[State Street Research Logo]
State Street Research
Capital Appreciation Fund
Semiannual Report
December 31, 1995
[Graphic of man walking up hill at night, towards the stars]
What's Inside
Investment Update:
About the Fund,
economy and markets
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Investment Update
Investment Environment
The Economy
(bullet) Economic growth has been moderate, and inflation remains low.
(bullet) Consumer debt levels are higher, and consumers are spending less.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996.
The Markets
(bullet) Stocks performed well in the second half of 1995, although they did
not maintain the pace they set earlier in the year. The Standard & Poor's 500
Index provided a total return of +14.43% for the six months ended December
31, 1995.(1)
(bullet) Bonds also continued their outstanding performance. Bond prices
rose, as yields on 30-year U.S. Treasury bonds fell dramatically in the
fourth quarter, finishing the year at 5.94% on December 31, 1995.
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1995, Capital Appreciation
Fund's Class A shares provided a total return of +8.73% (does not reflect
sales charge).(2) The average total return for 173 funds in Lipper Analytical
Services' Capital Appreciation Funds category was +11.87% (does not reflect
sales charge).
(bullet) We decreased our position in technology stocks substantially,
eliminating semiconductor stocks altogether. Most of our technology holdings
are in software and services companies.
(bullet) In retail as well as textile and apparel, we had holdings in
companies that specialized and had achieved a substantial market share.
Current strategy
(bullet) Our largest holdings are in the retail, computer software and
services, and textile and apparel industries.
(bullet) We are positioning the portfolio to be slightly less growth-stock
oriented and also adding more special situations, value stocks, and foreign
stocks.
(bullet) We generally select stocks with a "bottom-up" approach--evaluating
the growth prospects of individual companies.
1 The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely traded
common stocks and is a commonly used measure of U.S. stock performance. The
index is unmanaged and does not take sales charges into account. Direct
investment in the index is not possible; results are for illustrative purposes
only.
2 +8.30% for Class B shares; +8.91% for Class C shares; +8.29% for Class D
shares.
3 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. Performance for a class includes periods
prior to the adoption of class designations in 1993. "C" shares, offered without
a sales charge, are available only to certain employee benefit plans and large
institutions. Performance for "B" and "D" shares prior to class designations in
1993 reflects annual 12b-1 fees of .50% and performance thereafter reflects
12b-1 fees of 1%, which will reduce subsequent performance.
4 Performance reflects up to maximum 4.5% front-end or 5% contingent deferred
sales charges.
5 Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Fund Information (all data are for periods ended December 31, 1995)
SEC Average Annual Compound
Rates of Return
(at maximum applicable sales charge)(3,4)
<TABLE>
<CAPTION>
Life of Fund
(since 8/25/86) 5 Years 1 Year
<S> <C> <C> <C>
Class A +15.88% +23.35% +25.26%
Class B +16.26% +23.93% +25.28%
Class C +16.59% +24.76% +31.53%
Class D +16.28% +24.14% +29.08%
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)(3,5)
<TABLE>
<CAPTION>
Life of Fund
(since 8/25/86) 5 Years 1 Year
<S> <C> <C> <C>
Class A +316.07% +198.98% +31.16%
Class B +309.62% +194.35% +30.28%
Class C +320.56% +202.21% +31.53%
Class D +310.22% +194.78% +30.08%
</TABLE>
Top 10 Stock Positions
(by percentage of net assets)
1 Sunglass Hut Specialty retailer 3.3%
2 HFS Hotel reservation service 3.1%
3 General Electric Electrical equipment leader 2.9%
4 Gucci Apparel designer/manufacturer 2.4%
5 Philip Morris Tobacco giant 2.4%
6 Tommy Hilfiger Apparel designer/manufacturer 2.2%
7 Allstate Insurance giant 2.2%
8 Northwest Airlines Airline 2.2%
9 Halliburton Oil service firm 2.1%
10 Cephalon Pharmaceuticals company 2.1%
These securities represent an aggregate of 24.9% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
Top 5 Equity Industries
(by percentage of net assets)
[Tabular representation of horizontal bar graph]
Retail 13.1%
Computer software
and service 9.1%
Textile and apparel 7.9%
Hotel and restaurant 6.2%
Insurance 5.6%
Total: 41.9%
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Investment Portfolio
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ----------------------------------------- --------- -----------
<S> <C> <C>
Common Stocks 93.8%
Basic Industries 9.1%
Chemical 1.0%
Union Carbide Corp. 156,900 $ 5,883,750
---------
Diversified 1.0%
Loews Corp. 72,100 5,650,838
---------
Electrical Equipment 2.9%
General Electric Co. 237,900 17,128,800
---------
Machinery 4.2%
AGCO Corp. 161,200 8,221,200
Case Corp. 66,700 3,051,525
Elsag Bailey Financing Trust Cv. Pfd.* 81,000 4,060,125
Elsag Bailey Processing Automation NV* 84,700 2,276,313
UCAR International, Inc.* 94,800 3,199,500
Waters Corp.* 64,100 1,169,825
Wolverine Tube, Inc.* 83,200 3,120,000
---------
25,098,488
---------
Total Basic Industries 53,761,876
---------
Consumer Cyclical 36.3%
Airline 3.3%
Continental Airlines, Inc. 50,100 2,179,350
Continental Airlines Financing Trust
Pfd.+ 81,000 4,455,000
Northwest Airlines Corp. Cl. A* 254,200 12,964,200
---------
19,598,550
---------
Automotive 0.5%
Danaher Corp. 71,200 2,260,600
Team Rental Group, Inc. Cl. A* 51,400 436,900
---------
2,697,500
---------
Hotel & Restaurant 6.2%
Extended Stay America, Inc.* 12,800 352,000
HFS, Inc.* 225,600 18,442,800
Lone Star Steakhouse & Saloon, Inc.* 115,100 4,416,963
Papa John's International, Inc.* 64,100 2,640,120
Rainforest Cafe, Inc.* 24,700 744,088
Renaissance Hotel Group NV 129,800 3,309,900
Trump Hotels & Casino Resorts, Inc.* 321,800 6,918,700
---------
36,824,571
---------
Recreation 5.3%
American Radio Systems Corp.* 37,900 1,061,200
Ascent Entertainment Group, Inc.* 105,800 1,666,350
Brunswick Corp. 390,400 9,369,600
Walt Disney Co. 95,100 5,610,900
Evergreen Media Corp. Cl. A 80,700 2,582,400
Infinity Broadcasting Corp. Cl. A* 173,200 6,451,700
Recreation (cont'd)
Oakley, Inc. 110,700 $ 3,763,800
Silver King Communications, Inc.* 24,300 844,425
---------
31,350,375
---------
Retail Trade 13.1%
BT Office Products International, Inc.* 193,900 3,102,400
Baby Superstores, Inc.* 102,700 5,853,900
Corporate Express, Inc.* 327,200 9,856,900
Department 56, Inc.* 32,900 1,262,538
General Nutrition Centers, Inc. 203,400 4,678,200
Gucci Group NV* 362,100 14,076,638
Industrie Natuzzi SPA ADR 97,000 4,401,375
Just For Feet, Inc.* 264,750 9,464,813
Office Depot, Inc.* 254,900 5,034,275
Sunglass Hut International, Inc.* 832,200 19,764,750
---------
77,495,789
---------
Textile & Apparel 7.9%
Adidas ADR+* 29,500 774,670
Authentic Fitness Corp. 45,000 933,750
Fila Holdings SPA ADR* 170,500 7,757,750
Men's Wearhouse, Inc.* 339,450 8,740,838
Nautica Enterprises, Inc.* 193,200 8,452,500
Tommy Hilfiger Corp.* 314,100 13,309,988
Wolverine World Wide, Inc. 224,550 7,073,325
---------
47,042,821
---------
Total Consumer Cyclical 215,009,606
---------
Consumer Staple 13.3%
Business Service 5.4%
Fritz Companies, Inc.* 42,500 3,527,500
HBO & Co. 143,100 10,965,038
Medaphis Corp.* 284,900 10,541,300
Republic Waste Industries, Inc.* 185,500 6,701,188
---------
31,735,026
---------
Drug 2.6%
Cephalon, Inc.* 300,400 12,241,300
Magainin Pharmaceuticals, Inc.* 112,400 1,475,250
Matrix Pharmaceuticals, Inc.* 55,000 1,031,250
Myriad Genetics, Inc.* 20,300 662,288
---------
15,410,088
---------
Food & Beverage 2.0%
Boston Beer Company, Inc. Cl. A* 5,600 133,000
Coca-Cola Enterprises, Inc. 199,800 5,344,650
Pete's Brewing Co.* 11,900 166,600
Starbucks Corp.* 293,000 6,153,000
---------
11,797,250
The accompanying notes are an integral part of the financial statements
2
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Investment Portfolio (cont'd)
Value
Shares (Note 1)
- ----------------------------------------- --------- -----------
Hospital Supply 0.0%
National Surgery Centers, Inc.* 6,600 $ 151,800
---------
Personal Care 0.1%
De Rigo SPA ADR* 15,600 354,900
Estee Lauder Companies, Inc.* 8,600 299,925
---------
654,825
---------
Printing & Publishing 0.8%
CKS Group, Inc.* 5,700 222,300
Gannett Company, Inc. 77,500 4,756,563
---------
4,978,863
---------
Tobacco 2.4%
Philip Morris Companies, Inc. 154,500 13,982,250
---------
Total Consumer Staple 78,710,102
---------
Energy 6.5%
Oil 3.9%
Exxon Corp. 69,700 5,584,713
Royal Dutch Petroleum Co. 62,800 8,862,650
Texaco, Inc. 111,400 8,744,900
---------
23,192,263
---------
Oil Service 2.6%
Halliburton Co. 244,200 12,362,625
McDermott International, Inc. 141,800 3,119,600
---------
15,482,225
---------
Total Energy 38,674,488
---------
Finance 7.1%
Financial Service 1.5%
Countrywide Credit Industries, Inc. 280,100 6,092,175
Green Tree Financial Corp. 112,200 2,959,275
---------
9,051,450
---------
Insurance 5.6%
Allstate Corp. 315,300 12,966,713
Amerin Corp.* 13,400 358,450
W.R. Berkley Corp. 34,500 1,854,375
Equitable Companies, Inc. 90,800 2,179,200
Prudential Reinsurance Holdings, Inc. 152,200 3,557,675
Travelers Group, Inc. 190,500 11,977,688
---------
32,894,101
---------
Total Finance 41,945,551
---------
Science & Technology 19.0%
Aerospace 3.9%
Boeing Co. 149,600 $ 11,724,900
United Technologies Corp. 122,400 11,612,700
---------
23,337,600
---------
Computer Software & Service 9.1%
ADFlex Solutions, Inc.* 41,000 1,096,750
Advent Software, Inc.* 6,700 118,925
Bay Networks, Inc.* 133,400 5,486,075
Cabletron Systems, Inc.* 35,800 2,899,800
Checkfree Corp.* 20,500 440,750
Citrix Systems, Inc.* 5,500 178,750
Computer Associates International, Inc. 84,500 4,805,938
GT Interactive Software Corp.* 111,400 1,559,600
Geoworks* 166,200 3,157,800
IDX Systems Corp.* 8,300 288,425
Informix Corp.* 104,900 3,147,000
Logic Works, Inc.* 17,000 212,500
MetaTools, Inc.* 8,700 226,200
Objective Systems Integrators, Inc.* 10,500 574,875
Parametric Technology Corp.* 108,100 7,188,650
PeopleSoft, Inc.* 165,600 7,120,800
Plaintree Systems, Inc.* 63,300 379,800
Platinum Technology, Inc.* 206,000 3,785,250
Softkey International, Inc. 269,700 6,236,813
Sync Research, Inc.* 26,600 1,203,650
7th Level, Inc.* 123,900 1,734,600
Triple P NV 145,600 1,456,000
Visio Corp.* 7,500 211,875
Visioneer, Inc.* 7,000 155,750
Westell Technologies, Inc.* 11,100 278,888
---------
53,945,464
---------
Electronic Components 1.0%
Sanmina Holdings, Inc.* 115,800 6,007,125
---------
Electronic Equipment 0.6%
Exide Electronics Group, Inc.* 15,000 221,250
Glenayre Technologies, Inc.* 52,700 3,280,575
---------
3,501,825
---------
Office Equipment 4.4%
Digital Equipment Corp.* 187,800 12,042,675
Gateway 2000, Inc.* 108,100 2,648,450
Network General Corp.* 26,000 867,750
Stormedia, Inc.* 70,800 2,584,200
Sun Microsystems, Inc.* 175,200 7,993,500
---------
26,136,575
---------
Total Science & Technology 112,928,589
---------
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ------------------------------------------- ------ -----------
<S> <C> <C>
Utility 2.5%
Telephone 2.5%
Mobile Media Corp. Cl. A* 27,600 $ 614,100
Newbridge Networks Corp.* 270,800 11,204,350
Total Access Communications Public Co.
Ltd.* 405,000 2,632,500
Wireless One, Inc.* 19,200 316,800
---------
14,767,750
---------
Total Utility 14,767,750
---------
Total Common Stocks (Cost $457,915,660) 555,797,962
---------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
- ------------------------------ --------- -------- -------------
<S> <C> <C> <C>
CONVERTIBLE BONDS 0.8%
Starbuck's Corp. Cv. Sub.
Deb., 4.25% $4,410,000 11/1/2002 4,674,600
-----------
Total Convertible Bonds (Cost $4,410,287) 4,674,600
-----------
Commercial Paper 2.7%
Ford Motor Credit Co., 5.90% 9,383,000 1/2/1996 9,383,000
Ford Motor Credit Co., 5.80% 5,425,000 1/2/1996 5,425,000
Household Finance Corp., 5.50% 871,000 1/4/1996 871,000
-----------
Total Commercial Paper (Cost $15,679,000) 15,679,000
-----------
Total Investments (Cost $478,004,947)--97.3% 576,151,562
Cash and Other Assets, Less Liabilities--2.7% 16,283,641
-----------
Net Assets--100.0% $592,435,203
===========
Federal Income Tax Information:
At December 31, 1995, the net unrealized appreciation
of investments based on cost for Federal income tax
purposes of $478,004,947 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $111,007,382
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (12,860,767)
-----------
$ 98,146,615
===========
</TABLE>
* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
+ Security restricted in accordance with Rule 144A under the Securities Act
of 1933, which allows for the resale of such securities among certain
qualified institutional buyers. The total cost and market value of Rule 144A
securities owned at December 31, 1995 were $4,761,157 and $5,229,670 (0.88%
of net assets), respectively.
