As filed with the Securities and Exchange Commission
on April 29, 1996
1940 Act File No. 811-4256
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 13 [x]
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STATE STREET RESEARCH EXCHANGE TRUST
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (617) 357-1200
Francis J. McNamara, III, One Financial Center, Boston, MA 02111
(Name and Address of Agent for Service)
Copy to:
Thomas J. Kelly, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
<PAGE>
STATE STREET RESEARCH EXCHANGE TRUST
PART A - INFORMATION REQUIRED IN A PROSPECTUS
April 29, 1996
All information required by this Part of Form N-1A
except Items 1, 2, and 3 which are omitted pursuant
to Instruction F(4) is included in Part B.
<PAGE>
STATE STREET RESEARCH EXCHANGE TRUST
PART B - STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
The following Statement of Additional Information is not a Prospectus.
Registrant is not offering securities to the general public and maintains no
current prospectus. However, general information about Registrant which would
normally be included in a current prospectus, except such information as would
be applicable to an offering of Registrant's shares, has been included in this
Statement of Additional Information.
TABLE OF CONTENTS
Page
General Information and History ...............................2
Investment Policies............................................2
Trustees and Officers.........................................11
Controlling Persons and Principal Holders of Securities.......14
Investment Advisory and Other Services........................15
Portfolio Transactions........................................16
Shares of Beneficial Interest and Other Securities............18
Redemption and Pricing of Securities..........................20
Tax Status....................................................22
Financial Statements..........................................23
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General Information and History
Registrant's predecessor, State Street Exchange Fund, Inc., was
originally incorporated in Massachusetts on December 12, 1984 to
become the successor to State Street Exchange Fund (A Limited
Partnership) (the "Partnership") which was formed as a limited
partnership, and registered with the Securities and Exchange
Commission as an open-end, diversified management company, in 1975.
Effective May 1, 1985, in accordance with a Plan of Reorganization
and Liquidation which was approved by the partners of the
Partnership on December 11, 1984, State Street Exchange Fund, Inc.
succeeded to the business and operations of the Partnership.
Effective May 1, 1989 State Street Exchange Fund, Inc. was
reorganized as a Massachusetts business trust and carries on its
operations as State Street Research Exchange Fund (the "Fund")
(formerly known as State Street Exchange Fund), a series of State
Street Research Exchange Trust (the "Trust") (formerly known as
State Street Exchange Trust). References to Registrant here also
refer, where appropriate, to Registrant's predecessors.
Investment Policies
Investment Objective and Restrictions
The Fund's investment objective is to seek long-term growth of
capital and consequent long-term growth of income. This objective
cannot be changed without a vote of the shareholders. In order to
achieve this objective the Fund's assets normally will be invested
largely in a diversified and supervised portfolio of common stocks,
or securities convertible into common stocks, believed by management
to have growth potential over the years. However, there may be times
when, in management's judgment, the Fund's interests are best served
and the long range investment objective most likely to be achieved
by having a portion of the Fund's assets in cash or fixed income or
other defensive securities, and freedom to so administer the
portfolio is retained.
The Fund has no fundamental policy with respect to the issuance of
senior securities.
It is the Fund's policy not to purchase securities on margin or make
a short sale of any securities, or purchase or write puts, calls,
straddles or spreads except in connection with options on securities
and securities indices and options on futures with respect to
securities and securities indices.
It is the Fund's policy not to borrow money except for temporary,
emergency or extraordinary purposes and then only up to an amount
equal to 10% of its net assets.
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It is the Fund's policy not to underwrite securities of other
issuers except to the extent it may be deemed an "underwriter" when
it disposes of restricted securities. In addition, it is
Registrant's policy not to purchase or otherwise acquire securities
for its portfolio which are deemed by the Board of Trustees to be
restricted as to resale if such acquisition would cause more than
10% of the Fund's total assets (taken at market value) to be held in
such securities.
It is the Fund's policy not to make any investment which would cause
more than 25% of its total assets, taken at market value, to be
invested in any one industry.
It is the Fund's policy not to make any investment in real property.
The Fund has no fundamental policy with respect to investment in
real estate mortgage loans.
It is the Fund's policy not to invest in commodities or commodity
contracts except for futures and options on futures with respect to
securities and securities indices.
It is the Fund's policy not to make loans to other persons except
that Registrant may make loans of its portfolio securities
comprising not more than 10% of its total assets if such loans are
fully secured by cash when made. Registrant will lend portfolio
securities only when a determination has been made by the Board of
Trustees that the net return to the Fund in consideration of lending
the securities is reasonable and desirable, that any fee paid to the
broker placing such loan is reasonable and based solely upon
services rendered, that the lending of such securities is consistent
with the Fund's investment objective, and that no affiliate of the
Fund or of State Street Research & Management Company (the
"Management Company") is involved in such lending transaction or is
receiving any fees in connection therewith.
It is the Fund's policy not:
(a) To purchase oil, gas, or other mineral leases or
partnership interests in oil, gas, or other exploration
programs;
(b) To purchase for its portfolio, securities of any issuer
(other than the United States or its instrumentalities)
if such purchase at the time would cause more than 5% of
the total assets of Registrant (taken at market value)
to be invested in the securities of such issuer;
(c) To purchase for its portfolio, securities of any issuer
if such purchase at the time thereof would cause more
than 10% of any class of securities of such issuer to be
held by the Fund;
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(d) To make investments for the purpose of exercising
control or management of other companies;
(e) To purchase securities for its portfolio issued by any
other investment company;
(f) To purchase securities of any issuer which has a record
of less than three years' continuous operation if such
purchase would cause more than 5% of the Fund's total
assets (taken at market value) to be invested in the
securities of such issuers; provided that any such three
year period may include the operation of any predecessor
company, partnership, or individual enterprise if the
issuer whose securities are to be purchased came into
existence as a result of a merger, consolidation,
reorganization, or the purchase of substantially all the
assets of such predecessor company, partnership, or
individual enterprise; or
(g) To purchase or retain any securities of an issuer if, to
the knowledge of the Fund, those officers and trustees
of the Management Company who individually own
beneficially more than 1/2 of 1% of the shares or
securities of such issuer together own beneficially more
than 5% of such shares or securities.
Rule 144A Securities
Subject to the limitation on restricted securities noted above, the
Fund may buy or sell restricted securities in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities").
Securities may be resold pursuant to Rule 144A under certain
circumstances only to qualified institutional buyers as defined in
the rule, and the markets and trading practices for such securities
are relatively new and still developing; depending on the
development of such markets, such Rule 144A Securities may be deemed
to be liquid as determined by or in accordance with methods adopted
by the Trustees. Under such methods the following factors are
considered, among others: the frequency of trades and quotes for the
security, the number of dealers and potential purchasers in the
market, marketmaking activity, and the nature of the security and
marketplace trades. Investments in Rule 144A Securities could have
the effect of increasing the level of the Fund's illiquidity to the
extent that qualified institutional buyers become, for a time,
uninterested in purchasing such securities. Also, the Fund may be
adversely impacted by the possible illiquidity and subjective
valuation of such securities in the absence of an active market for
them.
Foreign Investments
The Fund reserves the right to invest without limitation in
securities of non-U.S. issuers directly, or indirectly in the form
of American Depositary Receipts ("ADRs") and
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European Depositary Receipts ("EDRs"). Under current policy,
however, the Fund limits such investments, including ADRs and EDRs,
to a maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities issued by a
foreign corporation or other entity. EDRs are receipts issued in
Europe which evidence a similar ownership arrangement. Generally,
ADRs in registered form are designed for use in U.S. securities
markets and EDRs are designed for use in European securities
markets. The underlying securities are not always denominated in the
same currency as the ADRs or EDRs. Although investment in the form
of ADRs or EDRs facilitates trading in foreign securities, it does
not mitigate all the risks associated with investing in foreign
securities.
ADRs are available through facilities which may be either
"sponsored" or "unsponsored." In a sponsored arrangement, the
foreign issuer establishes the facility, pays some or all of the
depository's fees, and usually agrees to provide shareholder
communications. In an unsponsored arrangement, the foreign issuer is
not involved, and the ADR holders pay the fees of the depository.
Sponsored ADRs are generally more advantageous to the ADR holders
and the issuer than are unsponsored ADRs. More and higher fees are
generally charged in an unsponsored program compared to a sponsored
facility. Only sponsored ADRs may be listed on the New York or
American Stock Exchanges. Unsponsored ADRs may prove to be more
risky due to (a) the additional costs involved to the Fund; (b) the
relative illiquidity of the issue in U.S. markets; and (c) the
possibility of higher trading costs in the over-the-counter market
as opposed to exchange-based trading. The Fund will take these and
other risk considerations into account before making an investment
in an unsponsored ADR.
The risks associated with investments in foreign securities include
those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future political and economic
developments, including the risks of nationalization or
expropriation, the possible imposition of currency exchange
blockages, higher operating expenses, foreign withholding and other
taxes which may reduce investment return, reduced availability of
public information concerning issuers and the fact that foreign
issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices
and requirements comparable to those applicable to domestic issuers.
Moreover, securities of many foreign issuers may be less liquid and
their prices more volatile than those of securities of comparable
domestic issuers.
It is anticipated that most of the foreign investments of the Fund
will consist of securities of issuers in countries with developed
economies. However, the Fund may also invest
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in the securities of issuers in countries with less developed
economies as deemed appropriate by the Management Company, although
the Fund does not presently expect to invest more than 5% of its
total assets in issuers in such less developed countries. Such
countries include countries that have an emerging stock market that
trades a small number of securities; countries with low- to
middle-income economies; and/or countries with economies that are
based on only a few industries. Eastern European countries are
considered to have less developed capital markets. To the extent the
Fund invests in such securities, it will be subject to a variety of
additional risks, including risks associated with political
instability, economies based on relatively few industries, lesser
market liquidity, high rates of inflation, significant price
volatility of portfolio holdings and high levels of external debt in
the relevant country.
Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its securities and other assets in U.S.
dollars. As a result, the net asset value of the Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price
changes of the Fund's securities in the various local markets and
currencies. Thus, an increase in the value of the U.S. dollar
compared to the currencies in which the Fund makes its investments
could reduce the effect of increases and magnify the effect of
decreases in the prices of the Fund's securities in their local
markets. Conversely, a decrease in the value of the U.S. dollar will
have the opposite effect of magnifying the effect of increases and
reducing the effect of decreases in the prices of the Fund's
securities in the local markets.
Currency Transactions
In order to protect against the effect of uncertain future exchange
rates on securities denominated in foreign currencies, the Fund may
engage in currency exchange transactions either on a spot (i.e.,
cash) basis at the rate prevailing in the currency exchange market
or by entering into forward contracts to purchase or sell
currencies. Although such contracts tend to minimize the risk of
loss resulting from a correctly predicted decline in value of hedged
currency, they tend to limit any potential gain that might result
should the value of such currency increase. In entering a forward
currency transaction, the Fund is dependent upon the
creditworthiness and good faith of the counterparty. The Fund
attempts to reduce the risks of nonperformance by the counterparty
by dealing only with established, large institutions with which the
Management Company has done substantial business in the past.
The Fund's dealings in forward currency exchange contracts will be
limited to hedging involving either specific transactions or
aggregate portfolio positions. A forward currency contract involves
an obligation to purchase or sell a specific currency at a future
date, which may be any fixed
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number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts
are not commodities and are entered into in the interbank market
conducted directly between currency traders (usually large
commercial banks) and their customers. Although spot and forward
contracts will be used primarily to protect the Fund from adverse
currency movements, they also involve the risk that anticipated
currency movements will not be accurately predicted, which may
result in losses to the Fund. This method of protecting the value of
the Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange that can be
achieved at some future point in time. Although such contracts tend
to minimize the risk of loss due to a decline in the value of hedged
currency, they tend to limit any potential gain that might result
should the value of such currency increase.
Options and Futures
The Fund may buy and sell options, futures contracts and options on
futures contracts with respect to securities and securities indices,
and enter into closing transactions with respect to each of the
foregoing under circumstances in which the use of such techniques
are expected by the Management Company to aid in achieving the
investment objective of the Fund. In most cases, only futures and
options listed and traded on national securities exchanges or
registered commodities exchanges or which are readily marketable
will be used. These techniques will not be employed for speculation,
but only as a hedge against changes resulting from market conditions
and, subject to the limitations described below, to enhance return.
The Fund on occasion may also purchase instruments with
characteristics of both futures and securities (e.g., debt
instruments with interest and principal payments determined by
reference to the value of a commodity or a currency at a future
time) and which, therefore, possess the risks of both futures and
securities investments.
