As filed with the Securities and Exchange Commission
on April 26, 1996
Securities Act of 1933 Registration No. 33-55024
Investment Company Act of 1940 File No. 811-985
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 [X]
STATE STREET RESEARCH GROWTH TRUST
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (617) 357-1200
Francis J. McNamara, III
Senior Vice President, Secretary & General Counsel
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Thomas J. Kelly, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
It is proposed that this filing will become effective under Rule 485:
[ ] Immediately upon filing pursuant to paragraph (b),
[X] On May 1, 1996 pursuant to paragraph (b),
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On_________pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] On_________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.
--------------------------------
The Registrant hereby declares that, pursuant to Rule 24f-2(a)(1)
promulgated under the Investment Company Act of 1940, as amended, it has
registered an indefinite number of Class A shares, Class B shares, Class C
shares and Class D shares of beneficial interest, par value $.001 per share, in
State Street Research Growth Fund, a series of the Registrant. A Rule 24f-2
Notice for the most recent fiscal year ended December 31, 1995, was filed by the
Registrant on February 26, 1996.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 481 (a)
Part A
CAPTION OR LOCATION IN
FORM N-1A ITEM NO. PROSPECTUS
1. Cover Page................... Same
2. Synopsis..................... Table of Expenses
3. Condensed Financial
Information.................. Financial Highlights; Calculation of
Performance Data
4. General Description of
Registrant................... The Fund's Investments; Limiting
Investment Risk; The Fund and its Shares
5. Management of the Fund....... Management of the Fund; Purchase of
Shares
5A. Management's Discussion
of Fund Performance.......... [To be included in Annual Shareholder
Reports]
6. Capital Stock and Other
Securities................... Shareholder Services; The Fund and its
Shares; Management of the Fund;
Dividends and Distributions; Taxes
7. Purchase of Securities
Being Offered................ Purchase of Shares; Shareholder Services
8. Redemption or Repurchase..... Redemption of Shares; Shareholder
Services
9. Legal Proceedings............ Not Applicable
( i )
<PAGE>
Part B
CAPTION OR LOCATION IN STATEMENT
FORM N-1A ITEM NO. OF ADDITIONAL INFORMATION
10. Cover Page................... Same
11. Table of Contents............ Same
12. General Information.......... Not Applicable
and History
13. Investment Objectives
and Policies................. Additional Investment Policies and
Restrictions; Additional Information
Concerning Certain Investment
Techniques; Debt Instruments and
Permitted Cash Investments; Rating
Categories of Debt Securities;
Portfolio Transactions
14. Management of the
Registrant................... Trustees and Officers
15. Control Persons and
Principal Holders of
Securities................... Trustees and Officers
16. Investment Advisory
and Other Services........... Investment Advisory Services;
Custodian; Independent Accountants;
Distribution of Shares of the Fund
17. Brokerage Allocation......... Portfolio Transactions
18. Capital Stock and
Other Securities............. Not Applicable (Description in
Prospectus)
19. Purchase, Redemption and
Pricing of Securities
Being Offered................ Purchase and Redemption of Shares; Net
Asset Value
( ii )
<PAGE>
CAPTION OR LOCATION IN STATEMENT
FORM N-1A ITEM NO. OF ADDITIONAL INFORMATION
20. Tax Status................... Certain Tax Matters
21. Underwriters................. Distribution of Shares of the Fund
22. Calculation of
Performance Data............. Calculation of Performance Data
23. Financial Statements......... Financial Statements
( iii )
<PAGE>
STATE STREET RESEARCH
GROWTH FUND
Prospectus-May 1, 1996
The investment objective of State Street Research Growth Fund (the "Fund") is
to provide long-term growth of capital. In seeking to achieve its investment
objective, the Fund invests primarily in equity securities believed by the
Investment Manager to have better than average growth potential over the
years.
State Street Research & Management Company (the "Investment Manager") serves
as investment adviser to the Fund. As of February 29, 1996, the Investment
Manager had assets of approximately $31.1 billion under management. State
Street Research Investment Services, Inc. serves as distributor (the
"Distributor") for the Fund.
Shareholders may have their shares redeemed directly by the Fund at net asset
value plus the applicable contingent deferred sales charge, if any; redemptions
processed through securities dealers may be subject to processing charges.
There are risks in any investment program, including the risk of changing
economic and market conditions, and there is no assurance that the Fund will
achieve its investment objective. The net asset value of the Fund's shares
fluctuates as market conditions change.
The Fund generally is designed for investors who seek growth over the long
term, can maintain their investment through changes in market cycles without
requiring current income and can afford the risks inherent in the investment
policies of the Fund. An investment in the Fund should be part of a balanced
investment program which includes short-term investments.
This Prospectus sets forth concisely the information a prospective investor
ought to know about the Fund before investing. It should be retained for
future reference. A Statement of Additional Information about the Fund dated
May 1, 1996, has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus. It is available at no
charge upon request to the Fund at the address indicated on the cover or by
calling 1-800-562-0032.
The Fund is a diversified series of State Street Research Growth Trust (the
"Trust"), an open-end management investment company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS PAGE
Table of Expenses 2
Financial Highlights 4
The Fund's Investments 5
Other Investments and Risk Considerations 6
Limiting Investment Risk 8
Purchase of Shares 9
Redemption of Shares 17
Shareholder Services 19
The Fund and its Shares 23
Management of the Fund 24
Dividends and Distributions; Taxes 25
Calculation of Performance Data 26
1
<PAGE>
The Fund offers four classes of shares which may be purchased at the next
determined net asset value per share plus, in the case of all classes except
Class C shares, a sales charge which, at the election of the investor, may be
imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares).
Class A shares are subject to (i) an initial sales charge of up to 4.5% and
(ii) an annual service fee of 0.25% of the average daily net asset value of
the Class A shares.
Class B shares are subject to (i) a contingent deferred sales charge
(declining from 5% to 2%), which will be imposed on most redemptions made
within five years of purchase, and (ii) annual distribution and service fees
of 1% of the average daily net asset value of such shares. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after purchase. No contingent deferred sales charge
applies after the fifth year following the purchase of Class B shares.
Class C shares are offered only to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees.
Class D shares are subject to (i) a contingent deferred sales charge of 1% if
redeemed within one year following purchase and (ii) annual distribution and
service fees of 1% of the average daily net asset value of such shares.
Table of Expenses
<TABLE>
<CAPTION>
Class A Class B Class C Class D
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses (1)
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) 4.5% None None None
Maximum Sales Charge
Imposed on Reinvested
Dividends
(as a percentage of
offering price) None None None None
Deferred Sales Charge
(as a percentage of
original purchase
price or redemption
proceeds, as
applicable) None (2) 5% None 1%
Redemption Fees (as a
percentage of amount
redeemed,
if applicable) None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses
(as a percentage of
average net assets)
Management Fees 0.475% 0.475% 0.475% 0.475%
12b-1 Fees 0.25 % 1.00 % None 1.00 %
Other Expenses 0.165% 0.165% 0.165% 0.165%
--------- --------- --------- -----------
Total Fund Operating
Expenses 0.89 % 1.64 % 0.64 % 1.64 %
========= ========= ========= ===========
</TABLE>
(1) Reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge declines
thereafter and no contingent deferred sales charge is imposed after the
fifth year. Class D shares are subject to a 1% contingent deferred sales
charge on any portion of the purchase redeemed within one year of the
sale. Long-term investors in a class of shares with a distribution fee
may, over a period of years, pay more than the economic equivalent of the
maximum sales charge permissible under applicable rules. See "Purchase of
Shares."
(2) Purchases of Class A shares of $1 million or more are not subject to a
sales charge. If such shares are redeemed within 12 months of purchase, a
contingent deferred sales charge of 1% will be applied to the redemption.
See "Purchase of Shares."
2
<PAGE>
Example:
You would pay the following expenses on a $1,000 investment including, for
Class A shares, the maximum applicable initial sales charge, and assuming (1)
5% annual return and (2) redemption of the entire investment at the end of
each time period:
1 Year 3 Years 5 Years 10 Years
------- ------- ------- ---------
Class A shares $54 $72 $ 92 $150
Class B shares (1) $67 $82 $109 $174
Class C shares $ 7 $20 $ 36 $ 80
Class D shares $27 $52 $ 89 $194
You would pay the following expenses on the same investment, assuming no
redemption:
1 Year 3 Years 5 Years 10 Years
------- ------- ------- ---------
Class B shares (1) $17 $52 $89 $174
Class D shares $17 $52 $89 $194
(1) Ten-year figures assume conversion of Class B shares to Class A shares at
the end of eight years.
The example should not be considered as a representation of past or future
return or expenses. Actual return or expenses may be greater or less than
shown.
The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor will bear directly or indirectly.
The percentage expense levels shown in the table are based on experience with
expenses during the fiscal year ended December 31, 1995; actual expense
levels for the current fiscal year and future years may vary from the amounts
shown. The table does not reflect charges for optional services elected by
certain shareholders, such as the $7.50 fee for remittance of redemption
proceeds by wire. For further information on sales charges, see "Purchase of
Shares--Alternative Purchase Program"; for further information on management
fees, see "Management of the Fund"; and for further information on 12b-1
fees, see "Purchase of Shares--Distribution Plan."
3
<PAGE>
Financial Highlights
The data set forth below has been examined by Coopers & Lybrand L.L.P.,
independent accountants, and their report thereon for the latest five years
is included in the Statement of Additional Information. For further
information about the performance of the Fund, see "Financial Statements" in
the Statement of Additional Information.
Class C
Year ended December 31
-----------------------------------------------------
1995* 1994 1993 1992 1991
------- ------- ------- ------- ---------
Net asset value,
beginning of year $7.08 $8.51 $9.26 $9.14 $7.44
Net investment
income (loss) .04 .07 .09 .14 .17
Net realized and
unrealized gain
(loss) on
investments** 2.29 (.40) .74 .15 1.71
Dividends from net
investment income (.03) (.07) (.10) (.14) (.18)
Distributions from
net realized gains (2.36) (1.03) (1.48) (.03) --
----- ----- ----- ----- -------
Net asset value, end
of year $7.02 $7.08 $8.51 $9.26 $9.14
===== ===== ===== ===== =======
Total return 33.02%+ (3.82)%+ 8.94%+ 5.71%+ 26.77%+
Net assets at end of
year (000s) $186,689 $186,108 $250,786 $263,781 $273,607
Ratio of operating
expenses
to average net
assets 0.64% 0.64% 0.66% 0.57% 0.56%
Ratio of net
investment income
(loss) to average
net assets 0.43% 0.78% 0.92% 1.56% 2.02%
Portfolio turnover
rate 234.43% 57.18% 68.36% 35.60% 31.89%
--------------------
** After provision
for Federal tax
on retained
capital gains at
end of year of -- -- -- $ .22 $ .12
(a) Includes $.10 relating principally to a special nonrecurring distribution
from Santa Fe Pacific Corp.
(b) Includes $.03 relating to a special nonrecurring distribution from
Wheelabrator Group, Inc.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
* Per-share figures have been calculated using the average shares method.
1990 1989 1988 1987 1986
------- ------- ------- ------- ---------
Net asset value,
beginning of year $8.23 $6.23 $6.05 $5.86 $5.39
Net investment
income (loss) .20 .20(b) .23(a) .14 .14
Net realized and
unrealized gain
(loss) on
investments** (.78) 2.14 .18 .33 .48
Dividends from net
investment income (.21) (.20) (.23) (.28) (.15)
Distributions from
net realized gains -- (.14) -- -- --
----- ----- ----- ----- -------
Net asset value, end
of year $7.44 $8.23 $6.23 $6.05 $5.86
===== ===== ===== ===== =======
Total return (6.16)%+ 39.83%+ 9.27%+ 9.39%+ 13.37%+
Net assets at end of
year (000s) $234,338 $284,940 $228,071 $231,526 $239,092
Ratio of operating
expenses
to average net
assets 0.55% 0.56% 0.60% 0.55% 0.55%
Ratio of net
investment income
(loss) to average
net assets 2.42% 2.60% 3.55% 1.97% 2.22%
Portfolio turnover
rate 16.09% 28.48% 42.18% 14.94% 23.83%
--------------------
** After provision
for Federal tax
on retained
capital gains at
end of year of $ .08 $ .13 $ .15 $ .09 $ .08
(a) Includes $.10 relating principally to a special nonrecurring distribution
from Santa Fe Pacific Corp.
(b) Includes $.03 relating to a special nonrecurring distribution from
Wheelabrator Group, Inc.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
* Per-share figures have been calculated using the average shares method.
4
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
-------------------------------- -------------------
Year ended Year ended
December 31, December 31,
----------------- -------------------
March 16,
1993
(Commencement
of Share
Class
Designations)
to
December
31,
1995* 1994 1993 1995* 1994
------ ------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $7.09 $8.50 $9.63 $7.02 $8.46
Net investment income
(loss) .01 .05 .06 (.06) (.00)
Net realized and
unrealized gain (loss)
on investments 2.30 (.38) .37 2.29 (.41)
Dividends from net
investment income (.02) (.05) (.08) -- --
Distributions from net
realized gains (2.36) (1.03) (1.48) (2.36) (1.03)
---- ----- --------- ---- -------
Net asset value, end of
year $7.02 $7.09 $8.50 $6.89 $7.02
==== ===== ========= ==== =======
Total return 32.57%+ (3.83)%+ 4.52%+++ 31.71%+ (4.80)%+
Net assets at end of
year (000s) $2,379 $719 $602 $10,684 $1,544
Ratio of operating
expenses to average
net assets 0.89% 0.90% 0.96%++ 1.63% 1.63%
Ratio of net investment
income (loss) to
average net assets 0.12% 0.54% 0.48%++ (0.69)% (0.20)%
Portfolio turnover rate 234.43% 57.18% 68.36% 234.43% 57.18%
</TABLE>
Class D
--------------------------------
Year ended
December 31,
-----------------
March 18,
1993
(Commencement
of Share March 18, 1993
Class (Commencement
Designations) of Share Class
to Designations)
December to
31, December 31,
1993 1995* 1994 1993
----------- ------ ------- --------------
Net asset value,
beginning of year $ 9.56 $ 7.02 $ 8.45 $ 9.56
Net investment income
(loss) .03 (.06) (.00) .03
Net realized and
unrealized gain (loss)
on investments .42 2.28 (.40) .41
Dividends from net
investment income (.07) -- -- (.07)
Distributions from net
realized gains (1.48) (2.36) (1.03) (1.48)
--------- ---- ----- ------------
Net asset value, end of
year $ 8.46 $ 6.88 $ 7.02 $ 8.45
========= ==== ===== ============
Total return 4.64%+++ 31.57%+ (4.68)%+ 4.59%+++
Net assets at end of
year (000s) $986 $2,117 $ 384 $242
Ratio of operating
expenses to average
net assets 1.71%++ 1.63% 1.63% 1.71%++
Ratio of net investment
income (loss) to
average net assets (0.36)%++ (0.67)% (0.20)% (0.34)%++
Portfolio turnover rate 68.36% 234.43% 57.18% 68.36%
++ Annualized
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
+++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
* Per-share figures have been calculated using the average shares method.
The Fund's Investments
The Fund's investment objective is to provide long-term growth of capital.
The investment objective is a fundamental policy that may not be changed
without approval of the Fund's shareholders.
In seeking to achieve its investment objective, the Fund invests at least 65%
of its total assets under normal circumstances in equity securities believed
by the Investment Manager to have better than average growth potential over
the years. The Fund invests in a diversified portfolio of securities of
companies in a broad range of industries. The Investment Manager seeks to
identify those industries which offer the greatest possibilities for
profitable expansion and, within such industries, those companies which
appear most capable of sustained growth. Potential income is not a major
factor in the selection of investments, although it is given consideration in
varying degrees depending on particular issuers. Investments will also be
made in securities of companies believed by the Investment Manager to be
selling below their intrinsic values, in emerging growth companies or in
cyclical companies believed by the Investment Manager to be at an attractive
point in their cycles.
In selecting such investments, the Investment Manager considers a variety of
factors, any one of which may be determinative. These include, but are not
limited to, a company's expected growth in earnings, relative financial
condition, cash flow, competitive position, management and business strategy,
overall potential as an enterprise, entrepreneurial character, and new or
innovative products, services or processes. The capitalization of the
companies in which the Fund invests can range across the full
5
<PAGE>
spectrum from small to large capitalization, with varying or high proportions
from time to time in different capitalization segments.
The equity securities in which the Fund will invest consist of common stocks,
or securities (preferred stocks, bonds and debentures) convertible into
common stocks, or which carry the right to acquire equity securities
(warrants). Although the Fund's investments are not limited to issuers of any
particular size, the Fund anticipates that most of the equity securities held
by the Fund will be traded or listed on a major securities exchange.
Under normal circumstances, the Fund expects to be fully invested in equity
securities as described above. However, the Fund may, consistent with its
investment objective, also invest at any time up to 35% of its total assets
in U.S. Government securities, and in the equity securities, and debt
securities of varying maturities, issued by small capitalization, less
mature, or special situation companies. A company's market capitalization,
the total market value of its publicly traded equity securities, is currently
regarded as small if it is $700 million or less. A special situation company
is one which, because of unique circumstances such as, for example, a
particular business niche it fills, is an attractive investment even though
it is not a small capitalization issuer. The Fund will purchase investment
grade debt securities (i.e., rated at the time of purchase AAA, AA, A or BBB
by Standard & Poor's Corporation ("S&P") or Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's")), or securities that are not rated but
considered by the Investment Manager to be of equivalent investment quality.
The debt securities, which may have differing maturities and fixed or
floating interest rates, will be U.S. Government securities or issued by
larger capitalization issuers. For more information on debt ratings, see the
Statement of Additional Information.
Other Investments and Risk Considerations
Foreign Investments
The Fund reserves the right to invest without limitation in securities of
non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). Under current
policy, however, the Fund limits such investments, including ADRs and EDRs,
to a maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company, which
evidence ownership of underlying securities issued by a foreign corporation
or other entity. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs in registered form are designed for
use in U.S. securities markets and EDRs are designed for use in European
securities markets. The underlying securities are not always denominated in
the same currency as the ADRs or EDRs. Although investment in the form of
ADRs or EDRs facilitates trading in foreign securities, it does not mitigate
all the risks associated with investing in foreign securities.
ADRs are available through facilities which may be either "sponsored" or
"unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the
foreign issuer is not involved, and the ADR holders pay the fees of the
depository. Sponsored ADRs are generally more advantageous to the ADR holders
and the issuer than are unsponsored ADRs. More and higher fees are generally
charged in an unsponsored program compared to a sponsored facility. Only
sponsored ADRs may be listed on the New York or American Stock Exchanges.
Unsponsored ADRs may prove to be more risky due to (a) the additional costs
involved to the Fund; (b) the relative illiquidity of the issue in U.S.
markets; and (c) the possibility of higher trading costs in the
over-the-counter market as opposed to exchange-based trading. The Fund will
take these and other risk considerations into account before making an
investment in an unsponsored ADR.
The risks associated with investments in foreign securities include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future political and economic developments, including the risks
of nationalization or expropriation, the possible imposition of currency
exchange blockages,
6
<PAGE>
higher operating expenses, foreign withholding and other taxes which may
reduce investment return, reduced availability of public information
concerning issuers, the difficulties in obtaining and enforcing a judgment
against a foreign issuer and the fact that foreign issuers are not generally
subject to uniform accounting, auditing and financial reporting standards or
to other regulatory practices and requirements comparable to those applicable
to domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of securities of comparable
domestic issuers. Investments in foreign securities also involve the
additional cost of converting foreign currency into U.S. dollars.
It is anticipated that most of the foreign investments of the Fund will
consist of securities of issuers in countries with developed economies.
However, the Fund may also invest in the securities of issuers in countries
with less developed economies as deemed appropriate by the Investment
Manager, although the Fund does not presently expect to invest more than 5%
of its total assets in issuers in such less developed countries. Such
countries include countries that have an emerging stock market that trades a
small number of securities; countries with low- to middle-income economies;
and/or countries with economies that are based on only a few industries.
Eastern European countries are considered to have less developed capital
markets. Some of the risks set forth above may be heightened for investments
in those countries.
For further information regarding foreign investments, see the Statement of
Additional Information.
Currency Transactions
In order to protect against the effect of uncertain future exchange rates on
securities denominated in foreign currencies, the Fund may engage in currency
exchange transactions either on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market or by entering into forward
contracts to purchase or sell currencies. Although such contracts tend to
minimize the risk of loss resulting from a correctly predicted decline in
value of hedged currency, they tend to limit any potential gain that might
result should the value of such currency increase. In entering a forward
currency transaction, the Fund is dependent upon the creditworthiness and
good faith of the counterparty. The Fund attempts to reduce the risks of
nonperformance by the counterparty by dealing only with established,
reputable institutions with which the Investment Manager has done substantial
business in the past. For further information, see the Statement of
Additional Information.
Other Investment Policies
The Fund may lend portfolio securities with a value of up to 33-1/3% of its
total assets. The Fund will receive cash or cash equivalents (e.g., U.S.
Government obligations) as collateral in an amount equal to at least 100% of
the current market value of the loaned securities plus accrued interest.
Collateral received by the Fund will generally be held in the form tendered,
although cash may be invested in securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, irrevocable stand-by letters
of credit issued by a bank, or any combination thereof. The investing of cash
collateral received from loaning portfolio securities involves leverage which
magnifies the potential for gain or loss on monies invested and, therefore,
results in an increase in the volatility of the Fund's outstanding
securities. Such loans may be terminated at any time.
The Fund will retain most rights of ownership including rights to dividends,
interest or other distributions on the loaned securities. Voting rights pass
with the lending, although the Fund may call loans to vote proxies if
desired. Should the borrower of the securities fail financially, there is a
risk of delay in recovery of the securities or loss of rights in the
collateral. Loans are made only to borrowers which are deemed by the
Investment Manager to be of good financial standing.
To aid in achieving its investment objective, the Fund may, subject to
certain limitations, buy and sell options, forward contracts, futures
contracts and options on futures contracts, on securities, securities indices
and currencies and purchase securities on a "when-issued" or forward
commitment basis. The Fund may not establish a position in a commodity
futures contract or purchase or sell a commodity option contract for other
than bona fide hedging purposes if immediately thereafter the sum of the
7
<PAGE>
amount of initial margin deposits and premiums required to establish such
positions for such nonhedging purposes would exceed 5% of the market value of
the Fund's net assets; similar policies apply to options which are not
commodities. The Fund may enter various forms of swap arrangements which have
simultaneously the characteristics of a security and a futures contract,
although the Fund does not presently expect to invest more than 5% of its
total assets in such items. These swap arrangements include interest rate
swaps, currency swaps and index swaps.
The Fund may enter into reverse repurchase agreements and repurchase
agreements involving U.S. Government securities. Repurchase agreements could
involve certain risks in the event of default or insolvency of the other
party, including possible delays or restrictions upon the Fund's ability to
dispose of the underlying securities. See the Statement of Additional
Information.
The Fund may engage in short-term trading of securities and reserves full
freedom with respect to portfolio turnover. In periods when there are rapid
changes in economic conditions or security price levels or when investment
strategy changes significantly, portfolio turnover may be higher than during
times of economic and market price stability or when investment strategy
remains relatively constant. A high rate of portfolio turnover will result in
increased transaction costs for the Fund and may have tax and other
consequences as well.
Limiting Investment Risk
In seeking to lessen investment risk, the Fund operates under certain
fundamental and nonfundamental investment restrictions.
Under the fundamental investment restrictions the Fund may not (a) purchase
the securities of any issuer if such purchase would cause less than 75% of
the total assets of the Fund to be invested in cash and securities limited in
respect of any one issuer to 5% of the total assets of the Fund; (b) purchase
for its portfolio a security of any one issuer if such purchase would cause
more than 10% of the securities of such issuer to be held by the Fund; or (c)
invest more than 25% of the Fund's total assets in any one industry with
certain designated exceptions such as in the case of the U.S. Government.
The foregoing fundamental investment restrictions may not be changed except
by vote of the holders of a majority of the outstanding voting securities of
the Fund. The vote of a majority of the outstanding voting securities of the
Fund means the vote (A) of 67 per centum or more of the voting securities
present at a meeting, if the holders of more than 50 per centum of the
outstanding voting securities of the Fund are present or represented by
proxy; or (B) of more than 50 per centum of the outstanding voting securities
of the Fund, whichever is less.
Under the nonfundamental investment restrictions, the Fund may not invest
more than 15% of the Fund's total assets in illiquid securities including
repurchase agreements extending for more than seven days.The foregoing
nonfundamental investment restriction may be changed without a shareholder
vote.
For further information on the above and other fundamental and nonfundamental
investment restrictions, see the Statement of Additional Information.
The Fund may hold up to 100% of its assets in cash or certain short-term
securities for temporary defensive purposes. The Fund will adopt a temporary
defensive position when, in the opinion of the Investment Manager, such a
position is more likely to provide protection against adverse market
conditions than adherence to the Fund's other investment policies. To the
extent that the Fund's assets are held in a temporary defensive position, the
Fund will not be achieving its investment objective. The types of short-term
instruments in which the Fund may invest for such purposes are, as more fully
described in the Statement of Additional Information: U.S. Government
securities, custodial receipts, certificates of deposit, time deposits and
bankers' acceptances of certain qualified financial institutions and
corporate commercial paper rated at least "A" by S&P or
8
<PAGE>
"Prime" by Moody's (or, if not rated, issued by companies having an
outstanding long-term unsecured debt issue rated at least "A" by S&P or
Moody's). See the Statement of Additional Information.
*****************************************************************************
Information on the Purchase of Shares, Redemption of Shares and Shareholder
Services is set forth below on pages 9 to 23.
*****************************************************************************
The Fund is available for investment by many kinds of investors including
participants investing through 401(k) or other retirement plan sponsors,
employees investing through savings plans sponsored by employers, Individual
Retirement Accounts ("IRAs"), trusts, corporations, individuals, etc. The
applicability of the general information and administrative procedures set
forth below accordingly will vary depending on the investor and the
recordkeeping system established for a shareholder's investment in the Fund.
Participants in 401(k) and other plans should first consult with the
appropriate person at their employer or refer to the plan materials before
following any of the procedures below. For more information or assistance,
anyone may call 1-800-562-0032.
*****************************************************************************
Purchase of Shares
Methods of Purchase
Through Dealers
Shares of the Fund are continuously offered through securities dealers who
have entered into sales agreements with the Distributor. Purchases through
dealers are confirmed at the offering price, which is the net asset value
plus the applicable sales charge, next determined after the order is duly
received by State Street Research Shareholder Services ("Shareholder
Services"), a division of State Street Research Investment Services, Inc.,
from the dealer. ("Duly received" for purposes herein means in accordance
with the conditions of the applicable method of purchase as described below.)
The dealer is responsible for transmitting the order promptly to Shareholder
Services in order to permit the investor to obtain the current price. See
"Purchase of Shares--Net Asset Value" herein.
By Mail
Initial investments in the Fund may be made by mailing or delivering to the
investor's securities dealer a completed Application (accompanying this
Prospectus), together with a check for the total purchase price payable to
the Fund. The dealer must forward the Application and check in accordance
with the instructions on the Application.
Additional shares may be purchased by mailing to Shareholder Services a check
payable to the Fund in the amount of the total purchase price together with
any one of the following: (i) an Application; (ii) the stub from the
shareholder's account statement; or (iii) a letter setting forth the name of
the Fund, the class of shares and the account name and number. Shareholder
Services will deliver the purchase order to the transfer agent and dividend
paying agent, State Street Bank and Trust Company (the "Transfer Agent").
If the check is not honored for its full amount, the purchaser could be
subject to additional charges to cover collection costs and any investment
loss, and the purchase may be cancelled.
By Wire
An investor may purchase shares by wiring Federal Funds of not less than
$5,000 to State Street Bank and Trust Company, which also serves as the
Trust's custodian (the "Custodian"), as set forth below. Prior to making an
investment by wire, an investor must notify Shareholder Services at
1-800-521-6548 and obtain a control number and instructions. Following such
notification, Federal Funds should be wired through the Federal Reserve
System to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA
BNF = State Street Research Growth Fund
and class of shares (A, B, C or D)
9
<PAGE>
AC = 99029761
OBI = Shareholder Name
Shareholder Account Number
Control #K (assigned by State Street Research Shareholder Services)
In order for a wire investment to be processed on the same day (i) the
investor must notify Shareholder Services of his or her intention to make
such investment by 12 noon Boston time on the day of his or her investment;
and (ii) the wire must be received by 4 P.M. Boston time that same day.
An investor making an initial investment by wire must promptly complete the
Application accompanying this Prospectus and deliver it to his or her
securities dealer, who should forward it as required. No redemptions will be
effected until the Application has been duly processed.
The Fund may in its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. Orders for the
purchase of shares are subject to acceptance by the Fund. The Fund reserves
the right to suspend the sale of shares, or reject any purchase order,
including orders in connection with exchanges, for any reason.
Minimum Investment
Class of Shares
----------------------------------------
A B C D
------- ------- ----- ---------
Minimum Initial Investment
By Wire $5,000 $5,000 (a) $5,000
By Investamatic $1,000 $1,000 (a) $1,000
IRAs $2,000 $2,000 (a) $2,000
All other $2,500 $2,500 (a) $2,500
Minimum Subsequent
Investment
By Wire $5,000 $5,000 (a) $5,000
By Investamatic $ 50 $ 50 (a) $ 50
IRAs $ 50 $ 50 (a) $ 50
All other $ 50 $ 50 (a) $ 50
(a) Special conditions apply; contact the Distributor.
The Fund reserves the right to vary the minimums for initial or subsequent
investments as in the case of, for example, exchanges and investments under
various employee benefit plans, sponsored arrangements involving group
solicitations of the members of an organization, or other investment plans
for reinvestment of dividends and distributions or for periodic investments
(e.g., Investamatic Check Program).
Alternative Purchase Program
General
Alternative classes of shares permit investors to select a purchase program
which they believe will be the most advantageous for them, given the amount
of their purchase, the length of time they anticipate holding Fund shares or
the flexibility they desire in this regard, and other relevant circumstances.
Investors will be able to determine whether in their particular circumstances
it is more advantageous to incur an initial sales charge and not be subject
to certain ongoing charges or to have their entire initial purchase price
invested in the Fund with the investment being subject thereafter to ongoing
service fees and distribution fees.
As described in greater detail below, securities dealers are paid differing
amounts of commission and other compensation depending on which class of
shares they sell.
The major differences among the various classes of shares are as follows:
10
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C Class D
--------------------- --------------------- -------- ----------------------
<S> <C> <C> <C> <C>
Sales Charges Initial sales Contingent deferred None Contingent deferred
charge at time of sales charge of 5% sales charge of 1%
investment of up to to 2% applies to applies to any
4.5% depending on any shares redeemed shares redeemed
amount of within first five within one year
investment years following following their
their purchase; no purchase
contingent deferred
sales charge after
five years
On investments of
$1 million or more,
no initial sales
charge; but
contingent deferred
sales charge of 1%
applies to any
shares redeemed
within one year
following their
purchase
Distribution Fee None 0.75% for first None 0.75% each year
eight years; Class
B shares convert
automatically to
Class A shares
after eight years
Service Fee 0.25% each year 0.25% each year None 0.25% each year
Initial Commission Above described 4% None 1%
Received by Selling initial sales
Securities Dealer charge less 0.25%
to 0.50% retained
by Distributor
On investments of
$1 million or more,
0.25% to 1% paid to
dealer by
Distributor
</TABLE>
11
<PAGE>
In deciding which class of shares to purchase, the investor should consider
the amount of the investment, the length of time the investment is expected
to be held, and the ongoing service fee and distribution fee, among other
factors.
Class A shares are sold at net asset value plus an initial sales charge of up
to 4.5% of the public offering price. Because of the sales charge, not all of
an investor's purchase amount is invested unless the purchase equals
$1,000,000 or more. Class B shareholders pay no initial sales charge, but a
contingent deferred sales charge of up to 5% generally applies to shares
redeemed within five years of purchase. Class D shareholders also pay no
initial sales charge, but a contingent deferred sales charge of 1% generally
applies to redemptions made within one year of purchase. For Class B and
Class D shareholders, therefore, the entire purchase amount is immediately
invested in the Fund.
An investor who qualifies for a significantly reduced initial sales charge,
or a complete waiver of the sales charge on investments of $1,000,000 or
more, on the purchase of Class A shares might elect that option to take
advantage of the lower ongoing service and distribution fees that
characterize Class A shares compared with Class B or Class D shares.
Class A, Class B and Class D shares are assessed an annual service fee of
0.25% of average daily net assets. In addition, Class B shares are assessed
an annual distribution fee of 0.75% of daily net assets for an eight-year
period following the date of purchase and are then automatically converted to
Class A shares. Class D shares are assessed an annual distribution fee of
0.75% of daily net assets for as long as the shares are held. The prospective
investor should consider these fees plus the initial or contingent deferred
sales charges in estimating the costs of investing in the various classes of
the Fund's shares.
Only certain employee benefit plans and large institutions may make
investments in Class C shares.
Some of the service and distribution fees are allocated to dealers (see
"Distribution Plan" below). In addition, the Distributor will, at its
expense, provide additional cash and noncash incentives to securities dealers
that sell shares. Such incentives may be extended only to those dealers that
have sold or may sell significant amounts of shares and/or meet other
conditions established by the Distributor; for example, the Distributor may
sponsor special promotions to develop particular distribution channels or to
reach certain investor groups. The incentives may include merchandise and
trips to and attendance at sales seminars at resorts.
Class A Shares--Initial Sales Charges
Sales Charges
The purchase price of a Class A share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein, plus a sales charge which varies depending on the dollar
amount of the shares purchased as set forth in the table below. A major
portion of this sales charge is reallowed by the Distributor to the
securities dealer responsible for the sale.
Sales
Charge Sales Charge
Paid By Paid Dealer
Dollar Investor By Investor Concession
Amount of As % of As % of As % of
Purchase Purchase Net Asset Purchase
Transaction Price Value Price
Less than $100,000 4.50% 4.71% 4.00%
$100,000 or above but
less than $250,000 3.50% 3.63% 3.00%
$250,000 or above but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or above but
less than
$1 million 2.00% 2.04% 1.75%
$1 million and above 0% 0% See
following
discussion
12
<PAGE>
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
a commission based on the aggregate of such sales as follows:
Amount of Sale Commission
- ---------------------------- -----------
(a) $1 million to $3 million 1.00%
(b) Next $2 million 0.50%
(c) Amount over $5 million 0.25%
On such sales of $1,000,000 or more, the investor is subject to a 1%
contingent deferred sales charge on any portion of the purchase redeemed
within one year of the sale. However, such redeemed shares will not be
subject to the contingent deferred sales charge to the extent that their
value represents (1) capital appreciation or (2) reinvestment of dividends or
capital gains distributions. In addition, the contingent deferred sales
charge will be waived for certain other redemptions as described under
"Contingent Deferred Sales Charge Waivers" below (as otherwise applicable to
Class B shares).
Class A shares of the Fund that are purchased without a sales charge may be
exchanged for Class A shares of certain other Eligible Funds, as described
below, without the imposition of a contingent deferred sales charge, although
contingent deferred sales charges may apply upon a subsequent redemption
within one year of the Class A shares which are acquired through such
exchange. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case
may be, on the amount realized on redemption. The amount of any contingent
deferred sales charge will be paid to the Distributor.
Reduced Sales Charges
The reduced sales charges set forth in the table above are applicable to
purchases made at any one time by any "person," as defined in the Statement
of Additional Information, of $100,000 or more of Class A shares of the Fund
or a combination of "Eligible Funds." "Eligible Funds" include the Fund and
other funds so designated by the Distributor from time to time. Class B,
Class C and Class D shares may also be included in the combination under
certain circumstances. Securities dealers should call Shareholder Services
for details concerning the other Eligible Funds and any persons who may
qualify for reduced sales charges and related information. See the Statement
of Additional Information.
Letter of Intent
Any investor who provides a Letter of Intent may qualify for a reduced sales
charge on purchases of no less than an aggregate of $100,000 of Class A
shares of the Fund and any other Eligible Funds within a 13-month period.
Class B, Class C and Class D shares may also be included in the combination
under certain circumstances. Additional information on a Letter of Intent is
available from dealers, or from the Distributor, and also appears in the
Statement of Additional Information.
Right of Accumulation
Investors may purchase Class A shares of the Fund or a combination of shares
of the Fund and other Eligible Funds at reduced sales charges pursuant to a
Right of Accumulation. Under the Right of Accumulation, the sales charge is
determined by combining the current purchase with the value of the Class A
shares of other Eligible Funds held at the time of purchase. Class B, Class C
and Class D shares may also be included in the combination under certain
circumstances. See the Statement of Additional Information and call
Shareholder Services for details concerning the Right of Accumulation.
