initially quoted or
denominated in foreign currencies will be converted to U.S. dollar values at the
mean of the bid and offer prices of such currencies against U.S. dollars last
quoted on a valuation date by any recognized dealer.
In the case of any securities which are not actively traded, reliable
market quotations may not be considered to be readily available. These
investments are stated at fair value as determined under the direction of the
Trustees. Such fair value is expected to be determined by utilizing information
furnished by a pricing service which determines valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders.
If any securities held by a fund are restricted as to resale, their fair
value will be determined following procedures approved by the Trustees. The
Trustees periodically review such procedures. The fair value of such securities
is generally determined to be the amount which the fund could reasonably expect
to realize from an orderly disposition of such securities over a reasonable
period of time. The valuation procedures applied in any specific instance are
likely to vary from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental analytical data
relating to the investment and to the nature of the restrictions on disposition
of the securities (including any registration expenses that might be borne by
the fund in connection with such disposition). In addition, specific factors are
also generally considered, such as the cost of the investment, the market value
of any unrestricted securities of the same class (both at the time of purchase
and at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer.
Notwithstanding the foregoing, short-term debt securities with maturities
of 60 days or less will be valued at amortized cost.
PURCHASE AND REDEMPTION OF SHARES
The shares of each fund are not offered to the public but may be purchased
only by participating insurance companies for their Accounts allocable to
Contracts. Within the limitations set forth in the appropriate Contract,
Contractholders may direct a participating insurance company to purchase or
redeem shares of any fund. Instructions for any such purchase or redemption of
the shares of any fund must be made by a participating insurance company and
Contractholders should not direct instructions or inquiries to the Trust. The
terms and conditions of the Contracts and any limitations upon the funds in
which the Accounts may invest are set forth in a separate prospectus.
Subject to the foregoing, each fund sells its shares to participating
insurance companies without a sales charge at the net asset value per share of
such fund next determined after the purchase order is received. Each fund
reserves the right to reject any order for the purchase of its shares or to
limit or suspend, without notice, the offering of its shares.
Shares of the funds may be redeemed on any day on which the Trust is open
for business. Each fund redeems its shares at the net asset value per share of
such fund next determined after the redemption request is received from a
participating insurance company. Proceeds of any redemption are delivered to the
participating insurance company within seven days after receipt of the
redemption request. The right to redeem shares of a fund and to receive payment
therefore may be suspended at times (a) when the securities markets are closed,
other than customary weekend and holiday closings, (b) when trading is
restricted for any reason, (c) when an emergency exists as a result of which
disposal by such fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for such fund fairly to determine the value of
its net assets, or (d) when the Securities and Exchange Commission by order
permits a suspension of the right of redemption or a postponement of the date of
payment or redemption.
Although the funds normally intend to redeem shares in cash, each fund
reserves the right to redeem shares by distributing securities in kind if deemed
advisable by the Trustees. The value of any portfolio securities distributed
upon redemption will be determined in the manner as described under "Net Asset
Value." However, a fund will redeem shares in cash to the extent that the amount
of a fund's shares to be redeemed for the benefit of any Contractholder within a
90-day period does not exceed the lesser of $250,000 or 1% of the aggregate net
asset value of the fund at the beginning of such period. If portfolio securities
are distributed in lieu of cash, the shareholder will normally incur transaction
costs upon the disposition of any such securities.
<PAGE>
TAXES
FEDERAL INCOME TAXES
In order to qualify as a regulated investment company as described in the
Prospectus, a fund must, among other things, (1) derive at least 90% of its
gross income in each taxable year from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stocks
or securities or foreign currencies, or other income (including but not limited
to gains from options and forward contracts) derived with respect to its
business of investing in such stocks or securities and (2) diversify its
holdings in compliance with the diversification requirements of Subchapter M of
the Code so that, at the end of each quarter of the fund's taxable year, (a) at
least 50% of the market value of the fund's total assets is represented by cash,
U.S. Government securities and other securities limited in respect of any one
issuer to not more than 5% of the value of the fund's total (gross) assets and
to not more than 10% of the voting securities of such issuer, and (b) not more
than 25% of the value of its total (gross) assets is invested in securities of
any one issuer (other than U.S. Government securities) or certain other issuers
controlled by the fund.
As a regulated investment company, a fund will not be subject to federal
income tax on net investment income and net capital gains (short- and
long-term), if any, that it distributes to its shareholders if at least 90% of
its investment company taxable income (i.e., all of its net taxable income other
than the excess, if any, of net long-term capital gain over net short-term
capital loss ("net capital gain")), for the taxable year is distributed in
accordance with applicable timing requirements, but will be subject to tax at
regular corporate rates on any investment company taxable income or net capital
gain that is not so distributed. In general, dividends will be treated as paid
when actually distributed, except that dividends declared in October, November
or December and made payable to shareholders of record in such a month will be
treated as having been received by shareholders on December 31, if the dividend
is paid in the following January. Each fund intends to satisfy the distribution
requirement in each taxable year. A fund's distributions from investment company
taxable income and net capital gain are generally treated as ordinary income and
long-term capital gain, respectively, under the Code. Insurance companies should
consult their own tax advisers regarding the tax rules governing their treatment
upon receipt of these distributions and the proceeds of share redemptions
(including exchanges).
Each fund will not be subject to federal excise tax or the related
distribution requirements for any taxable year in which all of its shares are
held by segregated asset accounts of life insurance companies held in connection
with variable contracts or are attributable to certain "seed money" in
accordance with Section 4982(f) of the Code.
Investment by a fund in the stock of a "passive foreign investment company"
may cause the fund to recognize income prior to the receipt of distributions
from such a company or to become subject to tax upon the receipt of certain
excess distributions from, or upon disposition of its stock of, such a company,
although an election may generally be available that would ameliorate some of
these adverse tax consequences.
Each fund intends to comply with the diversification requirements imposed
by Section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on a fund by the 1940 Act and Subchapter M of the Code, place certain
limitations on the assets of each separate account and, because Section 817(h)
and those regulations treat the assets of the fund as assets of the related
separate account, the assets of a fund, that may be represented by any one, two,
three and four investments. Specifically, the regulations provide that, except
as permitted by the "safe harbor" described below, as of the end of each
calendar quarter or within 30 days thereafter no more than 55% of the total
assets of a fund may be represented by any one investment, no more than 70% by
any two investments, no more than 80% by any three investments and no more than
90% by any four investments. For this purpose, all securities of the same issuer
are considered a single investment, and each U.S. Government agency and
instrumentality is considered a separate issuer. Section 817(h) provides, as a
safe harbor, that a separate account will be treated as being adequately
diversified if the diversification requirements under Subchapter M are satisfied
and no more than 55% of the value of the account's total assets are cash and
cash items (including receivables), U.S. Government securities and securities of
other regulated investment companies. Failure by a fund to both qualify as a
regulated investment company and satisfy the Section 817(h) requirements would
generally result in treatment of the variable contract holders other than as
described in the applicable variable contract prospectus, including inclusion in
ordinary income of income accrued under the contracts for the current and all
prior taxable years. Any such failure may also result in adverse tax
consequences for the insurance company issuing the contracts.
The Trust may therefore find it necessary to take action to seek to ensure
that a Contract continues to qualify as a Contract under federal tax laws,
although the insurance company that maintains each segregated asset account is
responsible for ensuring that the assets held in that account satisfy the
diversification requirements of Section 817(h) of the Code and the applicable
regulations and the Trust itself can control only the assets held within the
funds. The Trust, for example, may be required to alter the investment
objectives of a fund or substitute the shares of one fund for those of another.
No such change of investment objectives or substitution of securities will take
place without notice to the shareholders of the affected fund.
<PAGE>
The funds are not subject to Massachusetts corporate excise or franchise
tax. Provided that a fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.
FINANCIAL STATEMENTS
The audited financial statements of, and the independent auditors' report
for the funds appear in the funds' most recent annual report to shareholders and
are incorporated by reference into this Statement of Additional Information. A
copy of the funds' annual report accompanies this Statement of Additional
Information.
Registrant incorporates by reference the audited financial information for
the funds for the fiscal year ended December 31, 1999 as previously filed
electronically with the Securities and Exchange Commission (Accession Number
0000715165-00-000006).
<PAGE>
APPENDIX
- -------------------------------------------------------------------------------
WRIGHT QUALITY RATINGS
Wright Quality Ratings provide a means by which Wright evaluates certain
fundamental criteria for the measurement of the quality of an issuer's
securities.
Each rating is based on individual measures of quality which can be grouped
into four components: (1) Investment Acceptance, (2) Financial Strength, (3)
Profitability and Stability, and (4) Growth. The total rating is three letters
and a numeral. The three letters measure (1) Investment Acceptance, (2)
Financial Strength, and (3) Profitability and Stability. Each letter reflects a
composite measurement of eight individual standards which are summarized as A:
Outstanding, B: Excellent, C: Good, D: Fair, L: Limited, and N: Not Rated. The
numeral rating reflects Growth and is a composite of eight individual standards
ranging from 0 to 20.
EQUITY SECURITIES
INVESTMENT ACCEPTANCE reflects the acceptability of a security by and its
marketability among investors, and the liquidity of the market for such
securities.
FINANCIAL STRENGTH represents the amount, adequacy and liquidity of the
corporation's resources in relation to current and potential requirements. Its
principal components are aggregate equity and total capital, the ratio of
invested equity capital to debt, the adequacy of net working capital, its fixed
charges coverage ratio and other appropriate criteria.
PROFITABILITY AND STABILITY measures the record of a corporation's
management in terms of (1) the rate and consistency of the net return on
shareholders' equity capital investment at corporate book value, and (2) the
profits or losses of the corporation during generally adverse economic periods,
including its ability to withstand adverse financial developments.
GROWTH measures the growth per common share of the corporation's equity
capital, earnings, and dividends, rather than the corporation's overall growth
of revenues and income.
These ratings are determined by specific quantitative formulae. A
distinguishing characteristic of these ratings is that The Wright Investment
Committee must review and accept each rating. The Committee may reduce a
computed rating of any company, but may not increase it.
DEBT SECURITIES
Wright ratings for commercial paper, corporate bonds and bank certificates
of deposit consist of the two central positions of the four position
alphanumeric corporate equity rating. The two central positions represent those
factors which are particularly relevant to fixed income and reserve investments.
The first letter rating of the Wright four-part alphanumeric corporate
rating is not included in the ratings of fixed income securities since it
primarily reflects the adequacy of the floating supply of the company's common
shares for the investment of substantial funds. The numeric growth rating is not
included because this element is identified only with equity investments.
A-1 AND P-1 COMMERCIAL PAPER RATINGS BY STANDARD & POOR'S AND MOODY'S
A Standard & Poor's Commercial Paper Rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
`A': Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety. The
`A-1' designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
Issuers (or related supporting institutions) rated P-1 by Moody's have a
superior capacity for repayment of short-term promissory obligations. P-1
repayment capacity will normally be evidenced by the following characteristics:
-- Leading market positions in well-established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
The commercial paper rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained from other sources it considers reliable. The
ratings may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information.
<PAGE>
Statement of Additional Information
May 1, 2000
CATHOLIC VALUES EQUITY INVESTMENT PORTFOLIO
a series of
The Wright Managed Blue Chip Series Trust
255 State Street
Boston, Massachusetts 02109
Table of Contents
PAGE
The Fund's Investment Policies............................2
Additional Information about the Trust....................6
Investment Restrictions...................................6
Trustees, Officers and the Catholic Advisory Board........7
Control Persons and Principal Holders of Shares..........10
Investment Advisory and Administrative Services..........10
Custodian and Transfer Agent.............................11
Independent Certified Public Accountants.................11
Brokerage Allocation.....................................12
Pricing of Shares........................................12
Taxes....................................................13
Calculation of Performance and Yield Quotations..........14
Appendix.................................................15
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by the
current Prospectus of The Wright Managed Blue Chip Series Trust (the "Trust")
offering shares of Catholic Values Equity Investment Portfolio (the "fund"),
dated May 1, 2000, as supplemented from time to time, which is incorporated
herein by reference. This Statement of Additional Information should be read in
conjunction with the Prospectus. A copy of the Prospectus may be obtained
without charge from Wright Investors' Service Distributors, Inc., 440 Wheelers
Farms Road, Milford, CT 06460 (Telephone: 888-974-9471).
<PAGE>
THE FUND'S INVESTMENT POLICIES
The fund is a series of a diversified, open-end management investment
company. Unless otherwise defined herein, capitalized terms have the meaning
given them in the Prospectus.
The fund's objective is set forth in the Prospectus. The fund will, through
continuous supervision by Wright Investors' Service, Inc. ("Wright" or the
"Adviser") and the Catholic Advisory Board, pursue its objective by investing in
a broadly diversified portfolio consisting primarily of equity securities of
high-quality, well-established and profitable U.S. and non-U.S. companies that
offer products or services and undertake activities that are consistent with the
core teachings of the Catholic Church.
HOW INVESTMENTS ARE SELECTED. Securities selected for the fund are drawn
from investment lists prepared by Wright and known as The Approved Wright
Investment List (the "AWIL") and The International Approved Wright Investment
List (the "International AWIL"). Securities drawn from these Investment Lists
will be reviewed for compliance with the core teachings of the Catholic Church
by the Catholic Advisory Board, which is appointed by the Board of Trustees of
the Trust (the "trustees") and is made up of prominent lay members of the
Catholic Church.