The Fund may write covered put and call options on securities to
enhance return. For example, the Fund may engage in "buy-and-write"
transactions pursuant to which the Fund purchases a security and
concurrently writes a call option against that security. The
principal reason for writing options on a securities portfolio is to
attempt to realize, through the receipt of premiums, a greater
return than would be realized on the securities alone. The Fund also
reserves the right to use futures or options thereon for such other
purposes, including enhancement of return, as may be permitted by
the Commodity Futures Trading Commission without subjecting the Fund
to regulation as a commodity pool operator.
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The Fund may not establish a position in a commodity futures
contract or purchase or sell a commodity option contract for other
than bona fide hedging purposes if immediately thereafter the sum of
the amount of initial margin deposits and premiums required to
establish such positions for such non-hedging purposes would exceed
5% of the market value of the Fund's net assets; similar policies
apply to options which are not commodities.
Instruments of the type described above enable the Fund to
participate in the market movement of a specific security, type of
security or commodity and thereby compensate for a decline in the
values of its portfolio assets, or enable the Fund to protect itself
against a rise in the prices of assets which it intends to purchase.
The use of options, futures and options on futures may involve risks
not associated with other types of instruments which the Fund
intends to purchase. In particular, the Fund's positions in futures
and options may be closed out only on an exchange which provides a
secondary market therefor. There can be no assurance that a liquid
secondary market will exist for any particular futures contract or
option at any specific time. The inability to close out options and
futures positions could have an adverse impact. The Fund will enter
into an option or futures position only if it appears to be a liquid
investment.
Swap Arrangements
The Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates or
indices, including purchase of caps, floors and collars as described
below. In an interest rate swap the Fund could agree for a specified
period to pay a bank or investment banker the floating rate of
interest on a so-called notional principal amount (i.e., an assumed
figure selected by the parties for this purpose) in exchange for
agreement by the bank or investment banker to pay the Fund a fixed
rate of interest on the notional principal amount. In a currency
swap the Fund would agree with the other party to exchange cash
flows based on the relative differences in values of a notional
amount of two (or more) currencies; in an index swap, the Fund would
agree to exchange cash flows on a notional amount based on changes
in the values of the selected indices. Purchase of a cap entitles
the purchaser to receive payments from the seller on a notional
amount to the extent that the selected index exceeds an agreed upon
interest rate or amount whereas purchase of a floor entitles the
purchaser to receive such payments to the extent the selected index
falls below an agreed upon interest rate or amount. A collar
combines a cap and a floor.
Most swaps entered into by the Fund will be on a net basis; for
example, in an interest rate swap, amounts generated by application
of the fixed rate and the floating rate to the notional principal
amount would first offset one another,
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with the Fund either receiving or paying the difference between such
amounts. In order to be in a position to meet any obligations
resulting from swaps, the Fund will set up a segregated custodial
account to hold appropriate liquid assets, including cash; for swaps
entered into on a net basis, assets will be segregated having a
daily net asset value equal to any excess of the Fund's accrued
obligations over the accrued obligations of the other party, while
for swaps on other than a net basis assets will be segregated having
a value equal to the total amount of the Fund's obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a part of the Fund's
portfolio. However, the Fund may enter into such arrangements for
income purposes to the extent permitted by the Commodities Futures
Trading Commission for entities which are not commodity pool
operators, such as the Fund. In entering a swap arrangement, the
Fund is dependent upon the creditworthiness and good faith of the
counterparty. The Fund attempts to reduce the risks of
nonperformance by the counterparty by dealing only with established,
reputable institutions. The swap market is still relatively new and
emerging; positions in swap arrangements may become illiquid to the
extent that nonstandard arrangements with one counterparty are not
readily transferable to another counterparty or if a market for the
transfer of swap positions does not develop. The use of interest
rate swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Management
Company is incorrect in its forecasts of market values, interest
rates and other applicable factors, the investment performance of
the Fund would diminish compared with what it would have been if
these investment techniques were not used. Moreover, even if the
Management Company is correct in its forecasts, there is a risk that
the swap position may correlate imperfectly with the price of the
asset or liability being hedged.
Securities Lending
The Fund may lend portfolio securities with a value of up to 33 1/3%
of its total assets. The Fund will receive cash or cash equivalents
(e.g., U.S. Government obligations) as collateral in an amount equal
to at least 100% of the current market value of the loaned
securities plus accrued interest. Collateral received by the Fund
will generally be held in the form tendered, although cash may be
invested in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, irrevocable stand-by letters
of credit issued by a bank, or any combination thereof. The
investing of cash collateral received from loaning portfolio
securities involves leverage which magnifies the potential for gain
or loss on monies invested and, therefore, results in an increase in
the volatility of the Fund's outstanding securities. Such loans may
be
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terminated at any time. The Fund will retain most rights of
ownership including rights to dividends, interest or other
distributions on the loaned securities. Voting rights pass with the
lending, although the Fund may call loans to vote proxies if
desired. Should the borrower of the securities fail financially,
there is a risk of delay in recovery of the securities or loss of
rights in the collateral. Loans are made only to borrowers which are
deemed by the Management Company to be of good financial standing.
Industry Classifications
In determining how much of the Fund's portfolio is invested in a
given industry, the industry classifications set forth below,
grouped by sectors, are currently used. Companies engaged in the
business of financing will be classified according to the industries
of the parent companies or industries that otherwise most affect
such financing companies. Issuers of asset-backed pools will be
classified as separate industries based on the nature of the
underlying assets, such as mortgages, credit card receivables, etc.
Basic Industries Consumer Staple Science & Technology
---------------- --------------- --------------------
Chemical Business Service Aerospace
Diversified Container Computer Software &
Electrical Equipment Drug Service
Forest Products Food & Beverage Electronic Components
Machinery Hospital Supply Electronic Equipment
Metal & Mining Personal Care Office Equipment
Railroad Printing & Publishing
Truckers Tobacco
Utility Energy Consumer Cyclical
---------------- --------------- --------------------
Electric Oil Refining Airline
Gas & Marketing Automotive
Gas Transmission Oil Production Building
Telephone Oil Service Hotel & Restaurant
Photography
Other Finance Recreation
---------------- --------------- Retail Trade
Trust Certificates-- Bank Textile & Apparel
Government Related Financial Service
Lending Insurance
Asset-backed--Mortgages
Asset-backed--Credit
Card Receivables
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Trustees and Officers
Under Registrant's Master Trust Agreement, subject to the terms
thereof, Registrant's Board of Trustees has general management and control of
all the property and affairs of the Fund.
The Trustees and principal officers of the Trust, their addresses,
and their principal occupations and positions with certain affiliates of the
Management Company are set forth below.
*+Peter C. Bennett, One Financial Center, Boston, MA 02111, serves
as Vice President of the Trust. He is 57. His principal occupation is Executive
Vice President and Director of State Street Research & Management Company.
During the past five years he has also served as Senior Vice President and Vice
President of State Street Research & Management Company. Mr. Bennett's other
principal business affiliation is Director, State Street Research Investment
Services, Inc.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791,
serves as Trustee of the Trust. He is 69. He is engaged principally in private
investments and civic affairs, and is an author of business history. Previously,
he was with Morgan Guaranty Trust Company of New York.
+Robert A. Lawrence, Saltonstall & Co., 50 Congress Street, Boston,
MA 02109, serves as Trustee of the Trust. He is 69. His principal occupation
during the past five years has been Partner, Saltonstall & Co., a private
investment firm.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. He is 45. His principal occupation is Executive Vice
President, Treasurer and Director of State Street Research & Management Company.
During the past five years he has also served as Executive Vice President and
Chief Financial Officer of New England Investment Companies and as Senior Vice
President and Vice President of New England Mutual Life Insurance Company. Mr.
Maus's other principal business affiliations include Executive Vice President,
Treasurer, Chief Financial Officer and Director of State Street Research
Investment Services, Inc.
*+Francis J. McNamara, III, One Financial Center, Boston, MA 02111,
has served as Secretary and General Counsel of the Trust since May 1995. He is
40. His principal occupation is Senior Vice President, Secretary and General
Counsel of State Street Research & Management Company. During the past five
years he has also served as Senior Vice President, General Counsel and Assistant
Secretary of The Boston Company, Inc., Boston Safe Deposit and Trust Company and
The Boston Company Advisors, Inc.
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* or + See footnotes on page 13
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Mr. McNamara's other principal business affiliations include Senior Vice
President, Clerk and General Counsel of State Street Research Investment
Services, Inc.
*+Thomas P. Moore, Jr., One Financial Center, Boston, MA 02111,
serves as Vice President of the Trust. He is 57. His principal occupation is
Senior Vice President of State Street Research & Management Company. During the
past five years he has also served as Vice President of State Street Research &
Management Company.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves
as Trustee of the Trust. He is 64. He is retired, having served during the past
five years, until October 1992, as Executive Vice President, Chief Operating
Officer and Director of Hewlett-Packard Company.
+Thomas L. Phillips, 141 Spring Street, Lexington, MA 02173, serves
as Trustee of the Trust. He is 71. He is retired and was formerly Chairman of
the Board and Chief Executive Officer of Raytheon Company, of which he remains a
Director.
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118,
serves as Trustee of the Trust. He is 57. His principal occupations during the
past five years have been President of The Glen Ellen Company, a private
investment company and Vice President of Founders Investments Ltd.
+Michael S. Scott Morton, Massachusetts Institute of
Technology, 77 Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of
the Trust. He is 58. His principal occupation during the past five years has
been Jay W. Forrester Professor of Management at Sloan School of Management,
Massachusetts Institute of Technology.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Trust. He is 53. His principal occupation is Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research & Management
Company. During the past five years he also served as President and Chief
Executive Office of New England Investment Companies and as Chief Investment
Officer and Director of New England Mutual Life Insurance Company. Mr. Verni's
other principal business affiliations include Chairman of the Board and
Director of State Street Research Investment Services, Inc.
- ------------------------------------------------
* or + See footnotes on page 13
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+Jeptha H. Wade, 251 Old Billerica Road, Bedford, MA 01730, serves
as Trustee of the Trust. He is 71. He is retired and was formerly Of Counsel for
the law firm Choate, Hall & Stewart. He was partner of that firm from 1960 to
1987.
*+Kennard Woodworth, Jr., One Financial Center, Boston, MA 02111,
serves as Vice President of the Trust. He is 57. His principal occupation is
Senior Vice President of State Street Research & Management Company.
- ----------------------------
* These Trustees and/or officers are or may be deemed to be
"interested persons" of the Trust under the Investment Company Act
of 1940 (the "1940 Act") because of their affiliations with the
Trust's Management Company.
+ Serves as a Trustee and/or officer of one or more of the following
investment companies, each of which has an advisory or distribution
relationship with the Management Company or its affiliates: State
Street Research Equity Trust, State Street Research Financial Trust,
State Street Research Income Trust, State Street Research Money
Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Exchange Trust, State
Street Research Growth Trust, State Street Research Master
Investment Trust, State Street Research Securities Trust, State
Street Research Portfolios, Inc. and Metropolitan Series Fund, Inc.
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Controlling Persons and Principal Holders of Securities
There are no persons who control Registrant.
There are no persons who own or are known by Registrant to own of
record or beneficially 5% or more of Registrant's outstanding
shares.
Registrant's Trustees and Officers as a group beneficially owned, as
of March 31, 1996, less than 1% of the outstanding shares of the
Registrant.
During the last fiscal year of the Fund, the Trustees were
compensated as follows:
Name of Aggregate Total
Trustee Compensation Compensation
From Trust From Trust and
Complex paid
to Trustees(a)
Edward M. Lamont $4,300 $ 63,510
Robert A. Lawrence 4,300 91,685
Dean Morton 4,900 103,085
Thomas L. Phillips 4,100 67,185
Toby Rosenblatt 4,300 63,510
Michael S. Scott Morton 5,300 109,035
Ralph F. Verni 0 0
Jeptha H. Wade 4,600 76,285
(a) Includes compensation from Metropolitan Series Fund, Inc., for which
the Management Company serves as sub-investment adviser, State
Street Research Portfolios, Inc., for which State Street Research
Investment Services, Inc. serves as distributor, and all investment
companies for which the Management Company serves as primary
investment adviser, comprising a total of 29 series. The Trust does
not provide any pension or retirement benefits for the Trustees.