Other Programs
Class A shares of the Fund may be sold at a reduced sales charge or without a
sales charge pursuant to certain sponsored arrangements, which include
programs under which a company, employee benefit plan or other organization
makes recommendations to, or permits group solicitation of, its employees,
members or participants, except any organization created primarily for the
purpose of obtaining shares of the Fund at a reduced sales charge or without
a sales charge. Sales without a sales charge, or with a reduced sales charge,
may also be made through brokers, financial planners, institutions, and
others, under managed fee-based programs (e.g., "wrap fees" or similar
programs) which meet certain requirements
13
<PAGE>
established from time to time by the Distributor. Information on such
arrangements and further conditions and limitations is available from the
Distributor.
In addition, no sales charge is imposed in connection with the sale of Class
A shares of the Fund to the following entities and persons: (A) the
Investment Manager, the Distributor, or any affiliated entities, including
any direct or indirect parent companies and other subsidiaries of such
parents (collectively "Affiliated Companies"); (B) employees, officers, sales
representatives or current or retired directors or trustees of the Affiliated
Companies or any investment company managed by any of the Affiliated
Companies, any relatives of any such individuals whose relationship is
directly verified by such individuals to the Distributor, or any beneficial
account for such relatives or individuals; and (C) employees, officers, sales
representatives or directors of dealers and other entities with a selling
agreement with the Distributor to sell shares of any aforementioned
investment company, any spouse or child of such person, or any beneficial
account for any of them. The purchase must be made for investment and the
shares purchased may not be resold except through redemption. This purchase
program is subject to such administrative policies, regarding the
qualification of purchasers and any other matters, as may be adopted by the
Distributor from time to time.
Class B Shares--Contingent Deferred Sales Charges
Contingent Deferred Sales Charges
The public offering price of Class B shares is the net asset value per share
next determined after the purchase order is duly received, as defined herein.
No sales charge is imposed at the time of purchase; thus the full amount of
the investor's purchase payment will be invested in the Fund. However, a
contingent deferred sales charge may be imposed upon redemptions of Class B
shares as described below.
The Distributor will pay securities dealers at the time of sale a 4%
commission for selling Class B shares. The proceeds of the contingent
deferred sales charge and the distribution fee are used to offset
distribution expenses and thereby permit the sale of Class B shares without
an initial sales charge.
Class B shares that are redeemed within a five-year period after their
purchase will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents (1) capital appreciation of
Fund assets or (2) reinvestment of dividends or capital gains distributions.
The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the net asset value of such shares at the time of
redemption or at the time of purchase, whichever is lower, by the applicable
percentage shown in the table below:
Contingent Deferred Sales
Charge As A Percentage
Of Net Asset Value
Redemption During At Redemption
- -------------------------- ---------------------------
1st Year Since Purchase 5%
2nd Year Since Purchase 4%
3rd Year Since Purchase 3%
4th Year Since Purchase 3%
5th Year Since Purchase 2%
6th Year Since Purchase
and Thereafter None
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption of Class B shares is made first
of those shares having the greatest capital appreciation, next of shares
representing reinvestment of dividends and capital gains distributions and
finally of remaining shares held by the shareholder for the longest period of
time. The holding period for purposes of applying a contingent deferred sales
charge on Class B shares of the Fund acquired through an exchange from
another Eligible Fund will be measured from the date that such shares were
initially acquired in the other Eligible Funds, and Class B shares being
redeemed will be considered to represent, as applicable, capital appreciation
or dividend and capital gains distribution reinvestments in such other
Eligible Fund. These determinations will result in any contingent deferred
sales charge being imposed at the lowest possible rate. For federal income
tax purposes, the amount of the contingent deferred sales charge will reduce
the gain or increase the loss, as the case may be, on the amount realized on
redemption. The amount of any contingent deferred sales charge will be paid
to the Distributor.
14
<PAGE>
Contingent Deferred Sales Charge Waivers
The contingent deferred sales charge does not apply to exchanges, or to
redemptions under a systematic withdrawal plan which meets certain
conditions. In addition, the contingent deferred sales charge will be waived
for: (i) redemptions made within one year of the death or total disability,
as defined by the Social Security Administration, of all shareholders of an
account; (ii) redemptions made after attainment of a specific age in an
amount which represents the minimum distribution required at such age under
Section 401(a)(9) of the Internal Revenue Code for retirement accounts or
plans (e.g., age 70-1/2 for IRAs and Section 403(b) plans), calculated solely
on the basis of assets invested in the Fund or other Eligible Funds; and
(iii) a redemption resulting from a tax-free return of an excess contribution
to an IRA. (The foregoing waivers do not apply to a tax-free rollover or
transfer of assets out of the Fund.) The Fund may modify or terminate the
waivers at any time; for example, the Fund may limit the application of
multiple waivers.
Conversion of Class B Shares to Class A Shares
A shareholder's Class B shares, including all shares received as dividends or
distributions with respect to such shares, will automatically convert to
Class A shares of the Fund at the end of eight years following the issuance
of such Class B shares; consequently, they will no longer be subject to the
higher expenses borne by Class B shares. The conversion rate will be
determined on the basis of the relative per share net asset values of the two
classes and may result in a shareholder receiving either a greater or fewer
number of Class A shares than the Class B shares so converted. As noted
above, holding periods for Class B shares received in exchange for Class B
shares of other Eligible Funds will be counted toward the eight-year period.
Class C Shares--Institutional; No Sales Charge
The purchase price of a Class C share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase or
redemption. The Fund will receive the full amount of the investor's purchase
payment.
Class C shares are only available for new investments by certain employee
benefit plans and large institutions. See the Statement of Additional
Information. Information on the availability of Class C shares and further
conditions and limitations with respect thereto is available from the
Distributor. An employee benefit plan or endowment fund eligible to invest in
Class C shares should first consult with its dealer before investing in any
other class of shares, to obtain information on the higher sales charges, and
service and distribution fees applicable to such other classes of shares.
Shares held prior to February 17, 1993 are deemed to be Class C shares, but
shareholders thereof may not acquire additional Class C shares except through
reinvestment of dividends and distributions. Class C shares may have also
been issued directly or through exchanges to those shareholders of the Fund
or other Eligible Funds who previously held shares not subject to any future
sales charge or service fees or distribution fees.
Class D Shares--Spread Sales Charges
The purchase price of a Class D share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase; thus the
full amount of the investor's purchase payment will be invested in the Fund.
Class D shares are subject to a 1% contingent deferred sales charge on any
portion of the purchase redeemed within one year of the sale. The contingent
deferred sales charge will be 1% of the lesser of the net asset value of the
shares at the time of purchase or at the time of redemption. The Distributor
pays securities dealers a 1% commission for selling Class D shares at the
time of purchase. The proceeds of the contingent deferred sales charge and
the distribution fee are used to offset distribution expenses and thereby
permit the sale of Class D shares without an initial sales charge.
Class D shares that are redeemed within one year after purchase will not be
subject to the contingent deferred sales charge to the extent that the value
of such shares represents (1) capital appreciation of Fund assets or (2)
reinvestment of dividends or capital gains distributions. In addition, the
contingent deferred sales charge will be waived for certain other redemptions
as
15
<PAGE>
described under "Contingent Deferred Sales Charge Waivers" above (as
otherwise applicable to Class B shares). For federal income tax purposes, the
amount of the contingent deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any contingent deferred sales charge will be paid to the
Distributor.
Net Asset Value
The Fund's per share net asset values are determined Monday through Friday as
of the close of the New York Stock Exchange (the "NYSE") exclusive of days on
which the NYSE is closed. The NYSE ordinarily closes at 4 P.M. New York City
time. Assets held by the Fund are valued on the basis of the last reported
sale price or quotations as of the close of business on the valuation date,
except that securities and assets for which market quotations are not readily
available are valued as determined in good faith by or under the authority of
the Trustees of the Trust. In determining the value of certain assets for
which market quotations are not readily available, the Fund may use one or
more pricing services. The pricing services utilize information with respect
to market transactions, quotations from dealers and various relationships
among securities in determining value and may provide prices determined as of
times prior to the close of the NYSE. The Trustees have authorized the use of
the amortized cost method to value short-term debt instruments issued with a
maturity of one year or less and having a remaining maturity of 60 days or
less when the value obtained reflects fair value. Further information with
respect to the valuation of the Fund's assets is included in the Statement of
Additional Information.
Distribution Plan
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Distribution Plan") in accordance with the regulations under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under the provisions of the
Distribution Plan, the Fund makes payments to the Distributor based on an
annual percentage of the average daily value of the net assets of each class
of shares as follows:
Class Service Fee Distribution Fee
- -------- ------------ -------------------
A 0.25% None
B 0.25% 0.75%
C None None
D 0.25% 0.75%
Some or all of the service fees are used to pay or reimburse securities
dealers (including securities dealers that are affiliates of the Distributor)
or others for personal services and/or the maintenance of shareholder
accounts. A portion of any initial commission paid to dealers for the sale of
shares of the Fund represents payment for personal services and/or the
maintenance or servicing of shareholder accounts by such dealers. Dealers who
have sold Class A shares are eligible for further reimbursement commencing as
of the time of such sale. Dealers who have sold Class B and Class D shares
are eligible for further reimbursement after the first year during which such
shares have been held of record by such dealer as nominee for its clients (or
by such clients directly). Any service fees received by the Distributor and
not allocated to dealers may be applied by the Distributor in reduction of
expenses incurred by it directly for personal services and the maintenance or
servicing of shareholder accounts.
The distribution fees are used primarily to offset initial and ongoing
commissions paid to securities dealers for selling such shares. Any
distribution fees received by the Distributor and not allocated to dealers
may be applied by the Distributor in connection with sales or marketing
efforts, including special promotional fees and cash and noncash incentives
based upon sales by securities dealers.
The Distributor provides distribution services on behalf of other funds
having distribution plans and receives similar payments from, and incurs
similar expenses on behalf of, such other funds. When expenses of the
Distributor cannot be identified as relating to a specific fund, the
Distributor allocates expenses among the funds in a manner deemed fair and
equitable to each fund.
Commissions and other cash and noncash incentives and payments to dealers, to
the extent payable
16
<PAGE>
out of the general profits, revenues or other sources of the Distributor
(including the advisory fees paid by the Fund), have also been authorized
pursuant to the Distribution Plan.
A rule of the National Association of Securities Dealers, Inc. ("NASD")
limits the annual expenditures which the Fund may incur under the
Distribution Plan to 1%, of which 0.75% may be used to pay distribution
expenses and 0.25% may be used to pay shareholder service fees. The NASD rule
also limits the aggregate amount which the Fund may pay for such distribution
costs of 6.25% of gross share sales of a class since the inception of any
asset-based sales charge plus interest at the prime rate plus 1% on unpaid
amounts thereof (less any contingent deferred sales charges). Such limitation
does not apply to shareholder service fees. Payments to the Distributor or to
dealers funded under the Distribution Plan may be discontinued at any time by
the Trustees of the Trust.
Redemption of Shares
Shareholders may redeem all or any portion of their accounts on any day the
NYSE is open for business. Redemptions will be effective at the applicable
net asset value per share next determined (see "Purchase of Shares--Net Asset
Value" herein) after receipt of the redemption request, in accordance with
the requirements described below, by Shareholder Services and delivery of the
request by Shareholder Services to the Transfer Agent. To allow time for the
clearance of checks used for the purchase of any shares which are tendered
for redemption shortly after purchase, the remittance of the redemption
proceeds for such shares could be delayed for 15 days or more after the
purchase. Shareholders who anticipate a potential need for immediate access
to their investments should, therefore, purchase shares by wire. Except as
noted, redemption proceeds from the Fund are normally remitted within seven
days after receipt of the redemption request by the Fund and any necessary
documents in good order.
Methods of Redemption
Request By Mail
A shareholder may request redemption of shares, with proceeds to be mailed to
the shareholder or wired to a predesignated bank account (see "Proceeds By
Wire" below) by sending to State Street Research Shareholder Services, P.O.
Box 8408, Boston, Massachusetts 02266-8408: (1) a written request for
redemption signed by the registered owner(s) of the shares, exactly as the
account is registered; (2) an endorsed stock power in good order with respect
to the shares or, if issued, the share certificates for the shares endorsed
for transfer or accompanied by an endorsed stock power; (3) any required
signature guarantees (see "Redemption of Shares--Signature Guarantees"
below); and (4) any additional documents which may be required for redemption
in the case of corporations, trustees, etc., such as certified copies of
corporate resolutions, governing instruments, powers of attorney, and the
like. The Transfer Agent will not process requests for redemption until it
has received all necessary documents in good order. A shareholder will be
notified promptly if a redemption request cannot be accepted. Shareholders
having any questions about the requirements for redemption should call
Shareholder Services toll-free at 1-800-562-0032.
Request By Telephone
Shareholders may request redemption by telephone with proceeds to be
transmitted by check or by wire (see "Proceeds By Wire" below). A shareholder
can request a redemption for $50,000 or less to be transmitted by check. Such
check for the proceeds will be made payable to the shareholder of record and
will be mailed to the address of record. There is no fee for this service. It
is not available for shares held in certificate form or if the address of
record has been changed within 30 days of the redemption request. The Fund
may revoke or suspend the telephone redemption privilege at any time and
without notice.
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See "Shareholder Services--Telephone Services" for a discussion of the
conditions and risks associated with Telephone Privileges.
Proceeds By Wire
Upon a shareholder's written request or by telephone if the shareholder has
Telephone Privileges (see "Shareholder Services--Telephone Services" herein),
the Trust's custodian will wire redemption proceeds to the shareholder's
predesignated bank account. To make the request, the shareholder should call
1-800-521-6548 prior to 4 P.M. Boston time. A $7.50 charge against the
shareholder's account will be imposed for each wire redemption. This charge
is subject to change without notice. The shareholder's bank may also impose a
charge for receiving wires of redemption proceeds. The minimum redemption by
wire is $5,000.
Request to Dealer to Repurchase
For the convenience of shareholders, the Fund has authorized the Distributor
as its agent to accept orders from dealers by wire or telephone for the
repurchase of shares by the Distributor from the dealer. The Fund may revoke
or suspend this authorization at any time. The repurchase price is the net
asset value for the applicable shares next determined following the time at
which the shares are offered for repurchase by the dealer to the Distributor.
The dealer is responsible for promptly transmitting a shareholder's order to
the Distributor. Payment of the repurchase proceeds is made to the dealer who
placed the order promptly upon delivery of certificates for shares in proper
form for transfer or, for Open Accounts, upon the receipt of a stock power
with signatures guaranteed as described below, and, if required, any
supporting documents. Neither the Fund nor the Distributor imposes any charge
upon such a repurchase. However, a dealer may impose a charge as agent for a
shareholder in the repurchase of his or her shares.
The Fund has reserved the right to change, modify or terminate the services
described above at any time.
Additional Information
Because of the relatively high cost of maintaining small shareholder
accounts, the Fund reserves the right to involuntarily redeem at its option
any shareholder account which remains below $1,500 for a period of 60 days
after notice is mailed to the applicable shareholder, or to impose a
maintenance fee on such account after 60 days notice. Such involuntary
redemptions will be subject to applicable sales charges, if any. The Fund may
increase such minimum account value above such amount in the future after
notice to affected shareholders. Involuntarily redeemed shares will be priced
at the net asset value on the date fixed for redemption by the Fund, and the
proceeds of the redemption will be mailed promptly to the affected
shareholder at the address of record. Currently, the maintenance fee is $18
annually, which is paid to the Transfer Agent. The fee does not apply to
certain retirement accounts or if the shareholder has more than an aggregate
$50,000 invested in the Fund and other Eligible Funds combined. Imposition of
a maintenance fee on a small account could, over time, exhaust the assets of
such account.
To cover the cost of additional compliance administration, a $20 fee will be
charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Fund may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for more than seven days, except that (a) it
may elect to suspend the redemption of shares or postpone the date of payment
of redemption proceeds: (1) during any period that the NYSE is closed (other
than customary weekend and holiday closings) or trading on the NYSE is
restricted; (2) during any period in which an emergency exists as a result of
which disposal of portfolio securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the Fund's net asset values;
or (3) during such other periods as the Securities and Exchange Commission
may by order permit for the protection of investors; and (b) the payment of
redemption proceeds may be postponed as otherwise provided under "Redemption
of Shares" herein.
Signature Guarantees
To protect shareholder accounts, the Transfer Agent, the Fund, the Investment
Manager and the Distributor from possible fraud, signature guarantees are
required for
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certain redemptions. Signature guarantees help the Transfer Agent determine
that the person who has authorized a redemption from the account is, in fact,
the shareholder. Signature guarantees are required for, among other things:
(1) written requests for redemptions for more than $50,000; (2) written
requests for redemptions for any amount if the proceeds are transmitted to
other than the current address of record (unchanged in the past 30 days); (3)
written requests for redemptions for any amount submitted by corporations and
certain fiduciaries and other intermediaries; and (4) requests to transfer
the registration of shares to another owner. Signatures must be guaranteed by
a bank, a member firm of a national stock exchange, or other eligible
guarantor institution. The Transfer Agent will not accept guarantees (or
notarizations) from notaries public. The above requirements may be waived by
the Fund in certain instances. Please contact Shareholder Services at
1-800-562-0032 for specific requirements relating to your account.
Shareholder Services
The Open Account System
Under the Open Account System full and fractional shares of the Fund owned by
shareholders are credited to their accounts by the Transfer Agent, State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110. Certificates representing Class B or Class D shares will not be
issued, while certificates representing Class A or Class C shares will only
be issued if specifically requested in writing and, in any case, will only be
issued for full shares, with any fractional shares to be carried on the
shareholder's account. Shareholders will receive periodic statements of
transactions in their account.
The Fund's Open Account System provides the following options:
1. Additional purchases of shares of the Fund may be made through dealers, by
wire or by mailing a check payable to the Fund, to Shareholder Services
under the terms set forth above under "Purchase of Shares."
2. The following methods of receiving dividends from investment income and
distributions from capital gains are available:
(a) All income dividends and capital gains distributions reinvested in
additional shares of the Fund.
(b) All income dividends in cash; all capital gains distributions
reinvested in additional shares of the Fund.
(c) All income dividends and capital gains distributions in cash.
(d) All income dividends and capital gains distributions invested in any
one available Eligible Fund designated by the shareholder as described
below. See "Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, the account will automatically be coded for reinvestment of all
dividends and distributions in additional shares of the same class of the
Fund. Selections may be changed at any time by telephone or written notice to
Shareholder Services. Dividends and distributions are reinvested at net asset
value without a sales charge.
Exchange Privilege
Shareholders of the Fund may exchange their shares for available shares with
corresponding characteristics of any of the other Eligible Funds at any time
on the basis of the relative net asset values of the respective shares to be
exchanged, subject to compliance with applicable securities laws.
Shareholders of any other Eligible Fund may similarly exchange their shares
for Fund shares with corresponding characteristics. Prior to making an
exchange, shareholders should obtain the Prospectus of the Eligible Fund into
which they are exchanging. Under the Direct Program, subject to certain
conditions, shareholders may make arrangements for regular exchanges from the
Fund into other Eligible Funds. To effect an exchange, Class A, Class B and
Class D shares may be redeemed without the
19
<PAGE>
payment of any contingent deferred sales charge that might otherwise be due
upon an ordinary redemption of such shares. The State Street Research Money
Market Fund issues Class E shares which are sold without any sales charge.
Exchanges of State Street Research Money Market Fund Class E shares into
Class A shares of the Fund or any other Eligible Fund are subject to the
initial sales charge or contingent deferred sales charge applicable to an
initial investment in such Class A shares, unless a prior Class A sales
charge has been paid directly or indirectly with respect to the shares
redeemed. For purposes of computing the contingent deferred sales charge that
may be payable upon disposition of any acquired Class A, Class B and Class D
shares, the holding period of the redeemed shares is "tacked" to the holding
period of the acquired shares. The period any Class E shares are held is not
tacked to the holding period of any acquired shares. No exchange transaction
fee is currently imposed on any exchange.
Shares of the Fund may also be acquired or redeemed in exchange for shares of
the Summit Cash Reserves Fund ("Summit Cash Reserves") by customers of
Merrill Lynch, Pierce, Fenner & Smith Incorporated (subject to completion of
steps necessary to implement the program). The Fund and Summit Cash Reserves
are related mutual funds for purposes of investment and investor services.
Upon the acquisition of shares of Summit Cash Reserves by exchange for
redeemed shares of the Fund, (a) no sales charge is imposed by Summit Cash
Reserves, (b) no contingent deferred sales charge is imposed by the Fund on
the Fund shares redeemed, and (c) any applicable holding period of the Fund
shares redeemed is "tolled," that is, the holding period clock stops running
pending further transactions. Upon the acquisition of shares of the Fund by
exchange for redeemed shares of Summit Cash Reserves, (a) the acquisition of
Class A shares shall be subject to the initial sales charges or contingent
deferred sales charges applicable to an initial investment in such Class A
shares, unless a prior Class A sales charge has been paid directly or
indirectly with respect to the Summit Cash Reserve shares redeemed, and (b)
the acquisition of Class B or Class D shares of the Fund shall restart any
holding period previously tolled, or shall be subject to the contingent
deferred sales charge applicable to an initial investment in such shares.
For the convenience of its shareholders who have Telephone Privileges, the
Fund permits exchanges by telephone request from either the shareholder or
his or her dealer. Shares may be exchanged by telephone provided that the
registration of the two accounts is the same. The toll-free number for
exchanges is 1-800-521-6548. See "Telephone Services" herein for a discussion
of conditions and risks associated with Telephone Privileges.
The exchange privilege may be exercised only in those states where shares of
the relevant other Eligible Fund may legally be sold. For tax purposes, each
exchange actually represents the sale of shares of one fund and the purchase
of shares of another. Accordingly, exchanges may produce a capital gain or
loss for tax purposes. The exchange privilege may be terminated or suspended
or its terms changed at any time, subject, if required under applicable
regulations, to 60 days' prior notice. New accounts established for
investments upon exchange from an existing account in another fund will have
the same Telephone Privileges as the existing account, unless Shareholder
Services is instructed otherwise. Related administrative policies and
procedures may also be adopted with regard to a series of exchanges, street
name accounts, sponsored arrangements and other matters.
The exchange privilege is not designed for use in connection with short-term
trading or market timing strategies. To protect the interests of
shareholders, the Fund reserves the right to temporarily or permanently
terminate the exchange privilege for any person who makes more than six
exchanges out of or into the Fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, may be aggregated for purposes of the six exchange
limit. Notwithstanding the six exchange limit, the Fund reserves the right to
refuse exchanges by any person or group if, in the Investment Manager's
judgment, the Fund would be unable to invest effectively in
20
<PAGE>
accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. Exchanges may be restricted or refused if
the Fund receives or anticipates simultaneous orders affecting significant
portions of the Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund. The
Fund may impose these restrictions at any time. The exchange limit may be
modified for accounts in certain institutional retirement plans because of
plan exchange limits, Department of Labor regulations or administrative and
other considerations. Subject to the foregoing, if an exchange request in
good order is received by Shareholder Services and delivered by Shareholder
Services to the Transfer Agent by 12 noon Boston time on any business day,
the exchange usually will occur that day. For further information regarding
the exchange privilege, shareholders should contact Shareholder Services.
Reinvestment Privilege
A shareholder of the Fund who has redeemed shares or had shares repurchased
at his or her request may reinvest all or any portion of the proceeds (plus
that amount necessary to acquire a fractional share to round off his or her
reinvestment to full shares) in shares, of the same class as the shares
redeemed, of the Fund or any other Eligible Fund at net asset value and
without subjecting the reinvestment to an initial sales charge, provided such
reinvestment is made within 120 calendar days after a redemption or
repurchase. Upon such reinvestment, the shareholder will be credited with any
contingent deferred sales charge previously charged with respect to the
amount reinvested. The redemption of shares is, for federal income tax
purposes, a sale on which the shareholder may realize a gain or loss. If a
redemption at a loss is followed by a reinvestment within 30 days, the
transaction may be a "wash sale" resulting in a denial of the loss for
federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject to
any applicable minimum account standards imposed by the fund into which the
reinvestment is made. Shares are sold to a reinvesting shareholder at the net
asset value thereof next determined following timely receipt by Shareholder
Services of such shareholder's written purchase request and delivery of the
request by Shareholder Services to the Transfer Agent. A shareholder may
exercise this reinvestment privilege only once per 12-month period with
respect to his or her shares of the Fund. No charge is imposed by the Fund
for such reinvestments; however, dealers may charge fees in connection with
the reinvestment privilege. The reinvestment privilege may be exercised with
respect to an Eligible Fund only in those states where shares of the relevant
other Eligible Fund may legally be sold.
Investment Plans
The Investamatic Check Program is available to Class A, Class B and Class D
shareholders. Under this Program, shareholders may make regular investments
by authorizing withdrawals from their bank accounts each month or quarter on
the Application available from Shareholder Services.
The Distributor also offers IRAs and tax-sheltered retirement plans,
including prototype and other employee benefit plans for employees, sole
proprietors, partnerships and corporations. Details of these investment plans
and their availability may be obtained from securities dealers or from
Shareholder Services.
Systematic Withdrawal Plan
A shareholder who owns noncertificated Class A or Class C shares with a value
of $5,000 or more, or Class B or Class D shares with a value of $10,000 or
more, may elect by participating in the Fund's Systematic Withdrawal Plan, to
have periodic checks issued for specified amounts. These amounts may not be
less than certain minimums, depending on the class of shares held. The Plan
provides that all income dividends and capital gains distributions of the
Fund shall be credited to participating shareholders in additional shares of
the Fund. Thus, the withdrawal amounts paid can only be realized by redeeming
shares of the Fund under the Plan. To the extent such amounts paid exceed
dividends and distributions from the Fund, a shareholder's investment will
decrease and may eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales charges,
no such charges will be
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<PAGE>
imposed on withdrawals of up to 8% annually of either (a) the value, at the
time the Plan is initiated, of the shares then in the account or (b) the
value, at the time of a withdrawal, of the same number of shares as in the
account when the Plan was initiated, whichever is higher.
Expenses of the Plan are borne by the Fund. A participating shareholder may
withdraw from the Plan and the Fund may terminate the Plan at any time on
written notice. Purchase of additional shares while a shareholder is
receiving payments under a Plan is ordinarily disadvantageous because of
duplicative sales charges. For this reason, a shareholder may not participate
in the Investamatic Check Program and the Systematic Withdrawal Plan at the
same time.
Dividend Allocation Plan
The Dividend Allocation Plan allows shareholders to elect to have all of
their dividends and any other distributions from the Fund or any Eligible
Fund automatically invested at net asset value in one other such Eligible
Fund designated by the shareholder, provided the account into which the
investment is made is initially funded with the requisite minimum amount. The
number of shares purchased will be determined as of the dividend payment
date. The Dividend Allocation Plan is subject to state securities law
requirements, to suspension at any time, and to such policies, limitations
and restrictions, as, for instance, may be applicable to street name or
master accounts, that may be adopted from time to time.
Automatic Bank Connection
A shareholder may elect, by participating in the Fund's Automatic Bank
Connection ("ABC"), to have dividends and other distributions, including
Systematic Withdrawal Plan payments, automatically deposited in the
shareholder's bank account by electronic funds transfer. Some contingent
deferred sales charges may apply. See "Systematic Withdrawal Plan" herein.
Reports
Reports for the Fund will be sent to shareholders of record at least
semiannually. These reports will include a list of the securities owned by
the Fund as well as the Fund's financial statements.
Telephone Services
The following telephone privileges ("Telephone Privileges") can be used:
(1) the privilege allowing the shareholder to make telephone redemptions for
amounts up to $50,000 to be mailed to the shareholder's address of record is
available automatically;
(2) the privilege allowing the shareholder or his or her dealer to make
telephone exchanges is available automatically;
(3) the privilege allowing the shareholder to make telephone redemptions for
amounts over $5,000, to be remitted by wire to the shareholder's
predesignated bank account, is available by election on the Application
accompanying this Prospectus. A current shareholder who did not previously
request such telephone wire privilege on his or her original Application may
request the privilege by completing a Telephone Redemption-by-Wire Form which
may be obtained by calling 1-800-562-0032. The Telephone Redemption-by-Wire
Form requires a signature guarantee; and
(4) the privilege allowing the shareholder to make telephone purchases or
redemptions transmitted via the Automated Clearning House System into or from
the shareholder's predesignated bank account, is available upon completion of
the requisite initial documentation. For details and forms, call
1-800-521-6548. The documentation requires a signature guarantee.
A shareholder may decline the automatic Telephone Privileges set forth in (1)
and (2) above by so indicating on the Application accompanying this
Prospectus.
A shareholder may discontinue any Telephone Privilege at any time by advising
Shareholder Services that the shareholder wishes to discontinue the use of
such privileges in the future.
Unless such Telephone Privileges are declined, a shareholder is deemed to
authorize Shareholder Services
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<PAGE>
and the Transfer Agent to: (1) act upon the telephone instructions of any
person purporting to be the shareholder to redeem, or purporting to be the
shareholder or the shareholder's dealer to exchange, shares from any account;
and (2) honor any written instructions for a change of address regardless of
whether such request is accompanied by a signature guarantee. All telephone
calls will be recorded. None of the Fund, the other Eligible Funds, the
Transfer Agent, the Investment Manager or the Distributor will be liable for
any loss, expense or cost arising out of any request, including any
fraudulent or unauthorized requests. Shareholders assume the risk to the full
extent of their accounts that telephone requests may be unauthorized.
Reasonable procedures will be followed to confirm that instructions
communicated by telephone are genuine. The shareholder will not be liable for
any losses arising from unauthorized or fraudulent instructions if such
procedures are not followed.
Shareholders may redeem or exchange shares by calling toll-free
1-800-521-6548. Although it is unlikely, during periods of extraordinary
market conditions, a shareholder may have difficulty in reaching Shareholder
Services at such telephone number. In that event, the shareholder should
contact Shareholder Services at 1-800-562-0032, 1-617-357-7805 or otherwise
at its main office at One Financial Center, Boston, Massachusetts 02111-2690.
Shareholder Account Inquiries:
Please call 1-800-562-0032
Call this number for assistance in answering general questions on your
account, including account balance, available shareholder services, statement
information and performance of the Fund. Account inquiries may also be made
in writing to State Street Research Shareholder Services, P.O. Box 8408,
Boston, Massachusetts 02266-8408. A fee of up to $10 will be charged against
an account for providing additional account transcripts or photocopies of
paid redemption checks or for researching records in response to special
requests.
Shareholder Telephone Transactions:
Please call 1-800-521-6548
Call this number for assistance in purchasing shares by wire and for
telephone redemptions or telephone exchange transactions. Shareholder
Services will require some form of personal identification prior to acting
upon instructions received by telephone. Written confirmation of each
transaction will be provided.
The Fund and its Shares
The Fund, originally organized as a Massachusetts corporation in 1960, is a
series of State Street Research Growth Trust, a Massachusetts business trust,
formed in 1989. The Trustees have authorized shares of the Fund to be issued
in four classes: Class A, Class B, Class C and Class D shares. The Trust is
registered with the Securities and Exchange Commission under the 1940 Act as
an open-end management investment company. The fiscal year end of the Fund is
December 31.
Except for those differences between the classes of shares described below
and elsewhere in the Prospectus, each share of the Fund has equal dividend,
redemption and liquidation rights with other shares of the Fund and when
issued is fully paid and nonassessable. In the future, certain classes may be
redesignated, for administrative purposes only, to conform to standard class
designations and common usage of terms which may develop in the mutual fund
industry. For example, Class C shares may be redesignated as Class Y shares
and Class D shares may be redesignated as Class C shares. Any redesignation
would not affect any substantive rights respecting the shares.
Each share of each class of shares represents an identical legal interest in
the same portfolio of investments of the Fund, has the same rights and is
identical in all respects, except that Class B and Class D shares bear the
expenses of the deferred sales arrangement and any expenses (including the
higher service and distribution fees) resulting from such sales arrangement,
and certain other incremental expenses
23
<PAGE>
related to a class. Each class will have exclusive voting rights with respect
to provisions of the Rule 12b-1 distribution plan pursuant to which the
service and distribution fees, if any, are paid. Although the legal rights of
holders of each class of shares are identical, it is likely that the
different expenses borne by each class will result in different net asset
values and dividends. The different classes of shares of the Fund also have
different exchange privileges.
The rights of holders of shares may be modified by the Trustees at any time,
so long as such modifications do not have a material, adverse effect on the
rights of any shareholder. On any matter submitted to the shareholders, the
holder of each Fund share is entitled to one vote per share (with
proportionate voting for fractional shares) regardless of the relative net
asset value thereof.
Under the Master Trust Agreement of the Trust, no annual or regular meeting
of shareholders is required. Thus, there will ordinarily be no shareholder
meetings unless required by the 1940 Act. Except as otherwise provided under
said Act, the Board of Trustees will be a self-perpetuating body until fewer
than two thirds of the Trustees serving as such are Trustees who were elected
by shareholders of the Trust. In the event less than a majority of the
Trustees serving as such were elected by shareholders of the Trust, a meeting
of shareholders will be called to elect Trustees. Under the Master Trust
Agreement, any Trustee may be removed by vote of two thirds of the
outstanding Trust shares; holders of 10% or more of the outstanding Trust
shares can require that the Trustees call a meeting of shareholders for
purposes of voting on the removal of one or more Trustees. In connection with
such meetings called by shareholders, shareholders will be assisted in
shareholder communications to the extent required by applicable law.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and provides for
indemnification for all losses and expenses of any shareholder of the Fund
held personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to meet its
obligations. The Investment Manager believes that, in view of the above, the
risk of personal liability to shareholders is remote.
Management of the Fund
Under the provisions of the Master Trust Agreement and the laws of
Massachusetts, primary responsibility for the management and supervision of
the Fund rests with the Trustees.
The Fund's investment manager is State Street Research & Management Company.
The Investment Manager is charged with the overall responsibility for
managing the investments and business affairs of the Fund, subject to the
authority of the Board of Trustees.
The Investment Manager was founded by Paul Cabot, Richard Saltonstall and
Richard Paine to serve as investment adviser to one of the nation's first
mutual funds, presently known as State Street Research Investment Trust,
which they had formed in 1924. Their investment management philosophy, which
continues to this day, emphasized comprehensive fundamental research and
analysis, including meetings with the management of companies under
consideration for investment. The Investment Manager's portfolio management
group has extensive investment industry experience managing equity and debt
securities. In managing debt securities, if any, for a portfolio, the
Investment Manager may consider yield curve positioning, sector rotation and
duration, among other factors.
The Investment Manager and the Distributor are indirect wholly-owned
subsidiaries of Metropolitan Life Insurance Company and both are located at
One Financial Center, Boston, Massachusetts 02111-2690.
Under its Advisory Agreement with the Fund, the Investment Manager receives a
monthly investment advisory fee equal to 0.475% (on an annual basis) of the
average daily value of the net assets of the Fund. The Fund bears all costs
of its operation other than
24
<PAGE>
those incurred by the Investment Manager under the Advisory Agreement. In
particular, the Fund pays investment advisory fees, and the compensation and
expenses of the Trustees who are not otherwise currently affiliated with the
Fund, the Investment Manager or any of its affiliates. Under the Advisory
Agreement, the Investment Manager provides the Fund with office space,
facilities and personnel. The Investment Manager compensates Trustees if such
persons are employees or affiliates of the Investment Manager or its
affiliates. The Investment Manager will reduce its management fee payable by
the Fund up to the amount of any expenses (excluding permissible items, such
as brokerage commissions, Rule 12b-1 payments, interest, taxes and litigation
expenses) paid or incurred in any year in excess of the most restrictive
expense limitation imposed by any state in which the Fund sells shares, if
any.
Frederick R. Kobrick has served as portfolio manager of the Fund since
February 1995. Mr. Kobrick's principal occupation currently is, and during
the past five years has been, Senior Vice President of State Street Research
& Management Company.
Subject to the policy of seeking best overall price and execution, sales of
shares of the Fund may be considered by the Investment Manager in the
selection of broker or dealer firms for the Fund's portfolio transactions.
The Investment Manager has a Code of Ethics governing personal securities
transactions of certain of its employees; see the Statement of Additional
Information.
Dividends and Distributions; Taxes
The Fund qualified and elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code for its most recent
fiscal year and intends to qualify as such in future fiscal years, although
it cannot give complete assurance it will do so. As long as it so qualifies
and satisfies certain distribution requirements, it will not be subject to
federal income taxes on its income (including capital gains, if any)
distributed to its shareholders. The Fund intends to distribute annually to
its shareholders substantially all of its net investment income and any
capital gain net income (capital gains net of capital losses).