THE APPROVED WRIGHT INVESTMENT LISTS (AWIL AND INTERNATIONAL AWIL). Wright
systematically reviews about 10,000 U.S. companies and about 13,000 non-U.S.
companies in The Worldscope(R) database which it developed. This review first
identifies those companies which meet the minimum standards of prudence (e.g.,
the value of the company's assets and shareholders' equity exceeds certain
minimum standards) and thus are suitable for consideration by fiduciary
investors. Companies meeting these requirements (about 4,000 companies) are
considered by Wright to be suitable for prudent investment. They may be large or
small, may have their securities traded on exchange or over the counter and may
include companies not currently paying dividends on their shares.
These approximately 4,000 companies are then subjected to extensive
analysis and evaluation in order to identify those which meet Wright's
fundamental standards of Investment Quality. Only those companies which meet or
exceed all of these standards (a subset of the 4,000 companies considered
suitable for prudent investment) are eligible for selection by the Wright
Investment Committee for inclusion in the Investment Lists. See the Appendix
herein for a more detailed description of Wright Quality Ratings and the
Investment Lists.
All companies on the Investment Lists are, in the opinion of Wright,
soundly financed with established records of earnings profitability and equity
growth. All have established investment acceptance and active, liquid markets
for their publicly owned shares. The companies on the Investment Lists will be
referred to in this prospectus as "Blue Chips."
THE CATHOLIC ADVISORY BOARD. The Catholic Advisory Board assures that the
fund's investments are consistent with Catholic values. Each member of the Board
is involved in various Catholic organizations and activities and is in contact
with numerous Catholic institutions and Catholic clergy. Using the best publicly
available information obtained by Wright, the Catholic Advisory Board will
identify those companies recommended by Wright whose products, services and/or
activities are substantially consistent with core Catholic Church teachings. In
addition, information received from shareholders, secondary materials, and
general input from interested sources is consistently reviewed and evaluated.
The result is continuous dialogue, continuous information input, continuous
review, and thus continuous evaluation. It is believed that independent thinking
and independent information support a portfolio that adheres to Catholic
doctrine while balancing changes in the market place, changes in informational
input, and changes in value systems. Thus, the fund combines Catholic values
with investment values.
The Catholic Advisory Board will have sole discretion to determine which
companies meet the fund's religious criteria. Wright will be solely responsible
for evaluating the investment merits of the fund's holdings. When a company is
found not to be in compliance with core Catholic teachings, Wright is asked to
remove it from the fund's holdings. This policy may cause the fund to dispose of
a security at a time when it may be disadvantageous from an investment viewpoint
to do so.
Because the fund will consider for investment only securities which meet
the fund's investment and religious criteria, the return on securities chosen
may be lower than if the fund considered only investment criteria when selecting
investments. However, Wright does not expect there to be a material effect on
the performance.
PRIMARY INVESTMENTS. The fund will, under normal market conditions, invest
at least 80% of its net assets in equity securities of Blue Chip companies,
including common stocks, preferred stocks, warrants and securities convertible
into stock. As a matter of nonfundamental policy, it is expected that the fund
will normally be fully invested in equity securities. However, the fund may
<PAGE>
invest up to 20% of its net assets in the short-term debt securities described
under "Defensive and Certain Short-Term Investments." In addition, for temporary
defensive purposes the fund may hold cash or invest without limit in these
short-term debt securities.
DESCRIPTION OF INVESTMENTS
U.S. Government, Agency and Instrumentality Securities - U.S. Government
securities in which the fund may invest are short-term obligations issued by the
Treasury and include bills, certificates of indebtedness, notes, and bonds.
Agencies and instrumentalities of the U.S. Government are established under the
authority of an act of Congress and include, but are not limited to, the
Government National Mortgage Association ("GNMA"), the Tennessee Valley
Authority, the Bank for Cooperatives, the Farmers Home Administration, Federal
Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks, and the
Federal National Mortgage Association ("FNMA").
The fund has no current intention of investing in securities issued by GNMA
or FNMA or in any other mortgage-backed securities.
FOREIGN INVESTMENTS -- The fund may invest up to 30% of its total assets in
equity securities of foreign companies that are on the International AWIL and
that are traded on a securities market of the country in which the company is
located or other foreign securities exchanges. In addition, the fund may
purchase securities in the form of American Depositary Receipts ("ADRs") or
similar securities representing interests in an underlying foreign security.
ADRs are not necessarily denominated in the same currency as the underlying
foreign securities. If an ADR is not sponsored by the issuer of the underlying
foreign security, the institution issuing the ADR may have reduced access to
information about the issuer.
Investments in foreign securities involve risks in addition to those
associated with investments in the securities of U.S. issuers. These risks
include less publicly available financial and other information about foreign
companies; less rigorous securities regulation; the potential imposition of
currency controls, foreign withholding and other taxes; and war, expropriation
or other adverse governmental actions. Foreign equity markets may be less liquid
than United States markets and may be subject to delays in the settlement of
portfolio transactions. Brokerage commissions and other transaction costs in
foreign markets tend to be higher than in the United States. The value of
foreign securities denominated in a foreign currency will vary in accordance
with changes in currency exchange rates, which can be volatile. In addition, the
prices of unsponsored ADRs may be more volatile than if they were sponsored by
the issuers of the underlying securities. These considerations generally are of
greater concern in developing countries.
REPURCHASE AGREEMENTS - The fund may invest in repurchase agreements, which
involve purchase of U.S. Government securities. At the same time the fund
purchases the security, it resells it to the vendor (a member bank of the
Federal Reserve System or recognized securities dealer that meets Wright credit
standards), and is obligated to redeliver the security to the vendor on an
agreed-upon date in the future. The resale price exceeds the purchase price and
reflects an agreed-upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford an opportunity for the fund to earn
a return on cash which is only temporarily available. The fund's risk is the
ability of the vendor to pay an agreed-upon sum upon the delivery date. The fund
believes this risk is limited to the difference between the market value of the
security and the repurchase price provided for in the repurchase agreement.
Repurchase agreements must be fully collateralized at all times. In the
event of a default or bankruptcy by a vendor under a repurchase agreement, the
fund will seek to liquidate such collateral. However, the exercise of the right
to liquidate such collateral could involve certain costs, delays and
restrictions and is not ultimately assured. To the extent that proceeds from any
sale upon a default of the obligations to repurchase are less than the
repurchase price, the fund could suffer a loss.
In all cases when entering into repurchase agreements with other than
FDIC-insured depository institutions, the fund will take physical possession of
the underlying collateral security, or will receive written confirmation of the
purchase of the collateral security and a custodial or safekeeping receipt from
a third party under a written bailment for hire contract, or will be the
recorded owner of the collateral security through the Federal Reserve Book-Entry
System. Repurchase agreements are considered to be loans under the Investment
Company Act of 1940.
DEFENSIVE AND CERTAIN SHORT-TERM INVESTMENTS - Under normal market
conditions up to 20% of the fund's net assets or, during periods of unusual
market conditions, when Wright believes that investing for temporary defensive
purposes in appropriate, all or any portion of the fund's assets may be held in
cash, money market instruments or other short-term obligations. These include
short-term obligations issued or guaranteed as to interest and principle by the
U.S. Government or any agency or instrumentality thereof (including repurchase
agreement collateralized by such securities).
<PAGE>
The fund may invest in the following U.S. dollar denominated, high quality
short-term obligations to the extent set forth above:
CERTIFICATES OF DEPOSIT - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified rate of return,
and are normally negotiable.
BANKERS' ACCEPTANCES - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed "accepted"
when a bank guarantees their payment at maturity.
COMMERCIAL PAPER - refers to promissory notes issued by corporations in
order to finance their short-term credit needs. Commercial paper acquired by the
fund must, at the date of investment, be rated A-1 by Standard & Poor's Ratings
Group ("S&P") or P-1 by Moody's Investors Service, Inc. ( "Moody's"), or, if not
rated by such rating organizations, be deemed by the trustees to be of
comparable quality.
FINANCE COMPANY PAPER - refers to promissory notes issued by finance
companies in order to finance their short-term credit needs. Finance company
paper must have the same ratings as commercial paper at the time of purchase.
See "Commercial Paper" above.
CORPORATE OBLIGATIONS - include bonds and notes issued by corporations and
other entities in order to finance short-term credit needs. Corporate
obligations and other debt instruments in which the fund may invest must, at the
date of investment, be rated AA or better by S&P or Aa or better by Moody's or,
if not rated by such rating organizations, be deemed by the trustees to be of
comparable quality.
The fund may invest in instruments and obligations of banks that have other
relationships with the fund, Wright or Eaton Vance. No preference will be shown
towards investing in banks which have such relationships.
The prices of fixed income securities vary inversely with interest rates.
Therefore, the value of the fund's investments in convertible securities and
short-term obligations will decline when interest rates are rising. The
investment objective and, unless otherwise indicated, policies of the fund may
be changed by the trustees without a vote of the fund's shareholders. The fund
is not a complete investment program and there is no assurance that the fund
will achieve its investment objective. The market price of securities held by
the fund and the net asset value of the fund's shares will fluctuate in response
to stock market developments and currency exchange rate fluctuations.
"WHEN ISSUED" SECURITIES - Securities are frequently offered on a
"when-issued" basis. When so offered, the price, which is generally expressed in
terms of yield to maturity, is fixed at the time the commitment to purchase is
made, but delivery and payment for the when-issued securities may take place at
a later date. Normally, the settlement date occurs 15 to 90 days after the date
of the transaction. The payment obligation and the interest rate that will be
received on the securities are fixed at the time the fund enters into the
purchase commitment. During the period between purchase and settlement, no
payment is made by the fund to the issuer and no interest accrues to the fund.
To the extent that assets of the fund are held in cash pending the settlement of
a purchase of securities, the fund would earn no income; however, the fund
intends to be fully invested to the extent practicable and subject to the
policies stated above. While when-issued securities may be sold prior to the
settlement date, it is intended that such securities will be purchased for the
fund with the purpose of actually acquiring them unless a sale appears to be
desirable for investment reasons.
At the time a commitment to purchase securities on a when-issued basis is
made for the fund, the transaction will be recorded and the value of the
security reflected in determining the fund's net asset value. The fund will
establish a segregated account in which the fund will maintain cash and liquid
securities equal in value to commitments for when-issued securities. If the
value of the securities placed in the separate account declines, additional cash
or securities will be placed in the account on a daily basis so that the value
of the account will at least equal the amount of the fund's when-issued
commitments. Such segregated securities either will mature or, if necessary, be
sold on or before the settlement date.
Securities purchased on a when-issued basis and the securities held by the
fund are subject to changes in value based upon the public's perception of the
creditworthiness of the issuer and changes in the level of interest rates.
(Thus, both positions will change in value in the same way, i.e., both
experiencing appreciation when interest rates decline and depreciation when
interest rates rise.) Therefore, to the extent that the fund remains
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be greater fluctuations in the market value
of the fund's net assets than if only cash were set aside to pay for when-issued
securities.
The fund has no current intention of investing in when-issued securities.
<PAGE>
ILLIQUID AND RESTRICTED SECURITIES - The fund may purchase securities that
are not registered ( "restricted securities") under the Securities Act of 1933 (
"1933 Act"), including securities offered and sold to "qualified institutional
buyers" ("QIB's") under Rule 144A under the 1933 Act. However, the fund will not
invest more than 15% of its net assets in illiquid investments, which include
repurchase agreements maturing in more than seven days, securities that are not
readily marketable and restricted securities not eligible for resale to QIB's.
If the value of the fund's illiquid investments increased to more than 15% of
net assets, Wright would begin reducing these investments in an orderly manner
to the extent necessary to comply with the 15% limit. If the Board of Trustees
determines, based upon a continuing review of the trading markets for specific
Rule 144A securities, that they are liquid, then such securities may be
purchased without regard to the 15% limit. The trustees may adopt guidelines and
delegate to Wright the daily function of monitoring and determining the
liquidity of restricted securities. The trustees, however, will retain
sufficient oversight and be ultimately responsible for the determinations. The
trustees will carefully monitor the fund's investments in these securities,
focusing on such important factors, among others, as valuation, liquidity and
availability of information.
The fund may acquire other restricted securities including securities for
which market quotations are not readily available. These securities may be sold
only in privately negotiated transactions or in public offerings with respect to
which a registration statement is in effect under the 1933 Act. Where
registration is required, the fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the fund might obtain a less favorable price
than prevailed when it decided to sell. Restricted securities will be priced at
fair market value as determined in good faith by the Trust's trustees.
The fund does not currently intend to purchase restricted securities.
BORROWING: LENDING PORTFOLIO SECURITIES - The fund may borrow for temporary
or emergency purposes in an amount up to one-third of the fund's total assets.
The fund may lend portfolio securities with a value up to 30% of its total
assets to enhance its income. The fund may pay reasonable fees in connection
with securities loans. Wright will evaluate the creditworthiness of prospective
institutional borrowers and monitor the adequacy of the collateral to reduce the
risk of default by borrowers. The fund may seek to increase income by lending
portfolio securities to broker-dealers or other institutional borrowers. Under
present regulatory policies of the Securities and Exchange Commission, such
loans are required to be secured continuously by collateral in cash or liquid
securities maintained on a current basis at an amount at least equal to the
market value of the securities loaned, which will be marked to market daily. The
fund would have the right to call a loan and obtain the securities loaned at any
time on up to five business days' notice. The fund would not have the right to
vote any securities having voting rights during the existence of a loan, but
would call the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or withholding of their consent on a
material matter affecting the investment.