Statement of Assets and Liabilities
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $478,004,947) (Note 1) $576,151,562
Cash 567
Receivable for securities sold 29,441,985
Receivable for fund shares sold 1,948,103
Dividends and interest receivable 416,427
Other assets 14,805
-----------
607,973,449
Liabilities
Payable for securities purchased 13,742,825
Payable for fund shares redeemed 802,694
Accrued transfer agent and shareholder services
(Note 2) 492,075
Accrued management fee (Note 2) 351,207
Accrued trustees' fees (Note 2) 6,994
Other accrued expenses 142,451
-----------
15,538,246
-----------
Net Assets $592,435,203
===========
Net Assets consist of:
Unrealized appreciation of investments $ 98,146,615
Accumulated net realized gain 4,301,110
Shares of beneficial interest (Note 5) 489,987,478
-----------
$592,435,203
===========
Net Asset Value and redemption price per share of
Class A shares ($332,355,610 / 29,688,267 shares
of beneficial interest) $11.19
===========
Maximum Offering Price per share of Class A shares
($11.19 / .955) $11.72
===========
Net Asset Value and offering price per share of
Class B shares ($124,937,290 / 11,363,280 shares
of beneficial interest) $10.99
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($130,213,670
/ 11,486,855 shares of beneficial interest) $11.34
===========
Net Asset Value and offering price per share of
Class D shares ($4,928,633 / 447,267 shares of
beneficial interest)* $11.02
===========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements
4
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Statement of Operations
For the six months ended December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $13,270 $ 1,084,417
Interest 503,867
-----------
1,588,284
Expenses
Management fee (Note 2) 2,176,673
Transfer agent and shareholder services (Note 2) 960,201
Reports to shareholders 99,833
Custodian fee 85,100
Registration fees 50,038
Service fee--Class A (Note 4) 417,170
Distribution and service fees--Class B (Note 4) 573,761
Distribution and service fees--Class D (Note 4) 23,836
Trustees' fees (Note 2) 17,289
Audit Fee 8,254
Legal fees 1,155
Miscellaneous 11,525
-----------
4,424,835
-----------
Net investment loss (2,836,551)
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments (Notes 1 and 3) 56,513,303
Net unrealized depreciation of investments (11,323,544)
-----------
Net gain on investments 45,189,759
-----------
Net increase in net assets resulting from operations $ 42,353,208
===========
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended
December 31,
1995 Year ended
(Unaudited) June 30, 1995
- ---------------------------- ------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (2,836,551) $ (3,720,060)
Net realized gain on
investments* 56,513,303 12,149,840
Net unrealized appreciation
(depreciation) of
investments (11,323,544) 111,117,329
----------- ------------
Net increase resulting from
operations 42,353,208 119,547,109
----------- ------------
Distributions from net realized gains:
Class A (34,354,957) (11,280,742)
Class B (12,774,830) (2,571,808)
Class C (13,218,451) (3,080,510)
Class D (513,791) (112,508)
----------- ------------
(60,862,029) (17,045,568)
----------- ------------
Net increase from fund share
transactions (Note 5) 110,649,190 52,338,022
----------- ------------
Total increase in net assets 92,140,369 154,839,563
Net Assets
Beginning of period 500,294,834 345,455,271
----------- ------------
End of period $592,435,203 $500,294,834
=========== ============
* Net realized gain for
Federal income tax
purposes (Note 1) $ 56,495,526 $ 12,055,176
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Notes to Unaudited Financial Statements
December 31, 1995
Note 1
State Street Research Capital Appreciation Fund, formerly MetLife-State
Street Research Capital Appreciation Fund (the "Fund"), is a series of State
Street Research Equity Trust, formerly MetLife-State Street Equity Trust (the
"Trust"), which was organized as a Massachusetts business trust in March,
1986 and is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company. The Trust commenced operations
in August, 1986. The Trust consists presently of four separate funds: State
Street Research Capital Appreciation Fund, State Street Research Equity
Investment Fund, State Street Research Equity Income Fund and State Street
Research Global Resources Fund.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and an annual service fee of 0.25% of
average daily net assets. Investments of $1 million or more in Class A
shares, which are not subject to any initial sales charge, are subject to a
1.00% contingent deferred sales charge if redeemed within one year of
purchase. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years after the issuance of the Class B shares. Class C shares are only
offered to certain employee benefit plans and large institutions. No sales
charge is imposed at the time of purchase or redemption of Class C shares.
Class C shares do not pay any distribution or service fees. Class D shares
are subject to a contingent deferred sales charge of 1.00% on any shares
redeemed within one year of their purchase. Class D shares also pay annual
distribution and service fees of 1.00%. The Fund's expenses are borne
pro-rata by each class, except that each class bears expenses, and has
exclusive voting rights with respect to provisions of the Plan of
Distribution, related specifically to that class. The Trustees declare
separate dividends on each class of shares.
The following significant accounting 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. Investment Valuation
Values for listed securities reflect final sales 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 closing prices
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. Short- term securities
maturing within sixty days are valued at amortized cost. Other securities, if
any, are valued at their fair value as determined in accordance with
established methods consistently applied.
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. Net Investment Income
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Trust.
D. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested quarterly. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
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 an agreement under which the Adviser
earns monthly fees at an annual rate of 0.75% of the Fund's average daily net
assets. In consideration of these fees, the Adviser furnishes the Fund with
management, investment advisory, statistical and research facilities and
services. The Adviser also pays all salaries, rent and certain other expenses
of management. During the six months ended December 31, 1995, the fees
pursuant to such agreement amounted to $2,176,673.
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. In addition, Metropolitan receives a fee for maintenance
of the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through
or under which shares of the Fund may be purchased. During the six months
ended December 31, 1995, the amount of such shareholder servicing and account
maintenance expenses was $299,060.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $17,289 during the six months ended December 31, 1995.
6
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Notes (cont'd)
Note 3
For the six months ended December 31, 1995, purchases and sales of
securities, exclusive of short-term obligations, aggregated $767,538,529 and
$742,368,234, respectively.
Note 4
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance of shareholder accounts, to
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the six months ended December 31,
1995, fees pursuant to such plan amounted to $417,170, $573,761 and $23,836
for Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $98,276 and $676,139, respectively on sales of Class A shares of
the Fund during the six months ended December 31, 1995, and that MetLife
Securities, Inc. earned commissions aggregating $885,832 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $243,347 and $1,315 on redemptions of Class B and Class D shares,
respectively, during the same period.
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
At December 31, 1995, the Distributor owned 7,172 Class A shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1995 Year ended
(Unaudited) June 30, 1995
------------------------ --------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 4,159,443 $ 51,873,743 6,331,406 $ 61,983,784
Issued upon reinvestment of distributions from
net realized gains 3,044,864 33,510,032 1,183,334 10,907,541
Shares repurchased (3,250,138) (40,777,694) (7,177,882) (70,964,079)
-------- -------- -------- ----------
Net increase 3,954,169 $ 44,606,081 336,858 $ 1,927,246
======== ======== ======== ==========
Class B Shares Amount Shares Amount
- ------------------------------------------------- -------- -------- -------- ----------
Shares sold 3,159,746 $ 38,959,488 4,108,923 $ 40,145,257
Issued upon reinvestment of distributions from
net realized gains 1,156,534 12,481,051 276,437 2,529,368
Shares repurchased (1,133,895) (14,093,989) (1,642,379) (16,155,301)
-------- -------- -------- ----------
Net increase 3,182,385 $ 37,346,550 2,742,981 $ 26,519,324
======== ======== ======== ==========
Class C Shares Amount Shares Amount
- ------------------------------------------------- -------- -------- -------- ----------
Shares sold 2,683,610 $ 34,084,596 4,381,871 $ 43,450,467
Issued upon reinvestment of distributions from
net realized gains 1,187,189 13,211,114 324,761 3,010,459
Shares repurchased (1,551,854) (19,664,887) (2,379,730) (23,674,364)
-------- -------- -------- ----------
Net increase 2,318,945 $ 27,630,823 2,326,902 $ 22,786,562
======== ======== ======== ==========
Class D Shares Amount Shares Amount
- ------------------------------------------------- -------- -------- -------- ----------
Shares sold 179,121 $ 2,257,915 228,040 $ 2,226,133
Issued upon reinvestment of distributions from
net realized gains 42,662 435,033 11,168 102,407
Shares repurchased (130,543) (1,627,212) (125,783) (1,223,650)
-------- -------- -------- ----------
Net increase 91,240 $ 1,065,736 113,425 $ 1,104,890
======== ======== ======== ==========
</TABLE>
7
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Financial Highlights
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Six
months
ended
December
31, Year ended June 30
1995 ---------------------------------------------------------------
(Unaudited)** 1995** 1994 1993 1992 1991
---------------------------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.52 $ 9.11 $ 10.42 $ 8.33 $ 6.55 $ 6.70
Net investment loss* (.05) (.09) (.04) (.05) (.05) (.01)
Net realized and unrealized
gain (loss) on investments 1.01 2.95 .09 2.81 1.83 (.12)
Dividend from net investment
income -- -- -- -- -- (.01)
Dividend in excess of net
investment income -- -- -- -- -- (.01)
Distributions from net
realized gains (1.29) (.45) (1.36) (.67) -- --
------- ------- ------- ------- ------- ---------
Net asset value, end of
period $ 11.19 $ 11.52 $ 9.11 $ 10.42 $ 8.33 $ 6.55
======= ======= ======= ======= ======= =========
Total return 8.73%+++ 32.56%+ (0.28)%+ 35.78%+ 27.03%+ (1.69)%+
Net assets at end of period
(000s) $332,356 $296,471 $231,356 $183,886 $116,687 $62,898
Ratio of operating expenses
to average net assets* 1.42%++ 1.55% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment loss
to average net assets* (0.88)%++ (0.87)% (0.81)% (0.63)% (0.71)% (0.13)%
Portfolio turnover rate 132.37% 217.28% 147.73% 135.17% 128.10% 245.55%
*Reflects voluntary
assumption of fees or
expenses per share in each
period -- $ .03 $ .02 $ .01 $ .01 $ .03
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------
June 1, 1993
(Commencement
Six months of
ended Share Class
December 31, Year ended June 30 Designations)
1995 ----------------------------- to
(Unaudited)** 1995** 1994 June 30, 1993
- -------------------------------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.38 $ 9.05 $ 10.41 $ 10.44
Net investment loss* (.10) (.15) (.06) (.00)
Net realized and unrealized gain
(loss) on investments 1.00 2.93 .06 (.03)
Dividend from net investment income -- -- -- --
Dividend in excess of net investment
income -- -- -- --
Distributions from net realized gains (1.29) (.45) (1.36) --
----------- ----------- ----------- -------------
Net asset value, end of period $ 10.99 $ 11.38 $ 9.05 $ 10.41
=========== =========== =========== =============
Total return 8.30%+++ 31.86%+ (0.83)%+ (0.29)%+
Net assets at end of period (000s) $124,937 $93,088 $49,236 $ 2,790
Ratio of operating expenses to average
net assets* 2.17%++ 2.15% 2.00% 2.00%++
Ratio of net investment loss to
average net assets* (1.62)%++ (1.47)% (1.29)% (0.95)%++
Portfolio turnover rate 132.37% 217.28% 147.73% 135.17%
*Reflects voluntary assumption of fees
or expenses per share in each period -- $ .02 $ .02 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------
June 1, 1993
Six months (Commencement
ended of
December Share Class
31, Year ended June 30 Designations)
1995 ------------------ to
(Unaudited)** 1995** 1994 June 30, 1993
- ----------------------------------------- ---------- ------- ------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.64 $ 9.16 $ 10.42 $ 10.44
Net investment income (loss)* (.04) (.05) (.02) .00
Net realized and unrealized gain (loss)
on investments 1.03 2.98 .12 (.02)
Distributions from net realized gains (1.29) (.45) (1.36) --
-------- ----- ---- ----------
Net asset value, end of period $ 11.34 $ 11.64 $ 9.16 $ 10.42
======== ===== ==== ==========
Total return 8.91%+++ 33.06%+ 0.25%+ (0.19)%+++
Net assets at end of period (000s) $130,214 $106,675 $62,662 $37,826
Ratio of operating expenses to average
net assets* 1.17%++ 1.15% 1.00% 1.00%++
Ratio of net investment income (loss) to
average net assets* (0.63)%++ (0.46)% (0.30)% 0.50%++
Portfolio turnover rate 132.37% 217.28% 147.73% 135.17%
*Reflects voluntary assumption of fees or
expenses per share in each period -- $ .02 $ .02 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class D
----------------------------------------------------
June 1, 1993
(Commencement
Six months of
ended Share Class
December 31, Year ended June 30 Designations)
1995 ----------------- to
(Unaudited)** 1995** 1994 June 30, 1993
- ----------------------------------------- ------------ ------ ------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.41 $ 9.07 $10.41 $10.44
Net investment income (loss)* (.10) (.15) (.07) (.01)
Net realized and unrealized gain (loss)
on investments 1.00 2.94 .09 (.02)
Distributions from net realized gains (1.29) (.45) (1.36) --
---------- ---- ----- -----------
Net asset value, end of period $ 11.02 $11.41 $ 9.07 $10.41
========== ==== ===== ===========
Total return 8.29%+++ 31.79%+ (0.61)%+ (0.29)%+++
Net assets at end of period (000s) $ 4,929 $4,061 $2,201 $ 623
Ratio of operating expenses to average
net assets* 2.17%++ 2.15% 2.00% 2.00%++
Ratio of net investment income (loss) to
average net assets* (1.62)%++ (1.47)% (1.29)% (1.10)%++
Portfolio turnover rate 132.37% 217.28% 147.73% 135.17%
*Reflects voluntary assumption of fees or
expenses per share in each period -- $ .02 $ .02 $ .00
</TABLE>
** Per-share figures have been calculated using the average shares method.
++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower in the period June 1, 1993 (commencement of share class
designations) to June 30, 1993 if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
8
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Report on Special Meeting of Shareholders
A Special Meeting of Shareholders of the State Street Research Capital
Appreciation Fund ("Fund"), along with shareholders of other series of State
Street Research Equity Trust ("Meeting"), was convened on October 20, 1995, and
continued thereafter. The results of the Meeting are set forth below.
Votes (millions)
----------------
For Withheld
--- ---------
1. The following persons were elected as
Trustees:
Edward M. Lamount 29.4 1.9
Robert A. Lawrence 29.4 1.9
Dean O. Morton 29.4 1.9
Thomas L. Phillips 29.4 1.9
Toby Rosenblatt 29.4 1.9
Michael S. Scott Morton 29.4 1.9
Ralph F. Verni 29.4 1.9
Jeptha H. Wade 29.4 1.9
<TABLE>
<CAPTION>
Votes (millions)
-----------------------
For Against Abstain
---- ---- ------
<S> <C> <C> <C>
2. The Fund's following investments in securities were reclassified from
fundamental policies to nonfundamental policies:
a. The policy regarding investments in securities of companies with less than
three (3) years' continuous operation; 17.4 2.1 2.8
b. The policy regarding investments in illiquid securities; 16.7 2.4 3.3
3. The Fund's fundamental policy regarding investing in commodities and commodity
contracts was amended. 16.9 2.2 3.3
4. The Fund's fundamental policy on lending was amended to clarify the
permissibility of securities lending. 17.3 1.9 3.2
5. The Master Trust Agreement was amended to permit the Trustees to recognize,
merge or liquidate a fund without prior shareholder approval. 21.1 6.4 3.8
6. The Master Trust Agreement was amended to eliminate specified time permitted
between the record date and any shareholders meeting. 22.8 4.5 4.1
</TABLE>
9
<PAGE>
STATE STREET RESEARCH CAPITAL APPRECIATION FUND
Fund Information, Officers and Trustees of State Street Research Equity
Trust
Fund Information
State Street Research
Capital Appreciation Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Bartlett R. Geer
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
10
<PAGE>
State Street Research Capital Appreciation Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research Logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
CONTROL NUMBER: 2967-960221(0397)SSR-LD
Cover Illustration by Dorothy Cullinan CA-818C-296
<PAGE>
[State Street Logo]
State Street Research
Equity Investment Fund
Semiannual Report
December 31, 1995
What's Inside
Investment Update:
About the Fund,
economy and markets
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
State Street Research Equity Investment Fund
Investment Update
Investment Environment
The Economy
(bullet) Economic growth has been moderate, and inflation remains low.
(bullet) Consumer debt levels are higher, and consumers are spending less.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996.
The Markets
(bullet) Stocks performed well in the second half of 1995, although they did
not maintain the pace they set earlier in the year. The Standard & Poor's 500
Index provided a total return of +14.43% for the six months ended December
31, 1995.(1)
(bullet) Bonds also continued their outstanding performance. Bond prices
rose, as yields on 30-year U.S. Treasury bonds fell dramatically in the
fourth quarter, finishing the year at 5.94% on December 31, 1995.
