[logo]STATE STREET RESEARCH
STATE STREET RESEARCH
GROWTH FUND
ANNUAL REPORT
December 31, 1996
[GRAPHIC]MAN CLIMBING STAIRS
WHAT'S INSIDE
From the Chairman
Positive performance from
stocks and bonds
Portfolio Manager's Review
A mixed year for
Growth Fund
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
[GRAPHIC]DALBAR LOGO
For Excellence
in
Shareholder Service
<PAGE>
FROM THE CHAIRMAN
[GRAPHIC]RALPH F. VERNI
To Our Shareholders:
1996 was another year of strong returns for many investors in the stock
market. For much of the past year, there were strong corporate profits, low
inflation and steady-but-slow economic growth. The Dow Jones Industrial
Average broke the 6000 point barrier in October, and the Standard & Poor's
500 Composite Index was up +22.95% for the 12 months ended December 31, 1996.
Investors in the bond market also enjoyed positive returns, with the Lehman
Brothers Aggregate Bond Index gaining +3.63% for the same time period.(1)
Stocks
Most of the gains in the stock market in 1996 were concentrated in the
largest companies and industry giants. The Russell 2000 Index, which measures
small-company stock performance, lagged the performance of the S&P 500 but
still returned a solid +16.50%,(1) with most of the gain occurring in the first
six months of the year. Our analysts believe that 1997 may be a year in which
more of the smaller companies, many of which have not been able to keep pace
with the larger names, may see better results.
Bonds
High-yield bonds were steady performers throughout the year, benefiting from
the stronger than expected economy, which never overheated enough to
precipitate any action by the Federal Reserve, Higher-quality bonds rallied
through the summer and fall, before losing momentum late in the fourth
quarter. In 1997, bonds should continue to take their cue from the economy
and the Fed.
Tax-Time Reminder
In closing, I'd like to remind State Street Research investors of our
extended call-in hours for tax time. Starting March 1 and continuing through
April 15, 1997, Shareholder Services representatives will be available from
8:00 a.m. until 8:00 p.m., and on Saturdays from 10:00 a.m. until 2:00 p.m.
Call them with your account and tax-related questions during these extended
hours.
Thank you for investing in State Street Research Growth Fund.
Sincerely,
[SIG]Ralph F. Verni
Ralph F. Verni
Chairman
January 31, 1997
(1) 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 Lehman Brothers Aggregate Bond Index is a commonly used
measure of bond market performance. The Russell 2000 Index is a commonly used
measure of small-company stock performance. The indices are unmanaged and do
not take sales charges into consideration. Direct investment in the indices
is not possible; results are for illustrative purposes only.
(2)+11.73% for Class B shares; +12.74% for Class C shares; +11.89% for Class D
shares.
(3)Investment 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.
(4)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 and higher redemptions and expenses that have
occurred during the Fund's current, continuous public offering. Performance
for a class may include periods prior to the adoption of class designations
in 1993, which resulted in new or increased 12b-1 fees of up to 1% per class
thereafter and which will reduce subsequent performance. "C" shares, offered
without a sales charge, are available only to certain employee benefit plans
and large institutions.
(5)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "D" share contingent deferred sales charges where applicable.
(6)Cumulative 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, 1996)
- --------------------------------------------------------------------------------
Total value of $10,000 invested on 1/1/87(3)
(Class A shares, at maximum applicable sales charge)
[GRAPHIC]Mountain Chart
Mountain chart plot points
1/87 9550
12/87 10447
12/88 11416
12/89 15963
12/90 14979
12/91 18989
12/92 20073
12/93 21816
12/94 20981
12/95 27815
12/96 31334
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(4,5)
<TABLE>
<CAPTION>
10 Years 5 Years 1 Year
- ---------- ----------- --------- ----------
<S> <C> <C> <C>
Class A +12.10% +9.52% +7.58%
- ---------- ----------- --------- ----------
Class B +12.27% +9.64% +6.73%
- ---------- ----------- --------- ----------
Class C +12.69% +10.68% +12.74%
- ---------- ----------- --------- ----------
Class D +12.28% +9.88% +10.89%
- ---------- ----------- --------- ----------
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)(4,6)
<TABLE>
<CAPTION>
10 Years 5 Years 1 Year
- ---------- ----------- --------- ----------
<S> <C> <C> <C>
Class A +228.10% +65.01% +12.65%
- ---------- ----------- --------- ----------
Class B +218.09% +59.97% +11.73%
- ---------- ----------- --------- ----------
Class C +230.27% +66.10% +12.74%
- ---------- ----------- --------- ----------
Class D +218.44% +60.14% +11.89%
- ---------- ----------- --------- ----------
</TABLE>
Top 5 Equity Industries
(by percentage of net assets)
[GRAPHIC]Bar Chart
Hotel and restaurant 11.6%
Oil service 11.3%
Retail 9.1%
Computer software
and sevice 8.0%
Business service 7.5%
Total: 47.5%
<PAGE>
PORTFOLIO MANAGER'S REVIEW
[GRAPHIC]Frederick R. Kobrick
Portfolio Manager
The following is a discussion with portfolio manager Fred Kobrick. Fred
has 25 years of investment experience and is the lead portfolio manager for
the Equity Group's Aggressive Growth Team.
