SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional by Rule 14a-6(e)(2))
Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c)
or Section 240.14a-12
- -------------------------------------------------------------------------------
State Street Research Income Trust
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant).
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- -------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
3) Filing Party:
- -------------------------------------------------------------------------------
4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
STATE STREET RESEARCH HIGH INCOME FUND
STATE STREET RESEARCH MANAGED ASSETS
series of
State Street Research Income Trust
One Financial Center
Boston, Massachusetts 02111
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To Be Held On July , 1996
A Special Meeting of Shareholders (the "Meeting") of State Street Research
High Income Fund (the "High Income Fund") and State Street Research Managed
Assets ("Managed Assets"), (collectively the "Funds"), series of State Street
Research Income Trust, a Massachusetts business trust (the "Trust"), will be
held at the offices of the Trust, One Financial Center, 31st Floor, Boston,
Massachusetts 02111, at 4:00 P.M. on July , 1996 for the following purposes:
1. (For both Funds) To elect Trustees of the Trust.
2. To reclassify the following investment policies from fundamental to
nonfundamental policies:
a. (For both Funds) The policy regarding investments in securities of
companies with less than three (3) years' continuous operation;
b. (For Managed Assets only) The policy regarding investments in
illiquid securities; and
c. (For High Income Fund only) The policy regarding arbitrage and
warrants.
3. (For both Funds) To amend the Funds' fundamental policy regarding
investments in commodities and commodity contracts.
4. (For High Income Fund only) To amend the Fund's fundamental policy on
lending to permit securities lending.
5. (For both Funds) To amend the Funds' fundamental policies regarding
diversification of investments.
6. (For both Funds) To amend the Funds' fundamental policies regarding
industry concentration.
7. (For High Income Fund only) To amend the Fund's fundamental policy
regarding participation in underwritings.
8. (For both Funds) To amend the Master Trust Agreement to permit the
Trustees to reorganize, merge or liquidate a fund without prior
shareholder approval.
9. (For both Funds) To amend the Master Trust Agreement to eliminate
specified time permitted between the record date and any shareholders
meeting.
10. (For both Funds) To consider and act upon any matter incidental to the
foregoing and to transact such other business as may properly come before
the Meeting and any adjournments thereof.
<PAGE>
The matters referred to above may be acted upon at said Meeting and any
adjournments thereof.
The close of business on May , 1996 has been fixed as the record date for the
determination of shareholders entitled to notice of, and to vote at, the Meeting
and any adjournments thereof.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO LATER THAN
July , 1996. Instructions for shares held of record in the name of a nominee,
such as a broker-dealer or trustee of an employee benefit plan, may be subject
to earlier cut-off dates established by such intermediaries to facilitate a
timely response.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE TRUST.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND SIGN
THE ENCLOSED PROXY FORM AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
DESIRE TO VOTE IN PERSON AT THE MEETING, YOU MAY REVOKE YOUR PROXY.
By Order of the Trustees
FRANCIS J. McNAMARA, III
Secretary
May , 1996
Date of Notice
<PAGE>
QUESTIONS AND ANSWERS
Q: Why is this material being sent to shareholders and what are they supposed
to do with it?
A: This material is being sent to shareholders of the High Income Fund and
Managed Assets to ask them to vote on some changes which would give the Funds
more flexibility in making investments and the Trustees more flexibility to
make decisions for the shareholders. You should read the material, mark your
vote on the enclosed Proxy Form and send it back. Call 1-800- for help with
your questions. No material changes in current practices are planned. The
proposals provide flexibility that might be useful in the future. By asking
for your approval now, future delays and expenses can be avoided. The
Trustees recommend that you vote FOR all the proposals.
Q: (For both Funds) What is Proposal 1 relating to the election of Trustees?
A: Those current Trustees who have not been previously elected by shareholders
are being presented for election. Background information on all of the
Trustees is included in the material.
Q: Under Proposal 2a, b and c, what are fundamental policies and why are the
Funds changing them to nonfundamental policies?
A: Fundamental policies are ones which can only be changed by shareholder vote.
The proposal is to change the policies to be nonfundamental so that the Funds
can react quickly to investment ideas in the future and avoid coming back to
the shareholders in the event of a conflict with an old fundamental policy.
Q: (For both Funds) Under Proposal 2a, what is the change on investments in
companies with less than 3 years' continuous operations?
A: A new nonfundamental policy would be adopted to give the Funds greater
flexibility to invest in new companies. New companies have increased
importance in today's economy and it is in the interest of the Funds to be
able to invest in a greater number of them.
Q: (For Managed Assets only) Under Proposal 2b, what is the change in
investments in illiquid securities?
A: Illiquid securities are securities which cannot be resold quickly. A new
nonfundamental policy would be adopted to let the Fund invest up to 15%
(formerly 10%) in illiquid securities. Also, the change would allow more
investments in certain securities which only trade among institutions like
the Fund. The added investment flexibility would help the Fund invest in
today's markets and take advantage of new regulatory policies.
Q: (For High Income Fund only) What is Proposal 2c on arbitrage and warrants?
A: Warrants are rights to buy other securities, such as common stock; warrants
are being used more frequently by companies to schedule their financing in
stages. The current policy precludes investments in warrants; the new
nonfundamental policy change would allow such investments. The current
provisions on arbitrage would be dropped, since technically no provision is
required and the Fund has no present plans to engage in arbitrage.
Q: (For both Funds) Under Proposal 3, what is the change on commodities?
A: Commodities are a special category of investments, which includes so-called
futures contracts, which sophisticated investors like the Funds use to
protect against, or make money on, expected market changes. A revised
fundamental policy would be adopted to provide the Funds with greater
flexibility to invest in commodities.
Q: (For High Income Fund only) What is Proposal 4 on securities lending?
A: Opportunities can arise for the Fund to lend some of the securities it owns
to other institutions in exchange for a fee. The borrower returns the
securities later, and gives the Fund collateral in the meantime. The proposed
change would make clear that securities lending is permitted.
Q: (For both Funds) What is Proposal 5 on diversification of investments?
A: Under current policy, a Fund is limited as to how much it can invest in
one company. The change would give a Fund some leeway to invest relatively
more in individual companies.
<PAGE>
Q: (For both Funds) What is Proposal 6 on industry concentration?
A: Under current policy, a Fund may not make an investment which would cause it
to have more than 25% of its assets invested in companies in any one
industry. The proposed change would recognize that the way an industry is
defined can vary over time and acknowledges that a Fund may want to redefine
industries as businesses evolve.
Q: (For High Income Fund only) What is Proposal 7 on underwritings?
A: An underwriting occurs when shares of stock of a company are sold in a public
distribution, e.g., a company "goes public." The change would make clear that
the Fund is allowed to sell its own holdings of a company as part of any new
public offering the company may make, but that the Fund would not actively
help a company make a public distribution.
Q: (For both Funds) What is Proposal 8 to permit the Trustees to reorganize,
merge or liquidate a fund without shareholder approval?
A: Circumstances can arise with a Fund where it makes sense to merge it with a
similar fund or liquidate it and send the proceeds to shareholders. This can
happen where a fund is small or performance is not competitive; and the cost
of a proxy solicitation to all shareholders to get their approval would be
disadvantageous. The possibility that this could happen is unlikely with
these two Funds, but the standby authority for the Trustees to take action
would be in the best interest of shareholders in the long-run.
Q: (For both Funds) What is Proposal 9 on eliminating the specified time
between record date and meeting date for shareholders meetings?
A: The record date is the cutoff date to determine which shareholders should
have a vote for any upcoming shareholder meeting. For example, you were a
shareholder as of the record date for this shareholders meeting, so you
received this proxy material. However, the maximum 60 days for the period
between the record date and the meeting date as currently specified is
too little time to move proxy materials through brokers and pension plan
recordkeepers, etc. and receive votes back in time for the meeting. The
change would allow a reasonable period between the two dates.
Important additional information about the proposals is set forth in the
accompanying Proxy Statement. Please read it carefully.