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1995, Equity Investment Fund's
Class A shares provided a total return of +13.66% (does not reflect sales
charge).(2) The average total return for 490 funds in Lipper Analytical
Services' Growth & Income Funds category was +11.96% (does not reflect sales
charge).
(bullet) Fund performance was helped by an overweighting in technology. We
sold a portion of our technology holdings in September, when the rally was
peaking. We took profits and, after a market correction lowered prices in the
sector, replaced some of our technology holdings.
(bullet) We augmented our position in chemical stocks, especially companies
producing agricultural chemicals.
Current strategy
(bullet) Our largest holdings are in the chemical, office equipment, and
retail industries.
(bullet) We are targeting stocks that could have above-average earnings
growth, even in a slower economy.
(bullet) We have added convertible securities to increase the Fund's income.
(bullet) We continue to emphasize a quality portfolio and stock selection
based on fundamentals.
1The 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 performance. The index is unmanaged and does not take sales
charges into account. Direct investment in the index is not possible; results
are for illustrative purposes only.
2+13.26% for Class B shares; +13.81% for
Class C shares; +13.27% for Class D shares.
3All returns represent past
performance, which is no guarantee of future results. The investment return
and principal value of an investment made in the Fund will fluctuate and
shares, when redeemed, may be worth more or less than their original cost.
All returns assume reinvestment of capital gain distributions and income
dividends. Performance for a class includes periods prior to the adoption of
class designations in 1993. "C" shares, offered without a sales charge, are
available only to certain employee benefit plans and large institutions.
Performance for "B" and "D" shares prior to class designations in 1993
reflects annual 12b-1 fees of .50% and performance thereafter reflects 12b-1
fees of 1%, which will reduce subsequent performance.
4Performance reflects
up to maximum 4.5% front- end sales charges or 5% contingent deferred sales
charges.
5Cumulative total returns are not annualized, and do not reflect
sales charges, which, if reflected, would reduce performance.
Fund Information (all data are for periods ended December 31, 1995)
SEC Average Annual Compound
Rates of Return
(at maximum applicable sales charge)3,4
<TABLE>
<CAPTION>
Life of Fund
(since 8/25/86) 5 years 1 year
- -------- ---------------------------- ---------------------------- -----------------------------
<S> <C> <C> <C>
Class A +11.13%/+10.72% +15.19%/+14.87% +27.93%/+27.38%
- -------- -------------------------- -------------------------- ----------------------------
Class B +11.49%/+11.09% +15.68%/+15.35% +28.10%/+27.52%
- -------- -------------------------- -------------------------- ----------------------------
Class C +11.79%/+11.37% +16.49%/+16.13% +34.39%/+33.82%
- -------- -------------------------- -------------------------- ----------------------------
Class D +11.48%/+11.06% +15.88%/+15.52% +32.12%/+31.55%
- -------- -------------------------- -------------------------- ----------------------------
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)3,5
<TABLE>
<CAPTION>
Life of Fund
(since 8/25/86) 5 years 1 year
- -------- ---------------------------- ---------------------------- -----------------------------
<S> <C> <C> <C>
Class A +181.03%/+171.60% +112.33%/+109.38% +33.95%/+33.39%
- -------- -------------------------- -------------------------- ----------------------------
Class B +176.77%/+167.49% +109.12%/+106.22% +33.10%/+32.52%
- -------- -------------------------- -------------------------- ----------------------------
Class C +183.91%/+174.00% +114.51%/+111.23% +34.39%/+33.82%
- -------- -------------------------- -------------------------- ----------------------------
Class D +176.58%/+166.90% +108.97%/+105.76% +33.12%/+32.55%
- -------- -------------------------- -------------------------- ----------------------------
</TABLE>
Top 10 Stock Positions
(by percentage of net assets)
1 General Electric Electrical equipment leader 2.6%
2 Monsanto Chemical company 2.4%
3 Philip Morris Tobacco giant 2.2%
4 Home Depot Home supplies retailer 2.1%
5 Boeing Aircraft manufacturer 2.1%
6 Ciba-Geigy Chemical giant 2.1%
7 Abbott Labs Medical equipment supplier 2.0%
8 AT&T Telecommunications giant 2.0%
9 Interpublic Group Global advertising company 2.0%
10 Procter & Gamble Consumer products giant 2.0%
These securities represent an aggregate of 21.5% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Top 5 Equity Industries
(by percentage of net assets)
Chemicals 7.6%
Office equipment 7.2%
Retail 6.3%
Oil 5.9%
Telephone 5.6%
Total: 32.6%
<PAGE>
State Street Research Equity Investment Fund
Investment Portfolio
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- --------------------------------------- ----- -------------
<S> <C> <C>
Common Stocks 94.1%
Basic Industries 14.6%
Chemical 7.6%
Ciba-Geigy AG ADR* 48,800 $ 2,147,200
E.I. du Pont de Nemours & Co. 27,000 1,886,625
Monsanto Co. 19,800 2,425,500
Rohm & Haas Co. 20,100 1,293,938
-----------
7,753,263
-----------
Electrical Equipment 2.6%
General Electric Co. 37,600 2,707,200
-----------
Forest Product 0.4%
Champion International Corp. 9,600 403,200
-----------
Machinery 3.0%
Caterpillar, Inc. 7,400 434,750
Fluor Corp. 19,300 1,273,800
Pall Corp. 50,900 1,367,937
-----------
3,076,487
-----------
Metal & Mining 1.0%
Nucor Corp. 18,100 1,033,963
-----------
Total Basic Industries 14,974,113
-----------
Consumer Cyclical 15.1%
Automotive 1.0%
Chrysler Corp. 10,000 553,750
Magna International, Inc. Cl. A 11,000 475,750
-----------
1,029,500
-----------
Building 0.9%
Owens-Corning Fiberglas Corp.* 21,400 960,325
-----------
Hotel & Restaurant 2.2%
Darden Restaurants, Inc.* 39,900 473,813
Harrah's Entertainment, Inc.* 44,250 1,073,062
Mirage Resorts, Inc.* 20,400 703,800
-----------
2,250,675
-----------
Recreation 5.1%
Capital Cities/ABC, Inc. 9,000 1,110,375
Comcast Corp. Cl. A 10,600 186,825
Comcast Corp. Cl. A Sp. 32,100 583,819
Walt Disney Co. 22,800 1,345,200
Mattel, Inc. 43,431 1,335,503
Tele-Communications, Inc. Cl. A* 23,900 475,013
Tele-Communications, Inc. Liberty Media
Group Cl. A* 5,975 160,578
-----------
5,197,313
-----------
Retail Trade 5.9%
Home Depot, Inc. 44,900 $ 2,149,588
Office Depot, Inc.* 15,900 314,025
J.C. Penney Company, Inc. 24,400 1,162,050
Tandy Corp. 8,800 365,200
Toys "R" Us, Inc.* 24,000 522,000
Wal-Mart Stores, Inc. 67,500 1,510,312
-----------
6,023,175
-----------
Total Consumer Cyclical 15,460,988
-----------
Consumer Staple 20.8%
Business Service 2.0%
Interpublic Group of Companies, Inc. 47,200 2,047,300
-----------
Drug 5.5%
American Home Products Corp. 10,800 1,047,600
Eli Lilly & Co. 14,472 814,050
Merck & Co. 29,800 1,959,350
Pfizer, Inc. 29,200 1,839,600
-----------
5,660,600
-----------
Food & Beverage 3.0%
Anheuser-Busch, Inc. 29,000 1,939,375
PepsiCo., Inc. 19,100 1,067,213
-----------
3,006,588
-----------
Hospital Supply 5.6%
Abbott Laboratories 50,000 2,087,500
Columbia/HCA Healthcare Corp.* 18,000 913,500
Johnson & Johnson 13,000 1,113,125
United Healthcare Corp. 24,500 1,604,750
-----------
5,718,875
-----------
Personal Care 2.5%
Gillette Co. 10,800 562,950
Procter & Gamble Co. 24,500 2,033,500
-----------
2,596,450
-----------
Tobacco 2.2%
Philip Morris Companies, Inc. 24,600 2,226,300
-----------
Total Consumer Staple 21,256,113
-----------
Energy 7.4%
Oil 5.9%
Exxon Corp. 23,300 1,866,912
Louisiana Land & Exploration Co. 12,300 527,363
Phillips Petroleum Co. 41,700 1,423,012
Royal Dutch Petroleum Co. 10,600 1,495,925
Total S.A. Cl. B ADR 22,429 762,586
-----------
6,075,798
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
State Street Research Equity Investment Fund
Investment Portfolio (cont'd)
Value
Shares (Note 1)
- --------------------------------------- ----- -------------
Oil Service 1.5%
Schlumberger Ltd. 22,500 $ 1,558,125
-----------
Total Energy 7,633,923
-----------
Finance 9.8%
Bank 3.0%
BankAmerica Corp. 18,200 1,178,450
Citicorp 28,300 1,903,175
-----------
3,081,625
-----------
Financial Service 3.3%
Federal Home Loan Mortgage Corp. 17,200 1,436,200
Federal National Mortgage Association 15,400 1,911,525
-----------
3,347,725
-----------
Insurance 3.5%
Ace Ltd. 19,100 759,225
American International Group, Inc. 5,650 522,625
American Re Corp.* 20,100 821,588
General Re Corp. 2,700 418,500
Travelers, Inc. 16,700 1,050,012
-----------
3,571,950
-----------
Total Finance 10,001,300
-----------
Science & Technology 19.8%
Aerospace 3.6%
Boeing Co. 27,400 2,147,475
Raytheon Co. 33,000 1,559,250
-----------
3,706,725
-----------
Computer Software & Service 5.0%
Cisco Systems, Inc.* 13,500 1,007,438
First Data Corp. 22,900 1,531,437
General Motors Corp. Cl. E 20,300 1,055,600
Microsoft Corp.* 17,400 1,526,850
-----------
5,121,325
-----------
Electronic Components 0.9%
Intel Corp.* 15,100 856,925
-----------
Electronic Equipment 3.1%
L.M. Ericsson Telephone Co. Cl. B ADR* 54,040 1,053,780
General Motors Corp. Cl. H 22,700 1,115,137
Perkin-Elmer Corp. 26,800 1,011,700
-----------
3,180,617
-----------
Office Equipment 7.2%
Diebold, Inc. 23,100 $ 1,279,162
Digital Equipment Corp.* 9,000 577,125
Hewlett-Packard Co. 20,700 1,733,625
International Business Machines Corp. 20,400 1,871,700
Xerox Corp. 13,900 1,904,300
-----------
7,365,912
-----------
Total Science & Technology 20,231,504
-----------
Utility 6.6%
Electric 1.0%
FPL Group, Inc. 21,800 1,010,975
-----------
Telephone 5.6%
AT&T Corp. 31,700 2,052,575
AirTouch Communications, Inc.* 47,700 1,347,525
SBC Communications, Inc. 35,000 2,012,500
Tele Danmark Cl. B ADR* 12,700 350,837
-----------
5,763,437
-----------
Total Utility 6,774,412
-----------
Total Common Stocks (Cost $73,350,140) 96,332,353
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
- ------------------------------- --------- --------- ------------
<S> <C> <C> <C>
CONVERTIBLE BONDS 2.2%
Equitable Company, Inc. Cv.
Sub. Deb., 6.125% $1,191,000 12/15/2024 1,339,875
Price Co. Cv. Sub. Deb., 5.50% 440,000 2/28/2012 416,900
Time Warner, Inc. Cv. Sub.
Deb., 8.75% 498,950 1/10/2015 517,661
----------
Total Convertible Bonds (Cost $2,148,982) 2,274,436
----------
COMMERCIAL PAPER 3.9%
Beneficial Corp., 5.92% 357,000 1/02/1996 357,000
Ford Motor Credit Co., 5.80% 117,000 1/02/1996 117,000
Ford Motor Credit Co., 5.77% 3,315,000 1/04/1996 3,315,000
Ford Motor Credit Co., 5.60% 141,000 1/05/1996 141,000
----------
Total Commercial Paper (Cost $3,930,000) 3,930,000
----------
Total Investments (Cost $79,429,122)--100.2% 102,536,789
Cash and Other Assets, Less Liabilities--(0.2)% (179,041)
----------
Net Assets--100.0% $102,357,748
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
State Street Research Equity Investment Fund
<TABLE>
<CAPTION>
<S> <C>
Federal Income Tax Information:
At December 31, 1995, the net unrealized
appreciation of investments based on
cost for Federal income tax purposes
of $79,491,308 was as follows:
Aggregate gross unrealized appreciation
for all investments in which there is
an excess of value over tax cost. $23,391,019
Aggregate gross unrealized depreciation
for all investments in which there is
an excess of tax cost over value. (345,538)
----------
$23,045,481
==========
</TABLE>
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership
of foreign securities.
Statement of Assets and Liabilities
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $79,429,122) (Note 1) $102,536,789
Cash 89
Dividends and interest receivable 163,251
Receivable for fund shares sold 87,610
Receivable for securities sold 85,712
Receivable from Distributor (Note 3) 5,474
Other assets 9,865
-----------
102,888,790
Liabilities
Payable for securities purchased 235,729
Payable for fund shares redeemed 122,473
Accrued transfer agent and shareholder services
(Note 2) 61,011
Accrued management fee (Note 2) 52,530
Accrued distribution and service fees (Note 5) 13,746
Accrued trustees' fees (Note 2) 3,527
Other accrued expenses 42,026
-----------
531,042
-----------
Net Assets $102,357,748
===========
Net Assets consist of:
Undistributed net investment income $ 89,964
Unrealized appreciation of investments 23,107,667
Accumulated net realized gain 784,296
Shares of beneficial interest 78,375,821
-----------
$102,357,748
===========
Net Asset Value and redemption price per share of
Class A shares ($34,696,519 / 2,239,490 shares
of beneficial interest) $15.49
===========
Maximum Offering Price per share of Class A shares
($15.49 / .955) $16.22
===========
Net Asset Value and offering price per share of
Class B shares ($8,483,363 / 552,039 shares of
beneficial interest)* $15.37
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($58,370,142 /
3,771,129 shares of beneficial interest) $15.48
===========
Net Asset Value and offering price per share of
Class D shares ($807,724 / 52,585 shares of
beneficial interest)* $15.36
===========
- -------------------------------------------------------------------
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
State Street Research Equity Investment Fund
Statement of Operations
For the six months ended December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $4,071 $ 755,618
Interest 233,338
---------
988,956
Expenses
Management fee (Note 2) 308,552
Transfer agent and shareholder services (Note 2) 148,750
Custodian fee 45,205
Registration fees 28,446
Audit fee 16,416
Reports to shareholders 13,219
Trustees' fees (Note 2) 6,430
Service fee--Class A (Note 5) 41,411
Distribution and service fees--Class B (Note 5) 36,126
Distribution and service fees--Class D (Note 5) 3,801
Miscellaneous 4,330
---------
652,686
Expenses borne by the Distributor (Note 3) (96,652)
---------
556,034
---------
Net investment income 432,922
---------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 4) 3,270,628
Net unrealized appreciation of investments 8,438,442
---------
Net gain on investments 11,709,070
---------
Net increase in net assets resulting from operations $12,141,992
=========
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended
December 31,
1995 Year ended
(Unaudited) June 30, 1995
- ------------------------------------- ------------- --------------
Increase (Decrease) in Net Assets
<S> <C> <C>
Operations:
Net investment income $ 432,922 $ 626,508
Net realized gain on investments* 3,270,628 1,524,460
Net unrealized appreciation of
investments 8,438,442 11,229,657
----------- ------------
Net increase resulting from
operations 12,141,992 13,380,625
----------- ------------
Dividends from net investment income:
Class A (152,926) (111,024)
Class C (325,145) (535,596)
----------- ------------
(478,071) (646,620)
----------- ------------
Distributions from net realized
gains:
Class A (1,371,017) (778,560)
Class B (314,986) (112,505)
Class C (2,286,228) (859,567)
Class D (31,975) (15,072)
----------- ------------
(4,004,206) (1,765,704)
----------- ------------
Net increase from fund share
transactions (Note 6) 6,389,029 9,948,321
----------- ------------
Total increase in net assets 14,048,744 20,916,622
Net Assets
Beginning of period 88,309,004 67,392,382
----------- ------------
End of period (including
undistributed net investment income
of $89,964 and $135,113,
respectively) $102,357,748 $88,309,004
=========== ============
* Net realized gain for Federal
income tax purposes (Note 1) $ 3,262,688 $ 1,567,315
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
State Street Research Equity Investment Fund
Notes to Unaudited Financial Statements
December 31, 1995
Note 1
State Street Research Equity Investment Fund, formerly MetLife-State
Street Research Equity Investment Fund (the "Fund") is a series of State
Street Research Equity Trust, formerly MetLife-State Street Equity Trust (the
"Trust"), which was organized as a Massachusetts business trust in March,
1986 and is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company. The Trust commenced operations
in August, 1986. The Trust consists presently of four separate funds: State
Street Research Equity Investment Fund, State Street Research Capital
Appreciation Fund, State Street Research Equity Income Fund and State Street
Research Global Resources Fund.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and an annual service fee of 0.25% of
average daily net assets. Investments of $1 million or more in Class A
shares, which are not subject to any initial sales charge, are subject to a
1.00% contingent deferred sales charge if redeemed within one year of
purchase. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years after the issuance of the Class B shares. Class C shares are only
offered to certain employee benefit plans and large institutions. No sales
charge is imposed at the time of purchase or redemption of Class C shares.