Q: How did the Fund perform over the past 12 months?
A: Performance was mixed but positive. Class A shares of the Fund
provided a total return of +12.65% for the year ended December 31, 1996 (does
not reflect sales charge).(2) Over the past 12 months, the Fund underperformed
the +19.24% average total return for the 669 fund classes in Lipper
Analytical Services' Growth Funds category.
A total return of greater than 12% means that investors profited by being
in Growth Fund in 1996; however, we were disappointed by our performance
versus the other funds in our peer group. I should note that after the Fund
showed strong performance for nearly 10 of the past 12 months, we entered a
phase in which the stock market moved away from higher-growth issues to favor
more stable growers.
Q: What contributed to Fund performance?
A: Some of the Fund's underperformance can be attributed to a couple of
significant occurrences in the stock market in the past year. In July, we
experienced a stock market correction led by a sell-off in smaller, more
aggressive growth stocks. The market became conservative, and as the Dow
Index came back, aggressive stocks with high earnings growth did not come
back in the same fashion. We were able to recover somewhat by doing our
homework and making good choices in a number of industries, most notably,
retail, computer software and service, business service, and hotel and
restaurant stocks.
In the fourth quarter, there was a dramatic upswing in the Dow Jones
despite its sizable correction in the middle of December. But many aggressive
large-cap and mid-cap stocks--the type we focus on for the portfolio--were on
the way down. The market swung in favor of those stocks at the top end of the
chain.
The conservatism of the market late in the year stemmed from worries
developed during the July correction. Investors went looking for
predictability and stability of earnings, which is why they started buying
more of those market leaders' stocks.
Q: What adjustments did you make to the portfolio during the past 12
months?
A: We made a number of changes to the Fund. Last year at this time we had
5.6% of the portfolio invested in hotel and restaurant stocks. We have more
than doubled our holdings in this industry over the past 12 months to the
benefit of the portfolio. Reservation service provider HFS and hotel chain
Extended Stay America represent the largest holdings in this area. Hotel and
restaurant stocks now account for 11.6% of the portfolio.
Energy was a strong sector in 1996, and we built a reasonable position in
oil-services stocks, which make up 11.3% of the portfolio as of December 31,
1996. We like the fundamentals of many companies in this area and see
potential for strong growth. Oil-service equipment provider Schlumberger is
our largest holding here.
Q: What is your investment strategy going forward into 1997?
A: The outlook for 1997 is positive; we have many holdings that have
strong fundamentals but low prices. We believe the market offers great
opportunity for investors with a long-term bias and an emphasis on high
earnings growth. We'll primarily rely on fundamental research to uncover
companies--small or large--that present a good value or offer strong growth
potential. Bottom-up, company-by-company stock selection has been a mainstay
of our method and will continue to be so.
Top 10 Stock Positions
(by percentage of net assets)
1 Republic Industries Waste management 6.5%
2 HFS Hotel reservation service 5.3%
3 Gucci Apparel 3.4%
4 Chase Manhattan Banking 3.2%
5 Lucent Technologies Telecommunications products 3.1%
6 Sanmina Electronic circuit boards 2.9%
7 Compania Anonima Nacional Telefonos de Venezuela telephone 2.8%
8 Extended Stay America Extended-stay lodging 2.6%
9 Warner Lambert Pharmaceuticals 2.6%
10 Schlumberger Oil service equipment 2.2%
These securities represent an aggregate of 34.6% of the portfolio. 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, 1996 through December 31, 1996)
Best
- --------------------------------------------------------------------------------
Gucci
Market-share gains boosted the profits of this specialty retailer.