The fund does not currently intend to engage in securities loans.
WARRANTS AND CONVERTIBLE SECURITIES - The fund may invest up to 5% of its
net assets in warrants. Warrants acquired by the fund will entitle it to buy
common stock at a specified price and time. The fund may invest up to 5% of its
net assets in convertible securities. Convertible debt securities and
convertible preferred stock entitle the fund to acquire the issuer's stock by
exchange or purchase at a predetermined rate.
Warrants are subject to the same market risks as stocks, but may be more
volatile in price. The fund's investments in warrants will not entitle it to
receive dividends or exercise voting rights and will become worthless if the
warrants cannot be profitably exercised before their expiration dates.
Convertible securities are subject both to the credit and interest rate risks
associated with debt obligations and to the stock market risk associated with
equity securities. Convertible debt securities in which the fund may invest
must, at the date of investment, be rated AA or better by S&P or Aa or better by
Moody's or, if not rated by one of these rating organizations, be deemed by
Wright to be of comparable quality.
INTEREST RATE RISK - The market value of the U.S. Government securities,
short-term investments and convertible securities in which the fund may invest
varies inversely with changes in the prevailing levels of interest rates. For
example, if interest rates rise after one of the foregoing securities has been
purchased, the value of the security would decline.
SHORT SALES - The fund may engage in short sales in order to profit from an
anticipated decline in the value of a security. The fund may also engage in
short sales to attempt to limit its exposure to a possible market decline in the
value of its portfolio securities through short sales of securities which Wright
believes possess volatility characteristics similar to those being hedged. To
effect such a transaction, the fund must borrow the security sold short to make
delivery to the buyer. The fund then is obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. Until
the security is replaced the fund is required to pay to the lender any accrued
interest or dividends and may be required to pay a premium. The fund may only
make short sales "against the box," meaning that the fund either owns the
securities sold short or, by virtue of its ownership of other securities, has
the right to obtain securities equivalent in kind and amount to the securities
sold and, if the right is conditional, the sale is made upon the same
conditions.
<PAGE>
The fund has no current intention of engaging in short sales.
Financial Futures Contracts and Related Options - The fund does not
currently intend to purchase or sell financial futures contracts or related
options.
Diversification -- The fund is diversified and therefore may not, with
respect to 75% of its total assets, (1) invest more than 5% of its total assets
in the securities of any one issuer, other than U.S. Government securities, or
(2) acquire more than 10% of the outstanding voting securities of any one
issuer. The fund will not concentrate (invest 25% or more of its total assets)
in the securities of issuers in any one industry.
Portfolio Turnover Rate - The fund estimates that its portfolio turnover
rate will be approximately 22% per year.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust's Declaration of Trust may be amended with the affirmative vote
of a majority of the outstanding shares of the Trust or, if only the interests
of the fund are affected, a majority of the fund's outstanding shares. The
trustees are authorized to make amendments to the Declaration of Trust that do
not have a material adverse effect on the interests of shareholders. The Trust
may be terminated (i) upon the sale of the Trust's assets to another investment
company, if approved by the holders of two-thirds of the outstanding shares of
the Trust, except that if the Trustees recommend such sale of assets, the
approval by the vote of a majority of the Trust's outstanding shares will be
sufficient, or (ii) upon liquidation and distribution of the assets of the
Trust, if approved by a majority of its Trustees or by the vote of a majority of
the Trust's outstanding shares. If not so terminated, the Trust may continue
indefinitely.
The Trust's Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law; however,
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.
The Trust is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. The Trust's Declaration of Trust contains an express
disclaimer of shareholder liability in connection with the Trust property or the
acts, obligations or affairs of the Trust. The Declaration of Trust also
provides for indemnification out of the Trust property of any shareholder held
personally liable for the claims and liabilities to which a shareholder may
become subject by reason of being or having been a shareholder. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Trust has been advised by counsel that the risk of any
shareholder incurring any liability for the obligations of a Trust is extremely
remote. Wright does not consider this risk to be material.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the fund and may
be changed only by the vote of a majority of the fund's outstanding voting
securities, which as used in this Statement of Additional Information means the
lesser of (a) 67% of the shares of the fund if the holders of more than 50% of
the shares are present or represented at the meeting or (b) more than 50% of the
shares of the fund. Accordingly, the fund may not:
(1) With respect to 75% of the total assets of the fund, purchase the
securities of any issuer if such purchase at the time thereof would
cause more than 5% of its total assets (taken at market value) to be
invested in the securities of such issuer, or purchase securities of
<PAGE>
any issuer if such purchase at the time thereof would cause more than
10% of the total voting securities of such issuer to be held by the
fund, except obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and except securities of other
investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940. In addition, the fund may not issue
bonds, debentures or senior equity securities, other than shares of
beneficial interest;
(3) Purchase securities on margin (but the fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities);
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to equal or exceed 25% of the fund's total
assets, at market value at the time of such investment (other than
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities);
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the purchase or
sale of physical commodities, except that the fund may purchase and
sell financial futures contracts, options on financial futures
contracts and all types of currency contracts; or
(8) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments (b) entering into
repurchase agreements or (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the fund, the
fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
fund.
The fund has adopted the following investment policy which may be changed
without approval by the fund's shareholders. As a matter of nonfundamental
policy, the fund will not invest more than 15% of net assets in illiquid
investments.
The 1940 Act currently allows the fund to borrow (1) for any reason from
banks or by entering into reverse repurchase agreements in an amount not
exceeding one-third of the fund's total assets and (2) for temporary purposes
(presumed to mean not more than 60 days). If the fund's borrowings under
clause (1)later exceed one-third of the fund's total assets, the fund must
reduce its borrowings below this level within three busines days.
Except for the fund's investment policy with respect to borrowing money, if
a percentage restriction contained in the fund's investment policies is adhered
to at the time of investment, a later increase or decrease in the percentage
resulting from a change in the value of portfolio securities or the fund's net
assets will not be considered a violation of such restriction. If such a change
causes the fund to exceed its percentage limitation on illiquid investments,
the fund will reduce these investments, in an orderly manner, to a level that
does not exceed this limitation.
TRUSTEES, OFFICERS AND THE CATHOLIC ADVISORY BOARD
TRUSTEES AND OFFICERS
The trustees and officers of the Trust are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. Those trustees who are "interested
persons" (as defined in the Investment Company Act of 1940 (the "1940 Act") of
the Trust, Wright, The Winthrop Corporation ("Winthrop"), Eaton Vance, Eaton
Vance's wholly owned subsidiary, Boston Management and Research ("BMR"), Eaton
Vance's parent company, Eaton Vance Corp. ("EVC"), or Eaton Vance's and BMR's
trustee, Eaton Vance, Inc. ("EV") by virtue of their affiliation with either the
Trust, Wright, Winthrop, Eaton Vance, BMR, EVC or EV, are indicated by an
asterisk (*).
PETER M. DONOVAN (57), President and Trustee*
President, Chief Executive Officer and Director of Wright and Winthrop; Vice
President, Treasurer and a Director of Wright Investors' Service Distributors,
Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
<PAGE>
H. DAY BRIGHAM, JR. (73), Vice President, Secretary and Trustee*
Retired, Vice President, Chairman of the Management Committee and Chief Legal
Officer of Eaton Vance, BMR, EVC and EV and Director of EV and EVC; Director of
Wright and Winthrop since February, 1997.
Address: 92 Reservoir Avenue, Chestnut Hill, MA 02467
JUDITH R. CORCHARD (61), Vice President and Trustee*
Executive Vice President, Investment Management: Senior Investment Officer;
Chairman of the Investment Committee and Director of Wright and Winthrop. Ms.
Corchard was appointed a Trustee of the Trust on December 10, 1997.
Address: 440 Wheelers Farms Road, Milford, CT 06460
DORCAS R HARDY (53), Trustee
President, Dorcas R. Hardy & Associates, (a public policy and government
relations firm), Spotsylvania, VA; Director, The Options Clearing Corporation
and First Coast Service Options, Jacksonville, FL (FL Blue Cross Blue Shield
subsidiary); 1996-1998 - Chairman and CEO of Work Recovery, Inc., (an advanced
rehabilitation technology firm), Tucson AZ; 1986-1989 - U.S. Commissioner of
Social Security. Ms. Hardy was elected a Trustee on December 9, 1998.
Address: 11407 Stonewall Jackson Drive, Spotsylvania, VA 22553
LELAND F. MILES (76), Trustee
President Emeritus, University of Bridgeport (1987-present); President,
University of Bridgeport (1974-1987); Director, United Illuminating Company.
Address: 332 North Cedar Road, Fairfield, CT 06430
A.M. MOODY, III (63), Vice President & Trustee*
Senior Vice President, Wright and Winthrop; President, Wright Investors'
Service Distributors, Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
LLOYD F. PIERCE (81), Trustee
Retired Vice Chairman (prior to 1984 - President), People's Bank, Bridgeport,
CT; Member, Board of Trustees, People's Bank, Bridgeport, CT; Board of
Directors, Southern Connecticut Gas Company; Chairman, Board of Directors,
COSINE (a software company).
Address: 140 Snow Goose Court, Daytona Beach, FL 32119
RICHARD E. TABER (51), Trustee
Chairman and Chief Executive Officer of First County Bank, Stamford, CT
(1989-present). Mr. Taber was appointed a Trustee of the Trust on March 18,
1997.
Address: 117 Prospect Street, Stamford, CT 06904
RAYMOND VAN HOUTTE (75), Trustee
President Emeritus and Counselor of The Tompkins County Trust Company, Ithaca,
NY (since January 1989); President and Chief Executive Officer, The Tompkins
County Trust Company (1973-1988); President, New York State Bankers Association
(1987-1988); Trustee Emeritus Paleontological Institution (since May, 1995).
Address: One Strawberry Lane, Ithaca, NY 14850
JAMES L. O'CONNOR (55), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
JANET E. SANDERS (64), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
WILLIAM J. AUSTIN, JR. (48), Assistant Treasurer
Assistant Vice President of Eaton Vance, BMR and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
<PAGE>
A. JOHN MURPHY (37), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since March 1, 1994; employee of Eaton
Vance since March 1993. Officer of various investment companies managed by Eaton
Vance or BMR.
Address: 255 State Street, Boston, MA 02109
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993. Officer of
various investment companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
All of the trustees and officers hold identical positions with The Wright
Managed Equity Trust, The Wright Managed Income Trust, The Wright EquiFund
Equity Trust, The Wright Blue Chip Master Portfolio Trust, The Wright Asset
Allocation Trust and Catholic Values Investment Trust. Each trustee who is not
an employee of Wright, Winthrop, Eaton Vance, its parents or subsidiaries,
including Mr. Brigham, receives annual compensation from the Trust. The trustees
who are employees of Wright receive no compensation from the Trust.
Non-affiliated trustees, including Mr. Brigham, also receive additional payments
from other investment companies for which Wright provides investment advisory
services. The Trust does not have a retirement plan for the trustees. The fund
did not compensate the Trustees for serving on the Board during the current
fiscal year ended December 31, 1999. See the "Compensation Table" below.
The Trust's Board of Trustees has established an Independent Trustees'
Committee and an Audit Committe, each consisting of all of the Independent
Trustees who are Messrs. Miles, Pierce (Chairman), Taber, Van Houtte and Ms.
Hardy. The responsibilities of the Independent Trustees' Committee include those
of a nominating committee for additional or replacement trustees of the Trust
and a contract review committee for consideration of renewals or changes in the
investment advisory agreements, distribution agreements and distribution plans
and other agreements as appropriate. The responsibilities of the Audit Committee
are: (a) to oversee the Trusts' accounting and financial reporting practices,
their internal controls and, as appropriate, the internal controls of certain
service providers; (b) to oversee the quality and objectivity of the Trusts'
financial statements and the independent audit thereof; and (c) to act as a
liaison between the Trusts' independent auditors and the full Board of Trustees.
CATHOLIC ADVISORY BOARD
The members of the Catholic Advisory Board and their principal occupations
during the past five years are set forth below. Each member of the Catholic
Advisory Board may be contacted at the following address: The Wright Managed
Blue Chip Series Trust, 255 State Street, Boston, Massachusetts 02109.
THOMAS P. MELADY (73), Chairman. Former U.S. Ambassador to Burundi and to
the Holy See, President Emeritus of Sacred Heart University, author of 14 books
and numerous articles.
MARGARET M. HECKLER (68), Eight term Congresswoman from the Massachusetts
10th District, former Secretary of the Department of Health and Human Services,
former Ambassador to Ireland.
BOWIE K. KUHN (73), former Commissioner of Baseball.
TIMOTHY J. MAY (67), Senior Partner, Patton Boggs, L.L.P.
THOMAS S. MONAGHAN (63), President, CEO and Chairman of the Board of
Domino's Pizza, Inc.
WILLIAM A. WILSON (85), former (and first) U.S. Ambassador to the Holy See.
The members of the Catholic Advisory Board are paid by the fund. The Trust
does not have a retirement plan for the Catholic Advisory Board members. The
Catholic Advisory Board members serve the fund and Catholic Values Investment
Trust. The fund will not compensate Catholic Advisory Board members for serving
during the current fiscal year. See the following "Compensation Table."