<PAGE>
STATE STREET RESEARCH HIGH INCOME FUND
STATE STREET RESEARCH MANAGED ASSETS
series of
State Street Research Income Trust
One Financial Center
Boston, Massachusetts 02111
PROXY STATEMENT
The following table identifies each proposal set forth in the Notice of
Special Meeting of Shareholders and the checkmark (x) indicates which Fund's
shareholders and classes are being solicited to approve which proposal.
<TABLE>
<CAPTION>
Managed
High Income Fund, Assets,
All Classes All Classes
----------------- --------------
Proposal
- -----------------------------------------------------
<S> <C> <C>
1. Trustees [x] [x]
2. Fundamental to nonfundamental policies
a. Companies with less than 3 years'
operations [x] [x]
b. Illiquid securities [x]
c. Arbitrage and warrants [x]
3. Commodities [x] [x]
4. Securities lending [x]
5. Diversification of investments [x] [x]
6. Industry concentration [x] [x]
7. Underwriting [x]
8. Amendment of Master Trust Agreement to permit
Trustees to reorganize, merge or liquidate a fund [x] [x]
9. Amendment of Master Trust Agreement to eliminate
specified time permitted between record date and
any shareholders meeting [x] [x]
</TABLE>
<PAGE>
This Proxy Statement is furnished to the shareholders of State Street
Research Income Trust, in connection with the solicitation of proxies by and on
behalf of the Trust's Board of Trustees to be used at a Special Meeting of
Shareholders (the "Meeting") of the Trust, to be held at the offices of the
Trust, One Financial Center, 31st Floor, Boston, Massachusetts 02111, at 4:00
P.M., on July , 1996, and at any adjournments thereof. Any shareholder who has
given a Proxy has the right to revoke it at any time prior to its exercise by
attending the Meeting and voting his or her shares in person or by submitting a
written notice of revocation or a later-dated Proxy to the Trust at the above
address prior to the date of the Meeting.
Shareholders of record of the Trust at the close of business on May , 1996
are entitled to notice of, and to vote at, the Meeting or any adjournments
thereof. This Proxy Statement, Proxy and accompanying Notice of Special Meeting
of Shareholders were first sent or given to shareholders on or about May , 1996.
The Trust is presently comprised of two separate portfolio series: State Street
Research High Income Fund and State Street Research Managed Assets.
The chart below reflects the total number of shares issued and outstanding
for the Funds as of the record date. Each share is entitled to one vote with a
proportionate vote for each fractional share.
<TABLE>
<CAPTION>
Fund Class A Class B Class C Class D Total
- ------------------ -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
High Income Fund
Managed Assets
</TABLE>
If the enclosed Proxy is properly executed and returned in time to be voted
at the Meeting, the shares represented thereby will be voted in accordance with
the instructions on the Proxy. The Proxy grants discretion to the persons named
therein, as proxies, to take such further action as they may determine
appropriate in connection with any other matter which may properly come before
the Meeting or any adjournments thereof. The Board of Trustees does not
currently know of any matter to be considered at the Meeting other than the
matters set forth in the Notice of Special Meeting of Shareholders.
A majority of the shares entitled to vote constitutes a quorum for the
transaction of business at the Meeting. In the event a quorum is not present at
the Meeting, or in the event a quorum is present at the Meeting but sufficient
votes to approve any of the proposals are not received, the persons named as
proxies may propose one or more adjournments of such Meeting without further
notice to permit further solicitation of Proxies provided such persons determine
that an adjournment and additional solicitation are reasonable and in the
interest of shareholders, after consideration of all relevant factors, including
the nature of the relevant proposals, the percentage of votes then cast, the
percentage of negative votes then cast, the nature of the proposed solicitation
activities and the nature of the reasons for such further solicitation. A
shareholder vote may be taken on one or more of the proposals in this Proxy
Statement prior to such adjournment if sufficient votes have been received and
such vote is otherwise appropriate. Any such adjournment will require the
affirmative vote of a majority of those shares present at the Meeting in person
or by proxy.
For purposes of determining the presence of a quorum for transacting business
at the Meeting and for determining whether sufficient votes have been received
for approval of any proposal to be acted upon at the Meeting, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have, or choose not to exercise, discretionary
power), may in the discretion of the Trust be treated as present at the Meeting
and entitled to vote on the matter, but which have not been voted. For this
reason, abstentions and broker non-votes could assist the Trust in obtaining a
quorum; both have the practical effect of a "no" vote for purposes of obtaining
the requisite vote for approval of proposals 2 through 9 to be acted upon at the
Meeting, but will have no effect on approval of proposal 1 regarding the
election of Trustees.
In addition to solicitation of Proxies by mail, officers of the Trust and
officers and employees of State Street Research & Management Company (the
"Investment Manager"), affiliates of the Investment Manager, or other
representatives of the Trust may also solicit Proxies by telephone or in person.
The Trust may also retain a proxy solicitation firm to assist in any special,
personal solicitation of Proxies. The costs of retaining a firm to perform such
special solicitation, which the Trust does not anticipate would exceed $ per
Fund, would be borne by the relevant Fund, along with all other usual costs of
solicitation and expenses incurred in connection with preparing
2
<PAGE>
this Proxy Statement and its enclosures. The Trust will reimburse brokerage
firms and others for their expenses in forwarding solicitation material to the
beneficial owners of shares.
Upon request by a shareholder of either Fund of the Trust to State Street
Research Shareholder Services, One Financial Center, Boston, MA 02111 at
1-800-562-0032, the annual report and most recent semiannual report succeeding
the annual report, if any, for the relevant Fund will be furnished
without charge to the requesting shareholder.
The Funds' distributor is State Street Research Investment Services, Inc.,
One Financial Center, Boston, MA 02111.
3
<PAGE>
PROPOSAL 1
ELECTION OF TRUSTEES
(FOR BOTH FUNDS)
The shareholders of the Trust are being asked to elect the nominees named
below to serve as Trustees of the Trust. All shares represented by valid proxies
will be voted in favor of the election of the nominees, unless authority to vote
therefor is withheld. The nominees have agreed to serve as Trustees if elected.
If for any reason the nominees should not be available for election as
contemplated, the proxies hereby solicited may, unless otherwise limited, be
voted to elect such substitute nominees, if any, as may be designated by the
Board of Trustees, subject to the applicable provisions of the Investment
Company Act of 1940 (the "1940 Act"). The nominees currently serve as Trustees
and are being presented for shareholder election for the first time. The other
current Trustees were previously elected by the shareholders of the Trust and
are not being voted upon at this Meeting. This election will help assure
continued compliance with 1940 Act provisions regarding the election of
Trustees. Background information on all of the Trustees has been provided.
<TABLE>
<CAPTION>
Shares of Funds
Deemed Beneficially Owned on
, 1996
--------------------------------------
Number of Shares / Class / % of Class
--------------------------------------
Year First
Nominee Standing for Position Became
Election by Shareholders with Trust Trustee High Income Managed Assets
- ------------------------------------ ----------------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Thomas L. Phillips Trustee 1992
Toby Rosenblatt Trustee 1993
*Ralph F. Verni Trustee, 1992
Chairman
of the Board,
Chief Executive
Officer and
President
Previously Elected by Shareholders
- ------------------------------------
Edward M. Lamont Trustee 1987
Robert A. Lawrence Trustee 1986
Dean O. Morton Trustee 1986
Michael S. Scott Morton Trustee 1987
Jeptha H. Wade Trustee 1986
Trustees and Officers as a Group
</TABLE>
* Individual who is deemed to be an "interested person" of the Trust under the
1940 Act because of his affiliation with the Trust's investment manager.
(1) Less than 1%.
4
<PAGE>
Information on all of the current Trustees, in alphabetical order, is set
forth below.
Edward M. Lamont 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. He is . Mr. Lamont's other principal
business affiliations include Director of Sun Life Insurance and Annuity
Company of New York. Mr. Lamont is also a Trustee of 9 other investment
companies for which the Investment Manager serves as primary investment
adviser.
