[FRONT COVER]
[State Street Research logo]
State Street Research
Capital Appreciation Fund
Semiannual Report
December 31, 1996
[Illustration of person climbing steps 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
- -----------------------------------DALBAR AWARD---------------------------------
Quality
Tested Service
1 9 9 5
Dalbar
Honors Commitment To:
Investors
For Excellence
in
Shareholder Service
[BACK COVER]
State Street Research Capital Appreciation Fund
One Financial Center
Boston, MA 02111
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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.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Capital Appreciation
Fund prospectus. When used after March 31, 1997, this report must be accompanied
by a current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 3722-970225(0398)SSR-LD
Cover Illustration by Dorothy Cullinan CA-818C-297IBS
<PAGE>
State Street Research Capital Appreciation Fund
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Investment Update
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Investment Environment
The Economy
(bullet) Economic growth accelerated in the fourth quarter of 1996 after
showing signs of a slowdown in the third quarter.
(bullet) Consumer spending and industrial output showed a steady trend of
advancement for the final six months of 1996. Wages continued to
rise during the period, but consumer prices and inflation remained
low.
(bullet) The Federal Reserve met several times since July and left interest
rates unchanged.
The Markets
(bullet) From June 30 to December 31, 1996 stocks and bonds offered positive
performance overall, peppered with short-term corrections in some
sectors.
(bullet) The stock market continued its rise, with the S&P 500 up +11.68 for
the six months ended December 31, 1996. Small stocks lagged the
performance of larger stocks, as shown by the Russell 2000 Index,
which gained +5.56% for the same period.(1)
(bullet) Bond performance improved during the final six months of the year.
The Lehman Brothers Aggregate Bond Index gained +4.90%.(1)
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1996, Class A shares of
Capital Appreciation Fund provided a total return of -7.12% (does
not reflect sales charge).(2) The Fund underperformed the +4.70%
average total return for 217 fund classes in Lipper Analytical
Services' Capital Appreciation Funds category (does not reflect
sales charge).
(bullet) The Fund's performance was hurt by a risk-averse market that favored
large-capitalization stocks at the expense of small- and mid-
capitalization and growth-oriented stocks--the type Capital
Appreciation Fund mainly invests in.
(bullet) The Fund beat the average annual returns for its Lipper category and
the S&P 500 for the 10 years ended December 31, 1996.
Current strategy
(bullet) We continue to invest in growth stocks that are attractively valued,
which, historically, has been a successful strategy for the Fund.
(bullet) Focus sectors of the portfolio remain consumer cyclicals--especially
hotel and restaurant and retail--energy and science and technology.
(bullet) The outlook for 1997 is positive; we have many holdings that have
strong fundamentals. We believe the market offers great opportunity
to investors willing to ride out the current cycle.
December 31, 1996
(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 Russell 2000 Index is a commonly used measure of
small-company stock performance. The Lehman Brothers Aggregate Bond Index is
a commonly used measure of bond market performance. The indices are unmanaged
and do not take sales charges into consideration. Direct investment in the
indices is not possible; results are for illustrative purposes only.
(2)-7.44% for Class B shares; -7.02% for Class C shares; -7.42% 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 may include
periods prior to the adoption of class designations in 1993, which resulted
in new or increased 12b-1 fees of up to 1% per class thereafter and which
will reduce subsequent performance. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and large
institutions.
(4)Performance reflects maximum 4.5% "A" share front-end sales charge, or 5%
"B" share or 1% "D" share contingent deferred sales charges where applicable.
(5)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Because the Fund invests in emerging growth and special situation companies,
an investment in the Fund may involve greater-than-average risk and
above-average price fluctuation. Small-company stocks are more volatile than
large-company stocks.
Please note that the discussion throughout this shareholder report is dated
as indicated and, because of possible changes in viewpoint, data and
transactions, should not be relied upon as being current thereafter.
- -----------------------------------------------------------------------------
Fund Information (all data are for periods ended December 31, 1996)
- -----------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3),(4)
10 Years 5 Years 1 Year
- -------------------------------------------
Class A +15.90% +11.61% +1.06%
- -------------------------------------------
Class B +16.17% +11.88% +0.10%
- -------------------------------------------
Class C +16.59% +12.94% +6.10%
- -------------------------------------------
Class D +16.20% +12.19% +4.18%
===========================================
Cumulative Total Returns
(do not reflect sales charge)(3),(5)
10 Years 5 Years 1 Year
- -------------------------------------------
Class A +357.99% +81.34% +5.82%
- -------------------------------------------
Class B +347.84% +77.32% +5.10%
- -------------------------------------------
Class C +364.18% +83.79% +6.10%
- -------------------------------------------
Class D +348.84% +77.72% +5.18%
===========================================
Top 10 Stock Positions
(by percentage of net assets)
1 Republic Industries Waste management 5.2%
2 HFS Hotel reservation service 5.1%
3 Gucci Apparel 3.2%
4 Sanmina Electronic circuit boards 2.8%
5 Extended Stay America Extended-stay lodging 2.5%
6 Chase Manhattan Banking 2.0%
7 Lucent Technologies Telecommunications
products 1.8%
8 Global Marine Oil and gas contract drilling 1.8%
9 Ascend Communications Computer networking 1.8%
10 ENI SPA Oil and gas exploration 1.6%
These securities represent an aggregate of 27.8% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
- ---------------------------------Bar Chart--------------------------------------
Top 5 Equity Industries
(by percentage of net assets)
Hotel and restaurant 11.8%
Oil service 9.0%
Computer software and Service 8.9%
Retail 8.7%
Electronic components 7.1%
Total: 45.5%
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<PAGE>
State Street Research Capital Appreciation Fund
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Investment Portfolio
- --------------------------------------------------------------------------------
December 31, 1996 (Unaudited)
- -----------------------------------------------------------------------
Value
Shares (Note 1)
----------------------------------------------------------------------
COMMON STOCKS 89.3%
Basic Industries 1.1%
Chemical 0.7%
Rhone-Poulenc SA ADR 135,900 $ 4,603,613
---------------
Machinery 0.4%
Thermo Fibergen Inc.* 65,000 682,500
Thermo Fibergen Inc.* 71,600 179,000
US Filter Corp.* 66,100 2,098,675
---------------
2,960,175
---------------
Total Basic Industries 7,563,788
---------------
Consumer Cyclical 27.6%
Airline 1.5%
Continental Airlines Inc. Cl. B* 376,400 10,633,300
---------------
Automotive 0.8%
Danaher Corp. 71,200 3,319,700
Team Rental Group, Inc. Cl. A* 141,500 2,281,688
---------------
5,601,388
---------------
Hotel & Restaurant 11.8%
Doubletree Corp.* 111,800 5,031,000
Extended Stay America Inc.* 887,400 17,858,925
HFS Inc.* 611,400 36,531,150
Hilton Hotels Corp. 265,300 6,930,962
Interstate Hotels Co.* 258,600 7,305,450
Rainforest Cafe Inc.* 129,150 3,035,025
Sun International Hotels Ltd.* 45,800 1,671,700
Trump Hotels & Casino Resorts Inc.* 544,900 6,538,800
---------------
84,903,012
---------------
Recreation 1.9%
Action Performance Companies Inc.* 27,700 498,600
Ascent Entertainment Group Inc.* 121,200 1,954,350
Coachmen Industries Inc. 67,100 1,903,963
Evergreen Media Corp. Cl. A 46,200 1,155,000
Golden Bear Golf, Inc. Cl. A* 34,900 392,625
Lin Television Corp.* 98,500 4,161,625
Marker International Inc.* 90,800 488,050
Petco Animal Supplies Inc.* 55,300 1,147,475
Ticketmaster Group Inc.* 160,100 1,941,212
---------------
13,642,900
---------------
Retail Trade 8.7%
Abercrombie & Fitch Co. Cl. A* 41,600 686,400
Borders Group Inc.* 206,000 7,390,250
BT Office Products International Inc.* 112,300 996,663
CVS Corp.* 90,700 3,752,712
Dollar Tree Stores Inc.* 43,500 1,663,875
Gucci Group NV* 359,300 22,950,287
Jones Apparel Group Inc.* 241,000 9,007,375
Just For Feet Inc.* 121,600 3,192,000
Retail Trade (cont'd)
Loehmann's, Inc.* 12,700 $ 292,100
Rite-Aid Corp. 94,100 3,740,475
Staples Inc.* 174,000 3,142,875
Sunglass Hut International Inc.* 812,000 5,887,000
---------------
62,702,012
---------------
Textile & Apparel 2.9%
Men's Wearhouse, Inc.* 279,750 6,853,875
Nautica Enterprises Inc.* 188,300 4,754,575
Timberland Co. Cl. A* 59,500 2,261,000
Tommy Hilfiger Corp.* 147,200 7,065,600
---------------
20,935,050
---------------
Total Consumer Cyclical 198,417,662
---------------
Consumer Staple 14.2%
Business Service 7.1%
Apache Medical Systems Inc.* 58,100 620,944
Caribiner International Inc.* 14,400 723,600
Education Management Corp.* 60,500 1,270,500
Outdoor Systems Inc.* 55,350 1,556,719
Prime Service Inc.* 31,100 855,250
Republic Industries Inc.* 1,209,400 37,718,162
Teletech Holdings Inc.* 34,300 891,800
U.S. Office Products Co.* 112,300 3,832,237
Universal Outdoor Holdings Inc.* 146,300 3,438,050
---------------
50,907,262
---------------
Drug 3.2%
Cephalon Inc.* 193,400 3,964,700
Entremed Inc.* 106,600 1,732,250
Ligand Pharmaceuticals Inc. Cl. B* 69,600 1,035,300
Magainin Pharmaceuticals Inc.* 112,400 1,081,850
Novartis AG ADR* 80,641 4,603,425
Warner-Lambert Co. 139,500 10,462,500
---------------
22,880,025
---------------
Food & Beverage 0.8%
Boston Chicken Inc.* 151,400 5,431,475
---------------
Hospital Supply 1.9%
MedPartners Inc.* 405,324 8,511,804
Neopath Inc.* 123,000 2,244,750
Wellpoint Health Networks Inc. Cl. A* 87,900 3,021,562
---------------
13,778,116
---------------
Personal Care 0.2%
Gargoyles Inc.* 65,800 567,525
Polymer Group Inc.* 74,700 1,036,463
---------------
1,603,988
---------------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
State Street Research Capital Appreciation Fund
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Investment Portfolio (cont'd)
- --------------------------------------------------------------------------------
Printing & Publishing 0.9%
CKS Group Inc.* 5,700 $ 158,888
Hollinger International, Inc. Cl. A* 389,300 4,476,950
Hollinger International, Inc. Cv. Pfd. 181,400 2,086,100
---------------
6,721,938
---------------
Tobacco 0.1%
Swisher International Group Inc. Cl. A* 62,600 993,775
---------------
Total Consumer Staple 102,316,579
---------------
Energy 10.8%
Oil 1.8%
Chesapeake Energy Corp.* 18,100 1,006,812
ENI SPA ADR 217,400 11,223,275
Titan Exploration Inc.* 80,300 963,600
---------------
13,193,687
---------------
Oil Service 9.0%
BJ Services Co.* 162,600 8,292,600
Ensco International Inc.* 141,500 6,862,750
Global Marine Inc.* 626,500 12,921,562
Helmerich & Payne Inc. 162,800 8,485,950
Marine Drilling Companies, Inc.* 138,000 2,716,875
National Oilwell Inc.* 10,800 332,100
Newpark Resources, Inc.* 43,300 1,612,925
Noble Drilling Corp.* 538,800 10,708,650
Reading & Bates Corp.* 141,100 3,739,150
Rowan Companies, Inc.* 317,000 7,172,125
Varco International Inc.* 67,500 1,560,938
---------------
64,405,625
---------------
Total Energy 77,599,312
---------------
Finance 9.0%
Bank 3.2%