The Fund declares dividends from net investment income semiannually and pays
such dividends, if any, two times a year. Distributions of capital gain net
income will generally be made after the end of the fiscal year or as
otherwise required for compliance with applicable tax regulations. Both
dividends from net investment income and distributions of capital gain net
income will be declared and paid to shareholders in additional shares of the
Fund at net asset value on the record date of that dividend or distribution,
except in the case of shareholders who elect a different available
distribution method. The Fund will provide its shareholders of record with
annual information on a timely basis concerning the federal tax status of
dividends and distributions during the preceding calendar year.
Dividends paid by the Fund from taxable net investment income and
distributions of net short-term capital gains, whether paid in cash or
reinvested in additional shares, will be taxable for federal income tax
purposes to shareholders as ordinary income, and a portion may be eligible
for the 70% dividends-received deduction for corporations. The percentage of
the Fund's dividends eligible for such tax treatment may be less than 100% to
the extent that less than 100% of the Fund's gross income consists of
qualifying dividends of domestic corporations. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses) which are designated as capital gains distributions, whether paid in
cash or reinvested in additional shares, will be taxable for federal income
tax purposes to shareholders as long-term capital gains, regardless of how
long shareholders have held their shares, and are not eligible for the
dividends-received deduction. If shares of the Fund which are sold at a loss
have been held six months or less, the loss will be considered as a long-term
capital loss to the extent of any capital gains distributions received.
25
<PAGE>
As of December 31, 1995, approximately 16% of the net asset value per share
of the Fund consisted of net unrealized appreciation on portfolio assets. In
the event that the Fund realizes some or all of such appreciation and
distributes any net gain to shareholders, such distribution will reduce the
net asset value of the shares held by, and will be taxable to, shareholders.
Dividends and other distributions and proceeds of redemptions of Fund shares
paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if the Transfer Agent is not provided with the
shareholder's correct taxpayer identification number and certification that
the shareholder is not subject to such backup withholding.
The foregoing discussion relates only to generally applicable federal income
tax provisions in effect as of the date of this Prospectus. Therefore,
prospective shareholders are urged to consult their own tax advisers
regarding tax matters, including state and local tax consequences.
Calculation of Performance Data
From time to time, in advertisements or in communications to shareholders or
prospective investors, the Fund may compare the performance of its Class A,
Class B, Class C and Class D shares to that of other mutual funds with
similar investment objectives, to certificates of deposit and/or to other
financial alternatives. The Fund may also compare the performance of such
classes to appropriate indices such as the Standard & Poor's 500 Stock Index
(the "S&P 500"), Consumer Price Index and Dow Jones Industrial Average and/or
to appropriate rankings and averages, such as the Lipper Growth Funds
average, compiled by Lipper Analytical Services, Inc., or to those compiled
by Morningstar, Inc., Money Magazine, Business Week, Forbes Magazine, the
Wall Street Journal and Investor's Daily.
Total return and yield are computed separately for each class of shares of
the Fund. The average annual total return ("standard total return") for
shares of the Fund is computed by determining the average annual compounded
rate of return for a designated period that, if applied to a hypothetical
$1,000 initial investment (less the maximum initial or contingent deferred
sales charge, if applicable), would produce the redeemable value of that
investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. Standard
total return may be accompanied by nonstandard total return information
computed in the same manner, but for differing periods and with or without
annualizing the total return or taking sales charges into account.
Yield, for each of the Fund's Class A, Class B, Class C and Class D shares,
is computed by dividing the net investment income, after recognition of all
recurring charges, per share of each class earned during the most recent
month or other specified 30-day period by the applicable maximum offering
price per share of each class on the last day of such period and annualizing
the result.
The standard total return and yield results take sales charges into account,
if applicable, but do not take into account recurring and nonrecurring
charges for optional services which only certain shareholders elect and which
involve nominal fees, such as the $7.50 fee for remittance of redemption
proceeds by wire. Where sales charges are not applicable and therefore not
taken into account in the calculation of standard total return and yield, the
result will be increased.
The Fund's distribution rate is calculated by dividing the distributions for
the latest 12 months by the current maximum offering price per share. The
distribution rate is not computed in the same manner as the above described
yield, and therefore can be significantly different from it. In its
supplemental sales literature, the Fund may quote its distribution rate
together with the above described standard total return and yield
information. The use of such distribution rates would be subject to an
appropriate explanation of how the components of the distribution rate differ
from the above described yield.
Since the time of an initial public offering in 1961, shares of the Fund have
not been offered to the general public and the Fund has not been subject to
the cash inflows and higher level of redemptions or expenses that could occur
during a period when
26
<PAGE>
shares are continuously offered to the public. In 1993, the Fund commenced a
continuous public offering.
Performance information may be useful in evaluating the Fund and for
providing a basis for comparison with other financial alternatives. Because
the performance of the Fund varies in response to fluctuations in economic
and market conditions, interest rates and Fund expenses, among other things,
no performance quotation should be considered a representation as to the
Fund's performance for any future period. In addition, the net asset value of
shares of the Fund will fluctuate with the result that shares of the Fund,
when redeemed, may be worth more or less than their original cost. Neither an
investment in the Fund nor the Fund's performance is insured or guaranteed;
such lack of insurance or guarantees should accordingly be given appropriate
consideration when comparing the Fund to financial alternatives which have
such features.
Shares of the Fund had no class designations until February 17, 1993, when
Class C designations were assigned, March 16, 1993, when Class A designations
were assigned and March 18, 1993 when Class B and Class D designations were
assigned, based on the pricing and Rule 12b-1 fees applicable to shares sold
thereafter. Performance data for a specified class includes periods prior to
the adoption of class designations. Performance data for periods prior to
such dates will not reflect additional Rule 12b-1 Distribution Plan fees, if
any, of up to 1% per year depending on the class of shares, which will
adversely affect performance results for periods after such dates.
Performance data or rankings for a given class of shares should be
interpreted carefully by investors who hold or may invest in a different
class of shares.
27
<PAGE>
[COVER]
[logo] STATE STREET RESEARCH
State Street Research
Growth Fund
May 1, 1996
P R O S P E C T U S
STATE STREET RESEARCH
GROWTH FUND
One Financial Center
Boston, MA 02111
INVESTMENT ADVISER
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
DISTRIBUTOR
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
SHAREHOLDER SERVICES
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266
800-562-0032
CUSTODIAN
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
LEGAL COUNSEL
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
GF-521D-596IBS CONTROL NUMBER: 3125-960424(0597)SSR-LD
<PAGE>
STATE STREET RESEARCH GROWTH FUND
a Series of
STATE STREET RESEARCH GROWTH TRUST
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
TABLE OF CONTENTS
Page
Additional Investment Policies and Restrictions................... 2
Additional Information Concerning Certain
Investment Techniques........................................... 6
Debt Instruments and Permitted
Cash Investments................................................ 15
Rating Categories of Debt Securities.............................. 19
Trustees and Officers............................................. 21
Investment Advisory Services...................................... 25
Purchase and Redemption of Shares................................. 26
Net Asset Value................................................... 28
Portfolio Transactions............................................ 30
Certain Tax Matters............................................... 33
Distribution of Shares of the Fund................................ 36
Calculation of Performance Data................................... 40
Custodian......................................................... 44
Independent Accountants........................................... 44
Financial Statements.............................................. 44
The following Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus of State Street Research
Growth Fund (the "Fund") dated May 1, 1996 which may be obtained without charge
from the offices of State Street Research Growth Trust (the "Trust") or State
Street Research Investment Services, Inc. (the "Distributor"), One Financial
Center, Boston, Massachusetts 02111-2690.
Control Number: 1285H-950510(0696)SSR-LD GF-879D-596
<PAGE>
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS
As set forth in part under "The Fund's Investments" and "Limiting
Investment Risk" in the Fund's Prospectus, the Fund has adopted certain
investment restrictions.
All of the Fund's fundamental investment restrictions are set forth below.
These fundamental investment restrictions may not be changed except by the
affirmative vote of a majority of the Fund's outstanding voting securities as
defined in the Investment Company Act of 1940, as amended (the "1940 Act").
(Under the 1940 Act, a "vote of the majority of the outstanding voting
securities" means the vote, at a meeting of security holders duly called, (i) of
67% or more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy or (ii) of more than 50% of the outstanding voting securities, whichever
is less.) Under these restrictions, it is the Fund's policy:
(1) not to purchase for its portfolio the securities of any issuer if
such purchase at the time thereof would cause less than seventy five
percent (75%) of the total assets of the Fund to be invested in cash
and cash items including receivables), government securities,
securities of other investment companies, and other securities
limited in respect of any one issuer to an amount not greater in
value than five percent (5%) of said total assets of the Fund;
(2) not to purchase for its portfolio the securities of any one issuer
if such purchase at the time thereof would cause more than 10% of
any class of securities of such issuer (as disclosed by the last
available financial statement of such issuer) to be held by the
Fund;
(3) not to issue senior securities except that this restriction shall
not apply to the establishment of multiple classes of shares of the
Fund or other issuance of any securities or related actions that may
be construed to involve senior securities otherwise permitted by law
and regulatory authorities;
(4) not to underwrite or participate in the marketing of securities of
other issuers, except the Fund may, acting alone or in syndicates or
groups, purchase or otherwise acquire securities of other issuers
for investment, either from the issuers or from persons in a control
relationship with the issuers or from underwriters of such
securities [as a matter of interpretation, which is not part of the
fundamental policy, this restriction does not apply to the extent
that, in connection with the disposition of the Fund's securities,
the Fund may be deemed to be an underwriter under certain federal
securities laws];
(5) not to invest in or hold for investment any real property [as a
matter of interpretation, which is not part of the fundamental
policy, this restriction does not apply to the extent the Fund
purchases or sells other interests in real estate including
securities which are secured by real estate, or securities of
companies which own or invest or deal in real estate];
(6) not to invest in commodities or commodity contracts in excess of 10%
of the Fund's total assets, except that investments in foreign
currencies, forward contracts, futures contracts and options on
futures contracts on securities, securities indices and foreign
currencies shall not be deemed an investment in commodities or
commodities contracts;
(7) not to lend money, except that the Fund may lend portfolio
securities and purchase bonds, debentures, notes and similar
obligations (and enter into repurchase agreements with respect
thereto);
(8) not to make any investment which would cause more than 25% of the
Fund's total assets, taken at market value, to be invested in any
one industry [as a matter of interpretation, which is not part of
the fundamental policy, under this restriction, (a) utilities will
be divided according to their services so that, for example, gas,
gas transmission, electric and telephone companies will each be
deemed in a separate industry, (b) oil and oil related companies
will be divided by type so that, for example, oil production
companies, oil service companies and refining and marketing
companies will each be deemed in a separate industry, (c) finance
companies will be classified according to the industries of their
parent companies, and (d) securities issued or guaranteed as to
principal or interest by the U.S. Government or its agencies or
instrumentalities (including repurchase agreements involving such
U.S. Government securities to the extent excludable under relevant
regulatory interpretations) shall be excluded];
(9) not to borrow money, except that the Board of Trustees may authorize
the borrowing of money on an unsecured basis for the general
purposes of the Fund and may authorize the issue therefor of notes
or debentures, but no money shall be borrowed for the Fund except
pursuant to the authority of the Board of Trustees, and no
borrowings for the Fund shall be authorized to an aggregate amount
greater than 10% of the net assets of the Fund [as a matter of
interpretation, which is not part of the fundamental policy, this
restriction is deemed to include reverse repurchase agreements, and
as a current nonfundamental policy, the Fund will not borrow money
except from banks for extraordinary and emergency purposes, such as
to permit redemption requests to be honored, and except the use of
funds in the clearance of portfolio transactions may be regarded as
borrowing];
(10) not to purchase securities on margin or make a
short sale of any securities;
(11) not to purchase for its portfolio securities of companies which have
a record of less than three (3) years' continuous operation if such
purchase at the time thereof would cause more than 5% of the total
assets of the Fund to be invested in the securities of such company
or companies; such period of three years may include the operation
of any predecessor company or companies, partnership or individual
enterprise, if the company whose securities are taken as an
investment for funds of the Fund, has come into existence as a
result of a merger, consolidation, reorganization, or the purchase
of substantially all the assets of such predecessor company or
companies, partnership or individual enterprise; and
(12) not to purchase for, or retain in, its portfolio any securities
issued by an issuer any of whose officers, directors or security
holders is an Officer, Trustee or Director of the Trust or of the
investment adviser of the Fund if, to the knowledge of the Trust,
one or more of the Officers, Trustees or Directors of the Trust or
of its investment adviser own beneficially more than one-half of one
percent (0.5%) of the shares or securities or both (taken at market
value) of such issuer and all such Officers and Directors owning
more than one-half of one percent (0.5%) of such shares or
securities together own beneficially more than five percent (5%) of
such shares or securities or both (taken at market value); and if
the Secretary of the Trust shall have requested all Officers,
Trustees and Directors of the Trust and of its investment adviser to
notify the Trust at least quarter annually as to their ownership
interest in the securities held by the Fund, then the Fund shall not
be charged with knowledge of any such ownership interest in the
absence of receiving such notice.
The following nonfundamental investment restrictions may be changed
without shareholder approval. In accordance with these restrictions, it is the
Fund's policy:
(1) not to purchase any security or enter into a repurchase agreement if
as a result more than 15% of its total assets would be invested in
(a) securities that are illiquid because of the absence of a readily
available market or because such securities are restricted
securities (i.e., subject to legal or contractual restrictions on
resale), provided that such restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A or
Regulation S under the Securities Act of 1933, shall be limited to
5% of total assets, and (b) repurchase agreements not entitling the
holder to payment of principal and interest within seven days
[subject to such higher percentage limits or other modifications as
may be allowed or required under applicable regulatory policies in
the future]; see undertaking under the caption "Additional
Information Concerning Certain Investment Techniques -- Rule 144A
Securities";
(2) not to engage in transactions in options except in connection with
options on securities, securities indices and foreign currencies,
and options on futures contracts on securities, securities indices
and foreign currencies;
(3) not to hypothecate, mortgage or pledge any of its assets except as
may be necessary in connection with permitted borrowings (for the
purpose of this restriction, futures, options and forward
commitments, and related escrow or custodian receipts or letters,
margin or safekeeping accounts, or similar arrangements used in the
industry in connection with the trading of such investments, are not
deemed to involve a hypothecation, mortgage or pledge of assets);
(4) not to purchase a security issued by another investment company,
except to the extent permitted under the 1940 Act or except by
purchases in the open market involving only customary brokers'
commissions, or securities acquired as dividends or distributions or
in connection with a merger, consolidation or similar transaction or
other exchange;
(5) not to invest directly as a joint venturer or general partner in
oil, gas or other mineral exploration or development joint ventures
or general partnerships (provided that the Fund may invest in
securities issued by companies which invest in or sponsor such
programs and in securities indexed to the price of oil, gas or other
minerals);
(6) not to invest in warrants more than 5% of the value, at the lower of
cost or market, of its net assets, provided that warrants not listed
on the New York or American Stock Exchange shall be further limited
to 2% of the Fund's net assets (warrants initially attached to
securities and acquired by the Fund upon original issuance thereof
shall be deemed to be without value); and
(7) not to invest in companies for the purpose of exercising control
over their management, although the Fund may from time to time
present its views on various matters to the management of issuers in
which it holds investments.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES
Among other investments described below, the Fund may buy and sell foreign
and domestic options, futures contracts, and options on futures contracts with
respect to securities, securities indices, and currencies, and may enter into
closing transactions with respect to each of the foregoing, and invest in other
derivatives, under circumstances in which such instruments and techniques are
expected by State Street Research & Management Company (the "Investment
Manager") to aid in achieving the investment objective of the Fund. The Fund on
occasion may also purchase instruments with characteristics of both futures and
securities (e.g., debt instruments with interest and principal payments
determined by reference to the value of a commodity or a currency at a future
time) and which, therefore, possess the risks of both futures and securities
investments.
Futures Contracts
Futures contracts are publicly traded contracts to buy or sell underlying
assets, such as certain securities, currencies, or an index of securities, at a
future time at a specified price. A contract to buy establishes a "long"
position while a contract to sell establishes a "short" position.
The purchase of a futures contract on securities or an index of securities
normally enables a buyer to participate in the market movement of the underlying
asset or index after paying a transaction charge and posting margin in an amount
equal to a small percentage of the value of the underlying asset or index. The
Fund will initially be required to deposit with the Trust's custodian or the
broker effecting the futures transaction an amount of "initial margin" in cash
or U.S. Treasury obligations.
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin is
like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on a
daily basis as the price of the underlying assets fluctuates. This process is
known as "marking to market." For example, when the Fund has taken a long
position in a futures contract and the value of the underlying asset has risen,
that position will have increased in value and the Fund will receive from the
broker a maintenance margin payment equal to the increase in value of the
underlying asset. Conversely, when the Fund has taken a long position in a
futures contract and the value of the underlying instrument has declined, the
position would be less valuable, and the Fund would be required to make a
maintenance margin payment to the broker.
At any time prior to expiration of the futures contract, the Fund may
elect to close the position by taking an opposite position which will terminate
the Fund's position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain. While futures
contracts with respect to securities do provide for the delivery and acceptance
of such securities, such delivery and acceptance are seldom made.
Futures contracts will be executed primarily (a) to establish a short
position, and thus protect the Fund from experiencing the full impact of an
expected decline in market value of portfolio holdings without requiring the
sale of holdings, or (b) to establish a long position, and thus to participate
in an expected rise in market value of securities or currencies which the Fund
intends to purchase. Subject to the limitations described below, the Fund may
also enter into futures contracts for purposes of enhancing return. In
transactions establishing a long position in a futures contract, money market
instruments equal to the face value of the futures contract will be identified
by the Fund to the Trust's custodian for maintenance in a separate account to
insure that the use of such futures contracts is unleveraged. Similarly, a
representative portfolio of securities having a value equal to the aggregate
face value of the futures contract will be identified with respect to each short
position. The Fund will employ any other appropriate method of cover which is
consistent with applicable regulatory and exchange requirements.
Options on Securities
The Fund may use options on securities to implement its investment
strategy. A call option on a security, for example, gives the purchaser of the
option the right to buy, and the writer the obligation to sell, the underlying
asset at the exercise price during the option period. Conversely, a put option
on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period.
Purchased options have defined risk, i.e., the premium paid for the
option, no matter how adversely the price of the underlying asset moves, while
affording an opportunity for gain corresponding to the increase or decrease in
the value of the optioned asset.
Written options have varying degrees of risk. An uncovered written call
option theoretically carries unlimited risk, as the market price of the
underlying asset could rise far above the exercise price before its expiration.
This risk is tempered when the call option is covered, i.e., when the option
writer owns the underlying asset. In this case, the writer runs the risk of the
lost opportunity to participate in the appreciation in value of the asset rather
than the risk of an out-of-pocket loss. A written put option has defined risk,
i.e., the difference between the agreed-upon price that the Fund must pay to the
buyer upon exercise of the put and the value, which could be zero, of the asset
at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
his obligation to deliver the underlying asset in the case of a call option, or
to pay for the underlying asset in the case of a put option, a covered writer is
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the applicable clearing corporation and exchanges.
Options on Securities Indices
The Fund may engage in transactions in call and put options on securities
indices. For example, the Fund may purchase put options on indices of securities
in anticipation of or during a market decline to attempt to offset the decrease
in market value of its securities that might otherwise result.
Put options on indices of securities are similar to put options on the
securities themselves except that the delivery requirements are different.
Instead of giving the right to make delivery of a security at a specified price,
a put option on an index of securities gives the holder the right to receive an
amount of cash upon exercise of the option if the value of the underlying index
has fallen below the exercise price. The amount of cash received will be equal
to the difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. As with options
on securities, the Fund may offset its position in index options prior to
expiration by entering into a closing transaction on an exchange or it may let
the option expire unexercised.
A securities index assigns relative values to the securities included in
the index and the index options are based on a broad market index. Although
there are at present few available options on indices of fixed income
securities, other than tax-exempt securities, or futures and related options
based on such indices, such instruments may become available in the future. In
connection with the use of such options, the Fund may cover its position by
identifying a representative portfolio of securities having a value equal to the
aggregate face value of the option position taken. However, the Fund may employ
any appropriate method to cover its positions that is consistent with applicable
regulatory and exchange requirements.
Options on Futures Contracts
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option.
Options Strategy
A basic option strategy for protecting the Fund against a decline in
securities prices could involve (a) the purchase of a put -- thus "locking in"
the selling price of the underlying securities or securities indices -- or (b)
the writing of a call on securities or securities indices held by the Fund --
thereby generating income (the premium paid by the buyer) by giving the holder
of such call the option to buy the underlying asset at a fixed price. The
premium will offset, in whole or in part, a decline in portfolio value; however,
if prices of the relevant securities or securities indices rose instead of
falling, the call might be exercised, thereby resulting in a potential loss of
appreciation in the underlying securities or securities indices.
A basic option strategy when a rise in securities prices is anticipated is
the purchase of a call -- thus "locking in" the purchase price of the underlying
security or other asset. In transactions involving the purchase of call options
by the Fund, money market instruments equal to the aggregate exercise price of
the options will be identified by the Fund to the Trust's custodian to insure
that the use of such investments is unleveraged.
The Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and concurrently write a call option
against that security. If the call option is exercised in such a transaction,
the Fund's maximum gain will be the premium received by it for writing the
option, adjusted upward or downward by the difference between the Fund's
purchase price of the security and the exercise price of the option. If the
option is not exercised and the price of the underlying security declines, the
amount of such decline will be offset in part, or entirely, by the premium
received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
below the exercise price, the Fund's return will be the premium received from
writing the put option minus the amount by which the market price of the
security is below the exercise price.
Limitations and Risks of Options and Futures Activity
The Fund will engage in transactions in futures contracts or options only
as a hedge against changes resulting from market conditions which produce
changes in the values of its securities or the securities which it intends to
purchase (e.g., to replace portfolio securities which will mature in the near
future) or, subject to the limitations described below, to enhance return. The
Fund will not purchase any futures contract or purchase any call option if,
immediately thereafter, more than one third of the Fund's net assets would be
represented by long futures contracts or call options. The Fund will not write a
covered call or put option if, immediately thereafter, the aggregate value of
the assets (securities in the case of written calls and cash or cash equivalents
in the case of written puts) underlying all such options, determined as of the
dates such options were written, would exceed 25% of the Fund's net assets. In
addition, the Fund may not establish a position in a commodity futures contract
or purchase or sell a commodity option contract for other than bona fide hedging
purposes if immediately thereafter the sum of the amount of initial margin
deposits and premiums required to establish such positions for such nonhedging
purposes would exceed 5% of the market value of the Fund's net assets.
Although effective hedging can generally capture the bulk of a desired
risk adjustment, no hedge is completely effective. The Fund's ability to hedge
effectively through transactions in futures and options depends on the degree to
which price movements in its holdings correlate with price movements of the
futures and options.
Some positions in futures and options may be closed out only on an
exchange which provides a secondary market therefor. There can be no assurance
that a liquid secondary market will exist for any particular futures contract or
option at any specific time. Thus, it may not be possible to close such an
option or futures position prior to maturity. The inability to close options and
futures positions also could have an adverse impact on the Fund's ability to
effectively hedge its securities and might in some cases require the Fund to
deposit cash to meet applicable margin requirements. The Fund will enter into an
option or futures position only if it appears to be a liquid investment.
Foreign Investments
To the extent the Fund invests in securities of issuers in less developed
countries or emerging foreign markets, it will be subject to a variety of
additional risks, including risks associated with political instability,
economies based on relatively few industries, lesser market liquidity, high
rates of inflation, significant price volatility of portfolio holdings and high
levels of external debt in the relevant country.
Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of the Fund's shares may fluctuate with U.S.
dollar exchange rates as well as with price changes of the Fund's securities in
the various local markets and currencies. Thus, an increase in the value of the
U.S. dollar compared to the currencies in which the Fund makes its investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying the
effect of increases and reducing the effect of decreases in the prices of the
Fund's securities in the local markets.
Currency Transactions
The Fund's dealings in forward currency exchange contracts will be limited
to hedging involving either specific transactions or aggregate portfolio
positions. A forward currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are not commodities and are entered into
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. Although spot and forward contracts
will be used primarily to protect the Fund from adverse currency movements, they
also involve the risk that anticipated currency movements will not be accurately
predicted, which may result in losses to the Fund. This method of protecting the
value of the Fund's portfolio 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 that can be achieved at
some future point in time. Although such contracts tend to minimize the risk of
loss due to a decline in the value of hedged currency, they tend to limit any
potential gain that might result should the value of such currency increase.
Repurchase Agreements
The Fund may enter into repurchase agreements. Repurchase agreements occur
when the Fund acquires a security and the seller, which may be either (i) a
primary dealer in U.S. Government securities or (ii) an FDIC-insured bank having
gross assets in excess of $500 million, simultaneously commits to repurchase it
at an agreed-upon price on an agreed-upon date within a specified number of days
(usually not more than seven) from the date of purchase. The repurchase price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the acquired security. The Fund will
only enter into repurchase agreements involving U.S. Government securities.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities. Repurchase
agreements will be limited to 30% of the Fund's total assets, except that
repurchase agreements extending for more than seven days when combined with
other illiquid securities will be limited to 10% of the Fund's total assets.
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements. However, the Fund
has no present intention of engaging in reverse repurchase agreements in excess
of 5% of the Fund's total assets. In a reverse repurchase agreement the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed-upon rate. The ability to use
reverse repurchase agreements may enable, but does not ensure the ability of,
the Fund to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous.
When effecting reverse repurchase agreements, assets of the Fund in a
dollar amount sufficient to make payment of the obligations to be purchased are
segregated on the Fund's records at the trade date and maintained until the
transaction is settled.
When-Issued Securities
The Fund may purchase "when-issued" equity securities, which are traded on
a price basis prior to actual issuance. Such purchases will be made only to
achieve the Fund's investment objective and not for leverage. The when-issued
trading period generally lasts from a few days to months, or over a year or
more; during this period dividends on equity securities are not payable. No
income accrues to the Fund prior to the time it takes delivery. A frequent form
of when-issued trading occurs when corporate securities to be created by a
merger of companies are traded prior to the actual consummation of the merger.
Such transactions may involve a risk of loss if the value of the securities fall
below the price committed to prior to the actual issuance. The Trust's custodian
will establish a segregated account for the Fund when it purchases securities on
a when-issued basis consisting of cash or liquid securities equal to the amount
of the when-issued commitments. Securities transactions involving delayed
deliveries or forward commitments are frequently characterized as when-issued
and are similarly treated by the Fund.
Rule 144A Securities
Subject to the 15% limitation on illiquid and restricted securities noted
above, the Fund may buy or sell restricted securities in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities"). Securities may
be resold pursuant to Rule 144A under certain circumstances only to qualified
institutional buyers as defined in the rule, and the markets and trading
practices for such securities are relatively new and still developing; depending
on the development of such markets, such Rule 144A Securities may be deemed to
be liquid as determined by or in accordance with methods adopted by the
Trustees. Under such methods the following factors are considered, among others:
the frequency of trades and quotes for the security, the number of dealers and
potential purchasers in the market, marketmaking activity, and the nature of the
security and marketplace trades. Investments in Rule 144A Securities could have
the effect of increasing the level of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
such securities. Also, the Fund may be adversely impacted by the possible
illiquidity and subjective valuation of such securities in the absence of a
market for them. As of the date of this Statement of Additional Information, the
Fund has no present intention to invest more than 5% of its total assets in Rule
144A Securities.
The Fund has voluntarily undertaken with a state securities authority that
for so long as the Fund's shares are offered to residents of such state the Fund
will not purchase any security or enter into a repurchase agreement if as a
result more than 15% of its total assets would be invested in illiquid or
restricted securities, including Rule 144A Securities.
Swap Arrangements
The Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates or indices,
including purchase of caps, floors and collars as described below. In an
interest rate swap the Fund could agree for a specified period to pay a bank or
investment banker the floating rate of interest on a so-called notional
principal amount (i.e. an assumed figure selected by the parties for this
purpose) in exchange for agreement by the bank or investment banker to pay the
Fund a fixed rate of interest on the notional principal amount. In a currency
swap the Fund would agree with the other party to exchange cash flows based on
the relative differences in values of a notional amount of two (or more)
currencies; in an index swap, the Fund would agree to exchange cash flows on a
notional amount based on changes in the values of the selected indices. Purchase
of a cap entitles the purchaser to receive payments from the seller on a
notional amount to the extent that the selected index exceeds an agreed upon
interest rate or amount whereas purchase of a floor entitles the purchaser to
receive such payments to the extent the selected index falls below an
agreed-upon interest rate or amount. A collar combines a cap and a floor.
Most swaps entered into by the Fund will be on a net basis; for example,
in an interest rate swap, amounts generated by application of the fixed rate and
the floating rate to the notional principal amount would first offset one
another, with the Fund either receiving or paying the difference between such
amounts. In order to be in a position to meet any obligations resulting from
swaps, the Fund will set up a segregated custodial account to hold appropriate
liquid assets, including cash; for swaps entered into on a net basis, assets
will be segregated having a daily net asset value equal to any excess of the
Fund's accrued obligations over the accrued obligations of the other party,
while for swaps on other than a net basis assets will be segregated having a
value equal to the total amount of the Fund's obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a part of the Fund's portfolio.
However, the Fund may enter into such arrangements for income purposes to the
extent permitted by the CFTC for entities which are not commodity pool
operators, such as the Fund. In entering a swap arrangement, the Fund is
dependent upon the creditworthiness and good faith of the counterparty. The Fund
attempts to reduce the risks of nonperformance by the counterparty by dealing
only with established, reputable institutions. The swap market is still
relatively new and emerging; positions in swap arrangements may become illiquid
to the extent that nonstandard arrangements with one counterparty are not
readily transferable to another counterparty or if a market for the transfer of
swap positions does not develop. The use of interest rate swaps is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If the
Investment Manager is incorrect in its forecasts of market values, interest
rates and other applicable factors, the investment performance of the Fund would
diminish compared with what it would have been if these investment techniques
were not used. Moreover, even if the Investment Manager is correct in its
forecasts, there is a risk that the swap position may correlate imperfectly with
the price of the asset or liability being hedged.
Industry Classifications
In determining how much of the Fund's portfolio is invested in a given
industry, the industry classifications set forth below, grouped by sectors, are
currently used. Companies engaged in the business of financing will be
classified according to the industries of the parent companies or industries
that otherwise most affect such financing companies. Issuers of asset-backed
pools will be classified as separate industries based on the nature of the
underlying assets, such as mortgages, credit card receivables, etc.
Basic Industries Consumer Staple Science & Technology
- -------------------------- ------------------------- --------------------
Chemical Business Service Aerospace
Diversified Container Computer Software &
Electrical Equipment Drug Service
Forest Products Food & Beverage Electronic Components
Machinery Hospital Supply Electronic Equipment
Metal & Mining Personal Care Office Equipment
Railroad Printing & Publishing
Truckers Tobacco
Utility Energy Consumer Cyclical
- -------------------------- ------------------------- --------------------
Electric Oil Refining & Marketing Airline
Gas Oil Production Automotive
Gas Transmission Oil Service Building
Telephone Hotel & Restaurant
Photography
Recreation
Other Finance Retail Trade
- --------------------------- -------------------- Textile & Apparel
Trust Certificates-- Bank
Government Related Lending Financial Service
Asset-backed--Mortgages Insurance
Asset-backed--Credit
Card Receivables
Other Investment Limitations
Pursuant to the policies of a state securities authority, the Fund will
not purchase real estate limited partnerships or make investments in oil, gas or
mineral leases for so long as Fund shares are offered in that state.
DEBT INSTRUMENTS AND
PERMITTED CASH INVESTMENTS
As indicated in the Fund's Prospectus, the Fund may invest in long-term
and short-term debt securities. The Fund may invest in cash and short-term
securities for temporary defensive purposes when, in the opinion of the
Investment Manager, such a position is more likely to provide protection against
unfavorable market conditions than adherence to other investment policies.
Certain debt securities and money market instruments in which the Fund may
invest are described below.
U.S. Government and Related Securities. U.S. Government securities are
securities which are issued or guaranteed as to principal or interest by the
U.S. Government, a U.S. Government agency or instrumentality, or certain
mixed-ownership Government corporations as described herein. The U.S. Government
securities in which the Fund invests include, among others:
(bullet) direct obligations of the U.S. Treasury, i.e.,
Treasury bills, notes, certificates and bonds;
(bullet) obligations of U.S. Government agencies or
instrumentalities such as the Federal Home Loan
Banks, the Federal Farm Credit Banks, the
Federal National Mortgage Association, the
Government National Mortgage Association and
the Federal Home Loan Mortgage Corporation; and
(bullet) obligations of mixed-ownership Government
corporations such as Resolution Funding
Corporation.
U.S. Government securities which the Fund may buy are backed in a variety
of ways by the U.S. Government, its agencies or instrumentalities. Some of these
obligations, such as Government National Mortgage Association mortgage-backed
securities are backed by the full faith and credit of the U.S. Treasury. Other
obligations, such as those of the Federal National Mortgage Association, are
backed by the discretionary authority of the U.S. Government to purchase certain
obligations of agencies or instrumentalities. Obligations such as those of the
Federal Home Loan Banks, the Farmers Home Administration, the Federal Farm
Credit Banks, the Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation are backed by the credit of the agency or
instrumentality issuing the obligations. Certain obligations of Resolution
Funding Corporation, a mixed-ownership Government corporation, are backed with
respect to interest payments by the U.S. Treasury, and with respect to principal
payments by U.S. Treasury obligations held in a segregated account with a
Federal Reserve Bank. Except for certain mortgage-related securities, the Fund
will only invest in obligations issued by mixed-ownership Government
corporations where such securities are guaranteed as to payment of principal or
interest by the U.S. Government or a U.S. Government agency or instrumentality,
and any unguaranteed principal or interest is otherwise supported by U.S.
Government obligations held in a segregated account.
U.S. Government securities may be acquired by the Fund in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book entry
records of the Federal Reserve Banks.
In addition, the Fund may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury Securities" ("CATS"), and may
not be deemed U.S. Government securities.
The Fund may also invest from time to time in collective investment
vehicles, the assets of which consist principally of U.S. Government securities
or other assets substantially collateralized or supported by such securities,
such as Government trust certificates.
Bank Money Investments. Bank money investments include but are not limited
to certificates of deposit, bankers' acceptances and time deposits. Certificates
of deposit are generally short-term (i.e., less than one year), interest-bearing
negotiable certificates issued by commercial banks or savings and loan
associations against funds deposited in the issuing institution. A banker's
acceptance is a time draft drawn on a commercial bank by a borrower, usually in
connection with an international commercial transaction (to finance the import,
export, transfer or storage of goods). A banker's acceptance may be obtained
from a domestic or foreign bank, including a U.S. branch or agency of a foreign
bank. The borrower is liable for payment as well as the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity. Time deposits are nonnegotiable deposits
for a fixed period of time at a stated interest rate. The Fund will not invest
in any such bank money investment unless the investment is issued by a U.S. bank
that is a member of the Federal Deposit Insurance Corporation ("FDIC"),
including any foreign branch thereof, a U.S. branch or agency of a foreign bank,
a foreign branch of a foreign bank, or a savings bank or savings and loan
association that is a member of the FDIC and which at the date of investment has
capital, surplus and undivided profits (as of the date of its most recently
published financial statements) in excess of $50 million. The Fund will not
invest in time deposits maturing in more than seven days and will not invest
more than 10% of its total assets in time deposits maturing in two to seven
days.
U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and regulated
either federally or under state law. U.S. federal branches or agencies of
foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect FDIC insurance. Unlike U.S. branches of foreign banks,
U.S. agencies of foreign banks may not accept deposits and thus are not eligible
for FDIC insurance. Both branches and agencies can maintain credit balances,
which are funds received by the office incidental to or arising out of the
exercise of their banking powers and can exercise other commercial functions,
such as lending activities.
Short-Term Corporate Debt Instruments. Short-term corporate debt
instruments include commercial paper to finance short-term credit needs (i.e.,
short-term, unsecured promissory notes) issued by corporations including but not
limited to (a) domestic or foreign bank holding companies or (b) their
subsidiaries or affiliates where the debt instrument is guaranteed by the bank
holding company or an affiliated bank or where the bank holding company or the
affiliated bank is unconditionally liable for the debt instrument. Commercial
paper is usually sold on a discounted basis and has a maturity at the time of
issuance not exceeding nine months.