HFS
Expansion into real estate markets helped this reservation service
provider.
Republic Industries
Consolidation of its industries raised the profitability of this
waste-management company.
Worst
- --------------------------------------------------------------------------------
Sunglass Hut
Reduced shopping mall traffic hurt retailer's earnings.
Trump Hotels and Casino
Increased competition hurt casino business and stock's outlook.
Digital Equipment
Poor competitive position in the PC business weakened company's earnings.
2
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Value
Shares (Note 1)
- -------------------------------------------- --------- ---------------
<S> <C> <C>
COMMON STOCKS 97.9%
Basic Industries 1.0%
Chemical 0.7%
Rhone-Poulenc SA ADR 44,300 $ 1,500,663
---------------
Machinery 0.3%
US Filter Corp.* 22,000 698,500
---------------
Total Basic Industries 2,199,163
---------------
Consumer Cyclical 26.6%
Airline 1.5%
Continental Airlines Inc. Cl. B* 125,200 3,536,900
---------------
Automotive 0.3%
Team Rental Group, Inc. Cl. A* 46,400 748,200
---------------
Hotel & Restaurant 11.6%
Doubletree Corp.* 37,100 1,669,500
Extended Stay America Inc.* 290,400 5,844,300
HFS Inc.* 204,000 12,189,000
Hilton Hotels Corp. 87,900 2,296,387
Interstate Hotels Co.* 82,200 2,322,150
Sun International Hotels Ltd.* 15,600 569,400
Trump Hotels & Casino Resorts Inc.* 137,800 1,653,600
---------------
26,544,337
---------------
Recreation 1.1%
Action Performance Co., Inc.* 9,200 165,600
Evergreen Media Corp. Cl. A 24,400 610,000
Lin Television Corp.* 32,000 1,352,000
Petco Animal Supplies Inc.* 15,100 313,325
---------------
2,440,925
---------------
Retail Trade 9.1%
Abercrombie & Fitch Co. Cl. A* 13,700 226,050
Borders Group Inc.* 67,400 2,417,975
BT Office Products International Inc.* 37,400 331,925
CVS Corp. 30,200 1,249,525
Dollar Tree Stores Inc.* 14,500 554,625
Gucci Group NV* 122,200 7,805,525
Jones Apparel Group Inc.* 79,600 2,975,050
Just For Feet Inc.* 35,500 931,875
Rite-Aid Corp. 31,300 1,244,175
Staples Inc.* 59,550 1,075,622
Sunglass Hut International Inc.* 271,300 1,966,925
---------------
20,779,272
---------------
Textile & Apparel 3.0%
Men's Wearhouse, Inc.* 117,700 2,883,650
Nautica Enterprises Inc.* 62,700 1,583,175
Textile & Apparel (cont'd)
Tommy Hilfiger Corp.* 49,200 $ 2,361,600
---------------
6,828,425
---------------
Total Consumer Cyclical 60,878,059
---------------
Consumer Staple 16.6%
Business Service 7.5%
Apache Medical Systems Inc.* 19,100 204,131
Caribiner International Inc.* 4,800 241,200
Outdoor Systems Inc.* 18,300 514,688
Republic Industries Inc.* 395,900 12,347,131
Republic Industries Inc.++* 85,000 2,532,966
U.S. Office Products Co.* 37,400 1,276,275
---------------
17,116,391
---------------
Drug 5.3%
Cephalon Inc.* 64,400 1,320,200
Novartis AG ADR* 26,668 1,522,379
SmithKline Beecham PLC ADR 50,000 3,400,000
Warner-Lambert Co. 77,900 5,842,500
---------------
12,085,079
---------------
Food & Beverage 0.7%
Boston Chicken Inc.* 42,900 1,539,037
---------------
Hospital Supply 1.9%
MedPartners Inc.* 135,841 2,852,661
Neopath Inc.* 25,500 465,375
Wellpoint Health Networks Inc. Cl. A* 29,300 1,007,187
---------------
4,325,223
---------------
Personal Care 0.2%
Polymer Group Inc.* 33,900 470,363
---------------
Printing & Publishing 0.9%
Hollinger International, Inc. Cl. A* 128,800 1,481,200
Hollinger International, Inc. Cv. Pfd. 59,800 687,700
---------------
2,168,900
---------------
Tobacco 0.1%
Swisher International Group Inc. Cl. A* 21,000 333,375
---------------
Total Consumer Staple 38,038,368
---------------
Energy 13.8%
Oil 2.5%
Chesapeake Energy Corp.* 6,100 339,313
ENI SPA ADR 96,700 4,992,137
Titan Exploration Inc.* 26,800 321,600
---------------
5,653,050
---------------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- -----------------------------------------------------------------------
Value
Shares (Note 1)
- -------------------------------------------- --------- ---------------
Oil Service 11.3%
BJ Services Co.* 54,300 $ 2,769,300
Ensco International Inc.* 47,000 2,279,500
Global Marine Inc.* 209,900 4,329,187