Bank United Corp. Cl. A 41,000 1,096,750
Boatmen's Bancshares, Inc. 112,200 7,236,900
Chase Manhattan Corp. 163,000 14,547,750
---------------
22,881,400
---------------
Financial Service 3.9%
Allmerica Financial Corp. 140,700 4,713,450
Beacon Properties Corp. 123,500 4,523,188
First USA Paymentech Inc.* 96,500 3,268,938
Green Tree Financial Corp. 190,100 7,342,612
MoneyGram Payment Systems Inc.* 203,100 2,691,075
Starwood Lodging Trust 97,000 5,347,125
---------------
27,886,388
---------------
Insurance 1.9%
Everest Reinsurance Holdings Inc. 152,200 4,375,750
Progressive Corp. 50,800 3,422,650
TIG Holdings Inc. 137,000 4,640,875
Insurance (cont'd)
W.R. Berkley Corp. 34,500 $ 1,750,875
---------------
14,190,150
---------------
Total Finance 64,957,938
---------------
Science & Technology 24.5%
Computer Software & Service 8.9%
Adflex Solutions Inc.* 41,000 420,250
Ascend Communications Inc.* 207,400 12,884,725
Check Point Software Technologies Ltd.* 36,700 798,225
Datastream Systems Inc.* 42,900 772,200
Excalibur Technologies Corp.* 52,200 822,150
Geoworks* 228,900 5,608,050
Ingram Micro Inc. Cl. A* 62,600 1,439,800
JDA Software Group Inc.* 89,600 2,553,600
OpenVision Technologies Inc.* 5,200 61,100
P-COM, Inc.* 120,200 3,560,925
Parametric Technology Corp.* 168,300 8,646,412
Premiere Technologies Inc.* 26,700 667,500
Puma Technology Inc.* 39,900 688,275
Sabre Group Holdings Inc. Cl. A* 53,700 1,496,888
SS&C Technologies Inc.* 8,600 54,825
Sybase Inc.* 320,500 5,348,344
Synopsys Inc.* 65,500 3,029,375
Ultratech Stepper Inc.* 43,400 1,030,750
Westell Technologies, Inc. Cl. A* 281,900 6,448,463
Western Digital Corp.* 124,900 7,103,687
Wind River Systems Inc.* 16,700 791,163
Xionics Document Technologies, Inc.* 14,200 177,500
---------------
64,404,207
---------------
Electronic Components 7.1%
Affymetrix Inc.* 6,100 123,144
Altera Corp.* 121,200 8,809,725
Applied Magnetics Corp.* 114,000 3,405,750
CHS Electronics Inc.* 49,700 851,112
Cymer Inc.* 111,600 5,370,750
Pairgain Technologies Inc.* 162,800 4,955,225
Sanmina Corp.* 360,300 20,356,950
Texas Instruments Inc. 113,600 7,242,000
---------------
51,114,656
---------------
Electronic Equipment 5.0%
Advanced Fibre Communications, Inc.* 6,100 339,313
Applied Materials Inc.* 208,600 7,496,562
KLA Instruments Corp.* 188,600 6,695,300
Lucent Technologies Inc.* 281,000 12,996,250
Motorola Inc. 50,000 3,068,750
Novellus Systems Inc.* 49,500 2,682,281
Octel Communications Corp.* 26,600 465,500
Tencor Instruments* 71,200 1,877,900
---------------
35,621,856
---------------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
State Street Research Capital Appreciation Fund
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- --------------------------------------------------------------------------------
Office Equipment 3.5%
3Com Corp.* 74,000 $ 5,429,750
Compaq Computer Corp.* 136,300 10,120,275
Dell Computer Corp.* 83,200 4,420,000
Orckit Communications Ltd.* 5,800 56,550
Read-Rite Corp.* 150,800 3,807,700
Stormedia Inc. Cl. A* 106,000 1,709,250
---------------
25,543,525
---------------
Total Science & Technology 176,684,244
---------------
Utility 2.1%
Natural Gas 0.6%
Calpine Corp.* 227,400 4,548,000
---------------
Telephone 1.5%
Brooks Fiber Properties Inc.* 15,600 397,800
Colt Telecom Group PLC ADR* 91,600 1,763,300
Larscom Inc. Cl. A* 75,300 856,537
Omnipoint Corp.* 88,300 1,699,775
Telecomunicacoes Brasileiras ADR* 70,900 5,423,850
Vimpel Communications ADR* 32,900 777,263
---------------
10,918,525
---------------
Total Utility 15,466,525
---------------
Total Common Stocks (Cost $559,381,363) 643,006,048
---------------
- -------------------------------------------------------------------
Principal Maturity
Amount Date
- -------------------------------------------------------------------
REPURCHASE AGREEMENTS 0.2%
State Street Bank and
Trust Company, dated
12/31/96, repurchase
proceeds $1,315,292,
collateralized by
$1,315,000 U.S.
Treasury Bill, 6.125%,
due 3/31/98, market
value $1,342,548 $1,315,000 1/02/1997 1,315,000
---------------
Total Repurchase Agreements (Cost $1,315,000) 1,315,000
---------------
Principal Maturity Value
Amount Date (Note 1)
- -------------------------- ------------- ------------ ---------------
SHORT-TERM OBLIGATIONS 10.4%
American Express Credit
Corp., 5.90% $ 3,134,000 1/02/1997 $ 3,134,000
American Express Credit
Corp., 6.00% 27,679,000 1/06/1997 27,679,000
Ford Motor Credit Co.,
5.75% 7,968,000 1/02/1997 7,968,000
Ford Motor Credit Co.,
5.72% 20,000,000 1/03/1997 20,000,000
Ford Motor Credit Co.,
5.40% 5,879,000 1/08/1997 5,879,000
Philip Morris Companies,
Inc., 5.60% 10,000,000 1/08/1997 9,989,111
---------------
Total Short-Term Obligations (Cost $74,649,111) 74,649,111
---------------
Total Investments (Cost $635,345,474)--99.9% 718,970,159
Cash and Other Assets, Less Liabilities--0.1% 745,491
---------------
Net Assets--100.0% $719,715,650
===============
Federal Income Tax Information:
At December 31, 1996, the net unrealized appreciation
of investments based on cost for Federal income tax
purposes of $635,345,474 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $110,614,768
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (26,990,083)
---------------
$ 83,624,685
===============
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* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
State Street Research Capital Appreciation Fund
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Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
December 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $635,345,474) (Note 1) $718,970,159
Cash 2,848
Receivable for securities sold 8,123,094
Receivable for fund shares sold 745,452
Dividends and interest receivable 220,234
Other assets 88,118
------------
728,149,905
Liabilities
Payable for securities purchased 6,493,457
Accrued transfer agent and shareholder services (Note 2) 611,471
Payable for fund shares redeemed 589,044
Accrued management fee (Note 2) 454,923
Accrued distribution and service fees (Note 4) 238,084
Accrued trustees' fee (Note 2) 9,368
Other accrued expenses 37,908
-----------
8,434,255
------------
Net Assets $719,715,650
============
Net Assets consist of:
Unrealized appreciation of investments $ 83,624,685
Accumulated net realized gain 20,780,997
Shares of beneficial interest 615,309,968
------------
$719,715,650
============
Net Asset Value and redemption price per share of Class A
shares ($374,523,749 / 33,107,224 shares of beneficial
interest) $11.31
======
Maximum Offering Price per share of Class A shares
($11.31 / .955) $11.84
======
Net Asset Value and offering price per share of Class B
shares ($179,572,365 / 16,304,104 shares of beneficial
interest)* $11.01
======
Net Asset Value, offering price and redemption price per
share of Class C shares ($160,398,205 / 13,957,449 shares
of beneficial interest) $11.49
======
Net Asset Value and offering price per share of Class D
shares ($5,221,331 / 472,505 shares of beneficial
interest)* $11.05
======
- ------------------------------------------------------------------------------
* 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, 1996 (Unaudited)
Investment Income
Dividends, net of foreign taxes of $52,833 $ 1,178,983
Interest 725,783
------------
1,904,766
Expenses
Management fee (Note 2) 2,738,556
Transfer agent and shareholder services (Note 2) 1,030,082
Reports to shareholders 170,839
Custodian fee 97,223
Registration fees 30,489
Service fee--Class A (Note 4) 479,905
Distribution and service fees--Class B (Note 4) 880,101
Distribution and service fees--Class D (Note 4) 29,275
Trustees' fees (Note 2) 14,474
Audit fee 14,209
Legal fees 13,424
Miscellaneous 17,849
------------
5,516,426
------------
Net investment loss (3,611,660)
-------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments (Notes 1 and 3) 38,651,768
Net unrealized depreciation of investments (87,454,221)
-------------
Net loss on investments (48,802,453)
-------------
Net decrease in net assets resulting from operations $(52,414,113)
=============
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
State Street Research Capital Appreciation Fund
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Statement of Changes in Net Assets
- ------------------------------------------------------------------------
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
- ------------------------------------ ----------------- ----------------
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (3,611,660) $ (5,560,185)
Net realized gain on investments* 38,651,768 73,266,361
Net unrealized appreciation
(depreciation) of investments (87,454,221) 61,608,747
----------------- ----------------
Net increase (decrease) resulting
from operations (52,414,113) 129,314,923
----------------- ----------------
Distributions from net realized gains:
Class A (17,442,135) (34,354,819)
Class B (8,308,403) (12,773,915)
Class C (7,364,058) (13,218,452)
Class D (258,802) (510,505)
----------------- ----------------
(33,373,398) (60,857,691)
----------------- ----------------
Net increase from fund share
transactions (Note 5) 63,495,813 173,255,282
----------------- ----------------
Total increase (decrease) in net
assets (22,291,698) 241,712,514
Net Assets
Beginning of period 742,007,348 500,294,834
----------------- ----------------
End of period $ 719,715,650 $ 742,007,348
================= ================
*Net realized gain for Federal
income tax purposes (Note 1) $ 38,510,822 $ 73,389,253
================= ================
- ------------------------------------------------------------------------
Notes to Unaudited Financial Statements
- ------------------------------------------------------------------------
December 31, 1996
Note 1
State Street Research Capital Appreciation Fund (the "Fund"), is a series of
State Street Research 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 seeks to achieve maximum capital appreciation by investing primarily
in common stocks of emerging growth companies and of companies considered to
be undervalued special situations. Current income is not a consideration in
the selection of investments for the 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. 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.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
State Street Research Capital Appreciation 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
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 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 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.
F. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the report period. Actual
results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into 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, 1996, the fees
pursuant to such agreement amounted to $2,738,556.
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, 1996, the amount of such shareholder servicing and account
maintenance expenses was $354,472.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $14,474 during the six months ended December 31, 1996.
Note 3
For the six months ended December 31, 1996, purchases and sales of
securities, exclusive of short-term obligations, aggregated $747,246,011 and
$763,113,581, 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 or servicing of shareholder
accounts, to reimburse securities dealers for distribution and marketing
services, to furnish ongoing assistance to investors and to defray a portion
of its distribution and marketing expenses. For the six months ended December
31, 1996, fees pursuant to such plan amounted to $479,905, $880,101 and
$29,275 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 $85,083 and $551,043, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $858,585 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $198,480 and $2,619 on redemptions of Class B and Class D shares,
respectively, during the same period.