Commercial Paper Ratings. Commercial paper investments at the time of
purchase will be rated A by Standard & Poor's Corporation ("S&P") or Prime by
Moody's Investor's Service, Inc. ("Moody's"), or, if not rated, issued by
companies having an outstanding long-term unsecured debt issue rated at least A
by S&P or by Moody's. The money market investments in corporate bonds and
debentures (which must have maturities at the date of settlement of one year or
less) must be rated at the time of purchase at least A by S&P or by Moody's.
Commercial paper rated A (highest quality) by S&P is issued by entities
which have liquidity ratios which are adequate to meet cash requirements.
Long-term senior debt is rated A or better, although in some cases BBB credits
may be allowed. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. The relative strength or weakness of the
above factors determines whether the issuer's commercial paper is rated A-1, A-2
or A-3. (Those A-1 issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign: A-1+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
Prime-1, Prime-2 or Prime-3.
RATING CATEGORIES OF DEBT SECURITIES
Set forth below is a description of S&P corporate bond and debenture
ratings for securities which are deemed to be investment grade:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and pay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Plus (+) or minus (-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
S&P may attach the "r" symbol to derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to noncredit risks created by the terms of the
obligation, such as securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only (IO) and principal only (PO) mortgage securities.
Set forth below is a description of Moody's corporate bond and debenture
ratings for securities which are deemed to be investment grade:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." 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 issues.
Aa: Bonds which are rated Aa are judged 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 the best bonds because margins of
protection may not be as large as in the case of Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
1, 2, or 3: The ratings from Aa through Baa may be modified by the
addition of a numeral indicating a bond's rank within its rating category.
In the event applicable rating agencies lower the ratings of debt
instruments held by the Fund, resulting in a material decline in the overall
quality of the Fund's portfolio, the situation will be reviewed and necessary
action, if any, will be taken, including changes in the composition of the
portfolio.
TRUSTEES AND OFFICERS
The Trustees and principal officers of the Trust, their addresses, and
their principal occupations and positions with certain affiliates of the
Investment Manager are set forth below.
*+Peter C. Bennett, One Financial Center, Boston, MA 02111, serves as Vice
President of the Trust. He is 57. His principal occupation is Executive Vice
President and Director of State Street Research & Management Company. During the
past five years he has also served as Senior Vice President and Vice President
of State Street Research & Management Company. Mr. Bennett's other principal
business affiliation is Director, State Street Research Investment Services,
Inc.
*+Frederick R. Kobrick, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 52. His principal occupation is currently,
and during the past five years has been, Senior Vice President of State Street
Research & Management Company.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791, serves
as Trustee of the Trust. He is 69. He is engaged principally in private
investments and civic affairs and is an author of business history. Previously,
he was with Morgan Guaranty Trust Company of New York.
+Robert A. Lawrence, Saltonstall & Co., 50 Congress Street, Boston, MA
02109, serves as Trustee of the Trust. He is 69. His principal occupation during
the past five years has been Partner, Saltonstall & Co., a private investment
firm.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. He is 45. His principal occupation is Executive Vice
President, Treasurer, Chief Financial Officer and Director of State Street
Research & Management Company. During the past five years he has also served as
Executive Vice President and Chief Financial Officer of New England Investment
Companies and as Senior Vice President and Vice President of New England Mutual
Life Insurance Company. Mr. Maus's other principal business affiliations include
Executive Vice President, Treasurer, Chief Financial Officer and Director of
State Street Research Investment Services, Inc.
* or + See footnotes on page 23.
*+Francis J. McNamara, III, One Financial Center, Boston, MA 02111, has
served as Secretary and General Counsel of the Trust since May 1995. He is 40.
His principal occupation is Senior Vice President, Secretary and General Counsel
of State Street Research & Management Company. During the past five years he has
also served as Senior Vice President, General Counsel and Assistant Secretary of
The Boston Company, Inc., Boston Safe Deposit and Trust Company and The Boston
Company Advisors, Inc. Mr. McNamara's other principal business affiliations
include Senior Vice President, Clerk and General Counsel of State Street
Research Investment Services, Inc.
*+Thomas P. Moore, Jr., One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 57. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of State Street Research & Management
Company.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Trust. He is 64. He is retired, having served during the past
five years, until October 1992, as Executive Vice President, Chief Operating
Officer and Director, Hewlett-Packard Company.
+Thomas L. Phillips, 141 Spring Street, Lexington, MA 02173, serves as
Trustee of the Trust. He is 71. He is retired and was formerly Chairman of the
Board and Chief Executive Officer of Raytheon Company, of which he remains a
Director.
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118, serves as
Trustee of the Trust. He is 57. His principal occupations during the past five
years have been President of The Glen Ellen Company, a private investment
company, and Vice President of Founders Investments Ltd.
+Michael S. Scott Morton, Massachusetts Institute of Technology, 77
Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of the Trust. He is
58. His principal occupation during the past five years has been Jay W.
Forrester Professor of Management at Sloan School of Management, Massachusetts
Institute of Technology.
* or + See footnotes on page 23.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Trust. He is 53. His principal occupation is Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research & Management
Company. During the past five years he also served as President and Chief
Executive Officer of New England Investment Companies and as Chief Investment
Officer and Director, New England Mutual Life Insurance Company. Mr. Verni's
other principal business affiliations include Chairman of the Board and Director
of State Street Research Investment Services, Inc.
*+Dudley F. Wade, One Financial Center, Boston MA 02111, serves as Vice
President of the Trust. He is 77. His principal occupation is Senior Vice
President of State Street Research & Management Company.
+Jeptha H. Wade, 251 Old Billerica Road, Bedford, MA 01730, serves as
Trustee of the Trust. He is 71. He is retired and was formerly Of Counsel for
the law firm Choate, Hall & Stewart. He was a partner of that firm from 1960 to
1987.
*+Kennard Woodworth, Jr., One Financial Center, Boston, MA 02111, serves
as Vice President of the Trust. He is 57. During the past five years, his
principal occupation has been Senior Vice President of State Street Research &
Management Company.
As of March 31, 1996, the Trustees and officers of the Trust as a group
owned approximately 3.6% of the outstanding Class A shares of the Fund and owned
less than 1% of the outstanding Class C shares of the Fund. The Trustees and
officers owned no Class B or Class D shares of the Fund.
* These Trustees and/or officers are or may be deemed to be
"interested persons" of the Trust under the 1940 Act because of their
affiliations with the Fund's investment adviser.
+ Serves as a Trustee and/or officer of one or more of the
following investment companies, each of which has an advisory or
distribution relationship with the Investment Manager or its affiliates:
State Street Research Equity Trust, State Street Research Financial Trust,
State Street Research Income Trust, State Street Research Money Market
Trust, State Street Research Tax-Exempt Trust, State Street Research
Capital Trust, State Street Research Exchange Trust, State Street Research
Growth Trust, State Street Research Master Investment Trust, State Street
Research Securities Trust, State Street Research Portfolios, Inc. and
Metropolitan Series Fund, Inc.
As of March 31, 1996, the following persons or entities were the record
and/or beneficial owners of the approximate amounts of each class of shares of
the Fund as set forth beside their names:
Shareholder %
Class A Merrill Lynch 16.8
Class B Merrill Lynch 58.3
Class D Merrill Lynch 54.8
PaineWebber 7.5
The full name and address of each of the above persons or entities are as
follows:
Merrill Lynch, Pierce, Fenner & Smith, Inc. (a)
4800 Deer Lake Drive E.
Jacksonville, FL 32246
PaineWebber, Incorporated (a)
1285 Avenue of the Americas
New York, New York 10019
- ---------------
(a) The Fund believes that such entity does not have beneficial ownership of
such shares.
During the fiscal year ended December 31, 1995, the Trustees were
compensated as follows:
Total
Compensation
Aggregate From Trust and
Name of Compensation Complex paid
Trustee From Trust to Trustees(a)
Edward M. Lamont $4,300 $ 63,510
Robert A. Lawrence $4,300 $ 91,685
Dean O. Morton $4,900 $103,085
Thomas L. Phillips $4,100 $ 67,185
Toby Rosenblatt $4,300 $ 63,510
Michael S. Scott Morton $5,300 $109,035
Ralph F. Verni $ 0 $ 0
Jeptha H. Wade $4,600 $ 76,285
(a) Includes compensation from Metropolitan Series Fund, Inc.,
for which the Investment Manager serves as sub-investment adviser, State
Street Research Portfolios, Inc., for which State Street Research
Investment Services, Inc. serves as distributor, and all investment
companies for which the Investment Manager serves as primary investment
adviser, comprising a total of 29 series. The Trust does not provide any
pension or retirement benefits for the Trustees.
INVESTMENT ADVISORY SERVICES
State Street Research & Management Company, the Investment Manager, a
Delaware Corporation, with offices at One Financial Center, Boston,
Massachusetts 02111-2690, acts as investment adviser to the Fund. The Advisory
Contract provides that the Investment Manager shall furnish the Fund with an
investment program, suitable office space and facilities and such management,
investment advisory, statistical and research services as may be required from
time to time. The Investment Manager compensates all executive and clerical
personnel and Trustees of the Trust if such persons are employees or affiliates
of the Investment Manager or its affiliates. The Investment Manager is an
indirect wholly-owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan").
The advisory fee payable monthly by the Fund to the Investment Manager is
computed as a percentage of the average of the value of the net assets of the
Fund, as determined at the close of the New York Stock Exchange (the "NYSE") on
each day the NYSE is open for trading, at the annual rate of 0.475% of the net
assets of the Fund. The total dollar amounts paid by the Fund to the Investment
Manager for the fiscal years ended December 31, 1995, 1994 and 1993 were
$1,089,143, $1,095,083, and $1,291,654, respectively.
Further, to the extent required under applicable state regulatory
requirements, the Investment Manager will reduce its management fee up to the
amount of any expenses (excluding permissible items, such as brokerage
commissions, Rule 12b-1 payments, interest, taxes and litigation expenses) paid
or incurred by the Fund in any fiscal year which exceed specified percentages of
the average daily net assets of the Fund for such fiscal year. The most
restrictive of such percentage limitations is currently 2.5% of the first $30
million of average net assets, 2.0% of the next $70 million of average net
assets and 1.5% of the remaining average net assets. These commitments may be
amended or rescinded in response to changes in the requirements of the various
states by the Trustees without shareholder approval.
The Advisory Contract provides that it will continue from year to year as
long as it is approved at least annually both (i) by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act) or by the
Trustees of the Trust, and (ii) in either event by a vote of a majority of the
Trustees who are not parties to the Advisory Contract or "interested persons" of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval. The Advisory Contract may be terminated on 60 days' written
notice by either party and will terminate automatically in the event of its
assignment, as defined under the 1940 Act and regulations thereunder. Such
regulations provide that a transaction which does not result in a change of
actual control or management of an adviser is not deemed an assignment.
Under a Shareholders' Administrative Services Agreement between the Trust
and the Distributor, the Distributor provides shareholders' administrative
services, such as responding to inquiries and instructions from investors
respecting the purchase and redemption of shares of the Fund, and is entitled to
reimbursement of its costs for providing such services. Under certain
arrangements for Metropolitan to provide sub-administration services,
Metropolitan may receive a fee for the maintenance of certain share ownership
records for participants in sponsored arrangements, employee benefit plans, and
similar programs or plans, through or under which the Fund's shares may be
purchased.
Under the Code of Ethics of the Investment Manager, its employees in
Boston, where investment management operations are conducted, are only permitted
to engage in personal securities transactions in accordance with certain
conditions relating to an employee's position, the identity of the security, the
timing of the transaction, and similar factors. Such employees must report their
personal securities transactions quarterly and supply broker confirmations of
such transactions to the Investment Manager.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are distributed by State Street Research Investment
Services, Inc. The Fund offers four classes of shares which may be purchased at
the next determined net asset value per share plus, in the case of all classes
except Class C shares, a sales charge which, at the election of the investor,
may be imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares). General information on how to
buy shares of the Fund, as well as sales charges involved, are set forth under
"Purchase of Shares" in the Prospectus. The following supplements that
information.
Public Offering Price. The public offering price for each class of shares
of the Fund is based on their net asset value determined as of the close of the
NYSE on the day the purchase order is received by State Street Research
Shareholder Services provided that the order is received prior to the close of
the NYSE on that day; otherwise the net asset value used is that determined as
of the close of the NYSE on the next day it is open for unrestricted trading.
When a purchase order is placed through a dealer, that dealer is responsible for
transmitting the order promptly to State Street Research Shareholder Services in
order to permit the investor to obtain the current price. Any loss suffered by
an investor which results from a dealer's failure to transmit an order promptly
is a matter for settlement between the investor and the dealer.
Reduced Sales Charges. For purposes of determining whether a purchase of
Class A shares qualifies for reduced sales charges, the term "person" includes:
(i) an individual, or an individual combining with his or her spouse and their
children and purchasing for his, her or their own account; (ii) a "company" as
defined in Section 2(a)(8) of the 1940 Act; (iii) a trustee or other fiduciary
purchasing for a single trust estate or single fiduciary account (including a
pension, profit sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Internal Revenue Code); (iv) a
tax-exempt organization under Section 501(c)(3) or (13) of the Internal Revenue
Code; and (v) an employee benefit plan of a single employer or of affiliated
employers.
Investors may purchase Class A shares of the Fund at reduced sales charges
by executing a Letter of Intent to purchase no less than an aggregate of
$100,000 of the Fund or any combination of Class A shares of "Eligible Funds" as
designated by the Distributor within a 13-month period. The sales charge
applicable to each purchase made pursuant to a Letter of Intent will be that
which would apply if the total dollar amount set forth in the Letter of Intent
were being bought in a single transaction. Purchases made within a 90-day period
prior to the execution of a Letter of Intent may be included therein; in such
case the date of the earliest of such purchases marks the commencement of the
13-month period.
An investor may include toward completion of a Letter of Intent the value
(at the current public offering price) of all of his or her Class A shares of
the Fund and of any of the other Class A shares of Eligible Funds held of record
as of the date of his or her Letter of Intent, plus the value (at the current
offering price) as of such date of all of such shares held by any "person"
described herein as eligible to join with the investor in a single purchase.
Class B, Class C and Class D shares may also be included in the combination
under certain circumstances.
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 5% of the specified amount will, however, be taken
from the initial purchase (or, if necessary, subsequent purchases) and held in
escrow in the investor's account as collateral against the higher sales charge
which would apply if the total purchase is not completed within the allotted
time. The escrowed shares will be released when the Letter of Intent is
completed or, if it is not completed, when the balance of the higher sales
charge is, upon notice, remitted by the investor. All dividends and capital
gains distributions with respect to the escrowed shares will be credited to the
investor's account.
Investors may purchase Class A shares of the Fund or a combination of
Eligible Funds at reduced sales charges pursuant to a Right of Accumulation. The
applicable sales charge under the right is determined on the amount arrived at
by combining the dollar amount of the purchase with the value (at the current
public offering price) of all Class A shares of the Fund and Class A shares of
the other Eligible Funds owned as of the purchase date by the investor plus the
value (at the current public offering price) of all such shares owned as of such
date by any "person" described herein as eligible to join with the investor in a
single purchase. Class B, Class C and Class D shares may also be included in the
combination under certain circumstances. Investors must submit sufficient
information to show that they qualify for the Right of Accumulation.
Class C Shares. Class C shares are currently available to certain employee
benefit plans such as qualified retirement plans, which meet criteria relating
to number of participants (currently a minimum of 100 eligible employees),
service arrangements, or similar factors; insurance companies; investment
companies; endowment funds of nonprofit organizations with substantial minimum
assets (currently a minimum of $10,000,000); and other similar institutional
investors.
Reorganizations. In the event of mergers or reorganizations with other
public or private collective investment entities, including investment companies
as defined in the 1940 Act, the Fund may issue its shares at net asset value (or
more) to such entities or to their security holders.
Redemptions. The Fund reserves the right to pay redemptions in kind with
portfolio securities in lieu of cash. In accordance with its election pursuant
to Rule 18f-1 under the 1940 Act, the Fund may limit the amount of redemption
proceeds paid in cash. Although it has no present intention to do so, the Fund
may, under unusual circumstances, limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000 or (ii)
1% of the net asset value of the Fund at the beginning of such period. In
connection with any redemptions paid in kind with portfolio securities,
brokerage and other costs may be incurred by the redeeming shareholder in the
sale of the securities received.
NET ASSET VALUE
The net asset values of the shares of the Fund are determined once daily
as of the close of the NYSE, ordinarily 4 P.M. New York City time, Monday
through Friday, on each day during which the NYSE is open for unrestricted
trading. The NYSE is currently closed for New Year's Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
The net asset value per share of the Fund is computed by dividing the sum
of the market value of the securities held by the Fund plus any cash or other
assets minus all liabilities by the total number of outstanding shares of the
Fund at such time. Any expenses, except for extraordinary or nonrecurring
expenses, borne by the Fund, including the investment management fee payable to
the Investment Manager, are accrued daily.
In determining the values of the portfolio assets as provided below, the
Trustees may utilize one or more pricing services in lieu of market quotations
for certain securities which are not readily available on a daily basis. Such
services may provide prices determined as of times prior to the close of the
NYSE.
In general, securities are valued as follows. Securities which are listed
or traded on the New York or American Stock Exchange are valued at the price of
the last quoted sale on the respective exchange for that day. Securities which
are listed or traded on a national securities exchange or exchanges, but not on
the New York or American Stock Exchange, are valued at the price of the last
quoted sale on the exchange for that day prior to the close of the NYSE.
Securities not listed on any national securities exchange which are traded "over
the counter" and for which quotations are available on the National Association
of Securities Dealers' NASDAQ System, or other system, are valued at the closing
price supplied through such system for that day at the close of the NYSE. Other
securities are, in general, valued at the mean of the bid and asked quotations
last quoted prior to the close of the NYSE if there are market quotations
readily available, or in the absence of such market quotations, then at the fair
value thereof as determined by or under authority of the Trustees of the Trust
utilizing such pricing services as may be deemed appropriate. Securities deemed
restricted as to resale are valued at the fair value thereof as determined by or
in accordance with methods adopted by the Trustees of the Trust.
Short-term debt instruments issued with a maturity of one year or less
which have a remaining maturity of 60 days or less are valued using the
amortized cost method, provided that during any period in which more than 25% of
the Fund's total assets is invested in short-term debt securities the current
market value of such securities will be used in calculating net asset value per
share in lieu of the amortized cost method. The amortized cost method is used
when the value obtained is fair value. Under the amortized cost method of
valuation, the security is initially valued at cost on the date of purchase (or
in the case of short-term debt instruments purchased with more than 60 days
remaining to maturity, the market value on the 61st day prior to maturity), and
thereafter a constant amortization to maturity of any discount or premium is
assumed regardless of the impact of fluctuating interest rates on the market
value of the security.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Fund's portfolio turnover rate is determined by dividing the lesser of
securities purchases or sales for a year by the monthly average value of
securities held by the Fund (excluding, for purposes of this determination,
securities the maturities of which as of the time of their acquisition were one
year or less). The Fund reserves full freedom with respect to portfolio
turnover, as described in the Prospectus. The portfolio turnover rates for the
fiscal years ended December 31, 1995 and 1994 were 234.43% and 57.18%,
respectively.
The Investment Manager believes the portfolio turnover rate for the fiscal
year ended December 31, 1995 was significantly higher than that for the previous
year because of changes in investment strategy, leading to a repositioning of
the portfolio from one industry sector to another, in order to fully benefit
from the growth prospects of individual companies and the strong performance of
the market in general.
Brokerage Allocation
The Investment Manager's policy is to seek for its clients, including the
Fund, what in the Investment Manager's judgment will be the best overall
execution of purchase or sale orders and the most favorable net prices in
securities transactions consistent with its judgment as to the business
qualifications of the various broker or dealer firms with whom the Investment
Manager may do business, and the Investment Manager may not necessarily choose
the broker offering the lowest available commission rate. Decisions with respect
to the market where the transaction is to be completed, to the form of
transaction (whether principal or agency), and to the allocation of orders among
brokers or dealers are made in accordance with this policy. In selecting brokers
or dealers to effect portfolio transactions, consideration is given to their
proven integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to particular
markets or securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their willingness
to commit capital, and their clearance and settlement capability. The Investment
Manager makes every effort to keep informed of commission rate structures and
prevalent bid/ask spread characteristics of the markets and securities in which
transactions for the Fund occur. Against this background, the Investment Manager
evaluates the reasonableness of a commission or a net price with respect to a
particular transaction by considering such factors as difficulty of execution or
security positioning by the executing firm. The Investment Manager may or may
not solicit competitive bids based on its judgment of the expected benefit or
harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required standards in
respect of a particular transaction, consideration may also be given to services
other than execution services which certain of such firms have provided in the
past or may provide in the future. Negotiated commission rates and prices,
however, are based upon the Investment Manager's judgment of the rate which
reflects the execution requirements of the transaction without regard to whether
the broker provides services in addition to execution. Among such other services
are the supplying of supplemental investment research; general economic,
political and business information; analytical and statistical data; relevant
market information, quotation equipment and services; reports and information
about specific companies, industries and securities; purchase and sale
recommendations for stocks and bonds; portfolio strategy services; historical
statistical information; market data services providing information on specific
issues and prices; financial publications; proxy voting data and analysis
services; technical analysis of various aspects of the securities markets,
including technical charts; computer hardware used for brokerage and research
purposes; computer software and databases, including those used for portfolio
analysis and modelling; and portfolio evaluation services and relative
performance of accounts.
Certain nonexecution services provided by broker-dealers may in turn be obtained
by the broker-dealers from third parties who are paid for such services by the
broker-dealers. The Investment Manager has an investment of less than ten
percent of the outstanding equity of one such third party which provides
portfolio analysis and modelling and other research and investment
decision-making services integrated into a trading system developed and licensed
by the third party to others. The Investment Manager could be said to benefit
indirectly if in the future it allocates brokerage to a broker-dealer who in
turn pays this third party for services to be provided to the Investment
Manager.
The Investment Manager regularly reviews and evaluates the services furnished by
broker-dealers. Some services may be used for research and investment
decision-making purposes, and also for marketing or administrative purposes.
Under these circumstances, the Investment Manager allocates the cost of such
services to determine the appropriate proportion of the cost which is allocable
to purposes other than research or investment decision-making and is therefore
paid directly by the Investment Manager. Some research and execution services
may benefit the Investment Manager's clients as a whole, while others may
benefit a specific segment of clients. Not all such services will necessarily be
used exclusively in connection with the accounts which pay the commissions to
the broker-dealer producing the services.
The Investment Manager has no fixed agreements or understandings with any
broker-dealer as to the amount of brokerage business which that firm may expect
to receive for services supplied to the Investment Manager or otherwise. There
may be, however, understandings with certain firms that in order for such firms
to be able to continuously supply certain services, they need to receive
allocation of a specified amount of brokerage business. These understandings are
honored to the extent possible in accordance with the policies set forth above.
It is not the Investment Manager's policy to intentionally pay a firm a
brokerage commission higher than that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services) provided. However, the Investment Manager is aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, relies on the provisions of Section 28(e) of the
Securities Exchange Act of 1934, to the extent applicable. Brokerage commissions
paid by the Fund during the fiscal years ended December 31, 1995, 1994 and 1993,
amounted to $981,788, $357,083, and $413,870, respectively. The Investment
Manager believes the amount of brokerage commissions paid by the Fund during the
fiscal year ended December 31, 1995 was significantly higher than during the
previous year because of repositioning of the portfolio from one industry sector
to another, including reducing the Fund's holdings in one sector and increasing
holdings in another and because of general investment activity for a large
portfolio during a strong market.
During and at the end of its most recent fiscal year, the Fund held no
security of any entity that might be deemed to be a regular broker dealer of the
Fund as defined under the 1940 Act.
In the case of the purchase of fixed income securities in underwriting
transactions, the Investment Manager follows any instructions received from its
clients as to the allocation of new issue discounts, selling concessions and
designations to brokers or dealers which provide the client with research,
performance evaluation, master trustee and other services. In the absence of
instructions from the client, the Investment Manager may make such allocations
to broker-dealers which have provided the Investment Manager with research and
brokerage services.
When more than one client of the Investment Manager is seeking to buy or sell
the same security, the sale or purchase is carried out in a manner which is
considered fair and equitable to all accounts. In allocating investments among
various clients (including in what sequence orders for trades are placed), the
Investment Manager will use its best business judgment and will take into
account such factors as the investment objectives of the clients, the amount of
investment funds available to each, the amount already committed for each client
to a specific investment and the relative risks of the investments, all in order
to provide on balance a fair and equitable result to each client over time.
Although sharing in large transactions may sometimes affect price or volume of
shares acquired or sold, overall it is believed there may be an advantage in
execution. The Investment Manager may follow the practice of grouping orders of
various clients for execution to get the benefit of lower prices or commission
rates. In certain cases where the aggregate order may be executed in a series of
transactions at various prices, the transactions are allocated as to amount and
price in a manner considered equitable to each so that each receives, to the
extent practicable, the average price of such transactions. Exceptions may be
made based on such factors as the size of the account and the size of the trade.
For example, the Investment Manager may not aggregate trades where it believes
that it is in the best interests of clients not to do so, including situations
where aggregation might result in a large number of small transactions with
consequent increased custodial and other transactional costs which may
disproportionately impact smaller accounts. Such disaggregation, depending on
the circumstances, may or may not result in such accounts receiving more or less
favorable execution relative to other clients.
CERTAIN TAX MATTERS
Federal Income Taxation of the Fund -- In General
The Fund intends to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), although it cannot give complete assurance
that it will do so. Accordingly, the Fund must, among other things, (a) 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 stock, securities or foreign currencies, or other income
(including, but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "90% test"); (b) derive less than 30% of its gross income in
each taxable year from the sale or other disposition of any of the following
held for less than three months (the "30% test"): (i) stocks or securities; (ii)
options, futures, or forward contracts (other than options, futures, or forward
contracts on foreign currencies) or (iii) foreign currencies (or options,
futures, or forward contracts on foreign currencies) but only if such currencies
(or options, futures, or forward contracts) are not directly related to the
Fund's principal business of investing in stocks or securities (or options and
futures with respect to stocks or securities); (c) satisfy certain
diversification requirements and (d) in order to be entitled to utilize the
dividends paid deduction, distribute annually at least 90% of its investment
company taxable income (determined without regard to the deduction for dividends
paid).
The 30% test will limit the extent to which the Fund may sell securities
held for less than three months, write options which expire in less than three
months, and effect closing transactions with respect to call or put options that
have been written or purchased within the preceding three months. (If the Fund
purchases a put option for the purpose of hedging an underlying portfolio
security, the acquisition of the option is treated as a short sale of the
underlying security unless, for purposes only of the 30% test, the option and
the security are acquired on the same date). Finally, as discussed below, this
requirement may also limit investments by the Fund in options on stock indices,
listed options on nonconvertible debt securities, futures contracts, options on
interest rate futures contracts and certain foreign currency contracts.
If the Fund should fail to qualify as a regulated investment company in
any year, it would lose the beneficial tax treatment accorded regulated
investment companies under Subchapter M of the Code and all of its taxable
income would be subject to tax at regular corporate rates without any deduction
for distributions to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings and profits. Also, the shareholders, if they received a
distribution in excess of current or accumulated earnings and profits, would
receive a return of capital that would reduce the basis of their shares of the
Fund.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Fund must
distribute an amount equal to at least 98% of the sum of its ordinary income
(not taking into account any capital gains or losses) for the calendar year, and
its capital gain net income for the 12-month period ending on October 31, in
addition to any undistributed portion of the respective balances from the prior
year. The Fund intends to make sufficient distributions to avoid this 4% excise
tax.
Federal Income Taxation of the Investments
Original Issue Discount. For federal income tax purposes, debt securities
purchased by the Fund may be treated as having original issue discount. Original
issue discount represents interest for federal income tax purposes and can
generally be defined as the excess of the stated redemption price at maturity of
a debt obligation over the issue price. Original issue discount is treated for
federal income tax purposes as income earned by the Fund, whether or not any
income is actually received, and therefore is subject to the distribution
requirements of the Code. Generally, the amount of original issue discount is
determined on the basis of a constant yield to maturity which takes into account
the compounding of accrued interest. Under section 1286 of the Code, an
investment in a stripped bond or stripped coupon may result in original issue
discount.
Debt securities may be purchased by the Fund at a discount that exceeds
the original issue discount plus previously accrued original issue discount
remaining on the securities, if any, at the time the Fund purchases the
securities. This additional discount represents market discount for income tax
purposes. In the case of any debt security issued after July 18, 1984, having a
fixed maturity date of more than one year from the date of issue and having
market discount, the gain realized on disposition will be treated as interest
income to the extent it does not exceed the accrued market discount on the
security (unless the Fund elects to include such accrued market discount in
income in the tax year to which it is attributable). Generally, market discount
is accrued on a daily basis. The Fund may be required to capitalize, rather than
deduct currently, part or all of any direct interest expense incurred to
purchase or carry any debt security having market discount, unless the Fund
makes the election to include market discount currently. Because the Fund must
include original issue discount in income, it will be more difficult for the
Fund to make the distributions required to maintain its status as a regulated
investment company under Subchapter M of the Code and to avoid the 4% excise tax
described above.
Options and Futures Transactions. Certain of the Fund's investments may be
subject to provisions of the Code that (i) require inclusion of unrealized gains
or losses in the Fund's income for purposes of the 90% test, the 30% test, the
excise tax and the distribution requirements applicable to regulated investment
companies; (ii) defer recognition of realized losses; and (iii) characterize
both realized and unrealized gain or loss as short-term or long-term gain or
loss. Such provisions generally apply to, among other investments, options on
debt securities, indices on securities and futures contracts.
Federal Income Taxation of Shareholders
Dividends paid by the Fund may be eligible for the 70% dividends-received
deduction for corporations. The percentage of the Fund's dividends eligible for
such tax treatment may be less than 100% to the extent that less than 100% of
the Fund's gross income may be from qualifying dividends of domestic
corporations. Any dividend declared in October, November or December and made
payable to shareholders of record in any such month is treated as received by
such shareholders on December 31, provided that the Fund pays the dividend
during January of the following calendar year.
Distributions by the Fund can result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless may be taxable
to the shareholder as ordinary income or long-term capital gain, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a taxable distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a taxable distribution will then
receive a return of investment upon distribution which will nevertheless be
taxable to them.
DISTRIBUTION OF SHARES OF THE FUND
State Street Research Growth Trust is currently comprised of one series,
State Street Research Growth Fund. The Trustees have authorized shares of the
Trust to be issued in four classes: Class A, Class B, Class C and Class D
shares. The Trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest of separate series, $.001 par value per share. A
"series" is a separate pool of assets of the Trust which is separately managed
and has a different investment objective and different investment policies from
those of another series. The Trustees have authority, without the necessity of a
shareholder vote, to create any number of new series or classes or to commence
the public offering of shares of any previously established series or classes.
The Trust has entered into a Distribution Agreement with State Street
Research Investment Services, Inc., as Distributor, whereby the Distributor acts
as agent to sell and distribute shares of the Fund. Shares of the Trust are sold
through dealers who have entered into sales agreements with the Distributor. The
Distributor distributes shares of the Fund on a continuous basis at an offering
price which is based on the net asset value per share of the Fund plus (subject
to certain exceptions) a sales charge which, at the election of the investor,
may be imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares). The Distributor may reallow all
or portions of such sales charges as concessions to dealers. For the period
March 16, 1993 (commencement of share class designations) through December 31,
1993, and for the fiscal years ended December 31, 1994 and 1995, total sales
charges on Class A shares paid to the Distributor amounted to $11,863, $5,789
and $26,227, respectively, of which $1,030, $624, and $3,476, respectively, was
retained by the Distributor after reallowance of concessions to dealers.
The differences in the price at which the Fund's Class A shares are
offered due to scheduled variations in sales charges, as described in the Fund's
Prospectus, result from cost savings inherent in economies of scale. Management
believes that the cost of sales efforts of the Distributor and broker-dealers
tends to decrease as the size of purchases increases, or does not involve any
incremental sales expenses as in the case of, for example, exchanges,
reinvestments or dividend investments at net asset value. Similarly, no
significant sales effort is necessary for sales of shares at net asset value to
certain Directors, Trustees, officers, employees and other persons directly or
indirectly related to the Fund or associated entities. Where shares of the Fund
are offered at a reduced sales charge or without a sales charge pursuant to
sponsored arrangements or managed fee-based programs, the amount of the sales
charge reduction will similarly reflect the anticipated reduction in sales
expenses associated with such arrangements. The reduction in sales expenses, and
therefore the reduction in sales charges, will vary depending on factors such as
the size and other characteristics of the organization or program, and the
nature of its membership or participants. The Fund reserves the right to make
variations in, or eliminate, sales charges at any time or to revise the terms of
or to suspend or discontinue sales pursuant to sponsored arrangements at any
time.
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
making such sale a commission on the shares sold. Such commission also is
payable to authorized securities dealers upon sales of Class A shares made
pursuant to a Letter of Intent to purchase shares having a net asset value of
$1,000,000 or more. Shares sold with such commissions payable are subject to a
one-year contingent deferred sales charge of 1% on any portion of such shares
redeemed within one year following their sale. After a particular purchase of
Class A shares is made under the Letter of Intent, the commission will be paid
only in respect of that particular purchase of shares. If the Letter of Intent
is not completed, the commission paid will be deducted from any discounts or
commissions otherwise payable to such dealer in respect of shares actually sold.
If an investor is eligible to purchase shares at net asset value on account of
the Right of Accumulation, the commission will be paid only in respect of the
incremental purchase at net asset value.
For the periods shown below, the Distributor received contingent deferred
sales charges upon redemption of Class A, Class B and Class D shares of the Fund
and paid initial commissions to securities dealers for sales of such Class B and
Class D shares as follows:
<TABLE>
<CAPTION>
March 18, 1993*
(Commencement of
Fiscal Year Fiscal Year Share Class
Ended Ended Designations to
December 31, 1995 December 31, 1994 December 31, 1993)
-------------------------- -------------------------- --------------------------
Contingent Commissions Contingent Commissions Contingent Commissions
Deferred Paid to Deferred Paid to Deferred Paid to
Sales Charge Dealers Sales Charge Dealers Sales Charge Dealers
<S> <C> <C> <C> <C> <C> <C>
Class A $ 0 $ 22,751 $ 0 $ 5,165 $0 $10,833
Class B $18,143 $306,316 $1,987 $25,365 $0 $37,635
Class D $ 557 $ 16,698 $ 0 $ 713 $0 $ 2,578
</TABLE>
*For Class A, March 16, 1993 was the commencement of share class designations.
For information on the amount of distribution fees paid by the Fund to the
Distributor, see below.
The Fund has adopted a "Plan of Distribution Pursuant to Rule 12b-1" (the
"Distribution Plan") under which the Fund may engage, directly or indirectly, in
financing any activities primarily intended to result in the sale of Class A,
Class B and Class D shares, including, but not limited to, (1) the payment of
commissions and/or reimbursement to underwriters, securities dealers and others
engaged in the sale of shares, including payments to the Distributor to be used
to pay commissions and/or reimbursement to securities dealers (which securities
dealers may be affiliates of the Distributor) engaged in the distribution and
marketing of shares and furnishing assistance to investors on an ongoing basis,
(2) reimbursement of direct out-of-pocket expenditures incurred by the
Distributor in connection with the distribution and marketing of shares
including expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of Prospectuses of the Fund and reports
for recipients other than existing shareholders of the Fund, and obtaining such
information, analyses and reports with respect to marketing and promotional
activities and investor accounts as the Fund may, from time to time, deem
advisable, and (3) reimbursement of expenses incurred by the Distributor in
connection with the servicing of shareholder accounts including payments to
securities dealers and others in consideration of the provision of personal
services to investors and/or the maintenance of shareholder accounts and
expenses associated with the provision of personal services by the Distributor
directly to investors. In addition, the Distribution Plan is deemed to authorize
the Distributor and the Investment Manager to make payments out of general
profits, revenues or other sources to underwriters, securities dealers and
others in connection with sales of shares, to the extent, if any, that such
payments may be deemed to be within the scope of Rule 12b-1 under the 1940 Act.
The expenditures to be made pursuant to the Distribution Plan may not
exceed (i) with respect to Class A shares, an annual rate of 0.25% of the
average daily value of net assets represented by such Class A shares, and (ii)
with respect to Class B and Class D shares, an annual rate of 0.75% of the
average daily value of the net assets represented by such Class B or Class D
shares (as the case may be) to finance sales or promotion expenses and an annual
rate of 0.25% of the average daily value of the net assets represented by such
Class B or Class D shares (as the case may be) to make payments for personal
services and/or the maintenance of shareholder accounts. Proceeds from the
service fee will be used by the Distributor to compensate securities dealers and
others selling shares of the Fund for rendering service to shareholders on an
ongoing basis. Such amounts are based on the net asset value of shares of the
Fund held by such dealers as nominee for their customers or which are owned
directly by such customers for so long as such shares are outstanding and the
Distribution Plan remains in effect with respect to the Fund. Any amounts
received by the Distributor and not so allocated may be applied by the
Distributor as reimbursement for expenses incurred in connection with the
servicing of investor accounts. The distribution and servicing expenses of a
particular class will be borne solely by that class.