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
Aggregate Pension or Estimated Total Compensation
Compensation from Retirement Annual Benefits Paid from Fund and
the Fund(1) Benefits Accrued Upon Retirement Funds' Complex(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. Day Brigham, Jr. None None None $11,250
Dorcas Hardy None None None 11,250
Leland Miles None None None 11,250
Lloyd F. Pierce None None None 11,250
Richard E. Taber None None None 11,250
Raymond Van Houtte None None None 8,250
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the fund's fiscal year ended December 31, 1999.
(2) Total compensation paid is for the year ended December 31, 1999 and
includes service on the then-existing boards in the Wright fund complex (22
funds).
<TABLE>
<CAPTION>
Aggregate Pension or Estimated Total
Catholic Advisory Board Compensation from Retirement Annual Benefits Compensation
Members the Fund(1) Benefits Accrued Upon Retirement Paid(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas P. Melady None None None $ -
Margaret M. Heckler None None None 2,000
Bowie K. Kuhn None None None 2,000
Timothy J. May None None None 1,000
Thomas S. Monaghan None None None 2,000
William A. Wilson None None None 2,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the fund's fiscal year ended December 31, 1999.
(2) Total compensation paid is for the year ended December 31, 1999 and is for
service on Catholic Values Investment Trust's advisory board.
CONTROL PERSONS and PRINCIPAL HOLDERS OF SHARES
As of the date of this Statement of Additional Information, all of the
outstanding shares of the fund are owned by American Enterprise Life Insurance
company for the American Express Platinum Variable Annuity.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
The fund has engaged Wright to act as the fund's investment adviser
pursuant to an Investment Advisory Contract (the "Investment Advisory
Contract"). Wright, acting under the general supervision of the trustees,
furnishes the fund with investment advice and management services, as described
below. The School for Ethical Education, 440 Wheelers Farms Road, Milford, CT
06460, may be considered a controlling person of Wright's parent, Winthrop, and
Wright by reason of its ownership of more than 25% of the outstanding shares of
Winthrop.
Pursuant to the Investment Advisory Contract, Wright will carry out the
investment and reinvestment of the assets of the fund, will furnish continuously
an investment program with respect to the fund, will determine which securities
should be purchased, sold or exchanged in consultation with the Catholic
Advisory Board, and will implement such determinations. Wright will be solely
responsible for evaluating the investment merits of the fund's portfolio
investments. Wright will furnish to the fund investment advice and management
services, office space, equipment and clerical personnel, and investment
advisory, statistical and research facilities. In addition, Wright has arranged
for certain members of the Eaton Vance and Wright organizations to serve without
salary as officers or trustees of the Trust. In return for these services, the
fund is obligated to pay a monthly advisory fee calculated at the rates set
forth in the fund's current Prospectus. As of the fiscal year ended December 31,
1999, the fund had not commenced operations.
<PAGE>
The investment adviser and the Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Wright employees
may purchase and sell securities subject to certain pre-clearance and reporting
requirements and other procedures. These Codes of Ethics are on public file
with, and available from, the Securities and Exchange Commission.
The fund has engaged Eaton Vance to act as its administrator pursuant to an
Administration Agreement. For its services under the Administration Agreement,
Eaton Vance receives monthly administration fees at the annual rates of 0.07% of
the fund's average net assets under $100 million and 0.04% of average net assets
over $100 million.
Eaton Vance is a business trust organized under Massachusetts law. Eaton
Vance, Inc. ("EV") serves as trustee of Eaton Vance. Eaton Vance and EV are
wholly owned subsidiaries of Eaton Vance Corporation ("EVC"), a Maryland
corporation and publicly held holding company. EVC through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities.
The fund will be responsible for all of its expenses not expressly stated
to be payable by Wright under its Investment Advisory Contract, including,
without limitation, the fees and expenses of its custodian and transfer agent,
including those incurred for determining the fund's net asset value and keeping
the fund's books; the cost of share certificates; membership dues to investment
company organizations; brokerage commissions and fees; fees and expenses of
registering its shares; expenses of reports to shareholders, proxy statements,
and other expenses of shareholders' meetings; insurance premiums; printing and
mailing expenses; interest, taxes and corporate fees; legal and accounting
expenses; expenses of trustees not affiliated with Eaton Vance or Wright; and
investment advisory and administration fees. The fund will also bear expenses
incurred in connection with litigation in which the fund is a party and the
legal obligation the fund may have to indemnify the officers and trustees of the
Trust with respect thereto.
The fund's Investment Advisory Contract and Administration Agreement will
remain in effect until February 28, 2001. The Investment Advisory Contract may
be continued from year to year thereafter so long as such continuance after
February 28, 2001 is approved at least annually (i) by the vote of a majority of
the trustees who are not "interested persons" of the Trust, Eaton Vance or
Wright cast in person at a meeting specifically called for the purpose of voting
on such approval and (ii) by the board of trustees or by vote of a majority of
the outstanding shares of the fund. The fund's Administration Agreement may be
continued from year to year after February 28, 2001 so long as such continuance
is approved annually by the vote of a majority of the trustees. Each agreement
may be terminated at any time without penalty on sixty (60) days written notice
by the board of trustees or directors of either party, or by vote of the
majority of the outstanding shares of the fund. Each agreement will terminate
automatically in the event of its assignment. Each agreement provides that, in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties to the fund under such agreement on the
part of Eaton Vance or Wright, neither Eaton Vance nor Wright, as the case may
be, will be liable to the fund for any loss incurred.
CUSTODIAN AND TRANSFER AGENT
IBT, 200 Clarendon Street, Boston, MA 02116, acts as custodian and transfer
agent for the fund. IBT has the custody of all cash and securities of the fund,
maintains the fund's general ledgers and computes the daily net asset value per
share. In such capacity it attends to details in connection with the sale,
exchange, substitution, transfer or other dealings with the fund's investments,
receives and disburses all funds and performs various other ministerial duties
upon receipt of proper instructions from the fund.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 200 Berkeley Street, Boston, MA 02116-5022, is the
Trust's independent certified public accountant, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
<PAGE>
BROKERAGE ALLOCATION
Wright places the portfolio security transactions for the fund, which in
some cases may be effected in block transactions which include other accounts
managed by Wright. Wright provides similar services directly for bank trust
departments and other investment advisory accounts. Wright seeks to execute
portfolio security transactions on the most favorable terms and in the most
effective manner possible. In seeking best execution, Wright will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the nature and character of the markets for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, experience and financial condition of the
broker-dealer and the value and quality of service rendered by the broker-dealer
in other transactions, and the reasonableness of the brokerage commission or
markup, if any.
It is expected that on frequent occasions there will be many broker-dealer
firms which will meet the foregoing criteria for a particular transaction. In
selecting among such firms, Wright may give consideration to those firms which
supply brokerage and research services, quotations and statistical and other
information to Wright for its use in servicing its advisory accounts. Wright may
include firms which purchase investment services from Wright. The term
"brokerage and research services" includes advice as to the value of securities,
the advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). Such services and information may be useful
and of value to Wright in servicing all or less than all of its accounts and the
services and information furnished by a particular firm may not necessarily be
used in connection with the account which paid brokerage commissions to such
firm. The advisory fee paid by the fund to Wright is not reduced as a
consequence of Wright's receipt of such services and information. While such
services and information are not expected to reduce Wright's normal research
activities and expenses, Wright would, through use of such services and
information, avoid the additional expenses which would be incurred if it should
attempt to develop comparable services and information through its own staff.
Under the fund's Investment Advisory Contract, Wright has the authority to
pay commissions on portfolio transactions for brokerage and research services
exceeding that which other brokers or dealers might charge provided certain
conditions are met. This authority will not be exercised, however, until the
Prospectus or this Statement of Additional Information has been supplemented or
amended to disclose the conditions under which Wright proposes to do so.
The Investment Advisory Contract expressly recognizes the practices which
are provided for in Section 28(e) of the Securities Exchange Act of 1934 by
authorizing the selection of a broker or dealer which charges the fund a
commission which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if it is determined in
good faith that such commission was reasonable in relation to the value of the
brokerage and research services which have been provided.
PRICING OF SHARES
For a description of how the fund values its shares, see "Information About
Your Account -- How the Fund Values its Shares" in the fund's current
Prospectus. The fund values securities with a remaining maturity of 60 days or
less by the amortized cost method. The amortized cost method involves initially
valuing a security at its cost (or its fair market value on the sixty-first day
prior to maturity) and thereafter assuming a constant amortization to maturity
of any discount or premium, without regard to unrealized appreciation or
depreciation in the market value of the security.
The fund values foreign securities, if any, on the basis of quotations from
the primary market in which they are traded. Any assets or liabilities expressed
in terms of foreign currencies are translated into U.S. dollars by the custodian
based on London currency exchange quotations as of 5:00 p.m., London time (12:00
noon, New York time) on the date of any determination of the fund's net asset
value.
The fund will not price its securities on the following national holidays:
New Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
TAXES
In order to qualify as a regulated investment company as described in the
Prospectus, the fund must, among other things, (1) derive at least 90% of its
gross income in each taxable year from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stocks
or securities or foreign currencies, or other income (including but not limited
to gains from options and forward contracts) derived with respect to its
business of investing in such stocks or securities and (2) diversify its
holdings in compliance with the diversification requirements of Subchapter M of
the Code so that, at the end of each quarter of the fund's taxable year, (a) at
least 50% of the market value of the fund's total assets is represented by cash,
U.S. Government securities and other securities limited in respect of any one
issuer to not more than 5% of the value of the fund's total (gross) assets and
to not more than 10% of the voting securities of such issuer, and (b) not more
than 25% of the value of its total (gross) assets is invested in securities of
any one issuer (other than U.S. Government securities) or certain other issuers
controlled by the fund.
As a regulated investment company, the fund will not be subject to federal
income tax on net investment income and net capital gains (short and long-term),
if any, that it distributes to its shareholders if at least 90% of its
investment company taxable income (i.e., all of its net taxable income other
than the excess, if any, of net long-term capital gain over net short-term
capital loss ("net capital gain"), for the taxable year is distributed in
accordance with applicable timing requirements, but will be subject to tax at
regular corporate rates on any investment company taxable income or net capital
gain that is not so distributed. In general, dividends will be treated as paid
when actually distributed, except that dividends declared in October, November
or December and made payable to shareholders of record in such a month will be
treated as having been received by shareholders on December 31, if the dividend
is paid in the following January. The fund intends to satisfy the distribution
requirement in each taxable year. The fund's distributions from investment
company taxable income and net capital gain are generally treated as ordinary
income and long-term capital gain, respectively, under the Code. Insurance
companies should consult their own tax advisers regarding the tax rules
governing their treatment upon receipt of these distributions and the proceeds
of share redemptions (including exchanges).
The fund will not be subject to federal excise tax or the related
distribution requirements for any taxable year in which all of its shares are
held by segregated asset accounts of life insurance companies held in connection
with variable contracts or are attributable to certain "seed money" in
accordance with Section 4982(f) of the Code.
Investment by the fund in the stock of a "passive foreign investment
company" may cause the fund to recognize income prior to the receipt of
distributions from such a company or to become subject to tax upon the receipt
of certain excess distributions from, or upon disposition of its stock of, such
a company, although an election may generally be available that would ameliorate
some of these adverse tax consequences.
The fund intends to comply with the diversification requirements imposed by
Section 817(h) of the Code and the regulations thereunder. These requirements,
which are in addition to the diversification requirements imposed on the fund by
the 1940 Act and Subchapter M of the Code, place certain limitations on the
assets of each separate account and, because Section 817(h) and those
regulations treat the assets of the fund as assets of the related separate
account, the assets of the fund, that may be represented by any one, two, three
and four investments. Specifically, the regulations provide that, except as
permitted by the "safe harbor" described below, as of the end of each calendar
quarter or within 30 days thereafter no more than 55% of the total assets of the
fund may be represented by any one investment, no more than 70% by any two
investments, no more than 80% by any three investments and no more than 90% by
any four investments. For this purpose, all securities of the same issuer are
considered a single investment, and each U.S. Government agency and
instrumentality is considered a separate issuer. Section 817(h) provides, as a
safe harbor, that a separate account will be treated as being adequately
diversified if the diversification requirements under Subchapter M are satisfied
and no more than 55% of the value of the account's total assets are cash and
cash items (including receivables), U.S. Government securities and securities of
other regulated investment companies. Failure by the fund to both qualify as a
regulated investment company and satisfy the Section 817(h) requirements would
generally result in treatment of the variable contract holders other than as
described in the applicable variable contract prospectus, including inclusion in
ordinary income of income accrued under the contracts for the current and all
prior taxable years. Any such failure may also result in adverse tax
consequences for the insurance company issuing the contracts.
The Trust may therefore find it necessary to take action to seek to ensure
that a Contract continues to qualify as a Contract under federal tax laws,
although the insurance company that maintains each segregated asset account is
responsible for ensuring that the assets held in that account satisfy the
diversification requirements of Section 817(h) of the Code and the applicable
<PAGE>
regulations and the Trust itself can control only the assets held within the
fund. The Trust, for example, may be required to alter the investment objectives
of the fund or substitute the shares of one fund for those of another. No such
change of investment objectives or substitution of securities will take place
without notice to the shareholders of the affected fund. Failure by the fund to
qualify as a regulated investment company would also subject the fund to federal
and possibly state taxation of its income and gains, whether or not distributed
to shareholders, and distributions would generally be treated as ordinary income
to the extent of the fund's current or accumulated earnings and profits.