7
<PAGE>
State Street Research Capital Appreciation Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At December 31, 1996, the
Adviser held of record 8,330 Class A shares and the Distributor owned 7,172
Class A shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
------------------------------ ------------------------------
Class A Shares Amount Shares Amount
--------------------------------------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 4,271,672 $ 50,055,963 8,509,488 $103,271,609
Issued upon reinvestment of
distributions from net
realized gains 1,495,279 16,997,660 3,045,717 33,519,586
Shares repurchased (3,615,853) (42,318,261) (6,333,177) (77,140,136)
-------------- --------------- -------------- ---------------
Net increase 2,151,098 $ 24,735,362 5,222,028 $ 59,651,059
============== =============== ============== ===============
Class B Shares Amount Shares Amount
--------------------------------------------- --------------- -------------- ---------------
Shares sold 3,041,283 $ 34,927,596 6,634,276 $ 79,295,183
Issued upon reinvestment of
distributions from net
realized gains 735,944 8,157,377 1,158,748 12,504,495
Shares repurchased (1,264,332) (14,684,638) (2,182,710) (26,185,464)
-------------- --------------- -------------- ---------------
Net increase 2,512,895 $ 28,400,335 5,610,314 $ 65,614,214
============== =============== ============== ===============
Class C Shares Amount Shares Amount
--------------------------------------------- --------------- -------------- ---------------
Shares sold 2,880,291 $ 34,519,854 6,363,633 $ 78,353,974
Issued upon reinvestment of
distributions from net
realized gains 637,741 7,358,494 1,187,191 13,211,134
Shares repurchased (2,515,378) (30,336,254) (3,763,939) (45,981,872)
-------------- --------------- -------------- ---------------
Net increase 1,002,654 $ 11,542,094 3,786,885 $ 45,583,236
============== =============== ============== ===============
Class D Shares Amount Shares Amount
--------------------------------------------- --------------- -------------- ---------------
Shares sold 521,815 $ 5,736,036 1,631,034 $ 19,873,515
Issued upon reinvestment of
distributions from net
realized gains 21,991 244,613 42,662 461,756
Shares repurchased (639,965) (7,162,627) (1,461,059) (17,928,498)
-------------- --------------- -------------- ---------------
Net increase (decrease) (96,159) $ (1,181,978) 212,637 $ 2,406,773
============== =============== ============== ===============
</TABLE>
8
<PAGE>
State Street Research Capital Appreciation Fund
- ------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Year ended June 30
Six months ended ----------------------------------------------------------
December 31, 1996
(Unaudited)** 1996** 1995** 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.76 $ 11.52 $ 9.11 $ 10.42 $ 8.33 $ 6.55
Net investment loss* (0.05) (0.10) (0.09) (0.04) (0.05) (0.05)
Net realized and unrealized gain (loss)
on investments (0.85) 2.63 2.95 0.09 2.81 1.83
Distributions from net realized gains (0.55) (1.29) (0.45) (1.36) (0.67) --
---------------------------- ----------- ----------- ----------------------
Net asset value, end of period $ 11.31 $ 12.76 $ 11.52 $ 9.11 $ 10.42 $ 8.33
============================ =========== =========== ======================
Total return (7.12)%+++ 23.87%+ 32.56%+ (0.28)%+ 35.78%+ 27.03%+
Net assets at end of period (000s) $374,524 $395,050 $296,471 $231,356 $183,886 $116,687
Ratio of operating expenses to average
net assets* 1.38%++ 1.40% 1.55% 1.50% 1.50% 1.50%
Ratio of net investment loss to average
net assets* (0.86)%++ (0.79)% (0.87)% (0.81)% (0.63)% (0.71)%
Portfolio turnover rate 107.62% 279.55% 217.28% 147.73% 135.17% 128.10%
Average commission rate @ $ 0.03 $ 0.03 -- -- -- --
*Reflects voluntary assumption of fees
or expenses per share in each period -- -- $ 0.03 $ 0.02 $ 0.01 $ 0.01
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------
Year ended June 30
Six months ended ----------------------------------------------
December 31, 1996
(Unaudited)** 1996** 1995** 1994 1993***
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.49 $ 11.38 $ 9.05 $ 10.41 $ 10.44
Net investment loss* (0.09) (0.22) (0.15) (0.06) (0.00)
Net realized and unrealized gain (loss)
on investments (0.84) 2.62 2.93 0.06 (0.03)
Distributions from net realized gains (0.55) (1.29) (0.45) (1.36) --
---------------------------- ----------- ----------- -----------
Net asset value, end of period $ 11.01 $ 12.49 $ 11.38 $ 9.05 $ 10.41
============================ =========== =========== ===========
Total return (7.44)%+++ 22.97%+ 31.86%+ (0.83)%+ (0.29)%+++
Net assets at end of period (000s) $179,572 $172,213 $93,088 $49,236 $ 2,790
Ratio of operating expenses to average
net assets* 2.13%++ 2.15% 2.15% 2.00% 2.00%++
Ratio of net investment loss to average
net assets* (1.61)%++ (1.53)% (1.47)% (1.29)% (0.95)%++
Portfolio turnover rate 107.62% 279.55% 217.28% 147.73% 135.17%
Average commission rate @ $ 0.03 $ 0.03 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in each period -- -- $ 0.02 $ 0.02 $ 0.00
- ----------------------------------------------------------------------------------------------------------
</TABLE>
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower for each of the years in the
four year period ended June 30, 1995 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 for 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.
@ For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose
its average commission rate per share paid for security trades.
9
<PAGE>
State Street Research Capital Appreciation Fund
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------
Year ended June 30
Six months ended ----------------------------------------------
December 31, 1996
(Unaudited)** 1996** 1995** 1994 1993***
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.94 $ 11.64 $ 9.16 $ 10.42 $ 10.44
Net investment loss* (0.04) (0.08) (0.05) (0.02) (0.00)
Net realized and unrealized gain (loss)
on investments (0.86) 2.67 2.98 0.12 (0.02)
Distributions from net realized gains (0.55) (1.29) (0.45) (1.36) --
---------------------------- ----------- ----------- -----------
Net asset value, end of period $ 11.49 $ 12.94 $ 11.64 $ 9.16 $ 10.42
============================ =========== =========== ===========
Total return (7.02)%+++ 24.28%+ 33.06%+ 0.25%+ (0.19)%+++
Net assets at end of period (000s) $160,398 $167,624 $106,675 $62,662 $37,826
Ratio of operating expenses to average
net assets* 1.13%++ 1.15% 1.15% 1.00% 1.00%++
Ratio of net investment loss to average
net assets* (0.61)%++ (0.54)% (0.46)% (0.30)% 0.50%++
Portfolio turnover rate 107.62% 279.55% 217.28% 147.73% 135.17%
Average commission rate @ $ 0.03 $ 0.03 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in each period -- -- $ 0.02 $ 0.02 $ 0.00
</TABLE>
<TABLE>
<CAPTION>
Class D
-----------------------------------------------------------------
Year ended June 30
Six months ended ----------------------------------------------
December 31, 1996
(Unaudited)** 1996** 1995** 1994 1993***
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.52 $ 11.41 $ 9.07 $ 10.41 $ 10.44
Net investment loss* (0.09) (0.21) (0.15) (0.07) (0.01)
Net realized and unrealized gain (loss)
on investments (0.83) 2.61 2.94 0.09 (0.02)
Distributions from net realized gains (0.55) (1.29) (0.45) (1.36) --
---------------------------- ----------- ----------- -----------
Net asset value, end of period $ 11.05 $ 12.52 $ 11.41 $ 9.07 $ 10.41
============================ =========== =========== ===========
Total return (7.42)%+++ 23.03%+ 31.79%+ (0.61)%+ (0.29)%+++
Net assets at end of period (000s) $ 5,221 $ 7,120 $ 4,061 $2,201 $ 623
Ratio of operating expenses to average
net assets* 2.13%++ 2.15% 2.15% 2.00% 2.00%++
Ratio of net investment loss to average
net assets* (1.59)%++ (1.54)% (1.47)% (1.29)% (1.10)%++
Portfolio turnover rate 107.62% 279.55% 217.28% 147.73% 135.17%
Average commission rate @ $ 0.03 $ 0.03 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in each period -- -- $ 0.02 $ 0.02 $ 0.00
- ----------------------------------------------------------------------------------------------------------
</TABLE>
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower for each of the years in the
four year period ended June 30, 1995 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 for 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.
@ For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose
its average commission rate per share paid for security trades.
10
<PAGE>
State Street Research Capital Appreciation Fund
- ------------------------------------------------------------------------------
Fund Information, Officers, and Trustees of State Street Research Equity Trust
- ------------------------------------------------------------------------------
Fund Information Trustees
State Street Research Ralph F. Verni
Capital Appreciation Fund Chairman of the Board,
One Financial Center President, Chief Executive
Boston, MA 02111 Officer and Director,
State Street Research &
Investment Adviser Management Company
State Street Research & Steve A. Garban
Management Company Retired; formerly Senior Vice
One Financial Center President for Finance and
Boston, MA 02111 Operations and Treasurer, The
Pennsylvania State University
Distributor
Malcolm T. Hopkins
State Street Research Former Vice Chairman of the Board
Investment Services, Inc. and Chief Financial Officer, St.
One Financial Center Regis Corp.
Boston, MA 02111
Edward M. Lamont
Shareholder Services Formerly in banking (Morgan
Guaranty Trust Company of New
State Street Research York); presently engaged in
Shareholder Services private investments and civic
P.O. Box 8408 affairs
Boston, MA 02266-8408
1-800-562-0032 Robert A. Lawrence
Partner, Saltonstall & Co.
Custodian
Dean O. Morton
State Street Bank and Retired; formerly Executive
Trust Company Vice President, Chief
225 Franklin Street Operating Officer and Director,
Boston, MA 02110 Hewlett-Packard Company
Legal Counsel Thomas L. Phillips
Retired; formerly Chairman of the
Goodwin, Procter & Hoar LLP Board and Chief Executive
Exchange Place Officer, Raytheon Company
Boston, MA 02109
Toby Rosenblatt
Officers President,
The Glen Ellen Company
Ralph F. Verni Vice President,
Chairman of the Board, Founders Investments Ltd.
President and
Chief Executive Officer Michael S. Scott Morton
Jay W. Forrester Professor of
Peter C. Bennett Management, Sloan School of
Vice President Management, Massachusetts
Institute of Technology
Bartlett R. Geer
Vice President Jeptha H. Wade
Retired; formerly Of Counsel,
Frederick R. Kobrick Choate, Hall & Stewart
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
James M. Weiss
Vice President
John T. Wilson
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
11
<PAGE>
[FRONT COVER]
State Street Research
Equity Income Fund
Seeking high current income and, secondarily,
long-term capital growth
Semiannual Report
December 31, 1996
[Illustration of Microchip Board, Satellite Disk and Stock Certificates]
- ----------------------------------------
What's Inside
- ----------------------------------------
Investment Update 1
About the Fund, economy
and markets
Fund Information 1
Facts and figures
Plus, Complete Portfolio Holdings 2
and Financial Statements
- -----------------------------------DALBAR AWARD--------------------------------
Quality
Tested Service
1 9 9 5
Dalbar
Honors Commitment To:
Investors
For Excellence
in
Shareholder Service
- --------------------------------------------------------------------------------
<PAGE>
[BACK COVER]
State Street Research Equity Income Fund
One Financial Center [bullet] Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 6500
TRUSTEES
Ralph F. Verni
Chairman of the Board
Steve A. Garban
Malcolm T. Hopkins
Edward M. Lamont
Robert A. Lawrence
Dean O. Morton
Thomas L. Phillips
Toby Rosenblatt
Michael S. Scott Morton
Jeptha H. Wade
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
James M. Weiss
Vice President
John T. Wilson
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
FUND INFORMATION
State Street Research
Equity Income Fund
One Financial Center [bullet] Boston, MA 02111
INVESTMENT ADVISER
State Street Research &
Management Company
One Financial Center [bullet] Boston, MA 02111
DISTRIBUTOR
State Street Research
Investment Services, Inc.
One Financial Center [bullet] Boston, MA 02111
SHAREHOLDER SERVICES
State Street
Research Shareholder Services
P.O. Box 8408 [bullet] Boston, MA 02266-8408
1-800-562-0032
CUSTODIAN
State Street Bank and Trust Company [State Street Research logo]
225 Franklin Street [bullet] Boston, MA 02110 1-800-562-0032
State Street Research
LEGAL COUNSEL Shareholders Services
Goodwin, Procter & Hoar LLP Exchange P.O. Box 8408
Place [bullet] Boston, MA 02109 Boston, MA 02266-8408
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Equity Income Fund
prospectus. When used after March 31, 1997, this report must be accompanied by a
current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 3723-970225(0398)SSR-LD EIN-820C-297IBS
<PAGE>
Investment Update
-----------------------------------------------------------------------------
Investment Environment
The Economy
(bullet) Economic growth accelerated in the fourth quarter of 1996 after
showing signs of a slowdown in the third quarter.
(bullet) Consumer spending and industrial output showed a steady trend of
advancement for the final six months of 1996. Wages continued to
rise during the period, but consumer prices and inflation remained
low.
(bullet) The Federal Reserve met several times since July and left interest
rates unchanged.
The Markets
(bullet) From June 30 to December 31, 1996 stocks and bonds offered positive
performance overall, peppered with short-term corrections in some
sectors.
(bullet) The stock market continued its rise, with the Dow Jones Industrial
Average passing the 6000 point marker in October. The S&P 500 was up
+11.68 for the six months ended December 31, 1996.(1)
(bullet) Bond performance improved during the final six months of the year.
The Lehman Brothers Aggregate Bond Index gained +4.90%.(1)
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1996, Class A shares of Equity
Income Fund returned +14.23%,(2) outperforming the +10.33% average
six-month return for the 178 fund classes in Lipper Analytical
Services' Equity Income Funds category. (Returns do not reflect
sales charges.)
(bullet) Several stock buyouts helped the Fund's strong performance,
including Vons Companies, which was taken over by Safeway, and Chase
Manhattan Bank, which merged with Chemical Bank.
(bullet) The Fund also benefited from its energy holdings, which rose due to
industry restructuring and generally higher commodity prices.
Current strategy
(bullet) Our present investment style can be characterized as value investing
with an emphasis on yield. For the five-year period ended December 31,
1996, the Fund's Class A shares ranked in the top tenth of Lipper's
Equity Income Funds Category.(3)
(bullet) We will continue to position the Fund defensively, with roughly 23%
of the portfolio invested in high-yield bonds, preferred stocks and
convertible securities. This diversified strategy can help with the
Fund's risk level and yield.
(bullet) We created a small position (3%) in selected utility stocks. Their
valuations are low relative to the broader market, and we believe
that upcoming regulatory changes may help the performance of these
stocks.
December 31, 1996
-----------------------------------------------------------------------------
(1)The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The Lehman Brothers Aggregate Bond Index is a commonly used
measure of bond market performance. The indices are unmanaged and do not take
sales charges into consideration. Direct investment in the indices is not
possible; results are for illustrative purposes only.
(2)+13.74% for Class B shares; +14.37% for Class C shares; +13.80% for Class
D shares.