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Investment Advisory and Other Services
Registrant's Management Company is State Street Research &
Management Company, a Delaware corporation, with offices at One
Financial Center, Boston, Massachusetts 02111-2690. The Management
Company is an indirect wholly-owned subsidiary of Metropolitan Life
Insurance Company. It, and its predecessor, a Massachusetts
partnership having the same name, have been providing investment
advice and management to clients since 1927. As of February 29,
1996, the Management Company had assets of approximately $31.1
billion under direct or indirect management.
The advisory fee payable quarterly by Registrant to the Management
Company is computed as a percentage of the average of the values of
the net assets of Registrant as determined at the close of each
business day during the quarter at the annual rate of 1/2 of 1% of
the value of such net assets.
The total investment management fees paid by Registrant to the
Management Company for the fiscal years ended December 31, 1995,
1994, and 1993 were $1,078,699, $1,011,335, and $1,050,880,
respectively.
Registrant's investment advisory contract with the Management
Company provides that the Management Company shall furnish
Registrant with suitable office space and facilities and such
management, investment advisory, statistical and research facilities
and services as may be required from time to time by Registrant.
Although under such contract Registrant is responsible for all of
its other expenses and services, the Management Company currently
follows, and expects to continue to follow, the practice of keeping
Registrant's general books and accounts relative to the net asset
value of Registrant's shares and of calculating such net asset
value, both at no additional charge.
Under the Code of Ethics of the Management Company, its employees in
Boston, where investment management operations are conducted, are
only permitted to engage in personal securities transactions in
accordance with certain conditions relating to an employee's
position, the identity of the security, the timing of the
transaction, and similar factors. Such employees must report their
personal securities transactions quarterly and supply broker
confirmations of such transactions to the Management Company.
A commitment has been made to a state securities authority to the
effect that the Management Company will reimburse the Fund for any
expenses (excluding brokerage commissions, interest, taxes and
litigation expenses) paid or incurred by the Fund in any fiscal year
of the Fund which exceed the sum
15
<PAGE>
of (a) 2.5% of the average daily net assets for such year up to and
including $30,000,000 (b) 2.0% of the average daily net assets for
such year in excess of $30,000,000 up to and including $100,000,000
and (c) 1.5% of any excess of average daily net assets for such year
over $100,000,000. This commitment has been made in order to comply
with the requirements of such state securities authority and may be
amended or rescinded in response to changes in such requirements.
State Street Bank and Trust Company (the "Bank") is the registrant's
custodian with main offices at 225 Franklin Street, Boston, MA
02110. As custodian the Bank maintains custody over all portfolio
securities and cash of Registrant. The Bank also acts as
Registrant's Dividend Disbursing Agent and as Transfer Agent (the
"Transfer Agent") with respect to shares of Registrant and in each
capacity maintains appropriate records relating to, and forwards
appropriate statements to, Registrant's shareholders.
Under a Shareholders' Administrative Services Agreement with the
Trust, State Street Research Investment Services, Inc. provides
shareholders' administrative services, such as responding to
inquiries and instructions from investors respecting shareholder
records and the redemption of shares of the Fund, and is entitled to
a fee for providing such services.
Registrant's independent accountants are Coopers & Lybrand L.L.P.,
One Post Office Square, Boston, MA 02109. This firm is responsible
for all required audit functions with respect to Registrant's
financial statements and reviews Registrant's semi-annual and annual
reports to Registrant's shareholders as well as Registrant's filings
with the Securities and Exchange Commission on Form N-1A.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Fund's portfolio turnover rate is determined by dividing the
lesser of securities purchases or sales for a year by the monthly
average value of securities held by the Fund (excluding, for
purposes of this determination, securities the maturities of which
as of the time of their acquisition were one year or less). The
portfolio turnover rates for the fiscal years ended December 31,
1994 and 1995 were 16.31% and 11.67% , respectively.
Brokerage Allocation
The Management Company's policy is to seek for its clients,
including the Fund, what in the Management Company's judgment will
be the best overall execution of purchase or sale orders and the
most favorable net prices in securities transactions consistent with
its judgment as to the business qualifications of the various broker
or dealer firms with whom the Management Company may do business,
and the Management Company may not necessarily choose the broker
offering the lowest available commission rate. Decisions with
respect to the market where the transaction is to be completed, to
the form of transaction (whether principal or agency), and to the
allocation of orders among brokers or dealers are made in accordance
with this policy. In selecting brokers or dealers to effect
portfolio transactions, consideration is given to their proven
integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to
particular markets or securities, the competitiveness of their
commission rates in agency transactions (and their net prices in
principal transactions), their willingness to commit capital, and
their clearance and settlement capability. The Management Company
makes every effort to keep informed of commission rate structures
and prevalent bid/ask spread characteristics of the markets and
securities in which transactions for the Fund occur. Against this
background, the Management Company evaluates the reasonableness of a
commission or a net price with respect to a particular transaction
by considering such factors as difficulty of execution or security
positioning by the executing firm. The Management Company may or may
not solicit competitive bids based on its judgment of the expected
benefit or harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may
also be given to services other than execution services which
certain of such firms have provided in the past or may provide in
the future. Negotiated commission rates and prices, however, are
based upon the Management Company's judgment of the rate which
reflects the execution requirements of the transaction without
regard to whether the broker provides services in addition to
execution. Among such other services are the supplying of
supplemental investment research; general economic, political and
business information; analytical and statistical data; relevant
market information, quotation equipment and services; reports and
information about specific companies, industries and securities;
purchase and sale recommendations for stocks and bonds; portfolio
strategy services; historical statistical information; market data
services providing information on specific issues and prices;
financial publications; proxy voting data and analysis services;
technical analysis of various aspects of the securities markets,
including technical charts; computer hardware used for brokerage and
research purposes; computer
16
<PAGE>
software and databases, including those used for portfolio analysis
and modelling; and portfolio evaluation services and relative
performance of accounts.
Certain nonexecution services provided by broker-dealers may in turn
be obtained by the broker-dealers from third parties who are paid
for such services by the broker-dealers. The Management Company has
an investment of less than ten percent of the outstanding equity of
one such third party which provides portfolio analysis and modelling
and other research and investment decision-making services
integrated into a trading system developed and licensed by the third
party to others. The Management Company could be said to benefit
indirectly if in the future it allocates brokerage to a
broker-dealer who in turn pays this third party for services to be
provided to the Management Company.
The Management Company regularly reviews and evaluates the services
furnished by broker-dealers. Some services may be used for research
and investment decision-making purposes, and also for marketing or
administrative purposes. Under these circumstances, the Management
Company allocates the cost of such services to determine the
appropriate proportion of the cost which is allocable to purposes
other than research or investment decision-making and is therefore
paid directly by the Management Company. Some research and execution
services may benefit the Management Company's clients as a whole,
while others may benefit a specific segment of clients. Not all such
services will necessarily be used exclusively in connection with the
accounts which pay the commissions to the broker-dealer producing
the services.
The Management Company has no fixed agreements or understandings
with any broker-dealer as to the amount of brokerage business which
that firm may expect to receive for services supplied to the
Management Company or otherwise. There may be, however,
understandings with certain firms that in order for such firms to be
able to continuously supply certain services, they need to receive
allocation of a specified amount of brokerage business. These
understandings are honored to the extent possible in accordance with
the policies set forth above.
It is not the Management Company's policy to intentionally pay a
firm a brokerage commission higher than that which another firm
would charge for handling the same transaction in recognition of
services (other than execution services) provided. However, the
Management Company is aware that this is an area where differences
of opinion as to fact and circumstances may exist, and in such
circumstances, if any, relies on the provisions of Section 28(e) of
the Securities Exchange Act of 1934, to the extent applicable.
Brokerage commissions paid by Registrant during the fiscal years
ended December 31, 1995, 1994 and 1993 were $77,724, $89,233, and
$122,446, respectively. During and at the end of its most recent
fiscal year, the Fund held in its portfolio no securities of any
17
<PAGE>
entity that might be deemed to be a regular broker-dealer of the
Fund as defined under the 1940 Act.
In the case of the purchase of fixed income securities in
underwriting transactions, the Management Company follows any
instructions received from its clients as to the allocation of new
issue discounts, selling concessions and designations to brokers or
dealers which provide the client with research, performance
evaluation, master trustee and other services. In the absence of
instructions from the client, the Management Company may make such
allocations to broker-dealers which have provided the Management
Company with research and brokerage services.
When more than one client of the Management Company is seeking to
buy or sell the same security, the sale or purchase is carried out
in a manner which is considered fair and equitable to all accounts.
In allocating investments among various clients (including in what
sequence orders for trades are placed), the Management Company will
use its best business judgment and will take into account such
factors as the investment objectives of the clients, the amount of
investment funds available to each, the amount already committed for
each client to a specific investment and the relative risks of the
investments, all in order to provide on balance a fair and equitable
result to each client over time. Although sharing in large
transactions may sometimes affect price or volume of shares acquired
or sold, overall it is believed there may be an advantage in
execution. The Management Company may follow the practice of
grouping orders of various clients for execution to get the benefit
of lower prices or commission rates. In certain cases where the
aggregate order may be executed in a series of transactions at
various prices, the transactions are allocated as to amount and
price in a manner considered equitable to each so that each
receives, to the extent practicable, the average price of such
transactions. Exceptions may be made based on such factors as the
size of the account and the size of the trade. For example, the
Management Company may not aggregate trades where it believes that
it is in the best interests of clients not to do so, including
situations where aggregation might result in a large number of small
transactions with consequent increased custodial and other
transactional costs which may disproportionately impact smaller
accounts. Such disaggregation, depending on the circumstances, may
or may not result in such accounts receiving more or less favorable
execution relative to other clients.
Shares of Beneficial Interest and Other Securities
The Fund's only authorized and outstanding securities are shares of
beneficial interest ("Shares"). The following provisions are
applicable to the Shares.
(i) Distribution Rights
The Board of Trustees determines the amounts
of ordinary income and/or capital gains to
be distributed to the holders of Shares and
the time or times when such distributions
will be made. Distributions of net income,
exclusive of capital gains, to the extent
practicable will be made quarterly. Such
dividends are declared in additional Shares
with the option to each shareholder to elect
to receive the distribution in cash. The
Fund's current practice is to retain
long-term capital gains and to pay the
Federal
18
<PAGE>
taxes thereon at corporate capital gains tax
rates on behalf of the shareholders.
(ii) Voting Rights
Shareholders are entitled to one vote or
fraction thereof for each Share, or fraction
thereof, held. The Shares do not possess
cumulative voting rights.
(iii) Liquidation Rights
All Shares will participate on a pro rata
basis in net assets in the event of
liquidation.
(iv) Preemptive Rights
Shares and fractions thereof have no
Preemptive rights.
(v) Conversion Rights
Shares and fractions thereof have no
conversion rights.
(vi) Redemption Provisions
A Shareholder has the right to redeem his
Shares by delivering to the Fund either his
certificates, or an instrument of transfer
if no certificates have been issued, in good
order for transfer, with a separate written
request for redemption. Redemption is made
at the net asset value next computed after
such delivery. Good order means that
certificates or instruments of transfer must
be endorsed by the record owner(s) exactly
as the Shares are registered and the
signature(s) must be guaranteed by a bank, a
member firm of a national stock exchange, or
other eligible guarantor institution. The
Transfer Agent will not accept guarantees
(or notarizations) from notaries public. The
above requirements may be waived by the Fund
in certain instances.
Payment for Shares surrendered for
redemption is made within seven days. The
Fund may suspend the right of redemption or
postpone the date of payment of a redemption
or redemptions during any period when
trading on the New York Stock Exchange (the
"NYSE") is restricted or such Exchange is
closed (other than weekends or holidays), or
the Securities and Exchange Commission has
by order permitted such suspension, or the
Board of Trustees has determined an
emergency exists making disposal of
securities, or determination of the net
asset value of the Fund, not reasonably
practicable. The Fund, in the sole
discretion of
19
<PAGE>
the Board of Trustees, may pay, and
ordinarily will pay, the redemption price in
whole or in part by a distribution in kind
of securities from the portfolio of the Fund
in lieu of cash.
(vii) Sinking Fund Provisions
There are no sinking fund provisions.
(viii) Liability to Further Calls or to Assessment
There is no liability to further calls or to
assessment by the Registrant.
The rights of Registrant's shareholders set
forth in Registrant's Master Trust Agreement
may be modified by lawful amendment thereof
at any time, so long as such amendment does
not have a material adverse effect on the
rights of any shareholder with respect to
which such amendment is or purports to be
applicable by an instrument in writing
signed by a majority of Trustees (or by an
officer pursuant to a vote of a majority of
Trustees). Any such amendment that does have
a material adverse effect on the rights of
shareholders may be adopted as above
provided when authorized by vote of a
majority of shares then outstanding and
entitled to vote.