Class C shares do not pay any distribution or service fees. Class D shares
are subject to a contingent deferred sales charge of 1.00% on any shares
redeemed within one year of their purchase. Class D shares also pay annual
distribution and service fees of 1.00%. The Fund's expenses are borne
pro-rata by each class, except that each class bears expenses, and has
exclusive voting rights with respect to provisions of the Plan of
Distribution, related specifically to that class. The Trustees declare
separate dividends on each class of shares.
The following significant policies are consistently followed by the Fund
in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. Investment Valuation
Values for listed securities reflect final sales 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 closing prices
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. Short-term securities
maturing within sixty days are valued at amortized cost. Other securities, if
any, are valued at their fair value as determined in accordance with
established methods consistently applied.
B. Security Transactions
Security transactions are accounted for on the trade date (date the order
to buy or sell is executed). Realized gains or losses are reported on the
basis of identified cost of securities delivered.
C. Net Investment Income
Interest income is accrued daily as earned. Dividend income is accrued on
the ex-dividend date. The Fund is charged for expenses directly attributable
to it, while indirect expenses are allocated among all funds in the Trust.
D. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested quarterly. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gain distributions are determined in
accordance with Federal income tax regulations which may differ from
generally accepted accounting principles.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
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 an agreement under which the Adviser
earns monthly fees at an annual rate of 0.65% of the Fund's average daily net
assets. In consideration of these fees, the Adviser furnishes the Fund with
management, investment advisory, statistical and research facilities and
services. The Adviser also pays all salaries, rent and certain other expenses
of management. During the six months ended December 31, 1995, the fees
pursuant to such agreement amounted to $308,552.
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. In addition, Metropolitan receives a fee for maintenance
of the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through
or under which shares of the Fund may be purchased. During the six months
ended December 31, 1995, the amount of such shareholder servicing and account
maintenance expenses was $85,412.
The fees of the Trustees not currently affiliated with the Adviser
amounted to $6,430 during the six months ended December 31, 1995.
Note 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1995, the amount of such
expenses assumed by the Distributor and its affiliates was $96,652.
6
<PAGE>
State Street Research Equity Investment Fund
Notes (cont'd)
Note 4
For the six months ended December 31, 1995, purchases and sales of
securities, exclusive of short-term obligations, aggregated $18,909,259 and
$13,565,251, respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance of shareholder accounts, to
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the six months ended December 31,
1995, fees pursuant to such plan amounted to $41,411, $36,126 and $3,801 for
Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities,
Inc., a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $7,671 and $76,955, respectively on sales of Class A shares of
the Fund during the six months ended December 31, 1995, and that MetLife
Securities, Inc. earned commissions aggregating $53,167 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $37,021 and $56 on redemptions of Class B and Class D shares, respectively
during the same period.
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At December 31, 1995,
Metropolitan owned 42,732 Class D shares of the Fund and the Distributor
owned 3,603 Class A shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1995 Year ended
(Unaudited) June 30, 1995
---------------------- -------------------------
Class A Shares Amount Shares Amount
- -------------------------------------- -------- ---------- -------- -------------
<S> <C> <C> <C> <C>
Shares sold 166,336 $ 2,493,455 348,182 $ 4,474,313
Issued upon reinvestment of:
Distributions from net realized
gains 89,924 1,331,731 60,210 746,003
Dividends from net investment income 9,696 146,492 7,369 105,228
Shares repurchased (209,756) (3,150,838) (630,567) (8,019,412)
------ -------- ------ -----------
Net increase (decrease) 56,200 $ 820,840 (214,806) $ (2,693,868)
====== ======== ====== ===========
Class B Shares Amount Shares Amount
- -------------------------------------- ------ -------- ------ -----------
Shares sold 166,371 $ 2,472,597 147,104 $ 1,868,350
Issued upon reinvestment of
distributions from net realized
gains 20,913 307,750 9,061 111,547
Shares repurchased (54,346) (822,941) (63,119) (791,085)
------ -------- ------ -----------
Net increase 132,938 $ 1,957,406 93,046 $ 1,188,812
====== ======== ====== ===========
Class C Shares Amount Shares Amount
- -------------------------------------- ------ -------- ------ -----------
Shares sold 681,346 $10,309,492 1,589,454 $ 20,294,474
Issued upon reinvestment of:
Distributions from net realized
gains 154,432 2,286,226 69,042 859,569
Dividends from net investment income 21,542 325,116 24,036 342,993
Shares repurchased (626,493) (9,356,557) (784,881) (10,102,310)
------ -------- ------ -----------
Net increase 230,827 $ 3,564,277 897,651 $ 11,394,726
====== ======== ====== ===========
Class D Shares Amount Shares Amount
- -------------------------------------- ------ -------- ------ -----------
Shares sold 1,713 $ 25,424 5,152 $ 64,522
Issued upon reinvestment of
distributions from net realized
gains 2,081 30,561 1,172 14,429
Shares repurchased (618) (9,479) (1,525) (20,300)
------ -------- ------ -----------
Net increase 3,176 $ 46,506 4,799 $ 58,651
====== ======== ====== ===========
</TABLE>
7
<PAGE>
State Street Research Equity Investment Fund
Financial Highlights
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------------------- -------
Six Six
months months
ended ended
December December
31, 31,
1995 Year ended June 30 1995
---------------------------------------------------- -------
(Unaudited)** 1995** 1994 1993 1992 1991 (Unaudited)**
--------------------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $14.28 $12.44 $14.52 $13.16 $11.19 $12.15 $14.16
Net investment income
(loss)* .06 .08 .01 .04 .05 .14 .00
Net realized and unrealized
gain (loss) on investments 1.85 2.14 .18 2.48 1.99 (.89) 1.84
Dividends from net
investment income (.07) (.05) -- (.04) (.07) (.19) --
Distributions from net
realized gains (.63) (.33) (2.27) (1.12) -- (.02) (.63)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $15.49 $14.28 $12.44 $14.52 $13.16 $11.19 $15.37
====== ====== ====== ====== ====== ====== ======
Total return 13.66%+++ 18.34%+ 0.93%+ 20.37%+ 18.27%+ (6.10)%+ 13.26%+++
Net assets at end of period
(000s) $34,697 $31,174 $29,821 $26,933 $48,473 $35,733 $8,483
Ratio of operating expenses
to average net assets* 1.25%++ 1.42% 1.50% 1.50% 1.50% 1.50% 2.00%++
Ratio of net investment
income (loss) to average
net assets* 0.82%++ 0.64% 0.08% 0.23% 0.43% 1.29% 0.06%++
Portfolio turnover rate 15.03% 47.93% 62.93% 92.35% 81.89% 72.03% 15.03%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .02 $ .06 $ .04 $ .02 $ .02 $ .03 $ .02
</TABLE>
<TABLE>
<CAPTION>
June 1,
1993
(Commencement
of
Share
Class
Year ended Designations)
June 30 to
------------------ -------
June
30,
1995** 1994 1993
--------------------------- ------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning
of period $12.36 $14.51 $14.78
Net investment income
(loss)* .01 (.02) .00
Net realized and unrealized
gain (loss) on investments 2.12 .14 (.26)
Dividends from net
investment income -- -- (.01)
Distributions from net
realized gains (.33) (2.27) --
------ ------ ------
Net asset value, end of
period $14.16 $12.36 $14.51
====== ====== ======
Total return 17.70%+ 0.37%+ (1.77)%+++
Net assets at end of period
(000s) $5,933 $4,029 $ 663
Ratio of operating expenses
to average net assets* 2.00% 2.00% 2.00%++
Ratio of net investment
income (loss) to average
net assets* 0.08% (0.39)% 0.03%++
Portfolio turnover rate 47.93% 62.93% 92.35%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .06 $ .04 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------
June 1,
1993
(Commencement
of Share
Six months Class
ended Designations)
December Year ended June 30 to
31, 1995 -------------------------- June 30,
(Unaudited)** 1995** 1994 1993
--------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $14.27 $12.48 $14.51 $14.78
Net investment income
(loss)* .08 .14 .07 (.00)
Net realized and unrealized
gain (loss) on investments 1.85 2.15 .17 (.25)
Dividends from net
investment income (.09) (.17) -- (.02)
Distributions from net
realized gains (.63) (.33) (2.27) --
--------- --------- --------- ---------
Net asset value, end of
period $15.48 $14.27 $12.48 $14.51
========= ========= ========= =========
Total return 13.81%+++ 18.83%+ 1.41%+ (1.69)%+++
Net assets at end of period
(000s) $58,370 $50,503 $32,991 $18,796
Ratio of operating expenses
to
average net assets* 1.00%++ 1.00% 1.00% 1.00%++
Ratio of net investment
income (loss) to
average net assets* 1.10%++ 1.09% 0.59% (0.39)%++
Portfolio turnover rate 15.03% 47.93% 62.93% 92.35%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .02 $ .06 $ .06 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class D
---------------------------------------------------------
June 1, 1993
(Commencement
Six months of Share
ended Class
December Year ended June 30 Designations)
31, 1995 to
(Unaudited)** 1995** 1994 June 30, 1993
--------------------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $14.15 $12.36 $14.51 $14.78
Net investment income
(loss)* .00 .01 (.05) .00
Net realized and unrealized
gain (loss) on investments 1.84 2.11 .17 (.26)
Dividends from net
investment income -- -- -- (.01)
Distributions from net
realized gains (.63) (.33) (2.27) --
--------- --------- --------- -----------
Net asset value, end of
period $15.36 $14.15 $12.36 $14.51
========= ========= ========= ===========
Total return 13.27%+++ 17.53%+ 0.45%+ (1.77)%+++
Net assets at end of period
(000s) $ 808 $ 699 $ 551 $ 491
Ratio of operating expenses
to
average net assets* 2.00%++ 2.00% 2.00% 2.00%++
Ratio of net investment
income (loss) to
average net assets* 0.06%++ 0.08% (0.41)% 0.12%++
Portfolio turnover rate 15.03% 47.93% 62.93% 92.35%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .02 $ .06 $ .06 $ .00
</TABLE>
**Per-share figures have been calculated using the average shares method.
++Annualized
+Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
8
<PAGE>
State Street Research Equity Investment Fund
Report on Special Meeting of Shareholders
A Special Meeting of Shareholders of the State Street Research Equity
Investment Fund ("Fund"), along with shareholders of other series of State
Street Research Equity Trust ("Meeting"), was convened on October 20, 1995
and continued thereafter. The results on the proposals are set forth below.
<TABLE>
<CAPTION>
Votes (millions)
----------------
For Withheld
--- ---------
<S> <C> <C>
1. The following persons were elected as
Trustees:
Edward M. Lamont 29.4 1.9
Robert A. Lawrence 29.4 1.9
Dean O. Morton 29.4 1.9
Thomas L. Phillips 29.4 1.9
Toby Rosenblatt 29.4 1.9
Michael S. Scott Morton 29.4 1.9
Ralph F. Verni 29.4 1.9
Jeptha H. Wade 29.4 1.9
</TABLE>
<TABLE>
<CAPTION>
Votes
(millions)
-------------
For Against Abstain
- - ---
<S> <C> <C> <C>
2. The Fund's following investment policies were reclassified from
fundamental policies to nonfundamental policies:
a. The policy regarding investments in securities of companies with
less than three (3) years' continuous operation; * * *
b. The policy regarding investments in illiquid securities. * * *
3. The Fund's fundamental policy regarding investing in commodities and
commodity contracts was amended. * * *
4. The Fund's fundamental policy on lending was amended to clarify the
permissibility of securities lending. 2.3 0.3 0.5
5. The Master Trust Agreement was amended to permit the Trustees to
reorganize, merge or liquidate a fund without prior shareholder
approval. 21.1 6.4 3.8
6. The Master Trust Agreement was amended to eliminate specified time
permitted between the record date and any shareholders meeting. 22.8 4.5 4.1
</TABLE>
*Pending adjournment while shareholder solicitation continues.
9
<PAGE>
State Street Research Equity Investment Fund
Fund Information, Officers and Trustees of State Street Research Equity Trust
Fund Information
State Street Research
Equity Investment Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Officers
Ralph F. Verni
Chairman of the Board,
President and Chief
Executive Officer
Peter C. Bennett
Vice President
Bartlett R. Geer
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board, President, Chief Executive Officer and Director, State
Street Research & Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive Vice President, Chief Operating Officer and
Director, Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of the Board and Chief Executive Officer, Raytheon
Company
Toby Rosenblatt
President, The Glen Ellen Company
Vice President, Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of Management, Sloan School of Management,
Massachusetts Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel, Choate, Hall & Stewart
10
<PAGE>
State Street Research Equity Investment Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
[State Street Logo]
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
CONTROL NUMBER: 2964-960221(0397)SSR-LD
Cover Illustration by Dorothy Cullinan EIV-819C-296
<PAGE>
[cover]
[State Street Logo] State Street Research
State Street Research
Equity Income Fund
Semiannual Report
December 31, 1995
What's Inside
Investment Update:
About the Fund,
economy and markets
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
State Street Research Equity Income Fund
Investment Update
Investment Environment
The Economy
(bullet) Economic growth has been moderate, and inflation remains low.
(bullet) Consumer debt levels are higher, and consumers are spending less.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996.
The Markets
(bullet) Stocks performed well in the second half of 1995, although they did
not maintain the pace they set earlier in the year. The Standard &
Poor's 500 Index provided a total return of +14.43% for the six
months ended December 31, 1995.(1)
(bullet) Bonds also continued their outstanding performance. Bond prices
rose, as yields on 30-year U.S. Treasury bonds fell dramatically in
the fourth quarter, finishing the year at 5.94% on December 31, 1995.