(3)The Fund's Class A shares were ranked 15/160, 6/56, and 13/24 based on
total return in the Lipper Equity Income Funds category for the one-, five-,
and ten-year periods ended December 31, 1996, respectively. The Fund's Class
B, Class C, and Class D shares were ranked 20/160, 13/160, and 18/160 for the
one-year period ended December 31, 1996. Rankings do not reflect maximum 4.5%
Class A front-end sales charge. All classes of the Fund have a common
portfolio.
(4)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance for a class may include
periods prior to the adoption of class designations in 1993, which resulted
in new or increased 12b-1 fees of up to 1% per class thereafter and which
will reduce subsequent performance. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and large
institutions.
(5)Performance reflects maximum 4.5% "A" share front-end sales charge or 5%
"B" share or 1% "D" share contingent deferred sales charges where applicable.
(6)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
High-yield, high-risk debt securities reflect a greater possibility that
adverse changes in an issuer's business or financial condition or in general
economic conditions may impair the issuer's ability to pay principal and
interest on the securities.
Please note that the discussion throughout this shareholder report is dated
as indicated and, because of possible changes in viewpoint, data and
transactions, should not be relied upon as being current thereafter.
- -----------------------------------------------------------------------------
Fund Information (all data are for periods ended December 31, 1996)
- -----------------------------------------------------------------------------
SEC Average Annual Compound
Rates of Return
(at maximum applicable sales charge)(4),(5)
10 Years 5 Years 1 Year
- --------------------------------------------
Class A +11.50% +15.12% +19.63%
- --------------------------------------------
Class B +11.77% +15.42% +19.33%
- --------------------------------------------
Class C +12.18% +16.50% +25.57%
- --------------------------------------------
Class D +11.77% +15.65% +23.39%
- ---------------------------------------------
Cumulative Total Returns
(do not reflect sales charge)(4),(6)
10 Years 5 Years 1 Year
- ---------------------------------------------
Class A +210.48% +111.73% +25.26%
- ---------------------------------------------
Class B +203.36% +106.87% +24.33%
- ---------------------------------------------
Class C +214.74% +114.63% +25.57%
- ---------------------------------------------
Class D +203.43% +106.91% +24.39%
- ---------------------------------------------
Top 10 Stock Positions
(by percentage of net assets)
1 Coca-Cola Enterprises Beverage bottler 2.8%
2 Mid Ocean Reinsurance 2.7%
3 Canadian National Railway Railroad 2.6%
4 Coleman Recreational products 2.4%
5 Mapco Oil service 2.2%
6 Atlantic Richfield Oil/chemical 2.1%
7 Kennametal Metal cutting tools 2.1%
8 Seagull Energy Oil exploration 2.0%
9 Station Casinos Gaming 1.9%
10 ADT Electronic security 1.8%
These securities represent an aggregate of 22.6% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
- ----------------------------------PIE CHART-------------------------------------
Asset Allocation
(by percentage of net assets)
Common Stocks 65%
Bonds 15%
Convertible preferred stocks 13%
Cash 6%
Preferred stocks 1%
-----------------------------------------------------------------------------
1 December 1996
<PAGE>
Investment Portfolio
-----------------------------------------------------------------------------
December 31, 1996 (Unaudited)
The Investment Portfolio is a detailed list of the securities owned by the
Fund. The Portfolio lists the number of shares and the market value of each
security issue and the percentage invested in each classification. Common
stocks are listed first, and broken down by industry, then sub-industry; then
preferred stocks, bonds and commercial paper follow.
- -----------------------------------------------------------------------
Value
Shares (Note 1)
- -----------------------------------------------------------------------
Common Stocks 65.4%
Basic Industries 11.9%
- -----------------------------------------------------------------------
Chemical 3.8%
Mississippi Chemical Corp.* 80,500 $ 1,932,000
Rohm & Haas Co. 18,200 1,485,575
Thiokol Corp. 50,000 2,237,500
---------------
5,655,075
---------------
DIVERSIFIED 1.9%
Johnson Controls Inc. 26,200 2,171,325
Mark IV Industries Inc. 25,900 585,988
---------------
2,757,313
---------------
FOREST PRODUCT 0.6%
Stone Container Corp. 60,000 892,500
---------------
MACHINERY 0.9%
Sundstrand Corp. 32,000 1,360,000
---------------
METAL & MINING 2.1%
Kennametal Inc. 79,200 3,078,900
---------------
RAILROAD 2.6%
Canadian National Railway Co. 100,000 3,800,000
---------------
Total Basic Industries 17,543,788
---------------
Consumer Cyclical 8.3%
- ------------------------------------------------------------------------
AUTOMOTIVE 1.9%
Exide Corp. 120,000 2,760,000
---------------
BUILDING 1.7%
Lafarge Corp. 125,000 2,515,625
---------------
HOTEL & RESTAURANT 1.5%
Harrah's Entertainment Inc.* 115,000 2,285,625
Motels of America Inc.*+ 500 7,375
---------------
2,293,000
---------------
RECREATION 1.4%
HSN Inc.* 87,750 2,084,063
---------------
RETAIL TRADE 1.8%
Food 4 Less Holdings Inc. Wts.* 1,344 127,949
Intimate Brands Inc. Cl. A* 77,600 1,319,200
Kroger Co.* 25,000 1,162,500
---------------
2,609,649
---------------
Total Consumer Cyclical 12,262,337
---------------
Consumer Staple 13.8%
- ------------------------------------------------------------------------
BUSINESS SERVICE 3.9%
ADT Ltd.* 116,000 $ 2,653,500
Hillenbrand Industries Inc. 35,000 1,268,750
Moore Corp. Ltd. 75,000 1,528,125
Pagemart Nationwide Inc.*+ 1,750 12,250
Vestar/LPA Investment Corp.*+ 3,125 37,500
Viatel Inc.*+ 18,050 180,500
---------------
5,680,625
---------------
FOOD & BEVERAGE 4.6%
Coca-Cola Enterprises Inc. 85,400 4,141,900
Seven-Up/RC Bottling Co. of Southern
California* 8,750 86,406
Whitman Corp. 114,000 2,607,750
---------------
6,836,056
---------------
HOSPITAL SUPPLY 1.1%
Baxter International Inc. 40,000 1,640,000
---------------
PRINTING & PUBLISHING 2.6%
Hollinger International, Inc. Cl. A* 118,900 1,367,350
Valassis Communications Inc. 114,100 2,410,363
---------------
3,777,713
---------------
TOBACCO 1.6%
Imperial Tobacco Group PLC* 360,000 2,328,737
---------------
Total Consumer Staple 20,263,131
---------------
Energy 10.8%
- ------------------------------------------------------------------------
OIL 8.6%
Amerada Hess Corp. 8,300 480,363
Atlantic Richfield Co. 9,300 1,232,250
Oryx Energy Co. 55,000 1,361,250
Seagull Energy Corp. 135,000 2,970,000
Tom Brown, Inc.* 18,884 412,000
Tosco Corp. 30,000 2,373,750
Total SA Cl. B ADR 49,375 1,987,344
Ultramar Diamond Shamrock Co. 60,000 1,897,500
---------------
12,714,457
---------------
OIL SERVICE 2.2%
Mapco Inc. 95,000 3,230,000
---------------
Total Energy 15,944,457
---------------
Finance 11.0%
- ------------------------------------------------------------------------
BANK 4.1%
Bank of New York Inc. 35,000 1,181,250
Fleet Financial Group Inc. 54,100 2,698,238
Mellon Bank Corp. 31,000 2,201,000
---------------
6,080,488
---------------
- ------------------------------------------------------------------------------
December 1996 2
<PAGE>
Investment Portfolio (cont'd)
- ------------------------------------------------------------------------------
FINANCIAL SERVICE 0.8%
Federal National Mortgage Association 30,800 $ 1,147,300
---------------
INSURANCE 6.1%
Ace Ltd. 43,100 2,591,388
AMBAC Inc. 15,000 995,625
Mid Ocean Ltd. 74,800 3,927,000
Saint Paul Companies, Inc. 26,200 1,535,975
---------------
9,049,988
---------------
Total Finance 16,277,776
---------------
Science & Technology 6.1%
----------------------------------------------------------------------
AEROSPACE 2.5%
Boeing Co. 11,260 1,197,783
Rockwell International Corp. 30,000 1,826,250
Sequa Corp. Cl. A* 15,000 588,750
---------------
3,612,783
---------------
COMPUTER SOFTWARE & SERVICE 1.1%
Anacomp Inc.* 13,984 118,864
Western Digital Corp.* 25,900 1,473,063
---------------
1,591,927
---------------
ELECTRONIC COMPONENTS 0.9%
AMP Inc. 15,000 575,625
Thomas & Betts Corp. 16,000 710,000
---------------
1,285,625
---------------
OFFICE EQUIPMENT 1.6%
Quantum Corp.* 85,000 2,433,125
---------------
Total Science & Technology 8,923,460
---------------
Utility 3.5%
----------------------------------------------------------------------
ELECTRIC 2.8%
Allegheny Power Systems Inc. 80,000 2,430,000
American Electric Power Inc. 38,000 1,562,750
Oklahoma Gas & Electric Co. 5,000 208,750
---------------
4,201,500
---------------
NATURAL GAS 0.5%
TransTexas Gas Corp.* 48,000 696,000
---------------
TELEPHONE 0.2%
Celcaribe SA*+ 69,918 139,836
Colt Telecom Group PLC ADR* 5,900 113,575
---------------
253,411
---------------
Total Utility 5,150,911
---------------
Total Common Stocks (Cost $78,816,813) 96,365,860
---------------
Preferred Stocks 0.8%
Gentra Inc. Series G Pfd.* 65,000 $ 853,607
Gentra Inc. Series Q Pfd.* 45,000 407,105
---------------
Total Preferred Stocks (Cost $1,200,057) 1,260,712
---------------
Convertible Preferred Stocks & Other 13.1%
AmeriKing, Inc. Sr. Exch. Pfd.[diamond] 250 275,000
Atlantic Richfield Co. Exch. Notes 144,500 3,106,750
Clearnet Communications Inc. Wts.* 3,300 26,400
Cooper Industries Inc. Exch. Note* 126,500 2,450,938
Crown Packaging Holdings Ltd. Wts.*+ 2,000 20
Granite Broadcasting Corp. Cv. Pfd. 10,000 565,000
Heartland Wireless Communications, Inc.
Wts.*+ 1,500 1,500
Hollinger International, Inc. Cv. Pfd. 220,000 2,530,000
ICG Holdings Inc. Exch. Pfd.[diamond] 500 552,500
K-III Communications Corp. Series B Exch.
Pfd.[diamond] 5,770 582,770
K-III Communications Corp. Series D Exch.
Pfd.* 5,000 490,000
La Petite Holdings Corp. Exch. Pfd.* 45,000 1,575,000
Pagemart Inc. Wts.*+ 3,450 18,975
S.D. Warren Co. Series B Sr. Exch.
Pfd.[diamond] 27,000 945,000
Salomon Inc. Cv. Pfd.* 45,000 1,350,000
SDW Holdings Corp. Wts.* 27,000 135,000
Sheffield Steel Corp. Wts.* 2,500 7,500
Silgan Holdings Inc. Exch. Pfd.* 257 274,990
Station Casinos Inc. Cv. Pfd. 60,000 2,872,500
Supermarkets General Holdings Corp. Exch.
Pfd.[diamond] 60,000 1,560,000
Wireless One Inc. Wts.*+ 1,500 1,500
---------------
Total Convertible Preferred Stocks & Other
(Cost $17,991,794) 19,321,343
---------------
Principal Maturity
Amount Date
- ------------------------------------------------------------------------
Convertible Bonds 1.2%
Crown Resources Corp. Cv.
Sub. Deb., 5.75% 600,000 8/27/2001 513,000
Rohr Inc. Cv. Sub. Note,
7.75% 500,000 5/15/2004 850,000
Winstar Communications,
Inc. Sr. Sub. Cv. Note,
0.00% to 10/14/00,
14.00% from
10/15/00 to maturity+ 650,000 10/15/2005 455,000
--------------
Total Convertible Bonds (Cost $1,373,459) 1,818,000
--------------
-----------------------------------------------------------------------------
3 December 1996
<PAGE>
Investment Portfolio (cont'd)
-----------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- -----------------------------------------------------------------------------
Non-Convertible Bonds 13.4%
Anacomp, Inc. Sr. Sub. Note,
13.00% $ 177,000 6/04/2002 $ 189,833
Belle Casinos Inc. First
Mortgage Note,
12.00%+[square] 175,000 10/15/2000 66,500
Celcaribe SA Sr. Sec. Note,
0.00% to
3/14/98, 13.50% from 3/15/98
to maturity 430,000 3/15/2004 369,800
CHC Helicopter Corp. Sr. Sub.