During the fiscal year ended December 31, 1995, the Fund paid the
Distributor fees under the Distribution Plan and the Distributor used all of
such payments for expenses incurred on behalf of the Fund as follows:
Class A Class B Class D
Advertising $ 89 $2082 $ 0
Printing and mailing of
prospectuses to other
than current
shareholder 31 722 0
Compensation to
dealers 2,814 38,130 11,345
Compensation to
sales personnel 272 6,393 0
Interest 0 0 0
Carrying or other
financing charges 0 0 0
Other expenses: marketing, 166 3,897 0
general --- ----- ---
Total fees $ 3,372 $51,224 $11,345
======= ======= =======
The Distributor may have also used additional resources of its own for
further expenses on behalf of the Fund.
No interested Trustee of the Trust has any direct or indirect financial
interest in the operation of the Distribution Plan or any related agreements
thereunder. The Distributor's interest in the Distribution Plan is described
above.
To the extent that the Glass-Steagall Act may be interpreted as
prohibiting banks and other depository institutions from being paid for
performing services under the Distribution Plan, the Fund will make alternative
arrangements for such services for shareholders who acquired shares through such
institutions.
CALCULATION OF PERFORMANCE DATA
The average annual total return ("standard total return") of the Class A,
Class B, Class C and Class D shares of the Fund will be presented in sales
literature for the requisite periods as prescribed by applicable regulatory
provisions. Total return is computed separately for each class of shares of the
Fund. Performance data for a specified class includes periods prior to the
adoption of class designations. Shares of the Fund had no class designations
until March 16, 1993, when Class A and Class C designations were assigned, and
March 18, 1993, when Class B and Class D designations were assigned based on the
pricing and Rule 12b-1 fees applicable to shares sold thereafter.
The performance data reflects Rule 12b-1 fees and sales charges as set
forth below:
Rule 12b-1 Fees Sales Charges
- --------------------------------------------------------------------------------
Current
Class Amount Period
- ----- ------ ------
A 0.25% March 16, 1993 Maximum 4.5% sales
to present; fee charge reflected
will reduce
performance for
periods after
March 16, 1993
B 1.00% March 18, 1993 to 1- and 5-year
present; fee will periods reflect a
reduce performance 5% and a 2%
for periods after contingent deferred
March 18, 1993 deferred sales
charge, respectively
C 0.00% Since commencement None
of operations to
present
D 1.00% March 18, 1993 to 1-year period
present; fee will reflects a 1%
reduce performance contingent deferred
for periods after sales charge
March 18, 1993
Total Return
The Fund's average annual total returns of each class of the Fund's shares
were as follows:
Ten Years Five Years One Year
Ended Ended Ended
December 31, 1995 December 31, 1995 December 31, 1995
----------------- ----------------- -----------------
Class A 12.17% 12.14% 26.61%
Class B 12.43% 12.43% 26.80%
Class C 12.75% 13.31% 33.02%
Class D 12.43% 12.66% 30.59%
Standard total return is computed by determining the average annual
compounded rates of return over the designated periods that, if applied to the
initial amount invested, would produce the ending redeemable value in accordance
with the following formula:
P(1+T)(n) = ERV
Where: P = a hypothetical initial payment
of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the designated
period assuming a hypothetical $1,000 payment made at
the beginning of the designated period
The calculation is based on the further assumptions that the maximum
initial or contingent deferred sales charge applicable to the investment is
deducted, and that all dividends and distributions by the Fund are reinvested at
net asset value on the reinvestment dates during the periods. All accrued
expenses and recurring charges are also taken into account as described later
herein.
Yield
From time to time, the Fund may advertise its yield. If the Fund were to
advertise yield for each of its Class A, Class B, Class C and Class D shares,
such figures would be computed by dividing the net investment income per share
earned during a recent month or other specified 30-day period by the applicable
maximum offering price per share on the last day of the period and annualizing
the result in accordance with the following formula:
(6)
YIELD = [(a-b + 1)
2 ---- -1]
cd
Where: a = dividends and interest earned during
the period
b = expenses accrued for the period
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share
on the last day of the period
To calculate interest earned (for purposes of "a" above) on debt
obligations, the Fund computes the yield to maturity of each obligation held by
the Fund based on the market value of the obligation (including actual accrued
interest) at the close of the last business day of the preceding period, or,
with respect to obligations purchased during the period, the purchase price
(plus actual accrued interest). The yield to maturity is then divided by 360 and
the quotient is multiplied by the market value of the obligation (including
actual accrued interest) to determine the interest income on the obligation for
each day of the period that the obligation is in the portfolio. Dividend income
is recognized daily based on published rates.
With respect to the treatment of discount and premium on mortgage or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("paydowns"), the Fund accounts for gain or
loss attributable to actual monthly paydowns as a realized capital gain or loss
during the period. The Fund has elected not to amortize discount or premium on
such securities.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price.
Undeclared earned income is the net investment income which, at the end of the
base period, has not been declared as a dividend, but is reasonably expected to
be declared as a dividend shortly thereafter. The maximum offering price
includes a maximum sales charge of 4.5% with respect to Class A shares.
All accrued expenses are taken into account as described later herein.
Yield information is useful in reviewing the Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in the Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Fund's
portfolio, portfolio maturity and operating expenses and market conditions.
Accrued Expenses
Accrued expenses include all recurring expenses that are charged to all
shareholder accounts in proportion to the length of the base period. The
standard total return results take sales charges, if applicable, into account,
although the results do not take into account recurring and nonrecurring charges
for optional services which only certain shareholders elect and which involve
nominal fees, such as the $7.50 fee for wire orders.
Nonstandardized Total Return
The Fund may provide the above described standard total return results for
Class A, Class B, Class C and Class D shares for periods which end no earlier
than the most recent calendar quarter end and which begin one, five and ten
years before. In addition, the Fund may provide nonstandardized total return
results for differing periods, such as for the period since the Fund commenced
operations in 1960. Such nonstandardized total return is computed as otherwise
described under "Total Return" except the result may or may not be annualized,
and as noted any applicable sales charge may not be taken into account and
therefore not deducted from the hypothetical initial payment of $1,000 or ending
value. For example, the Fund's nonstandardized total return for the six months
ended December 31, 1995, without taking sales charges, if any, into account,
were as follows:
Class A 6.30%
Class B 6.03%
Class C 6.54%
Class D 5.92%
Distribution Rates
From time to time, the Fund may advertise its distribution rate. If the
Fund were to advertise a distribution rate for each of its Class A, Class B,
Class C and Class D shares, such figures would be calculated by dividing the
distributions for the latest 12 months by the maximum current offering price per
share. A distribution can include gross investment income from debt obligations
purchased at a premium and in effect include a portion of the premium paid. A
distribution can also include nonrecurring, gross short-term capital gains
without recognition of any unrealized capital losses. Further, a distribution
can include income from the sale of options by the Fund even though such option
income is not considered investment income under generally accepted accounting
principles.
Because a distribution can include such premiums, capital gains and option
income, the amount of the distribution may be susceptible to control by the
Investment Manager through transactions designed to increase the amount of such
items. Also, because the distribution rate is calculated in part by dividing the
latest distribution by the offering price, which is based on net asset value
plus any applicable sales charge, the distribution rate will increase as the net
asset value declines. A distribution rate can be greater than the yield rate
calculated as described above.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trust's custodian. As custodian, State Street Bank
and Trust Company is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities and collecting interest and dividends on the Fund's investments.
State Street Bank and Trust Company is not an affiliate of the Investment
Manager or its affiliates.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as the Trust's independent accountants, providing professional
services including (1) audits of certain financial statements, (2) assistance
and consultation in connection with Securities and Exchange Commission filings
and (3) review of the annual income tax returns filed on behalf of the Fund.
FINANCIAL STATEMENTS
In addition to the Semiannual reports provided to holders of record on a
regular basis, other supplementary financial reports may be made available from
time to time and holders of record may request a copy of a current supplementary
report, if any, by calling State Street Research Shareholder Services.
The following financial statements are for the Fund's fiscal year ended
December 31, 1995:
<PAGE>
State Street Research Growth Fund
Investment Portfolio
December 31, 1995
Value
Shares (Note 1)
- ------------------------------------------- ------ -------------
Common Stocks 95.2%
Basic Industries 7.6%
Diversified 1.2%
Loews Corp. 29,600 $ 2,319,900
-----------
Electrical Equipment 2.3%
General Electric Co. 65,000 4,680,000
-----------
Machinery 4.1%
AGCO Corp. 25,700 1,310,700
Case Corp. 27,300 1,248,975
Elsag Bailey Financing Trust Cv. Pfd.* 31,100 1,558,888
Elsag Bailey Processing Automation N.V.* 37,500 1,007,812
UCAR International, Inc.* 41,800 1,410,750
Waters Corp.* 23,200 423,400
Wolverine Tube, Inc.* 35,800 1,342,500
-----------
8,303,025
-----------
Total Basic Industries 15,302,925
-----------
Consumer Cyclical 36.8%
Airline 4.1%
Continental Airlines, Inc. Cl. B* 21,200 922,200
Continental Airlines Financing Trust Pfd.*+ 34,500 1,897,500
Northwest Airlines Corp. Cl. A* 108,500 5,533,500
-----------
8,353,200
-----------
Hotel & Restaurant 5.6%
Extended Stay America, Inc.* 5,400 148,500
HFS, Inc.* 97,100 7,937,925
Lone Star Steakhouse & Saloon, Inc.* 49,500 1,899,563
Renaissance Hotel Group N.V.* 56,000 1,428,000
-----------
11,413,988
-----------
Recreation 7.5%
American Radio Systems Corp.* 15,400 431,200
Brunswick Corp. 165,000 3,960,000
Walt Disney Co. 80,800 4,767,200
Evergreen Media Corp. 30,600 979,200
Infinity Broadcasting Corp.* 70,600 2,629,850
Oakley, Inc.* 56,600 1,924,400
Silver King Communications, Inc.* 10,400 361,400
-----------
15,053,250
-----------
Retail Trade 12.4%
BT Office Products International, Inc.* 87,200 1,395,200
Baby Superstores, Inc.* 24,200 1,379,400
Corporate Express, Inc.* 124,900 3,762,613
General Nutrition Centers, Inc.* 90,200 2,074,600
Gucci Group N.V.* 146,200 5,683,525
Office Depot, Inc.* 108,700 2,146,825
Sunglass Hut International, Inc.* 361,400 8,583,250
-----------
25,025,413
-----------
Textile & Apparel 7.2%
Adidas ADR+* $
12,600 330,876
Authentic Fitness Corp. 19,500 404,625
Men's Wearhouse, Inc.* 156,900 4,040,175
Nautica Enterprises, Inc.* 83,000 3,631,250
Tommy Hilfiger Corp.* 143,700 6,089,288
-----------
14,496,214
-----------
Total Consumer Cyclical 74,342,065
-----------
Consumer Staple 15.5%
Business Service 4.2%
HBO & Co. 38,800 2,973,050
Medaphis Corp.* 70,000 2,590,000
Republic Waste Industries, Inc.* 79,200 2,861,100
-----------
8,424,150
-----------
Drug 1.4%
SmithKline Beecham PLC ADR 50,000 2,775,000
-----------
Food & Beverage 4.7%
Coca-Cola Co. 61,000 4,529,250
Coca-Cola Enterprises 82,200 2,198,850
Starbucks Corp.* 126,600 2,658,600
-----------
9,386,700
-----------
Hospital Supply 2.8%
Abbott Laboratories 80,432 3,358,036
Medtronic, Inc. 40,000 2,235,000
-----------
5,593,036
-----------
Personal Care 0.1%
De Rigo SPA ADR* 6,700 152,425
Estee Lauder Co., Inc.* 3,700 129,038
-----------
281,463
-----------
Printing & Publishing 0.0%
CKS Group, Inc.* 2,300 89,700
-----------
Tobacco 2.3%
Philip Morris Companies, Inc. 51,000 4,615,500
-----------
Total Consumer Staple 31,165,549
-----------
Energy 3.1%
Oil 3.1%
Halliburton Co. 100,100 5,067,562
McDermott International Inc. 58,100 1,278,200
-----------
6,345,762
-----------
Total Energy 6,345,762
-----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
- -----------
Finance 7.9%
Financial Service 1.8%
Countrywide Credit Industries, Inc. 114,700 $ 2,494,725
Green Tree Financial Corp. 46,000 1,213,250
-----------
3,707,975
-----------
Insurance 6.1%
Allstate Corp. 85,500 3,516,187
AMBAC, Inc. 47,900 2,245,313
W.R. Berkley Corp. 15,000 806,250
Equitable Companies, Inc. 37,000 888,000
Travelers Group, Inc. 77,200 4,853,950
-----------
12,309,700
-----------
Total Finance 16,017,675
-----------
Science & Technology 21.4%
Aerospace 4.8%
Boeing Co. 64,000 5,016,000
United Technologies Corp. 50,200 4,762,725
-----------
9,778,725
-----------
Computer Software & Service 6.9%
Bay Networks, Inc.* 54,650 2,247,481
Cabletron Systems, Inc.* 14,700 1,190,700
CheckFree Corp.* 8,600 184,900
Geoworks* 2,300 43,700
Informix Corp.* 43,000 1,290,000
Parametric Technology Corp.* 44,600 2,965,900
PeopleSoft, Inc.* 70,600 3,035,800
Softkey International, Inc.* 122,600 2,835,125
Visioneer Communications, Inc.* 3,000 66,750
-----------
13,860,356
-----------
Electronic Components 4.1%
AMP, Inc. 100,000 3,837,500
DST Systems, Inc.* 68,400 1,949,400
Sanmina Holdings, Inc.* 48,900 2,536,687
-----------
8,323,587
-----------
Electronic Equipment 0.8%
Exide Electronics Group, Inc.* 9,800 144,550
Glenayre Technologies, Inc.* 22,400 1,394,400
Perkin-Elmer Corp. 200 7,550
-----------
1,546,500
-----------
Office Equipment 4.8%
Digital Equipment Corp.* 77,400 4,963,275
Gateway 2000, Inc.* 46,200 1,131,900
Network General Corp.* 11,100 370,462
Office Equipment (cont'd)
Sun Microsystems, Inc.* 71,800 $ 3,275,875
-----------
9,741,512
-----------
Total Science & Technology 43,250,680
-----------
Utility 2.9%
Telephone 2.9%
Mobile Media Corp. Cl.A* 11,800 262,550
Newbridge Networks Corp.* 107,500 4,447,812
Total Access Communications Public Co.
Ltd.* 174,400 1,133,600
-----------
5,843,962
-----------
Total Utility 5,843,962
-----------
Total Common Stocks (Cost $161,033,573) 192,268,618
-----------
Principal Maturity
Amount Date
- ----------------------------- --------- -------- -------------
Convertible Bonds 1.0%
Starbucks Corp. Cv. Sub.
Deb., 4.25% $1,900,000 11/1/2002 2,014,000
-----------
Total Convertible Bonds (Cost $1,900,124) 2,014,000
-----------
Commercial Paper 4.7%
Ford Motor Credit Co., 5.90% 484,000 1/2/1996 484,000
Ford Motor Credit Co., 5.77% 1,924,000 1/2/1996 1,924,000
Household Finance Corp.,
5.50% 7,055,000 1/4/1996 7,055,000
-----------
Total Commercial Paper (Cost $9,463,000) 9,463,000
-----------
Total Investments (Cost $172,396,697)--100.9% 203,745,618
Cash and Other Assets, Less Liabilities--(0.9)% (1,877,626)
-----------
Net Assets--100.0% $201,867,992
===========
Federal Income Tax Information:
At December 31, 1995, the net unrealized appreciation
of investments based on cost for Federal income tax
purposes of $171,662,547 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $ 37,433,992
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (5,350,921)
-----------
$ 32,083,071
===========
- -------------------------------------------------------------------------------
* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
+ Security restricted in accordance with Rule 144A under the Securities Act
of 1933, which allows for the resale of such securities among certain
qualified institutional buyers. The total cost and market value of Rule 144A
securities owned at December 31, 1995 were $2,028,748 and $2,228,376 (1.10%
of net assets), respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets and Liabilities
December 31, 1995
Statement of Operations
For the year ended December 31, 1995
Assets
Investments, at value (Cost $172,396,697) (Note 1) $203,745,618
Cash 1,717
Receivable for securities sold 39,848,936
Receivable for fund shares sold 2,232,762
Dividends and interest receivable 202,150
Other assets 2,107
-----------
246,033,290
Liabilities
Capital gains distribution payable 39,583,431
Payable for securities purchased 4,356,446
Accrued management fee (Note 2) 91,655
Accrued transfer agent and shareholder services
(Note 2) 20,026
Payable for fund shares redeemed 11,069
Accrued trustees' fees (Note 2) 10,574
Accrued distribution and service fees (Note 4) 7,528
Other accrued expenses 84,569
-----------
44,165,298
-----------
Net Assets $201,867,992
===========
Net Assets consist of:
Undistributed net investment income $ 206,529
Unrealized appreciation of investments 31,348,921
Distribution in excess of net realized gains (662,655)
Shares of beneficial interest (Note 5) 170,975,197
-----------
$201,867,992
===========
Net Asset Value and redemption price per share of
Class A shares ($2,378,920 / 338,988 shares of
beneficial interest) $7.02
===========
Maximum Offering Price per share of Class A shares
($7.02 / .955) $7.35
===========
Net Asset Value and offering price per share of
Class B shares ($10,683,834 / 1,551,711 shares
of beneficial interest)* $6.89
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($186,688,522
/ 26,577,304 shares of beneficial interest) $7.02
===========
Net Asset Value and offering price per share of
Class D shares ($2,116,716 / 307,691 shares of
beneficial interest)* $6.88
===========
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
Investment Income
Dividends, net of foreign taxes of $15,443 $ 2,126,752
Interest 330,634
---------
2,457,386
Expenses
Management fee (Note 2) 1,089,143
Custodian fee 129,992
Transfer agent and shareholder services (Note 2) 74,859
Registration fees 50,700
Trustees' fees (Note 2) 35,782
Reports to shareholders 32,853
Audit fee 24,346
Legal fee 3,624
Service fee--Class A (Note 4) 3,372
Distribution and service fees--Class B (Note 4) 51,224
Distribution and service fees--Class D (Note 4) 11,345
Miscellaneous 28,809
---------
1,536,049
---------
Net investment income 921,337
---------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 57,615,231
Net unrealized appreciation of investments 2,561,460
---------
Net gain on investments 60,176,691
---------
Net increase in net assets resulting from operations $61,098,028
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
Year ended December 31
----------------------------
1995 1994
- ----------------------------------- ----------- -------------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 921,337 $ 1,769,499
Net realized gain on investments* 57,615,231 25,250,259
Net unrealized appreciation
(depreciation) of investments 2,561,460 (35,361,052)
--------- -----------
Net increase (decrease) resulting
from operations 61,098,028 (8,341,294)
--------- -----------
Dividends from net investment income:
Class A (2,898) (4,236)
Class C (756,996) (1,816,088)
--------- -----------
(759,894) (1,820,324)
--------- -----------
Distributions from net realized gains:
Class A (568,862) (92,832)
Class B (2,759,387) (200,276)
Class C (56,277,393) (25,837,209)
Class D (549,837) (48,227)
--------- -----------
(60,155,479) (26,178,544)
--------- -----------
Net increase (decrease) from fund
share transactions (Note 5) 12,930,239 (27,522,240)
--------- -----------
Total increase (decrease) in net
assets 13,112,894 (63,862,402)
Net Assets
Beginning of year 188,755,098 252,617,500
--------- -----------
End of year (including
undistributed net investment
income of $206,529 and $64,801,
respectively) $201,867,992 $188,755,098
========= ===========
* Net realized gain for Federal
income tax purposes
(Note 1) $ 60,297,725 $ 26,178,544
========= ===========
Notes to Financial Statements
December 31, 1995
Note 1
State Street Research Growth Fund (the "Fund"), is a series of State Street
Research Growth Trust, formerly State Street Growth Trust (the "Trust"),
which is a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company. The Trust was organized in February, 1989 as a successor to State
Street Growth Fund, Inc., a Massachusetts corporation. The Fund is presently
the only series of the Trust.
The investment objective of the Fund is to provide long-term growth of
capital. In seeking to achieve its investment objective, the Fund invests
primarily in equity securities believed by the Investment Adviser to have
better than average growth potential over the years.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and pay a service fee equal to 0.25% of
average daily net assets. Class B shares are subject to a contingent deferred
sales charge on certain redemptions made within five years of purchase and
pay annual distribution and service fees of 1.00%. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after the issuance of the Class B shares. Class C
shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees. Class D shares are subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class D shares also pay annual distribution and service fees of 1.00%. The
Fund's expenses are borne pro-rata by each class, except that each class
bears expenses, and has exclusive voting rights with respect to provisions of
the Plan of Distribution, related specifically to that class. The Trustees
declare separate dividends on each class of shares.
The following significant policies are consistently followed by the Fund in
preparing its financial statements, and such policies are in conformity with
generally accepted accounting principles for investment companies.
A. Investments in Securities
Values for listed securities represent the last sale on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are
at the mean of the closing bid and asked quotations, except for securities
that may be restricted as to public resale, which are valued in accordance
with methods adopted by the Trustees. Security transactions are accounted for
on the trade date (date the order to buy or sell is executed), and dividends
declared but not received are accrued on the ex-dividend date. Interest
income is determined on the accrual basis. Realized gains and losses from
security transactions are reported on the basis of average cost of securities
delivered.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes (cont'd)
B. Federal Income Taxes
No provision for Federal income taxes is necessary since the Fund has elected to
qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods. It is also the intention of the Fund to
distribute an amount sufficient to avoid imposition of any Federal Excise Tax
under Section 4982 of the Internal Revenue Code.
C. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested semiannually. Net realized capital gains are distributed annually.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles. The difference is primarily due to the disposition of
securities that have different bases for financial reporting and tax
purposes.
D. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into a contract that provides for an annual
fee equal to 0.475% of the Fund's average daily net assets. In consideration
of these fees, the Adviser furnishes the Fund with management, investment
advisory, statistical and research facilities and services. The Adviser also
pays all salaries, rent and certain other expenses of management. The fees of
the Trustees not currently affiliated with the Adviser amounted to $35,782
during the year ended December 31, 1995.
State Street Research Shareholder Services, a division of State Street
Research Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the year ended December 31, 1995, the amount of
such expenses was $18,954.
Note 3
For the year ended December 31, 1995, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$512,963,794 and $566,085,289, respectively.
Note 4
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
to reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the year ended December 31, 1995,
fees pursuant to such plan amounted to $3,372, $51,224 and $11,345 for Class
A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan earned initial sales charges
aggregating $3,476 and $210, respectively, on sales of Class A shares of the
Fund during the year ended December 31, 1995, and that MetLife Securities,
Inc. earned commissions aggregating $2,120 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $18,143
and $557 on redemptions of Class B and Class D shares, respectively during
the same period.
<PAGE>
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At December 31, 1995, the
Adviser owned one share each of Class A, Class B and Class D of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------------------
1995 1994
------------------------- ----------------------------
Class A Shares Amount Shares Amount
- -------------------------------------- ---------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Shares sold 208,712 $ 1,886,012 47,443 $ 391,810
Issued upon reinvestment of:
Distributions from net realized gains 78,495 551,038 11,437 81,091
Dividends from net investment income 315 2,775 341 2,582
Shares redeemed (49,931) (451,405) (28,715) (237,146)
-------- --------- -------- ------------
Net increase 237,591 $ 1,988,420 30,506 $ 238,337
======== ========= ======== ============
Class B Shares Amount Shares Amount
- -------------------------------------- -------- --------- -------- ------------
Shares sold 1,044,801 $ 9,544,221 95,509 $ 797,077
Issued upon reinvestment of
distributions from net realized gains 352,023 2,425,440 26,274 184,443
Shares redeemed (65,041) (572,546) (18,494) (152,620)
-------- --------- -------- ------------
Net increase 1,331,783 $ 11,397,115 103,289 $ 828,900
======== ========= ======== ============
Class C Shares Amount Shares Amount
- -------------------------------------- -------- --------- -------- ------------
Shares sold 18,689 $ 168,373 1,054 $ 8,692
Issued upon reinvestment of:
Distributions from net realized gains 2,691,966 18,924,523 1,137,980 7,887,572
Dividends from net investment income 12,393 109,179 33,456 250,211
Shares redeemed (2,415,508) (21,806,684) (4,369,713) (36,946,991)
-------- --------- -------- ------------
Net increase (decrease) 307,540 $ (2,604,609) (3,197,223) $(28,800,516)
======== ========= ======== ============
Class D Shares Amount Shares Amount
- -------------------------------------- -------- --------- -------- ------------
Shares sold 199,449 $ 1,805,535 22,162 $ 187,612
Issued upon reinvestment of
distributions from net realized gains 74,313 511,275 6,869 48,217
Shares redeemed (20,783) (167,497) (3,007) (24,790)
-------- --------- -------- ------------
Net increase 252,979 $ 2,149,313 26,024 $ 211,039
======== ========= ======== ============
</TABLE>
<PAGE>
Financial Highlights
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Class B
--------------------------- ------------------------------
Year ended December 31 Year ended December 31
--------------------------- ------------------------------
1995*** 1994 1993* 1995*** 1994 1993**
- -------------------------------------- ------ ------- ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.09 $ 8.50 $ 9.63 $ 7.02 $ 8.46 $ 9.56
Net investment income (loss) .01 .05 .06 (.06) (.00) .03
Net realized and unrealized gain
(loss) on investments 2.30 (.38) .37 2.29 (.41) .42
Dividends from net investment income (.02) (.05) (.08) -- -- (.07)
Distributions from net realized gains (2.36) (1.03) (1.48) (2.36) (1.03) (1.48)
---- ----- ---- ---- ----- -------
Net asset value, end of year $ 7.02 $ 7.09 $ 8.50 $ 6.89 $ 7.02 $ 8.46
==== ===== ==== ==== ===== =======
Total return 32.57%+ (3.83)%+ 4.52%+++ 31.71%+ (4.80)%+ 4.64%+++
Net assets at end of year (000s) $ 2,379 $ 719 $ 602 $10,684 $1,544 $ 986
Ratio of operating expenses to
average net assets 0.89% 0.90% 0.96%++ 1.63% 1.63% 1.71%++
Ratio of net investment income
(loss) to average net assets 0.12% 0.54% 0.48%++ (0.69)% (0.20)% (0.36)%++
Portfolio turnover rate 234.43% 57.18% 68.36% 234.43% 57.18% 68.36%
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
--------------------------------------------------------------- ------------------------------
Year ended December 31 Year ended December 31
--------------------------------------------------------------- ------------------------------
1995*** 1994 1993 1992 1991 1995*** 1994 1993**
- ------------------------------ ---------- ----------- ---------- ---------- ---------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 7.08 $ 8.51 $ 9.26 $ 9.14 $ 7.44 $ 7.02 $8.45 $ 9.56
Net investment income (loss) .04 .07 .09 .14 .17 (.06) (.00) .03
Net realized and unrealized
gain (loss) on
investments(open diamond) 2.29 (.40) .74 .15 1.71 2.28 (.40) .41
Dividends from net investment
income (.03) (.07) (.10) (.14) (.18) -- -- (.07)
Distributions from net realized
gains (2.36) (1.03) (1.48) (.03) -- 2.36) (1.03)
(1.48)
-------- --------- ------- -------- ------- -------- -------- -------
Net asset value, end of year $ 7.02 $ 7.08 $ 8.51 $ 9.26 $ 9.14 $ 6.88 $7.02 $ 8.45
======== ========= ======= ======== ======= ======== ======== ========
Total return 33.02%+ (3.82)%+ 8.94%+ 5.71%+ 26.77%+ 31.57%+ (4.68)%+ 4.59%+++
0Net assets at end of year
(000s) $186,689 $186,108 $250,786 $263,781 $273,607 $2,117 $ 384 $186,108
Ratio of operating expenses
to average net assets 0.64% 0.64% 0.66% 0.57% 0.56% 1.63% 1.63% $242
Ratio of net investment income
(loss) to average net
assets 0.43% 0.78% 0.92% 1.56% 2.02% (0.67)% (0.20)% 1.71%++
Portfolio turnover rate 234.43% 57.18% 68.36% 35.60% 31.89% 234.43% 57.18% (0.34)%++
(open diamond)After provision for Federal
tax on retained capital
gains at end of year of -- -- -- $ .22 $ .12 -- -- 68.36%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ Annualized
* March 16, 1993 (commencement of share class designations) to December 31,
1993.
** March 18, 1993 (commencement of share class designations) to December 31,
1993.
*** Per-share figures have been calculated using the average shares method.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
+++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
<PAGE>
Report of Independent Accountants
To the Trustees of State Street Research Growth Trust
(formerly State Street Growth Trust) and
Shareholders of State Street Research Growth Fund:
We have audited the accompanying statement of assets and liabilities of State
Street Research Growth Fund, including the schedule of portfolio investments,
as of December 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
State Street Research Growth Fund as of December 31, 1995, the results of
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated therein, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 2, 1996
<PAGE>
State Street Research Growth Fund
Management's Discussion of Fund Performance
Growth Fund performed well in 1995 and prospered from both a booming stock
market and successful stock selection.
Technology stocks led the market for most of the year, and the Fund
participated and profited from this tech stock rally. The fourth quarter saw
some personal computer and semiconductor stocks fall out of favor with the
market, which hurt Fund performance somewhat. Eventually, the Fund reduced
technology holdings to 21% of the total portfolio and eliminated
semiconductor stocks altogether.
While retail stocks as a sector of the market did not fare very well in 1995,
the Fund had success with a number of retail holdings. Most of these stocks
were specialty retailers that concentrated in a specific niche and achieved a
substantial market share.
The Fund increased holdings in insurance stocks, which benefited from cost
cutting and offered good value.
December 31, 1995
The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The index is unmanaged and does not take sales charges into
consideration. Direct investment in the index is not possible; results are
for illustrative purposes only.
All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. During the periods prior to 1993 that
shares of the Fund were not offered to the general public, the Fund was not
subject to the cash inflows or higher redemptions or expenses that have
occurred since 1993, when the Fund commenced a continuous public offering.
Performance for a class includes periods prior to the adoption of class
designations. Performance reflects up to maximum 4.5% front-end or 5%
contingent deferred sales charges. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and
institutions. Performance prior to class designations in 1993 does not
reflect annual 12b-1 fees of .25% for "A" shares and 1% for "B" and "D"
shares, which will reduce subsequent performance.
Comparison Of Change In Value Of A
$10,000 Investment In Growth Fund
and The S&P 500
Class A Shares
****************************[LINE CHART]**************************************
Average Annual Total Return
1 Year 5 Years 10 Years
+26.61% +12.14% +12.17%
Growth
Fund S&P 500
1/86 9500 10000
12/86 10827 11867
12/87 11844 12490
12/88 12942 14558
12/89 18097 19163
12/90 16982 18567
12/91 21529 24212
12/92 22758 26054
12/93 24734 28674
12/94 23787 29051
12/95 31535 39955
******************************************************************************
Class B Shares
****************************[LINE CHART]**************************************
Average Annual Total Return
1 Year 5 Years 10 Years
+26.80% +12.43% +12.43%
Growth
Fund S&P 500
1/86 10000 10000
12/86 11337 11867
12/87 12402 12490
12/88 13552 14558
12/89 18950 19163
12/90 17782 18567
12/91 22543 24212
12/92 23830 26054
12/93 25742 28674
12/94 24507 29051
12/95 32278 39955
*******************************************************************************
Class C Shares
****************************[LINE CHART]**************************************
Average Annual Total Return
1 Year 5 Years 10 Years
+33.02% +13.31% +12.75%
Growth
Fund S&P 500
1/86 10000 10000
12/86 11337 11867
12/87 12402 12490
12/88 13552 14558
12/89 18950 19163
12/90 17782 18567
12/91 22543 24212
12/92 23830 26054
12/93 25960 28674
12/94 24967 29051
12/95 33212 39955
*******************************************************************************
Class D Shares
****************************[LINE CHART]**************************************
Average Annual Total Return
1 Year 5 Years 10 Years
+30.59% +12.66% +12.43%
Growth
Fund S&P 500
1/86 10000 10000
12/86 11337 11867
12/87 12402 12490
12/88 13552 14558
12/89 18950 19163
12/90 17782 18567
12/91 22543 24212
12/92 23830 26054
12/93 25729 28674
12/94 24524 29051
12/95 32266 39955
*******************************************************************************
Growth Fund (solid line)
S&P 500 (dashed line)
<PAGE>
STATE STREET GROWTH TRUST
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements included in PART A (Prospectus) of this
Registration Statement:
Financial Highlights for State Street
Research Growth Fund for the fiscal years
ended December 31, 1986 through December 31, 1995.
(2) Financial Statements included in PART B
(Statement of Additional Information) of this
Registration Statement:
For State Street Research Growth Fund for the fiscal year
ended December 31, 1995 (except as provided below):
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(fiscal years ended December 31, 1995
and December 31, 1994)
Notes to Financial Statements
(including financial highlights)
Report of Independent Accountants
Management's Discussion of Fund
Performance
(b) Exhibits:
(1) First Amended and Restated
Master Trust Agreement and Amendment No. 1 to
First Amended and Restated Master Trust
Agreement
(1)(b)
(2)(a) By-Laws (i)
(2)(b) Amendment to By-Laws effective
September 30, 1992 (iv)
(4) Specimen Share Certificate (i)
C-1
<PAGE>
(5) First Amended and Restated Investment Advisory
Contract
(6)(a) Distribution Agreement with State
Street Research Investment
Services, Inc. (vi)
(6)(b) Form of Selected Dealer Agreement and Form of
Supplement No. 1 to Selected Dealer Agreement
(6)(c) Form of Bank and Bank Affiliated
Broker-Dealer Agreement (viii)
(8)(a) Custodian Contract (iii)
(8)(c) Shareholders' Administrative
Services Agreement (iii)
(10) Consent, and Opinion of counsel on
legality of shares being issued
with respect to State Street Growth Fund (iv)
(11) Consent of Coopers & Lybrand L.L.P.
(14)(a) State Street Research IRA: Forms Booklet, Transfer of
Assets/Direct Rollover Form (viii)
(14)(b) State Street Research 403(b): Brochure, Maximum
Salary Reduction Worksheet, Account Application,
Salary Reduction Agreement and Transfer of 403(b)
Assets Form
(15) Plan of Distribution Pursuant to
Rule 12b-1 (vi)
(16) Calculation of Performance Data
(vii)
(17) Multiple Class Expense Allocation Plan Adopted
Pursuant To Rule 18f-3
(18)(a) Powers of Attorney
C-2
<PAGE>
(18)(b) Certificate of Board Resolution Respecting Powers of
Attorney
(19) Application Forms (viii)
(27) Financial Data Schedules
- -------------------------
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
Footnote
Reference Registration/Amendment Date Filed
i Amendment No. 11 to April 26, 1989
Registration Statement
ii Amendment No. 12 to April 27, 1990
Registration Statement
iii Amendment No. 14 to April 30, 1991
Registration Statement
iv Registration Statement November 25, 1992
under Securities Act of
1933
v Pre-Effective Amendment January 28, 1993
No. 1
vi Post-Effective Amendment March 19, 1993
No. 1
vii Post-Effective Amendment April 29, 1994
No. 2
viii Post-Effective Amendment April 28, 1995
No. 3
C-3
<PAGE>
Item 25. Persons Controlled by or under
Common Control with Registrant
Inapplicable
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders (at 3/31/96)
Shares of
Beneficial Interest
Class A 440
Class B 584
Class C 783
Class D 100
Item 27. Indemnification
Under Article VI of the Registrant's Master Trust Agreement each of its Trustees
and officers or persons serving in such capacity with another entity at the
request of the Registrant ("Covered Person") shall be indemnified against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office (such conduct
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in section
2(a)(19) of the 1940 Act nor parties to the
C-4
<PAGE>
proceeding, or (b) an independent legal counsel in a written opinion.
Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's distributor, the Registrant
has agreed to indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may hereafter be an officer,
director, employee or agent of State Street Research Investment Services, Inc.
against any loss, damage or expense reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon a violation of any of its convenants herein contained or
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements made
not misleading, in a Registration Statement or Prospectus of the Registrant, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written information furnished by State Street Research
Investment Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers, underwriters and
controlling persons of the Registrant, pursuant to Article VI of the
Registrant's Master Trust Agreement, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy expressed in the Act and will be governed by the final
adjudication of such issue.