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1995, Equity Income Fund's
Class A shares provided a total return of +11.63% (does not reflect
sales charge).(2) The average total return for 146 funds in Lipper
Analytical Services' Equity Income Funds category was +13.33% (does
not reflect sales charge).
(bullet) We reduced our positions in forest products and some auto equipment
stocks, as we felt that stocks in these industries had reached their
full potential. We also moved some money out of retail stocks, which
had a difficult year.
(bullet) In the chemicals area, we began to target companies poised to
benefit from increased agricultural production.
Current strategy
(bullet) Given the current economy, we are looking for stocks in areas of the
market that haven't received a lot of investment dollars. The Fund
is positioned relatively defensively.
(bullet) Many of our stock holdings are selected using a value approach,
looking for stocks that are relatively cheap or fairly valued and
on course to meet earnings targets.
(bullet) In addition to stocks, nearly 27% of the portfolio is invested in
high-yield bonds, preferred stocks and convertible securities (bonds
or preferred stocks that may be converted to common stock). We
believe this diversified portfolio helps spread risk and also
enhances the Fund's yield.
(1) The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock
performance. The index is unmanaged and does not take sales charges into
account. Direct investment in the index is not possible; results are for
illustrative purposes only.
(2) +11.24% for Class B shares; +11.87% for Class C shares; +11.32% for Class D
shares.
(3) 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. Performance for a class includes periods
prior to the adoption of class designations in 1993. "C" shares, offered
without a sales charge, are available only to certain employee benefit plans
and large institutions. Performance for "B" and "D" shares prior to class
designations in 1993 reflects annual 12b-1 fees of .50% and performance
thereafter reflects 12b-1 fees of 1%, which will reduce subsequent
performance.
(4) Performance reflects up to maximum 4.5% front-end sales charges or 5%
contingent deferred sales charges.
(5) Cumulative total returns are not annualized, and do not reflect sales
charges which, if reflected, would reduce performance.
Fund Information (all data are for periods ended December 31, 1995)
SEC Average Annual Compound
Rates of Return
(at maximum applicable sales charge)(3,4)
<TABLE>
<CAPTION>
- ----------------------------------------------
Life of Fund
(since 5
8/25/86) years 1 year
- ----------------------------------------------
<S> <C> <C> <C>
Class A +10.00% +13.79% +22.94%
- -----------------------------------------------
Class B +10.34% +14.24% +22.72%
- -----------------------------------------------
Class C +10.65% +15.10% +29.13%
- -----------------------------------------------
Class D +10.33% +14.47% +26.82%
- -----------------------------------------------
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)(3,5)
<TABLE>
<CAPTION>
- -----------------------------------------------
Life of Fund
(since
8/25/86) 5 years 1 year
- ------------------------------------------------
<S> <C> <C> <C>
Class A +155.05% +99.72% +28.73%
- ------------------------------------------------
Class B +151.07% +96.90% +27.72%
- ------------------------------------------------
Class C +157.92% +101.97% +29.13%
- ------------------------------------------------
Class D +151.00% +96.55% +27.82%
- ------------------------------------------------
</TABLE>
Top 10 Holdings
(by percentage of net assets)
1 Computervision Computer software firm 5.2%
2 ADT Business service provider 2.4%
3 Granite Broadcasting Broadcasting network 2.4%
4 Boeing Leading aircraft manufacturer 2.3%
5 US Bancorp Regional bank 2.3%
6 Rohm & Haas Chemical company 2.2%
7 Cytec Chemical company 2.2%
8 Atlantic Richfield Oil/chemical company 2.1%
9 Federal Home Loan Mortgage repurchaser 2.1%
10 ENSERCH Natural gas company 1.9%
These securities represent an aggregate of 25.1% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
Asset Allocation
(by percentage of net assets)
[Tabular representation of pie chart]
Common stocks 73%
Bonds 13%
Convertible preferred stocks 7%
Preferred stocks 5%
Convertible bonds 2%
<PAGE>
State Street Research Equity Income Fund
Investment Portfolio
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- --------------------------------------------- ------ -----------
<S> <C> <C>
Common Stocks 73.1%
Basic Industries 14.4%
Chemical 9.1%
Agrium, Inc.* 10,000 $ 450,000
Atlantic Richfield Co. 90,000 2,115,000
Cytec Industries, Inc. 35,000 2,183,125
FMC Corp.* 17,000 1,149,625
Potash Corp. of Saskatchewan, Inc. 15,000 1,063,125
Rohm & Haas Co. 35,000 2,253,125
---------
9,214,000
---------
Diversified 0.7%
Johnson Controls, Inc. 10,000 687,500
---------
Forest Product 0.0%
Crown Vantage, Inc.* 1,000 14,250
---------
Machinery 1.9%
Cincinnati Milacron, Inc. 3,000 78,750
Cooper Industries, Inc.* 50,000 687,500
Sundstrand Corp. 16,000 1,126,000
---------
1,892,250
---------
Metal & Mining 2.7%
Alumax, Inc.* 31,700 970,813
Cyprus Amax Minerals Co. 12,800 334,400
Quanex Corp.* 30,000 581,250
Reynolds Metals, Co. 15,000 849,375
---------
2,735,838
---------
Total Basic Industries 14,543,838
---------
Consumer Cyclical 10.7%
Automotive 3.8%
Exide Corp. 34,000 1,559,750
Federal Mogul Corp. 55,000 1,079,375
Lear Seating Corp.* 40,000 1,160,000
---------
3,799,125
---------
Building 2.2%
Fleetwood Enterprises, Inc. 23,000 592,250
LaFarge Corp. 50,000 937,500
Owens-Corning Fiberglas Corp.* 16,000 718,000
---------
2,247,750
---------
Hotel & Restaurant 0.0%
Motels of America, Inc.+* 500 40,000
---------
Recreation 0.2%
Pyramid Communications, Inc. Cl. B+* 525 26,250
Time Warner Financing Trust 5,000 156,250
---------
182,500
---------
Retail Trade 4.5%
Federated Department Stores, Inc.* 24,100 $ 662,750
Finlay Enterprises, Inc. Cl. A* 667 7,837
Hillenbrand Industries, Inc. 14,000 474,250
May Department Stores Co. 9,000 380,250
Stop & Shop Cos., Inc.* 20,000 462,500
Tandy Corp. 23,500 975,250
Woolworth Corp. 120,000 1,560,000
---------
4,522,837
---------
Total Consumer Cyclical 10,792,212
---------
Consumer Staple 8.5%
Business Service 2.6%
ADT Ltd.* 162,400 2,436,000
PageMart Nationwide, Inc.+* 1,750 16,406
Vestar/LPA Investment Corp.+* 3,125 46,875
Viatel, Inc.+* 27,075 108,300
---------
2,607,581
---------
Drug 0.9%
Merck & Company, Inc. 13,400 881,050
---------
Food & Beverage 3.3%
Coca-Cola Enterprises, Inc. 60,000 1,605,000
Ralcorp Holdings, Inc.* 43,000 1,042,750
Whitman Corp. 30,000 697,500
---------
3,345,250
---------
Printing & Publishing 1.7%
American Greetings Corp. Cl. A 42,000 1,160,250
Dimac Corp.* 4,756 128,412
Knight-Ridder, Inc. 7,000 437,500
---------
1,726,162
---------
Total Consumer Staple 8,560,043
---------
Energy 4.5%
Oil 4.5%
Amerada Hess Corp. 10,000 530,000
Crystal Oil Corp.* 4,200 126,525
Louisiana Land & Exploration Co. 40,000 1,715,000
Phillips Petroleum Co. 12,000 409,500
Tosco Corp. 46,000 1,753,750
---------
4,534,775
---------
Total Energy 4,534,775
---------
The accompanying notes are an integral part of the financial
statements.
2
<PAGE>
Finance 16.3%
Bank 4.1%
Chase Manhattan Corp. 5,000 $ 303,125
Fleet Financial Group, Inc. 25,000 1,018,750
Mellon Bank Corp. 11,000 591,250
U.S. Bancorp 67,839 2,281,086
---------
4,194,211
---------
Financial Service 3.7%
Bear Stearns Co., Inc. 37,900 753,262
Federal Home Loan Mortgage Corp. 25,000 2,087,500
Federal National Mortgage Association 7,000 868,875
---------
3,709,637
---------
Insurance 8.5%
Ace, Ltd. 38,100 1,514,475
AMBAC Industries, Inc. 21,900 1,026,563
American Re Corp.* 39,600 1,618,650
GCR Holdings Ltd.* 45,000 1,012,500
Mid Ocean Ltd.* 50,000 1,856,250
Progressive Corp. 6,200 303,025
Safeco Corp. 36,000 1,242,000
---------
8,573,463
---------
Total Finance 16,477,311
---------
Science & Technology 13.5%
Aerospace 3.1%
Boeing Co. 30,000 2,351,250
Sequa Corp. Cl. A* 25,900 789,950
---------
3,141,200
---------
Computer Software & Service 6.4%
Computervision Corp.* 340,000 5,227,500
Western Digital Corp.* 70,000 1,251,250
---------
6,478,750
---------
Electronic 4.0%
AMP, Inc. 20,000 767,500
Perkin-Elmer Corp. 50,000 1,887,500
Tektronix, Inc. 10,000 491,250
Thomas & Betts Corp. 12,400 914,500
---------
4,060,750
---------
Total Science & Technology 13,680,700
---------
Utility 5.2%
Natural Gas 4.1%
Coastal Corp. 15,000 $ 558,750
ENSERCH Corp. 120,400 1,956,500
Tenneco, Inc. 20,000 992,500
Trans Texas Gas Corp.* 49,100 662,850
---------
4,170,600
---------
Telephone 1.1%
Sprint Corp. 30,000 1,140,000
---------
Total Utility 5,310,600
---------
Total Common Stocks (Cost $58,907,824) 73,899,479
---------
Preferred Stocks & Other 4.7%
Boomtown, Inc. Wts.* 250 42
Crown Packaging Holdings Ltd. Wts.*+ 2,000 20,000
Food 4 Less Holdings, Inc. Wts.*++ 1,344 126,605
Geneva Steel Co. Series B Exch. Pfd.* 1,600 124,800
K-III Communications Corp. Series B Exch.
Pfd.[diamond graphic] 5,145 510,641
La Petite Holdings Co. Cum. Exch. Pfd.* 45,000 900,000
PageMart, Inc. Wts.*+ 3,450 20,700
Pyramid Communications, Inc. Pfd.+ 16,948 432,169
SDW Holdings Corp. Wts.*+ 27,000 135,000
S.D. Warren Co. Series B Sr. Exch.
Pfd.[diamond graphic] 27,000 850,500
Sheffield Steel Corp. Wts.* 2,500 4,375
Supermarkets General Holding Corp. Exch.
Pfd.[diamond graphic] 55,000 1,595,000
---------
Total Preferred Stocks & Other (Cost $4,341,810) 4,719,832
---------
Convertible Preferred Stocks 7.0%
Ashland Oil, Inc. Cum. Cv. Pfd. 18,000 1,059,750
Ford Motor Co. Cum. Cv. Pfd. Series A 15,000 1,421,250
Lewis Galoob Toys, Inc. Cv. Exch. Pfd. 62,000 1,294,250
Granite Broadcasting Corp. Cum. Cv. Exch.
Pfd.[diamond graphic] 45,000 2,430,000
Kaiser Aluminum Corp. Cv. Pfd. 67,500 869,062
---------
Total Convertible Preferred Stocks (Cost $4,604,220) 7,074,312
---------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
- ------------------------------ ------- ---------
<S> <C> <C> <C>
CONVERTIBLE BONDS 1.8%
Anacomp International N.V. Cv.
Sub. Deb., 9.00% [Box] $650,000 1/15/1996 53,625
Crown Resources Corp. Cv. Sub.
Deb., 5.75% 600,000 8/27/2001 453,000
Magna International, Inc. Cv.
Sub. Deb., 5.00% 532,000 10/15/2002 542,640
Rohr, Inc. Cv. Sub. Note,
7.75% 500,000 5/15/2004 790,000
-------
Total Convertible Bonds (Cost $2,133,649) 1,839,265
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
State Street Research Equity Income Fund
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
- --------------------------------- -------- --------- ------------
<S> <C> <C> <C>
Non-Convertible Bonds 13.3%
Anacomp, Inc. Sr. Sub. Note,
15.00% [Box] $ 250,000 11/01/2000 $ 175,000
Bayou Steel Corp. First Mortgage
Note, 10.25% 150,000 3/01/2001 132,750
Belle Casinos, Inc. First
Mortgage Notes, 12.00%+[Box] 175,000 10/15/2000 70,000
CAI Wireless Systems, Inc. Sr.
Disc. Note, 12.25% 250,000 9/15/2002 266,875
Carrols Merger Corp. Sr. Notes,
11.50% 250,000 8/15/2003 252,500
Celcaribe S.A. Units, 0.00% to
3/14/98, 13.50% from
3/15/98 to maturity+ 43,000 3/15/2004 391,300
Clearnet Communications, Inc.
Units, 0.00% to 12/14/2000,
14.75% from 12/15/2000 to
maturity 7,500 12/15/2005 390,000
Crown Packaging Holdings Ltd. Sr.
Sub. Notes, 0.00% to
10/31/2000, 12.25% from
11/1/2000 to maturity 2,000,000 11/01/2003 885,000
Dual Drilling Co. Sr. Sub. Notes,
9.875% 400,000 1/15/2004 381,000
Finlay Enterprises, Inc. Sr.
Disc. Deb., 0.00% to 4/30/98,
12.00% from 5/1/98 to maturity 250,000 5/01/2005 165,000
Great Bay Property Funding Corp.
First Mortgage Note, 10.875% 250,000 1/15/2004 219,375
Haynes International, Inc. Sr.
Sec. Notes, 11.25% 800,000 6/15/1998 773,600
Heartland Wireless
Communications, Inc. Units,
13.00%+ 250,000 4/15/2003 285,000
Horsehead Industries Sub. Note,
14.00% 250,000 6/01/1999 261,675
K&F Industries, Inc. Sr. Sub.
Debs., 13.75% 428,000 8/01/2001 444,050
La Petite Holdings Co. Sr. Sec.
Notes, 9.625% 250,000 8/01/2001 227,500
Marcus Cable Capital Co. Sr.
Disc. Note, 0.00% to 7/31/99,
13.50% from 8/1/99 to maturity 100,000 8/01/2004 75,250
Motels of America, Inc. Sr. Sub.
Notes, 12.00% 500,000 4/15/2004 500,000
PageMart, Inc. Sr. Disc. Notes,
0.00% to 10/31/98, 12.25% from
11/1/98 to maturity $ 750,000 11/01/2003 $ 555,000
PageMart Nationwide, Inc. Sr.
Disc. Exch. Notes, 0.00% to
1/31/2000, 15.00% from 2/1/2000
to maturity 500,000 2/01/2005 327,500
Penn Traffic Co. Sr. Notes,
8.625% 250,000 12/15/2003 222,500
Plastic Specialties and
Technologies, Inc. Sr. Note,
11.25% 250,000 12/01/2003 226,250
Plitt Theatres, Inc. Sr. Sub.