Helmerich & Payne Inc. 53,800 2,804,325
Marine Drilling Companies, Inc.* 22,700 446,906
NewPark Resources, Inc.* 14,300 532,675
Noble Drilling Corp.* 180,500 3,587,438
Reading & Bates Corp.* 46,500 1,232,250
Rowan Companies, Inc.* 106,200 2,402,775
Schlumberger Ltd. 51,300 5,123,587
Varco International Inc.* 21,500 497,188
---------------
26,005,131
---------------
Total Energy 31,658,181
---------------
Finance 10.9%
Bank 4.4%
Bank United Corp. Cl. A 13,000 347,750
Boatmen's Bancshares, Inc. 37,600 2,425,200
Chase Manhattan Corp. 81,600 7,282,800
---------------
10,055,750
---------------
Financial Service 3.9%
Allmerica Financial Corp. 41,500 1,390,250
Beacon Properties Corp. 41,000 1,501,625
First USA Paymentech Inc.* 32,200 1,090,775
Green Tree Financial Corp. 63,000 2,433,375
MoneyGram Payment Systems Inc.* 67,700 897,025
Starwood Lodging Trust 32,000 1,764,000
---------------
9,077,050
---------------
Insurance 2.6%
AMBAC Inc. 47,900 3,179,362
Progressive Corp. 16,700 1,125,163
TIG Holdings Inc. 24,900 843,488
W.R. Berkley Corp. 15,000 761,250
---------------
5,909,263
---------------
Total Finance 25,042,063
---------------
Science & Technology 24.5%
Computer Software & Service 8.0%
Ascend Communications Inc.* 68,300 4,243,137
Check Point Software Technologies Ltd.* 12,100 263,175
Excalibur Technologies Corp.* 17,300 272,475
Geoworks* 26,100 639,450
Ingram Micro Inc. Cl. A* 20,800 478,400
P-COM, Inc.* 40,000 1,185,000
Parametric Technology Corp.* 54,300 2,789,662
Computer Software & Service (cont'd)
Sabre Group Holdings Inc. Cl. A* 17,600 $ 490,600
Sybase Inc.* 106,800 1,782,225
Synopsys Inc.* 21,400 989,750
Ultratech Stepper Inc.* 14,400 342,000
Westell Technologies, Inc. Cl. A* 94,000 2,150,250
Western Digital Corp.* 41,700 2,371,688
Wind River Systems Inc.* 7,100 336,363
---------------
18,334,175
---------------
Electronic Components 6.5%
Altera Corp.* 40,300 2,929,306
Applied Magnetics Corp.* 35,500 1,060,563
CHS Electronics Inc.* 16,300 279,138
Pairgain Technologies Inc.* 54,600 1,661,887
Sanmina Corp.* 117,800 6,655,700
Texas Instruments Inc. 37,800 2,409,750
---------------
14,996,344
---------------
Electronic Equipment 6.3%
Applied Materials Inc.* 69,600 2,501,250
KLA Instruments Corp.* 63,100 2,240,050
Lucent Technologies Inc.* 153,700 7,108,625
Motorola Inc. 16,700 1,024,962
Novellus Systems Inc.* 16,500 894,094
Tencor Instruments* 23,800 627,725
---------------
14,396,706
---------------
Office Equipment 3.7%
3Com Corp.* 24,000 1,761,000
Compaq Computer Corp.* 46,200 3,430,350
Dell Computer Corp.* 27,600 1,466,250
Read-Rite Corp.* 50,300 1,270,075
Stormedia Inc. Cl. A* 35,100 565,987
---------------
8,493,662
---------------
Total Science & Technology 56,220,887
---------------
Utility 4.5%
Natural Gas 0.7%
Calpine Corp.* 73,800 1,476,000
---------------
Telephone 3.8%
Compania Anonima Nacional Telefonos de
Venezuela ADR 226,500 6,370,313
Omnipoint Corp.* 30,400 585,200
Telecomunicacoes Brasileiras ADR* 23,700 1,813,050
---------------
8,768,563
---------------
Total Utility 10,244,563
---------------
Total Common Stocks (Cost $191,923,468) 224,281,284
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- --------------------------------- ------------- ------------ ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 6.6%
American Express Credit Corp.,
6.55% $7,768,000 1/02/1997 $ 7,768,000
Beneficial Corp., 5.95% 1,058,000 1/02/1997 1,058,000
Chevron Oil Finance Co., 6.15% 6,149,000 1/02/1997 6,149,000
---------------
Total Short-Term Obligations (Cost $14,975,000) 14,975,000
---------------
Total Investments (Cost $206,898,468)--104.5% 239,256,284
Cash and Other Assets, Less Liabilities--(4.5%) (10,224,843)
---------------
Net Assets--100.0% $229,031,441
===============
</TABLE>
<TABLE>
<S> <C>
- ------------------------------------------------------------
Federal Income Tax Information:
At December 31, 1996, the net unrealized appreciation
of investments based on cost for Federal income tax
purposes of $204,146,956 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an excess
of value over tax cost $43,709,638