The fund is not subject to Massachusetts corporate excise or franchise tax.
Provided that the fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.
CALCULATION OF PERFORMANCE AND YIELD QUOTATIONS
The average annual total return of the fund is determined for a particular
period by calculating the actual dollar amount of investment return on a $1,000
investment in the fund made at the maximum public offering price (i.e. net asset
value) at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year is equal to the actual return of the fund during that period.
This calculation assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period.
The yield of the fund is computed by dividing its net investment income per
share earned during a recent 30-day period by the maximum offering price (i.e.
net asset value) per share on the last day of the period and analyzing the
resulting figure. Net investment income per share is equal to the fund's
dividends and interest earned during the period, with the resulting number being
divided by the average daily number of shares outstanding and entitled to
receive dividends during the period.
The fund's yield is calculated according to the following formula:
6
Yield = 2 [(a-b + 1) - 1]
----
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (after reductions).
c = the average daily number of shares outstanding during the period.
d = the net asset value per share on the last day of the period.
Yield and effective yield will be based on historical earnings and are not
intended to indicate future performance. Yield and effective yield will vary
based on changes in market conditions and the level of expenses. The fund's
yield or total return may be compared to the Consumer Price Index and various
domestic securities indices. The fund's yield or total return and comparisons
with these indices may be used in advertisements and in information furnished to
present or prospective shareholders.
From time to time, in advertisements, in sales literature, or in reports to
shareholders, the past performance of the fund may be illustrated and/or
compared with that of other mutual funds with similar investment objectives, and
to stock or other relevant indices. In addition, the performance of the fund may
be compared to alternative investment or savings vehicles and/or to indexes or
indicators of economic activity, e.g., inflation or interest rates. Performance
rankings and listings reported in newspapers or national business and financial
publications, such as Barron's, Business Week, Consumers Digest, Consumer
Reports, Financial World, Forbes, Fortune, Investors Business Daily, Kiplinger's
Personal Finance Magazine, Money Magazine, New York Times, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal and Worth may also be
cited (if the fund is listed in any such publication) or used for comparison, as
well as performance listings and rankings from various other sources including
Bloomberg Financial Markets, CDA/Wiesenberger, Donoghue's Mutual fund Almanac,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and Co.,
Lipper Analytical Services, Inc., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems, Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature, or in reports to shareholders of the fund. The performance of the
fund will not be presented in advertisements or sales literature without also
presenting the performance of the separate account.
<PAGE>
APPENDIX
- -------------------------------------------------------------------------------
WRIGHT QUALITY RATINGS
Wright Quality Ratings provide the means by which the fundamental criteria
for the measurement of quality of an issuer's securities can be objectively
evaluated.
Each rating is based on individual measures of quality grouped into four
components: (1) Investment Acceptance, (2) Financial Strength, (3) Profitability
and Stability, and (4) Growth. The total rating is three letters and a numeral.
The three letters measure (1) Investment Acceptance, (2) Financial Strength, and
(3) Profitability and Stability. Each letter reflects a composite measurement of
eight individual standards which are summarized as A: Outstanding, B: Excellent,
C: Good, D: Fair, L: Limited, and N: Not Rated. The numeral rating reflects
Growth and is a composite of eight individual standards ranging from 0 to 20.
EQUITY SECURITIES
INVESTMENT ACCEPTANCE reflects the acceptability of a security by and its
marketability among investors, and the adequacy of the floating supply of its
common shares for the investment of substantial funds.
FINANCIAL STRENGTH represents the amount, adequacy and liquidity of the
corporation's resources in relation to current and potential requirements. Its
principal components are aggregate equity and total capital, the ratio of
invested equity capital to debt, the adequacy of net working capital, its fixed
charges coverage ratio and other appropriate criteria.
PROFITABILITY AND STABILITY measures the record of a corporation's
management in terms of (1) the rate and consistency of the net return on
shareholders' equity capital investment at corporate book value, and (2) the
profits or losses of the corporation during generally adverse economic periods,
including its ability to withstand adverse financial developments.
GROWTH per common share of the corporation's equity capital, earnings, and
dividends - rather than the corporation's overall growth of dollar sales and
income.
These ratings are determined by specific quantitative formulae. A
distinguishing characteristic of these ratings is that The Wright Investment
Committee must review and accept each rating. The Committee may reduce a
computed rating of any company, but may not increase it.
DEBT SECURITIES
Wright ratings for commercial paper, corporate bonds and bank certificates
of deposit consist of the two central positions of the four position
alphanumeric corporate equity rating. The two central positions represent those
factors which are most applicable to fixed income and reserve investments. The
first, Financial Strength, represents the amount, the adequacy and the liquidity
of the corporation's resources in relation to current and potential
requirements. Its principal components are aggregate equity and total capital,
the ratios of (a) invested equity capital, and (b) long-term debt, total of
corporate capital, the adequacy of net working capital, fixed charges coverage
ratio and other appropriate criteria. The second letter represents Profitability
and Stability and measures the record of a corporation's management in terms of:
(a) the rate and consistency of the net return on shareholders' equity capital
investment at corporate book value, and (b) the profits and losses of the
corporation during generally adverse economic periods, and its ability to
withstand adverse financial developments.
The first letter rating of the Wright four-part alphanumeric corporate
rating is not included in the ratings of fixed-income securities since it
primarily reflects the adequacy of the floating supply of the company's common
shares for the investment of substantial funds. The numeric growth rating is not
included because this element is identified only with equity investments.
A-1 AND P-1 COMMERCIAL PAPER RATINGS BY S&P AND MOODY'S
An S&P Commercial Paper Rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
<PAGE>
`A': Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety. The
`A-1' designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
The commercial paper rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to S&P by the
issuer or obtained from other sources it considers reliable. The ratings may be
changed, suspended or withdrawn as a result of changes in or unavailability of
such information.
Issuers (or related supporting institutions) rated P-1 by Moody's have a
superior capacity for repayment of short-term promissory obligations. P-1
repayment capacity will normally be evidenced by the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
BOND RATINGS
In addition to Wright quality ratings, bonds or bond insurers may be
expected to have credit risk ratings assigned by the two major rating companies,
Moody's and S&P. Moody's uses a nine-symbol system with Aaa being the highest
rating and C the lowest. S&P uses a 10-symbol system that ranges from AAA to D.
Bonds within the top four categories of Moody's (Aaa, Aa, A and Baa) and of S&P
(AAA, AA, A and BBB) are considered to be of investment-grade quality. Bonds in
the lowest investment grade category (BBB) may have speculative characteristics.
Note that both S&P and Moody's currently give their highest rating to issuers
insured by the American Municipal Bond Assurance Corporation (AMBAC) or by the
Municipal Bond Investors Assurance Corporation (MBIA).
Bonds rated A by S&P have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher-rated categories. The
rating of AA is accorded to issues where the capacity to pay principal and
interest is very strong and they differ from AAA issues only in small degree.
The AAA rating indicates an extremely strong capacity to pay principal and
interest.
Bonds rated A by Moody's are judged by Moody's to possess many favorable
investment attributes and are considered as upper medium grade obligations.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuations of protective elements may be of
greater degree or there may be other elements present which make the long-term
risks appear somewhat larger. Bonds rated Aaa by Moody's are judged to be of the
best quality. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issuers.
NOTE RATINGS
In addition to Wright quality ratings, municipal notes and other short-term
loans may be assigned ratings by Moody's or S&P.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG 2 are of high quality, with margins of protection ample although
not so large as in the preceding group.
S&P's top ratings for municipal notes issued after July 29, 1984 are SP-1
and SP-2. the designation SP-1 indicates a very strong capacity to pay principal
and interest. A "+" is added for those issues determined to possess overwhelming
safety characteristics. An "SP-2" designation indicates a satisfactory capacity
to pay principal and interest.
<PAGE>
PART C
-----------------
Other Information
Item 23. Exhibits
(a) (1) Amended and Restated Declaration of Trust dated September
16, 1993 filed as Exhibit (1)(a) to Post-Effective Amendment
No. 4 filed April 30, 1997 and incorporated herein by
reference.
(2) Amended and Restated Establishment and Designation of Series
of Shares dated June 24, 1998, filed as Exhibit (a)(2) to
Post-Effective Amendment No. 7 filed February 26, 1999 and
incorporated herein by reference.
(b) (1) By-laws filed as Exhibit (2) to Post-Effective Amendment
No. 4 filed April 30, 1997 and incorporated herein by
reference.
(2) Amendment to By-laws dated June 24, 1998, filed as Exhibit
(2)(b) to Post-Effective Amendment No. 6 filed on June 25,
1998 and incorporated herein by reference.
(c) Not Applicable
(d) (1) Investment Advisory Contract dated September 23, 1998
between the Registrant on behalf of Wright Selected Blue Chip
Portfolio and Wright International Blue Chip Portfolio and
Wright Investors' Service, Inc. filed as Exhibit (d)(1) to
Post-Effective Amendment No. 7 filed February 26, 1999 and
incorporated herein by reference.
(2) Investment Advisory Contract dated September 8, 1998
between the Registrant on behalf of Catholic Values Equity
Investment Portfolio and Wright Investors' Service, Inc.,
filed as Exhibit (d)(2) to Post-Effective Amendment No. 7
filed February 26, 1999 and incorporated herein by reference.
(3) Amended and Restated Administration Agreement between the
Registrant and Eaton Vance Management dated February 1, 1998
filed as Exhibit (5)(b) to Post-Effective Amendment No. 5 on
April 29, 1998 and incorporated herein by reference.
(4) Revised Schedules A and B to the Amended and Restated
Administration Agreement between the Registrant and Eaton
Vance Management, filed as Exhibit (d)(4) to Post-Effective
Amendment No. 7 filed February 26, 1999 and incorporated
herein by reference.
(e) Not Applicable
(f) Not Applicable
(g) (1) Custodian Agreement dated August 10, 1993 with Investors
Bank & Trust Company filed as Exhibit (8)(a) to Post-Effective
Amendment No. 3 filed April 29, 1996 and incorporated herein
by reference.
(2) Amendment dated September 20, 1995 to Master Custodian
Agreement filed as Exhibit (8)(b) to Post-Effective Amendment
No. 3 filed April 29, 1996 and incorporated herein by
reference.
(3) Form of Letter Agreement to Master Custodian Agreement
filed as Exhibit (8)(c) to Post-Effective Amendment No. 6
filed on June 25, 1998 and incorporated herein by reference
(4) Amendment dated September 24, 1997 to Master Custodian
Agreement filed as Exhibit (g)(4) to Post-Effective Amendment
No. 7 filed February 26, 1999 and incorporated herein by
reference.
(h) Not Applicable
(i) (1) Opinion of Hale and Dorr dated June 24, 1998 filed as
Exhibit (10) to Post-Effective Amendment No. 6 filed on June
25, 1998 and incorporated herein by reference.
(2) Consent of Counsel filed herewith.
<PAGE>
(j) Consent of Independent Auditors filed herewith.
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not applicable.
(p) (1) Power of Attorney dated March 25, 1998 filed as Exhibit
(17) to Post-Effective Amendment No. 5 on April 29, 1998 and
incorporated herein by reference.
(2) Power of Attorney dated December 9, 1998 filed as Exhibit
(p)(2) to Post-Effective Amendment No. 7 filed February 26,
1999 and incorporated herein by reference.
(q) Codes of Ethics filed herewith.
Item 24. Persons Controlled By or Under Common Control with Registrant
Not Applicable
Item 25. Indemnification
Except for the Amended and Restated Declaration of Trust dated September 16,
1993 establishing the Registrant as a Trust under Massachusetts law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The
Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability of which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Registrant's Trustees and officers are insured under a standard investment
company errors and omissions insurance policy covering loss incurred by reason
of negligent errors and omissions committed in their capacities as such.
Item 26. Business and Other Connections of Investment Adviser
Reference is made to the information set forth under the caption "Management of
the Trust" in the Statement of Additional Information, which information is
incorporated herein by reference.
Item 27. Principal Underwriter
Not Applicable.
Item 28. Location of Accounts and Records
All applicable accounts, books and documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are in the possession and custody of the Registrant's
custodian and transfer agent, Investors Bank & Trust Company, 200 Clarendon
<PAGE>
Street, Boston, MA 02116, with the exception of certain corporate documents and
portfolio trading documents which are either in the possession and custody of
the Registrant's administrator, Eaton Vance Management, 255 State Street,
Boston, MA 02109 or of the investment adviser, Wright Investors' Service, 440
Wheelers Farms Road, Milford, CT 06460. Registrant is informed that all
applicable accounts, books and documents required to be maintained by registered
investment advisers are in the custody and possession of Registrant's
administrator, Eaton Vance Management, or of the investment adviser, Wright
Investors' Service, Inc.
Item 29. Management Services
Not Applicable
Item 30. Undertakings
The annual report also contains performance information and is available to any
recipient of the Prospectus upon request and without charge by writing to the
Wright Investors' Service Distributors, Inc., 440 Wheelers Farms Road, Milford,
CT 06460.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and that it has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Bridgeport, and
State of Connecticut on the 26th day of April, 2000.
WRIGHT MANAGED BLUE CHIP SERIES TRUST
By: Peter M. Donovan*
--------------------------------
Peter M. Donovan, President
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Amendment to its Registration Statement has been
signed below by the following persons in the capacities and on the 26th day of
April, 2000.