Under Massachusetts law, the shareholders of
the Trust could, under certain
circumstances, be held personally liable for
the obligations of the Trust. However, the
Master Trust Agreement of the Trust
disclaims shareholder liability for acts or
obligations of the Trust and provides for
indemnification for all losses and expenses
of any shareholder of the Fund held
personally liable for the obligations of the
Trust. Thus, the risk of a shareholder
incurring financial loss on account of
shareholder liability is limited to
circumstances in which the Fund would be
unable to meet its obligations. The
Management Company believes that, in view of
the above, the risk of personal liability to
shareholders is remote.
Shareholder inquiries should be made to
State Street Research Shareholder Services,
P.O. Box 8408, Boston, MA 02266-8408 or, if
by telephone, to 1-800-562-0032.
Redemption and Pricing of Securities
The Fund is not offering its Shares to the general public and
consequently has no offering price. Registrant has no principal
underwriter.
20
<PAGE>
As set forth above, redemptions of the Fund's Shares are made at
their net asset value next computed after delivery of such shares to
the Fund in good order for transfer under the conditions and in
accordance with the policies and procedures there stated.
The Fund reserves the right to pay redemptions in kind with
portfolio securities in lieu of cash. In accordance with its
election pursuant to Rule 18f-1 under the 1940 Act, the Fund may
limit the amount of redemption proceeds paid in cash. Although it
has no present intention to do so, the Fund may, under unusual
circumstances, limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i)
$250,000 or (ii) 1% of the net asset value of the Fund at the
beginning of such period. In connection with any redemptions paid in
kind with portfolio securities, brokerage and other costs may be
incurred by the redeeming shareholder in the sale of the securities
received.
The net asset value of the shares of the Fund is determined once
daily as of the close of the NYSE, ordinarily 4 P.M. New York
City time, Monday through Friday, on each day during which the NYSE
is open for unrestricted trading. The NYSE is currently closed for
New Year's Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of the Fund is computed by dividing
the sum of the market value of the securities held by the Fund plus
any cash or other assets minus all liabilities by the total number
of outstanding shares of the Fund at such time. Any expenses, except
for extraordinary or nonrecurring expenses, borne by the Fund,
including the investment management fee payable to the Management
Company, are accrued daily.
In determining the values of the portfolio assets, the Trustees
utilize one or more pricing services to value, certain securities
for which market quotations are not readily available on a daily
basis. The pricing services may provide prices determined as of
times prior to the close of the NYSE.
In general, securities are valued as follows. Securities which are
listed or traded on the New York or American Stock Exchange are
valued at the price of the last quoted sale on the respective
exchange for that day. Securities which are listed or traded on a
national securities exchange or exchanges, but not on the New York
or American Stock Exchange, are valued at the price of the last
quoted sale on the exchange for that day prior to the close of the
NYSE. Securities not listed on any national securities exchange
which are traded "over the counter" and for which quotations are
available on the National Association of Securities Dealers' NASDAQ
System, or other system, are valued at the closing price supplied
through such system for that day at
21
<PAGE>
the close of the NYSE. Other securities are, in general, valued at
the mean of the bid and asked quotations last quoted prior to the
close of the NYSE if there are market quotations readily available,
or in the absence of such market quotations, then at the fair value
thereof as determined by or under authority of the Trustees of the
Trust utilizing such pricing services as may be deemed appropriate.
Securities deemed restricted as to resale are valued at the fair
value thereof as determined by or in accordance with methods adopted
by the Trustees of the Trust.
Short-term debt instruments issued with a maturity of one year or
less which have a remaining maturity of 60 days or less are valued
using the amortized cost method, provided that during any period in
which more than 25% of the Fund's total assets is invested in
short-term debt securities the current market value of such
securities will be used in calculating net asset value per share in
lieu of the amortized cost method. The amortized cost method is used
when the value obtained is fair value. Under the amortized cost
method of valuation, the security is initially valued at cost on the
date of purchase (or in the case of short-term debt instruments
purchased with more than 60 days remaining to maturity, the market
value on the 61st day prior to maturity), and thereafter a constant
amortization to maturity of any discount or premium is assumed
regardless of the impact of fluctuating interest rates on the market
value of the security.
Tax Status
Registrant intends to qualify under those sections of the Internal
Revenue Code which provide that Registrant, so long as it so
qualifies, will pay no federal income taxes on investment income or
on capital gains to the extent they are distributed to Registrant's
shareholders.
Dividends paid out of investment income are taxable to Registrant's
shareholders at ordinary income tax rates whether they are taken by
Registrant's shareholders in additional shares of Registrant or in
cash. In general, such dividends are eligible for the dividends
received deduction for corporations. The percentage of Registrant's
dividends eligible for such tax treatment may be less than 100% to
the extent that less than 100% of the Registrant's gross income may
be from qualifying dividends of domestic corporations. Distributions
of capital gains, if made, will ordinarily be taxable to
Registrant's shareholders at federal capital gain rates regardless
of how long the underlying shares of Registrant have been held and
regardless of whether they are taken by the shareholder in
additional shares of Registrant or in cash.
Registrant currently follows a policy of distributing substantially
all of its net investment income (ordinarily
22
<PAGE>
no less than 98% to avoid imposition of an excise tax under the
Internal Revenue Code) to its shareholders and of retaining net
realized capital gains and paying the Federal tax thereon on behalf
of its shareholders. Retention by Registrant of its net realized
long-term capital gains and payment of the tax thereon on behalf of
shareholders results in each shareholder including in his income tax
return his proportionate share of such gains and taking a credit for
the payment of the corporate tax thereon and of increasing the tax
basis of his shares in Registrant by an amount equal to the
difference between his proportionate share of such gains and the
amount of the tax paid on his behalf by Registrant.
Financial Statements
The Investment Portfolio, the Statement of Assets and Liabilities,
the Statement of Operations, the Notes to Financial Statements
(including Financial Highlights), the Report of Independent
Accountants and Management's Discussion of Fund Performance, each of
which is included in the Annual Report to Shareholders of State
Street Research Exchange Fund, for the fiscal year ended December
31, 1995, and the Statement of Changes in Net Assets for the year
ended December 31, 1995 and for the year ended December 31, 1994,
also included in said Annual Report, are hereby incorporated by
reference into this Statement of Additional Information.
23
<PAGE>
Part C
STATE STREET RESEARCH EXCHANGE TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements - Incorporated by reference in Part
B of this Registration Statement from the Annual Report
to Shareholders for the fiscal year ended December 31,
1995:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets - Years
ended December 31, 1995 and December 31,
1994
Notes to Financial Statements (including
Financial Highlights)
Report of Independent Accountants
Management's Discussion of Fund Performance
(b) Exhibits
(1) Master Trust Agreement and
Amendment No. 1 to the
Master Trust Agreement
(2)(a) By-Laws (i)*
(2)(b) No. 1 to By-Laws effective
September 30, 1992 (iv)*
(4) Specimen Share Certificate (i)
(5) Investment Advisory Contract (iii)
(8)(a) Custodian Contract (ii)
(11) Consent of Coopers & Lybrand L.L.P.
(12) Annual Report to Shareholders
for fiscal year ended December 31, 1995
(18)(a) Power of Attorney
(18)(b) Certificate of Board Resolution Respecting
Power of Attorney
(27) Financial Data Schedule
- ----------------------
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
Footnote Investment Company Act of 1940
Reference Registration/Amendment Date Filed
i Amendment No. 5 to April 26, 1989
Registration Statement
ii Amendment No. 6 to April 27, 1990
Registration Statement
iii Amendment No. 8 to April 30, 1991
Registration Statement
iv Amendment No. 10 to April 30, 1993
Registration Statement
* Filed electronically April 24, 1996
C-1
<PAGE>
Item 25. Persons Controlled by or under Common Control with
Registrant
Inapplicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders (at 3/31/96)
Shares of
Beneficial Interest 429
Item 27. Indemnification
Article VI of Registrant's Master Trust Agreement provides: The
Trust shall indemnify (from the assets of the Sub-Trust or
Sub-Trusts in question) each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person")) against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may
be or may have been involved as a party or otherwise or with which
such person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or
officer, director or trustee, except with respect to any matter as
to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling
Conduct"). A determination that the Covered Person is entitled to
indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of
Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of
Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as
defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Investment Adviser Various investment Boston, MA
Research & advisory clients
Management
Company
Bangs, Linda L. None
Vice President
Barton, Michael E. None
Vice President
Bennett, Peter C. Vice President State Street Research Capital Trust Boston, MA
Director and Vice President State Street Research Exchange Trust Boston, MA
Executive Vice Vice President State Street Research Growth Trust Boston, MA
President Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust
Director State Street Research Investment Services, Inc Boston, MA
Director Boston Private Bank & Trust Co. Boston, MA
President and Director Christian Camps & Conferences, Inc. Boston, MA
Chairman and Trustee Gordon College Wenham, MA
Brown, Susan H. None
Vice President
Burbank, John F. None
Vice President
Canavan, Joseph W. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
C-3
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Carmen, Michael T. None
Vice President
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President Director Avalon, Inc. Boston, MA
DiFazio, Susan M.W. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Dillman, Thomas J Director of Research Bank of New York New York, NY
Senior Vice President (until 6/95)
Drake, Susan W. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President (until 2/96)
Duggan, Peter J. Vice President New England Mutual Life Insurance Company Boston, MA
Senior Vice (until 8/94)
President
Evans, Gordon Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President (Vice President until 3/96)
Federoff, Alex G. None
Vice President
Gardner, Michael D. Partner Prism Group Seattle, WA
Senior Vice President
(Vice President until
6/95)
Geer, Bartlett R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
C-4
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Glovsky, Charles S. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
Treasurer and Director North Conway Institute Boston, MA
Haverty, Jr., Lawrence J. None
Senior Vice President
Heineke, George R. None
Vice President
Jackson, Jr., Trustee Certain trusts of related and
F. Gardner non-related individuals
Senior Vice President Trustee Vincent Memorial Hospital Boston, MA
Jamieson, Frederick H. Vice President and Asst. Treasurer State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Vice President and Asst. Treasurer SSRM Holdings, Inc. Boston, MA
(Vice President Vice President and Controller MetLife Securities, Inc. New York, NY
until 6/95)
Kallis, John H. Vice President State Street Research Financial Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Director and President K&G Enterprises Washington, D.C.