Aggregate gross unrealized depreciation for
all investments in which there is an excess
of tax cost over value (8,600,310)
--------------
$35,109,328
==============
</TABLE>
* Nonincome-producing securities
++ Security valued under consistently applied procedures established by the
Trustees. Security restricted as to public resale. At December 31, 1996,
there were no outstanding unrestricted securities of the same class as
those held. The total cost and market value of restricted securities owned
at December 31, 1996 were $2,507,500 and $2,532,966 (1.11% of net assets),
respectively.
ADR stands for American Depositary Receipt representing ownership of foreign
securities.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- -----------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------
December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $206,898,468) (Note 1) $239,256,284
Cash 23,090
Receivable for securities sold 2,120,461
Receivable for fund shares sold 1,361,382
Dividends and interest receivable 99,010
Other assets 4,432
------------
242,864,659
Liabilities
Capital gains distribution payable 13,194,747
Payable for fund shares redeemed 372,502
Accrued management fee (Note 2) 95,947
Accrued distribution and service fees (Note 4) 33,342
Accrued transfer agent and shareholder services (Note 2) 28,258
Payable for securities purchased 23,019
Accrued trustees' fees (Note 2) 8,914
Other accrued expenses 76,489
------------
13,833,218
------------
Net Assets $229,031,441
=============
Net Assets consist of:
Unrealized appreciation of investments $ 32,357,816
Accumulated net realized gain 77,400
Shares of beneficial interest 196,596,225
-------------
$229,031,441
=============
Net Asset Value and redemption price per share of Class
A shares ($15,181,360 / 2,118,742 shares of beneficial
interest) $7.17
=============
Maximum Offering Price per share of Class A shares
($7.17 / .955) $7.51
=============
Net Asset Value and offering price per share of
Class B shares ($31,118,685 / 4,473,179 shares of
beneficial interest)* $6.96
=============
Net Asset Value, offering price and redemption price per
share of Class C shares ($177,147,340 / 24,667,126
shares of beneficial interest) $7.18
=============
Net Asset Value and offering price per share of
Class D shares ($5,584,056 / 802,899 shares of
beneficial interest)* $6.95
=============
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------
For the year ended December 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $27,798 $ 1,017,593
Interest 344,131
-----------
1,361,724
Expenses
Management fee (Note 2) 1,100,839
Custodian fee 136,386
Transfer agent and shareholder services (Note 2) 89,410
Registration fees 53,456
Reports to shareholders 36,256
Audit fee 30,328
Trustees' fees (Note 2) 27,440
Service fee--Class A (Note 4) 22,693
Distribution and service fees--Class B (Note 4) 209,446
Distribution and service fees--Class D (Note 4) 42,516
Legal fee 7,794
Miscellaneous 26,827
-----------
1,783,391
-----------
Net investment loss (421,667)
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 25,313,329
Net unrealized appreciation of investments 1,008,895
-----------
Net gain on investments 26,322,224
-----------
Net increase in net assets resulting from operations $25,900,557
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- ------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------
1996 1995
- --------------------------------------- --------------- ---------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss) $ (421,667) $ 921,337
Net realized gain on investments* 25,313,329 57,615,231
Net unrealized appreciation of
investments 1,008,895 2,561,460
--------------- ---------------
Net increase resulting from operations 25,900,557 61,098,028
--------------- ---------------
Dividends from net investment income:
Class A -- (2,898)
Class C (212,810) (756,996)
--------------- ---------------
(212,810) (759,894)
--------------- ---------------
Distributions from net realized gains:
Class A (1,432,492) (568,862)
Class B (3,063,722) (2,759,387)
Class C (17,829,679) (56,277,393)
Class D (542,316) (549,837)