Robert A. Lawrence's principal occupation is Partner, Saltonstall & Co., a
private investment firm. He is . Mr. Lawrence's other principal business
affiliations include Director of Metropolitan Series Fund, Inc., State Street
Research Portfolios, Inc., New York Times Company and Fifty Associates (a real
estate investment trust). Mr. Lawrence is also a Trustee of 9 other investment
companies for which the Investment Manager serves as primary investment adviser.
Dean O. Morton is retired and was formerly Executive Vice President, Chief
Operating Officer and Director, Hewlett-Packard Company. He is . Mr. Morton's
other principal business affiliations include Director of Metropolitan Series
Fund, Inc., State Street Research Portfolios, Inc., Alza Corp. (a therapeutic
systems developer), Raychem Corp. (a materials science company), The Clorox
Company (a consumer products company), Tencor Instruments (a scientific
instruments company) and Centigram Communications Corporation (a
communication equipment company). Mr. Morton is also a Trustee of 9 other
investment companies for which the Investment Manager serves as primary
investment adviser.
Thomas L. Phillips is retired and was formerly Chairman of the Board and
Chief Executive Officer of Raytheon Company, of which he remains a Director.
He is . Mr. Phillips's other principal business affiliations include Director
of John Hancock Mutual Life Insurance Company, Knight-Ridder, Inc. and
Digital Equipment Corporation. Mr. Phillips is also a Trustee of 9 other
investment companies for which the Investment Manager serves as primary
investment adviser.
Toby Rosenblatt's 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. He is . Mr. Rosenblatt's other principal
business affiliations include Director of Biosource Technologies, Inc., Advanced
Polymer Systems, Inc. and Pherin Corporation (proprietary compounds for human
health). Mr. Rosenblatt is also a Trustee of 9 other investment companies for
which the Investment Manager serves as primary investment adviser.
Michael S. Scott Morton's principal occupation during the past five years
has been Jay W. Forrester Professor of Management at Sloan School of
Management, Massachusetts Institute of Technology. He is . Dr. Scott Morton's
other principal business affiliations include Director of Metropolitan Series
Fund, Inc., State Street Research Portfolios, Inc. and Sequent Computer
Systems, Inc. (a computer manufacturer). Dr. Scott Morton is also a Trustee
of 9 other investment companies for which the Investment Manager serves as
primary investment adviser.
Ralph F. Verni's principal occupation is Chairman of the Board, President,
Chief Executive Officer and Director of the Investment Manager. He is . During
the past five years he also served as President and Chief Executive Officer of
New England Investment Companies and as Chief Investment Officer and Director 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.; Director of CML Group, Inc. (consumer specialty
company); member of the Advisory Board of Commonwealth Capital Ventures, L.P.;
Chairman and Director of Metric Holdings, Inc. and Metric Realty Corp.; Chairman
of the Board of MetLife Securities, Inc.; President, Chief Executive Officer and
Director of SSRM Holdings, Inc.; and President and Director of State Street
Research Energy, Inc. Mr. Verni is also a Trustee of 9 other investment
companies for which the Investment Manager serves as primary investment adviser.
Jeptha H. Wade is retired and was formerly Of Counsel for the law firm
Choate, Hall & Stewart. He was a partner of that firm from 1960 to 1987. He
is . Mr. Wade's other principal business affiliations include Director of
Cleveland-Cliffs, Inc. (a natural resource company). Mr. Wade is also a
Trustee of 9 other investment companies for which the Investment Manager
serves as primary investment adviser.
A nominee elected as a Trustee will serve as such until any successor is
elected and qualified. A Trustee serves until he retires, resigns or is removed
as provided in the Declaration of Trust, as amended ("Master Trust Agreement")
of the Trust. The Trust is not required to hold regularly scheduled annual
meetings for the election of Trustees. (See "No Annual Meetings of Shareholders"
below.)
5
<PAGE>
The following persons are principal officers, but not Trustees, of the Trust:
Bartlett R. Geer has served as Vice President of the Trust since 1987. He is
. His principal occupation is Senior Vice President of the Investment Manager.
During the past five years he has also served as Vice President of the
Investment Manager.
John H. Kallis has served as Vice President of the Trust since 1994. He is .
His principal occupation is Senior Vice President of the Investment Manager.
During the past five years he has also served as a portfolio manager for the
Investment Manager.
Gerard P. Maus has served as Treasurer of the Trust since 1993. He is . His
principal occupation is Executive Vice President, Treasurer, Chief Financial
Officer and Director of the Investment Manager. 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.;
Treasurer and Director of State Street Research Energy, Inc.; Treasurer and
Chief Financial Officer of SSRM Holdings, Inc.; and Director of Metric Holdings,
Inc.
Francis J. McNamara, III has served as Secretary and General Counsel of the
Trust since May, 1995. He is . His principal occupation is Senior Vice
President, Secretary and General Counsel of the Investment Manager. During the
past five years he has also served as Senior Vice President and General Counsel
of The Boston Company Inc., Boston Safe Deposit and Trust Company and The Boston
Company Advisors, Inc. Mr. McNamara's other principal business affiliations
include Senior Vice President, Clerk and General Counsel of State Street
Research Investment Services, Inc.; Secretary and General Counsel of SSRM
Holdings, Inc.; and Director, Clerk and General Counsel of State Street Research
Energy, Inc.
Thomas A. Shively has served as Vice President of the Trust since 1987. He
is . His principal occupation is Executive Vice President and Director of the
Investment Manager. During the past five years he has also served as Senior
Vice President of the Investment Manager. Mr. Shively's other principal
business affiliations include Director of State Street Research Investment
Services, Inc.
Michael R. Yogg has served as Vice President of the Trust since 1991. He is .
His principal occupation is Senior Vice President of the Investment Manager.
During the past five years he has also served as Vice President of the
Investment Manager.
These officers are deemed to be "interested persons" of the Trust under the
1940 Act inasmuch as they are affiliated with the Investment Manager as noted.
Board Meetings and Committees
During the fiscal year ended March 31, 1996, the Board of Trustees held a
total of five meetings.
The Audit Committee of the Board of Trustees held two meetings during the
fiscal year ended March 31, 1996. The present members of the Audit Committee are
Messrs. Morton, Scott Morton and Wade. The duties of this Committee include
meeting with representatives of the Trust's independent public accountants both
to review the range of the accountants' activities and to discuss the Trust's
system of internal controls. Thereafter, this Committee reports to the Board on
the Committee's findings and recommendations concerning internal accounting
matters as well as its recommendation for retention or dismissal of the auditing
firm.
The Nominating Committee of the Board of Trustees held one meeting during the
fiscal year ended March 31, 1996. The present members of the Nominating
Committee are Messrs. Morton, Phillips, Scott Morton and Wade. The duties of
this Committee include consideration of recommendations on nominations for
Trustees, review of the composition of the Board, and recommendations respecting
attendance, frequency of meetings and similar matters. The Nominating Committee
will consider nominees recommended by shareholders; shareholders may submit
recommendations to the attention of the Secretary, State Street Research Income
Trust, One Financial Center, 30th Floor, Boston, Massachusetts 02111.
Remuneration of Principal Officers and Trustees
The executive officers of the Trust and those of its Trustees who are
officers of the Investment Manager receive no direct remuneration from the
Trust. Such executive officers and Trustees receive remuneration from the
Investment Manager. Trustees who are not officers of the Investment Manager are
compensated for attendance at each
6
<PAGE>
meeting of the Board of Trustees and committees of the Board and reimbursed for
reasonable expenses incurred in connection therewith, and are paid an annual
retainer.