Notes, 10.875% 250,000 6/15/2004 226,250
Presidio Oil Co. Sr. Sub. Gas
Indexed Notes, 13.25%[Box] 400,000 7/15/2002 316,000
Presidio Oil Co. Sr. Sec. Notes,
11.50%[Box] 650,000 9/15/2000 633,750
Ralphs Grocery Co. Sr. Note,
10.45% 250,000 6/15/2004 253,750
Seven-Up/RC Bottling Co. of
Southern California, Inc.,
11.50%[Box] 250,000 8/01/1999 145,000
Sheffield Steel Corp. First
Mortgage Note, 12.00% 500,000 11/01/2001 455,000
Star Markets Co. Sr. Sub. Note,
13.00% 250,000 11/01/2004 255,625
U.S.A. Mobile Communications,
Inc. Sr. Notes, 9.50% 250,000 2/01/2004 247,500
U.S.A. Mobile Communications,
Inc. Sr. Notes, 14.00% 750,000 11/01/2004 877,500
Viatel, Inc. Sr. Disc. Note,
0.00% to 1/14/2000, 15.00% from
1/15/2000 to maturity 750,000 1/15/2005 382,500
Wilrig A.S. Sr. Sec. Notes,
11.25% 750,000 3/15/2004 832,500
Winstar Communications, Inc.
Units, 0.00% to 10/14/2000,
14.00% from 10/15/2000 to
maturity+ 650,000 10/15/2005 1,030,250
Wireless One, Inc. Units, 13.00% 500,000 10/15/2003 526,250
----------
Total Non-Convertible Bonds (Cost $13,442,959) 13,409,000
----------
Total Investments (Cost $83,430,462) -- 99.9% 100,941,888
Other Assets, Less Liabilities--0.1% 137,878
----------
Net Assets--100.0% $101,079,766
==========
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE>
State Street Research Equity Income Fund
Investment Portfolio (cont'd)
<TABLE>
<CAPTION>
<S> <C>
Federal Income Tax Information:
At December 31, 1995, the net unrealized
appreciation of
investments based on cost for Federal
income tax purposes of $83,451,096 was
as follows:
Aggregate gross unrealized appreciation
for all investments in which there is
an excess of value over tax cost $21,309,455
Aggregate gross unrealized depreciation
for all investments in which there is
an excess of tax cost over value (3,818,663)
----------
$17,490,792
==========
</TABLE>
* Nonincome-producing securities.
[diamond graphic] Payments of income may be made in cash or in the form of
additional securities.
++ Security valued under consistently applied procedures established by the
Trustees. Security restricted as to public resale. At December 31, 1995,
there were no outstanding unrestricted securities of the same class as
those held. The total cost and market value of restricted securities owned
at December 31, 1995 was $0 and $126,605 (0.13% of net assets),
respectively.
+ Security restricted in accordance with Rule 144A under the Securities Act
of 1933, which allows for the resale of such securities among certain
qualified institutional buyers. The total cost and market value of Rule 144A
securities owned at December 31, 1995 was $2,454,427 and $2,622,250 (2.59%
of net assets), respectively.
[Box] Security is in default.
Statement of Assets and Liabilities
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $83,430,462) (Note 1) $100,941,888
Dividends and interest receivable 408,740
Receivable for fund shares sold 136,121
Receivable from Distributor (Note 3) 13,516
Other assets 380
-----------
101,500,645
Liabilities
Payable to custodian 111,364
Accrued transfer agent and shareholder services
(Note 2) 86,018
Payable for fund shares redeemed 68,283
Accrued management fee (Note 2) 51,882
Accrued distribution and service fees (Note 5) 25,093
Accrued trustees' fees (Note 2) 3,944
Other accrued expenses 74,295
-----------
420,879
-----------
Net Assets $101,079,766
===========
Net Assets consist of:
Undistributed net investment income $ 110,914
Unrealized appreciation of investments 17,511,426
Accumulated net realized gain 2,256,861
Shares of beneficial interest 81,200,565
-----------
$101,079,766
===========
Net Asset Value and redemption price per share of
Class A shares ($40,132,782 / 3,144,591 shares
of beneficial interest) $12.76
===========
Maximum Offering Price per share of Class A shares
($12.76 / .955) $13.36
===========
Net Asset Value and offering price per share of
Class B shares ($19,619,523 / 1,540,676 shares
of beneficial interest)* $12.73
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($40,235,388 /
3,154,155 shares of beneficial interest) $12.76
===========
Net Asset Value and offering price per share of
Class D shares ($1,092,073 / 85,785 shares of
beneficial interest)* $12.73
===========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
State Street Research Equity Income Fund
Statement of Operations
For the six months ended December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $128 $ 804,631
Interest, net of foreign taxes of $820 688,303
---------
1,492,934
Expenses
Management fee (Note 2) 313,939
Transfer agent and shareholder services (Note 2) 166,893
Custodian fee 60,740
Registration fees 25,126
Reports to shareholders 23,822
Audit fee 15,996
Trustees' fees (Note 2) 7,266
Service fee--Class A (Note 5) 48,693
Distribution and service fees--Class B (Note 5) 91,719
Distribution and service fees--Class D (Note 5) 6,568
Legal fees 2,964
Miscellaneous 2,679
---------
766,405
Expenses borne by the Distributor (Note 3) (136,441)
---------
629,964
---------
Net investment income 862,970
---------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 4) 2,300,025
Net unrealized appreciation of investments 7,315,624
---------
Net gain on investments 9,615,649
---------
Net increase in net assets resulting from operations $10,478,619
=========
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended
December 31,
1995 Year ended
(Unaudited) June 30, 1995
- ------------------------------------- ------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 862,970 $ 2,054,937
Net realized gain on investments* 2,300,025 1,155,735
Net unrealized appreciation of
investments 7,315,624 9,032,370
----------- ------------
Net increase resulting from
operations 10,478,619 12,243,042
----------- ------------
Dividends from net investment income:
Class A (438,959) (984,856)
Class B (142,815) (285,324)
Class C (483,306) (808,655)
Class D (9,524) (28,201)
----------- ------------
(1,074,604) (2,107,036)
----------- ------------
Distributions from net realized
gains:
Class A (492,304) (2,006,103)
Class B (223,972) (563,723)
Class C (472,914) (1,043,962)
Class D (18,976) (63,626)
----------- ------------
(1,208,166) (3,677,414)
----------- ------------
Net increase from fund share
transactions (Note 6) 3,233,903 10,409,654
----------- ------------
Total increase in net assets 11,429,752 16,868,246
Net Assets
Beginning of period 89,650,014 72,781,768
----------- ------------
End of period (including
undistributed net investment income
of $110,914 and $322,548,
respectively) $101,079,766 $ 89,650,014
=========== ============
* Net realized gain for Federal
income tax purposes (Note 1) $ 2,267,879 $ 1,208,383
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
State Street Research Equity Income Fund
Notes to Unaudited Financial Statements
December 31, 1995
Note 1
State Street Research Equity Income Fund, formerly MetLife-State Street
Research Equity Income Fund (the "Fund") is a series of State Street Research
Equity Trust, formerly MetLife-State Street Equity Trust (the "Trust"), which
was organized as a Massachusetts business trust in March, 1986 and is
registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Trust commenced operations in
August, 1986. The Trust consists presently of four separate funds: State
Street Research Equity Income Fund, State Street Research Capital
Appreciation Fund, State Street Research Equity Investment Fund and State
Street Research Global Resources Fund.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and an annual service fee of 0.25% of
average daily net assets. Investments of $1 million or more in Class A
shares, which are not subject to any initial sales charge, are subject to a
1.00% contingent deferred sales charge if redeemed within one year of
purchase. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years after the issuance of the Class B shares. Class C shares are only
offered to certain employee benefit plans and large institutions. No sales
charge is imposed at the time of purchase or redemption of Class C shares.
Class C shares do not pay any distribution or service fees. Class D shares
are subject to a contingent deferred sales charge of 1.00% on any shares
redeemed within one year of their purchase. Class D shares also pay annual
distribution and service fees of 1.00%. The Fund's expenses are borne
pro-rata by each class, except that each class bears expenses and has
exclusive voting rights with respect to provisions of the Plan of
Distribution, related specifically to that class. The Trustees declare
separate dividends on each class of shares.
The following significant accounting 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. Investment Valuation
Values for listed securities reflect final sales 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 closing prices
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. Fixed income securities
are valued by a pricing service, approved by the Trustees, which utilizes
market transactions, quotations from dealers, and various relationships among
securities in determining value. Short-term securities maturing within sixty
days are valued at amortized cost. Other securities, if any, are valued at
their fair value as determined in accordance with established methods
consistently applied.
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. Net Investment Income
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. Discount on debt obligations is amortized under the
effective yield method. Certain preferred securities held by the Fund pay
dividends in the form of additional securities (payment-in-kind securities).
Dividend income on payment-in-kind preferred securities is recorded at the
market value of securities received. Differences between the market value of
securities received and the corresponding amounts of income accrued are
recorded as adjustments to income. The Fund is charged for expenses directly
attributable to it, while indirect expenses are allocated among all funds in
the Trust.
D. Dividends
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually,
unless additional distributions are required for compliance with applicable
tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
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 an agreement under which the Adviser
earns monthly fees at an annual rate of 0.65% of the Fund's average daily net
assets. In consideration of these fees, the Adviser furnishes the Fund with
management, investment advisory, statistical and research facilities and
services. The Adviser also pays all salaries, rent and certain other expenses
of management. During the six months ended December 31, 1995, the fees
pursuant to such agreement amounted to $313,939.
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. In addition, Metropolitan receives a fee for maintenance
of the accounts of cer-
7
<PAGE>
State Street Research Equity Income Fund
tain shareholders who are participants in sponsored arrangements,
employee benefit plans and similar programs or plans, through or under which
shares of the Fund may be purchased. During the six months ended December 31,
1995, the amount of such shareholder servicing and account maintenance
expenses was $78,683.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $7,266 during the six months ended December 31, 1995.
Note 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1995, the amount of such
expenses assumed by the Distributor and its affiliates was $136,441.
Note 4
For the six months ended December 31, 1995, purchases and sales of
securities, exclusive of short-term obligations, aggregated $38,862,019 and
$36,951,504, respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance of shareholder accounts, to
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the six months ended December 31,
1995, fees pursuant to such plan amounted to $48,693, $91,719 and $6,568 for
Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly-owned subsidiary of Metropolitan, earned initial sales charges
aggregating $8,029 and $44,690, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1995, and that MetLife
Securities, Inc. earned commissions aggregating $59,070 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $47,058 on redemptions of Class B shares during the same period.
8
<PAGE>
State Street Research Equity Income Fund
Notes (cont'd)
Note 6
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
Distributor owned 3,614 Class A shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1995 Year ended
(Unaudited) June 30, 1995
---------------------- ---------------------------
Class A Shares Amount Shares Amount
- -------------------------------------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 231,115 $ 2,855,240 398,649 $ 4,285,947
231,115 $ 2,855,240 398,649 4,285,947
Issued upon reinvestment of:
Distributions from net realized
gains 37,754 461,359 179,249 1,907,857
Dividends from net investment income 31,964 396,661 82,151 897,184
Shares repurchased (345,641) (4,238,996) (1,195,595) (12,867,093)
------ -------- -------- -----------
Net decrease (44,808) $ (525,736) (535,546) $ (5,776,105)
====== ======== ======== ===========
Class B Shares Amount Shares Amount
- -------------------------------------- ------ -------- -------- -----------
Shares sold 245,570 $ 3,008,186 532,548 $ 5,717,454
Issued upon reinvestment of:
Distributions from net realized
gains 17,255 210,166 48,954 520,771
Dividends from net investment income 10,251 126,953 23,498 257,756
Shares repurchased
(113,741) (1,401,997) (213,874) (2,294,678)
------ -------- -------- -----------
Net increase 159,335 $ 1,943,308 391,126 $ 4,201,303
====== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Amount Shares Amount
- ------------------------------------- -------- ---------- -------- -------------
<S> <C> <C> <C> <C>
Shares sold 397,365 $ 4,896,713 1,452,407 $15,677,247
Issued upon reinvestment of:
Distributions from net realized
gains 38,732 472,914 98,117 1,043,974
Dividends from net investment income 38,953 483,224 73,413 806,458
Shares repurchased (298,579) (3,667,838) (512,040) (5,526,511)
------ -------- ------ -----------
Net increase 176,471 $ 2,185,013 1,111,897 $12,001,168
====== ======== ====== ===========
</TABLE>
<TABLE>
<CAPTION>
Class D Shares Amount Shares Amount
- ------------------------------------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 20,842 259,694 24,855 $ 265,512
Issued upon reinvestment of:
Distributions from net realized
gains 1,480 18,010 5,541 58,959
Dividends from net investment income 414 5,127 1,154 12,472
Shares repurchased
(53,948) (651,513) (32,405) (353,655)
------ -------- -------- -----------
Net decrease (31,212) $(368,682) (855) $ (16,712)
====== ======== ======== ===========
</TABLE>
9
<PAGE>
State Street Research Equity Income Fund
Financial Highlights
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Year ended June 30
-------------------------------------------------
Six months
ended
December
31,
1995
(Unaudited)** 1995** 1994 1993 1992 1991
- ------------------------------ ---------- ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $11.70 $10.87 $10.79 $ 9.19 $8.33 $9.83
Net investment income* .12 .28 .24 .44 .39 .45
Net realized and unrealized
gain (loss) on investments 1.24 1.37 .25 1.52 .83 (1.08)
Dividends from net investment
income (.14) (.28) (.26) (.36) (.36) (.48)
Distributions from net
realized gains (.16) (.54) (.15) -- -- (.39)
-------- ---- ---- ---- ---- -------
Net asset value, end of period $12.76 $11.70 $10.87 $10.79 $9.19 $8.33
======== ==== ==== ==== ==== =======
Total return 11.63%+++ 16.12%+ 4.30%+ 21.64%+ 14.81%+ (6.51)%+
Net assets at end of period
(000s) $40,133 $37,327 $40,484 $28,995 $51,585 $45,233
Ratio of operating expenses to
average net assets* 1.25%++ 1.42% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income
to average net assets* 1.84%++ 2.55% 2.42% 3.76% 4.27% 5.30%
Portfolio turnover rate 38.88% 67.50% 73.96% 80.42% 102.39% 131.43%
*Reflects voluntary assumption
of fees or expenses per
share in each period (Note
3). $.02 $.05 $.05 $.01 $.01 $.01
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------
Year ended June 30
---------- ------------------
June 1, 1993
Six months (Commencement
ended of
December Share Class
31, Designations)
1995 to
(Unaudited)** 1995** 1994 June 30, 1993
- ------------------------------ ---------- ------ ------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $11.68 $10.86 $10.79 $10.81
Net investment income* .07 .21 .21 .02
Net realized and unrealized
gain (loss) on investments 1.23 1.38 .21 (.02)
Dividends from net investment
income (.09) (.23) (.20) (.02)
Distributions from net
realized gains (.16) (.54) (.15) --
-------- ---- ---- -----------
Net asset value, end of period $12.73 $11.68 $10.86 $10.79
======== ==== ==== ===========
Total return 11.24%+++ 15.43%+ 3.79%+ 0.05%+++
Net assets at end of period
(000s) $19,620 $16,130 $10,752 $1,060
Ratio of operating expenses to
average net assets* 2.00%++ 2.00% 2.00% 2.00%++
Ratio of net investment income
to average net assets* 1.09%++ 1.95% 1.80% 1.53%++
Portfolio turnover rate 38.88% 67.50% 73.96% 80.42%
*Reflects voluntary assumption
of fees or expenses per
share in each period (Note
3). $.02 $.05 $.07 $.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C
---------------------------------------------
Year ended June 30
------------------
June 1,
1993
(Commencement
Six months of
ended Share Class
December Designations)
31, to
1995 June 30,
(Unaudited)** 1995** 1994 1993
- ------------------------------------------ ---------- ------ ------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.70 $10.86 $10.79 $10.81
Net investment income* .13 .32 .33 .03
Net realized and unrealized gain (loss) on
investments 1.25 1.39 .21 (.02)
Dividends from net investment income (.16) (.33) (.32) (.03)
Distributions from net realized gains (.16) (.54) (.15) --
-------- ---- ---- ---------
Net asset value, end of period $12.76 $11.70 $10.86 $10.79
======== ==== ==== =========
Total return 11.87%+++ 16.64%+ 4.84%+ 0.14%++++
Net assets at end of period (000s) $40,235 $34,827 $20,266 $15,988
Ratio of operating expenses to average net
assets* 1.00%++ 1.00% 1.00% 1.00%++
Ratio of net investment income to average
net assets* 2.09%++ 2.93% 2.92% 1.65%++
Portfolio turnover rate 38.88% 67.50% 73.96% 80.42%
*Reflects voluntary assumption of fees or
expenses per share in each period (Note
3). $ .02 $ .05 $ .06 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class D
---------------------------------------------
Year ended June 30
---------------
June 1, 1993
(Commencement
Six months of
ended Share Class
December 31, Designations)
1995 to
(Unaudited)** 1995** 1994 June 30, 1993
- ------------------------------------------ ------------- ------ ----- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.67 $10.86 $10.79 $10.81
Net investment income* .06 .22 .21 .02
Net realized and unrealized gain (loss) on
investments 1.25 1.36 .21 (.02)
Dividends from net investment income (.09) (.23) (.20) (.02)