Note, 11.50% 442,000 7/15/2002 450,840
Clearnet Communications Inc.
Sr. Disc. Note, 0.00% to
12/14/00, 14.75% from
12/15/00 to maturity 1,000,000 12/15/2005 620,000
Coleman Worldwide Corp. Sr.
Sec. LYON, 0.00% 12,255,000 5/27/2013 3,569,269
Crown Packaging Holdings Ltd.
Sr. Sub. Disc. Note, 0.00%
to 10/31/00, 12.25% from
11/1/00 to maturity 2,000,000 11/01/2003 500,000
Envirosource Inc. Note, 9.75% 750,000 6/15/2003 705,937
Geotek Communications Inc.
Sr. Disc. Note, 0.00% to
7/14/00, 15.00% from
7/15/00 to maturity 500,000 7/15/2005 317,500
Grand Union Co. Sr. Sub.
Note, 12.00% 500,000 9/01/2004 527,500
Haynes International Inc. Sr.
Note, 11.625% 500,000 9/01/2004 527,500
Heartland Wireless
Communications, Inc. Note,
13.00% 250,000 4/15/2003 247,500
Intertek Financial Corp. Sr.
Sub. Note, 10.25%+ 500,000 11/01/2006 522,500
J.M. Peters, Inc. Sr. Note,
12.75% 250,000 5/01/2002 237,500
La Petite Holdings Corp. Sr.
Sec. Notes, 9.625% 750,000 8/01/2001 738,750
Marcus Cable Co. L.P. Sr.
Deb., 11.875% 525,000 10/01/2005 555,844
NS Group Inc. Units, 13.50% 250,000 7/15/2003 260,000
Outdoor Systems Inc. Sr. Sub.
Note, 9.375% 500,000 10/15/2006 515,000
Packaging Resources Inc. Sr.
Sec. Note, 11.625% $ 250,000 5/01/2003 $ 263,750
Pagemart Inc. Sr. Disc. Exch.
Note, 0.00% to 10/31/98,
12.25% from 11/1/98 to
maturity 750,000 11/01/2003 600,000
Park Newspapers Inc. Sr.
Note, 11.875%[diamond] 1,000,000 5/15/2004 1,175,000
Plastic Specialties &
Technology, Inc. Sr. Note,
11.25% 500,000 12/01/2003 520,000
Ralphs Grocery Co. Sr. Note,
10.45% 250,000 6/15/2004 265,937
Renaissance Cosmetics Inc.
Sr. Note, 13.75% 500,000 8/15/2001 582,500
Sheffield Steel Corp. First
Mortgage Note, 12.00% 500,000 11/01/2001 462,500
Spanish Broadcasting Systems
Inc. Sr. Note, 7.50% 750,000 6/15/2002 791,250
Spinnaker Industries Inc. Sr.
Sec. Note, 10.75%+ 500,000 10/15/2006 522,500
TransTexas Gas Corp. Sr. Sec.
Note, 11.50% 500,000 6/15/2002 540,000
U.S.A. Mobile Communications
Inc. Sr. Note, 14.00% 500,000 11/01/2004 570,000
Universal Outdoor Inc. Sr.
Sub. Note, 9.75% 1,000,000 10/15/2006 1,032,500
Viatel Inc. Sr. Disc. Note,
0.00% to 1/14/00, 15.00%
from 1/15/00 to maturity 750,000 1/15/2005 461,250
Winstar Communications, Inc.
Sr. Disc. Note, 0.00% to
10/14/00, 14.00% from
10/15/00 to maturity 550,000 10/15/2005 335,500
Wireless One Inc. Sr. Disc.
Note, 13.00% 750,000 10/15/2003 727,500
------------
Total Non-Convertible Bonds (Cost $19,780,855) 19,771,960
------------
Short-Term Obligations 5.8%
American Express Credit
Corp., 5.50% 4,539,000 1/03/1997 4,539,000
Chevron Oil Finance Co.,
6.15% 3,964,000 1/06/1997 3,964,000
------------
Total Short-Term Obligations (Cost $8,503,000) 8,503,000
------------
Total Investments (Cost $127,665,978)--99.7% 147,040,875
Cash and Other Assets, Less Liabilities--0.3% 383,606
------------
Net Assets--100.0% $147,424,481
============
-----------------------------------------------------------------------------
December 1996 4
<PAGE>
Investment Portfolio (cont'd)
- ------------------------------------------------------------------------------
Federal Income Tax Information:
At December 31, 1996, the net unrealized
appreciation of investments based on
cost for Federal income tax purposes
of $127,665,978 was as follows:
Aggregate gross unrealized appreciation
for all investments in which there is an
excess of value over tax cost $22,193,032
Aggregate gross unrealized depreciation
for all investments in which there is an
excess of tax cost over value (2,818,135)
--------------
$19,374,897
==============
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
[diamond] Payments of income may be made in cash or in the form of additional
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, 1996 was $1,905,914 and $1,965,956
(1.33% of net assets), respectively.
[square] Security is in default.
-----------------------------------------------------------------------------
5 December 1996
<PAGE>
Financial Statements
-----------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1996
(Unaudited)
The Statement of Assets and Liabilities is the Fund's balance sheet. Assets
are anything of value owned by the Fund; liabilities are claims against the
assets of the Fund. The Net Asset Value is the market value of each Fund
share.
Assets
Investments, at value (Cost $127,665,978)
(Note 1) $147,040,875
Cash 845
Receivable for securities sold 2,913,714
Receivable for fund shares sold 567,064
Dividends and interest receivable 537,660
Receivable from Distributor (Note 3) 13,751
Other assets 3,805
---------------
151,077,714
LIABILITIES
Payable for securities purchased 3,045,595
Payable for fund shares redeemed 328,571
Accrued transfer agent and shareholder services
(Note 2) 108,491
Accrued management fee (Note 2) 76,331
Accrued distribution and service fees (Note 5) 44,703
Accrued trustees' fees (Note 2) 6,541
Other accrued expenses 43,001
---------------
3,653,233
---------------
NET ASSETS $147,424,481
===============
Net Assets consist of:
Undistributed net investment income $ 265,428
Unrealized appreciation of investments 19,374,897
Accumulated net realized gain 8,152,726
Shares of beneficial interest 119,631,430
---------------
$147,424,481
===============
Net Asset Value and redemption price per share of
Class A shares ($53,603,995 / 3,981,630 shares of
beneficial interest) $13.46
======
Maximum Offering Price per share of Class A shares
($13.46 / .955) $14.09
======
Net Asset Value and offering price per share of Class
B shares ($39,681,590 / 2,958,652 shares of
beneficial interest)* $13.41
======
Net Asset Value, offering price and redemption price
per share of Class C shares ($50,745,247 /
3,771,022 shares of beneficial interest) $13.46
======
Net Asset Value and offering price per share of Class
D shares ($3,393,649 / 253,182 shares of beneficial
interest)* $13.40
======
-----------------------------------------------------------------------------
* 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, 1996
(Unaudited)
The Statement of Operations is the Fund's income statement and shows the
income earned from its investments and its operating costs. It concludes with
the net gains (losses are shown in parentheses) for the period stated.
Investment Income
Dividends, net of foreign taxes of $17,908 $ 1,306,936
Interest 1,119,004
-------------
2,425,940
EXPENSES
Management fee (Note 2) 403,012
Transfer agent and shareholder services (Note 2) 171,900
Custodian fee 66,686
Reports to shareholders 45,732
Registration fees 18,208
Audit fee 14,844
Service fee--Class A (Note 5) 59,837
Distribution and service fees--Class B (Note 5) 154,493
Distribution and service fees--Class D (Note 5) 9,786
Trustees' fees (Note 2) 7,078
Legal fees 4,108
Miscellaneous 6,647
-------------
962,331
Expenses borne by the Distributor (Note 3) (115,940)
-------------
846,391
-------------
Net investment income 1,579,549
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments (Notes 1 and 4) 9,094,203
Net realized gain on foreign currency (Note 1) 20,979
-------------
Total net realized gain 9,115,182
-------------
Net unrealized appreciation of investments 6,238,064
-------------
Net gain on investments 15,353,246
-------------
Net increase in net assets resulting from operations $16,932,795
=============
The accompanying notes are an integral part of the financial statements.
-----------------------------------------------------------------------------
December 1996 6
<PAGE>
Financial Statements
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
-----------------------------------------------------------------------------
The Statement of Changes in Net Assets summarizes on a comparative basis
changes in net assets resulting from operations, distributions to
shareholders, and capital share transactions.
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
- -----------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 1,579,549 $ 1,719,834
Net realized gain on investments
and foreign currency* 9,115,182 15,234,292
Net unrealized appreciation of
investments 6,238,064 2,941,031
----------------- ----------------
Net increase resulting from
operations 16,932,795 19,895,157
----------------- ----------------
Dividends from net investment income:
Class A (536,516) (882,400)
Class B (119,998) (304,585)
Class C (564,985) (914,329)
Class D (18,852) (17,808)
----------------- ----------------
(1,240,351) (2,119,122)
----------------- ----------------
Distributions from net realized gains:
Class A (6,343,780) (492,304)
Class B (3,973,081) (223,972)
Class C (5,623,211) (472,914)
Class D (219,488) (18,976)
----------------- ----------------
(16,159,560) (1,208,166)
----------------- ----------------
Net increase from fund share
transactions (Note 6) 37,200,705 4,473,009
----------------- ----------------
Total increase in net assets 36,733,589 21,040,878
NET ASSETS
Beginning of period 110,690,892 89,650,014
----------------- ----------------
End of period (including
undistributed (overdistributed)
net investment income of $265,428
and $(73,770), respectively) $147,424,481 $110,690,892
================= ================
*Net realized gain for Federal
income tax purposes (Note 1) $ 9,020,428 $ 15,256,123
================= ================
Notes to Unaudited Financial Statements
- ------------------------------------------------------------------------------
December 31, 1996
Note 1
State Street Research Equity Income Fund (the "Fund"), is a series of State
Street Research 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 seeks to provide a high level of current income and, secondarily,
long-term growth of capital by investing primarily in common stocks offering
above-average dividend yields and in securities convertible into common
stocks. The Fund seeks to provide a higher income yield than that of the
Standard & Poor's 500 Stock Index. The Fund has authority to invest from time
to time in lower rated fixed income securities.
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. 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.
The accompanying notes are an integral part of the financial statements.
- ------------------------------------------------------------------------------
7 December 1996
<PAGE>
Financial Statements
- ------------------------------------------------------------------------------
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.
F. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into 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, 1996, the fees
pursuant to such agreement amounted to $403,012.
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, 1996, the amount of such shareholder servicing and account
maintenance expenses was $92,267.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $7,078 during the six months ended December 31, 1996.
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, 1996, the amount of such
expenses assumed by the Distributor and its affiliates was $115,940.
Note 4
For the six months ended December 31, 1996, purchases and sales of
securities, exclusive of short-term obligations, aggregated $67,906,260 and
$55,320,273, respectively.
-----------------------------------------------------------------------------
December 1996 8
<PAGE>
Financial Statements
- ------------------------------------------------------------------------------
Notes (cont'd)
-----------------------------------------------------------------------------
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 or
servicing of shareholder accounts, to reimburse securities deal-
ers 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, 1996, fees
pursuant to such plan amounted to $59,837, $154,493 and $9,786 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 $18,695 and $81,695, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $146,342 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $18,870 and $682 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, 1996, the
Distributor owned 3,614 Class A shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
----------------------------- ------------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 471,272 $ 6,141,196 499,172 $ 6,447,619
Issued upon reinvestment of:
Distributions from net realized gains 497,882 5,949,190 37,754 461,359
Dividends from net investment income 37,604 486,719 61,647 800,177
Shares repurchased (234,929) (3,049,547) (578,171) (7,338,450)
-------------- -------------- -------------- ---------------
Net increase 771,829 $ 9,527,558 20,402 $ 370,705
============== ============== ============== ===============
Class B Shares Amount Shares Amount
- ---------------------------------------- -------------- -------------- -------------- ---------------
Shares sold 973,017 $12,549,180 670,304 $ 8,719,427
Issued upon reinvestment of:
Distributions from net realized gains 296,462 3,540,487 17,255 210,166
Dividends from net investment income 9,321 119,998 20,749 269,362
Shares repurchased (168,791) (2,164,421) (241,006) (3,101,383)
-------------- -------------- -------------- ---------------
Net increase 1,110,009 $14,045,244 467,302 $ 6,097,572
============== ============== ============== ===============
Class C Shares Amount Shares Amount
- ---------------------------------------- -------------- -------------- -------------- ---------------
Shares sold 876,931 $11,353,888 887,078 $ 11,446,658
Issued upon reinvestment of:
Distributions from net realized gains 470,421 5,622,233 38,732 472,914
Dividends from net investment income 43,741 564,907 70,662 914,329
Shares repurchased (458,246) (5,881,509) (1,135,981) (14,666,301)
-------------- -------------- -------------- ---------------
Net increase (decrease) 932,847 $11,659,519 (139,509) $ (1,832,400)
============== ============== ============== ===============
Class D Shares Amount Shares Amount
- ---------------------------------------- -------------- -------------- -------------- ---------------
Shares sold 181,000 $ 2,365,536 46,515 $ 607,680
Issued upon reinvestment of:
Distributions from net realized gains 17,516 208,976 1,480 18,010
Dividends from net investment income 1,036 13,522 861 11,171
Shares repurchased (46,680) (619,650) (65,543) (799,729)
-------------- -------------- -------------- ---------------
Net increase (decrease) 152,872 $ 1,968,384 (16,687) $ (162,868)
============== ============== ============== ===============
</TABLE>
-----------------------------------------------------------------------------
9 December 1996
<PAGE>
Financial Statements
- ------------------------------------------------------------------------------
Financial Highlights
-----------------------------------------------------------------------------
Financial Highlights presents selected per share data, ratios and
supplemental data. The per share data demonstrates on a comparative basis how
the net asset value per share was affected by several factors during each
period.