C-5
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Investment Adviser Various investment Boston, MA
Research & advisory clients
Management
Company
Bangs, Linda L. None
Vice President
Barton, Michael E. None
Vice President
Bennett, Peter C. Vice President State Street Research Capital Trust Boston, MA
Director and Vice President State Street Research Exchange Trust Boston, MA
Executive Vice Vice President State Street Research Growth Trust Boston, MA
President Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust
Director State Street Research Investment Services, Inc Boston, MA
Director Boston Private Bank & Trust Co. Boston, MA
President and Director Christian Camps & Conferences, Inc. Boston, MA
Chairman and Trustee Gordon College Wenham, MA
Brown, Susan H. None
Vice President
Burbank, John F. None
Vice President
Canavan, Joseph W. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
C-6
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Carmen, Michael T. None
Vice President
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President Director Avalon, Inc. Boston, MA
DiFazio, Susan M.W. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Dillman, Thomas J Director of Research Bank of New York New York, NY
Senior Vice President (until 6/95)
Drake, Susan W. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President (until 2/96)
Duggan, Peter J. Vice President New England Mutual Life Insurance Company Boston, MA
Senior Vice (until 8/94)
President
Evans, Gordon Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President (Vice President
until 3/96)
Federoff, Alex G. None
Vice President
Gardner, Michael D. Partner Prism Group Seattle, WA
Senior Vice President
(Vice President until
6/95)
Geer, Bartlett R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
C-7
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Glovsky, Charles S. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
Treasurer and Director North Conway Institute Boston, MA
Haverty, Jr., Lawrence J. None
Senior Vice President
Heineke, George R. None
Vice President
Jackson, Jr., Trustee Certain trusts of related and
F. Gardner non-related individuals
Senior Vice President Trustee Vincent Memorial Hospital Boston, MA
Jamieson, Frederick H. Vice President and Asst. Treasurer State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Vice President and Asst. Treasurer SSRM Holdings, Inc. Boston, MA
(Vice President Vice President and Controller MetLife Securities, Inc. New York, NY
until 6/95)
Kallis, John H. Vice President State Street Research Financial Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Director and President K&G Enterprises Washington, D.C.
Kasper, M. Katherine None
Vice President
C-8
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Vice President
Kobrick, Frederick R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Growth Trust Boston, MA
Member Harvard Business School Association Cambridge, MA
Member National Alumni Council, Boston University Boston, MA
Leary, Eileen M. None
Vice President
Lintz, Carol None
Vice President
McNamara, III, Francis J. Senior Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Senior Vice President, and General Counsel
Secretary and Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Capital Trust Boston, MA
Secretary and General Counsel State Street Research Exchange Trust Boston, MA
Secretary and General Counsel State Street Research Growth Trust Boston, MA
Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel State Street Research Equity Trust Boston, MA
Secretary and General Counsel State Street Research Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money Market Trust Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Clerk and Director State Street Research Energy, Inc. Boston, MA
Senior Vice President, General The Boston Company, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General Boston Safe Deposit and Trust Company Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General The Boston Company Advisors, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
C-9
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Maus, Gerard P. Treasurer State Street Research Equity Trust Boston, MA
Director, Executive Treasurer State Street Research Financial Trust Boston, MA
Vice President Treasurer State Street Research Income Trust Boston, MA
and Treasurer Treasurer State Street Research Money Market Trust Boston, MA
Treasurer State Street Research Tax-Exempt Trust Boston, MA
Treasurer State Street Research Capital Trust Boston, MA
Treasurer State Street Research Exchange Trust Boston, MA
Treasurer State Street Research Growth Trust Boston, MA
Treasurer State Street Research Master Investment Trust Boston, MA
Treasurer State Street Research Securities Trust Boston, MA
Director, Executive Vice President, State Street Research Investment Services, Inc. Boston, MA
Treasurer and Chief Financial Officer
Director and Treasurer State Street Research Energy, Inc. Boston, MA
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Director (until 11/94) GFM International Investors, Ltd. London, England
Treasurer and Chief Financial SSRM Holdings, Inc. Boston, MA
Officer
Treasurer MetLife - Securities, Inc. New York, NY
Milder, Judith J. None
Senior Vice President
(Vice President
until 6/95)
Miller, Joan D. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Moore, Jr., Thomas P. Director Hibernia Savings Bank Quincy, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Exchange Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust Boston, MA
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Vice President
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
C-10
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Pannell, James C. None
Vice President
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
(Vice President
until 7/94)
Ragsdale, Easton Senior Vice President Kidder, Peabody, & Co. Incorporated New York, NY
Vice President (until 12/94)
Rawlins, Jeffrey A. None
Vice President
Rice III, Daniel Joseph Vice President State Street Research Equity Trust Boston, MA
Senior Vice President
Richards, Scott None
Vice President
Romich, Douglas A. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
Row, III, Walter A. None
Vice President
C-11
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Schrage, Michael None
Vice President
Schultz, David C. Director (non-voting) Capital Trust, S.A. Luxembourg
Executive Vice Director Alex Brown Capital, Ltd. Hamilton, Bermuda
President
(Senior Vice President Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
until 12/94, Vice Member Association of Investment
President until Management Sales Executives Atlanta, GA
4/94) Member, Investment Committee Lexington Christian Academy Lexington, MA
Shaver, Jr., C. Troy President and Chief Executive State Street Research Investment Services, Inc. Boston, MA
Executive Vice Officer
President President and Chief Executive John Hancock Funds, Inc. Boston, MA
Officer
Shean, William G. None
Vice President
Shively, Thomas A. Vice President State Street Research Financial Trust Boston, MA
Director and Vice President State Street Research Money Market Trust Boston, MA
Executive Vice Vice President State Street Research Tax-Exempt Trust
President (Senior Director State Street Research Investment Services, Inc Boston, MA
Vice President Vice President State Street Research Securities Trust Boston, MA
until 6/93)
Shoemaker, Richard D. None
Senior Vice President
Strelow, Dan R. None
Senior Vice President
Stuka, Paul U.S. Portfolio Consultant Teton Partners Boston, MA
Senior Vice President (until 4/95)
C-12
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Swanson, Amy McDermott None
Senior Vice President
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
(Vice President
until 6/95)
Verni, Ralph F. Chairman, President, Chief State Street Research Capital Trust Boston, MA
Chairman, President, Executive Officer and Trustee
Chief Executive Chairman, President, Chief State Street Research Exchange Trust Boston, MA
Officer and Executive Officer and Trustee
Director Chairman, President, Chief State Street Research Growth Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Master Investment Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Securities Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Equity Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Financial Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Income Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Money Market Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Tax-Exempt Trust Boston, MA
Executive Officer and Trustee
Chairman and Director State Street Research Investment Services, Inc. Boston, MA
(President and Chief
Executive Officer until 2/96)
President and Director State Street Research Energy, Inc. Boston, MA
Chairman and Director Metric Holdings, Inc. San Francisco, CA
Director and Officer Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Chairman of the Board and Director MetLife Securities, Inc. New York, NY
Chairman and Director (until 11/94) GFM International Investors, Ltd. London, England
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
C-13
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
Ward, Geoffrey None
Senior Vice President
Weiss, James M. Chief Investment Officer IDS Equity Advisory Group, Inc. Minneapolis, MN
Senior Vice President (until 12/95)
Westvold, President and Director Bondurant, Inc. Medfield, MA
Elizabeth McCombs (until 2/94)
Vice President
Wing, Darman A. Senior Vice President and State Street Research Investment Services, Inc. Boston, MA
Vice President, Asst. Clerk (Vice President
Assistant Secretary until 6/95)
and Assistant Assistant Secretary State Street Research Capital Trust Boston, MA
General Counsel Assistant Secretary State Street Research Exchange Trust Boston, MA
Assistant Secretary State Street Research Growth Trust Boston, MA
Assistant Secretary State Street Research Master Investment Trust Boston, MA
Assistant Secretary State Street Research Securities Trust Boston, MA
Assistant Secretary State Street Research Equity Trust Boston, MA
Assistant Secretary State Street Research Financial Trust Boston, MA
Assistant Secretary State Street Research Income Trust Boston, MA
Assistant Secretary State Street Research Money Market Trust Boston, MA
Assistant Secretary State Street Research Tax-Exempt Trust Boston, MA
Assistant Secretary SSRM Holdings, Inc. Boston, MA
Woodbury, Robert S. Employee Metropolitan Life Insurance Company New York, NY
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Growth Trust Boston, MA
President (until 2/96)
C-14
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
(Vice President
until 8/93)
Yogg, Michael Richard Vice President MetLife - State Street Financial Trust Boston, MA
Senior Vice Vice President State Street Research Income Trust Boston, MA
President (until 2/96)
</TABLE>
C-15
<PAGE>
Item 29. Principal Underwriters
(a) State Street Research Investment Services, Inc. serves as principal
underwriter for State Street Research Equity Trust, State Street Research
Financial Trust, State Street Research Income Trust, State Street Research Money
Market Trust, State Street Research Tax-Exempt Trust, State Street Research
Capital Trust, State Street Research Growth Trust, State Street Research Master
Investment Trust, State Street Research Securities Trust and State Street
Research Portfolios, Inc.
(b) Directors and Officers of State Street Research Investment Services,
Inc. are as follows:
(1) (2) (3)
Positions Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Ralph F. Verni Chairman of Chairman of
One Financial Center the Board the Board,
Boston, MA 02111 and Director President,
Chief Executive
Officer and
Trustee
Peter C. Bennett Director Vice President
One Financial Center
Boston, MA 02111
Gerard P. Maus Executive Vice Treasurer
One Financial Center President,
Boston, MA 02111 Treasurer,
Chief Financial
Officer and Director
Thomas A. Shively Director None
One Financial Center
Boston, MA 02111
C. Troy Shaver, Jr. President and None
One Financial Center Chief Executive
Boston, MA 02111 Officer
George B. Trotta Executive Vice None
One Madison Avenue President
New York, NY 10010
Dennis Barghaan Senior Vice None
One Financial Center President
Boston, MA 02111
C-16
<PAGE>
(1) (2) (3)
Positions Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Peter Borghi Senior Vice None
One Financial Center President
Boston, MA 02111
Paul V. Daly Senior Vice None
One Financial Center President
Boston, MA 02111
Susan M.W. DiFazio Senior Vice None
One Financial Center President
Boston, MA 02111
Gordon Evans Senior None
One Financial Center Vice President
Boston, MA 02111
Robert Haeusler Senior Vice None
One Financial Center President
Boston, MA 02111
Francis J. McNamara, III Senior Vice Secretary
One Financial Center President and
Boston, MA 02111 Clerk
Gregory R. McMahan Senior Vice None
One Financial Center President
Boston, MA 02111
Joan D. Miller Senior Vice None
One Financial Center President
Boston, MA 02111
Richard P. Samartin Senior Vice None
One Financial Center President
Boston, MA 02111
Darman A. Wing Senior Vice President Assistant
One Financial Center and Assistant Secretary
Boston, MA 02111 Clerk
Linda Grasso Vice President None
One Financial Center
Boston, MA 02111
C-17
<PAGE>
(1) (2) (3)
Positions Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Frederick H. Jamieson Vice President None
One Financial Center and Assistant
Boston, MA 02111 Treasurer
Item 30. Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 31. Management Services
(a) Inapplicable.
Item 32. Undertakings
(a) Inapplicable.
(b) Inapplicable.
(c) Deleted.
(d) The Registrant undertakes to hold a special meeting of shareholders of
the Trust for the purpose of voting upon the question of removal of any trustee
or trustees when requested in writing to do so by the recordholders of not less
than 10 per centum of the outstanding shares of the Trust and, in connection
with such meeting, to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
(e) The Registrant has elected to include the information required by Item
5A of Form N-1A in its annual report to shareholders. The Registrant undertakes
to furnish each person to whom a prospectus is delivered with a copy of the
applicable fund's latest annual report to shareholders upon request and without
charge.
C-18
<PAGE>
NOTICE
A copy of the Declaration of Trust of the Registrant is on file with the
Secretary of State of the Commonwealth of Massachusetts and notice is hereby
given that the obligations of the Registrant hereunder, and the authorization,
execution and delivery of this amendment to the Registrant's Registration
Statement, shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Registrant as individuals or
personally, but shall bind only the property of the Funds comprising the series
of the Registrant, as provided in the Declaration of Trust. Each Fund of the
Registrant shall be solely and exclusively responsible for all of its direct or
indirect debts, liabilities, and obligations, and no other Fund shall be
responsible for the same.
C-19
<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 Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 4 to its Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Boston and the Commonwealth of Massachusetts on the 26th day of April, 1996.
STATE STREET RESEARCH GROWTH TRUST
By: *
_____________________________
Ralph F. Verni
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed on the
above date by the following persons in the capacities indicated.
Signature Capacity
--------- --------
*
______________________________ Trustee, Chairman of
Ralph F. Verni the Board, President
and Chief Executive Officer
(principal executive
officer)
*
______________________________ Treasurer (principal
Gerard P. Maus financial and accounting
officer)
*
______________________________ Trustee
Edward M. Lamont
*
______________________________ Trustee
Robert A. Lawrence
C-20
<PAGE>
*
______________________________ Trustee
Dean O. Morton
*
______________________________ Trustee
Thomas L. Phillips
*
______________________________ Trustee
Toby Rosenblatt
*
______________________________ Trustee
Michael S. Scott Morton
*
______________________________ Trustee
Jeptha H. Wade
*By: /s/ Francis J. McNamara, III
______________________________________________
Francis J. McNamara, III, Attorney-in-Fact
under Powers of Attorney dated April 25, 1996 filed herewith.
C-21
<PAGE>
1933 Act Registration No. 33-55024
1940 Act File No. 811-985
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 21 [X]
-------------------
STATE STREET RESEARCH GROWTH TRUST
(Exact Name of Registrant as Specified in
Master Trust Agreement)
---------------------
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(1) First Amended and Restated Master Trust Agreement and
Amendment No. 1 to First Amended and Restated Master Trust
Agreement
(5) First Amended and Restated Investment Advisory Contract
(6)(b) Form of Selected Dealer Agreement and Form of Supplement No. 1
to Selected Dealer Agreement
(11) Consent of Coopers & Lybrand L.L.P.
(14)(b) State Street Research 403(b): Brochure, Maximum Salary
Reduction Worksheet, Account Application, Salary Reduction
Agreement and Transfer of 403(b) Assets Form
(17) Multiple Class Expense Allocation Plan Adopted Pursuant to
Rule 18f-3
(18)(a) Powers of Attorney
(18)(b) Certificate of Board Resolution Respecting Powers of Attorney
(27) Financial Data Schedules
STATE STREET GROWTH TRUST
FIRST AMENDED AND RESTATED
MASTER TRUST AGREEMENT
The AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts on the
7th day of February, 1989, by the Trustees thereunder, and by the holders of
shares of beneficial interest to be issued thereunder as therein provided, is
hereby amended and restated in its entirety this 5th day of February, 1993.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial interest
in separate series, each separate series to be a Sub-Trust hereunder, and to
issue classes of Shares of any Sub-Trust or divide Shares of any Sub-Trust into
two or more classes, all in accordance with the provisions hereinafter set
forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust or Sub-Trusts (as hereinafter
defined) created hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as State Street Growth Trust
and the Trustees shall conduct the business of the Trust under that name or any
other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
<PAGE>
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time;
(b) "Class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of Article
IV;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Declaration of Trust" shall mean this First Amended and Restated
Agreement and Declaration of Trust as amended or restated from time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust and each Sub-Trust of the Trust and/or any
class of any Sub-Trust (as the context may require) shall be divided from time
to time;
(h) "Sub-Trust" or "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article IV;
(i) "Trust" refers to the Massachusetts business trust established by this
Declaration of Trust, as amended from time to time, inclusive of each and every
Sub-Trust established hereunder; and
(j) "Trustees" refers to the Trustees of the Trust and of each Sub-Trust
hereunder named herein or elected in accordance with Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
2
<PAGE>
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The Trustees hereof are Francis H. Burr, Martin Feldstein,
Edward M. Lamont, Robert A. Lawrence, Bill O. Mead, Dean O. Morton, Thomas L.
Phillips, William P. Rich, Toby Rosenblatt, Michael S. Scott Morton, Ralph F.
Verni and Jeptha H. Wade.
(b) Number. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase or decrease (to not less than two at any time
after the effective date of the Trust's Registration Statement on Form N-1A with
the Commission) the number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his term,
but the number of Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Election and Term. The Shareholders shall elect a Board of Trustees at
the first meeting of Shareholders following the initial public offering of
Shares. Each Trustee, whether named above or hereafter becoming a Trustee, shall
serve as a Trustee of the Trust and of each Sub-Trust hereunder during the
lifetime of this Trust and until its termination as hereinafter provided except
as such Trustee sooner dies, resigns or is removed. The Trustees may elect their
own successors, and may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies; provided, however, that the Shareholders shall have the right to
elect Trustees subsequent to the initial election contemplated by this Section
3.1(c) in the event there shall at any time be no Trustees in office or when and
to the extent otherwise required by Section 16(a) of the 1940 Act.
(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument and shall be effective as to the Trust and each Sub-Trust
hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any time:
(i) by written instrument, signed by at least two-thirds of the number of
Trustees in office immediately prior to such removal, specifying the date upon
3
<PAGE>
which such removal will become effective; or (ii) by vote of Shareholders
holding not less than two-thirds of the shares then outstanding, cast in person
or by proxy at any meeting called for the purpose. Any such removal shall be
effective as to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or after
the effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this Declaration of
Trust and the appointment is effective, the Trust estate shall vest in the new
Trustee, together with the continuing Trustees, without any further act or
conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not operate to
annul or terminate the Trust or any Sub-Trust hereunder, or to revoke or
terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing to be
a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and
4
<PAGE>
authority to do any and all acts and to make and execute any and all contracts
and instruments that they may consider necessary or appropriate in connection
with the management of the Trust. The Trustees shall not be bound or limited by
present or future laws or customs with regard to investment by trustees or
fiduciaries, but shall have full authority and absolute power and control over
the assets of the Trust and the business of the Trust to the same extent as if
the Trustees were sole owners of the assets of the Trust and the business in
their own right, including such authority, power and control to do all acts and
things as they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may amend
and repeal them to the extent that such ByLaws do not reserve that right to the
Shareholders; they may sue or be sued in the name of the Trust; they may from
time to time in accordance with the provisions of Section 4.1 hereof establish
Sub-Trusts, each such Sub-Trust to operate as a separate and distinct investment
medium and with separately defined investment objectives and policies and
distinct investment purposes; from time to time in accordance with the
provisions of Section 4.1 hereof establish classes of Shares of any Series or
Sub-Trust or divide the Shares of any Series or Sub-Trust into classes; they may
as they consider appropriate elect and remove officers and appoint and terminate
agents and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of all
of the foregoing; they may appoint from their own number, and terminate, any one
or more committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 3.3 they may employ one or more advisers, administrators, depositories
and custodians and may authorize any depository or custodian to employ
subcustodians or agents and to deposit all or any part of such assets in a
system or systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents or any of
the foregoing, provide for the distribution of Shares by the Trust through one
or more distributors, principal underwriters or otherwise, and set record dates
or times for the determination of Shareholders or various of them with respect
to various matters; they may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the Trust,
to any committee of the
5
<PAGE>
Trustees and to any employee, adviser, administrator, distributor, depository,
custodian, transfer and dividend disbursing agent, or any other agent or
consultant of the Trust such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs of
the Trust, including without implied limitation the power and authority to act
in the name of the Trust and any Sub-Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property, and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property in a
form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust of any Sub-Trust
or in the name of a custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
6
<PAGE>
(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge the
assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
7
<PAGE>
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(n) Distribution Plans. To adopt on behalf of the Trust or any Sub-Trust a
plan of distribution and related agreements thereto pursuant to the terms of
Rule 12b-1 of the 1940 Act and to make payments from the assets of the Trust or
the relevant Sub-Trust or Sub-Trusts pursuant to said Rule 12b-1 plan.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees on
behalf of the Trust or any Sub-Trust may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least one-half of
the Trustees then in the office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office (or such larger or different number
as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other types of organizations, or individuals (a
"Contracting Party"), to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or on behalf
of the Trust and/or any Sub- Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such
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investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the Trustees and
in conformity with any policies of the Trustees with respect to the operations
of the Trust and each Sub-Trust (including each class thereof), to supervise all
or any part of the operations of the Trust and each Sub-Trust, and to provide
all or any part of the administrative and clerical personnel, office space and
office equipment and services appropriate for the efficient administration and
operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each Sub-Trust
(including any classes thereof), to be principal underwriter of such Shares,
and/or to act as agent of the Trust and each Sub-Trust in the sale of Shares and
the acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agent. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof; and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or part of the accounting responsibilities,
whether with respect to the Trust's properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relating to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
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The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any
Contracting Party, or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust or
any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
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connection with the Trust or any Sub-Trust and/or one or more classes of Shares
thereof, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository, custodian,
transfer agent, dividend disbursing agent, accounting agent, Shareholder
servicing agent, and such other agents, consultants and independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust for their
services as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all with par value $.001 per Share, but the
Trustees shall have the authority from time to time to issue Shares in one or
more Series (each of which Series of Shares shall be a separate and distinct
Sub-Trust of the Trust, including without limitation those Sub-Trusts
specifically established and designated in Section 4.2), as they deem necessary
or desirable. For all purposes under this Declaration of Trust or otherwise,
including, without implied limitation: (i) with respect to the rights of
creditors and (ii) for purposes of interpreting the relative rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue
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classes of Shares of any Sub-Trust or divide the Shares of any Sub-Trust into
classes, each class having such different dividend, liquidation, voting and
other rights as the Trustees may determine, and may establish and designate the
specific classes of Shares of each Sub-Trust. The fact that a Sub-Trust shall
have initially been established and designated without any specific
establishment or designation of classes (i.e., that all Shares of such Sub-Trust
are initially of a single class), or that a Sub-Trust shall have more than one
established and designated class, shall not limit the authority of the Trustees
to establish and designate separate classes, or one or more further classes, of
said Sub-Trust without approval of the holders of the initial class thereof, or
previously established and designated class or classes thereof, provided that
the establishment and designation of such further separate classes would not
adversely affect the rights of the holders of the initial or previously
established and designated class or classes.
The number of authorized Shares and the number of Shares of each Sub-Trust
or class thereof that may be issued is unlimited, and the Trustees may issue
Shares of any Sub-Trust or class thereof for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in Section
5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of the Shares of such Sub-Trust or class,
(ii) upon the execution of an instrument in writing by an officer of the Trust
pursuant to the vote of a
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majority of the Trustees, or (iii) as otherwise provided in either such
instrument. At any time that there are no Shares outstanding of any particular
Sub-Trust or class previously established and designated the Trustees may by an
instrument executed by a majority of their number (or by an instrument executed
by an officer of the Trust pursuant to a vote of a majority of the Trustees)
abolish that Sub-Trust or class and the establishment and designation thereof.
Each instrument establishing and designating any Sub-Trust shall have the status
of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Sub-Trust (including any classes thereof) of the Trust to the same extent
as if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
Shares of any Sub-Trust (including any classes thereof) from any such person or
any such organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such Sub-Trust
(including any classes thereof) generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate further Sub-Trusts and classes, the Trustees hereby establish and
designate one Sub-Trust: the "State Street Research Growth Fund." The Shares of
such Sub-Trust and any Shares of any further Sub-Trusts that may from time to
time be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Sub-Trust at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the Trust
for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Sub-Trust or class thereof and shall irrevocably
belong to that Sub-Trust (and be allocable to any classes thereof) for all
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or
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liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items (as hereinafter defined) allocated to that Sub-Trust as
provided in the following sentence, are herein referred to as "assets belonging
to" that Sub-Trust. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Sub-Trust (collectively "General
Items"), the Trustees shall allocate such General Items to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items so allocated to a particular Sub-Trust shall
belong to that Sub-Trust (and be allocable to any classes thereof). Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Sub-Trusts (including any classes thereof) for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
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The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust or in the case of a class, belonging to that Sub-Trust and allocable
to that class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class thereof shall be
distributed pro rata to the holders of Shares of that Sub- Trust or class in
proportion to the number of Shares of that Sub-Trust or class held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a combination
thereof as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (h) of Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust and each class thereof that has been
established and designated shall be entitled to receive, when and as declared by
the Trustees, the excess of the assets belonging to that Sub-Trust, or in the
case of a class, belonging to that Sub-Trust and allocable to that class, over
the liabilities belonging to that Sub-Trust or class. The assets so
distributable to the Shareholders of any particular Sub-Trust or class thereof
shall be distributed among such Shareholders in proportion to the number of
Shares of that Sub-Trust or class thereof held by them and recorded on the books
of the Trust. The liquidation of any particular Sub-Trust or class thereof may
be authorized at any time by vote of a majority of the Trustees then in office.
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(e) Voting. On each matter submitted to a vote of the Shareholders, each
holder of a Share of each Sub-Trust or class thereof shall be entitled to one
vote for each whole Share standing in his name on the books of the Trust,
irrespective of the series thereof, and all Shares of all series shall vote as a
single class ("Single Class Voting"); provided, however, that (a) as to any
other matter with respect to which a separate vote of one or more series or
class is required by the 1940 Act, such requirements as to a separate vote by
such series or class shall apply in lieu of Single Class Voting as described
above; and (b) as to any matter which affects the interests of one or more
particular series, only the holders of Shares of the one or more affected series
or class shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Shares of that Sub-Trust or class
thereof at a redemption price equal to the net asset value per Share of that
Sub-Trust or class thereof next determined in accordance with subsection (h) of
this Section 4.2 after the Shares are properly tendered for redemption, subject
to any contingent deferred sales charge in effect at the time of redemption.
Payment of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class thereof that
has been established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that failure to so redeem may have materially adverse consequences to the Trust
or any Sub-Trust or to the holders of the Shares of the Trust or any Sub-Trust
thereof or class thereof, or (b) upon such other conditions as may from time to
time be determined by the
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Trustees and set forth in the then current Prospectus of the Trust with respect
to maintenance of Shareholder accounts of a minimum amount. Upon such redemption
the holders of the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust shall
be (i) in the case of a Sub-Trust whose Shares are not divided into classes, the
quotient obtained by dividing the value of the net assets of that Sub-Trust
(being the value of the assets belonging to that Sub-Trust less the liabilities
belonging to that Sub-Trust) by the total number of Shares of that Sub-Trust
outstanding, and (ii) in the case of a class of Shares of a Sub-Trust whose
Shares are divided into classes, the quotient obtained by dividing the value of
the net assets of that Sub-Trust allocable to such class (being the value of the
assets belonging to that Sub-Trust allocable to such class less the liabilities
belonging to such class) by the total number of Shares of such class
outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of any
Sub-Trust at a designated constant dollar amount and in connection therewith may
adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust his
pro rata portion of the total number of Shares required to be cancelled in order
to permit the net asset value per Share of that Sub-Trust to be maintained,
after reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his investment in
any Sub-Trust with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence in the
event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub- Trust or class
and at such other times as may be permitted by the Trustees.
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(j) Equality. Except as provided herein or in the instrument designating
and establishing any class of Shares or any Sub-Trust, all Shares of each
particular Sub-Trust or class thereof shall represent an equal proportionate
interest in the assets belonging to that Sub- Trust, or in the case of a class,
belonging to that Sub-Trust and allocable to that class (subject to the
liabilities belonging to that Sub-Trust or class), and each Share of any
particular Sub- Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or class or in any way
affecting the rights of Shares of any other Sub-Trust or class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if any such
fractional Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Sub-Trust or class, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub- Trust or class thereof in
accordance with such requirements and procedures as may be established by the
Trustees.
(m) Class Differences. The relative rights and preferences of the classes
of any Sub-Trust may differ in such other respects as the Trustees may determine
to be appropriate in their sole discretion, provided that such differences are
set forth in the instrument establishing and designating such classes and
executed by a majority of the Trustees (or by an instrument executed by an
officer of the Trust pursuant to a vote of a majority of the Trustees).
Section 4.3 Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Sub-Trust and each
class thereof that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider
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appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Sub-Trust and class thereof held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept investments
in the Trust and each Sub-Trust thereof from such persons and on such terms and
for such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no pre-emptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or take
any action in court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to demand
payment for their shares or to any other rights of dissenting Shareholders in
the event the Trust participates in any transaction which would give rise to
appraisal or dissenters' rights by a Shareholder of a
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corporation organized under Chapter 156B of the General Laws of the Commonwealth
of Massachusetts, or otherwise.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is as required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any Sub-Trust to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Sub-Trust thereof or the Shareholders (provided, however,
that a Shareholder of a particular Sub-Trust shall not be entitled to a
derivative or class action on behalf of any other Sub-Trust (or Shareholder of
any other Sub- Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the ByLaws to be taken by Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the
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time, place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. The Trustees shall promptly
call and give notice of a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so in writing by
Shareholders holding not less than 10% of the Shares then outstanding. If the
Trustees shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at least 10%
of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 10% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a reasonable date and
time prior to the date of any meeting of Shareholders or other action as the
date and time of record for the determination of Shareholders entitled to vote
at such meeting or any adjournment thereof or to be treated as Shareholders of
record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by the
1940 Act or other applicable law, 30% of the Shares entitled to vote shall be a
quorum for the transaction of business at a Shareholders' meeting, but any
lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted, at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required or permitted by any provision of the 1940 Act or other applicable law
or by this Declaration of Trust or the ByLaws.
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Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more shareholders
of record who have been such for at least six months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded upon
the books of the Trust or Sub-Trust, as applicable; or (2) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (2) above,
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such
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opinion. The Trustees shall thereafter comply with any order entered by the
Commission and the requirements of the 1940 Act and the Securities Exchange Act
of 1934.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub- Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees shall be entitled to rely upon the books
of account of
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the Trust and upon written reports made to the Trustees by any officer appointed
by them, any independent public accountant, and (with respect to the subject
matter of the contract involved) any officer, partner or responsible employee of
a Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to be
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, said Sub- Trust (upon proper and timely
request by the Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of said Sub-Trust estate to be held harmless
from and indemnified against all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person")) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
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reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article VI and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees who are not a party to the proceeding, or an independent legal counsel
in a written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found entitled to
indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI,
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"Covered Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act [Shares of each
Sub-Trust voting separately by Sub- Trust]. Any Sub-Trust or class liquidated
pursuant to Section 4.2(d) or whose shares have been redeemed pursuant to
Section 4.2(g), may be terminated at any time by a majority of the Trustees then
in office, except that any such Sub-Trust or class which is the last remaining
Sub-Trust or class may only be so terminated by the Trustees with the favorable
vote of a majority of the outstanding voting securities, as defined in the 1940
Act, of such Sub-Trust or class.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or
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any combination thereof, and distribute the proceeds to the Shareholders.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust or class thereof) with such
transfer either (1) being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Sub-Trust the assets of which
are so transferred, or (2) not being made subject to, or not with the assumption
of, such liabilities; provided, however, that no assets belonging to any
particular Sub-Trust shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Sub-Trust. Following such transfer, the
Trustees shall distribute such cash, shares or other securities (taking into
account the differences among the classes of Shares of the Sub-Trust, if any,
and giving due effect to the assets and liabilities belonging to and any other
differences among the various Sub-Trusts the assets belonging to which have so
been transferred) among the Shareholders of the Sub-Trust the assets belonging
to which have been so transferred; and if all of the assets of the Trust have
been so transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of
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Massachusetts or any other state of the United States. Any such consolidation or
merger, other than the purchase or acquisition of assets of an investment
company or other collective investment entity which is not registered under the
1940 Act, shall require the affirmative vote of the holders of a majority of the
outstanding voting Shares, as defined in the 1940 Act, of each Sub-Trust
affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not have a material adverse effect on the rights of any
Shareholder with respect to which such amendment is or purports to be applicable
and so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority of the
then Trustees (or by an officer of the Trust pursuant to the vote of a majority
of such Trustees). Any amendment to this Declaration of Trust that does have a
material adverse effect on the rights of Shareholders may be adopted at any time
by an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to a vote of a majority of such Trustees) when
authorized to do so by the vote in accordance with subsection (e) of Section 4.2
of Shareholders holding a majority of the Shares entitled to vote. Subject to
the foregoing, any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed by a Trustee
or officer of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a copy
of the instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts as well as any other governmental
office where such filing may from time to time be required, but the failure to
make any such filing shall not impair the effectiveness of this instrument or
any such amendment. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any
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such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth.
Reference herein to Massachusetts Business Corporation Law is not intended to
give the Trust, the Trustees, the Shareholders or any other person any right,
power, authority or responsibility applicable only to or in connection with an
entity organized in corporate form. The Trust shall be of the type referred to
in Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts the
foregoing on behalf of the Trust pursuant to authorization by the Trustees of
the Trust.
/s/ Constantine Hutchins, Jr.
-----------------------------
Constantine Hutchins, Jr.
Secretary
Principal office of the Trust: One Financial Center
Boston, MA 02111
<PAGE>
STATE STREET GROWTH TRUST
Amendment No. 1 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article I, Section 1.1 and Article VII,
Section 7.3 of the First Amended and Restated Master Trust
Agreement of the State Street Growth Trust (the "Trust")
dated February 5, 1995 ("Master Trust Agreement"), the
Master Trust Agreement is hereby amended to change the name
of the Trust to State Street Research Growth Trust.
Pursuant to Article VII, Section 7.3 of the Master
Trust Agreement, the third sentence of the third paragraph
of Article IV, Section 4.1 of the Master Trust Agreement is
hereby amended to read as follows:
"The Trustees may classify or reclassify any
Shares of any Sub-Trust or class into one or more
Sub-Trusts or classes that may be established
and designated from time to time provided,
however, that no such classification or
reclassification shall adversely affect the
rights of any Shareholder."
This Amendment shall be effective as of May 1, 1995.
IN WITNESS WHEREOF, the undersigned officer of the
Trust hereby adopts the foregoing on behalf of the Trust
pursuant to authorization by the Trustees of the Trust.
/s/ Constantine Hutchins, Jr.
-----------------------------
Constantine Hutchins, Jr.
Secretary
FIRST AMENDED AND RESTATED
INVESTMENT ADVISORY CONTRACT
Contract amended and restated as of January 12, 1995, between State Street
Growth Trust, a Massachusetts business trust, having its principal place of
business in Boston, Massachusetts (the "Trust") and State Street Research &
Management Company, a Delaware corporation having its principal place of
business in Boston, Massachusetts (the
"Advisor").
WITNESSETH:
That in consideration of the mutual covenants herein contained and the
performance herein required, the Trust and the Adviser hereby mutually agree as
follows:
1. Appointment of Adviser. The Trust hereby appoints and employs the Adviser to
act as investment adviser for the State Street Research Growth Fund ("Fund")
series of the Trust for the term, with the duties, and subject to the
conditions as provided in this Contract, and the Adviser hereby accepts such
appointment and employment.
2. Duties of Adviser. The Adviser shall furnish to the Trust such
management, investment advisory, statistical and research facilities
and services as may be required from time to time by the trust in
operating the Fund.
3. Allocation of Expenses.
(a)The Adviser, at its own expense, shall furnish to the Trust suitable
office space and facilities, including all necessary equipment and
clerical personnel for managing the affairs and investments of the Fund,
in the offices maintained by the Adviser in Boston, Massachusetts, or in
such other place as may be agreed on from time to time. The Adviser shall
also pay the reasonable salaries and fees of the officers of the Trust and
all salaries, expenses and costs connected with investment research and
statistical work and the operation of the business of the Adviser.
(b)The Fund shall pay all other expenses of the operation of the Fund,
including without implied limitation, governmental fees, Trustees' fees,
interest charges, taxes, membership dues in the investment Company
Institute, fees of independent auditors, of legal counsel and of any
transfer agent, registrar and dividend disbursing agent of the Trust,
expenses of preparing, printing and mailing share certificates,
shareholders' reports, notices, proxy statements and reports to
governmental officers and commissions, brokerage expenses, insurance
premiums, fees and expenses of the custodian for all services to the Fund,
including safekeeping of funds and securities, keeping of books and
accounts and calculation of the net asset value of shares of the Fund,
expenses of shareholders' meetings, and expenses relating the issuance,
registration and qualification of shares of the Fund.