Distributions from net realized gains (.16) (.54) (.15) --
--- ---- --- --------
Net asset value, end of period $12.73 11.67 $10.86 $10.79
====== ==== ===== ========
Total return 11.32%+++ 15.33%+ 3.78%+ 0.04%+++
Net assets at end of period (000s) $1,092 $1,366 $1,280 $628
Ratio of operating expenses to average net
assets* 2.00%++ 2.00% 2.00% 2.00%++
Ratio of net investment income to average
net assets* 1.07%++ 1.96% 1.88% 1.49%++
Portfolio turnover rate 38.88% 67.50% 73.96% 80.42%
*Reflects voluntary assumption of fees or
expenses per share in each period (Note
3). $.02 $.05 $.06 $.00
</TABLE>
**Per-share figures have been calculated using the average shares method.
<PAGE>
++Annualized
+Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
10
<PAGE>
State Street Research Equity Income Fund
Report on Special Meeting of Shareholders
A Special Meeting of Shareholders of the State Street Research Equity Income
Fund ("Fund"), along with shareholders of other series of State Street
Research Equity Trust ("Meeting"), was convened on October 20, 1995 and
continued thereafter. The results on the proposals are set forth below.
<TABLE>
<CAPTION>
Votes (millions)
----------------
For Withheld
--- ---------
<S> <C> <C>
1. The following persons were elected as Trustees:
Edward M. Lamont 29.4 1.9
Robert A. Lawrence 29.4 1.9
Dean O. Morton 29.4 1.9
Thomas L. Phillips 29.4 1.9
Toby Rosenblatt 29.4 1.9
Michael S. Scott Morton 29.4 1.9
Ralph F. Verni 29.4 1.9
Jeptha H. Wade 29.4 1.9
</TABLE>
<TABLE>
<CAPTION>
Votes (millions)
-------------------
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
2. The Fund's following investment policies were reclassified from
fundamental policies to nonfundamental policies:
a. The policy regarding investments in securities of companies
with less than three (3) years' continuous operation; 2.8 0.9 0.5
b. The policy regarding investments in illiquid securities; * * *
3. The Fund's fundamental policy regarding investing in commodities
and commodity contracts was amended. * * *
4. The Fund's fundamental policy on lending was amended to clarify
the permissibility of securities lending. 3.3 0.4 0.5
5. The Master Trust Agreement was amended to permit the Trustees to
reorganize, merge or liquidate a fund without prior shareholder
approval. 21.1 6.4 3.8
6. The Master Trust Agreement was amended to eliminate specified
time permitted between the record date and any shareholders
meeting. 22.8 4.5 4.1
</TABLE>
*Pending adjournment while shareholder solicitation continues.
11
<PAGE>
State Street Research Equity Income Fund
Fund Information, Officers and
Trustees of State Street Research Equity Trust
Fund Information
State Street Research
Equity Income Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Officers
Ralph F. Verni
Chairman of the Board, President and Chief Executive Officer
Peter C. Bennett
Vice President
Bartlett R. Geer
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research
& Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive Vice
President, Chief Operating
Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
12
<PAGE>
[back cover]
State Street Research Equity Income Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Logo] State Street Research
This report is prepared for the general information of shareholders.
It is not authorized for distribution to prospective investors.
CONTROL NUMBER: 2964-960221(0397)SSR-LD
Cover Illustration by Dorothy Cullinan EIN-820C-296
<PAGE>
XXX
[State Street Logo]
State Street Research
Global Resources Fund
Semiannual Report
December 31, 1995
[Graphic of man walking up a hill, at night, towards the stars]
What's Inside
Investment Update:
About the Fund,
economy and markets
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
State Street Research Global Resources Fund
Investment Update
Investment Environment
The Economy
(bullet) Economic growth has been moderate, and inflation remains low.
(bullet) Consumer debt levels are higher, and consumers are spending less.
(bullet) The Federal Reserve cut interest rates by one-quarter point in December
1995 and again in January 1996.
The Markets
(bullet) Stocks performed well in the last six months of 1995, although they did
not maintain the pace they set earlier in the year. The Standard &
Poor's 500 Index provided a total return of +14.43% for the six months
ended December 31, 1995.(1)
(bullet) Bonds also continued their outstanding performance. Bond prices rose,
as yields on 30-year U.S. Treasury bonds fell dramatically in the
fourth quarter, finishing the year at 5.94%.(1)
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1995, Global Resources Fund's
Class A shares provided a total return of +8.31% (does not reflect
sales charge).(2) The average total return for 34 funds in Lipper
Analytical Services' Natural Resources Funds category was +7.54% (does
not reflect sales charge).
(bullet) The supply and demand relationship was favorable for oil and natural
gas. Demand for oil remained very strong and OPEC did not increase its
production levels. As we entered the winter season, natural gas
supplies were well below their level the year before.
(bullet) Oil and natural gas prices rose solidly in the last quarter of 1995,
benefiting Fund performance.
Current strategy
(bullet) The Fund holds a significant position in small-capitalization stocks,
especially those tied to natural gas prices.
(bullet) Approximately two-thirds of the portfolio is invested in producers of
oil, natural gas and other natural resources (3% in metal and mining
stocks); one-third is invested in stocks that service oil and gas
producers.
(bullet) Nearly all of the stocks in the portfolio are based in North America,
although most have operations in other parts of the world.
(1)The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The index is unmanaged and does not take sales charges into
account. Direct investment in the index is not possible; results are for
illustrative purposes only.
(2)+7.90% for Class B shares; +8.48% for Class C shares; +7.82% for Class D
shares.
(3)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. Performance for a class includes periods
prior to the adoption of class designations in 1993. "C" shares, offered
without a sales charge, are available only to certain employee benefit plans
and large institutions. Performance for "B" and "D" shares prior to class
designations in 1993 reflects annual 12b-1 fees of .50% and performance
thereafter reflects 12b-1 fees of 1%, which will reduce subsequent
performance.
(4)Performance reflects up to maximum 4.5% front-end or 5% contingent
deferred sales charges.
(5)Cumulative total returns are not annualized, and do not reflect sales
charges, which, if reflected, would reduce performance.
Fund Information (all data are for periods ended December 31, 1995)
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3,4)
<TABLE>
<CAPTION>
Life of Fund
(since
3/2/90) 5 years 1 year
---------------------------------------------------------
<S> <C> <C> <C>
Class A +1.00%/+0.42% +5.33%/+4.68% +17.11%/+16.22%
---------------------------------------------------------
Class B +1.55%/+0.92% +5.68%/+4.96% +16.76%/+15.83%
---------------------------------------------------------
Class C +1.99%/+1.36% +6.53%/+5.81% +23.01%/+22.19%
---------------------------------------------------------
Class D +1.52%/+0.91% +5.97%/+5.27% +20.69%/+19.76%
---------------------------------------------------------
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)3,5
<TABLE>
<CAPTION>
Life of
Fund
(since
3/2/90) 5 years 1 year
--------------------------------------------------------
<S> <C> <C> <C>
Class A +10.99%/+7.33% +35.77%/+31.59% +22.63%/+21.69%
--------------------------------------------------------
Class B +9.39%/+5.52% +33.81%/+29.38% +21.76%/+20.83%
--------------------------------------------------------
Class C +12.17%/+8.19% +37.22%/+32.65% +23.01%/+22.19%
--------------------------------------------------------
Class D +9.22%/+5.44% +33.61%/+29.28% +21.69%/+20.76%
--------------------------------------------------------
</TABLE>
Performance results for the Fund are increased by the Distributor's voluntary
reduction of fees and expenses related to the Fund. The first figure reflects
expense reduction; the second shows what results would have been without
subsidization.
Top 10 Holdings
(by percentage of net assets)
1 Phoenix Resource Oil exploration firm 7.7%
2 Global Natural Resources Oil exploration firm 4.5%
3 Nuevo Energy Oil and gas exploration firm 4.0%
4 Ranger Oil International exploration firm 3.9%
5 Energy Ventures Oil service company 3.8%
6 Tom Brown Natural gas exploration firm 3.7%
7 TransTexas Gas Oil exploration firm 3.7%
8 CS Resources Oil exploration firm 3.6%
9 Noble Drilling Oil service/gas drilling company 3.5%
10 Nowsco Well Service Oil service company 3.4%
These securities represent an aggregate of 41.8% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
Asset Allocation
(by percentage of net assets)
[Tabular Representation of Pie Chart]
Oil and gas producers 61%
Energy service stocks 35%
Cash 1%
Metal and mining stocks 3%
<PAGE>
State Street Research Global Resources Fund
Investment Portfolio
December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ------------------------------------ ------ ------------
<S> <C> <C>
EQUITY SECURITIES 98.9%
Basic Industries 3.3%
Metal & Mining 3.3%
Aber Resources, Ltd.* 40,000 $ 252,500
Crown Resources Corp.* 100,000 493,750
Cyprus Amax Minerals Co. 5,000 130,625
Dia Met Minerals Ltd. Cl. A* 5,000 44,398
Dia Met Minerals Ltd. Cl. B* 20,000 195,899
Southernera Resources Ltd.* 80,000 150,568
----------
1,267,740
----------
Total Basic Industries 1,267,740
----------
Energy 89.3%
Oil 54.8%
Abacan Resource Corp.* 297,500 838,795
Ballistic Energy Corp.* 80,000 336,873
Basin Exploration, Inc.* 99,700 492,269
Tom Brown, Inc.* 98,000 1,433,250
CS Resources Ltd.* 190,000 1,374,039
Coho Energy, Inc.* 38,800 189,150
Crystal Oil Corp.* 41,600 1,253,200
Elan Energy Inc.* 38,000 386,122
Garnet Resources Corp.* 60,000 93,750
Gerrity Oil & Gas Co.* 88,900 355,600
Global Natural Resources Inc.* 165,500 1,737,750
Intensity Resources, Ltd.* 200,000 402,783
Inverness Petroleum Ltd.* 68,967 378,801
Kelly Oil & Gas Corp.* 209,600 275,100
Morgan Hydrocarbons, Inc.* 300,000 911,754
New Cache Petroleum Ltd.* 74,900 235,862
Newport Petroleum Corp.* 100,000 278,286
Nuevo Energy Co.* 68,600 1,534,925
Optima Petroleum Corp.* 46,700 132,803
Oryx Energy Co.* 39,700 530,988
Phoenix Resource Cos., Inc. 171,700 2,961,825
Plains Resources, Inc.* 122,400 1,101,600
Profco Resources Ltd.* 17,600 36,089
Ranger Oil Ltd.* 240,000 1,500,000
Strike Energy, Inc.* 25,000 75,159
Summit Resources Ltd. 25,000 141,889
Swift Energy Co.* 60,000 720,000
Tatham Offshore, Inc.* 96,700 108,788
Ulster Petroleum Ltd.* 275,000 966,679
Clayton Williams Energy, Inc.* 55,330 179,823
----------
20,963,952
----------
Oil Service 34.5%
Dreco Energy Services Ltd.* 30,000 532,500
Dual Drilling Co.* 40,000 455,000
Energy Ventures, Inc.* 57,600 1,454,400
Ensco International, Inc.* 40,000 920,000
Oil (cont'd)
Falcon Drilling, Inc.* 47,500 $ 712,500
Global Industries, Inc.* 13,600 408,000
Grant Geophysical, Inc.* 70,000 175,000
Landmark Graphics Corp.* 37,000 860,250
Marine Drilling Companies, Inc.* 50,000 256,250
J. Ray McDermott S.A.* 22,100 395,037
Nabors Industries, Inc.* 67,200 747,600
Noble Drilling Corp.* 150,000 1,350,000
Nowsco Well Service Ltd. 100,000 1,287,500
Oceaneering International, Inc.* 64,400 829,150
Pool Energy Services Co.* 30,000 285,000
Rowan Companies, Inc.* 101,700 1,004,287
Schlumburger Ltd.* 1,000 69,250
Solid State Geophysical, Inc.* 50,000 115,342
TMBR/Sharp Drilling, Inc.* 40,000 365,000
Tesco Corp.* 50,000 242,585
Tuboscope Vetco International Corp.* 65,000 369,688
Unit Corp.* 80,000 380,000
----------
13,214,339
----------
Total Energy 34,178,291
----------
Utility 6.3%
Natural Gas 6.3%
ENSERCH Corp. 60,000 975,000
TransTexas Gas Corp.* 105,400 1,422,900
----------
2,397,900
----------
Total Utility 2,397,900
----------
Total Equity Securities and Investments
(Cost $32,701,772)--98.9% 37,843,931
Cash and Other Assets, Less Liabilities--1.1% 405,063
----------
Net Assets--100.0% $38,248,994
==========
</TABLE>
<TABLE>
<S> <C>
Federal Income Tax Information:
At December 31, 1995, the net unrealized
appreciation of investments based on cost for
Federal income tax purposes of $32,789,223
was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of
value over tax cost $ 9,071,735
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value (4,017,027)
-----------
$ 5,054,708
===========
</TABLE>
* Nonincome-producing securities
Diversification of Equity Securities at December 31, 1995 (as a percentage of
net assets) was United States 81.2%, Canada 18.6%, and Netherlands Antilles
0.2%.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
State Street Research Global Resources Fund
Statement of Assets and Liabilities
December 31, 1995 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $32,701,772) (Note 1) $37,843,931
Cash 580,937
Receivable for fund shares sold 153,954
Receivable from Distributor (Note 3) 15,989
Dividends receivable 3,809
Other assets 9,298
----------
38,607,918
Liabilities
Payable for securities purchased 160,381
Accrued transfer agent and shareholder services
(Note 2) 64,766
Payable for fund shares redeemed 59,734
Accrued management fee (Note 2) 21,816
Accrued distribution and service fees (Note 5) 12,956
Accrued trustees' fees (Note 2) 2,052
Other accrued expenses 37,219
----------
358,924
----------
Net Assets $38,248,994
==========
Net Assets consist of:
Unrealized appreciation of investments $ 5,142,159
Accumulated net realized loss (3,818,337)
Shares of beneficial interest 36,925,172
----------
$38,248,994
==========
Net Asset Value and redemption price per share of
Class A shares ($23,967,923 / 1,819,966 shares
of beneficial interest) $13.17
==========
Maximum Offering Price per share of Class A shares
($13.17 / .955) $13.79
==========
Net Asset Value and offering price per share of
Class B shares ($7,413,043 / 571,065 shares of
beneficial interest)* $12.98
==========
Net Asset Value, offering price and redemption
price per share of Class C shares ($3,182,480 /
239,095 shares of beneficial interest) $13.31
==========
Net Asset Value and offering price per share of
Class D shares ($3,685,548 / 284,283 shares of
beneficial interest)* $12.96
==========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
Statement of Operations
For the six months ended December 31, 1995 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $1,999 $ 26,923
Interest 8,644
--------
35,567
Expenses
Management fee (Note 2) 139,894
Transfer agent and shareholder services (Note 2) 95,738
Custodian fee 51,130
Reports to shareholders 22,540
Audit fee 16,204
Service fee--Class A (Note 5) 30,450
Distribution and service fees--Class B (Note 5) 35,824
Distribution and service fees--Class D (Note 5) 13,299
Trustees' fees (Note 2) 7,320
Registration fees 4,060
Legal fees 3,728
Miscellaneous 4,022
--------
424,209
Expenses borne by the Distributor (Note 3) (64,847)
--------
359,362
--------
Net investment loss (323,795)
--------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 4) 1,109,970
Net unrealized appreciation of investments 2,145,852
--------
Net gain on investments 3,255,822
--------
Net increase in net assets resulting from operations $2,932,027
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
State Street Research Global Resources Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended
December 31,
1995 Year ended
(Unaudited) June 30, 1995
- ----------------------------- ------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (323,795) $ (579,458)
Net realized gain (loss) on
investments* 1,109,970 (1,268,036)
Net unrealized appreciation
of investments 2,145,852 2,488,313
----------- ------------
Net increase resulting from
operations 2,932,027 640,819
----------- ------------
Net decrease from fund share
transactions (Note 7) (3,042,021) (2,185,277)
----------- ------------
Total decrease in net assets (109,994) (1,544,458)
Net Assets
Beginning of period 38,358,988 39,903,446
----------- ------------
End of period $38,248,994 $38,358,988
=========== ============
* Net realized gain (loss)
for Federal income tax
purposes
(Note 1) $ 480,056 $(1,203,874)
=========== ============
</TABLE>
Notes to Unaudited Financial Statements
December 31, 1995
Note 1
State Street Research Global Resources Fund (the "Fund"), is a series of
State Street Research Equity Trust, formerly MetLife-State Street Equity
Trust (the "Trust"), which was organized as a Massachusetts business trust in
March, 1986 and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund commenced
operations in March, 1990. The Trust presently consists of four separate
funds: State Street Research Global Resources Fund, State Street Research
Capital Appreciation Fund, State Street Research Equity Income Fund and State
Street Research Equity Investment Fund.