--------------- ---------------
(22,868,209) (60,155,479)
--------------- ---------------
Net increase from fund share
transactions (Note 5) 24,343,911 12,930,239
--------------- ---------------
Total increase in net assets 27,163,449 13,112,894
Net Assets
Beginning of year 201,867,992 188,755,098
--------------- ---------------
End of year (including undistributed
net investment income of
$0 and $206,529, respectively) $229,031,441 $201,867,992
=============== ===============
* Net realized gain for Federal income
tax purposes (Note 1) $ 23,295,967 $ 60,297,725
=============== ===============
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1996
State Street Research Growth Fund (the "Fund"), is a series of State
Street Research 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.
7
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
For the year ended December 31, 1996, the Fund has designated as long-term
$15,526,331 of the distributions from net realized gains.
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. During the
year ended December 31, 1996, the fees pursuant to such agreement amounted to
$1,100,839.
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, 1996, the amount of
such expenses was $28,674.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $27,440 during the year ended December 31, 1996.
Note 3
For the year ended December 31, 1996, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$529,974,448 and $526,298,006, 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
for personal services and/or the maintenance or servicing of shareholder
accounts, 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,
1996, fees pursuant to such plan amounted to $22,693, $209,446 and $42,516
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 $35,003 and $188,274, respectively, on sales of Class A shares of
the Fund during the year ended December 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $391,207 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $36,816 and $250 on redemptions of Class B and Class D shares,
respectively, during the same period.
8
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
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, 1996, 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
---------------------------------------------------------------
1996 1995
------------------------------- ------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------- -------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 1,847,928 $ 14,383,066 208,712 $ 1,886,012
Issued upon reinvestment of:
Distributions from net realized gains 195,417 1,399,231 78,495 551,038
Dividend from net investment income -- -- 315 2,775
Shares redeemed (263,591) (2,062,377) (49,931) (451,405)
-------------- ---------------- -------------- ---------------
Net increase 1,779,754 $ 13,719,920 237,591 $ 1,988,420
============== ================ ============== ===============
Class B Shares Amount Shares Amount
- --------------------------------------------- -------------- ---------------- -------------- ---------------
Shares sold 2,947,485 $ 22,502,916 1,044,801 $ 9,544,221
Issued upon reinvestment of distributions
from net realized gains 369,233 2,566,243 352,023 2,425,440
Shares redeemed (395,250) (2,996,738) (65,041) (572,546)
-------------- ---------------- -------------- ---------------
Net increase 2,921,468 $ 22,072,421 1,331,783 $ 11,397,115
============== ================ ============== ===============
Class C Shares Amount Shares Amount
- --------------------------------------------- -------------- ---------------- -------------- ---------------
Shares sold 114,007 $ 899,665 18,689 $ 168,373
Issued upon reinvestment of:
Distributions from net realized gains 807,652 5,802,306 2,691,966 18,924,523
Dividends from net investment income 4,457 36,774 12,393 109,179
Shares redeemed (2,836,294) (21,897,052) (2,415,508) (21,806,684)
-------------- ---------------- -------------- ---------------
Net increase (decrease) (1,910,178) $(15,158,307) 307,540 $ (2,604,609)
============== ================ ============== ===============