Kasper, M. Katherine None
Vice President
C-5
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Vice President
Kobrick, Frederick R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Growth Trust Boston, MA
Member Harvard Business School Association Cambridge, MA
Member National Alumni Council, Boston University Boston, MA
Leary, Eileen M. None
Vice President
Lintz, Carol None
Vice President
McNamara, III, Francis J. Senior Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Senior Vice President, and General Counsel
Secretary and Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Capital Trust Boston, MA
Secretary and General Counsel State Street Research Exchange Trust Boston, MA
Secretary and General Counsel State Street Research Growth Trust Boston, MA
Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel State Street Research Equity Trust Boston, MA
Secretary and General Counsel State Street Research Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money Market Trust Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Clerk and Director State Street Research Energy, Inc. Boston, MA
Senior Vice President, General The Boston Company, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General Boston Safe Deposit and Trust Company Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General The Boston Company Advisors, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
C-6
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Maus, Gerard P. Treasurer State Street Research Equity Trust Boston, MA
Director, Executive Treasurer State Street Research Financial Trust Boston, MA
Vice President Treasurer State Street Research Income Trust Boston, MA
and Treasurer Treasurer State Street Research Money Market Trust Boston, MA
Treasurer State Street Research Tax-Exempt Trust Boston, MA
Treasurer State Street Research Capital Trust Boston, MA
Treasurer State Street Research Exchange Trust Boston, MA
Treasurer State Street Research Growth Trust Boston, MA
Treasurer State Street Research Master Investment Trust Boston, MA
Treasurer State Street Research Securities Trust Boston, MA
Director, Executive Vice President, State Street Research Investment Services, Inc. Boston, MA
Treasurer and Chief Financial Officer
Director and Treasurer State Street Research Energy, Inc. Boston, MA
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Director GFM International Investors, Ltd. London, England
(until 11/94)
Treasurer and Chief Financial SSRM Holdings, Inc. Boston, MA
Officer
Treasurer MetLife Securities, Inc. New York, NY
Milder, Judith J. None
Senior Vice President
(Vice President
until 6/95)
Miller, Joan D. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Moore, Jr., Thomas P. Director Hibernia Savings Bank Quincy, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Exchange Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust Boston, MA
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Vice President
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
C-7
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Pannell, James C. None
Vice President
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
(Vice President
until 7/94)
Ragsdale, Easton Senior Vice President Kidder, Peabody, & Co. Incorporated New York, NY
Vice President (until 12/94)
Rawlins, Jeffrey A. None
Vice President
Rice III, Daniel Joseph Vice President State Street Research Equity Trust Boston, MA
Senior Vice President
Richards, Scott None
Vice President
Romich, Douglas A. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
Row, III, Walter A. None
Vice President
C-8
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Schrage, Michael None
Vice President
Schultz, David C. Director (non-voting) Capital Trust, S.A. Luxembourg
Executive Vice Director Alex Brown Capital, Ltd. Hamilton, Bermuda
President
(Senior Vice President Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
until 12/94, Vice Member Association of Investment
President until Management Sales Executives Atlanta, GA
4/94) Member, Investment Committee Lexington Christian Academy Lexington, MA
Shaver, Jr., C. Troy President and Chief Executive State Street Research Investment Services, Inc. Boston, MA
Executive Vice Officer
President President and Chief Executive John Hancock Funds, Inc. Boston, MA
Officer (until 1/96)
Shean, William G. None
Vice President
Shively, Thomas A. Vice President State Street Research Financial Trust Boston, MA
Director and Vice President State Street Research Money Market Trust Boston, MA
Executive Vice Vice President State Street Research Tax-Exempt Trust
President Director State Street Research Investment Services, Inc Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Shoemaker, Richard D. None
Senior Vice President
Strelow, Dan R. None
Senior Vice President
Stuka, Paul U.S. Portfolio Consultant Teton Partners Boston, MA
Senior Vice President (until 4/95)
C-9
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Swanson, Amy McDermott None
Senior Vice President
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
(Vice President
until 6/95)
Verni, Ralph F. Chairman, President, Chief State Street Research Capital Trust Boston, MA
Chairman, President, Executive Officer and Trustee
Chief Executive Chairman, President, Chief State Street Research Exchange Trust Boston, MA
Officer and Executive Officer and Trustee
Director Chairman, President, Chief State Street Research Growth Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Master Investment Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Securities Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Equity Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Financial Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Income Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Money Market Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Tax-Exempt Trust Boston, MA
Executive Officer and Trustee
Chairman and Director, (President State Street Research Investment Services, Inc. Boston, MA
and Chief Executive Officer
until 2/96)
President and Director State Street Research Energy, Inc. Boston, MA
Chairman and Director Metric Holdings, Inc. San Francisco, CA
Director and Officer Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Chairman of the Board and Director MetLife Securities, Inc. New York, NY
Chairman and Director (until 11/94) GFM International Investors, Ltd. London, England
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
C-10
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
Ward, Geoffrey None
Senior Vice President
Weiss, James M. Chief Investment Officer IDS Advisory Group, Inc. Minneapolis, MN
Senior Vice President (until 12/95)
Westvold, President and Director Bondurant, Inc. Medfield, MA
Elizabeth McCombs (until 2/94)
Vice President
Wing, Darman A. Senior Vice President and State Street Research Investment Services, Inc. Boston, MA
Vice President, Asst. Clerk (Vice President
Assistant Secretary until 6/95)
and Assistant Assistant Secretary State Street Research Capital Trust Boston, MA
General Counsel Assistant Secretary State Street Research Exchange Trust Boston, MA
Assistant Secretary State Street Research Growth Trust Boston, MA
Assistant Secretary State Street Research Master Investment Trust Boston, MA
Assistant Secretary State Street Research Securities Trust Boston, MA
Assistant Secretary State Street Research Equity Trust Boston, MA
Assistant Secretary State Street Research Financial Trust Boston, MA
Assistant Secretary State Street Research Income Trust Boston, MA
Assistant Secretary State Street Research Money Market Trust Boston, MA
Assistant Secretary State Street Research Tax-Exempt Trust Boston, MA
Assistant Secretary SSRM Holdings, Inc. Boston, MA
Woodbury, Robert S. Employee Metropolitan Life Insurance Company New York, NY
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Growth Trust Boston, MA
President (until 2/96)
C-11
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
Yogg, Michael Richard Vice President State Street Research Financial Trust Boston, MA
Senior Vice Vice President State Street Research Income Trust Boston, MA
President
</TABLE>
C-12
<PAGE>
Item 29. Principal Underwriters
Inapplicable.
Item 30. Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
(a) Inapplicable
(b) Inapplicable
(c) The Registrant has elected to include the information
required by Item 5A of Form N-1A in its annual report to
shareholders. The Registrant undertakes to furnish each
person to whom a Statement of Additional Information is
delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
C-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on the 24th day of April, 1996.
STATE STREET RESEARCH EXCHANGE TRUST
Registrant
By /s/Francis J. McNamara, III
------------------------------
Francis J. McNamara, III
Secretary
STATE STREET EXCHANGE TRUST
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
7th day of February, 1989, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
all in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust or Sub-Trusts (as
hereinafter defined) created hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as State Street Exchange
Trust and the Trustees shall conduct the business of the Trust under that name
or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(b) "Commission" shall have the meaning given it in the 1940 Act;
(c) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
<PAGE>
(d) "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(e) "Shareholder" means a record owner of Shares;
(f) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust (as the
context may require) shall be divided from time to time;
(g) "Sub-Trust" or "Series" refers to a series of Shares established
and designated under or in accordance with the provisions of Article IV;
(h) "Trust" refers to the Massachusetts business trust established by
this Declaration of Trust, as amended from time to time, inclusive of each and
every Sub-Trust established hereunder; and
(i) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon his execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, Charles L. Smith, Jr., 94 Black
Horse Lane, Cohasset, Massachusetts 02025, shall become a Trustee hereof and of
each Sub-Trust hereunder.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease (to not less than two at
any time after the effective date of the Trust's Registration Statement on Form
N-1A with the Commission) the number of Trustees to a number other than the
number theretofore determined. No decrease in the number of Trustees
2
<PAGE>
shall have the effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (e) of this
Section 3.1.
(c) Election and Term. The Shareholders shall elect a Board of
Trustees at the first meeting of Shareholders following the initial public
offering of Shares. Each Trustee, whether named above or hereafter becoming a
Trustee, shall serve as a Trustee of the Trust and of each Sub-Trust hereunder
during the lifetime of this Trust and until its termination as hereinafter
provided except as such Trustee sooner dies, resigns or is removed. The Trustees
may elect their own successors, and may, pursuant to Section 3.1(f) hereof,
appoint Trustees to fill vacancies; provided, however, that the Shareholders
shall have the right to elect Trustees subsequent to the initial election
contemplated by this Section 3.1(c) in the event there shall at any time be no
Trustees in office or when and to the extent otherwise required by Section 16(a)
of the 1940 Act.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number of
Trustees in office immediately prior to such removal, specifying the date upon
which such removal will become effective; or (ii) by vote of Shareholders
holding not less than two-thirds of the shares then outstanding, cast in person
or by proxy at any meeting called for the purpose. Any such removal shall be
effective as to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become
3
<PAGE>
effective only at or after the effective date of said retirement, resignation or
increase in number of Trustees. As soon as any Trustee so appointed shall have
accepted such appointment and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment is effective, the Trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or any Sub-Trust hereunder, or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his removal for cause, no person ceasing
to be a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future laws or
customs with regard to investment by trustees or fiduciaries, but shall have
full authority and absolute power and control over the assets of the Trust and
the business of the Trust to the same extent as if the Trustees were sole owners
of the assets of the Trust and the business in their own right, including such
authority, power and control to do all acts and things as they, in their
uncontrolled discretion, shall deem proper to accomplish the purposes of this
Trust. Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders; they may sue or
be sued in the name of the Trust; they may from time to time in accordance with
the provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust
to operate as a separate and distinct investment medium and with separately
defined investment objectives and policies and distinct investment purposes;
they may as they consider appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the
4
<PAGE>
foregoing; they may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 3.3 they may employ one or more advisers, administrators, depositories
and custodians and may authorize any depository or custodian to employ
subcustodians or agents and to deposit all or any part of such assets in a
system or systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents or any of
the foregoing, provide for the distribution of Shares by the Trust through one
or more distributors, principal underwriters or otherwise, and set record dates
or times for the determination of Shareholders or various of them with respect
to various matters; they may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the Trust,
to any committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust such authority, powers, functions and
duties as they consider desirable or appropriate for the conduct of the business
and affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and any Sub-Trust and of the Trustees,
to sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property, and
to hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
5
<PAGE>
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust of any Sub-Trust
or in the name of a custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities
or debt instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such obligations;
(1) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust
6
<PAGE>
and payment of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent contractors, or any thereof
(or any person connected therewith), of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in any such capacity, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability;
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(n) Distribution Plans. To adopt on behalf of the Trust or any
Sub-Trust a plan of distribution and related agreements thereto pursuant to the
terms of Rule 12b-1 of the 1940 Act and to make payments from the assets of the
Trust or the relevant Sub-Trust or Sub-Trusts pursuant to said Rule 12b-1 plan.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
on behalf of the Trust or any Sub-Trust may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least
one-half of the Trustees then in the office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office (or such larger or different number
as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other types of organizations, or individuals
(a "Contracting Party"), to provide for the performance and
7
<PAGE>
assumption of some or all of the following services, duties and responsibilities
to, for or on behalf of the Trust and/or any Sub-Trust, and/or the Trustees, and
to provide for the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust, to supervise all or any part of the
operations of the Trust and each Sub-Trust, and to provide all or any part of
the administrative and clerical personnel, office space and office equipment and
services appropriate for the efficient administration and operations of the
Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust, to be principal underwriter of such Shares, and/or to act as agent of
the Trust and each Sub-Trust in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agent. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof; and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto
8
<PAGE>
may contain such terms interpretive of or in addition to the delineation of the
services, duties and responsibilities provided for, including provisions that
are not inconsistent with the 1940 Act relating to the standard of duty of and
the rights to indemnification of the Contracting Party and others, as the
Trustees may determine. Nothing herein shall preclude, prevent or limit the
Trust or a Contracting Party from entering into sub-contractual arrangements
relating to any of the matters referred to in Sections 3.3(a) through (g)
hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate
of any Contracting Party, or that the Contracting Party
or any parent or affiliate thereof is a Shareholder or
has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more
other corporations, trusts, associations, partnerships,
limited partnerships or other organizations, or have
other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust or any Sub-Trust, or partly out of principal and partly
out of income, and
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to charge or allocate the same to, between or among such one or more of the
Sub-Trusts that may be established and designated pursuant to Article IV, as the
Trustees deem fair, all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Trust or any Sub-Trust, or in connection with
the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without limiting
the generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all with par value $.001 per Share and of
one class, but the Trustees shall have the authority from time to time to divide
the class of Shares into two or more Series of Shares (each of which Series of
Shares shall be a separate and distinct Sub-Trust of the Trust, including
without limitation those Sub-Trusts specifically established and designated in
Section 4.2), as they deem necessary or desirable. For all purposes under this
Declaration of Trust or otherwise, including, without implied limitation, (i)
with respect to the rights of creditors and (ii) for purposes of interpreting
the relative rights of each Sub-Trust and the Shareholders of each Sub-Trust,
each Sub-Trust established hereunder shall be deemed to be a separate trust. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Sub-Trusts, and
to fix and determine the relative rights and preferences as between the shares
of the separate Sub-Trusts as to right of redemption and the price, terms and
manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts shall have
separate voting rights or no voting rights.
The number of authorized Shares and the number of Shares of each
Sub-Trust that may be issued is unlimited, and the Trustees
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may issue Shares of any Sub-Trust for such consideration and on such terms as
they may determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in subsection (h) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Sub-Trust into one or more Sub-Trusts that may be established and designated
from time to time. The Trustees may hold as treasury Shares, reissue for such
consideration and on such terms as they may determine, or cancel, at their
discretion from time to time, any Shares of any Sub-Trust reacquired by the
Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust in addition to
those established and designated in Section 4.2 shall be effective (i) upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Sub-Trust, (ii) upon the execution of an instrument in writing by
an officer of the Trust pursuant to the vote of a majority of the Trustees, or
(iii) as otherwise provided in either such instrument. At any time that there
are no Shares outstanding of any particular Sub-Trust previously established and
designated the Trustees may by an instrument executed by a majority of their
number abolish that Sub-Trust and the establishment and designation thereof.