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Six months ended Year ended June 30
December 31, 1996 -----------------------------------------------------
Class A (Unaudited)** 1996** 1995** 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.85 $ 11.70 $10.87 $10.79 $ 9.19 $ 8.33
Net investment income* 0.17 0.23 0.28 0.24 0.44 0.39
Net realized and unrealized gain on
investments 1.52 2.36 1.37 0.25 1.52 0.83
Dividends from net investment income (0.14) (0.28) (0.28) (0.26) (0.36) (0.36)
Distributions from net realized gains (1.94) (0.16) (0.54) (0.15) -- --
----------------- --------- --------- --------- --------- ----------
Net asset value, end of period $13.46 $ 13.85 $11.70 $10.87 $10.79 $ 9.19
================= ========= ========= ========= ========= ==========
Total return 14.23%+++ 22.41%+ 16.12%+ 4.30%+ 21.64%+ 14.81%+
Net assets at end of period (000s) $53,604 $44,464 $37,327 $40,484 $28,995 $51,585
Ratio of operating expenses to average
net assets* 1.25%++ 1.25% 1.42% 1.50% 1.50% 1.50%
Ratio of net investment income to
average net assets* 2.66%++ 1.78% 2.55% 2.42% 3.76% 4.27%
Portfolio turnover rate 46.66% 111.13% 67.50% 73.96% 80.42% 102.39%
Average commission rate @ $ 0.04 $ 0.01 -- -- -- --
*Reflects voluntary assumption of fees
or expenses per share in each period
(Note 3) $ 0.01 $ 0.03 $ 0.05 $ 0.05 $ 0.01 $ 0.01
</TABLE>
<TABLE>
<CAPTION>
Six months ended Year ended June 30
December 31, 1996 ------------------------------------------
Class B (Unaudited)** 1996** 1995** 1994 1993***
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.82 $ 11.68 $10.86 $10.79 $10.81
Net investment income* 0.12 0.13 0.21 0.21 0.02
Net realized and unrealized gain (loss)
on investments 1.51 2.36 1.38 0.21 (0.02)
Dividends from net investment income (0.10) (0.19) (0.23) (0.20) (0.02)
Distributions from net realized gains (1.94) (0.16) (0.54) (0.15) --
----------------- --------- --------- -------------------
Net asset value, end of period $13.41 $ 13.82 $11.68 $10.86 $10.79
================= ========= ========= ===================
Total return 13.74%+++ 21.60%+ 15.43%+ 3.79%+ 0.05%+++
Net assets at end of period (000s) $39,682 $25,54 $16,130 $10,752 $1,060
Ratio of operating expenses to average
net assets* 2.00%++ 2.00% 2.00% 2.00% 2.00%++
Ratio of net investment income to
average net assets* 1.92%++ 1.05% 1.95% 1.80% 1.53%++
Portfolio turnover rate 46.66% 111.13% 67.50% 73.96% 80.42%
Average commission rate @ $ 0.04 $ 0.01 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in period
(Note 3) $ 0.01 $ 0.03 $ 0.05 $ 0.07 $ 0.00
</TABLE>
**Per-share figures have been calculated using the average shares method.
***June 1, 1993 (commencement of share class designations) to June 30, 1993.
++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.
@For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose its
average commission rate per share paid for security trades.
-----------------------------------------------------------------------------
December 1996 10
<PAGE>
Financial Statements
- ------------------------------------------------------------------------------
Financial Highlights (cont'd)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended Year ended June 30
December 31, 1996 ------------------------------------------
Class C (Unaudited)** 1996** 1995** 1994 1993***
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.85 $ 11.70 $10.86 $10.79 $10.81
Net investment income* 0.19 0.26 0.32 0.33 0.03
Net realized and unrealized gain (loss)
on investments 1.52 2.36 1.39 0.21 (0.02)
Dividends from net investment income (0.16) (0.31) (0.33) (0.32) (0.03)
Distributions from net realized gains (1.94) (0.16) (0.54) (0.15) --
----------------- --------- --------- -------------------
Net asset value, end of period $13.46 $ 13.85 $11.70 $10.86 $10.79
================= ========= ========= ===================
Total return 14.37%+++ 22.82%+ 16.64%+ 4.84%+ 0.14%+++
Net assets at end of period (000s) $50,745 $39,298 $34,827 $20,266 $15,988
Ratio of operating expenses to average
net assets* 1.00%++ 1.00% 1.00% 1.00% 1.00%++
Ratio of net investment income to
average net assets* 2.90%++ 2.03% 2.93% 2.92% 1.65%++
Portfolio turnover rate 46.66% 111.13% 67.50% 73.96% 80.42%
Average commission rate @ $ 0.04 $ 0.01 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in period
(Note 3) $ 0.01 $ 0.03 $ 0.05 $ 0.06 $ 0.00
</TABLE>
<TABLE>
<CAPTION>
Six months ended Year ended June 30
December 31, 1996 ------------------------------------------
Class D (Unaudited)** 1996** 1995** 1994 1993***
- --------------------------------------- ----------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.82 $ 11.67 $10.86 $10.79 $10.81
Net investment income* 0.12 0.13 0.22 0.21 0.02
Net realized and unrealized gain (loss)
on investments 1.50 2.37 1.36 0.21 (0.02)
Dividends from net investment income (0.10) (0.19) (0.23) (0.20) (0.02)
Distributions from realized gains (1.94) (0.16) (0.54) (0.15) --
----------------- --------- --------- -------------------
Net asset value, end of period $13.40 $ 13.82 $11.67 $10.86 $10.79
================= ========= ========= ===================
Total return 13.80%+++ 21.68%+ 15.33%+ 3.78%+ 0.04%+++
Net assets at end of period (000s) $3,394 $1,386 $1,366 $1,280 $628
Ratio of operating expenses to average
net assets* 2.00%++ 2.00% 2.00% 2.00% 2.00%++
Ratio of net investment income to
average net assets* 1.91%++ 1.03% 1.96% 1.88% 1.49%++
Portfolio turnover rate 46.66% 111.13% 67.50% 73.96% 80.42%
Average commission rate @ $ 0.04 $ 0.01 -- -- --
*Reflects voluntary assumption of fees
or expenses per share in period
(Note 3) $ 0.01 $ 0.03 $ 0.05 $ 0.06 $ 0.00
</TABLE>
-----------------------------------------------------------------------------
**Per-share figures have been calculated using the average shares method.
***June 1, 1993 (commencement of share class designations) to June 30, 1993.
++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.
@For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose its
average commission rate per share paid for security trades.
-----------------------------------------------------------------------------
11 December 1996
<PAGE>
[FRONT COVER]
[State Street Research logo] State Street Research
[Illustration of person climbing steps towards the stars]
State Street Research
Equity Investment Fund
Semiannual Report
December 31, 1996
- ------------------------------------
What's Inside
- ------------------------------------
Investment Update
About the Fund, economy
and markets
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
- ---------------------------------[Dalbar Award]---------------------------------
Quality
Tested Service
1 9 9 5
Dalar
Honors Commitment To:
Investors
For Excellence
in
Shareholder Service
- --------------------------------------------------------------------------------
<PAGE>
[BACK COVER]
State Street Research Equity Investment 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] State Street Research
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Equity Investment
Fund prospectus. When used after March 31, 1997, this report must be accompanied
by a current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 3721-970225(0398)SSR-LD
Cover Illustration by Dorothy Cullinan EIV-819C-297IBS
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Investment Update
- -----------------------------------------------------------------------------
Investment Environment
The Economy
(bullet) Economic growth accelerated in the fourth quarter of 1996 after
showing signs of a slowdown in the third quarter.
(bullet) Consumer spending and industrial output showed a steady trend of
advancement for the final six months of 1996. Wages continued to
rise during the period, but consumer prices and inflation remained
low.
(bullet) The Federal Reserve met several times since July and left interest
rates unchanged
The Markets
(bullet) From June 30 to December 31, 1996 stocks and bonds offered positive
performance overall, peppered with short-term corrections in some
sectors.
(bullet) The stock market continued its rise, with the Dow Jones Industrial
Average passing the 6000 point marker in October. The S&P 500 was up
+11.68 for the six months ended December 31, 1996.(1)
(bullet) Bond performance improved during the final six months of the year.
The Lehman Brothers Aggregate Bond Index gained +4.90%.(1)
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1996, Class A shares of Equity
Investment Fund returned +10.25% (does not reflect sales charge).(2)
The average six-month return for the 567 fund classes in Lipper
Analytical Services' Growth and Income Fund category was +10.57%
(does not reflect sales charge).
(bullet) The Fund's energy holdings helped boost its performance. This sector
benefited from industry restructuring and generally higher commodity
prices.
(bullet) Overweighting in the finance sector also helped performance. Banks
showed more promise during the year but were still selling below
average market values, so they provided good opportunities.
(bullet) The consumer cyclical sector was disappointing in 1996, and retailer
Home Depot, the Fund's 11th largest holding, detracted from
performance.
Current strategy
(bullet) We are maintaining an overweighting in the science and technology
sector, focusing on companies like Cisco Systems, the leading
producer of networking products and services, which have the
industry position to help weather the inevitable market turbulence.
(bullet) With valuations at their current high levels, we are seeking
lower-risk buy opportunities.
(bullet) We continue to emphasize a high-quality portfolio with stock
selection based on companies' fundamentals.
December 31, 1996
(1)The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The Lehman Brothers Aggregate Bond Index is a commonly used
measure of bond market performance. The indices are unmanaged and do not take
sales charges into consideration. Direct investment in the indices is not
possible; results are for illustrative purposes only.
(2)+9.85% for Class B shares; +10.33% for Class C shares; +9.85% 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 may include
periods prior to the adoption of class designations in 1993, which resulted
in new or increased 12b-1 fees of up to 1% per class thereafter and which
will reduce subsequent performance. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and large
institutions.
(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5%
"B" share or 1% "D" share contingent deferred sales charges where applicable.
(5)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
(6) Performance results for the Fund are increased by the voluntary reduction
of Fund fees and expenses. The first figure reflects expense reduction; the
second shows what results would have been without subsidization.
Please note that the discussion throughout this shareholder report is dated
as indicated, and, because of possible changes in viewpoint, data and
transactions, should not be relied upon as being current thereafter.
