[front cover]
[logo] STATE STREET RESEARCH
STATE STREET RESEARCH
GROWTH FUND
ANNUAL REPORT
December 31, 1995
[graphic of figure climbing to stars]
WHAT'S INSIDE
From the Chairman:
1995: An outstanding
year for investors
Portfolio Manager's Review:
Strong returns
from growth stocks
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
From the Chairman
To Our Shareholders:
We have reluctantly bid farewell to 1995, an outstanding year for most of our
investors. Stocks and bonds achieved their best results in many years. 1995
offered a uniquely positive combination of moderate economic growth, low
inflation, falling interest rates, and strong corporate profits.
Looking ahead
We are cautiously optimistic about 1996. There are several positive signs.
Inflation and interest rates remain low and the economy may be able to
sustain modest growth. On January 31, the Federal Reserve lowered short-term
interest rates by one-quarter point. This was the Fed's second interest-rate
cut in less than two months.
Benefits of professional management
1996 may be a year in which the benefits of professional management will be
more evident than ever. It can be reassuring to know that an experienced
portfolio manager is working on your behalf, paying close attention to market
conditions and economic indicators. We appreciate your trust.
Top-rated service
We work extremely hard to provide the highest-quality service to
shareholders. Recently, State Street Research received two prestigious awards
from Dalbar, an organization that rates mutual fund companies for their
service. We were one of only seven firms to receive the Dalbar Quality Tested
Service Seal, which recognizes leaders in all key service areas. Dalbar also
awarded us Dalbar Key Honors, recognizing our service quality in written and
telephone communications to shareholders.
Best wishes for a successful 1996.
Sincerely,
[Signature of Ralph F. Verni]
Ralph F. Verni
Chairman
January 31, 1996
1+31.71% for Class B shares; +33.02% for Class C shares; +31.57% for Class D
shares.
2Investment results are based on an assumed $10,000 investment at "A" share
maximum sales charge of 4.5%; thus, the net amount invested was $9,550. Also
assumes reinvestment of capital gain distributions and income dividends. No
adjustment has been made for income taxes payable by shareholders on income
dividends or capital gain distributions.
3All 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. "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.
4Performance reflects up to maximum 4.5% front- end or 5% contingent deferred
sales charges.
5Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Please note that the discussion throughout this shareholder report is
dated as indicated and because of possible changes in viewpoint, data,
and transactions, should not be relied upon as being current thereafter.
Fund Information (all data are for periods ended December 31, 1995)
Total value of $10,000 invested on January 1, 1986(2)
(Class A shares, at maximum applicable sales charge)
*************************[MOUNTAIN CHART]************************************
1/86 9550
12/86 10827
12/87 11844
12/88 12942
12/89 18097
12/90 16982
12/91 21529
12/92 22758
12/93 24734
12/94 23787
12/95 31535
*******************************************************************************
<TABLE>
<CAPTION>
SEC Average Annual Compound
Rates of Return
(at maximum applicable sales charge)3,4
10 5
Years Years 1 Year
- -------- ------- ------ --------
<S> <C> <C> <C>
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%
======== ===== ==== ======
</TABLE>
<TABLE>
<CAPTION>
Cumulative Total Returns
(do not reflect sales charge)3,5
10 5
Years Years 1 Year
- -------- ------- ------ --------
<S> <C> <C> <C>
Class A +230.21% +85.69% +32.57%
Class B +222.78% +81.51% +31.71%
Class C +232.12% +86.77% +33.02%
Class D +222.66% +81.45% +31.57%
======== ===== ==== ======
</TABLE>
Top 5 Equity Industries
(by percentage of net assets)
Retail 12.4%
Recreation 7.5%
Textile and apparel 7.2%
Computer software and service 6.9%
Insurance 6.1%
Total: 40.1%
<PAGE>
Portfolio Manager's Review
[picture of Federick R. Kobrick]
Frederick R. Kobrick
Portfolio Manager
State Street Research Growth Fund rewarded investors with outstanding
performance in 1995. For the 12 months ended December 31, 1995, Class A
shares of the Fund posted a total return of +32.57% (does not reflect sales
charge).(1) The Fund outperformed the +30.79% average return for the 572
funds in Lipper Analytical Services' Growth Funds category over the same time
period (does not reflect sales charges).