Each instrument referred to in this paragraph shall have the status of an
amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust of the Trust to the same extent as if such person were
not a Trustee, officer or other agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold and may purchase Shares of any Sub-Trust
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of Shares of such Sub-Trust generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate further Sub-Trusts, the Trustees hereby establish and designate one
Sub-Trust: the "State Street Exchange Fund." The Shares of such Sub-Trust and
any Shares of any further Sub-Trusts that may from time to time be established
and designated by the Trustees shall (unless the
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Trustees otherwise determine with respect to some further Sub-Trust at the time
of establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held by the Trustees in trust for the benefit of the holders of Shares of
that Sub-Trust and shall irrevocably belong to that Sub-Trust for all purposes,
and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items (as
hereinafter defined) allocated to that Sub-Trust as provided in the following
sentence, are herein referred to as "assets belonging to" that Sub-Trust. In the
event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Sub-Trust (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Sub-Trusts
established and designated from time to time in such manner and on such basis as
they, in their sole discretion, deem fair and equitable; and any General Items
so allocated to a particular Sub-Trust shall belong to that Sub-Trust. Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Sub-Trusts for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Sub-Trust are herein referred to as "liabilities belonging to"
that Sub-Trust. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the Shareholders
of all Sub-Trusts for all purposes. Any creditor of any Sub-Trust may look only
to the assets of that Sub-Trust to satisfy such creditor's debt.
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The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to the
holders of Shares of that Sub-Trust, from such of the income and capital gains,
accrued or realized, from the assets belonging to that Sub-Trust, as the
Trustees may determine, after providing for actual and accrued liabilities
belonging to that Sub-Trust. All dividends and distributions on Shares of a
particular Sub-Trust shall be distributed pro rata to the holders of Shares of
that Sub-Trust in proportion to the number of Shares of that Sub-Trust held by
such holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees may have
in effect at the time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder. Any such dividend
or distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust that has been established and
designated shall be entitled to receive, when and as declared by the Trustees,
the excess of the assets belonging to that Sub-Trust over the liabilities
belonging to that Sub-Trust. The assets so distributable to the Shareholders of
any particular Sub-Trust shall be distributed among such Shareholders in
proportion to the number of Shares of that Sub-Trust held by them and recorded
on the books of the Trust. The liquidation of any particular Sub-Trust may be
authorized at any time by vote of a majority of the Trustees then in office.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in his name on the books of the Trust, irrespective of the series
thereof, and all Shares of all series shall vote as a single class ("Single
Class Voting"); provided, however, that (a) as to any other matter with respect
to which a separate vote of one or more series is required by the
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1940 Act, such requirements as to a separate vote by such series shall apply in
lieu of Single Class Voting as described above; and (b) as to any matter which
affects the interests of one or more particular series, only the holders of
Shares of the one or more affected series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust shall have the right at such times as may be permitted by the Trust,
but no less frequently than once each week, to require the Trust to redeem all
or any part of his Shares of that Sub-Trust at a redemption price equal to the
net asset value per Share of that Sub-Trust next determined in accordance with
subsection (h) of this Section 4.2 after the Shares are properly tendered for
redemption, subject to any contingent deferred sales charge in effect at the
time of redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may, subject to the requirements of the 1940 Act, make
payment wholly or partly in securities or other assets belonging to the
Sub-Trust of which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that failure to so redeem may have materially adverse consequences to the Trust
or any Sub-Trust or to the holders of the Shares of the Trust or any Sub-Trust
thereof, or (b) upon such other conditions as may from time to time be
determined by the Trustees and set forth in the then current Prospectus of the
Trust with respect to maintenance of Shareholder accounts of a minimum amount.
Upon such redemption the holders of the Shares so redeemed shall have no further
right with respect thereto other than to receive payment of such redemption
price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, all determined in accordance with the methods and
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procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share
of any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as dividends
payable in additional Shares of that Sub-Trust at the designated constant dollar
amount and for the handling of any losses attributable to that Sub-Trust. Such
procedures may provide that in the event of any loss each Shareholder shall be
deemed to have contributed to the capital of the Trust attributable to that
Sub-Trust his pro rata portion of the total number of Shares required to be
cancelled in order to permit the net asset value per Share of that Sub-Trust to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have agreed, by his
investment in any Sub-Trust with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust shall be
transferable, but transfers of Shares of a particular Sub-Trust will be recorded
on the Share transfer records of the Trust applicable to that Sub-Trust only at
such times as Shareholders shall have the right to require the Trust to redeem
Shares of that Sub-Trust and at such other times as may be permitted by the
Trustees.
(j) Equality. All Shares of each particular Sub-Trust shall represent
an equal proportionate interest in the assets belonging to that Sub-Trust
(subject to the liabilities belonging to that Sub-Trust), and each Share of any
particular Sub-Trust shall be equal to each other Share of that Sub-Trust; but
the provisions of this sentence shall not restrict any distinctions permissible
under subsection (c) of this Section 4.2 that may exist with respect to
dividends and distributions on Shares of the same Sub-Trust. The Trustees may
from time to time divide or combine the Shares of any particular Sub-Trust into
a greater or lesser number of Shares of that Sub-Trust without thereby changing
the proportionate beneficial interest in the assets belonging to that Sub-Trust
or in any way affecting the rights of Shares of any other Sub-Trust.
(k) Fractions. Any fractional Share of any Sub-Trust, if any such
fractional Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Sub-Trust, including rights and obligations
with respect to voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the
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authority to provide that holders of Shares of any Sub-Trust shall have the
right to convert said Shares into Shares of one or more other Sub-Trust in
accordance with such requirements and procedures as may be established by the
Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Sub-Trust held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and on
such terms and for such consideration, not inconsistent with the provisions of
the 1940 Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or take
any action in court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or
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assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
Shareholders in the event the Trust participates in any transaction which would
give rise to appraisal or dissenters' rights by a Shareholder of a corporation
organized under Chapter 156B of the General Laws of the Commonwealth of
Massachusetts, or otherwise.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is as required by the 1940 Act,
(iii) with respect to any termination or reorganization of the Trust or any
Sub-Trust to the extent and as provided in Sections 7.1 and 7.2, (iv) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 7.3, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or any Sub-Trust thereof or the
Shareholders (provided, however, that a Shareholder of a particular Sub-Trust
shall not be entitled to a derivative or class action on behalf of any other
Sub-Trust (or Shareholder of any other Sub-Trust) of the Trust) and (vi) with
respect to such additional matters relating to the Trust as may be required by
the 1940 Act, this Declaration of Trust, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the Trust receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a Shareholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of
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taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. The Trustees shall promptly call and
give notice of a meeting of Shareholders for the purpose of voting upon removal
of any Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees shall
fail to call or give notice of any meeting of Shareholders for a period of 30
days after written application by Shareholders holding at least 10% of the
Shares then outstanding requesting a meeting be called for any other purpose
requiring action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10% of the Shares then outstanding may call and
give notice of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a reasonable date and
time prior to the date of any meeting of Shareholders or other action as the
date and time of record for the determination of Shareholders entitled to vote
at such meeting or any adjournment thereof or to be treated as Shareholders of
record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by
the 1940 Act or other applicable law, 30% of the Shares entitled to vote shall
be a quorum for the transaction of business at a Shareholders' meeting, but any
lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted, at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required
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or permitted by any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by the 1940 Act
or by any express provision of this Declaration of Trust or the By-Laws) consent
to the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more
shareholders of record who have been such for at least six months preceding the
date of application, and who hold in the aggregate either Shares having a net
asset value of at least $25,000 or at least 1% of the outstanding shares,
whichever is less, shall apply to the Trustees in writing, stating that they
wish to communicate with other Shareholders with a view to obtaining signatures
to a request for a Shareholder meeting and accompanied by a form of
communication and request which they wish to transmit, the Trustees shall within
five business days after receipt of such application either (1) afford to such
applicants access to a list of the names and addresses of all Shareholders as
recorded upon the books of the Trust or Sub-Trust, as applicable; or (2) inform
such applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (2)
above, the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and
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specifying the basis of such opinion. The Trustees shall thereafter comply with
any order entered by the Commission and the requirements of the 1940 Act and the
Securities Exchange Act of 1934.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Sub-Trust with which such
person dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any
20
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officer, partner or responsible employee of a Contracting Party appointed by the
Trustees pursuant to Section 3.3. The Trustees as such shall not be required to
give any bond or surety or any other security for the performance of their
duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of said
Sub-Trust estate to be held harmless from and indemnified against all loss and
expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust
shall indemnify (from the assets of the Sub-Trust or Sub-Trusts in question)
each of its Trustees and officers (including persons who serve at the Trust's
request as directors, officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person")) against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an
21
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independent legal counsel in a written opinion. Expenses, including accountants'
and counsel fees so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines or penalties), may
be paid from time to time by the Sub-Trust in question in advance of the final
disposition of any such action, suit or proceeding, provided that the Covered
Person shall have undertaken to repay the amounts so paid to the Sub-Trust in
question if it is ultimately determined that indemnification of such expenses is
not authorized under this Article VI and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of a quorum
of the disinterested Trustees who are not a party to the proceeding, or an
independent legal counsel in a written opinion, shall have determined, based on
a review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to
22
<PAGE>
purchase and maintain liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust shall operate to terminate the Trust.
The Trust may be terminated at any time by a majority of the Trustees then in
office subject to a favorable vote of a majority of the outstanding voting
securities, as defined in the 1940 Act [Shares of each Sub-Trust voting
separately by Sub-Trust]. Any Sub-Trust liquidated pursuant to Section 4.2(d) or
whose shares have been redeemed pursuant to Section 4.2(g), may be terminated at
any time by a majority of the Trustees then in office, except that any such
Sub-Trust which is the last remaining Sub-Trust may only be so terminated by the
Trustees with the favorable vote of a majority of the outstanding voting
securities, as defined in the 1940 Act, of such Sub-Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust) with such transfer either (1)
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Sub-Trust the assets of which are so transferred,
or (2) not being made subject to, or not with the assumption of, such
liabilities; provided, however, that no assets belonging to any particular
Sub-Trust shall be so
23
<PAGE>
transferred unless the terms of such transfer shall have first been approved at
a meeting called for the purpose by the affirmative vote of the holders of a
majority of the outstanding voting Shares, as defined in the 1940 Act, of that
Sub-Trust. Following such transfer, the Trustees shall distribute such cash,
shares or other securities (giving due effect to the assets and liabilities
belonging to and any other differences among the various Sub-Trusts the assets
belonging to which have so been transferred) among the Shareholders of the
Sub-Trust the assets belonging to which have been so transferred; and if all of
the assets of the Trust have been so transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the
successor, survivor, or non-survivor, (1) consolidate with one or more other
trusts, partnerships, associations or corporations organized under the laws of
the Commonwealth of Massachusetts or any other state of the United States, to
form a new consolidated trust, partnership, association or corporation under the
laws of which any one of the constituent entities is organized, or (2) merge
into one or more other trusts, partnerships, associations or corporations
organized under the laws of the Commonwealth of Massachusetts or any other state
of the United States, or have one or more such trusts, partnerships,
associations or corporations merged into it, any such consolidation or merger to
be upon such terms and conditions as are specified in an agreement and plan of
reorganization entered into by the Trust, or one or more Sub-Trusts as the case
may be, in connection therewith. The terms "merge" or "merger" as used herein
shall also include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger, other than the purchase or
acquisition of assets of an investment company or other collective investment
entity which is not registered under the 1940 Act, shall require the affirmative
vote of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not have a material adverse effect on the rights of any
Shareholder with respect to which such amendment is or purports to be applicable
and so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an
24
<PAGE>
instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
amendment to this Declaration of Trust that does have a material adverse effect
on the rights of Shareholders may be adopted at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to a vote of a majority of such Trustees) when authorized to do so by
the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote. Subject to the foregoing, any
such amendment shall be effective as provided in the instrument containing the
terms of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of the instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts as well as any other governmental
office where such filing may from time to time be required, but the failure to
make any such filing shall not impair the effectiveness of this instrument or
any such amendment. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any such amendments have been made,
as to the identities of the Trustees and officers, and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be a copy
of this instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth.
Reference herein to Massachusetts Business Corporation Law is not intended to
give the Trust, the Trustees, the Shareholders or any other person any right,
power, authority or responsibility applicable only to or in connection with an
entity organized in corporate form. The Trust shall be of the type referred to
in Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly
25
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called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by such
a trust.