For the Funds' fiscal year ended March 31, 1996, the Trustees were
compensated as follows:
<TABLE>
<CAPTION>
Aggregate Compensation from Total Compensation
------------------------------------ from Funds and
Name of Trustee High Income Fund Managed Assets Fund Complex (1)
- -------------------------- ----------------- --------------- --------------------
<S> <C> <C> <C>
Edward M. Lamont $4,300 $4,300 $ 63,510
Robert A. Lawrence $4,300 $4,300 $ 91,685
Dean O. Morton $4,700 $4,700 $103,085
Thomas L. Phillips $4,000 $4,000 $ 67,185
Toby Rosenblatt $4,300 $4,300 $ 63,510
Michael S. Scott Morton $5,100 $5,100 $109,035
*Ralph F. Verni $ 0 $ 0 $ 0
Jeptha H. Wade $4,400 $4,400 $ 76,285
</TABLE>
* Individual who is deemed to be an "interested person" of the Trust under the
1940 Act because of his affiliation with the Funds' investment manager.
(1) Includes compensation from 30 series, including Metropolitan Series Fund,
Inc., for which the Investment Manager serves as sub- investment adviser,
State Street Research Portfolios, Inc., for which State Street Research
Investment Services, Inc. serves as distributor, and all investment
companies for which the Investment Manager serves as primary investment
adviser. Total Compensation from Funds and Fund Complex is for the 12 months
ended December 31, 1995. The Funds do not provide any pension or retirement
benefits for the Trustees.
Required Vote
A plurality of the votes properly cast in person or by proxy at the Meeting,
provided a quorum is represented, is required for the election of a Trustee.
PROPOSAL 2
(FOR BOTH FUNDS) TO RECLASSIFY THE INVESTMENT
POLICIES OF THE FUND SET FORTH BELOW FROM
FUNDAMENTAL POLICIES TO NONFUNDAMENTAL POLICIES
The Funds are currently subject to the investment policies set forth below
which, among others, the Funds originally designated as "fundamental" policies,
i.e. policies only changeable by shareholder vote. The Trustees of the Trust
after careful consideration and analysis have concluded that it is not in the
best interest of the Funds to continue this designation for these investment
policies. A fundamental policy which may only be altered by shareholder vote by
its nature inhibits the ability of a fund's management to respond quickly to
changing market conditions or revised regulations or policies affecting the
industry. The Trustees recognize that certain policies, such as whether a Fund
is to be a diversified fund or nondiversified fund, should be changeable only by
the investors themselves. On the other hand, the Trustees believe that other
policies do not fit within this category in today's rapidly changing investment
environment. The Trustees believe that the following investment policies for the
reasons given should be characterized as nonfundamental and recommend that the
shareholders approve the elimination of the fundamental characteristics of such
policies.
a. (FOR BOTH FUNDS) Policy regarding investments in securities of companies
with less than three (3) years' continuous operation.
It is each Fund's current fundamental policy, with certain exceptions, not to
invest in securities of companies which, including predecessors, have a record
of less than three (3) years' continuous operation if so doing would cause more
than five percent (5%) of a Fund's total assets to be invested in the securities
of such company. Specifically, the current policy of the High Income Fund is:
"not to invest in a security if the transaction would result in more than 5%
of the Fund's total assets being invested in securities of issuers (including
predecessors) with less than three years of continuous operations unless such
securities are rated BBB or higher by Standard & Poor's Corporation ("S&P")
or Baa or higher by Moody's Investors Service, Inc. ("Moody's"), except that
this restriction does not apply to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities."
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The current policy of Managed Assets is:
"not to invest in a security if the transaction would result in more than 5%
of the Fund's total assets being invested in securities of issuers (including
predecessors) with less than three years of continuous operations except in
the case of debt securities rated BBB or higher by Standard & Poor's
Corporation ("S&P") or Baa or higher by Moody's Investors Service, Inc.
("Moody's"), and except that this restriction does not apply to investments
in securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities."
At the time the current policy of each Fund was adopted, issuers with less
than 3 years' operations were not as prevalent as they are today. The investment
attractiveness of such issuers has changed dramatically in light of the
importance of new entrepreneurial companies and financial intermediaries in
today's economy, the role of emerging growth companies both domestically and
internationally, and the sophistication of such issuers. Many of the growth
industries, such as science and technology, natural resources and consumer
staples, are characterized by a large proportion of newer companies. In
addition, a number of new financing arrangements involve recently formed
entities which may not have the requisite years of operations, but which are
based on sound premises, such as a new holding company which owns interests in
newly consolidated operations of established companies, or pass-through entities
such as trusts which hold pools of income producing assets such as mortgages or
consumer account receivables.
If the proposal to change this policy from fundamental to nonfundamental is
approved, the Trustees intend to adopt the following nonfundamental policy on
this matter which would broaden the ability of a Fund to invest in securities of
companies with less than 3 years of continuous operation.
"The Fund may not invest more than 5% of its total assets in securities of
private companies including predecessors with less than three years'
continuous operations except (a) securities guaranteed or backed by an
affiliate of the issuer with three years of continuous operations, (b)
securities issued or guaranteed as to principal or interest by the U.S.
Government, or its agencies or instrumentalities, or a mixed- ownership
Government corporation, (c) securities of issuers with debt securities rated
at least "BBB" by Standard & Poor's Corporation or "Baa" by Moody's
Investor's Service, Inc. (or their equivalent by any other nationally
recognized statistical rating organization) or securities of issuers
considered by the Investment Manager to be equivalent, (d) securities issued
by a holding company with at least 50% of its assets invested in companies
with three years of continuous operations including predecessors, and (e)
securities which generate income which is exempt from local, state or federal
taxes; provided that the Fund may invest up to 15% in such issuers so long as
such investments plus investments in restricted securities (other than those
which are eligible for resale under Rule 144A, Regulation S or other
exemptive provisions) do not exceed 15% of the Fund's total assets."
Each Fund intends to implement and monitor the operation of the new policy
and to change it, as appropriate, subject to market, regulatory or other
developments. Assuming the proposal is approved, such change could then be
accomplished without the delay and expense of soliciting shareholder approval.
In the event regulatory policies requiring limits on investments in issuers with
less than three years operations become inapplicable in the future, a Fund could
eliminate the nonfundamental policy entirely.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders, each Fund's present investment policy will remain in
effect.
b. (FOR MANAGED ASSETS ONLY) Policy regarding investments in illiquid
securities.
It is the current fundamental policy for Managed Assets:
"not to invest more than 10% of its total assets in illiquid assets,
including securities restricted as to resale, repurchase agreements extending
for more than seven days, options not listed and traded on any national
securities exchange or registered commodities exchange and other securities
and assets which are not readily marketable."
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Open-end investment companies such as the Fund must stand ready to redeem
their shares on a continuous basis. Thus, they are limited in the amount of
illiquid securities they may hold because illiquid securities may not be easily
sold to raise cash necessary to meet redemptions under certain circumstances and
because illiquid securities can present valuation problems. Illiquid securities
have generally included those set forth in the Fund's current fundamental
policy, i.e., securities restricted as to resale, repurchase agreements
extending for more than seven days, and other securities not readily marketable.
However, the securities markets are evolving, certain securities are being
recharacterized and new instruments continue to be developed.
In 1992, the Securities and Exchange Commission raised the percentage of a
fund's net assets that may be held in illiquid securities from 10% to 15%.
Illiquid securities are generally regarded as securities which may not be sold
or disposed of within seven days in the ordinary course of business at
approximately the price at which a fund has valued them. The Trustees have
concluded that the 15% limitation is appropriate for the Fund. In addition,
certain state regulators have likewise liberalized their policies on illiquid or
restricted securities. Had the Fund's policies in this area been nonfundamental,
corresponding revisions in the Fund's policies to reflect the Securities and
Exchange Commission and state changes could have been made by the Trustees alone
without delays and costs associated with solicitation of shareholder votes.
In 1990, the Securities and Exchange Commission adopted a rule, Rule 144A
under the Securities Act of 1933, which has resulted in a new form of restricted
security which can be traded among qualified institutional buyers. The Fund is a
qualified institutional buyer and the new rule is an important development for
the Fund. However, a change in the Fund's current fundamental policies is needed
to enhance the Fund's use of Rule 144A securities. The Trustee believe that
additional flexibility is needed in dealing with so-called illiquid and
restricted securities and that the policy with respect thereto should
consequently be nonfundamental.