Class D Shares Amount Shares Amount
- --------------------------------------------- -------------- ---------------- -------------- ---------------
Shares sold 462,926 $ 3,510,341 199,449 $ 1,805,535
Issued upon reinvestment of distributions
from net realized gains 71,693 498,203 74,313 511,275
Shares redeemed (39,411) (298,667) (20,783) (167,497)
-------------- ---------------- -------------- ---------------
Net increase 495,208 $ 3,709,877 252,979 $ 2,149,313
============== ================ ============== ===============
</TABLE>
9
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------- --------------------------------------------
Year ended December 31 Year ended December 31
------------------------------------------- --------------------------------------------
1996*** 1995*** 1994 1993* 1996*** 1995*** 1994 1993**
---------------------- --------- --------- ----------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 7.02 $ 7.09 $ 8.50 $ 9.63 $ 6.89 $ 7.02 $ 8.46 $ 9.56
Net investment income
(loss) (0.03) 0.01 0.05 0.06 (0.08) (0.06) (0.00) 0.03
Net realized and
unrealized gain
(loss) on investments 0.93 2.30 (0.38) 0.37 0.90 2.29 (0.41) 0.42
Dividends from net
investment income -- (0.02) (0.05) (0.08) -- -- -- (0.07)
Distributions from net
realized gains (0.75) (2.36) (1.03) (1.48) (0.75) (2.36) (1.03) (1.48)
--------- --------- ----------- --------- --------- --------- ----------- -----------
Net asset value, end
of year $ 7.17 $ 7.02 $ 7.09 $ 8.50 $ 6.96 $ 6.89 $ 7.02 $ 8.46
========= ========= =========== ========= ========= ========= =========== ===========
Total return 12.65%+ 32.57%+ (3.83)%+ 4.52%+++ 11.73%+ 31.71%+ (4.80)%+ 4.64%+++
Net assets at end of
year (000s) $15,181 $ 2,379 $ 719 $ 602 $31,119 $10,684 $1,544 $ 986
Ratio of operating
expenses to average
net assets 0.90% 0.89% 0.90% 0.96%++ 1.65% 1.63% 1.63% 1.71%++
Ratio of net
investment income
(loss) to average net
assets (0.34)% 0.12% 0.54% 0.48%++ (1.07)% (0.69)% (0.20)% (0.36)%++
Portfolio turnover
rate 237.85% 234.43% 57.18% 68.36% 237.85% 234.43% 57.18% 68.36%
Average commission
rate@ $ 0.03 -- -- -- $ 0.03 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
---------------------------------------------------------- -------------------------------------------
Year ended December 31 Year ended December 31
---------------------------------------------------------- -------------------------------------------
1996*** 1995*** 1994 1993 1992 1996*** 1995*** 1994 1993**
- ------------------------- ----------- ------------ -------- ----------- ----------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 7.02 $ 7.08 $ 8.51 $ 9.26 $ 9.14 $ 6.88 $ 7.02 $ 8.45 $ 9.56
Net investment income (loss) (0.00) 0.04 0.07 0.09 0.14 (0.08) (0.06) (0.00) 0.03
Net realized and unrealized
gain (loss) on investments 0.92 2.29 (0.40) 0.74 0.15 0.90 2.28 (0.40) 0.41
Dividends from net investment
income (0.01) (0.03) (0.07) (0.10) (0.14) -- -- -- (0.07)
Distributions from net
realized gains (0.75) (2.36) (1.03) (1.48) (0.03) (0.75) (2.36) (1.03) (1.48)
----------- ------------ -------- ----------- ----------- --------- ---------- -------- -----------
Net asset value, end of
year $ 7.18 $ 7.02 $ 7.08 $ 8.51 $ 9.26 $ 6.95 $ 6.88 $ 7.02 $ 8.45
=========== ============ ======== =========== =========== ========= ========== ======== ===========
Total return 12.74%+ 33.02%+ (3.82)%+ 8.94%+ 5.71%+ 11.89%+ 31.57%+ (4.68)%+ 4.59%+++
Net assets at end of year
(000s) $177,147 $186,689 $186,108 $250,786 $263,781 $ 5,584 $ 2,117 $ 384 $ 242
Ratio of operating
expenses to average
net assets 0.65% 0.64% 0.64% 0.66% 0.57% 1.65% 1.63% 1.63% 1.71%++
Ratio of net investment
income (loss) to
average net assets (0.06)% 0.43% 0.78% 0.92% 1.56% (1.07)% (0.67)% (0.20)% (0.34)%++
Portfolio turnover rate 237.85% 234.43% 57.18% 68.36% 35.60% 237.85% 234.43% 57.18% 68.36%
Average commission rate@ $ 0.03 -- -- -- -- $ 0.03 -- -- --
[diamond]After provision
for Federal tax on
retained capital gains
at end of year of -- -- -- -- $ 0.22 -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
*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.