IN WITNESS WHEREOF, the undersigned hereunto sets his hand in the City
of Boston, Massachusetts, as of the day and year first above written.
/s/ Charles L. Smith, Jr.
----------------------------------
Charles L. Smith, Jr.
Principal office of the Trust: One Financial Center
Boston, MA 02111
26
ETMTA89
<PAGE>
EX-99.B1
Amendment to Charter
STATE STREET EXCHANGE TRUST
Amendment No. 1 to Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article I, Section 1.1, Article IV, Sections 4.1 and 4.2
and Article VII, Section 7.3 of the Master Trust Agreement of the State Street
Exchange Trust (the "Trust") dated February 7, 1989 ("Master Trust Agreement"),
the Master Trust Agreement is hereby amended to change the name of the Trust to
State Street Research Exchange Trust and to change the name of the series of
shares under such Trust, currently a Sub-Trust designated as State Street
Exchange Fund, to State Street Research Exchange Fund.
This Amendment shall be effective as of May 1, 1995.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby
adopts the foregoing on behalf of the Trust pursuant to authorization by the
Trustees of the Trust.
/s/ Constantine Hutchins, Jr.
Constantine Hutchins, Jr.
Secretary
BY-LAWS
OF
STATE STREET EXCHANGE TRUST
ARTICLE I
Agreement and Declaration
of Trust; Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust (also referred to as the Master Trust
Agreement), as from time to time in effect (the "Declaration of Trust"), of
State Street Exchange Trust, the Massachusetts business trust established by the
Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust
shall be located in Boston, Massachusetts.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board of Trustees, the President or the Treasurer or by two
or more Trustees, sufficient notice thereof being given to each Trustee by the
Secretary or an Assistant Secretary or by the officer or the Trustees calling
the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his usual
or last known business or residence address or to give notice to him in person
or by telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by him before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior thereto or at
the commencement thereof the lack of notice to him. Neither notice
<PAGE>
of a meeting nor a waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees one-half of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including a
Chairman of the Board of Trustees, one or more Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. The Chairman of the Board of Trustees shall be a Trustee and may, but
need not be, a shareholder of the Trust; and any other officer may, but need not
be, a Trustee or shareholder of the Trust. Any two or more offices may be held
by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees at a meeting held within the first four months
of the Trust's fiscal year. The meeting at which the officers are elected shall
be known as the annual meeting of Trustees. Other officers, if any, may be
elected or appointed by the Trustees at said meeting or at any other time.
Vacancies in any office may be filled at any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office until the next annual meeting of the Trustees and until their respective
successors are chosen and qualified, or in each case until he sooner dies,
resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such
2
<PAGE>
duties and powers as are commonly incident to the office occupied by him as if
the Trust were organized as a Massachusetts business corporation and such other
duties and powers as the Trustees may from time to time designate.
3.5 Chairman of the Board of Trustees. The Chairman of the Board of
Trustees, if any, shall preside at all meetings of the shareholders and of the
Trustees unless otherwise provided by the Trustees, and shall perform such other
duties and shall have such other powers as the Trustees may determine from time
to time.
3.6 President. The President shall be the chief executive officer of
the Trust. In the absence of the Chairman of the Board of Trustees, the
President shall preside at meetings of the shareholders and of the Trustees
unless otherwise provided by the Trustees.
3.7 Vice President. The Vice President, or if there be more than one
Vice President, the Vice Presidents in the order determined by the Trustees (or
if there be no such determination, then in the order of their election), shall
in the absence of the President or in the event of his inability or refusal to
act, perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Trustees may from time to time prescribe.
3.8 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.9 Assistant Treasurer. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Trustees
(or if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Trustees may from time to time prescribe.
3.10 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he is absent, a temporary
3
<PAGE>
secretary chosen at such meeting, shall record the proceedings thereof in the
aforesaid books.
3.11 Assistant Secretary. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Trustees (or
if there be no determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.
3.12 Resignations and Removals. Any Trustee or officer may resign at
any time by written instrument signed by him and delivered to the Chairman of
the Board of Trustees, the President or the Secretary or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. The Trustees may remove any officer elected by
them with or without cause. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his
resignation or removal, or any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
4
<PAGE>
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any applicable
law. Officers and committees shall render such additional reports as they may
deem desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed by resolution
of the Trustees.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon, but, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. All deeds, leases, contracts, notes and other obligations
made by the Trustees may be signed by the President, any Vice President, the
Treasurer or Assistant Treasurer, Secretary or Assistant Secretary, or any agent
of the Trust, and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
5
<PAGE>
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all shareholders. In that event, a
shareholder may receive a certificate stating the number of shares owned by him,
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the President or a Vice President and by the
Treasurer or Assistant Treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction
or the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. The Trustees may, in their
discretion, institute a policy of enabling a pledgee of shares transferred as
collateral security to obtain a new certificate if the instrument of transfer
substantially describes the debt or duty that is intended to be secured thereby.
Such new certificate shall express on its face that it is held as collateral
security, and the name of the pledgor shall be stated thereon, who alone shall
be liable as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at
any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
ARTICLE 10
Dealings with Trustees and Officers
10.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which any Trustee,
officer or other agent of the Trust may have an interest.
6
<PAGE>
ARTICLE 11
Amendments to the By-Laws
11.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
The foregoing By-Laws were adopted on February 7, 1989.
/s/ Constantine Hutchins, Jr.
----------------------------------
Constantine Hutchins, Jr.
Clerk
ExByl89
7
<PAGE>
EX-99.B2
By-Laws
State Street Exchange Trust
Amendment No. 1 to the By-Laws
That the first sentence of Section 3.6 of Article III of the By-Laws
of the State Street Exchange Trust is hereby amended to read as follows:
"Unless otherwise determined by the Trustees, the President shall be
the Chief Executive Officer of the Trust."
/s/ Constantine Hutchins, Jr.
Effective as of: -----------------------------
September 30, 1992 Constantine Hutchins, Jr.
Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
State Street Research Exchange Trust
We consent to the inclusion in Amendment No. 13 to the Registration
Statement of the State Street Research Exchange Trust on Form N-1A (1940 Act
File No. 811-4256) of our report dated February 2, 1996 on our audit of the
financial statements and the financial highlights of State Street Research
Exchange Fund, which report is included in the Annual Report to Shareholders for
the year ended December 31, 1995, which report is also included in the
Registration Statement. We also consent to the reference to our Firm under the
caption "Investment Advisory and Other Services" in the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 25, 1996
STATE STREET RESEARCH EXCHANGE FUND
Investment Portfolio
December 31, 1995
Value
Shares (Note 1)
Common Stocks 100.5%
Basic Industries 17.0%
Chemical 7.5%
Ciba-Geigy AG ADR 86,900 $ 3,823,600
Dow Chemical Co. 60,000 4,222,500
E.I. du Pont de Nemours and Co. 68,500 4,786,438
Monsanto Co. 38,700 4,740,750
-----------
17,573,288
-----------
Electrical Equipment 4.2%
General Electric Co. 104,311 7,510,392
General Signal Corp. 70,372 2,278,293
-----------
9,788,685
-----------
Forest Product 0.8%
Georgia-Pacific Corp. 26,251 1,801,475
Machinery 3.2%
Caterpillar, Inc. 58,400 3,431,000
Millipore Corp. 99,400 4,087,825
-----------
7,518,825
-----------
Metal & Mining 1.3%
Nucor Corp. 51,600 2,947,650
-----------
Total Basic Industries 39,629,923
-----------
Consumer Cyclical 10.2%
Hotel & Restaurant 0.4%
Darden Restaurants, Inc. 69,200 821,750
-----------
Recreation 5.8%
Capital Cities/ABC, Inc. 59,356 7,323,046
Walt Disney Co. 50,000 2,950,000
Tele-Communications, Inc. Cl. A* 127,597 2,535,990
Tele-Communications, Inc. Liberty
Media Group Cl. A* 31,899 857,286
-----------
13,666,322
-----------
Retail Trade 4.0%
Dayton Hudson Corp. 50,184 3,763,800
Office Depot, Inc.* 46,600 920,350
Toys 'R Us, Inc.* 98,800 2,148,900
Wal-Mart Stores, Inc. 111,600 2,497,050
-----------
9,330,100
-----------
Total Consumer Cyclical 23,818,172
-----------
Consumer Staple 28.6%
Drug 7.7%
American Home Products Corp. 51,736 $ 5,018,392
Merck & Co., Inc. 117,259 7,709,779
Pfizer, Inc. 83,800 5,279,400
-----------
18,007,571
-----------
Food & Beverage 8.3%
Coca-Cola Co. 118,056 8,765,658
Anheuser-Busch, Inc. 56,300 3,765,063
Campbell Soup Co. 48,800 2,928,000
General Mills, Inc. 69,200 3,996,300
-----------
19,455,021
-----------
Hospital Supply 5.6%
Columbia/HCA Healthcare Corp. 24,700 1,253,525
Johnson & Johnson 136,496 11,687,470
-----------
12,940,995
-----------
Personal Care 4.8%
Gillette Co. 118,200 6,161,175
Procter & Gamble Co. 61,600 5,112,800
-----------
11,273,975
-----------
Tobacco 2.2%
Philip Morris Companies, Inc. 56,000 5,068,000
-----------
Total Consumer Staple 66,745,562
-----------
Energy 11.2%
Oil 8.8%
Amoco Corp. 71,032 5,105,425
Exxon Corp. 85,068 6,816,074
Mobil Corp. 68,400 7,660,800
Union Pacific Resources Group, Inc. 43,900 1,113,962
-----------
20,696,261
-----------
Oil Service 2.4%
Halliburton Co. 35,012 1,772,482
Schlumberger Ltd. 54,619 3,782,366
-----------
5,554,848
-----------
Total Energy 26,251,109
-----------
Finance 9.9%
Bank 2.2%
Banc One Corp. 50,820 1,918,455
-----------
BankAmerica Corp. 49,300 3,192,175
-----------
5,110,630
-----------
The accompanying notes are an integral part of the financial statements
3
<PAGE>
STATE STREET RESEARCH EXCHANGE FUND
Financial Service 4.0%
American Express Co. 141,591 $ 5,858,328
Federal National Mortgage Association 27,600 3,425,850
-----------
9,284,178
-----------
Insurance 3.7%
Equitable Companies, Inc. 95,000 2,280,000
General Re Corp. 40,941 6,345,855
-----------
8,625,855
-----------
Total Finance 23,020,663
-----------
Science & Technology 21.3%
Aerospace 7.0%
Boeing Co. 65,900 5,164,912
Raytheon Co. 235,400 11,122,650
-----------
16,287,562
-----------
Computer Software & Service 2.8%
First Data Corp. 32,669 2,184,739
Microsoft Corp.* 49,750 4,365,563
-----------
6,550,302
-----------
Electronic Components 1.6%
AMP, Inc. 96,000 3,684,000
-----------
Electronic Equipment 3.4%
L.M. Ericsson Telephone Co. Cl. B ADR 152,460 2,972,970
Motorola, Inc. 50,600 2,884,200
Perkin-Elmer Corp. 58,000 2,189,500
-----------
8,046,670
-----------
Office Equipment 6.5%
Hewlett-Packard Co. 80,000 6,700,000
International Business Machines Corp. 59,800 5,486,650
Xerox Corp. 21,800 2,986,600
-----------
15,173,250
-----------
Total Science & Technology 49,741,784
-----------
Utility 2.3%
Telephone 2.3%
AT&T Corp. 30,000 $ 1,942,500
Air Touch Communications, Inc.* 123,800 3,497,350
-----------
5,439,850
-----------
Total Utility 5,439,850
-----------
Total Common Stocks (Cost $94,079,093) 234,647,063
-----------
Principal Maturity
Amount Date
Commercial Paper 1.8%
Beneficial Corp., 5.92% $4,035,000 1/2/1996 4,035,000
------------
Total Commercial Paper (Cost $4,035,000) 4,035,000
------------
Total Investments (Cost $98,114,093)--102.3% 238,682,063
------------
Other Assets, Less Liabilities--(2.3)% (5,259,961)
------------
Net Assets--100.0% $233,422,102
============
Federal Income Tax Information:
At December 31, 1995, the net unrealized
appreciation of investments based on cost for
Federal income tax purposes of $84,571,971
was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of
value over tax cost $155,282,441
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value (1,172,349)
------------
$154,110,092
============
* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