If the proposal to change the character of this policy from fundamental to
nonfundamental is approved by the shareholders, the Trustees intend to adopt
nonfundamental policies that read as follows:
"(1) not to purchase any security or enter into a repurchase agreement if as
a result more than 15% of its net assets would be invested in securities
that are illiquid (including repurchase agreements not entitling the
holder to payment of principal and interest within seven days); and
(2) not to invest more than 15% of its net assets in restricted securities
of all types (including not more than 5% of its net assets in restricted
securities which are not eligible for resale pursuant to Rule 144A,
Regulation S or other exemptive provisions under the Securities Act of
1933)."
Although many illiquid securities may also be restricted, and vice-versa,
compliance with each of these policies will be computed independently. The
percentage limitations would apply as of the time of investment.
The Fund intends to implement and monitor the operation of the new policy and
to change it, as appropriate, subject to market, regulatory or other
developments. Assuming the proposal is approved, such change could then be
accomplished without shareholder approval. In the event regulatory policies
requiring limits on investments in illiquid and/or restricted securities become
inapplicable in the future, the Fund could eliminate the nonfundamental policy
entirely.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders, the Fund's present investment policy will remain in effect.
c. (FOR HIGH INCOME FUND ONLY) Policy regarding arbitrage and warrants.
The current fundamental policy of the High Income Fund respecting arbitrage
and warrants reads as follows. The High Income Fund's policy is:
"not to conduct arbitrage transactions (provided that investments in futures
and options for hedging purposes as provided [in the Statement of Additional
Information] and in the Trust's Prospectus shall not be deemed arbitrage
transactions) or purchase warrants."
For the reasons set forth below, the Trustees propose to change this policy
from fundamental to nonfundamental and to adopt the following nonfundamental
policy. The proposed nonfundamental policy for the High Income Fund would be:
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"not to make an investment in warrants, valued at the lower of cost or
market, which causes the Fund to own, at the time of such investment,
warrants in excess of 5% of the Fund's net assets, provided that warrants not
listed on the New York or American Stock Exchange shall be further limited to
2% of the Fund's net assets (warrants initially attached to securities and
acquired by the Fund upon original issuance thereof shall be deemed to be
without value)."
The reasons for the change relate primarily to warrants. A warrant is a right
to acquire other securities, such as common stock. While the current policy
precludes investments in warrants, the proposed nonfundamental policy would give
the Trustees flexibility over time to adopt policies on investments in warrants
as appropriate. Thus, the nonfundamental provisions enabling up to 5% (measured
at the time of investment) of the High Income Fund's net assets to be invested
in warrants, would be adopted initially because of the growing use of warrants
in current financings. Whereas before, warrants were considered as possibly
speculative, today they are used by issuers in many situations as interim steps
in part of a timetable for an overall financing program to raise capital. An
issuer may use warrants to take advantage of current market conditions and help
avoid some of the uncertainties that a delay could entail. Also, warrants might
be offered in combination with stock in an offering and become detached and
separately available for investment.
In changing the current policy from fundamental to nonfundamental, the
provisions relating to arbitrage would simply be eliminated, since technically
no arbitrage policy is regulatorily required and the presence of a policy can be
the source of confusion as to what constitutes arbitrage. The Fund has no
present intention to engage in arbitrage.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders, the Fund's present investment policy will remain in effect.
PROPOSAL 3
(FOR BOTH FUNDS) TO AMEND EACH FUND'S
FUNDAMENTAL POLICY REGARDING INVESTMENTS
IN COMMODITIES AND COMMODITY CONTRACTS
The fundamental policy regarding commodities and commodity contracts
currently reads as follows for the High Income Fund. The High Income Fund's
policy is:
"not to invest in commodities or commodity contracts, except that the Fund
may make investments in financial futures, options on financial futures and
forward currency exchange contracts to the extent set forth in the Trust's
Prospectus and Statement of Additional Information."
The fundamental policy regarding commodities and commodity contracts
currently reads as follows for Managed Assets. Managed Assets' policy is:
"not to invest in commodities or commodity contracts in excess of 10% of the
Fund's total assets, except that (i) investments in futures contracts and
options on futures contracts on securities or securities indices and (ii)
investments made in accordance with applicable regulatory limitations in the
securities of any related or unrelated entity which holds precious metals or
other commodities, shall not be deemed an investment in commodities or
commodities contracts;"
In order to clarify this policy as well as provide greater flexibility as
regards investments in commodities and commodity contracts, the Trustees propose
that the shareholders adopt the following revised fundamental policy, to wit,
that it is each Fund's policy:
"not to invest in physical commodities or physical commodity contracts or
options in excess of 10% of the Fund's total assets, except that investments
in essentially financial items or arrangements such as, but not limited to,
swap arrangements, hybrids, currencies, currency and other forward contracts,
delayed delivery and when-issued contracts, futures contracts and options on
futures contracts on securities, securities indices, interest rates and
currencies, shall not be deemed investments in commodities or commodities
contracts."
The proposed policy would clarify that certain arrangements and newer kinds
of mixed instruments which involve futures and other commodities are
permissible. With changes in interest rates and greater financing pressures
being placed on issuers, more complex arrangements are being presented for
investment consideration. For example,
10
<PAGE>
an issuer may find it advantageous to lock-in current interest rates by agreeing
to make delayed delivery of securities months or years from now, and a Fund may
find the terms of such arrangements favorable as an investment. A Fund could
decide that such an investment is attractive because of its view of future
interest rates, the interim earnings to be made on the funds until the future
delivery is made, the actual stated interest rate on the bonds, and similar
analytical considerations. The proposed policy would make clear that such
delayed delivery contracts are permissible investments. Among other
clarifications, the proposed policy would also make clear that currencies are
not regarded as commodities and that limited investments in physical commodities
are allowed, although the Fund has no present intention to make such
investments.
The Trustees and the Investment Manager are familiar with the risks inherent
in certain of the investments covered by the proposed policy and, if the
proposed policy is adopted by the shareholders, they intend to act accordingly
in the implementation thereof. No imminent change in current practices is
anticipated.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders, each Fund's present investment policy will remain in
effect.
PROPOSAL 4
(FOR HIGH INCOME FUND ONLY) TO AMEND THE
FUND'S FUNDAMENTAL POLICY ON LENDING TO
PERMIT SECURITIES LENDING
It is the current policy for the High Income Fund:
"not to make loans, except that the Fund may purchase bonds, debentures,
notes and similar obligations (including repurchase agreements with respect
thereto) in accordance with applicable investment policies and objectives)."
Securities lending, when practiced as described below, could be an attractive
investment alternative for the Fund from time to time. The Trustees propose that
the policy be revised to read as follows. It will be the policy of the Fund:
"not to lend money; however, the Fund may lend portfolio securities and
purchase bonds, debentures, notes and similar obligations (and enter into
repurchase agreements with respect thereto)."
If the proposed revised policy is adopted by the shareholders, the Fund would
be able to lend portfolio securities up to a maximum in value of 33-1/3% of its
total assets. Whenever any such loan is made, the Fund will receive collateral
in the form of cash or cash equivalents (e.g., U.S. Government obligations)
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 short-term securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
irrevocable stand-by letters of credit issued by a bank, or any combination
thereof. The investing of cash collateral received from loaning portfolio
securities involves leverage which magnifies the potential for gain or loss on
monies invested and, therefore, results in an increase in the volatility of the
Fund's outstanding securities. Such loans may be terminated at any time. The
Fund will retain most rights of ownership of the loaned securities 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 would be made only to borrowers which are deemed by the
Investment Manager to be of good financial standing.