- -----------------------------------------------------------------------------
Fund Information (all data are for periods ended December 31, 1996)
- -----------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3),(4),(6)
- -------------------------------------------------------------------
10 Years 5 Years 1 Year
- -------------------------------------------------------------------
Class A +12.44%/+12.08% +12.80%/+12.52% +16.10%/+15.90%
- -------------------------------------------------------------------
Class B +12.70%/+12.34% +13.08%/+12.79% +15.64%/+15.42%
- -------------------------------------------------------------------
Class C +13.10%/+12.72% +14.12%/+13.80% +21.81%/+21.59%
- -------------------------------------------------------------------
Class D +12.70%/+12.31% +13.31%/+12.99% +19.65%/+19.42%
- -------------------------------------------------------------------
Cumulative Total Returns
(do not reflect sales charge)(3),(5),(6)
- -------------------------------------------------------------------
10 Years 5 Years 1 Year
- -------------------------------------------------------------------
Class A +238.37%/+227.53% +91.25%/+88.86% +21.57%/+21.36%
- -------------------------------------------------------------------
Class B +230.69%/+220.06% +86.91%/+84.56% +20.64%/+20.42%
- -------------------------------------------------------------------
Class C +242.51%/+231.03% +93.59%/+90.88% +21.81%/+21.59%
- -------------------------------------------------------------------
Class D +230.48%/+219.38% +86.79%/+84.16% +20.65%/+20.42%
- -------------------------------------------------------------------
Top 10 Stock Positions
(by percentage of net assets)
1 BankAmerica Banking 3.1%
2 Citicorp Banking 3.0%
3 General Electric Electrical equipment 2.5%
4 Schlumberger Oil service equipment 2.5%
5 Rohm & Haas Chemical 2.3%
6 DuPont Chemical 2.2%
7 Monsanto Chemical 2.1%
8 Royal Dutch Oil exploration 2.0%
9 Johnson & Johnson Medical supply 2.0%
10 Anheuser-Busch Beer brewing 2.0%
These securities represent an aggregate of 23.7% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
- ---------------------------------[BAR CHART]------------------------------------
Top 5 Equity Industries
(by percentage of net assets)
Chemicals 8.4%
Banks 7.8%
Retail 7.5%
Hospital supply 7.2%
Oil 6.8%
Total: 37.7%
- --------------------------------------------------------------------------------
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Investment Portfolio
- -----------------------------------------------------------------------------
December 31, 1996 (Unaudited)
- --------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------
COMMON STOCKS 97.0%
Basic Industries 17.1%
Chemical 8.4%
E.I. Du Pont De Nemours & Co. 31,200 $ 2,944,500
Monsanto Co. 75,000 2,915,625
Rhone-Poulenc SA ADR* 72,700 2,462,712
Rohm & Haas Co. 38,200 3,118,075
---------------
11,440,912
---------------
Electrical Equipment 2.5%
General Electric Co. 34,500 3,411,188
---------------
Forest Product 0.5%
James River Corp. 21,600 715,500
---------------
Machinery 1.5%
Case Corp. 38,000 2,071,000
---------------
Metal & Mining 3.3%
Aluminum Company of America 27,100 1,727,625
Carpenter Technology Corp.* 20,000 732,500
Reynolds Metals Co. 35,200 1,984,400
---------------
4,444,525
---------------
Railroad 0.9%
Canadian National Railway Co. 30,900 1,174,200
---------------
Total Basic Industries 23,257,325
---------------
Consumer Cyclical 15.7%
Automotive 2.2%
General Motors Corp. 21,900 1,220,925
Magna International, Inc. Cl. A 31,600 1,761,700
---------------
2,982,625
---------------
Hotel & Restaurant 2.3%
Harrah's Entertainment Inc.* 57,000 1,132,875
Hilton Hotels Corp. 34,600 903,925
Mirage Resorts Inc.* 48,200 1,042,325
---------------
3,079,125
---------------
Recreation 3.7%
Harley Davidson Inc. 19,000 893,000
Time Warner Inc. 56,700 2,126,250
Walt Disney Co. 29,843 2,077,819
---------------
5,097,069
---------------
Retail Trade 7.5%
Gucci Group NV* 13,300 849,538
Home Depot Inc. 52,100 2,611,512
J.C. Penney Inc. 24,400 1,189,500
Kroger Co.* 35,100 1,632,150
Rite-Aid Corp. 25,400 $ 1,009,650
Sears Roebuck & Co. 26,300 1,213,087
Toys R Us Inc.* 60,000 1,800,000
---------------
10,305,437
---------------
Total Consumer Cyclical 21,464,256
---------------
Consumer Staple 22.1%
Business Service 2.8%
Cognizant Corp.* 25,300 834,900
HBO & Co. 18,000 1,068,750
Interpublic Group of Companies, Inc. 39,600 1,881,000
---------------
3,784,650
---------------
Drug 4.0%
Amgen Inc.* 11,600 630,750
Eli Lilly & Co. 19,772 1,443,356
Novartis AG ADR* 41,066 2,344,297
Pfizer Inc. 11,700 969,637
---------------
5,388,040
---------------
Food & Beverage 3.6%
Anheuser-Busch Companies, Inc. 66,500 2,660,000
Coca-Cola Co. 42,100 2,215,513
---------------
4,875,513
---------------
Hospital Supply 7.2%
Aetna Inc. 13,800 1,104,000
Baxter International Inc. 62,400 2,558,400
Columbia / HCA Healthcare Corp. 51,150 2,084,362
Guidant Corp. 23,700 1,350,900
Johnson & Johnson 53,600 2,666,600
---------------
9,764,262
---------------
Personal Care 2.3%
Avon Products Inc. 27,200 1,553,800
Gillette Co. 20,800 1,617,200
---------------
3,171,000
---------------
Printing & Publishing 0.4%
Dun & Bradstreet Corp. 25,300 600,875
---------------
Tobacco 1.8%
Philip Morris Companies, Inc. 22,400 2,522,800
---------------
Total Consumer Staple 30,107,140
---------------
Energy 9.3%
Oil 6.8%
Burlington Resources Inc. 44,600 2,246,725
Exxon Corp. 14,300 1,401,400
Oryx Energy Co. 25,200 623,700
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Investment Portfolio (cont'd)
- -----------------------------------------------------------------------------
Oil (cont'd)
Royal Dutch Petroleum Co. 16,200 $ 2,766,150
Total SA Cl. B ADR 55,900 2,249,975
---------------
9,287,950
---------------
Oil Service 2.5%
Schlumberger Ltd. 34,000 3,395,750
---------------
Total Energy 12,683,700
---------------
Finance 13.4%
Bank 7.8%
BankAmerica Corp. 42,700 4,259,325
Citicorp 39,900 4,109,700
NationsBank Corp. 23,700 2,316,675
---------------
10,685,700
---------------
Financial Service 0.6%
Federal National Mortgage Association 23,800 886,550
---------------
Insurance 5.0%
Ace Ltd. 38,200 2,296,775
American International Group Inc. 12,250 1,326,062
General Re Corp. 1,300 205,075
Saint Paul Companies, Inc. 24,400 1,430,450
Travelers Group Inc. 33,400 1,515,525
---------------
6,773,887
---------------
Total Finance 18,346,137
---------------
Science & Technology 17.9%
Aerospace 0.9%
Raytheon Co. 26,000 1,251,250
---------------
Computer Software & Service 3.8%
Cisco Systems Inc.* 41,000 2,608,625
Electronic Data Systems Corp. 31,600 1,366,700
First Data Corp. 32,400 1,182,600
---------------
5,157,925
---------------
Electronic Components 2.8%
Intel Corp.* 18,100 2,369,969
Texas Instruments Inc. 22,200 1,415,250
---------------
3,785,219
---------------
Electronic Equipment 6.2%
Advanced Fibre Communications, Inc.* 10,300 572,938
L.M. Ericsson Telephone Co. ADR Cl. B* 56,740 1,712,839
Lucent Technologies Inc.* 43,300 2,002,625
Motorola Inc. 12,200 748,775
Perkin-Elmer Corp. 34,500 2,031,187
Teradyne Inc.* 57,700 1,406,437
---------------
8,474,801
---------------
Office Equipment 4.2%
Compaq Computer Corp.* 23,400 $ 1,737,450
Diebold Inc. 28,850 1,813,944
International Business Machines Corp. 14,500 2,189,500
---------------
5,740,894
---------------
Total Science & Technology 24,410,089
---------------
Utility 1.5%
Electric 0.8%
FPL Group Inc. 21,800 1,002,800
---------------
Natural Gas 0.7%
Calpine Corp.* 50,000 1,000,000
---------------
Total Utility 2,002,800
---------------
Total Common Stocks (Cost $105,033,820) 132,271,447
---------------
- --------------------------------------------------------------------------------
Principal Maturity
Amount Date
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS 2.7%
Chevron Oil Finance Co., 6.15% $1,835,000 1/06/1997 1,835,000
Ford Motor Credit Co., 5.80% 1,787,000 1/06/1997 1,787,000
--------------
Total Short-Term Obligations (Cost $3,622,000) 3,622,000
--------------
Total Investments (Cost $108,655,820)--99.7% 135,893,447
Cash and Other Assets, Less Liabilities--0.3% 470,253
--------------
Net Assets--100.0% $136,363,700
==============
Federal Income Tax Information:
At December 31, 1996, the net unrealized appreciation
of investments based on cost for Federal income tax
purposes of $108,718,006 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost $ 27,865,422
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (689,981)
------------------
$ 27,175,441
==================
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
December 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $108,655,820) (Note 1) $135,893,447
Cash 408
Receivable for securities sold 380,794
Receivable for fund shares sold 186,544
Dividends and interest receivable 138,373
Receivable from Distributor (Note 3) 14,530
Other assets 8,034
---------------
136,622,130
Liabilities
Accrued transfer agent and shareholder services (Note 2) 103,259
Accrued management fee (Note 2) 73,368
Payable for fund shares redeemed 49,073
Accrued distribution and service fees (Note 5) 24,269
Accrued trustees' fees (Note 2) 5,586
Other accrued expenses 2,875
---------------
258,430
---------------
Net Assets $136,363,700
===============
Net Assets consist of:
Undistributed net investment income $ 499,023
Unrealized appreciation of investments 27,237,627
Accumulated net realized gain 4,223,887
Shares of beneficial interest 104,403,163
---------------
$136,363,700
===============
Net Asset Value and redemption price per share of Class A
shares ($43,756,313 / 2,635,958 shares of beneficial
interest) $16.60
======
Maximum Offering Price per share of Class A shares
($16.60 / .955) $17.38
======
Net Asset Value and offering price per share of Class B
shares ($17,634,622 / 1,074,159 shares of beneficial
interest)* $16.42
======
Net Asset Value, offering price and redemption price per
share of Class C shares ($73,879,971 / 4,454,883 shares of
beneficial interest) $16.58
======
Net Asset Value and offering price per share of Class D
shares ($1,092,794 / 66,592 shares of beneficial
interest)* $16.41
======
-----------------------------------------------------------------------------
*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, 1996 (Unaudited)
Investment Income
Dividends, net of foreign taxes of $11,218 $ 923,914
Interest 151,032
-------------
1,074,946
Expenses
Management fee (Note 2) 406,635
Transfer agent and shareholder services (Note 2) 172,039
Custodian fee 52,964
Reports to shareholders 43,433
Registration fees 18,917
Audit fee 14,146
Trustees' fees (Note 2) 6,509
Service fee--Class A (Note 5) 51,721
Distribution and service fees--Class B (Note 5) 74,586
Distribution and service fees--Class D (Note 5) 4,931
Legal fees 4,851
Miscellaneous 5,351
-------------
856,083
Expenses borne by the Distributor (Note 3) (99,253)
-------------
756,830
-------------
Net investment income 318,116
-------------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 4) 10,934,036
Net unrealized appreciation of investments 742,649
-------------
Net gain on investments 11,676,685
-------------
Net increase in net assets resulting from operations $11,994,801
=============
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
State Street Research Equity Investment Fund
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 318,116 $ 907,504
Net realized gain on
investments* 10,934,036 10,187,786
Net unrealized appreciation of
investments 742,649 11,825,753
------------ -------------
Net increase resulting from
operations 11,994,801 22,921,043
------------ ------------
Dividends from net investment income:
Class A (150,089) (248,210)
Class C (340,550) (571,956)
------------- ------------
(490,639) (820,166)
------------- ------------
Distributions from net realized gains:
Class A (4,782,504) (1,371,017)
Class B (1,764,902) (315,045)
Class C (7,753,956) (2,286,228)
Class D (116,740) (31,975)
------------- ------------
(14,418,102) (4,004,265)
------------- ------------
Net increase from fund share
transactions (Note 6) 15,741,103 17,130,921
------------- ------------
Total increase in net assets 12,827,163 35,227,533
Net Assets
Beginning of period 123,536,537 88,309,004
------------ ------------
End of period (including
undistributed net investment
income of $499,023 and
$671,546, respectively) $136,363,700 $123,536,537
============ ============
* Net realized gain for Federal
income tax purposes (Note 1) $ 10,934,036 $ 10,179,814
============ ============
- ------------------------------------------------------------------------------
Notes to Unaudited Financial Statements
- ------------------------------------------------------------------------------
December 31, 1996
Note 1
State Street Research Equity Investment Fund (the "Fund"), is a series of
State Street Research 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 seeks to achieve long-term growth of capital and, secondarily,
long-term growth of income by investing primarily in common stocks of
established companies with above-average prospects for growth.
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. 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.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
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.
F. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into 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, 1996, the fees
pursuant to such agreement amounted to $406,635.
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, 1996, the amount of such shareholder servicing and account
maintenance expenses was $95,862.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $6,509 during the six months ended December 31, 1996.
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, 1996, the amount of such
expenses assumed by the Distributor and its affiliates was $99,253.
Note 4
For the six months ended December 31, 1996, purchases and sales of
securities, exclusive of short-term obligations, aggregated $58,800,663 and
$57,785,097, 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 or servicing of shareholder
accounts, to reimburse securities dealers for distribution and marketing
services, to furnish ongoing assistance to investors and to defray a portion
of its distribution and marketing expenses. For the six months ended December
31, 1996, fees pursuant to such plan amounted to $51,721, $74,586 and $4,931
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 $8,785 and $53,317, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $104,035 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $10,153 on redemptions of Class B shares during the same period.