The accompanying notes are an integral part of the financial statements
4
<PAGE>
STATE STREET RESEARCH EXCHANGE FUND
Statement of Assets and Liabilities
December 31, 1995
Assets
Investments, at value (Cost $98,114,093) (Note 1) $238,682,063
Receivable for securities sold 99,504
Dividends and interest receivable 335,615
------------
239,117,182
Liabilities
Federal income tax payable 4,069,573
Dividend payable 997,346
Accrued management fee (Note 2) 285,630
Capital gain distribution payable 156,686
Payable for fund shares redeemed 113,112
Payable to custodian 9,500
Accrued transfer agent and shareholder services (Note
2) 5,555
Accrued trustees' fees (Note 2) 5,061
Other accrued expenses 52,617
------------
5,695,080
------------
Net Assets $233,422,102
============
Net Assets consist of:
Undistributed net investment income $ 85,983
Unrealized appreciation of investments 140,567,970
Shares of beneficial interest (Note 4) 92,768,149
------------
$233,422,102
============
Net Asset Value per share
($233,422,102 / 879,362 shares of beneficial
interest) $ 265.44
======
Statement of Operations
For the year ended December 31, 1995
Investment Income
Dividends, net of foreign taxes of $5,272 $ 4,319,102
Interest 148,684
-----------
4,467,786
Expenses
Management fee (Note 2) 1,078,699
Custodian fee 70,312
Trustees' fees (Note 2) 32,460
Audit fee 24,105
Transfer agent and shareholder services (Note 2) 16,777
Reports to shareholders 7,163
Legal fees 5,525
Miscellaneous 26,967
-----------
1,262,008
-----------
Net investment income 3,205,778
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 26,724,341
Provision for federal income tax (4,069,573)
-----------
22,654,768
Net unrealized appreciation of investments 33,669,225
-----------
Net gain on investments 56,323,993
-----------
Net increase in net assets resulting from operations $59,529,771
===========
The accompanying notes are an integral part of the financial statements
5
<PAGE>
STATE STREET RESEARCH EXCHANGE FUND
Statement of Changes in Net Assets
Year ended December 31
1995 1994
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 3,205,778 $ 3,643,898
------------ ------------
Net realized gain on investments* 26,724,341 19,577,484
Provision for federal income tax (4,069,573) (4,654,368)
------------ ------------
22,654,768 14,923,116
------------ ------------
Net unrealized appreciation
(depreciation) of investments 33,669,225 (16,465,650)
------------ ------------
Net increase resulting from
operations 59,529,771 2,101,364
------------ ------------
Dividends from net investment
income (3,378,495) (3,661,288)
------------ ------------
Distribution from net realized
gains (236,946) --
------------ ------------
Share transactions:
Net asset value of shares issued in payment of:
Distribution from net realized
gains 80,260 --
Dividends from net investment
income 847,325 554,363
Cost of shares repurchased (18,569,970) (9,997,643)
------------ ------------
Net decrease from fund share
transactions (17,642,385) (9,443,280)
------------ ------------
Total increase (decrease) in net
assets 38,271,945 (11,003,204)
Net Assets
Beginning of year 195,150,157 206,153,361
------------ ------------
End of year (including
undistributed net investment
income of $85,983 and $258,700,
respectively) $233,422,102 $195,150,157
============ ============
Number of shares:
Issued upon reinvestment of:
Distribution from net realized
gains 302 --
Dividends from net investment
income 3,354 2,727
Repurchased (80,284) (48,387)
------------ ------------
Net decrease in fund shares (76,628) (45,660)
------------ ------------
* Net realized gain for Federal
income tax purposes
(Note 1) $ 11,864,297 $ 13,298,196
============ ============
Notes to Financial Statements
December 31, 1995
Note 1
State Street Research Exchange Fund, formerly State Street Exchange Fund (the
"Fund"), is a series of State Street Research Exchange Trust, formerly State
Street Exchange 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 Exchange 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 and, secondarily, long-term growth of income. In seeking to achieve
its investment objective, the Fund invests primarily in common stocks, or
securities convertible into common stocks, that have long-term growth
potential.
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.
B. Federal Income Taxes
No provision for Federal income taxes is necessary with respect to net
investment income since the Fund has elected to qualify under Subchapter M of
the Internal Revenue Code and its policy is to distribute substantially all
of such income. 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. The Fund retains and designates as
undistributed gains all of its taxable net long-term capital gains and pays
Federal income taxes thereon on behalf of the shareholders.
C. Dividends
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized short-term capital gains, if any, are distributed
annually.
The accompanying notes are an integral part of the financial statements
6
<PAGE>
STATE STREET RESEARCH EXCHANGE FUND
NOTES (CONT'D)
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 differing
treatments for nontaxable redemptions in kind and the disposition of
securities that have different bases for financial reporting and tax
purposes. The permanent book and tax basis difference relating to shareholder
distributions will result in reclassifications to shares of beneficial
interest.
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 0.50% 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 $32,460
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 $4,225.
Note 3
For the year ended December 31, 1995, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities, including
$18,117,874 representing redemptions in kind, aggregated $24,911,540 and
$48,670,480, respectively.
Note 4
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 13,766 shares of the Fund.
Financial Highlights
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 204.13 $ 205.81 $ 205.98 $ 198.84 $ 156.56
Net investment income 3.63 3.79 3.47 3.28 3.43
Net realized and unrealized gain (loss) on investments* 61.75 (1.67) (.24) 7.06 42.36
Dividends from net investment income (3.80) (3.80) (3.40) (3.20) (3.51)
Distribution from net realized gains (.27) -- -- -- --
------ ----- ----- ----- -------
Net asset value, end of year $ 265.44 $ 204.13 $ 205.81 $ 205.98 $ 198.84
====== ====== ====== ====== ======
Total return+ 34.44% 3.44% 4.88% 6.75% 29.97%
Net assets at end of year (000s) $233,422 $195,150 $206,153 $209,922 $211,721
Ratio of operating expenses to average net assets 0.58% 0.57% 0.62% 0.59% 0.60%
Ratio of net investment income to average net assets 1.49% 1.80% 1.65% 1.63% 1.89%
Portfolio turnover rate 11.67% 16.31% 22.10% 10.68% 8.21%
*After provision for Federal tax on retained capital
gains at end of year of $ 4.64 $ 4.88 $ 6.79 $ 2.94 $ .88
</TABLE>
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
7
<PAGE>
Report of Independent Accountants
To the Trustees of State Street Research Exchange Trust
(formerly State Street Exchange Trust) and
Shareholders of State Street Research Exchange Fund
(formerly State Street Exchange Fund):
We have audited the accompanying statement of assets and liabilities of State
Street Research Exchange Fund, formerly State Street Exchange 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 five years in the period then ended.
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 Exchange Fund as of December 31, 1995, the results of
its operations for the year then ended, the changes in its net assts for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 2, 1996
8
<PAGE>
STATE STREET RESEARCH EXCHANGE FUND
Management's Discussion of Fund Performance
1995 was an outstanding year for the stock market, and Exchange Fund shared in
this good fortune. Large-capitalization, quality stocks--the same type of
stocks that make up much of the Fund's portfolio--generally led the market in
the past year. Stocks also benefited from significant merger and acquisition
activity.
Exchange Fund's performance benefited from positions in several key areas.
Health-care stocks came back to life after two years of disappointment.
Technology stocks enjoyed their second year of strong performance. Positions
in oil and aerospace stocks also performed quite well for the portfolio.
Utilities and insurance stocks underperformed for the Fund.
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 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.
Comparison Of Change In Value Of A $10,000
Investment In Exchange Fund and The S&P 500
[Line Chart Data]
Average Annual Total Return
1 Year 5 Years 10 Years
+34.44% +15.14% +13.95
Exchange Fund S&P 500
1/86 10000 10000
12/86 11687 11867
12/87 12348 12490
12/88 14554 14558
12/89 19517 19163
12/90 18244 18567
12/91 23713 24212
12/92 25313 26054
12/93 26549 28674
12/94 27462 29051
12/95 36921 39955
9
POWER OF ATTORNEY
We, the undersigned State Street Research Exchange Trust ("Trust"),
a Massachusetts business trust, its trustees, its principal executive officer
and its principal financial and accounting officer, hereby severally constitute
and appoint Francis J. McNamara III and Darman A. Wing, as our true and lawful
attorneys, with full power to each of them alone to sign for us, in our names
and in the capacities indicated below, any Registration Statements and any and
all amendments thereto of the Trust filed with the Securities and Exchange
Commission and generally to do all such things in our names and in the indicated
capacities as are required to enable the Trust to comply with provisions of the
Securities Act of 1933, as amended, and/or the Investment Company Act of 1940,
as amended, and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they have been and
may be signed by our said attorneys to said Registration Statements, and any and
all amendments thereto.
IN WITNESS WHEREOF, we have hereunto set our hands, on this
25th day of April, 1996.
SIGNATURES
STATE STREET RESEARCH EXCHANGE TRUST
By: /s/ Ralph F. Verni
-------------------------------
Ralph F. Verni, Chief Executive
Officer and President
/s/ Ralph F. Verni /s/ Thomas L. Phillips
- ----------------------------------- --------------------------------
Ralph F. Verni, Trustee and Thomas L. Phillips, Trustee
principal executive officer
/s/ Gerard P. Maus /s/ Toby Rosenblatt
- ----------------------------------- --------------------------------
Gerard P. Maus, Principal financial Toby Rosenblatt, Trustee
and accounting officer
/s/ Edward M. Lamont /s/ Michael S. Scott Morton
- ----------------------------------- --------------------------------
Edward M. Lamont, Trustee Michael S. Scott Morton, Trustee
/s/ Robert A. Lawrence /s/ Jeptha H. Wade
- ----------------------------------- --------------------------------
Robert A. Lawrence, Trustee Jeptha H. Wade, Trustee
/s/ Dean O. Morton
- -----------------------------------
Dean O. Morton, Trustee
poa\SSRET1
STATE STREET RESEARCH EXCHANGE TRUST
Certificate of Resolution
I, the undersigned Darman A. Wing, hereby certify that I am
Assistant Secretary of State Street Research Exchange Trust (the "Trust"), a
Massachusetts business trust duly authorized and validly existing under
Massachusetts law, and that the following is a true, correct and complete
statement of a vote duly adopted by the Trustees of said (Master) Trust on May
5, 1995:
"VOTED: That Francis J. McNamara, III and Darman A. Wing be, and
each hereby is, authorized and empowered, for and on
behalf of the Trust, its principal financial and
accounting officer, and in their name, to execute, and
file a Power of Attorney relating to, the Trust's
Registration Statements under the Investment Company Act
of 1940 and/or the Securities Act of 1933, and
amendments thereto, the execution and delivery of such
Power of Attorney, Registration Statements and
amendments thereto, to constitute conclusive proof of
such authorization."
I further certify that said vote has not been amended or revoked and
that the same is now in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand on this 25th day
of April, 1996.
/s/ Darman A. Wing
-----------------------------
Darman A. Wing
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000766768
<NAME> STATE STREET RESEARCH EXCHANGE TRUST
<SERIES>
<NUMBER> 01
<NAME> STATE STREET RESEARCH EXCHANGE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 98,114,093
<INVESTMENTS-AT-VALUE> 238,682,063
<RECEIVABLES> 435,119
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 239,117,182
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,695,080
<TOTAL-LIABILITIES> 5,695,080
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,768,149
<SHARES-COMMON-STOCK> 879,362
<SHARES-COMMON-PRIOR> 955,990
<ACCUMULATED-NII-CURRENT> 85,983
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 140,567,970
<NET-ASSETS> 233,422,102
<DIVIDEND-INCOME> 4,319,102
<INTEREST-INCOME> 148,684
<OTHER-INCOME> 0
<EXPENSES-NET> 1,262,008
<NET-INVESTMENT-INCOME> 3,205,778
<REALIZED-GAINS-CURRENT> 22,654,768
<APPREC-INCREASE-CURRENT> 33,669,225
<NET-CHANGE-FROM-OPS> 59,529,771
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,378,495)
<DISTRIBUTIONS-OF-GAINS> (236,946)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (80,284)
<SHARES-REINVESTED> 3,656
<NET-CHANGE-IN-ASSETS> 38,271,945
<ACCUMULATED-NII-PRIOR> 258,700
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,078,699
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,262,008
<AVERAGE-NET-ASSETS> 215,739,800
<PER-SHARE-NAV-BEGIN> 204.13
<PER-SHARE-NII> 3.63
<PER-SHARE-GAIN-APPREC> 61.75
<PER-SHARE-DIVIDEND> (3.80)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 265.44
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