The Fund offers four classes of shares. Class A shares are subject to an initial
sales charge of up to 4.50% and an annual service fee of 0.25% of average daily
net assets. Investments of $1 million or more in Class A shares, which are not
subject to any initial sales charge, are subject to a 1.00% contingent deferred
sales charge if redeemed within one year of purchase. Class B shares are subject
to a contingent deferred sales charge on certain redemptions made within five
years of purchase and pay annual distribution and service fees of 1.00%. Class B
shares automatically convert into Class A shares (which pay lower ongoing
expenses) at the end of eight years after the issuance of the Class B shares.
Class C shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or redemption
of Class C shares. Class C shares do not pay any distribution or service fees.
Class D shares are subject to a contingent deferred sales charge of 1.00% on any
shares redeemed within one year of their purchase. Class D shares also pay
annual distribution and service fees of 1.00%. The Fund's expenses are borne
pro-rata by each class, except that each class bears expenses, and has exclusive
voting rights with respect to provisions of the Plan of Distribution, relating
specifically to that class. The Trustees declare separate dividends on each
class of shares.
The following significant accounting 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. Investment Valuation
Values for listed securities reflect final sales 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 closing prices
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. Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange rate. Gains
and losses that arise from changes in exchange rates are not segregated from
gains and losses that arise from changes in market prices of investments. Short-
term securities maturing within sixty days are valued at amortized cost. Other
securities, if any, are valued at their fair value as determined in accordance
with established methods consistently applied.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
State Street Research Global Resources Fund
Notes (cont'd)
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. Net Investment Income
Investment income is accrued daily as earned. Dividend income is accrued on
the ex-dividend date. The Fund is charged for expenses directly attributable
to it, while indirect expenses are allocated among all funds in the Trust.
D. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested semiannually. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gains distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods. At June 30, 1995, the Fund
had a capital loss carryforward of $4,210,961 available, to the extent
provided in regulations, to offset future capital gains, if any, of which
$278,720, $1,767,752, $199,959, $760,656 and $1,203,874 expire on June 30,
1999, 2000, 2001, 2002 and 2003, respectively.
In order to meet certain excise tax distribution requirements under Section
4982 of the Internal Revenue Code, the Fund is required to measure and
distribute annually, if necessary, net capital gains realized during a
twelve-month period ending October 31. In this connection, the Fund is
permitted to defer into its next fiscal year any net capital losses incurred
between each November 1 and the end of its fiscal year. From November 1, 1994
through June 30, 1995, the Fund incurred net capital losses of approximately
$630,000 and it intends to defer and treat such losses as arising in the
fiscal year ending June 30, 1996.
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 an agreement under which the Adviser
earns monthly fees at an annual rate of 0.75% of the Fund's average daily net
assets. In consideration of these fees, the Adviser furnishes the Fund with
management, investment advisory, statistical and research facilities and
services. The Adviser also pays all salaries, rent and certain other expenses
of management. During the six months ended December 31, 1995, the fees
pursuant to such agreement amounted to $139,894.
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. In addition, Metropolitan receives a fee for maintenance
of the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through
or under which shares of the Fund may be purchased. During the six months
ended December 31, 1995, the amount of such shareholder servicing and account
maintenance expenses was $32,060.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $7,320 during the six months ended December 31, 1995.
Note 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1995, the amount of such
expenses assumed by the Distributor and its affiliates was $64,847.
Note 4
For the six months ended December 31, 1995, purchases and sales of
securities, exclusive of short-term obligations, aggregated $7,603,093 and
$10,827,238, respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance of shareholder accounts, to
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the six months ended December 31,
1995, fees pursuant to such plan amounted to $30,450, $35,824 and $13,299 for
Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $3,211 and $9,241, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1995, and that MetLife
Securities, Inc. earned commissions aggregating $11,633 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $32,362 on redemptions of Class B shares during the same period.
5
<PAGE>
State Street Research Global Resources Fund
Note 6
Under normal market conditions the Fund invests not less than 65% of its
total assets in equity securities of domestic and foreign companies in the
energy and natural resources industries. Also, the Fund may invest up to 35%
of its total assets in the securities of issuers in industries that are not
related to the energy or natural resources industries. Accordingly, the
Fund's investments will fluctuate in response to a variety of economic,
political and other factors peculiar to the energy industries and may
fluctuate more widely than a portfolio that invests in a broader range of
industries.
Note 7
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At December 31, 1995,
Metropolitan owned 38,491 Class D shares and the Distributor owned one Class
A share of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1995 Year ended
(Unaudited) June 30, 1995
----------------------- ---------------------------
Class A Shares Amount Shares Amount
- ----------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 268,219 $ 3,316,179 2,514,296 $ 28,346,425
Shares repurchased (561,122) (6,911,299) (2,992,842) (33,679,131)
------ --------- -------- -----------
Net decrease (292,903) $(3,595,120) (478,546) $ (5,332,706)
====== ========= ======== ===========
Class B Shares Amount Shares Amount
- ----------------------- ------ --------- -------- -----------
Shares sold 96,346 $ 1,175,167 314,583 $ 3,497,941
Shares repurchased (109,474) (1,330,423) (267,978) (3,006,916)
------ --------- -------- -----------
Net increase (decrease) (13,128) $ (155,256) 46,605 $ 491,025
====== ========= ======== ===========
Class C Shares Amount Shares Amount
- ----------------------- ------ --------- -------- -----------
Shares sold 84,497 $ 1,070,808 280,275 $ 3,409,713
Shares repurchased (113,255) (1,419,292) (93,086) (1,092,177)
------ --------- -------- -----------
Net increase (decrease) (28,758) $ (348,484) 187,189 $ 2,317,536
====== ========= ======== ===========
Class D Shares Amount Shares Amount
- ----------------------- ------ --------- -------- -----------
Shares sold 126,657 $ 1,518,639 108,958 $ 1,239,952
Shares repurchased (37,854) (461,800) (77,489) (901,084)
------ --------- -------- -----------
Net increase 88,803 $ 1,056,839 31,469 $ 338,868
====== ========= ======== ===========
</TABLE>
6
<PAGE>
State Street Research Global Resources Fund
Financial Highlights
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
Six
months
ended
December Year ended June 30
31, 1995 ----------------------------------------------------------------
(Unaudited)** 1995** 1994** 1993 1992 1991
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.16 $ 11.84 $ 13.51 $ 8.02 $ 9.12 $ 11.23
Net investment income
(loss)* (.10) (.16) (.17) (.13) (.12) .03
Net realized and unrealized
gain (loss) on investments 1.11 .48 (1.50) 5.62 (.98) (2.07)
Distribution from net
realized gains -- -- -- -- -- (.06)
Dividend from net
investment income -- -- -- -- -- (.01)
-------- -------- -------- -------- -------- ---------
Net asset value, end of
period $ 13.17 $ 12.16 $ 11.84 $ 13.51 $ 8.02 $ 9.12
======== ======== ======== ======== ======== =========
Total return 8.31%+++ 2.70%+ (12.36)%+ 68.45%+ (12.06)%+ (18.28)%+
Net assets at end of period
(000s) $23,968 $25,692 $30,679 $33,513 $19,227 $29,760
Ratio of operating expenses
to average net assets* 1.75%++ 1.75% 1.75% 1.75% 1.75% 1.75%
Ratio of net investment
income (loss) to average
net assets (1.56)%++ (1.41)% (1.46)% (1.44)% (1.16%) 0.25%
Portfolio turnover rate 20.47% 62.94% 30.98% 61.00% 47.09% 108.18%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .02 $ .09 $ .11 $ .03 $ .05 $ .03
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------
June 1, 1993
(Commencement
Six months of Share
ended Class
December 31, Year ended June 30 Designations)
1995 ------------------------------ to
(Unaudited)** 1995** 1994** June 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $12.03 $11.78 $ 13.51 $12.99
Net investment income
(loss)* (.14) (.23) (.23) (.02)
Net realized and unrealized
gain (loss) on investments 1.09 .48 (1.50) .54
Distribution from net
realized gains -- -- -- --
Dividend from net
investment income -- -- -- --
----------- ----------- ----------- -----------
Net asset value, end of
period $12.98 $12.03 $ 11.78 $13.51
=========== =========== =========== ===========
Total return 7.90%+++ 2.12%+ (12.81)%+ 4.00%+++
Net assets at end of period
(000s) $7,413 $7,030 $ 6,333 $1,048
Ratio of operating expenses
to average net assets* 2.50%++ 2.33% 2.25% 2.25%++
Ratio of net investment
income (loss) to average
net assets (2.31)%++ (1.98)% (1.93)% (1.98)%++
Portfolio turnover rate 20.47% 62.94% 30.98% 61.00%
*Reflects voluntary
assumption of fees or
expenses per share in each
period (Note 3). $ .02 $ .09 $ .14 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------
June 1, 1993
Six months (Commencement
ended of Share Class
December 31, Year ended June 30 Designations)
1995 ------------------------------ to
(Unaudited)** 1995** 1994** June 30, 1993
- ---------------------------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $12.27 $11.90 $ 13.52 $12.99
Net investment loss* (.08) (.11) (.15) (.00)
Net realized and unrealized gain
(loss) on investments 1.12 .48 (1.47) .53
----------- ----------- ----------- -------------
Net asset value, end of period $13.31 $12.27 $ 11.90 $13.52
=========== =========== =========== =============
Total return 8.48%+++ 3.11%+ (11.98)%+ 4.08%+++
Net assets at end of period (000s) $3,182 $3,288 $ 960 $ 146
Ratio of operating expenses to
average net assets* 1.50%++ 1.33% 1.25% 1.25%++
Ratio of net investment loss to
average net assets* (1.31)%++ (1.01)% (0.95)% (1.05)%++
Portfolio turnover rate 20.47% 62.94% 30.98% 61.00%
*Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3). $ .02 $ .08 $ .16 $ .00
</TABLE>
<TABLE>
<CAPTION>
Class D
------------------------------------------------------------------
June 1, 1993
Six months (Commencement
ended of Share Class
December 31, Year ended June 30 Designations)
1995 ------------------------------ to
(Unaudited)** 1995** 1994** June 30, 1993
- ---------------------------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $12.02 $11.77 $ 13.51 $12.99
Net investment loss* (.14) (.23) (.23) (.02)
Net realized and unrealized gain
(loss) on investments 1.08 .48 (1.51) .54
----------- ----------- ----------- -------------
Net asset value, end of period $12.96 $12.02 $ 11.77 $13.51
=========== =========== =========== =============
Total return 7.82%+++ 2.12%+ (12.88)%+ 4.00%+++
Net assets at end of period (000s) $3,686 $2,350 $ 1,931 $ 588
Ratio of operating expenses to
average net assets* 2.50%++ 2.33% 2.25% 2.25%++
Ratio of net investment loss to
average net assets* (2.29)%++ (1.99)% (1.94)% (2.00)%++
Portfolio turnover rate 20.47% 62.94% 30.98% 61.00%
*Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3). $ .02 $ .09 $ .13 $ .00
</TABLE>
** Per share figures have been calculated using the average shares method.
++ Annualized
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
7
<PAGE>
State Street Research Global Resources Fund
Report on Special Meeting of Shareholders
A Special Meeting of Shareholders of the State Street Research Global
Resources Fund ("Fund"), along with shareholders of other series of State
Street Research Equity Trust ("Meeting"), was convened on October 20, 1995,
and continued thereafter. The results of the Meeting are set forth below.
Votes (millions)
----------------
For Withheld
----- ---------
1. The following persons were elected as
Trustees:
Edward M. Lamont 29.4 1.9
Robert A. Lawrence 29.4 1.9
Dean O. Morton 29.4 1.9
Thomas L. Phillips 29.4 1.9
Toby Rosenblatt 29.4 1.9
Michael S. Scott Morton 29.4 1.9
Ralph F. Verni 29.4 1.9
Jeptha H. Wade 29.4 1.9
Votes (millions)
-------------------
For Against Abstain
--- ---- ------
2. The Fund's following investment policies were
reclassified from fundamental policies to
nonfundamental policies:
a. The policy regarding investments in
securities of companies with less than three
(3) years' continuous operation; 1.3 0.2 0.1
3. The Fund's fundamental policy regarding
investing in commodities and commodity
contracts was amended. 1.3 0.1 0.1
4. The Master Trust Agreement was amended to
permit the Trustees to reorganize, merge or
liquidate a fund without prior shareholder
approval. 21.1 6.4 3.8
5. The Master Trust Agreement was amended to
eliminate specified time permitted between the
record date and any shareholder meeting. 22.8 4.5 4.1
8
<PAGE>
State Street Research Global Resources Fund
Fund Information, Officers and Trustees of State Street Research Equity
Trust
Fund Information
State Street Research
Global Resources Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02110
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Bartlett R. Geer
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust Company
of New York); presently engaged
in private investments and
civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of the
Board and Chief Executive Officer,
Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
9
<PAGE>
State Street Research Global Resources Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
CONTROL NUMBER: 2971-960222(0397)SSR-LD
Cover Illustration by Dorothy Cullinan EG-821C-296