4. Compensation of the Adviser.
(a)As full compensation for the services to be rendered and the expenses to
be borne by the Adviser ad provided in Paragraphs 2 and 3(a) hereof, the
Fund shall pay, subject to the limitation in subparagraph (b) of this
Paragraph 4, to the Adviser a monthly fee as soon as practicable after the
last day of each calendar month, which fee shall be paid at a rate equal
to four hundred seventy-five thousandths of one percent (0.475%) on an
annual basis of the average daily net asset value of such Fund for such
calendar month. In the case of commencement or termination of this
Agreement with respect to the Fund during any calendar month, the fee with
respect to the Fund for that month shall be reduce proportionately based
upon the number of calendar days during which this Agreement is in effect
with respect to such Fund, and the fee shall be computed based upon the
average daily net asset value of such Fund during such period.
--------------------
The following subparagraph (b) would be deleted:
(b)In the event that the total expenses incurred by the Fund in any fiscal
year, excluding interest, taxes brokerage commissions and extraordinary
litigation costs, but including payments to the Adviser, shall exceed 1%
of the average of the value of the net assets (computed without deducting
amounts borrowed for investment purposes) of the Fund during said fiscal
year, based upon computations of such value made as of the close of
business on each business day during such fiscal year, then the Adviser
shall reimburse the Fund for such excess expenses by making a payment to
the Fund in the amount of such excess expenses within thirty days
following the close of such fiscal year.
The following subparagraph (b) would be added:
(b)The Adviser agrees that if the total expenses of the Fund (exclusive of
interest, taxes, payments to fund certain distribution expenses pursuant
to the Trust's Plan of Distribution Pursuant to Rule 12b-1 applicable to
the Fund, if any, brokerage expenses, extraordinary items such as
litigation expenses and any other items excludable under applicable law)
for any fiscal year of the Trust exceed the lowest expense limitation
imposed in any jurisdiction in which the Fund is then making sales of its
shares or in which its shares are then qualified for sale, if any, the
Adviser will pay or reimburse the Fund for that excess up to the amount of
its advisory fees payable with respect o the fund during the fiscal year.
The amount of the monthly advisory fee under paragraph 4 hereof shall be
reduced to the extent that the monthly expenses of the Fund, on an
annualized basis, would exceed the foregoing limitation. At the end of
each fiscal year of the Trust, if the aggregate annual expenses chargeable
to the Fund for that year exceed the foregoing limitation based upon the
average of the monthly average net asset value of the Fund for the year,
the Adviser will promptly reimburse the Fund for the amount of such excess
to the extent not already reimbursed by reduction of the monthly advisory
fee, but if such expenses are within the foregoing limitation, any excess
amount previously withheld from the monthly advisory fee during that
fiscal year will be promptly paid over to the Adviser.
5. Covenants of the Adviser.
(a)The Adviser covenants that it and its officers and directors shall comply
with the provisions of Article X of the By-Laws of the Trust during the
term of his Contact to the extent that such provisions are applicable to
them.
(b)The Adviser covenants that during the term of this Contract each of its
officers and directors, and each of its employees who is an officer or
trustee of the Trust, shall keep the Secretary of the Trust advised on a
monthly basis of the names of those issuers (the securities of which are
owned by the Fund) in which such officer, director or employee owns more
than one half of one percent (1/2 of 1%) of the outstanding shares or
securities, or both (taken at market value), of such issuer.
6. Effective Date, Duration and Termination of This Contract.
(a)This Contract shall become effective at the commencement of business on
January 12, 1995, and shall remain in effect (unless terminated as
hereinafter provided) until January 12, 1996, and from year to year
thereafter; provided that this Contract shall continue in effect after
January 12, 1996, only so long as
(1) such continuance is specifically approved at least annually by either
(A) the Board of Trustees of the Trust, or (b) "vote of a majority of
the outstanding voting securities" (as defined in Section 2(a)(42) of
the Investment Company Act of 1940) of the Fund, and
(2) the terms of this Contract are approved at least annually by the vote
of a majority of the Trustees of the Trust, who are not parties to the
Contract or "interested persons" of any such party (as such terms are
used in Section 15(c) of the Investment Company Act of 1940), cast in
person at a meeting called for the purpose of voting on such approval.
(b)This Contract may be terminated at any time without the payment of any
penalty by vote of the Board of Trustees of the Trust or by "vote of a
majority of the outstanding voting securities" (as defined in Section
2(a)(42) of the Investment Company Act of 1940) of the Fund, or by the
Adviser, in each case upon sixty calendar days' prior written notice to
the other party to the Contract.
(c)This Contract shall terminate automatically in the event of its
"assignment" (as defined in Section 2(a)(4) of the Investment Company Act
of 1940).
7. Amendments This Contract may be amended at any time or from time to time by
an instrument in writing signed by a duly authorized officer of the Trust and
by the Adviser, but no amendment to this Contract shall be effective until
(1) Such amendment is approved by the affirmative "vote of a majority of
the outstanding securities" (as defined in Section 2(a)(42) of the
Investment Company Act of 1940) of the Fund and
(2) the terms of such amendment are approved by the vote of a majority of
the Trustees of the Trust, who are not parties to the Contract or
"interested persons" of any such party (as such terms are used in
Section 15(c) of the Investment Company Act of 1940), cast in person
at a meeting called for the purpose of voting on such approval.
8. Miscellaneous Provisions.
(a)For all purposes of this Contact the Adviser shall be deemed to be an
independent contractor and not an agent of the Trust, and shall have no
authority to act for or represent the Trust in any way.
(b)The duties of the Adviser under this Contract shall not prevent the
Adviser from rendering similar services to other persons, firm, trusts,
corporations or other entities.
(c)The Adviser shall not be subject to liability for any act or omission in
the course of, or connected with, its performance of this Contract, except
in the case of willful misfeasance, bad faith or gross negligence on the
part of the Adviser, or the reckless disregard by the Adviser of its
obligations and duties under this Contract.
(d)Notices under this Contract shall be in writing and shall be addressed,
and delivered or mailed postage prepaid, to the other party at such
address as such other party may designate from time to time for the
receipt of such notices. Until further notice to the other party, the
address of each party to this Contract for this purpose shall be One
Financial Center, Boston, Massachusetts 02111.
(e)It is expressly agreed that the obligations of the Trust hereunder, and
the authorization, execution and delivery to this document, shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents
or employees of the Truest as individuals or personally, but shall bind
only the property of the Fund, as provided in the Master Trust Agreement
of the Trust. The Master Trust Agreement of the Trust provides, and is
expressly agreed, that the Fund of the Trust shall be solely and
exclusively responsible for the payment of any direct or indirect debts,
liabilities and obligations relating to the Fund, and that no other fund
shall be responsible for the same.
IN WITNESS WHEREOF, STATE STREET GROWHT TRUST has caused this instrument to be
signed in duplicate on its behalf by its President, thereunto duly authorized,
and State Street Research & Management Company has caused this instruction to be
signed in duplicate on its behalf by its President, thereunto duly authorized,
all as of the day and year first above written.
STATE STREET GROWTH TRUST
By: /s/ Constantine Hutchins, Jr.
---------------------------------
Secretary
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
---------------------------------
President
Exhibit (6)(b)
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: __________
Dealer Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Attn:
---------------------------------------
Ladies and Gentlemen:
We have been appointed to serve as an agent and principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife - State Street trusts, the State
Street trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio
series shall be denoted individually as a "Fund" and collectively as the
"Funds", and the investment companies shall be denoted individually as an
"Investment Company" and collectively as the "Investment Companies" for purposes
of this Agreement.
We are hereby inviting you, as a selected dealer and subject to the terms
and conditions set forth below, to make available to your customers Shares of
the Funds. By your acceptance hereof, you agree that you shall exercise your
best efforts to find purchasers for the Shares, shall purchase Shares only from
us or from your customers, and shall act only as agent for your customers or
dealer for your own account, with no authority to act as agent for the Funds,
for us or for any other dealer in any respect.
1. Acceptance of Orders. Orders received from you will be accepted only at
the public offering price (as defined below in Section 2) applicable to each
order. You agree to place orders for Shares immediately upon the receipt of, and
in the same amount as, orders from your customers. We will not accept a
conditional order from you on any basis. All orders are subject to our receipt
of Shares from the Investment Company and to acceptance and confirmation of such
<PAGE>
orders by us and by the Investment Company. The procedures relating to the
handling of orders shall be subject to instructions which we shall provide from
time to time to you. We and the Investment Companies reserve the right in our
sole discretion to reject any order.
2. Public Offering Price and Sales Charge. The public offering price shall
be the net asset value per Share plus any sales charge payable upon the purchase
of Shares of such Fund or class thereof as described in the then current
prospectus applicable to such Shares, as amended and in effect from time to time
(the "Prospectus"). The public offering price may reflect scheduled variations
in, or the elimination of, the sales charge on sales of the Shares either
generally to the public or in connection with special purchase plans, as
described in the Prospectus and related Statement of Additional Information. You
agree that you will apply any scheduled variation in, or elimination of, the
sales charge uniformly to all offerees in the class specified in the Prospectus.
The sales charge applicable to any sale of Shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Shares accepted by us shall be as set forth in the applicable Prospectus and
related Statement of Additional Information. You agree that you will not combine
customer orders to reach breakpoints in commissions for any purpose unless
authorized by the Prospectus or by us in writing. All commissions and
concessions are subject to change without notice by us.
3. 12b-1 Plans.
(a) As consideration for your providing distribution and marketing
services in the promotion of the sale of Shares of certain Funds or classes
thereof which have adopted Distribution Plans pursuant to Rule 12b-1 under the
1940 Act, and for providing personal services to and/or the maintenance of the
accounts of, your customers who invest in and own such Shares, we shall pay you
such fee, if any, as is described in the applicable Prospectus and otherwise
established by us from time to time on Shares which are owned of record by your
firm as nominee for your customers or which are owned by those customers of your
firm whose records, as maintained by such Fund or its agent, designate your firm
as the customer's dealer of record. Any fee payable hereunder shall be computed
and accrued daily and for each month shall be based on average daily net asset
value of the relevant Shares which remain outstanding during such month. No such
fee will be paid to you with respect to Shares redeemed or repurchased by such
Fund within seven business days after the date of our confirmation of such
purchase. No such fee will be paid to you with respect to any of your customers
2
<PAGE>
if the amount of such fee based upon the value of such customer's Shares will be
less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect to
any Fund or class thereof in accordance with the provisions of Rule 12b-1 under
the 1940 Act or the rules of the National Association of Securities Dealers,
Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time to
time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Payment for Shares. Payment for Shares sold through you shall be made on
or before the settlement date specified in the applicable confirmation, at the
office of our clearing agent, and by your check payable to the order of such
Fund or, if applicable, by Federal Funds wire for credit to such Fund, in any
case in accordance with the procedures and conditions described in the
applicable Prospectus. Each Fund reserves the right to delay issuance or
transfer of Shares until such check has cleared. If such payment is not received
by us, we reserve the right, without notice, forthwith to cancel the sale.
Unless other instructions are received by us on or before the settlement date,
orders accepted by us may be placed in an Open Account in your name. If such
payment or instruments are not timely received by us, we may hold you
responsible for any expense or loss, including loss of profit, suffered by us or
by such Fund resulting from your failure to make payment as aforesaid.
5. Redemption and Repurchase of Shares. If any of the Shares sold through
you hereunder are redeemed by such Fund or repurchased by us as agent for such
Fund within seven business days after confirmation of the original purchase, it
is agreed that you shall forfeit your right to the entire dealer concession and
related commission, if any, received by you on such Shares. We will notify you
of any such repurchase or redemption within ten business days from the date
thereof and you shall forthwith refund to us the entire concession and
commission, if any, received by you on such sale. We agree, in the event of any
such repurchase or redemption, to refund to such Fund our share of the sales
charge retained by us, if any, and upon receipt from you of the refund of the
concession allowed to you, to pay such refund forthwith to such Fund.
3
<PAGE>
If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to us or a Fund, you
agree not to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
6. Manner of Offering.
(a) No person is authorized to make any representations concerning
Shares except those contained in the applicable Prospectus, in the related
Statement of Additional Information and in any then current sales literature or
other material issued by us supplemental to such Prospectus, which sales
literature or other material is used in conformity with applicable rules or
conditions. All offerings of Shares by you shall be subject to the conditions
set forth in the applicable Prospectus (including the condition relating to
minimum purchases) and to the terms and conditions herein set forth. We will
furnish additional copies of the Prospectuses and such sales literature and
other material issued by us in reasonable quantities upon request. You will
provide all customers with the applicable Prospectus prior to or at the time
such customer purchases Shares and will forward promptly to us any customer
request for a copy of the applicable Statement of Additional Information. Sales
and exchanges of Shares may only be made in those states and jurisdictions where
the Shares are registered or qualified for sale to the public. We agree to
advise you currently of the identity of those states and jurisdictions in which
the Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that we
may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
4
<PAGE>
7. NASD Matters. This Agreement is conditioned upon your representation and
warranty that you are a member of the NASD or, in the alternative, that you are
a foreign dealer not eligible for membership in the NASD. You and we agree to
abide by the Rules and Regulations of the NASD, including Rule 26 of its Rules
of Fair Practice, and all applicable federal, state, and foreign laws, rules and
regulations.
8. Rejection of Orders. We shall have the right to accept or reject orders
for the purchase of Shares of any Fund. It is understood that for the purposes
hereof no Share shall be considered to have been sold by you and no compensation
will be payable to you with respect to any subscription for Shares which is
rejected by us or an Investment Company. Any consideration which you may receive
in connection with a rejected purchase order will be returned promptly.
Confirmations of all accepted purchase orders will be transmitted by the
Transfer Agent for the applicable Fund or class thereof to the investor or to
you, if authorized.
9. Status of Soliciting Dealer. Nothing herein shall make you a partner
with us or render our relationship an association. You are responsible for your
own conduct, for the employment, control and conduct of your employees and
agents and for injury to such employees or agents or to others through such
employees or agents. You assume full responsibility for your employees and
agents under applicable laws and agree to pay all employer taxes relating
thereto.
10. No Liability. As distributor of the Shares, we shall have full
authority to take such action as we may deem advisable in respect of all matters
pertaining to the distribution of such Shares. We shall not be under any
liability to you, except for lack of good faith and for obligations expressly
assumed by us in this Agreement; provided, however, that nothing in this
sentence shall be deemed to relieve any of us from any liability imposed by the
Securities Act of 1933, as amended.
11. Term of Contract; Amendment; Termination. This Agreement shall become
effective on the date hereof. We and each Fund reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time, to change any sales charges, commissions, concessions and other fees
described in the applicable Prospectus or to suspend sales or withdraw the
offering of Shares of any Fund or class of Shares thereof entirely. You agree
that any order to purchase Shares placed by you after notice of any amendment to
this Agreement has been sent to you shall constitute your agreement to such
amendment.
5
<PAGE>
12. Miscellaneous. This Agreement supersedes any and all prior agreements
between us. All communications to us should be sent to the above address. Any
notice to you shall be duly given if mailed or telefacsimiled to you at the
address specified by you above. This Agreement shall be effective when accepted
by you below and shall be construed under the laws of the Commonwealth of
Massachusetts.
The following provision, as marked, applies to this agreement.
|_| This document constitutes an amendment to and restatement of the Selected
Dealer Agreement currently in effect between you and us.
|_| Please confirm your agreement hereto by signing and returning the enclosed
counterpart of this Agreement at once to: State Street Research Investment
Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us as of the date
indicated.
State Street Research
Investment Services, Inc.
(Distributor)
By:
-----------------------
ACCEPTED:
[ ]
(Selected Dealer)
By:
----------------------------
6
<PAGE>
SUPPLEMENT NO. 1 TO
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: _________________
Dealer Name: _____________________________________
Address: _____________________________________
_____________________________________
Attn: _____________________________________
Ladies and Gentlemen:
This Agreement amends and supplements the Selected Dealer Agreement
between you and us, as in effect from time to time (the "Selected Dealer
Agreement"). All of the terms and provisions of the Selected Dealer Agreement
remain in full force and effect, and this Agreement and the Selected Dealer
Agreement shall be construed and interpreted as one Agreement, provided that in
the event of any inconsistency between this Agreement and the Selected Dealer
Agreement, the terms and provisions of this Agreement shall control. Capitalized
terms used in this Agreement and not defined herein are used as defined in the
Selected Dealer Agreement.
We understand that you wish to use Shares of the Funds in managed
fee-based programs in which you participate (the "Fee-Based Program"), and that
you wish to afford investors participating in such programs the opportunity to
qualify for the ability to purchase shares of the Funds at net asset value. We
are willing to allow you to purchase Shares of the Funds for sale to investors
participating in the Fee-Based Program on such basis, subject to the terms and
conditions of this Agreement and the Selected Dealer Agreement.
1. Sale of Shares through Fee-Based Program
You may, in connection with the Fee-Based Program, sell shares of any
Funds made available by us, from time to time, at net asset value to investors
participating in a bona fide Fee-Based Program. You will receive no discount,
commission or other concession with respect to any
<PAGE>
such sale, but will be entitled to receive any service fees otherwise payable
with respect thereto to the extent provided from time to time in the applicable
Funds' Prospectuses and in the Dealer Agreement. We will, after consulting with
you, determine, from time to time, which Funds we will make available to you for
use in the Fee-Based Program. You agree that Shares will not be made available
through the Fee-Based Program for the sole purpose of enabling evasion of sales
charges.
2. Fees under Fee-Based Program
For any Fee-Based Program investor eligible to purchase Fund shares at
net asset value, the investor shall be subject to an annual fee of not more than
2.50% of such investor's average net assets included in the Fee-Based Program,
nor less than 0.50% of such assets. You shall send to us upon request from time
to time the then-current standard fee schedule for the applicable Fee-Based
Program and a copy of the applicable Schedule H to the Form ADV containing the
required disclosures relating to the Fee-Based Program, or any successor
required disclosures. Any brochures, written materials or advertising relating
to the Fee-Based Program may refer to the Funds as available at net asset value
if the fees and expenses of the Fee-Based Program are given at least equal
prominence. In connection with explaining the fees and expenses of the Fee-Based
Program, your representatives may describe to customers the option of purchasing
Fund shares through such Program at net asset value.
3. Undertakings
You will (i) provide us with continuous reasonable access to your
offices, representatives and mutual fund and Fee-Based Program sales support
personnel and to meetings, including national and regional sales conferences and
training programs, of your representatives and sales personnel, (ii) include
descriptions of all Funds offered through the Fee-Based Program in internal
sales materials and electronic information displays used in conjunction with the
Fee-Based Program, (iii) include our representatives on your internal sales
lines and conference calls on a regular basis, (iv) use reasonable efforts to
motivate your representatives to recommend suitable Funds for clients of the
Fee-Based Program, (v) provide us with sales information in reasonable
Fund-by-Fund detail, including identification of offices and representatives
that account for the most significant sales of shares of the Funds through the
Fee-Based Program, and (vi) include the Funds on any approved, preferred or
other similar list of mutual fund products offered through the Fee-Based
Program.
4. Customer Accounts
You may maintain with the Funds' shareholder servicing agent either (i)
one or more omnibus accounts solely for the participants in the applicable
Fee-Based Program or (ii) separate accounts for each participant in the
applicable Fee-Based Program. If one or more omnibus accounts are maintained,
you shall, among other things, be responsible for forwarding proxies, annual and
semi-annual reports and other materials to each beneficial owner in a timely
manner.
5. Applicable Law
This Agreement shall be governed by and construed and interpreted in
accordance with the internal laws of The Commonwealth of Massachusetts.
6. Disclaimer and Indemnity
We are not endorsing, recommending and are not otherwise involved in
providing any investment product of yours, including but not limited to any
Fee-Based Program. We are merely affording you the opportunity to use shares of
the Funds as an investment medium for the applicable Fee-Based Program. You
acknowledge and agree that you are solely responsible for any such Fee-Based
Program and you agree to indemnify, defend and hold harmless us, the Funds and
our and their affiliates, directors, trustees, officers, employees and agents
from and against any claims, losses, damages or costs (including attorneys'
fees) arising from or related to such Fee-Based Program, including without
limitation any brochures, written materials or advertising in any form that
refers to the Funds or the Fee-Based Program.
7. Miscellaneous
This Agreement is not exclusive and shall terminate automatically upon
termination of the Selected Dealer Agreement. We reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has been sent to you shall constitute your
agreement to such amendment.
<PAGE>
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: __________________________
Name:
Title:
Accepted:
__________________________________
Name of Dealer
By: __________________________________
Name:
Title:
CONSENT OF INDEPENDENT ACCOUNTS
To the Board of Trustees of
State Street Research Growth Trust:
We consent to the inclusion in Post-Effective Amendment No. 4 to the
Registration Statement of the State Street Research Growth Trust on Form N-1A
(Securities Act of 1933 File No. 33-55024) of our report dated February 2, 1996
on our audit of the financial statements and financial highlights of State
Street Research Growth Fund for the year ended December 31, 1995. We also
consent to the reference to our Firm under the captions "Financial Highlights"
and "Independent Accountants" in the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 25, 1996
Exhibit (14)(b)
[FRONT COVER]
[State Street Research Logo]
403(b)
Retirement--The Key Is Planning Now
As a working person, you have a decision to make--how to protect your current
earnings and provide for a comfortable retirement.
Social Security may not be adequate. Currently, average monthly benefits
are around $675.* And, as the retired population grows in proportion to
the number of workers paying into the fund, Social Security may become
less reliable. In fact, in many places, employees of state or local
governments do not participate in Social Security.
Taxable savings plans may not be adequate either. Both the money you set
aside and the interest it earns are taxed at current rates--just when
you're at peak income levels.
*Source: Social Security Administration.
A Good Way To Plan For Retirement
A State Street Research 403(b) Account is a good way for employees of
private tax-exempt organizations such as hospitals or colleges, and
employees of public schools or colleges, to build financial resources
for retirement. If you are such an employee, you should consider a
403(b) account.
The 403(b) Advantage--Lower Income Taxes
Contributions to your State Street Research 403(b) Account are not
subject to current federal income tax, within the limits allowed by the tax
laws. This reduces your current federal income tax liability and increases your
spendable income, compared to a taxable savings program. Many states
exclude 403(b) contributions from state income taxes as well.
This chart shows the benefits of saving with a 403(b) account. In each
instance, the employee plans to save 10% of income, or $5,000. This
example shows only federal income tax savings. You may also save on
state income taxes.
Saving Outside 403(b) Saving With 403(b)
Salary $50,000 Salary $50,000
Income Taxes 9,353 403(b) Savings 5,000
- ---------------------------- -------------------------------
After-Tax Income 40,647 Taxable income 45,000
Savings 5,000 Income Taxes 7,953
- ---------------------------- -------------------------------
Spendable Income $35,647 Spendable Income $37,047
With 403(b), you have $1,400 more in spendable income!
The 403(b) Advantage--Tax-Free Accumulation
The interest and other investment earnings accumulating in your 403(b)
account compound tax deferred until you begin making withdrawals from your
account. This can mean greater overall returns than with taxable
investments.
<PAGE>
------------------------ LINE CHART ------------------------------
Taxable vs. Tax-free Accumulation
The chart at right
illustrates what
happens when monthly investments of $125
grow at 7% and 5%
tax free for 10 years,
versus the same
taxable investments
growing at 7% and 5%
for 10 years in the 28%
tax bracket. All
distributions are
reinvested. Sales
charges, if any are
not reflected.
($ in Thousands)
$21,501 Tax deferred 7%
$19,413 Taxable 7%
$19,375 Tax deferred 5%
$18,018 Taxable 5%
The chart illustrates general advantages of tax-deferral. Returns are
hypothetical and are for illustrative purposes only; they are not
intended to imply or guarantee a rate of return on any mutual fund or
other investment.
----------------------------------------------------------------
State Street Research Mutual Funds
Your 403(b) contributions will be invested in the State Street Research
fund(s) of your choice. State Street Research offers a variety of mutual
funds, each managed to meet a specific investment objective, such as
growth or income.
Corporate Heritage
State Street Research has a history dating to 1924, with the founding of
the nation's second oldest mutual fund. Today the Company manages over
$27 billion in assets.
How To Get Started
The following questions and answers will give you important information
about your State Street Research 403(b) Account. Simply follow the
instructions on the back cover to set up your account.
Questions And Answers About Your
403(b) Account
Eligibility
Who can have a 403(b) account?
Only employees of an organization described in Section 501(c)(3) of the
Internal Revenue Code may have a 403(b) account. These include non-
profit charitable, educational, scientific or religious organizations,
such as hospitals or colleges. Also, an employee of a state or local
government who is employed by a school (for example, a local school
system or state college or university) can have a 403(b) account. Check
with your employer to determine whether you qualify for a 403(b)
account.
<PAGE>
What happens if I change employers?
If your new employer is a qualified employer, you may continue to
contribute to your 403(b) account after changing jobs. If your new
employer is not a qualified organization, you may no longer make
contributions to your 403(b) account, but your account will continue to
accumulate tax free until you begin making withdrawals. Contact
State Street Research Shareholder Services for additional information:
1-800-562-0032.
Contributions
How do I make contributions to my 403(b) account?
Usually, you would enter into a salary reduction agreement with your
employer that specifies the amount you want to contribute. Your
compensation will be reduced by this amount and the money will be
contributed by your employer to your 403(b) account. In some cases, your
employer may make contributions to your 403(b) account as a retirement
benefit for you.
Your employer may already have a salary reduction agreement for you to
use. If not, a form of salary reduction agreement is included in your
State Street Research 403(b) Package. Read the form for an explanation
of IRS restrictions on changing the amount of your salary reduction.
Maximum Contribution
How much can be contributed each year to my 403(b) account?
Determining your maximum 403(b) contribution is complex because several
different tax law limits apply depending on your individual situation.
For most employees, the maximum salary reduction contribution for a
calendar year will be the smaller of 20% of your compensation or $9,500.
In the future, the $9,500 limit may be indexed for inflation each year.
Employees of certain kinds of qualified employers (for example, public
schools and private tax-exempt schools, colleges, hospitals and home-
health agencies) can elect different limits in some situations. Also,
long-service employees (15 or more years of service) of such employers
may have increased limits.
Your employer's benefits or personnel department, or the business
office, may be available to calculate your maximum contribution. If not,
you may use the worksheet enclosed in your State Street Research 403(b)
Package. You may wish to consult an accountant or tax adviser to confirm
your maximum contribution.
What happens if I exceed the maximum for a year?
If you exceed the $9,500 limit for a year, you should request State
Street Research to return the excess contribution to you with earnings.
You should make your request no later than March 1 of the following
year.
<PAGE>
If your contributions for a year exceed any of the other limits, you
must include the excess in your income for federal income tax purposes.
In addition, you may have to pay a penalty tax equal to 6% of the
"excess contribution." The penalty tax also applies to excess
contribution amounts left over from prior years.
You can avoid paying the penalty tax if you withdraw the amount of the
excess from your account before the end of the year in which the excess
contribution was made.
Even if you have to pay the penalty tax in one year, you can avoid paying it in
later years by contributing less than your maximum for the later year; the
excess is reduced by the difference between the maximum and the actual
contribution.
Investments
What are my investment choices?
Contributions to your 403(b) account may be invested in one or more of
the eligible mutual funds distributed by State Street Research.
Also, you can exchange amounts from one fund to another. (You can even
choose telephone exchange privileges when completing your State Street
Research 403(b) Account Application.) There may be minimum investment
amounts for certain funds, or there may be sales charges. Such minimums
or charges are described in the prospectus(es).
Before investing, be sure to read the current prospectus(es) for the
funds in which you are interested so that you can be familiar with the
investment objectives and policies, and the sales charges or other
charges applicable to a Fund.
May I transfer my existing 403(b) to State Street Research?
Yes. Complete the Transfer of 403(b) Assets Form found in your State
Street Research 403(b) Package. Be sure to note the requirements for a
tax-free transfer described in the Form. Consult your personnel or
benefits department or your tax adviser for additional information.
What about an IRA?
You can have an IRA even though you are contributing to a 403(b)
account. Depending on your income level, contributions to an IRA may or
may not be deductible on your federal income tax return. For more
information about our IRAs, call State Street Research Shareholder
Services: 1-800-562-0032.
<PAGE>
Withdrawals From Your Account
When will I begin to receive retirement benefits from my account?
You choose when to make withdrawals from your 403(b) account. However,
withdrawals may not begin until you have retired or terminated
employment with your employer; reached age 59-1/2 (even though you are
still employed by your employer); or died. Earlier withdrawals are
permitted only if you become disabled or suffer a financial hardship
(as defined by IRS regulations). Consult your tax adviser, as tax
penalties may result. You may be requested to verify disability with a
doctor's certificate or a Social Security disability benefits award.
You may be asked to verify financial hardship by a certificate from an
independent person appointed by your employer, and financial hardship
withdrawals are limited to the amount of your salary reduction
contributions (no earnings or investment gains). You must begin making
withdrawals by April 1 of the year following the year when you reach
age 70-1/2. This is required even if you are still working.
Use the Withdrawal Form to notify State Street Research when you wish to
begin making withdrawals from your account.
How will the benefits be paid to me?
Benefits will be paid to you either in a lump-sum payment or in periodic
(monthly, quarterly, or annual) installments. Installment payments may
not extend beyond your life expectancy or the joint life expectancy of
you and your designated beneficiary.
Also, there are minimums on the amount of installments you must receive
after age 70-1/2. There are substantial penalty taxes (up to 50%) if you
do not make the minimum required withdrawals.
What happens to my account if I die?
Your account balance goes to the beneficiary(ies) you designate on the
403(b) application or on another written document you send to State
Street Research Shareholder Services. You can change your
beneficiary(ies) in writing. Naming a beneficiary(ies) can have estate
and tax-planning implications; consult a qualified professional.
Withdrawals by a beneficiary(ies) are also subject to rules relating to
when withdrawals must begin and minimums for installment withdrawals.
Taxes
How will I be taxed on withdrawals from my 403(b)?
Generally, amounts withdrawn from your account are taxed as ordinary
income in the year when received. In addition, with limited exceptions,
such as disability, amounts withdrawn before age 59-1/2 are subject to
an additional 10% penalty tax.
Special five-year averaging, applicable to lump-sum distributions from
certain retirement plans, does not apply to 403(b).
<PAGE>
Certain very large withdrawals (generally over $150,000 in a year--
counting all 403(b) and IRA withdrawals and distributions to you from
qualified retirement plans) may be subject to a 15% penalty tax.
There may be income tax withholding on the amounts you withdraw. If you
withdraw an amount from your State Street Research 403(b) Account that
is eligible for rollover (see next question), mandatory 20% federal
income tax withholding will apply unless the withdrawn amount is rolled
directly to another 403(b) arrangement or to an IRA. If the amount you
withdraw is not eligible for rollover to another 403(b) arrangement or
IRA, 10% withholding of federal income tax will apply unless you elect
no withholding on your Withdrawal Form.
Can I postpone federal income tax on a withdrawal from my 403(b)
account?
In certain situations, you can defer income taxes on withdrawals from
your 403(b) account if all or part of the withdrawal is rolled over to
another 403(b) account or into an IRA either directly by State Street
Research (direct rollover) or by you (regular rollover) within 60 days.
All withdrawals are eligible for rollover (either a direct rollover or a
regular rollover) except minimum required withdrawals after age 70-1/2
and withdrawals over a period of at least 10 years or over the life
expectancy of you (or you and your designated beneficiary).
Caution: Rollovers must meet technical IRS requirements that cannot be
described in detail here. Consult your employer or tax adviser for
assistance in carrying out a rollover.
If a withdrawal is eligible for rollover and if you do not elect a
direct rollover, the Custodian must withhold 20% of your withdrawal for
federal income taxes. The rollover and withholding rules also apply to
your surviving spouse if he or she receives a distribution from your
account upon your death.
Be certain to carefully read the notice on tax treatment and withholding
on withdrawals that accompanies the Withdrawal Form for more
information.
What about other taxes?
Contributions under a salary reduction agreement will be subject to
Social Security withholding if you are covered by Social Security.
State tax treatment varies from state to state. You should consult your
tax adviser with any questions on how a 403(b) account would affect your
state taxes.
IMPORTANT. The preceding questions and answers are general and are
provided for informative purposes only. Always consult your tax adviser
for advice on how the tax laws apply to you and how a State Street
Research 403(b) account will affect your tax situation. More information
is available in IRS Publication 571, Tax-Sheltered Annuity Plans for
Employees of Public Schools and Certain Tax-Exempt Organizations; this
publication is available from the IRS.
<PAGE>
How To Start Your State Street Research 403(b) Account
1. Carefully read the material describing the State Street Research
403(b) Account and the prospectus(es) for the fund(s) in which you plan
to invest. You may want to review the material with your accountant,
lawyer or other tax adviser because the rules under Section 403(b) are
complex and subject to change.
2. If contributions to your 403(b) Account will be made under a salary
reduction agreement, you should fill out, and you and your employer
should sign, a salary reduction agreement. If your employer does not
have a form of salary reduction agreement for use with employees, you
may use the sample Salary Reduction Agreement found in the State Street
Research 403(b) package.
3. Complete and sign the State Street Research 403(b) Account
Application. Be sure to complete the beneficiary section of the
Application.
4. If you are transferring your current 403(b) assets to State Street
Research, complete and sign the Transfer of Assets Form.
5. Mail the completed and signed Application (and the Transfer of Assets
Form, if used) to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Enclose a check in the amount of $10.00 payable to State Street Bank and
Trust Company, Custodian, to cover the first year's annual maintenance
fee for the account; otherwise the fee will be charged to your account.
There is a $10.00 annual maintenance fee for each calendar year (the fee
is not prorated for less than a full calendar year). We will forward the
necessary materials to the Custodian.
This brochure must be preceded or accompanied by the relevant fund
prospectus(es), which includes investment policies, sales charges and
expenses. Please read the prospectus(es) carefully before investing.
[State Street Research logo]
(C)1995 State Street Research Investment Services, Inc. Boston, MA 02111
Control Number: 2717-951025(1196)SSR-LD RP-923C-1095
<PAGE>
[BACK COVER]
(C)1995 State Street Research Investment Services, Inc., Boston, MA 02111
CONTROL NUMBER: 2713-951025(1196)SSR-LD RP-921C-1095
[FRONT COVER]
[State Street Research logo]
403(b)
Maximum Salary
Reduction Worksheet
Maximum Salary Reduction Worksheet
This worksheet will help you compute the maximum amount by which you can reduce
your salary without exceeding any of the limits. Before doing the calculations,
you may wish to check with your Employer's benefits or personnel department or
business office. Often these departments will calculate an employee's 403(b)
maximum.
If you use the worksheet to do your own calculation, read the
information following the worksheet first. After completing the
worksheet, you should consult your accountant, lawyer or other
professional tax adviser to verify your calculation or answer your
questions. The tax laws change often and individual situations can vary.
Also, certain exceptions and rules that apply only in relatively rare
situations are not covered by the worksheet. This worksheet and the
questions and answers following it are not intended to be tax advice,
and you are responsible for meeting the tax law limits
on contributions to your 403(b) account.
To help you, the example demonstrates a typical salary reduction situation and
the worksheet provides spaces for your own computations. This worksheet and the
questions and answers are designed to help you determine your maximum salary
reduction. If your employer will make contributions on your behalf as an
addition to your salary, or if you will contribute by foregoing an increase in
compensation, there are different formulas to determine your maximum. If this
situation applies to you, your Employer should be able to help you calculate the
limits that apply to you.
In the example, a college teacher will earn $40,000 in 1995. She will
have worked for the college 15 years at the end of 1995. The college has
previously contributed $20,000 on her behalf to its 403(b) retirement
plan ($18,000 of which was contributed in the most recent 10 years). The
college will contribute 10% of her salary ($4,000) to its retirement
plan for 1995. In addition, the employee reduced her salary in prior
years by a total of $10,000 for contribution to her 403(b) account. How
much can this employee reduce her salary for 1995?