SIGNATURE TITLE
- -------------------------------------------------------------------------------
Peter M. Donovan* President
- ------------------ (Principal Executive Officer & Trustee)
Peter M. Donovan
James L. O'Connor* Treasurer and Principal
- ------------------- Financial and Accounting Officer
James L. O'Connor
H. Day Brigham, Jr.* Trustee
- ----------------------
H. Day Brigham, Jr.
Judith R. Corchard* Trustee
- ----------------------
Judith R. Corchard
Dorcas R. Hardy* Trustee
- -------------------
Dorcas R. Hardy
Leland F. Miles* Trustee
- ------------------
Leland F. Miles
/s/A. M. Moody III Trustee
- ----------------------
A. M. Moody III
Lloyd F. Pierce* Trustee
- --------------------
Lloyd F. Pierce
Richard E. Taber* Trustee
- ------------------
Richard E. Taber
Raymond Van Houtte* Trustee
- -------------------
Raymond Van Houtte
* By: /s/ A. M. Moody III
- -------------------------
A. M. Moody III
Attorney-in-Fact
<PAGE>
Exhibit Index
The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to Rule 483 of Regulation C.
Exhibit No. Description
- -------------------------------------------------------------------------------
(i) (2) Consent of Counsel.
(j) Consent of Independent Certified Public Accountants.
(q) Codes of Ethics
Exhibit (i)(2)
Hale and Dorr LLP
Counsellors At Law
60 State Street
Boston, Massachusetts 02109
617-526-6000 FAX 617-526-5000
April 25, 2000
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Post-Effective Amendment No. 9 to the Registration
Statement of The Wright Managed Blue Chip Series Trust (Trust)
File Nos. 33-61314; 811-7654 (PEA no. 9)
-----------------------------------------------------------------
Gentlemen:
Hale and Dorr LLP hereby consents to the incorporation by reference into
PEA no. 9 of its opinion, dated June 24, 1998, filed with the Securities and
Exchange Commission on June 25, 1998, as exhibit no. 10 to post-effective
amendment no. 6.
The consent may not be used for any purpose other than as set forth above
without our further consent.
Very truly yours,
/s/Hale and Dorr LLP
Hale and Dorr LLP
EXHIBIT (j)
Independent Auditors' Consent
We consent to the incorporation by reference in this Post-Effective
Amendment No. 9 to the Registration Statement of The Wright Managed Blue Chip
Series Trust (1933 Act File No. 33-61314) on behalf of the Wright Selected Blue
Chip Portfolio and Wright International Blue Chip Portfolio of our report dated
February 4, 2000 relating to the Portfolios referenced above, which report is
included in the Annual Report to Shareholders for the year ended December 31,
1999, in the Statement of Additional Information which is part of such
Registration Statement.
We also consent to the reference to our Firm under the heading "Financial
Highlights" in the Prospectus and under the caption "Independent Certified
Public Accountants" in the Statements of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 2000
CODE OF ETHICS
ADOPTED BY
THE WRIGHT MANAGED INCOME TRUST
THE WRIGHT MANAGED EQUITY TRUST
THE WRIGHT EQUIFUND EQUITY TRUST
THE WRIGHT ASSET ALLOCATION TRUST
THE WRIGHT MANAGED BLUE CHIP SERIES TRUST
THE WRIGHT BLUE CHIP MASTER PORTFOLIO TRUST
THE CATHOLIC VALUES INVESTMENT TRUST
As Adopted March 23, 2000
Each of The Wright Managed Income Trust, The Wright Managed Equity
Trust, The Wright EquiFund Equity Trust, The Wright Asset Allocation Trust, The
Wright Managed Blue Chip Series Trust, The Wright Blue Chip Master Portfolio
Trust and The Catholic Values Investment Trust (the "Funds") has adopted this
Code of Ethics, pursuant to Rule 17j-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), with respect to certain types of personal
securities transactions by the officers and Trustees of the Funds which might be
deemed to create possible conflicts of interest and to establish reporting
requirements and enforcement procedures with respect to such transactions.
I. Code Provisions Applicable Only to Affiliated Officers and Trustees of
the Funds.
A. INCORPORATION OF ADVISER'S CODE OF ETHICs. The provisions of the
Adviser's Code of Ethics of Wright Investors' Service (the "Adviser"), which is
attached as APPENDIX A hereto, are hereby incorporated herein as each Fund's
Code of Ethics applicable to Officers and Trustees of such Fund who are
employees or affiliates of the Adviser. A violation of the Adviser's Code of
Ethics by any such Officer or Trustee of a Fund shall constitute a violation of
the Fund's Code of Ethics. Reports of the Adviser's personnel required by the
Adviser's Code of Ethics shall be deemed to be reports with the Funds under this
Code of Ethics, and shall at all times be available to the Funds.
B. REPORTS UNDER THE ADMINISTRATOR'S CODE OF ETHICS. Officers and
Trustees of the Funds who are employees of the Administrator shall file copies
of the reports required by the Administrator's Code of Ethics with the Review
Officer (as defined in Section I.C. of this Code). Such filings shall be deemed
to be filings with the Funds under this Code of Ethics, and shall at all
times be available to the Funds.
C. REVIEW. The person designated as the review officer by the Trustees
of each Fund (the "Review Officer") shall compare the reported personal
securities transactions with completed and contemplated portfolio transactions
of the Funds to determine whether a violation of this Code may have occurred.
Before making any determination that a violation has been committed by any
person, the Review Officer shall give such person an opportunity to supply
additional explanatory material. If the Review Officer determines that a
material violation of this Code has or may have occurred, he or she shall submit
his or her written determination, together with the transaction report and any
additional explanatory material provided by the individual, to the President of
the Adviser, who shall make an independent determination of whether a material
violation has occurred.
D. SANCTIONS. If the Review Officer or the President of the Adviser
finds that a material violation has occurred, he shall report the violation and
any sanctions imposed by the Adviser to the Trustees of the affected Funds. If a
securities transaction of the Review Officer or the President of the Adviser is
under consideration, an alternate review officer appointed by the Trustees of
each Fund, who may be a Vice President or other senior officer of the Adviser or
an unaffiliated third party, shall act in all respects in the manner prescribed
herein for the Review Officer or the President of the Adviser.
II. CODE PROVISIONS APPLICABLE ONLY TO INDEPENDENT TRUSTEES OF THE FUNDS.
A. DEFINITIONS.
(1) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. Application of this definition is explained in more detail in the
form of report attached as Appendix B hereto.
(2) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act. Generally, it means the power to exercise a controlling
influence over the management or policies of a company, unless such power is
solely the result of an official position with such company.
(3) "Independent Trustee" means a Trustee of any Fund who is not an
employee or affiliate of the Adviser or the Administrator.
(4) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
(5) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the 1940 Act (generally, all securities) except that it shall not
include direct obligations of the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments (including repurchase agreements) and shares of
registered open-end investment companies.
(6) A Security is "being considered for purchase or sale" by a Fund when a
recommendation that the Fund purchase or sell the Security has been communicated
by a member of the Adviser's Investment Department to an officer of such Fund.
B. PROHIBITED PURCHASES AND SALES. No Independent Trustee of any Fund
shall purchase or sell, directly or indirectly, any Security in which he has,
or by reasons of such transaction acquires, any direct or indirect beneficial
ownership and which to his actual knowledge at the time of such purchase or
sale:
(1) is being considered for purchase or sale by such Fund; or
(2) is being purchased or sold by such Fund.
C. EXEMPTED TRANSACTIONS. The prohibitions of Section IIB of this Code
shall not apply to:
(1) purchases or sales effected in any account over which the Independent
Trustee has no direct or indirect influence or control;
(2) purchases or sales
which are non-volitional on the part of the Independent Trustee or a Fund;
(3)purchases which are part of an automatic dividend reinvestment plan;
(4)purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such rights were
acquired from such issuer, and sales of such rights so acquired;
(5) purchases or sales other than those exempted in Paragraphs (1) through
(4) above, (a) which will not cause the Independent Trustee to gain improperly a
personal profit as a result of his relationship with any Fund, or (b) which will
only remotely affect a Fund because the proposed transaction would be unlikely
to affect a highly institutional market, or (c) which, because of the
circumstances of the proposed transaction, are not related economically to the
Securities purchased or sold or to be purchased or sold by a Fund, and in each
case which are previously approved by the Review Officer, which approval shall
be confirmed in writing.
D. REPORTING. Whether or not one of the exemptions listed in Section IIC
hereof applies, each Independent Trustee of each Fund shall file with the Review
Officer a written report containing the information described below in this
Section IID with respect to each transaction in any Security in which such
Independent Trustee has, or by reasons of such transaction acquires, any direct
or indirect beneficial ownership, if such Independent Trustee, at the time he
entered into that transaction, actually knew or, in the ordinary course of
fulfilling his official duties as a Trustee of such Fund should have know,1 that
during the 15-day period immediately preceding or after the date of that
transaction:
(a) such Security was or is to be purchased or sold by the Fund, or
(b) such Security was or is being considered for purchase or sale by the Fund;
PROVIDED, HOWEVER, that such Independent Trustee shall not be required to make a
report with respect to any transaction effected for any account over which he
does not have any direct or indirect influence or control. Each such report
shall be deemed to be filed with the Funds for purposes of this Code, and may
contain a statement that the report shall not be construed as an admission by
the Independent Trustee that he has any direct or indirect beneficial ownership
in the Security to which the report relates.
Such report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) The date of the transaction, the title, interest rate and maturity date
(if applicable), the number of shares, and the principal amount of each
security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other type of
acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date that the report is submitted.
Any report concerning a purchase or sale prohibited under Section IIB hereof
with respect to which the Independent Trustee relies upon one of the exemptions
provided in Section IIC shall contain a brief statement of the exemption relied
upon and the circumstances of the transaction.
E. REVIEW. The Review Officer shall compare the reported personal
securities transactions with completed and contemplated portfolio transactions
of each Fund to determine whether any transaction ("Reviewable Transaction") of
the type listed in Section IIB (without regard to exemptions provided by Section
IIC(1) through (5)) may have occurred. If the Review Officer determines that a
Reviewable Transaction may have occurred, he shall submit the pertinent
information regarding the transaction to counsel for the Funds. Such counsel
shall determine whether a material violation of this Code has occurred, taking
into account all the exemptions provided under Section IIC. Before making any
determination that a violation has occurred, such counsel shall give the person
involved an opportunity to supply additional information regarding the
transaction in question.
F. SANCTIONS. If such counsel determines that a material violation of this
Code has occurred, such counsel shall so advise the President of the affected
Fund and an ad hoc committee consisting of the Independent Trustees of such
Fund, other than the person whose transaction is under consideration, and such
counsel shall provide the committee with a report of the matter, including any
additional information supplied by such person. The committee may impose such
sanctions as it deems appropriate.
III. MISCELLANEOUS CODE PROVISIONS.
A. AMENDMENT OR REVISION OF THE ADVISER'S CODE OF ETHICS. Any material
change or amendment to the Adviser's Code of Ethics must be approved by the
Board of Trustees of the Funds (including a majority of Independent Trustees) no
later than six months of its adoption by the Adviser. Such amendment or revision
shall be deemed to be an amendment or revisions of Section IA of this Code, and
a copy of such amendment or revision shall be appended hereto.
B. ANNUAL REPORT AND CERTIFICATION OF THE ADVISER. No later than once
annually, the Adviser shall prepare and submit a written report and
certification to the Trustees of the Funds, as required by Paragraph C.8. of the
Adviser's Code of Ethics (Appendix A hereto).
C. RECORDS. Each Fund shall maintain records in the manner and to the
extent set forth below, which records may be maintained in electronic format
under the conditions described in Rule 31a-2(f)(a) under the 1940 Act and shall
be available for examination by representatives of the Securities and Exchange
Commission:
(1) A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved in an easily
accessible place;
(2) A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible place for a
period of not less than five years following the end of the fiscal year in which
the violation occurs;
(3) A copy of each report made by an Officer or Trustee pursuant to this
Code shall be preserved for a period of not less than five years after the end
of the fiscal year in which it is made, the first two years in an easily
accessible place;
(4) A list of all persons who are, or within the past five years have been,
required to make reports pursuant to this Code shall be maintained in a easily
accessible place;
(5) A copy of each annual written report and certification made by the
Adviser to the Board of Trustees of the Funds must be maintained for a period of
five years after the end of the fiscal year in which it is made, the first two
years in an easily accessible place; and
(6) A record of any decision, and the reasons supporting the decision, to
approve the acquisition by Access Persons of any initial public offering or
private placement securities shall be maintained for at least five years after
the end of the fiscal year in which the approval was granted.
C. CONFIDENTIALITY. All reports of securities transactions and any other
information filed with the Funds or furnished to any person pursuant to this
Code shall be treated as confidential, but are subject to review as provided
herein and by representatives of the Securities and Exchange Commission.
D. INTERPRETATION OF PROVISIONS. The Trustees of each Fund may from time to
time adopt such interpretations of this Code as they deem appropriate.