++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.
@For fiscal years beginning on or after January 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security trades.
10
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees of State Street Research 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, 1996, 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, 1996 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, 1996, 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 7, 1997
11
<PAGE>
STATE STREET RESEARCH GROWTH FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
State Street Research Growth Fund's performance was mixed but positive in
1996. The Fund underperformed the average total return for Lipper Analytical
Services' Growth Funds category.
Some of the Fund's underperformance can be attributed to a couple of
significant occurrences in the stock market in the past year. In July, there
was a stock market correction led by a sell-off in smaller, more aggressive
growth stocks. The market became conservative, and as the Dow Jones came
back, aggressive stocks with high earnings growth did not come back in the
same fashion. Fund performance rebounded somewhat following this event.
In the fourth quarter there was a dramatic upswing in the Dow despite its
sizable correction in mid-December. But many aggressive large-cap and mid-cap
stocks--the type Growth Fund invests in--were on the way down.
The Fund benefited from holdings in a number of industries, most notably,
retail, computer software and service, business service, hotel and restaurant
and oil-service stocks.
Fund management more than doubled the Fund's position in hotel and
restaurant stocks, which account for 11.6% of the portfolio as of December
31, 1996. Growth Fund management also built a reasonable position in oil
services stocks, which make up 11.3% of the portfolio as of today.
December 31, 1996
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 and higher redemptions and expenses that have
occurred during the Fund's current, continuous public offering. Performance
for a class may include periods prior to the adoption of class designations
in 1993, which resulted in new or increased 12b-1 fees of up to 1% per class
thereafter and which will reduce subsequent performance. "C" shares, offered
without a sales charge, are available only to certain employee benefit plans
and large institutions. Performance reflects maximum 4.5% "A" share front-end
sales charge or 5% "B" share or 1% "D" share contingent deferred sales
charges where applicable. 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.
Change In Value Of $10,000
Based On The S&P 500 Compared
To Change In Value Of $10,000
Invested In Growth Fund
Average Annual Total Return
1 Year 5 Years 10 Years
+7.58% +9.52% +12.10%
Class A Shares
12/86 9,550 10,000
12/87 10,477 10,525
12/88 11,416 12,268
12/89 15,963 16,149
12/90 14,979 15,647
12/91 18,989 20,403
12/92 20,073 21,956
12/93 21,816 24,164
12/94 20,981 24,481
12/95 27,815 33,670
12/96 31,334 41,396
Average Annual Total Return
1 Year 5 Years 10 Years
+6.73% +9.64% +12.27%
Class B Shares
12/86 10,000 10,000
12/87 10,939 10,525
12/88 11,954 12,268
12/89 16,715 16,149
12/90 15,685 15,647
12/91 19,884 20,403
12/92 21,019 21,956
12/93 22,705 24,164
12/94 21,616 24,481
12/95 28,470 33,670
12/96 31,809 41,396
Average Annual Total Return
1 Year 5 Years 10 Years
+12.74% +10.68% +12.69%
Class C Shares
12/86 10,000 10,000
12/87 10,939 10,525
12/88 11,954 12,268
12/89 16,715 16,149
12/90 15,685 15,647
12/91 19,884 20,403
12/92 21,019 21,956
12/93 22,898 24,164
12/94 22,022 24,481
12/95 29,294 33,670
12/96 33,027 41,396
Average Annual Total Return
1 Year 5 Years 10 Years
+10.89% +9.88% +12.28%
Class D Shares
12/86 10,000 10,000
12/87 10,939 10,525
12/88 11,954 12,268
12/89 16,715 16,149
12/90 15,685 15,647
12/91 19,884 20,403
12/92 21,019 21,956
12/93 22,694 24,164
12/94 21,631 24,481
12/95 28,460 33,670
12/96 31,844 41,396
12
<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
Dudley F. Wade
Vice President
James M. Weiss
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
Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial
Officer, St. Regis Corp.
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
13
<PAGE>
State Street Research Growth Fund
One Financial Center
Boston, MA 02111
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.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Growth Fund
prospectus. When used after March 31, 1997, this report must be accompanied by
a current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was
not industry-wide.
CONTROL NUMBER: 3731-970221(0398)SSR-LD
Cover Illustration by Dorothy Cullinan GF-926D-297IBS