Step 1 - Determine the Exclusion Allowance
(example) (your computation)
(a) Enter your expected
salary for the current
year before reduction
for contributions to
your 403(b) account. $40,000 ___________________
(b) Enter your number
of years of service
(including whole
and fractional years)
as of the end of the
current year. 15 ____________________
(c) Multiply (a) by (b)
by .20. $120,000 ____________________
(d) Enter the amount of
your salary reduction
contributions and
employer contributions
for you to a 403(b)
retirement plan or to a
qualified retirement plan
in prior years. $ 30,000 _____________________
<PAGE>
(e) Enter amount of
contributions by
your employer
for you to a 403(b)
retirement plan for
the current year. $ 4,000 ______________________
(f) Subtract (d) and (e)
from (c). $ 86,000 ______________________
(g) Multiply your years
of service in (b) by .20
and add 1. 4 ______________________
(h) Divide (f) by (g) to
determine your
exclusion allowance
for the year. $ 21,500 ______________________
Step 2 - Determine the Section 415 General Limitation
(a) Multiply your expected
salary (before reduction
for contributions to your
403(b) account) for the
current year by .20. $ 8,000 ______________________
(b) Multiply amount of
your employer's
expected contributions
for you for the current
year to a 403(b) retire-
ment plan by .80. $ 3,200 ______________________
(c) Subtract (b) from
(a)to determine your
Section 415 general
limitation (but not
in excess of $30,000). $ 4,800 ______________________
Step 3 - Determine the Section 415 Alternatives
Alternative A
Available if employee
terminates service;
same as exclusion
allowance but based
on last ten years of
service with employer,
up to a maximum
of $30,000. $ 16,000 ______________________
Alternative B
(a) Enter the exclusion
allowance determined
in Step 1. $ 21,500 ______________________
(b) Add $3,200 to the Section
415 general limitation
determined in Step 2. $ 8,000 ______________________
(c) Enter $15,000. $ 15,000 $ 15,000
<PAGE>
(d) Your alternative B
limitation is the
smallest of (a),
(b) or (c). $ 8,000 ______________________
Alternative C
Enter the Section 415
general limitation
determined in Step 2. $ 4,800 ______________________
Step 4 - Apply the $9,500 Limit
(a) Enter $9,500. $ 9,500 $9,500
(b) If eligible (see Question 14
below), use the smallest
of the following:
(i) $ 3,000 $ 3,000 $3,000
(ii) $15,000 reduced
by increases to the
$9,500 limit you
used in prior years. $ 15,000 ______________________
(iii) $5,000 multiplied
times years of service,
reduced by all prior
salary reduction
contributions to a
403(b) account or
annuity or to a
401(k) plan. $ 65,000 $_____________________
(c) Add the amount
determined in (b)
to $9,500; this is
your limit for the
year under this step. $ 12,500 $_____________________
Step 5 - Determine the maximum salary reduction
(a) Enter your exclusion
allowance from step 1. $ 21,500 ______________________
(b) Enter your Section 415
general limitation
from step 2. $ 4,800 ______________________
(c) Enter the lesser
of (a) or (b). $ 4,800 ______________________
(d) Enter Alternative A
if applicable. $ 16,000* ______________________
(e) Enter Alternative B. $ 8,000 ______________________
(f) Enter Alternative C. $ 4,800 ______________________
(g) Enter the largest
of items (c), (d),
(e) or (f). $ 8,000* ______________________
<PAGE>
(h) Enter the $9,500
limit (Step 5(c)). $ 12,500 $_____________________
(i) Enter the smaller
of (g) or (h).
This is your maxi-
mum salary reduc-
tion for this year. $ 8,000 ______________________
*Alternative A is not available to the employee in the example because
she is not terminating employment.
For this employee, the Alternative B limit of $8,000 is the largest for
this year. Keep in mind that the alternative election, which appears
most advantageous in this year may not necessarily be the best for you
over the long run. See Questions 9 and 12.
Step 6 - Salary Reduction Agreement
Enter a salary reduction agreement with your Employer, which reduces
your compensation each pay period so that the correct amount is
contributed to your State Street Research 403(b) Account.
QUESTIONS AND ANSWERS ON
CALCULATING YOUR MAXIMUM
Maximum Contribution
1. What is the maximum annual contribution to my 403(b) account?
The maximum contribution you can exclude from your taxable income
(sometimes called your "maximum exclusion allowance"
or "MEA") is the smaller of your "403(b) exclusion allowance" (Questions
2-5) or your "415 limit" (Questions 6-12). Finally, your salary
reduction contributions for a year cannot exceed $9,500; this is
increased for certain employees (Questions 13 and 14).
Exclusion Allowance
2. How do I compute my "exclusion allowance"?
Use the following steps to compute your 403(b) exclusion allowance:
(a) Take 20 percent of your expected salary for the current
year (before reduction for your 403(b) contributions, but
after reduction for salary reduction contributions under a
cafeteria or flexible benefits plan or 401(k) plan if your
employer maintains such a plan).
(b) Multiply (a) by your number of years of service with your
current employer as of the end of the current year.
(c) Subtract the following total from (b):
(bullet) your total 403(b) salary reduction contributions
in previous years (which you excluded from your
income),
(bullet) your employer's contributions in previous years on
your behalf to a 403(b) retirement plan or to a
qualified retirement plan,
<PAGE>
(bullet) your employer's expected contributions to a 403(b)
retirement plan for you for the current year (see
Questions 15 and 16).
(d) Divide (c) by the sum of one plus 20 percent of your years
of service as of the end of the current year.
The resulting figure is the amount of your exclusion allowance for the
current year.
3. What if I do not know how much my employer has contributed in
previous years on my behalf to a retirement plan?
If you cannot learn this from the benefits or personnel office of your
employer, IRS regulations provide a method for determining the amount of
your employer's prior contributions. Consult your employer or tax
adviser for further information.
Years of Service
4. How do I determine my years of service?
Count one year of service for each full year you were a full-time
employee. Count a fraction of a year of service for years in which you
were a part-time employee or did not work a full year. Add your full and
fractional years of service together to determine your total years of
service. Only service with your current employer can be counted.
Part-time Fraction. For part-time work, the fraction is your work
schedule divided by the normal work schedule for a full-time employee
holding the same position. For example, if for a year you taught one
course for six hours per week, and a full-time teacher normally teaches
18 hours per week, your fraction would be one-third of a year.
Partial Year Fraction. If you were a full-time employee for part of the year,
the fraction is the number of weeks or months you worked divided by the number
of weeks or months in your employer's annual work period. For example, if you
taught full-time for four and one-half months and your employer's annual work
period is an academic year of nine months, your fraction would be one-half of a
year.
Part-time, Partial Year Fraction. If you were a part-time employee for
part of a year, calculate one fraction as though you were a part-time
employee for a full year and one fraction as though you were
a full-time employee for a part of a year. Then multiply the two
fractions together to obtain your fractional year of service. For
example, if you taught a course for six hours per week for one semester
at a school where full-time teachers taught 18 hours per week for two
semesters, your fractional year of service would be one-sixth (part-time
fraction of one-third times full-time for part-of-a-year fraction of
one-half).
5. What if I have less than one year of service?
Under the law, you may compute your exclusion allowance based on one
year of service even if you have worked for your employer for less than
a year or if your fractional years of service total less than a year.
<PAGE>
415 Limits
6. What are the 415 limits?
The 415 limits are from Section 415 of the Internal Revenue Code. The
415 limits apply even though your 403(b) exclusion allowance for the
year is greater. Section 415 has a general limit and certain
alternatives that may permit a larger maximum.
7. How do I compute the 415 general limit?
Your 415 general limit is the smaller of:
(a) 20 percent of your compensation for the year (before
reduction for contributions to your 403(b) account, but
after reduction for salary reduction contributions under
any cafeteria or flexible benefits plan or 401(k) plan your
employer maintains); this amount must be reduced by 80% of
your employer's contribution for the year to the 403(b)
retirement plan; or
(b) $30,000. (This $30,000 figure will eventually be indexed
for cost-of-living changes. However, the indexing will not
begin for some years depending on future inflation.)
415 Alternatives
8. What are the 415 alternatives?
In the past, many employees eligible for 403(b) did not enter into
salary reduction agreements because they expected to make large "catch-
up" contributions later. The 415 general limit might prevent those
employees from saving enough for their retirement years. To remedy this
situation, 415 provides certain alternatives.
These alternatives are available only to employees of an educational
organization, a hospital, a home health service agency, a health and
welfare service agency, or a church or association of churches. If you
do not work for such an employer, you can skip Questions 9 through 12.
9. How many alternatives are there?
Section 415 provides three alternatives:
Alternative A may be used only once, in the year you leave the
service of your employer. Under this alternative, the 415
percentage limitation (see Answer 7(a)) is disregarded and you
may calculate your 403(b) exclusion allowance using your years
of service with your employer up to a maximum of ten years. The
$30,000 limit still applies, however, even if your exclusion
allowance is higher.
In other words, under this alternative, you are limited to your
403(b) exclusion allowance based on a maximum of ten years of
service, or $30,000, whichever is less.
Alternative B is the smallest of:
(a) the amount of your 403(b) exclusion allowance;
(b) 20 percent of your compensation (before reduction for
contributions to your 403(b) account) plus $3,200;
(c) $15,000
<PAGE>
Alternative C is to disregard the 403(b) exclusion allowance
altogether. Under this alternative, contributions are subject
only to the 415 general limit described in Answer 7.
Finally, there is a separate alternative available only to an employee
of a church or association of churches: to replace the 415 general limit
with the limit of $10,000 per year (up to a cumulative total
of $40,000).
10. Are there any special rules for electing one of the alternatives?
Yes. You may elect only one of the three alternatives. If you elect one
of the alternatives, you may not elect either of the other
alternatives in any future year.
Alternative A (for the year of separation) may be elected only once. If
you elect this alternative in any year, you may not elect an
alternative at any time in the future.
If you elect an alternative, your election is irrevocable for that year.
However, you may elect either alternative B or C in one year,
choose not to use it in the following year, and then elect the same
alternative again in the third year.
11. How do l elect an alternative?
You elect an alternative simply by computing your income tax
liability in a manner consistent with the alternative.
12. Which alternative is best for me?
This depends upon your current compensation, expected future
compensation, years of service, expected future years of service,
expected ability to make future salary reduction contributions, and so
forth. An alternative which appears advantageous this year may restrict
contributions to your 403(b) account in later years. Only you can decide
which alternative is most advantageous to you.
The $9,500 Cap
13. Where did the $9,500 limit come from?
In the Tax Reform Act of 1986, Congress decided to limit salary
reduction contributions by employees. For 403(b), Congress chose a
$9,500 cap. This $9,500 cap applies as a maximum salary reduction
contribution even though your 403(b) exclusion allowance or 415 limit is
higher. This cap applies only to your salary reduction contributions,
not to employer contributions to a 403(b) retirement plan for you.
The $9,500 cap is indexed for future cost-of-living increases.
However, the cap will not increase for some years; exactly when depends
on future inflation rates.
14. Who qualifies for an increased $9,500 cap?
Congress realized that the $9,500 cap would affect employees who
expected to make "catch-up" contributions. Therefore, an increased cap
is available to some employees.
There are two requirements for an increased cap. First, your employer
must be one of the types listed in Answer 8. Second, you must have 15 or
more years of service with the employer. If you qualify, your $9,500 cap
is increased by the smallest of the following:
(a) $3,000;
<PAGE>
(b) $15,000 (reduced by all amounts by which your $9,500 cap
was increased in prior years under this special rule); or
(c) $5,000 multiplied by your number of years of service, minus
all previous salary reduction contributions under 403(b)
(or under any 401(k) plan in which you participated).
Additional Rules for an Employee with Another Retirement Program
15. If for the current year my employer or any other employer contributes to
another 403(b) account or annuity for me, must such contributions be added to my
salary reduction contributions when determining my maximum contribution?
Yes. To determine your 403(b) exclusion allowance, your 415 limit or one
of the alternatives (but not the $9,500 cap--only your salary reduction
contributions count against the $9,500 cap), your employer's current
contributions to a 403(b) plan or arrangement for you must be included.
(See the Worksheet for an example of this situation). If your employer
has a retirement plan, you should find out whether it is a 403(b) plan.
16. If for the current year my employer makes contributions for me to a
retirement plan that is "qualified" under section 401(a) of the Code,
must such contributions be counted when determining my maximum
contribution?
If this situation applies to you, you should consult your tax adviser.
The following is only a general summary of the rules governing
aggregation of contributions to your 403(b) account with contributions
to a qualified plan.
Contributions for you to a qualified plan during the current year by an
employer are not counted in determining your 403(b) exclusion allowance
this year.
However, for your 415 limit, the answer depends on whether you have
elected one of the 415 alternatives and on whether you
"control" your employer.
If you have not elected an alternative, or if you have elected
alternative A or B, you need not combine contributions to your 403(b)
account with contributions on your behalf to a qualified plan of the
same or any other employer unless you control the employer by owning a
50% or greater interest.
If you have elected alternative C (to disregard the exclusion allowance
entirely), you must count contributions to your 403(b) account with
contributions for you to a qualified retirement plan maintained by any employer
regardless of whether you "control" the employer.
<PAGE>
State Street Research 403(b)
Account Application
How to open your
State Street
Research 403(b)
Account
1. To open a State Street Research 403(b) Account, please complete
this side of the Application.
2. Your investment dealer must complete the dealer information
section of the Application.
What type of State
Street Research
403(b) are you
opening?
[ ] Regular 403(b) [ ] Transfer of Assets [ ] Regular Rollover
or Direct Rollover
Employee
information
Complete the following
information about
yourself. Your account
will be registered in
your name.
Name ___________________________________ Birth date______________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Social Security #________________________________________________________
Daytime telephone #______________________________________________________
Employer
information
Complete the following
information about your
Employer.
Name_____________________________________________________________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Name of contact person___________________Daytime telephone #_____________
Which Fund(s)
have you selected
for your 403(b)?
See the State Street
Research 403(b)
brochure and relevant
prospectus(es) for
Fund details.
Name of Fund Class of Shares Percentage
A B D
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
Total 100%
<PAGE>
Who is the
beneficiary of
your State Street
Research 403(b) Account?
1. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
2. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
Important
Naming a beneficiary(ies) can have estate and tax-planning implications.
Also, if you are married and live in a community property state (AZ, CA,
ID, LA, NM, NV, TX, or WA), you may need your spouse's consent to
designate someone else as beneficiary for more than half of your
Account. Consult your attorney, or other qualified professional, for
additional advice.
Keep a copy of this account application with your other important papers
(such as your will).
Telephone Exchange
The Telephone Exchange Privilege is available only for shares held on
deposit with the Transfer Agent. None of the Transfer Agent, any of the
Funds, State Street Research Shareholder Services, the Investment
Manager or the Distributor will be liable for any loss, injury, damage
or expense as a result of acting upon, and will not be responsible for
the authenticity of, any telephone instructions. I understand that all
telephone calls are tape recorded. My liability shall be subject to the
use of reasonable procedures to confirm that instructions communicated
by telephone are genuine.
<PAGE>
Telephone Exchange
by Shareholder
or Dealer
The Transfer Agent may effect exchanges for my account according
to telephone instructions from me or my Dealer as set forth in the
prospectus, and may register the shares of the Fund to be acquired
exactly the same as my existing account. Authorizing an exchange
constitutes an acknowledgment that the shareholder has received
the current prospectus of the Fund to be acquired. The account will
automatically have this privilege unless it is expressly declined by
providing your initials in the space below.
I DO NOT WANT THE TELEPHONE EXCHANGE PRIVILEGE.
___(Initial here.)
Sign here to
establish the
403(b) Account
I hereby establish a State Street Research 403(b) Account, the terms of
which are contained in this Application and the State Street Research
403(b) Agreement (which I have received and which is incorporated herein
by reference) and appoint State Street Bank and Trust Company as
Custodian. I direct that contributions to my 403(b) Account be invested
as specified above in this Application (until changed by me
in accordance with the Agreement), designate the individual(s) named
above as my beneficiary(ies) (unless I have filed a separate written
designation with the Custodian or its agent), acknowledge that I have
received a current prospectus(es) of the Fund(s) indicated above, and
acknowledge that there is a $10 annual maintenance fee (in addition
to any fees and charges described in the prospectus(es)).
Under penalties of perjury, I certify that (1) the number shown on this
Application is my correct taxpayer identification number (or I am
waiting for a number to be issued to me), and (2) I am not subject to
backup withholding because (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your
tax return.
Employee signature_____________________________Date___________________
<PAGE>
Dealer information
and signature
guarantee
Please have your
investment dealer
fill out this section.
Dealer firm__________________________________________________________
Home office address_________________City__________State______ZIP_____
Branch office address_______________City__________State______ZIP_____
Telephone #______________Branch #_____________Rep. #_________________
Authorized dealer signature__________________________________________
Investment Dealer's last name________________________________________
If this Application is for an account introduced through the
above-named Dealer, the Dealer further agrees to all applicable
provisions in this Application and in the prospectus(es) of the
Fund(s) selected by the Employee, represents that it has provided a
current prospectus(es) to the Employee and that the Application is
properly executed by a person authorized by the Dealer to guarantee
signatures. The Dealer warrants that this Application is completed in
accordance with the Employee's instructions and agrees to indemnify
the Funds(s), the Distributor, the Investment Manager, State Street
Research Shareholder Services and the Transfer Agent for any loss or
liability from acting or relying upon such instructions and
information. The terms and conditions of the Distributor's currently
effective Selected Dealer Agreement or sales agreement are included by
reference in this section. The Dealer represents that it has a
currently effective Selected Dealer Agreement or sales agreement with
the Distributor authorizing the Dealer to sell shares of the Fund(s),
and that it may lawfully sell shares of the designated Fund(s) in the
state designated as the Employee's address of record.
State Street Bank
and Trust Company,
Custodian
You are hereby authorized and appointed on behalf of the above-signed
dealer to execute purchase transactions in accordance with the terms and
conditions of this Application, and to confirm each purchase.
Acceptance by
the Custodian
This Account will be deemed to have been accepted by the Custodian,
State Street Bank and Trust Company, after all necessary forms, properly
completed, are received by State Street Research Shareholder
Services and delivered by Shareholder Services to the Transfer Agent.
Send completed application to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Control Number: 2709-951025(1196)SSR-LD RP-918C-1095
<PAGE>
State Street Research 403(b)
Salary Reduction Agreement
Parties
Complete the information
about the Employee and
the Employer.
Employee name______________________________________
Social Security #__________________________________
Employer name______________________________________
Check one box.
[ ] Original Agreement [ ] Modification
Agreements
Fill in the dollar amount
or percentage that you
want to contribute in
section 2.
The Employee and the Employer agree as follows:
1. The Employee has signed the State Street Research 403(b) Account
Application establishing the Account for the benefit of the
Employee. The Employee and the Employer are entering into this
salary reduction agreement ("this Agreement") to provide for
contributions to the Account.
2. The Employee requests, and the Employer agrees, to reduce the
compensation of the Employee by $______ or by ______% per pay
period, starting with the first pay period that begins after the
Employee and the Employer have signed this Agreement.
3. As soon as possible after each pay day, the Employer will transmit
the amount by which the Employee's compensation is reduced for that
pay period to the agent for the Custodian of the Employee's
Account, to be credited to the Employee's Account in accordance
with the State Street Research 403(b) Account Agreement. For
federal income tax purposes, such amounts are considered Employer
contributions to the Employee's Account.
Where to send
contributions.
Checks should be made payable to "State Street Bank and Trust Company,
Custodian, FBO __________________________ [insert name of Employee]
403(b) Account." Mail checks to State Street Research, P.O. Box
8408, Boston, MA 02266-8408.
OVER
<PAGE>
4. This Agreement will be effective only with respect to compensation
not yet earned by the Employee, and not with respect to
compensation already earned by the Employee on the date this
Agreement is signed.
This Agreement is binding and irrevocable with respect to
compensation earned by the Employee while this Agreement is in
effect. The Employer or the Employee may terminate this Agreement
at any time with respect to compensation not yet earned by the
Employee at the date of termination, by giving written notice to
the other party. After termination, the Employee may reinstate this
Agreement (with the same or a different salary reduction amount);
however, the Employee may not reinstate this Agreement during the
same calendar year that the Employee (or Employer) terminated this
Agreement.
The Employee may modify the amount of salary reduction elected in
Paragraph 2 above at any time by giving the Employer signed
instructions specifying the new salary reduction amount. However,
the Employee may not modify this Agreement during the same calendar
year that the Employee originally signed this Agreement or in any
calendar year when the Employee has already modified this Agreement
once during such year.
5. Unless the Employer agrees to calculate the Employee's maximum
403(b) contribution, the Employer has no responsibility for
determining that the amount by which the Employee's compensation is
reduced, as set forth in Paragraph 2 above, does not exceed the
limitations applicable to the Employee under the Internal Revenue
Code. The Employee agrees to indemnify the Employer, State Street
Research Investment Services, Inc., and its affiliates for any and
all charges, expenses, taxes, interest or penalties imposed on the
Employer as a result of any reduction in compensation in excess of
such limitations.
Signatures
In witness whereof, the parties hereto have signed this Agreement
on______________________________, 19_______.
Employee Employer
(Signature)______________ (Name of employer)___________________________
By:_________________________________________
Signature and title of authorized official)
CONTROL NUMBER: 2711-951025(1196)SSR-LD RP-920C-1095
<PAGE>
State Street Research 403(b)
Transfer of 403(b) Assets Form
How to transfer
your existing
403(b) Account
to State Street
Research
(bullet) If you don't have a State Street Research 403(b) Account
yet, complete this transfer form and a State Street Research
403(b) Account Application.
(bullet) If you already have a State Street Research 403(b) Account,
just complete this transfer form.
(bullet) When completed, send this transfer form (and if necessary,
your 403(b) Account Application) to: State Street Research
Shareholder Services, P.O. Box 8408, Boston, MA 02266-8408.
Information
about you
Name______________________________Social Security #__________________
Telephone (day)___________________Telephone (night)__________________
Account number (If you already have a State Street Research 403(b)
Account)_____________________________________________________________
Where is your
403(b) Account
now?
Name of current Custodian/Insurer____________________________________
Address______________________________________________________________
City_____________________________State__________________ZIP__________
Account number_____________________Name of mutual fund or fund family
(if applicable)______________________________________________________
Please tell us
which Fund(s)
you have selected
for your 403(b)
investment
[ ] This is a new State Street Research 403(b) Account. My
investment choices are on my 403(b) Account Application.
[ ] I already have a State Street Research 403(b) Account. Please
invest the amount transferred as follows:
Fund name___________________________Account number____________ _____%
Fund name___________________________Account number____________ _____%
I acknowledge that I have received a current prospectus(es) of the
Fund(s) selected.
OVER >
<PAGE>
Please authorize
transfer of your
current 403(b)
Account to State
Street Research
To my current Custodian/Insurer: Please redeem
[ ] ALL or [ ] PART ($_________) of my current 403(b) and transfer
the proceeds in cash to my State Street Research 403(b) Account.
(For partial transfers, indicate which investments are to be liquidated.)
Your signature______________________________Date____________
Note: Under current IRS rulings, a transfer from another 403(b) account
to a State Street Research 403(b) Account will be a tax-free transaction
as long as the withdrawal restrictions under your existing 403(b) are
not more severe than those under the State Street Research 403(b)
account (see Section 5.2 of the State Street Research 403(b) Agreement).
By signing this form, you are certifying that this transfer will be a
tax-free transaction under the preceding sentence.
Signature
Guarantee
A signature guarantee may be required. Call your current Custodian/
Insurer for requirements.
Signature guaranteed by (name of bank or dealer firm)__________________
Signature and title of officer_________________________________________
PLEASE DO NOT FILL OUT THE FOLLOWING PORTION OF THIS FORM
Directions
to Current
Custodian/Insurer
Please liquidate and transfer on a fiduciary-to-fiduciary basis all or
part of the designated account as instructed above. Make check payable
to State Street Bank and Trust Company, Custodian.
Include the following account number and FBO on the check.
Account number________________________Name____________________________
Mail to: State Street Research Shareholder Services,
P.O. Box 8408, Boston, MA 02266-8408
Include a copy of this Transfer of 403(b) Assets Form with the check for
proper credit to the customer's account. State Street Research
Shareholder Services will deliver the items to Boston Financial Data
Services, Inc., which serves as Agent for the Custodian.
Successor
Custodian
State Street Bank and Trust Company will accept the transfer described
above once this form has been completed by you and the transfer has been
completed by your current 403(b) Custodian/Insurer.
______________________________________________________________________
Authorized signature of acceptance Date
by State Street Research Shareholder
Services on behalf of State Street Bank and Trust Company, Custodian
CONTROL NUMBER: 2707-951025(1196)SSR-LD RP-919C-1095
Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, State Street Research Growth Trust, an unincorporated
association of the type commonly known as a business trust organized
under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended
(the "Act");
WHEREAS, the Trust is authorized to (i) issue shares of
beneficial interest ("Shares") in separate series, with the Shares of
each such series representing the interests in a separate portfolio of
securities and other assets, and (ii) divide the Shares within each
such series into two or more classes;
WHEREAS, the Trust has established one or more portfolio series
as of the date hereof (such portfolios being referred to collectively
herein as the "Initial Series", such series, together with all other
series subsequently established by the Trust and made subject to this
Plan, being referred to herein individually as a "Series" and
collectively as the "Series"), and four classes thereof, and of series of
affiliated investment companies, have been designated as "Class A," "Class B,"
"Class C," and "Class D" shares, except for the MetLife - State Street Research
Money Market Fund, which issues four classes thereof designated as "Class B,"
"Class C," "Class D," and "Class E" shares);
WHEREAS, prior to the adoption of Rule 18f-3 by the Securities
and Exchange Commission the Trust received an Order from the Securities
and Exchange Commission under Section 6(c) of the Act for an exemption
from Sections 2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c) and 22(d)
of the Act and Rule 22c-1 thereunder to permit the Trust to issue
multiple classes of shares representing interests in the same portfolio
of securities, assess a contingent deferred sales charge ("CDSC") on
certain redemptions of shares, and waive the CDSC in certain cases; and
WHEREAS, the Trustees have determined to operate under Rule
18f-3 and pursuant to such Rule the Board of Trustees as a whole, and
the Trustees who are not interested persons of the Trust (as defined in
the Act) (the "Qualified Trustees"), having determined in the exercise
of their reasonable business judgment this Plan is in the best interest
of each class of the Initial Series individually and the Initial Series
as a whole, have accordingly approved this Plan.
NOW, THEREFORE, Trust hereby adopts this Plan in accordance
with Rule 18f-3 under the Act, on the following terms and conditions:
1. Class Differences. Each class of Shares of each Initial
Series shall represent interests in the same portfolio of investments
of Initial Series and shall be identical in all respects, and except as
otherwise set forth in this Plan, shall differ solely with respect to:
(i) arrangements for shareholder services or the distribution of
Shares, or both, as provided for in Sections 2 and 3 of this Plan;
(ii) the exclusive right of a Class to vote on certain matters relating
to the Plan of Distribution Pursuant to Rule 12b-1 adopted by the Trust
with respect to such Class; (iii) such differences relating to purchase
minimums, sales charges and eligible investors as may be set forth in
the Prospectuses and Statement of Additional Information of the Initial
Series, as the same may be amended or supplemented from time to time
(the "Prospectuses" and "SAI"); (iv) the different exchange privileges
of the classes of Shares; (v) the fact that only certain classes will
have a conversion feature; and (iv) the designation of each Class of
shares.
2. Differences in Distribution and Shareholder Services.
Each Class of Shares of the Initial Series shall have a different
arrangement for shareholder services or the distribution of Shares, or
both, as follows:
Class A Shares shall be sold subject to a front-end
sales charge as set forth in the Prospectuses and SAI with respect to
the applicable Initial Series. Class A, Class B and Class D Shares
shall be sold subject to a contingent deferred sales charge as set
forth in the Prospectuses and SAI with respect to the applicable
Initial Series. Class A, B and D Shares shall be subject to a service
fee of up to 0.25% of the nets assets of the Initial Series allocable
to such Class of Shares. Class B and D Shares shall also be subject to
an annual distribution fee of up to 0.75% of the nets assets of the
Initial Series allocable to such Class of Shares. Such service and
distribution fees may be used to finance activities in accordance with
Rule 12b-1 under the Act and the Plan of Distribution pursuant to
Rule 12b-1 adopted by the Trust.
3. Allocation of Expenses. Expenses of the Series shall be
allocated as follows:
(a) Class Expenses. Expenses relating to different
arrangements for shareholder services or the distribution of Shares, or
both, shall be allocated to and paid by that class. A class may pay a
different share of other expenses, not including advisory or custodial
fees or other expenses related to the management of a Series' assets,
if such expenses are actually incurred in a different amount by that
class, or if the class receives services of a different kind or to a
different degree than other classes.
(b) Other Allocations. All expenses of the Series
not allocated to a particular class pursuant to Sections 2 and 3(a) of
this Plan shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of the
Series. Notwithstanding the foregoing, the underwriter, adviser, or
other provider of services to a Series may waive or reimburse the
expenses of a specific class or classes to the extent permitted under
Rule 18f-3 under the Act; provided, however, that the Board shall
monitor the use of such waivers or reimbursements intended to differ by
class.
4. Term and Termination.
(a) Initial Series. This Plan shall become effective
with respect to the Initial Series as of the date hereof, and shall
continue in effect with respect to each Class of Shares of the Initial
Series (subject to Section 4(c) hereof) until terminated in accordance
with the provisions of Section 4(c) hereof.
(b) Additional Series or Classes. This Plan shall
become effective with respect to any class of the Initial Series other
than Class A, Class B, Class C, and Class D, and in the case of the
MetLife - State Street Money Market Fund, Class E, and with respect to
each additional Series or class thereof established by the Trust after
the date hereof and made subject to this Plan, upon commencement of
operations thereof or as otherwise determined, and shall continue in
effect with respect to each such additional Series or class (subject to
Section 4(c) hereof) until terminated in accordance with the provisions
of Section 4(c) hereof. An addendum hereto setting forth such specific
and different terms of such additional series of classes shall be
attached to this Plan.
(c) Termination. This Plan may be terminated at any
time with respect to the Trust or any Series or class thereof, as the
case may be, by vote of a majority of both the Trustees of the Trust
and the Qualified Trustees. The Plan may remain in effect with respect
to a Series or class thereof even if it has been terminated in
accordance with this Section 4(e) with respect to such Series or class
or one or more other Series of the Trust.
5. Amendments. Any material amendment to this Plan shall
require the affirmative vote of a majority of both the Trustees of the
Trust and the Qualified Trustees.
Dated: May 5, 1995
POWER OF ATTORNEY
We, the undersigned State Street Research Growth Trust
("Trust"), a Massachusetts business trust, its trustees, its principal
executive officer and its principal financial and accounting officer,
hereby severally constitute and appoint Francis J. McNamara III and
Darman A. Wing, as our true and lawful attorneys, with full power to
each of them alone to sign for us, in our names and in the capacities
indicated below, any Registration Statements and any and all amendments
thereto of the Trust filed with the Securities and Exchange Commission
and generally to do all such things in our names and in the indicated
capacities as are required to enable the Trust to comply with
provisions of the Securities Act of 1933, as amended, and/or the
Investment Company Act of 1940, as amended, and all requirements and
regulations of the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they have been and may be signed by
our said attorneys to said Registration Statements, and any and all
amendments thereto.
IN WITNESS WHEREOF, we have hereunto set our hands, on
April 25, 1996.
SIGNATURES
STATE STREET RESEARCH GROWTH TRUST
By: /s/ Ralph F. Verni
- ----------------------
Ralph F. Verni, Chief Executive
Officer and President
/s/ Ralph F. Verni /s/ Thomas L. Phillips
- ------------------ ----------------------
Ralph F. Verni, Trustee and Thomas L. Phillips, Trustee
principal executive officer
/s/ Gerard P. Maus /s/ Toby Rosenblatt
- ------------------ -------------------
Gerard P. Maus, Principal financial Toby Rosenblatt, Trustee
and accounting officer
/s/ Edward M. Lamont /s/ Michael S. Scott Morton
- -------------------- ---------------------------
Edward M. Lamont, Trustee Michael S. Scott Morton,
Trustee
/s/ Robert A. Lawrence /s/ Jeptha H. Wade
- ---------------------- ------------------
Robert A. Lawrence, Trustee Jeptha H. Wade, Trustee
/s/ Dean O. Morton
- ------------------
Dean O. Morton, Trustee
poa\SSRGT1
Certificate of Resolution
I, the undersigned Darman A. Wing, hereby certify that I am
Assistant Secretary of State Street Research Growth Trust (the
"Trust"), a Massachusetts business trust duly authorized and validly
existing under Massachusetts law, and that the following is a true,
correct and complete statement of a vote duly adopted by the Trustees
of said Trust on May 5, 1995:
"VOTED: That Francis J. McNamara, III and Darman A.
Wing be, and each hereby is, authorized and
empowered, for and on behalf of the Trust, its
principal financial and accounting officer, and
in their name, to execute, and file a Power of
Attorney relating to, the Trust's Registration
Statements under the Investment Company Act of
1940 and/or the Securities Act of 1933, and
amendments thereto, the execution and delivery of
such Power of Attorney, Registration Statements
and amendments thereto, to constitute conclusive
proof of such authorization."
I further certify that said vote has not been amended or
revoked and that the same is now in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand on this 25th
day of April, 1996.
/s/ Darman A. Wing
________________________
Assistant Secretary
<TABLE> <S> <C>
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<NAME> STATE STREET RESEARCH GROWTH TRUST
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<NUMBER> 011
<NAME> STATE STREET RESEARCH GROWTH FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 172,396,697
<INVESTMENTS-AT-VALUE> 203,745,618
<RECEIVABLES> 42,283,848
<ASSETS-OTHER> 3,824
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,033,290
<PAYABLE-FOR-SECURITIES> 4,356,446
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,808,852
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<SHARES-COMMON-PRIOR> 101,397
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (662,655)
<ACCUM-APPREC-OR-DEPREC> 31,348,921
<NET-ASSETS> 201,867,992
<DIVIDEND-INCOME> 2,126,752
<INTEREST-INCOME> 330,634
<OTHER-INCOME> 0
<EXPENSES-NET> 1,536,049
<NET-INVESTMENT-INCOME> 921,337
<REALIZED-GAINS-CURRENT> 57,615,231
<APPREC-INCREASE-CURRENT> 2,561,460
<NET-CHANGE-FROM-OPS> 61,098,028
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<DISTRIBUTIONS-OF-INCOME> (2,898)
<DISTRIBUTIONS-OF-GAINS> (568,862)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 208,712
<NUMBER-OF-SHARES-REDEEMED> (49,931)
<SHARES-REINVESTED> 78,810
<NET-CHANGE-IN-ASSETS> 13,112,894
<ACCUMULATED-NII-PRIOR> 64,801
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (76,360)
<GROSS-ADVISORY-FEES> 1,089,143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,536,049
<AVERAGE-NET-ASSETS> 229,293,263
<PER-SHARE-NAV-BEGIN> 7.09
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 2.30
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (2.36)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.02
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
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<NUMBER> 012
<NAME> STATE STREET RESEARCH GROWTH FUND CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 172,396,697
<INVESTMENTS-AT-VALUE> 203,745,618
<RECEIVABLES> 42,283,848
<ASSETS-OTHER> 3,824
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,033,290
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<OTHER-ITEMS-LIABILITIES> 39,808,852
<TOTAL-LIABILITIES> 44,165,298
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 170,975,197
<SHARES-COMMON-STOCK> 1,551,711
<SHARES-COMMON-PRIOR> 219,928
<ACCUMULATED-NII-CURRENT> 206,529
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (662,655)
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<NET-ASSETS> 201,867,992
<DIVIDEND-INCOME> 2,126,752
<INTEREST-INCOME> 330,634
<OTHER-INCOME> 0
<EXPENSES-NET> 1,536,049
<NET-INVESTMENT-INCOME> 921,337
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<APPREC-INCREASE-CURRENT> 2,561,460
<NET-CHANGE-FROM-OPS> 61,098,028
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (2,759,387)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,044,801
<NUMBER-OF-SHARES-REDEEMED> (65,041)
<SHARES-REINVESTED> 352,023
<NET-CHANGE-IN-ASSETS> 13,112,894
<ACCUMULATED-NII-PRIOR> 64,801
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 1,536,049
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<PER-SHARE-NAV-BEGIN> 7.02
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 2.29
<PER-SHARE-DIVIDEND> 0
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<NAME> STATE STREET RESEARCH GROWTH FUND CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 172,396,697
<INVESTMENTS-AT-VALUE> 203,745,618
<RECEIVABLES> 42,283,848
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<OTHER-ITEMS-ASSETS> 0
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<SHARES-COMMON-STOCK> 26,577,304
<SHARES-COMMON-PRIOR> 26,269,764
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (662,655)
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<DIVIDEND-INCOME> 2,126,752
<INTEREST-INCOME> 330,634
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<EXPENSES-NET> 1,536,049
<NET-INVESTMENT-INCOME> 921,337
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<APPREC-INCREASE-CURRENT> 2,561,460
<NET-CHANGE-FROM-OPS> 61,098,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (756,996)
<DISTRIBUTIONS-OF-GAINS> (56,277,393)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,689
<NUMBER-OF-SHARES-REDEEMED> (2,415,508)
<SHARES-REINVESTED> 2,704,359
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<ACCUMULATED-NII-PRIOR> 64,801
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (76,360)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,536,049
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<PER-SHARE-NII> 0.04
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 172,396,697
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<RECEIVABLES> 42,283,848
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<OTHER-ITEMS-ASSETS> 0
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</TABLE>