E. EFFECT OF VIOLATION OF THE CODE. In adopting Rule 17j-1 under the
1940 Act, the Securities and Exchange Commission specifically noted in
Investment Company Act Release No. IC-11421 that a violation of any provision of
a particular code of ethics, such as this Code, would not be considered a per se
unlawful act prohibited by the general anti-fraud provisions of the Rule. As
stated in the Release:
"....the Commission believes that such a violation should and would be
considered, with all the surrounding facts and circumstances, merely as one
piece of evidence in determining whether, in addition to a violation of the code
of ethics, a violation of the anti-fraud provisions of the Rule also has
occurred."
In adopting this Code of Ethics, it is not intended that a violation of this
Code is or should be considered to be a violation of Rule 17j-1.
<PAGE>
WRIGHT INVESTORS' SERVICE, INC.
CODE OF ETHICS - PERSONAL INVESTMENTS
A. STATEMENT OF GENERAL PRINCIPLES
All directors, officers and employees of Wright Investors' Service,
Inc. ("Wright") shall conduct themselves with integrity and dignity and act in a
thoroughly ethical manner in dealings with clients, the public and fellow
employees. All such persons shall have the duty at all times to place the
interests of the shareholders of Wright-managed mutual funds (the "Funds") and
Wright's other clients first, and may not in any respect take advantage of
client transactions. It is essential that we avoid not only actual conflicts,
but also any appearance of conflicts of interest and any abuse of an
individual's position of trust and responsibility. No Code of Ethics can cover
every possible circumstance, and an individual's conduct must depend ultimately
upon his sense of fiduciary obligation to the Funds and Wright's direct advisory
clients.
This Code of Ethics ("Code") supersedes Wright's prior code and Statement
of Policy. The management of Wright believes this Code meets current SEC
requirements and is appropriate and desirable for the Company.
All requests and reports provided to anyone pursuant to this Code shall
be treated as confidential, but are subject to review as provided herein and by
representatives of the Securities and Exchange Commission.
B. APPLICABILITY OF RESTRICTIONS AND PROCEDURES
PERSONS AFFECTED.
ALL EMPLOYEES* located in any office of Wright must comply with the
requirements of Paragraphs C-1 through C-3, below and all provisions of
Section E. Employees must also familiarize themselves with all other
parts of this Code.
ACCESS PERSONS (as defined in Exhibit A) must comply with the
requirements of Paragraphs C-1 through C-6, inclusive, and all
provisions of Section E. Access Persons must also familiarize
themselves with all other parts of this Code.
ACCOUNTS INCLUDED.
Wright's policies and procedures concerning personal investments apply
to all securities accounts in which the affected employee has "a direct
or indirect beneficial ownership," unless the employee has no "direct
or indirect influence or control" over the account. The concept of
BENEFICIAL OWNERSHIP is an important part of this Code and is more
extensively defined in Exhibit A.
* For purposes of clarity, all employees of The Winthrop Corporation
performing services for Wright are referred to as employees of Wright.
TYPES OF SECURITIES COVERED.
In general this Code employs the terms Security to mean shares of any
publicly-traded company, including puts, calls, options and warrants
for such securities, and open-end and closed-end mutual funds, except
direct obligations of the US Government, bank certificates of deposit
and money market funds.
C. COMPLIANCE PROCEDURES
1. Disclosure of Personal Holdings. As a condition to employment, each
newly-hired person must (i) make full disclosure of any brokerage account and
all publicly-traded securities beneficially owned by the employee or members of
the employee's immediate family; (ii) agree to comply with the Company's written
policies restricting personal trading and prohibiting insider trading; and (iii)
provide a written acknowledgment of receipt of such policies. This disclosure
must include all of the information requested on Exhibit B-1.
2. Preclearance. No employee of Wright may buy or sell shares of any
Security without the prior approval of the Chief Executive Officer (CEO) or the
Chief Investment Officer (CIO) of Wright. Any such approval will only be given
in accordance with the provisions of Paragraph D, "Guidelines for Approval of
Securities Transactions." The approval will remain valid for three days.
Employees who receive approvals for trades must have the broker send a copy of
the confirmation to the Legal Department.
3. Annual Certification of Compliance. All employees shall certify
annually that they (i) have read and understand this Code; (ii) recognize that
they are subject thereto; (iii) have complied with its requirements, including
any necessary preclearance; and (iv) have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. The form of such certification is set forth in Exhibit B-2.
4. Broker/Dealer Reports. All employees shall cause each broker/dealer
at which they have an account to send a copy of all quarterly and annual account
statements to the Legal Department.
5. Quarterly Report of Transactions. Each Access Person must file every
quarter with the Legal Department a report of all transactions in Securities.
(See Exhibit B-3) Transactions encompass sales, purchases and other acquisitions
or dispositions, including gifts and exercise of conversion rights or
subscription rights. In addition, if the Access Person established a securities
account during the quarter, the report must disclose the name of the broker,
dealer or bank with whom the account is established and the date the account was
established. The report must be filed with the Legal Department even if there
were no reportable transactions during the prior calendar quarter, in which case
the employee should state on the form that there were no such transactions. The
report is due ten days after the end of each calendar quarter. Failure to submit
the report in a timely manner is a violation of SEC regulations and this Code,
and may be a cause for sanctions. Copies of all brokerage statements should be
attached to an Access Person's signed report.
6. Annual Disclosure. No less than once annually, all Access Persons shall
submit to the Legal Department a list of all of his/her securities holdings. The
specific information of this report is identical to that of the Initial
Disclosure of Investments. Brokerage statements may be substituted for a
separate report.
7. Monitoring of Compliance. Within thirty days after the end of each
quarter, the Legal Department* shall review the Quarterly and Annual Reports for
reconciliation with the Initial Disclosure, Annual Disclosure, and the
Preclearance Approvals given in the same quarter or year, as applicable. The
Legal Department will investigate all apparent violations of this Code and will
prepare a report for the President of Wright.
8. Review by the Board of Trustees. No less than once each year, Wright
shall prepare and submit a written report to the Trustees of the Funds that
o describes any issues arising under this Code of Ethics since the last
report to the Board of Trustees, including, but not limited to,
information about material violations of the Code or procedures, and
sanctions imposed in response to the material violations; and
o certifies that Wright has adopted procedures reasonably necessary to
prevent violations of this Code.
If there have been any material changes to the Code of Ethics, Wright
will submit such changes to the Trustee at the next meeting of the Board.
The Trustees shall review any violations of the Code specified in the
annual report and any recommended changes in existing restrictions and
procedures. They should then take such action, if any, as they may deem
appropriate.
9. Additional Disclosure. Wright's Code of Ethics shall be filed with
the SEC as an exhibit to the registration statement of each Wright-managed
mutual fund. There will be disclosure in the Funds' prospectuses or their
statements of additional information that (i) Wright has a code of ethics, (ii)
whether personnel of Wright are permitted to invest in securities for their own
accounts, and (iii) that the code is on public file, and available from the SEC.
* As of March, 2000, Helen George, Senior Vice President of Legal Affairs, is
the person responsible for reviewing the reports.
D. GUIDELINES FOR APPROVAL OF SECURITIES TRANSACTIONS
1. Initial Public Offerings. Generally no approval will be given for
any employee to purchase securities of a publicly owned corporation that is
making an initial public offering of its securities, except in connection with
the exercise of rights issued in respect of securities such employee owns. The
reason for this rule is that it precludes the appearance that an employee has
used our clients' market stature as a means of obtaining for himself or herself
"hot" issues which would otherwise not be offered to him or her. Any realization
of short-term profits may create at least the appearance that an investment
opportunity that should have been available to a direct advisory account or a
Fund account was diverted to the personal benefit of an employee.
2. Limited Offerings. Any prior approval of any acquisition of
securities in a limited offering (such as a private placement) should take into
account, among other factors, whether the investment opportunity should be
reserved for a Fund and its shareholders or other client, and whether the
opportunity is being offered to an individual by virtue of his or her position
with the investment adviser.
3. Blackout Periods. No employee shall be authorized to exercise a
securities transaction within seven calendar days before or after a direct
advisory account or a Fund in the Wright complex has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
4. Short Sales and Options. Usually no approval will be given for short
sales. Also prohibited are buying, selling or exercising put or call options or
combinations thereof of securities held by a Fund or other advisory client or
which are being considered for purchase for them. It should be noted, for
example, that an exercise of an option or the covering of a short sale could
conflict with current trading for clients. However, where any such option is
held by a member of an employee's family, approval may be given provided there
is no conflict with the interests of the Funds or other Wright clients.
5. Short-Term Trading Profits. Short-term trading, i.e., profiting in
the purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days, is prohibited and approval will generally
not be given. The management of Wright believes that short-term trading by
Access Persons may increase the risk of conflicts of interest, affect an
individual's investment judgment, and in some instances divert an individual's
attention from the best interests of our Funds and other clients. Where one or
both sides of a short-term trade have not been pre-cleared, there is presumably
already a violation and the whole matter should be handled under the Sanctions
section of this Code, with disgorgement of profits being only one alternative
available to the President of Wright.
6. Margin Accounts. Margin Accounts are absolutely prohibited and no
approval will be given.
7. By-Law Violation. No approval will be given which would result in an
employee's holdings exceeding 1/2 of 1% of the shares or securities of any
publicly-owned issuer.
8. General Standards. In the rare case where approval is given for a
transaction involving an initial public offering or a limited offering,
additional written disclosure will be required and will be maintained in the
Legal Department. In authorizing any other types of transactions, the CEO or CIO
may consider the extent to which the employee has access to pending investment
decisions, the number of transactions already approved for such employee within
the past six months, whether the employee has made unreasonable use of the
company's resources during business hours in arriving at a personal investment
decision, and any other factors that are, in the opinion of the CEO or CIO,
pertinent to the matter.
E. RESPONSIBILITIES OF ALL EMPLOYEES RELATING TO PERSONAL INVESTMENTS.
1. Securities Recommended by a Member of the Investment Committee. Each
member of the Investment Committee who makes a recommendation as to whether a
security shall be purchased, sold or held in the account of a Fund or client
shall fully apprise the CEO or CIO of Wright of any direct or indirect
beneficial ownership the employee has in such security.
2. By-Law Provision. The by-laws of the Wright Funds generally provide
that a Wright Fund shall not purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors or security holders is an
officer or director of the Fund, or is an officer or director of the investment
adviser of the Fund, if after the purchase of the securities of such issuer by
the Fund one or more of such persons owns beneficially more than 1/2 of 1% of
the shares or securities, or both, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both. In view of the foregoing, and to avoid
any possibility of an inadvertent violation of this by-law provision, no
approval will be given that would result in an employee's holdings exceeding 1/2
of 1% of the shares or securities of any publicly-owned issuer. Any request for
prior approval of a trade in this type of security must state whether this
provision applies.
3. Gifts. No employee shall accept gifts of a value in excess of $35
from any person or entity that does business with or on behalf of a Wright Fund
or direct advisory account. Any gift in excess of $35 shall be disclosed to the
President of Wright before acceptance by the employee.
4. Service As a Director. No employee shall serve on the board of
directors of a publicly traded company, absent prior authorization based upon a
determination by the President of Wright that the board service would be
consistent with the interests of the Fund and its shareholders which may have an
investment in such public company. In the relatively small number of instances
in which board service may be authorized, Access Persons serving as directors
should be isolated from those making investment decisions through written
procedures applicable to the person's position in Wright.
5. Sanctions. Careful adherence to this Code of Ethics is one of the
basic conditions of employment of every employee. Any employee violating any
provision of this Code of Ethics, including the Compliance Procedures, may be
subject to sanction, including but not limited to suspension or termination of
employment, censure or disgorgement of profits, at the determination of the
President of Wright.
Exhibit A
ACCESS PERSONS*
Using the Investment Company Act definition, an Access Person includes:
(i) any officer or director of Wright;
(ii) any employee of Wright who, in connection with his regular
functions or duties, makes, participates in or obtains information
regarding the purchase or sale of a security by a registered investment
company, or whose functions relate to the making of any recommendations
with respect to such purchases or sales; and
(iii) any natural person in a control relationship to Wright who
obtains information concerning recommendations regarding the
purchase or sale of a security for a Wright-managed mutual fund.
The current list of positions at Wright deemed to be "Access Persons"
are: directors, officers, trading department personnel, analysts and others
involved in making recommendations to portfolio managers, and any employee who
has direct contact with clients and/or receives advance notice from the
Investment Committee of contemplated portfolio transactions.
BENEFICIAL OWNERSHIP
Under current SEC interpretations, Beneficial Ownership includes
securities accounts of a spouse, minor children and relatives resident in the
employee's home, as well as accounts of another person if by reason of any
contract, understanding, relationship, agreement or other arrangement the
employee obtains therefrom benefits substantially equivalent to those of
ownership.
When an employee has a substantial measure of influence or control over
an account, but not direct or indirect beneficial ownership (as for example when
the employee serves as executor or trustee for someone outside his immediate
family, or manages or helps to manage a charitable a account), the rules set
forth in this Code of Ethics will not be considered to be directly applicable,
but in all transactions involving any such account the employee will be expected
to conform to the spirit of these rules and specifically avoid any activity that
conflicts or might appear to conflict with the interests of our clients.
* Since all provisions of this Code restrict all Access Persons, no special
mention of Investment Personnel, as defined by the SEC, has been made. Further,
any director of Wright who is not an "interested person" of Wright (as defined
in applicable SEC regulations) need not make any initial, annual or quarterly
report, unless the director knows, or should have known, of a possible conflict
of interest between his/her securities transaction and the investment decisions
of Wright or the Funds. Within thirty days after the adoption of this Code, the
Legal Department of Wright shall send each such director a notice that includes
a full explanation of the types of transactions that are, in any case,
prohibited and the circumstances under which it may be necessary to report a
transaction.