Management strategy
Growth Fund prospered from both a booming stock market and successful stock
selection. The market benefited from low inflation, a healthy bond market, a
slower economy, and strong corporate profits. Our "bottom-up" stock-selection
strategy--which focuses on the growth prospects of individual companies--
served us well in 1995.
Technology
Technology stocks led the market most of the year, and we participated and
profited from our involvement in this tech stock rally. The fourth quarter
saw some personal computer and semiconductor stocks fall out of favor with
the market, which hurt our performance somewhat. We reviewed the technology
sector and made numerous portfolio changes. By year-end, we reduced our
technology holdings to 21% of the total portfolio and eliminated
semiconductor stocks altogether. Our current technology holdings are
primarily stocks of software and service companies that offer products to
increase productivity.
Retail
While retail stocks as a sector of the market did not fare very well in 1995,
we had success with a number of our holdings. Overall retail sales were down
all year, and a lack of consumer confidence was a likely culprit. For the
most part, we targeted specialty retailers that concentrate in a specific
niche and achieve a substantial market share. One such company is Sunglass
Hut International, our largest holding in both the retail sector and the
overall portfolio.
Textile and apparel
Like retail, the textile and apparel component of our portfolio primarily
focused on companies that specialize. We believe that some of the best
apparel makers do their own design as well as have their own outlets. As of
December 31, 1995, all of the textile stocks in the portfolio also offered
retail operations. Tommy Hilfiger, one of our ten largest holdings, designs,
manufactures, and sells its own line of clothing.
Insurance
We increased our holdings in insurance stocks last year because we saw some
companies taking positive steps towards profitability through cost cutting.
Some of these stocks also offered good value, which we look for. Our largest
holding in this area is Travelers Group.
Looking ahead
We will continue to manage Growth Fund actively to keep it positioned in
stocks that offer promising outlooks and values. We are making portfolio
shifts toward larger, more seasoned companies with longer operating
histories. 1996's market is already proving to be more volatile, but we are
confident that our portfolio structure will benefit over the long term.
December 31, 1995
Top 10 Stock Positions
(by percentage of net assets)
1 Sunglass Hut Specialty retailer 4.3%
2 HFS Hotel reservation service 3.9%
3 Tommy Hilfiger Apparel designer/manufacturer 3.0%
4 Gucci Apparel designer/manufacturer 2.8%
5 Northwest Airlines Airline 2.7%
6 Halliburton Oil industry supplier 2.5%
7 Boeing Aircraft manufacturer 2.5%
8 Digital Office equipment company 2.5%
9 Travelers Group Financial services company 2.4%
10 Walt Disney Entertainment giant 2.4%
These securities represent an aggregate of 29.0% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Best and Worst Contributors to Performance
(January 1, 1995 through December 31, 1995)
Best (triangle pointing up)
HFS
Expansion into related markets helped this reservation-service provider.
Tommy Hilfiger
Clothing designer/retailer benefited from strong demand.
Intel
Profited from booming demand for its Pentium processor.
Worst (triangle pointing down)
Softkey International
Company's aggressive expansion made many investors nervous.
Texas Instruments
Semiconductor manufacturer hurt by weakening demand.
Gateway 2000
Investor apprehension about P.C. market contributed to stock's decline.
2
<PAGE>
State Street Research Growth Fund
Investment Portfolio
December 31, 1995
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ------------------------------------------- ------ -------------
<S> <C> <C>
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.
3
<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
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
- ----------------------------- --------- -------- -------------
<S> <C> <C> <C>
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
===========
</TABLE>
- -------------------------------------------------------------------------------
* 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.
4
<PAGE>
Statement of Assets and Liabilities
December 31, 1995
Statement of Operations
For the year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
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
===========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
<TABLE>
<CAPTION>
<S> <C>
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
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
1995 1994
- ----------------------------------- ----------- -------------
<S> <C> <C>
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
========= ===========
</TABLE>
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.
6
<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.
7
<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>
8
<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.
9
<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
10
<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)
11
<PAGE>
State Street Research Growth Fund
Fund Information, Officers and Trustees of State Street Research Growth Trust
Fund Information
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 02266-8408
1-800-562-0032
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
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Dudley F. Wade
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
12
<PAGE>
[back cover]
State Street Research Growth Fund
One Financial Center
Boston, MA 02111
[indicia]
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[logo] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective
investors.
CONTROL NUMBER: 2963-960220(0397)SSR-LD
Cover Illustration by Dorothy Cullinan GF-926D-296