The Trustees believe that the proposed revised policy is in the best
interests of the Fund. The Trustees, including the Trustees who are not
interested persons, recommend a vote FOR approval of this proposal. If the
proposal is not approved by the shareholders, the Fund's present investment
policy will remain in effect.
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PROPOSAL 5
(FOR BOTH FUNDS) TO AMEND THE FUNDS' FUNDAMENTAL POLICIES
REGARDING DIVERSIFICATION OF INVESTMENTS
The fundamental policies of the Funds regarding diversification of
investments currently read as follows:
It is the policy of the High Income Fund:
"(1) not to invest in a security if the transaction would result in more than
5% of the Fund's total assets being invested in any one issuer, except
this restriction does not apply to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities;
and
(2) not to invest in a security if the transaction would result in the Fund's
owning more than 10% of any class of voting securities of an issuer,
except this restriction does not apply to investments in securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities."
It is the policy of Managed Assets:
"(1) not to invest in a security if the transaction would result in more than
5% of the Fund's total assets being invested in any one issuer, except
this restriction does not apply to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities;
and
(2) not to invest in a security if the transaction would result in the Fund
owning more than 10% of the outstanding voting securities of an issuer,
except that this restriction does not apply to investments in securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities."
In order to provide greater flexibility in managing the investments of the
Funds, as more fully described below, the proposal is to change the above
policies to read for both Funds as follows:
It would be the policy of each Fund:
"not to purchase a security of any one issuer (other than securities issued
or guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities or mixed-ownership Government corporations) if
such purchase would, with respect to 75% of the Fund's total assets, cause
more than 5% of the Fund's total assets to be invested in the securities of
such issuer or cause more than 10% of the voting securities of such issuer to
be held by the Fund."
Under the current policies, a Fund may not invest more than 5% of its total
assets in any one issuer ("5% issuer test"). In addition, Managed Assets may not
invest in an issuer if the investment would result in the Fund owning more than
10% of the outstanding voting securities of an issuer, or in the case of the
High Income Fund, 10% of any class of voting securities of an issuer ("10%
voting securities test"). U.S. Government securities are not counted. The
significant difference between the current policies and proposed policy is that
the 5% issuer test and the 10% voting securities test would only apply to 75% of
a Fund's assets, thereby giving a Fund the investment flexibility to exceed the
5% issuer test and 10% voting securities test as to the remaining 25% of such
Fund's assets.
The added flexibility to make an investment resulting in more than 5% of a
Fund's assets being invested in one issuer would enable the Fund to take
advantage of potential investment opportunities where, for example, the
particular issuer appears to be very attractive because of the high credit
worthiness of the issuer or its unique financial strengths. In addition, where a
relatively low supply of other comparable issuers exists, the Fund could be
interested in investing more in the limited number of issuers available. In
short, circumstances can arise where the best interests of shareholders can be
served by exceeding the 5% issuer test. Similarly, as a Fund increases in size,
its portfolio purchases get larger and could from time to time comprise more
than 10% of the voting securities of a small issuer. Accordingly, the proposed
change would give a Fund flexibility in its investments as it grows.
Neither Fund has any present plan to change its investment approach if the
proposal is adopted. Adoption of the proposal would simply provide helpful
flexibility for possible use under the right circumstances in the future.
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<PAGE>
The Funds intend to implement and monitor the operation of the new policy
subject to market, regulatory or other developments.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders of a given Fund, that Fund's present investment policies
will remain in effect.
PROPOSAL 6
(FOR BOTH FUNDS) TO AMEND EACH FUND'S FUNDAMENTAL POLICY
REGARDING INDUSTRY CONCENTRATION
The fundamental policy regarding industry concentration currently reads as
follows for the High Income Fund. The High Income Fund's policy is:
"not to make any investment which would cause more than 25% of the value of
the Fund's total assets to be invested in securities of issuers principally
engaged in any one industry (for purposes of this restriction, (a) utilities
will be divided according to their services so that, for example, gas, gas
transmission, electric and telephone companies will each be deemed in a
separate industry, (b) oil and oil related companies will be divided by type
so that, for example, oil production companies, oil service companies and
refining and marketing companies will each be deemed in a separate industry
and (c) securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities shall be excluded)."
The fundamental policy regarding industry concentration currently reads as
follows for Managed Assets. It is Managed Assets' policy:
"not to make any investment which would cause more than 25% of the value of
the Fund's total assets to be invested in securities of issuers principally
engaged in any one industry (for purposes of this restriction, (a) utilities
will be divided according to their services so that, for example, gas, gas
transmission, electric and telephone companies will each be deemed in a
separate industry, (b) oil and oil related companies will be divided by type
so that, for example, oil production companies, oil service companies and
refining and marketing companies will each be deemed in a separate industry,
(c) finance companies will be classified according to the industries of their
parent companies, and (d) securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (including repurchase
agreements collateralized by U.S. Government securities) shall be excluded)."
For the reasons set forth below, the Trustees propose to amend the policy for
each Fund to simply read as follows. The policy of each Fund would be:
"not to make any investment which would cause more than 25% of the value of
the Fund's total assets to be invested in the securities of
nongovernment-related issuers principally engaged in any one industry, as
described in the Fund's Prospectus or Statement of Additional Information, as
amended from time to time."
Because the current policy contains specific examples of how a few industries
would be defined, it could be misconstrued as inferring that no other kinds of
distinctions would be made for other industries. Each Fund in fact has always
reserved the right to define industries as appropriate over time on the basis of
evolutionary changes in businesses. For example, the burgeoning growth and
changes in what was formerly lumped together as the electronic industry is now
considered by the Funds to involve separate industries for electronic components
and electronic equipment. Accordingly, the change in the statement of the policy
would make clear that each Fund will define and redefine industries over time as
business directions dictate.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders of a given Fund, the text of that Fund's present investment
policies will remain in effect.
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PROPOSAL 7
(FOR HIGH INCOME FUND ONLY)
TO AMEND THE FUND'S FUNDAMENTAL POLICY REGARDING
PARTICIPATION IN UNDERWRITINGS
The fundamental policy regarding participation in underwritings currently
reads as follows for the High Income Fund. The High Income Fund's policy is:
"not to underwrite or participate in the marketing of securities of other
issuers, although the Fund may, acting alone or in syndicates or groups, if
determined by the Trust's Board of Trustees, purchase or otherwise acquire
securities of other issuers for investment, either from the issuers or from
persons in a control relationship with the issuers or from underwriters of
such securities."
For the reasons set forth below, the Trustees propose to amend the policy to
read as follows. The policy of the High Income Fund would be:
"not to underwrite or participate in the marketing of securities of other
issuers, except (a) the Fund may, acting alone or in a syndicate or group,
purchase or otherwise acquire securities of other issuers for investment,
either from the issuers or from persons in a control relationship with the
issuers or from underwriters of such securities; and (b) to the extent that,
in connection with the disposition of the Fund's securities, the Fund may be
a selling shareholder in an offering or deemed to be an underwriter under
certain federal securities laws."
The reasons for the change relate primarily to the disposition of portfolio
securities acquired by the Fund. From time to time, the Fund may invest in
securities which have not been registered under the federal securities law.
Opportunities can arise to sell or dispose of such securities by participating
in a public offering under which such securities could be sold directly or
indirectly as registered securities. For example, the Fund could piggy-back on a
registration of a public offering of securities by the issuer, that is, the Fund
could be a so-called selling shareholder in a registered offering by the issuer
and other selling shareholders. Under those circumstances, the Fund could be
deemed, under the relevant laws, to be an underwriter, which is not the kind of
underwriting that the current policy has been interpreted as precluding. The
current provisions were only intended to preclude investment banking or
brokerage activities where the initial purpose is to effect a public
distribution of securities from the issuer to the public through one or more
closely planned and connected transactions. The proposed change would make clear
that the Fund can, for example, be a selling shareholder in an issuer's public
offering. If the proposal is adopted, no material change in investment practice
is currently anticipated.