<PAGE>
WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC.
CODE OF ETHICS - PERSONAL INVESTMENTS
A. STATEMENT OF GENERAL PRINCIPLES
Wright Investors' Service Distributors, Inc. ("Distributors") is the
principal underwriter of a family of mutual funds (the "Funds") managed by
Distributors' affiliate, Wright Investors' Service, Inc. ("Wright"). All
directors, officers and employees of Distributors shall conduct themselves with
integrity and dignity and act in a thoroughly ethical manner in dealings with
clients, the public and fellow employees. All such persons shall have the duty
at all times to place the interests of the shareholders of the Funds, and may
not in any respect take advantage of transactions made by or on behalf of the
Funds. It is essential that we avoid not only actual conflicts, but also any
appearance of conflicts of interest and any abuse of an individual's position of
trust and responsibility. No Code of Ethics can cover every possible
circumstance, and an individual's conduct must depend ultimately upon his sense
of fiduciary obligation to the Funds.
This Code of Ethics ("Code") supersedes Distributors's prior code and
Statement of Policy. The management of Distributors believes this Code meets
current SEC requirements and is appropriate and desirable for the Company.
All requests and reports provided to anyone pursuant to this Code shall
be treated as confidential, but are subject to review as provided herein and by
representatives of the Securities and Exchange Commission.
B. APPLICABILITY OF RESTRICTIONS AND PROCEDURES
Persons Affected.
ALL EMPLOYEES* located in any office of Distributors must comply with
the requirements of Paragraphs C-1 through C-3, below and all
provisions of Section E. Employees must also familiarize themselves
with all other parts of this Code.
ACCESS PERSONS (as defined in Exhibit A) must comply with the
requirements of Paragraphs C-1 through C-6, inclusive, and all
provisions of Section E. Access Persons must also familiarize
themselves with all other parts of this Code.
ACCOUNTS INCLUDED.
Distributors's policies and procedures concerning personal investments
apply to all securities accounts in which the affected employee has "a
direct or indirect beneficial ownership," unless the employee has no
"direct or indirect influence or control" over the account. The concept
of Beneficial Ownership is an important part of this Code and is more
extensively defined in Exhibit A.
* For purposes of clarity, all employees of The Winthrop Corporation
performing services for Distributors are referred to as employees of
Distributors.
TYPES OF SECURITIES COVERED.
In general this Code employs the terms Security to mean shares of any
publicly-traded company, including puts, calls, options and warrants
for such securities, and open-end and closed-end mutual funds, except
direct obligations of the US Government, bank certificates of deposit
and money market funds.
C. COMPLIANCE PROCEDURES*
1. Disclosure of Personal Holdings. As a condition to employment, each
newly-hired person must (i) make full disclosure of any brokerage account and
all publicly-traded securities beneficially owned by the employee or members of
the employee's immediate family; (ii) agree to comply with the Company's written
policies restricting personal trading and prohibiting insider trading; and (iii)
provide a written acknowledgment of receipt of such policies. This disclosure
must include all of the information requested on Exhibit B-1.
2. Preclearance. No employee of Distributors may buy or sell shares of
any Security without the prior approval of the President of Distributors. Any
such approval will only be given in accordance with the provisions of Paragraph
D, "Guidelines for Approval of Securities Transactions." The approval will
remain valid for three days. Employees who receive approvals for trades must
have the broker send a copy of the confirmation to the President of
Distributors.
3. Annual Certification of Compliance. All employees shall certify
annually that they (i) have read and understand this Code; (ii) recognize that
they are subject thereto; (iii) have complied with its requirements, including
any necessary preclearance; and (iv) have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. The form of such certification is set forth in Exhibit B-2.
4. Broker/Dealer Reports. All employees shall cause each broker/dealer
at which they have an account to send a copy of all quarterly and annual account
statements to the president of Distributors.
5. Quarterly Report of Transactions. Each Access Person must file every
quarter with the President of Distributors a report of all transactions in
Securities. (See Exhibit B-3) Transactions encompass sales, purchases and other
acquisitions or dispositions, including gifts and exercise of conversion rights
or subscription rights. In addition, if the Access Person established a
securities account during the quarter, the report must disclose the name of the
broker, dealer or bank with whom the account is established and the date the
account was established. The report must be filed with the President of
Distributors even if there were no reportable transactions during the
prior calendar quarter, in which case the employee should state on the form that
there were no such transactions. The report is due ten days after the end of
each calendar quarter. Failure to submit the report in a timely manner is a
violation of SEC regulations and this Code, and may be a cause for sanctions.
Copies of all brokerage statements should be attached to an Access Person's
signed report.
*At the present time, all employees of Distributors also perform services for
Wright. Therefore, a copy of any disclosure, preclearance (whether approved or
disapproved), report or certification required under Wright's Code of Ethics may
be submitted to the President of Distributors in order to comply with this Code.
6. Annual Disclosure. No less than once annually, all Access Persons shall
submit to the President of Distributors a list of all of his/her securities
holdings. The specific information of this report is identical to that of the
Initial Disclosure of Investments. Brokerage statements may be substituted for a
separate report.
7. Monitoring of Compliance. Within thirty days after the end of each
quarter, Internal Counsel for Distributors shall review the Quarterly and Annual
Reports for reconciliation with the Initial Disclosure, Annual Disclosure, and
the Preclearance Approvals given in the same quarter or year, as applicable. The
Internal Counsel will investigate all apparent violations of this Code and will
prepare a report for the President of Distributors.
8. Review by the Board of Trustees. No less than once each year,
Distributors shall prepare and submit a written report to the Trustees of the
Funds that
o describes any issues arising under this Code of Ethics since the last
report to the Board of Trustees, including, but not limited to,
information about material violations of the Code or procedures, and
sanctions imposed in response to the material violations; and
o certifies that Distributors has adopted procedures reasonably necessar
to prevent violations of this Code.
If there have been any material changes to the Code of Ethics,
Distributors will submit such changes to the Trustee at the next meeting of the
Board.
The Trustees shall review any violations of the Code specified in the
annual report and any recommended changes in existing restrictions and
procedures. They should then take such action, if any, as they may deem
appropriate.
9. Additional Disclosure. Distributors's Code of Ethics shall be filed
with the SEC as an exhibit to the registration statement of each Fund. There
will be disclosure in the Funds' prospectuses or their statements of additional
information that (i) Distributors has a code of ethics, (ii) whether personnel
of Distributors are permitted to invest in securities for their own accounts,
and (iii) that the code is on public file, and available from the SEC.
* As of March, 2000, Helen W. George is Internal Counsel for Distributors and
the person responsible for reviewing the reports.
D. GUIDELINES FOR APPROVAL OF SECURITIES TRANSACTIONS
1. Initial Public Offerings. Generally no approval will be given for
any employee to purchase securities of a publicly owned corporation that is
making an initial public offering of its securities, except in connection with
the exercise of rights issued in respect of securities such employee owns. The
reason for this rule is that it precludes the appearance that an employee has
used the Funds' market stature as a means of obtaining for himself or herself
"hot" issues which would otherwise not be offered to him or her. Any realization
of short-term profits may create at least the appearance that an investment
opportunity that should have been available to a Fund account was diverted to
the personal benefit of an employee.
2. Limited Offerings. Any prior approval of any acquisition of
securities in a limited offering (such as a private placement) should take into
account, among other factors, whether the investment opportunity should be
reserved for a Fund and its shareholders, and whether the opportunity is being
offered to an individual by virtue of his or her position with the principal
underwriter of the Funds.
3. Blackout Periods. No employee shall be authorized to exercise a
securities transaction within seven calendar days before or after a direct
advisory account or a Fund in the Wright complex has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
4. Short Sales and Options. Usually no approval will be given for short
sales. Also prohibited are buying, selling or exercising put or call options or
combinations thereof of securities held by a Fund, or which are being considered
for purchase for a Fund. It should be noted, for example, that an exercise of an
option or the covering of a short sale could conflict with current trading for a
Fund. However, where any such option is held by a member of an employee's
family, approval may be given provided there is no conflict with the interests
of the Fund(s).
5. Short-Term Trading Profits. Short-term trading, i.e., profiting in
the purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days, is prohibited and approval will generally
not be given. The management of Distributors believes that short-term trading by
Access Persons may increase the risk of conflicts of interest, affect an
individual's investment judgment, and in some instances divert an individual's
attention from the best interests of the Funds. Where one or both sides of a
short-term trade have not been pre-cleared, there is presumably already a
violation and the whole matter should be handled under the Sanctions section of
this Code, with disgorgement of profits being only one alternative available to
the President of Distributors.
6. Margin Accounts. Margin Accounts are absolutely prohibited and no
approval will be given.
7. By-Law Violation. No approval will be given which would result in an
employee's holdings exceeding 1/2 of 1% of the shares or securities of any
publicly-owned issuer.
8. General Standards. In the rare case where approval is given for a
transaction involving an initial public offering or a limited offering,
additional written disclosure will be required and will be maintained by the
President of Distributors. In authorizing any other types of transactions, the
President may consider the extent to which the employee has access to pending
investment decisions, the number of transactions already approved for such
employee within the past six months, whether the employee has made unreasonable
use of the company's resources during business hours in arriving at a personal
investment decision, and any other factors that are, in the opinion of the
President, pertinent to the matter.
E. RESPONSIBILITIES OF ALL EMPLOYEES RELATING TO PERSONAL INVESTMENTS.
1. Securities Recommended by a Member of the Investment Committee. Each
member of the Investment Committee of Wright who is an employee of Distributors
and who makes a recommendation as to whether a security shall be purchased, sold
or held in the account of a Fund or client shall fully apprise the President of
Distributors of any direct or indirect beneficial ownership the employee has in
such security.
2. By-Law Provision. The by-laws of the Wright Funds generally provide
that a Wright Fund shall not purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors or security holders is an
officer or director of the Fund, or is an officer or director of the principal
underwriter of the Fund, if after the purchase of the securities of such issuer
by the Fund one or more of such persons owns beneficially more than 1/2 of 1% of
the shares or securities, or both, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both. In view of the foregoing, and to avoid
any possibility of an inadvertent violation of this by-law provision, no
approval will be given that would result in an employee's holdings exceeding 1/2
of 1% of the shares or securities of any publicly-owned issuer. Any request for
prior approval of a trade in this type of security must state whether this
provision applies.
3. Gifts. No employee shall accept gifts of a value in excess of $35
from any person or entity that does business with or on behalf of a Wright Fund
or Distributors. Any gift in excess of $35 shall be disclosed to the President
of Distributors before acceptance by the employee.
4. Service As a Director. No employee shall serve on the board of
directors of a publicly traded company, absent prior authorization based upon a
determination by the President of Distributors that the board service would be
consistent with the interests of the Fund and its shareholders which may have an
investment in such public company. In the relatively small number of instances
in which board service may be authorized, Access Persons serving as directors of
Distributors should be isolated from personnel of Wright making investment
decisions through written procedures applicable to the person's position in
Distributors.
5. Sanctions. Careful adherence to this Code of Ethics is one of the
basic conditions of employment of every employee. Any employee violating any
provision of this Code of Ethics, including the Compliance Procedures, may be
subject to sanction, including but not limited to suspension or termination of
employment, censure or disgorgement of profits, at the determination of the
President of Distributors.
Exhibit A
ACCESS PERSONS*
Using the Investment Company Act definition, an Access Person includes
any director or officer of Distributors who, in the ordinary course of business,
makes, participates in or obtains information regarding, the purchase or sale of
Securities by any Fund for which Distributor acts, or whose functions or duties
in the ordinary course of business relate to the making of any recommendation to
any of the Funds regarding the purchase or sale of Securities.
The current list of positions at Distributors deemed to be "Access
Persons" are: directors, officers, and any employee who receives advance notice
from the Investment Committee of Wright of contemplated portfolio transactions.
BENEFICIAL OWNERSHIP
Under current SEC interpretations, Beneficial Ownership includes
securities accounts of a spouse, minor children and relatives resident in the
employee's home, as well as accounts of another person if by reason of any
contract, understanding, relationship, agreement or other arrangement the
employee obtains therefrom benefits substantially equivalent to those of
ownership.
When an employee has a substantial measure of influence or control over
an account, but not direct or indirect beneficial ownership (as for example when
the employee serves as executor or trustee for someone outside his immediate
family, or manages or helps to manage a charitable a account), the rules set
forth in this Code of Ethics will not be considered to be directly applicable,
but in all transactions involving any such account the employee will be expected
to conform to the spirit of these rules and specifically avoid any activity that
conflicts or might appear to conflict with the interests of our clients.
* Since all provisions of this Code restrict all Access Persons, no special
mention of Investment Personnel, as defined by the SEC, has been made. Further,
any director of Distributors who is not an "interested person" of Distributors
(as defined in applicable SEC regulations) need not make any initial, annual or
quarterly report, unless the director knows, or should have known, of a possible
conflict of interest between his/her securities transaction and the investment
decision of the Funds. Within thirty days after the adoption of this Code, the
Internal Counsel for Distributors shall send each such director a notice that
includes a full explanation of the types of transactions that are, in any case,
prohibited and the circumstances under which it may be necessary to report a
transaction.