The Trustees, including the Trustees who are not interested persons,
recommend a vote FOR approval of this proposal. If the proposal is not approved
by the shareholders, the Fund's present investment policy will remain in effect.
PROPOSAL 8
(FOR BOTH FUNDS) TO AMEND THE MASTER TRUST AGREEMENT TO
PERMIT THE TRUSTEES TO REORGANIZE, MERGE OR
LIQUIDATE A FUND WITHOUT PRIOR SHAREHOLDER APPROVAL
The Trust is organized as a Massachusetts business trust. One of the
advantages of operating a mutual fund as a business trust, rather than as a
corporation, is the substantial operational flexibility available to the
trustees. The trustees of a business trust are permitted to take a variety of
actions, without prior shareholder approval, that are beyond common practice for
directors of a typical corporation. As a result, the trustees of a business
trust are able to react quickly on behalf of shareholders to changes in
competitive and regulatory conditions, without incurring the costs of a
shareholder meeting.
The particular actions that may be taken by the Trustees of the Trust without
a shareholder meeting are determined by the terms of the Trust's First Amended
and Restated Master Trust Agreement, as amended (the "Master Trust Agreement").
Currently, the Master Trust Agreement provides that shareholder approval is
required to reorganize, merge or liquidate a Fund except in certain very limited
circumstances. Shareholder approval for these actions is not required, however,
by the 1940 Act or by the laws of Massachusetts applicable to business trusts.
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The Board of Trustees believes that, in most circumstances, it is not in the
best interests of shareholders to require a meeting of shareholders to
reorganize, merge or liquidate a Fund. For example, a Fund may have insufficient
assets to invest effectively or high expense levels because of operational
needs. In such a case, the Trustees may determine that it would be in the best
interests of shareholders of the Fund to merge the Fund with another mutual fund
that has similar investment objectives or policies, which could have the effect
of reducing the per share expenses of each Fund or otherwise benefit
shareholders. The process of obtaining shareholder approval for such a
transaction, however, may make it difficult to complete the transaction and, in
general, will substantially increase the costs of the transaction for
shareholders. The Trustees believe that it would be in the best interests of
shareholders to permit consummation of such a transaction without incurring the
expenses associated with holding a meeting of shareholders.
The Trustees would exercise the authority in a reasonable manner. Any action
by the Trustees would be subject to compliance with any laws that may be
applicable. While, as noted, the 1940 Act does not require shareholder approval
for these actions, the Funds would comply with any other indirect requirements
of the 1940 Act that would become applicable. If circumstances warranted, the
Trustees could determine to elicit viewpoints from shareholders prior to any
action or conduct a formal proxy solicitation even though not required. In all
cases, shareholders would receive notice prior to completion of any transaction.
The Trustees do not have any present plans to use the new authority.
Approval of this proposal requires the affirmative vote of a majority of the
shares of the Trust voting at the Meeting, provided a quorum is present. If this
proposal is approved, the last sentence of Article IV, Section 4.2(d) of the
Master Trust Agreement would be amended as follows (material to be added is
underlined, material to be deleted is in brackets):
"The liquidation of any particular Sub-Trust or class thereof may be
authorized by vote of a majority of the Trustees then in office without the
-----------
approval of shareholders of such Sub-Trust [subject to the approval of a
- ------------------------------------------
majority of the outstanding voting Shares of that Sub-Trust or class, as defined
in the 1940 Act]."
In addition, Article VII, Section 7.2 of the Master Trust Agreement would be
deleted and replaced in its entirety with the following:
"Section 7.2 Reorganization. The Trust, or any one or more Sub-Trusts, may,
either as the successor, survivor, or non-survivor, (1) consolidate or merge
with one or more other trusts, sub-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 consolidated or merged trust,
sub-trust, partnership, limited liability company, association or corporation
under the laws of which any one of the constituent entities is organized, with
the Trust or Sub-Trust to be the survivor or non-survivor of such consolidation
or merger or (2) transfer a substantial portion of its assets to one or more
other trusts, sub-trusts, partnerships, limited liability companies,
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, sub-trusts, partnerships, limited liability companies, associations or
corporations transfer a substantial portion of its assets to it, any such
consolidation, merger or transfer to be upon such terms and conditions as are
specified in an agreement and plan of reorganization authorized and approved by
the Trustees and entered into by the Trust, or one or more Sub-Trusts, as the
case may be, in connection therewith. Any such consolidation, merger or transfer
may be authorized by vote of a majority of the Trustees then in office without
the approval of shareholders of any Sub-Trust."
The Board of Trustees unanimously recommends that shareholders vote FOR
approval of this proposal.
PROPOSAL 9
(FOR BOTH FUNDS) TO AMEND THE MASTER TRUST AGREEMENT TO
ELIMINATE SPECIFIED TIME PERMITTED BETWEEN THE
RECORD DATE AND ANY SHAREHOLDERS MEETING
The Master Trust Agreement currently provides that the Trustees may fix a
date not more than 60 days prior to the date of any meeting of shareholders as
the date of record for the determination of shareholders entitled to vote at
such meeting. As a result, proxy statements, which are required to be delivered
to record date shareholders, may not be mailed to shareholders more than 60 days
prior to a meeting. The Board of Trustees believes that it would be in the best
interest of the Funds to be able to distribute proxy statements and begin to
solicit votes more than 60 days prior to a shareholders meeting.
15
<PAGE>
Increasingly, shares of mutual funds are held of record by brokerage firms,
financial institutions or retirement plan trustees, ("financial intermediaries")
with the financial intermediary identifying in its own records the beneficial
owner of the shares. Proxy solicitations are distributed first to the financial
intermediary which in turn may forward proxy materials to the beneficial owners
of shares. The process of distributing proxy materials has become increasingly
time consuming and the period of time available to beneficial owners to return
proxies has correspondingly decreased. Although the funds have been able to
achieve quorums, the need has grown in the industry to use interim reminder
mailings and special solicitation efforts, such as telephone calls to large
record holders, in order to obtain requisite quorums.
The Trustees believe that adopting an earlier record date and commencing a
shareholder solicitation further in advance of a meeting would in many cases
help avoid this result by providing shareholders with additional time in which
to consider shareholder proposals. The proposed amendment would grant the
Trustees discretion to fix a record date as of a reasonable date prior to any
meeting of shareholders, compared with the current provision in the Master Trust
Agreement which does not allow for a record date to be fixed more than 60 days
prior to a meeting.
Approval of proposal 9 requires the affirmative vote of a majority of the
shares of the Trust voting at the Meeting, provided a quorum is present. If
proposal 9 is approved, Article V, Section 5.3 of the Master Trust Agreement
would be deleted and replaced in its entirety with the following:
"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 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.
The Board of Trustees unanimously recommends that shareholders vote FOR
approval of this proposal.
VOTES REQUIRED FOR APPROVAL OF PROPOSALS 2 THROUGH 9
Approval of each of proposals 2 (including proposals 2a, 2b and 2c) through
Proposal 7 requires the affirmative vote of a majority of the outstanding voting
securities of the relevant Fund as defined in the 1940 Act. Under the 1940 Act,
the vote of a majority of the outstanding voting shares means the vote of the
lesser of (a) 67% or more of the voting shares present at the meeting if the
holders of more than 50% of the outstanding voting shares are present or
represented by proxy or (b) more than 50% of the outstanding voting shares.
Approval of proposals 8 and 9 requires the affirmative vote of a majority of
the shares voted at the meeting, provided a quorum is present; that is, more
than 50% of the shares voted if the holders of more than 50% of the shares
entitled to vote are present or represented by proxy.
OTHER MATTERS TO COME BEFORE THE MEETING
The Trustees do not intend to present any other business at the Meeting, nor
are they aware that any shareholder intends to do so. If however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying proxy will vote thereon in accordance with their judgment.
NO ANNUAL MEETINGS OF SHAREHOLDERS
There will be no annual or further special meetings of shareholders of the
Trust unless required by applicable law or called by the Trustees in their
discretion. In accordance with the 1940 Act, or under the Trust's Master Trust
Agreement, as amended, any Trustee may be removed (i) by a 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
16
<PAGE>
shall become effective; or (ii) by a vote of shareholders holding not less than
two-thirds of the shares of the Trust then outstanding, cast in person or by
proxy at a meeting called for the purpose. Shareholders holding 10% or more of
the shares of the Trust then outstanding can require that the Trustees call a
meeting of shareholders for the purpose of voting on the removal of one or more
Trustees. In addition, if ten or more shareholders who have been such for at
least six months and who hold in the aggregate shares with a net asset value of
at least $25,000 or at least 1% of the outstanding Trust shares, inform the
Trustees that they wish to communicate with other shareholders, the Trustees
will either give such shareholders access to the shareholder list or inform them
of the cost involved if the Trust forwards material to shareholders on their
behalf. If the Trustees object to mailing such materials, they must inform the
Securities and Exchange Commission and thereafter comply with the requirements
of the 1940 Act.
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a subsequent shareholder meeting should send their written proposals to the
Secretary of the Trust, One Financial Center, Boston, Massachusetts 02111.
Shareholder proposals should be received in a reasonable time before the
solicitation is made.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE FILL IN, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS NECESSARY IF IT IS MAILED IN THE UNITED STATES.
May , 1996
Date of Proxy Statement
17
<PAGE>
[STATE STREET RESEARCH HIGH INCOME FUND
STATE STREET RESEARCH MANAGED ASSETS]
a series of
State Street Research Income Trust
PROXY
Special Meeting of Shareholders - ___________________, 1996
The undersigned hereby appoints Ralph F. Verni, Francis J. McNamara, III and
Darman A. Wing, and each of them, as proxies with full power of substitution to
act for and vote on behalf of the undersigned all shares of [State Street
Research High Income Fund and State Street Research Managed Assets], a portfolio
series of State Street Research Income Trust, which the undersigned would be
entitled to vote if personally present at the Special Meeting of Shareholders to
be held at the principal offices of the Trust, One Financial Center, 31st Floor,
Boston, Massachusetts 02111, at 4 p.m. on ______________________, 1996, or at
any adjournments thereof, on the following items as set forth in the Notice of
Special Meeting of Shareholders and the accompanying Proxy Statement.
If a choice is specified for a proposal, this proxy will be voted as
indicated. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
IF NO CHOICES ARE SPECIFIED FOR ANY PROPOSALS, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS. In their discretion the proxies are authorized to vote upon such
other business as may properly come before the Meeting. The Board of Trustees
recommends a vote FOR all proposals.
The undersigned acknowledges receipt of the Notice of Special Meeting of
Shareholders and the accompanying Proxy Statement dated _________________, 1996.
PLEASE INDICATE ANY CHANGE OF ADDRESS BELOW. This proxy may be revoked at any
time prior to the exercise of the powers conferred thereby.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- -------------------------------------------------------------------------------
SEE REVERSE SIDE
- -------------------------------------------------------------------------------
<PAGE>
_____
1. Election of Trustees. ( ) FOR all nominees listed
below (except as noted in space
provided)
_____ WITHHOLD authority to
( ) vote for all nominees
listed
To withhold authority to vote for any individual nominee, write that nominee's
name in the following space _____________________
________________________________________________________________.
Nominees: Thomas L. Phillips, Toby Rosenblatt,
Ralph F. Verni
2. To reclassify the following investment policies from fundamental
policies to nonfundamental policies:
a. (For both Funds) Policy regarding investments in securities of
companies with less than three (3) years' continuous operation;
_____ _____ _____
( ) For ( ) Against ( ) Abstain
b. (For both Funds) Policy regarding investments in illiquid securities;
and
_____ _____ _____
( ) For ( ) Against ( ) Abstain
c. (For High Income Fund only) Policy regarding arbitrage and warrants.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
3. (For both Funds) To amend each Fund's fundamental policy regarding
investments in commodities and commodity contracts.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
4. (For High Income Fund only) To amend the Fund's fundamental policy on
lending to permit securities lending.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
5. (For both Funds) To amend each Fund's fundamental policies regarding
diversification of investments.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
6. (For both Funds) To amend each Fund's fundamental policy regarding
industry concentration.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
7. (For High Income Fund only) To amend the Fund's fundamental policy
regarding participation in underwritings.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
8. (For both Funds) To amend the Master Trust Agreement to permit the
Trustees to reorganize, merge or liquidate a fund without prior
shareholder approval.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
9. (For both Funds) To amend the Master Trust Agreement to eliminate
specified time permitted between the record date and any shareholders
meeting.
_____ _____ _____
( ) For ( ) Against ( ) Abstain
YES NO
_ _
I plan to attend the meeting: | | | |
IT IS IMPORTANT THAT THIS PROXY BE
SIGNED AND RETURNED IN THE ENCLOSED
ENVELOPE.
NOTE: Please date and sign exactly as name or
names appear hereon and return in the Signature: _________________
enclosed envelope, which requires no Date: ______________________
postage. When signing as attorney, Signature: _________________
executor, trustee, guardian or officer of Date: ______________________
a corporation, please give title as such.
<PAGE>
REQUEST TO RECONSIDER
PRIOR [ABSTENTION] ["AGAINST" VOTE]
(date)
To Shareholders of the
[Name of Fund]
Recently we solicited your proxy vote on a number of important proposals.
Because you returned a proxy form which indicated that you [abstained from
voting on] [voted "against"] one or more proposals that are still open, we are
contacting you again to ask that you reconsider your [abstention] [vote
"against"] and vote in favor of the proposals. The Fund is very close to the
requisite vote to approve the proposals and your vote may make a difference. The
meeting has been adjourned to allow more time to obtain votes.
The open proposals are proposal(s) [proposal number(s)]. Each of the
proposal(s) would help the Fund achieve its investment objective by giving it
more investment flexibility in the future to adapt to changing market
environments, and to invest in a broader range of investment vehicles, [and help
the Trustees govern the Trust], all in the best interests of shareholders. The
proposals are described in more detail in the Proxy Statement. Please call
1-800-562-0032 if you need another copy of the Proxy Statement.
Please indicate your vote, sign and return promptly the enclosed Supplemental
Proxy form in the special accompanying envelope which will expedite processing
and does not require any postage from you. (If your return envelope is for
Federal Express, call for free pick-up at 1-800-238-5355.)
You may receive a telephone call urging you to return your Supplemental Proxy
form. If you have any questions, please contact State Street Research
Shareholder Services toll-free nationwide at 1-800-562-0032 between 8 a.m. and 6
p.m. Eastern Standard Time.
Thank you.
State Street Research
Shareholder Services
Note:
In come cases, persons with the same tax identification number and mailing
address may have received proxy solicitation materials for different
accounts in one package.
<PAGE>
[Name of Fund]
a series of
[Name of Trust]
SUPPLEMENTAL PROXY
Special Meeting of Shareholders
The undersigned hereby submits this Supplemental Proxy to make the below
indicated changes to the [vote(s)] [abstention(s)] previously submitted by the
undersigned in connection with a Special Meeting of Shareholders as described in
a related Proxy Statement dated .
If a choice is specified for a proposal, this proxy will be voted as indicated.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. IF NO
CHOICES ARE SPECIFIED FOR ANY PROPOSALS, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS. The Board of Trustees recommends a vote FOR all proposals.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
PLEASE DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
FOR AGAINST ABSTAIN
[recite proposal(s) from original
proxy card] [ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
IT IS IMPORTANT THAT THIS PROXY BE
SIGNED AND RETURNED IN THE ENCLOSED
ENVELOPE.
DATE: _____________________ , 1996.
NOTE: Please date and sign exactly as name
or names appear hereon and return in the
enclosed envelope, which requires no postage.
When signing as attorney, executor, trustee,
guardian or officer of a corporation, please
give title as such.
____________________________________________
____________________________________________
Signature(s) if held jointly (Title(s),
if required)