6
<PAGE>
State Street Research Equity Investment 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, 1996,
Metropolitan owned 48,256 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, 1996 Year ended
(Unaudited) June 30, 1996
------------------------------ ------------------------------
Class A Shares Amount Shares Amount
-------------------------------------------------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 202,373 $ 3,351,033 405,624 $ 6,395,709
Issued upon reinvestment of:
Distributions from net realized gains 289,030 4,652,507 89,924 1,331,731
Dividends from net investment income 8,684 144,245 14,813 236,859
Shares repurchased (170,345) (2,836,224) (387,435) (6,071,101)
-------------- --------------- -------------- ---------------
Net increase 329,742 $ 5,311,561 122,926 $ 1,893,198
============== =============== ============== ===============
Class B Shares Amount Shares Amount
-------------------------------------------------------- --------------- -------------- ---------------
Shares sold 260,065 $ 4,294,103 440,639 $ 6,927,207
Issued upon reinvestment of
distributions from net realized gains 108,323 1,728,240 20,913 307,750
Shares repurchased (71,980) (1,179,418) (102,902) (1,616,965)
-------------- --------------- -------------- ---------------
Net increase 296,408 $ 4,842,925 358,650 $ 5,617,992
============== =============== ============== ===============
Class C Shares Amount Shares Amount
-------------------------------------------------------- --------------- -------------- ---------------
Shares sold 1,034,409 $ 17,076,178 1,692,679 $ 26,954,407
Issued upon reinvestment of:
Distributions from net realized gains 481,543 7,753,590 154,432 2,286,228
Dividends from net investment income 20,531 340,442 36,260 571,723
Shares repurchased (1,203,245) (19,770,634) (1,302,028) (20,281,019)
-------------- --------------- -------------- ---------------
Net increase 333,238 $ 5,399,576 581,343 $ 9,531,339
============== =============== ============== ===============
Class D Shares Amount Shares Amount
-------------------------------------------------------- --------------- -------------- ---------------
Shares sold 5,646 $ 96,541 5,582 $ 87,865
Issued upon reinvestment of
distributions from net realized gains 7,066 112,590 2,081 30,561
Shares repurchased (1,286) (22,090) (1,906) (30,034)
-------------- --------------- -------------- ---------------
Net increase 11,426 $ 187,041 5,757 $ 88,392
============== =============== ============== ===============
</TABLE>
7
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Financial Highlights
- -----------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------
Six months ended
December 31, 1996 Year ended June 30
-----------------------------------------------------
(Unaudited)** 1996** 1995** 1994 1993 1992
- --------------------------------------- ------------------ --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.04 $ 14.28 $ 12.44 $ 14.52 $ 13.16 $ 11.19
Net investment income* 0.04 0.12 0.08 0.01 0.04 0.05
Net realized and unrealized gain on
investments 1.57 3.38 2.14 0.18 2.48 1.99
Dividends from net investment income (0.06) (0.11) (0.05) -- (0.04) (0.07)
Distributions from net realized gains (1.99) (0.63) (0.33) (2.27) (1.12) --
------------------ --------- --------- --------- --------- ----------
Net asset value, end of period $ 16.60 $ 17.04 $ 14.28 $ 12.44 $ 14.52 $ 13.16
================== ========= ========= ========= ========= ==========
Total return 10.25%+++ 25.33%+ 18.34%+ 0.93%+ 20.37%+ 18.27%+
Net assets at end of period (000s) $43,756 $39,300 $31,174 $29,821 $26,933 $48,473
Ratio of operating expenses to average
net assets* 1.25%++ 1.25% 1.42% 1.50% 1.50% 1.50%
Ratio of net investment income to
average net assets* 0.49%++ 0.79% 0.64% 0.08% 0.23% 0.43%
Portfolio turnover rate 47.67% 44.44% 47.93% 62.93% 92.35% 81.89%
Average commission rate@ $ 0.05 $ 0.03 -- -- -- --
*Reflects voluntary assumption of fees
or expenses per share in period (Note 3). $ 0.01 $ 0.03 $ 0.06 $ 0.04 $ 0.02 $ 0.02
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------
Six months ended
December 31, 1996 Year ended June 30
--------------------------------------------
(Unaudited)** 1996** 1995** 1994 1993***
--------------------------------------------- ------------------ --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.88 $ 14.16 $12.36 $14.51 $14.78
Net investment income (loss)* (0.02) 0.01 0.01 (0.02) 0.00
Net realized and unrealized gain (loss) on
investments 1.55 3.34 2.12 0.14 (0.26)
Dividend from net investment income -- -- -- -- (0.01)
Distributions from net realized gains (1.99) (0.63) (0.33) (2.27) --
------------------ --------- --------- --------- ------------
Net asset value, end of period $ 16.42 $ 16.88 $14.16 $12.36 $14.51
================== ========= ========= ========= ============
Total return 9.85%+++ 24.39%+ 17.70%+ 0.37%+ (1.77)%+++
Net assets at end of period (000s) $17,635 $13,129 $5,933 $4,029 $ 663
Ratio of operating expenses to average net
assets* 2.00%++ 2.00% 2.00% 2.00% 2.00%++
Ratio of net investment income (loss) to
average net assets* (0.28)%++ 0.05% 0.08% (0.39)% 0.03%++
Portfolio turnover rate 47.67% 44.44% 47.93% 62.93% 92.35%
Average commission rate@ $ 0.05 $ 0.03 -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $ 0.01 $ 0.03 $ 0.06 $ 0.04 $ 0.00
</TABLE>
-----------------------------------------------------------------------------
**Per-share figures have been calculated using the average shares method.
***June 1, 1993 (commencement of share class designations) to June 30, 1993.
++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.
@For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose its
average commission rate per share paid for security trades.
8
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Financial Highlights (cont'd)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------------------
Six months ended
December 31, 1996 Year ended June 30
--------------------------------------------
(Unaudited)** 1996** 1995** 1994 1993***
--------------------------------------------- ------------------ --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.03 $ 14.27 $ 12.48 $ 14.51 $ 14.78
Net investment income (loss)* 0.06 0.17 0.14 0.07 (0.00)
Net realized and unrealized gain (loss) on
investments 1.56 3.37 2.15 0.17 (0.25)
Dividends from net investment income (0.08) (0.15) (0.17) -- (0.02)
Distributions from net realized gains (1.99) (0.63) (0.33) (2.27) --
------------------ --------- --------- --------- ------------
Net asset value, end of period $ 16.58 $ 17.03 $ 14.27 $ 12.48 $ 14.51
================== ========= ========= ========= ============
Total return 10.33%+++ 25.66%+ 18.83%+ 1.41%+ (1.69)%+++
Net assets at end of period (000s) $73,880 $70,177 $50,503 $32,991 $18,796
Ratio of operating expenses to average net
assets* 1.00%++ 1.00% 1.00% 1.00% 1.00%++
Ratio of net investment income (loss) to
average net assets* 0.71%++ 1.06% 1.09% 0.59% (0.39)%++
Portfolio turnover rate 47.67% 44.44% 47.93% 62.93% 92.35%
Average commission rate@ $ 0.05 $ 0.03 -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $ 0.01 $ 0.03 $ 0.06 $ 0.06 $ 0.00
</TABLE>
<TABLE>
<CAPTION>
Class D
----------------------------------------------------------------
Six months ended
December 31, 1996 Year ended June 30
--------------------------------------------
(Unaudited)** 1996** 1995** 1994 1993***
- ---------------------------------------------- ------------------ --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.87 $14.15 $12.36 $14.51 $14.78
Net investment income (loss)* (0.02) 0.01 0.01 (0.05) 0.00
Net realized and unrealized gain (loss) on
investments 1.55 3.34 2.11 0.17 (0.26)
Dividend from net investment income -- -- -- -- (0.01)
Distributions from net realized gains (1.99) (0.63) (0.33) (2.27) --
------------------ --------- --------- --------- ------------
Net asset value, end of period $16.41 $16.87 $14.15 $12.36 $14.51
================== ========= ========= ========= ============
Total return 9.85%+++ 24.40%+ 17.53%+ 0.45%+ (1.77)%+++
Net assets at end of period (000s) $1,093 $931 $699 $551 $491
Ratio of operating expenses to average net
assets* 2.00%++ 2.00% 2.00% 2.00% 2.00%++
Ratio of net investment income (loss) to
average net assets* (0.27)%++ 0.04% 0.08% (0.41)% 0.12%++
Portfolio turnover rate 47.67% 44.44% 47.93% 62.93% 92.35%
Average commission rate@ $ 0.05 $ 0.03 -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $ 0.01 $ 0.03 $ 0.06 $ 0.06 $ 0.00
- ---------------------------------------------- ------------------ --------- --------- --------- ------------
</TABLE>
**Per-share figures have been calculated using the average shares method.
***June 1, 1993 (commencement of share class designations) to June 30, 1993.
++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.
@For fiscal years beginning on or after July 1, 1996, the Fund is required
to disclose its average commission rate per share paid for security
trades. For the year ended June 30, 1996, the Fund elected to disclose its
average commission rate per share paid for security trades.
9
<PAGE>
State Street Research Equity Investment Fund
- -----------------------------------------------------------------------------
Fund Information, Officers and Trustees of State Street Research Equity Trust
- -----------------------------------------------------------------------------
Fund Information Trustees
State Street Research Ralph F. Verni
Equity Investment Fund
One Financial Center Chairman of the Board,
Boston, MA 02111 President, Chief Executive
Officer and Director,
Investment Adviser State Street Research &
Management Company
State Street Research &
Management Company Steve A. Garban
One Financial Center
Boston, MA 02111 Retired; formerly Senior
Vice President for Finance
Distributor and Operations and Treasurer,
The Pennsylvania State University
State Street Research
Investment Services, Inc. Malcolm T. Hopkins
One Financial Center
Boston, MA 02111 Former Vice Chairman of the
Board and Chief Financial
Shareholder Services Officer, St. Regis Corp.
State Street Research Edward M. Lamont
Shareholder Services
P.O. Box 8408 Formerly in banking
Boston, MA 02266-8408 (Morgan Guaranty Trust
1-800-562-0032 Company of New York);
presently engaged in private
Custodian investments and civic affairs
State Street Bank and Robert A. Lawrence
Trust Company
225 Franklin Street Partner, Saltonstall & Co.
Boston, MA 02110
Dean O. Morton
Legal Counsel
Retired; formerly Executive
Goodwin, Procter & Hoar LLP Vice President, Chief
Exchange Place Operating Officer and Director,
Boston, MA 02109 Hewlett-Packard Company
Officers Thomas L. Phillips
Ralph F. Verni Retired; formerly Chairman of
the Board and Chief Executive
Chairman of the Board, Officer, Raytheon Company
President and
Chief Executive Officer Toby Rosenblatt
Peter C. Bennett President,
Vice President The Glen Ellen Company
Vice President,
Bartlett R. Geer Founders Investments Ltd.
Vice President
Michael S. Scott Morton
Frederick R. Kobrick
Vice President Jay W. Forrester Professor of
Management, Sloan School of
Thomas P. Moore, Jr. Management, Massachusetts
Vice President Institute of Technology
Daniel J. Rice III Jeptha H. Wade
Vice President
Retired; formerly Of Counsel,
James M. Weiss Choate, Hall & Stewart
Vice President
John T. Wilson
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
10
<PAGE>
[FRONT COVER]
[State Street Research Logo]
State Street Research
State Street Research
Global Resources Fund
Semiannual Report
December 31, 1996
- ------------------------------------
What's Inside
- ------------------------------------
Investment Update
About the Fund,
economy and markets
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings and Financial Statements
- ---------------------------------[Dalbar Award]---------------------------------
Quality
Tested Service
1 9 9 5
Dalbar
Honors Commitment To:
Investors
For Excellence
in
Shareholder Service
- --------------------------------------------------------------------------------
<PAGE>
[BACK COVER]
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 Research logo] State Street Research
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Global Resources Fund
prospectus. When used after March 31, 1997, this report must be accompanied by a
current Quarterly Performance Update.
Portfolio changes should not be considered
recommendations for action by individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 3726-970221(0398)SSR-LB
Cover Illustration by Dorothy Cullinan GR-821C-297IBS
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
Investment Update
- -------------------------------------------------------------------------------
Investment Environment
The Economy
(bullet) Economic growth accelerated in the fourth quarter of 1996, after
showing signs of slowdown in the third quarter.
(bullet) Consumer spending and industrial output showed a steady trend of
advancement for the final six months of 1996. Wages continued to rise
during the period, but consumer prices and inflation remained low.
(bullet) The Federal Reserve met several times since July and left interest
rates unchanged.
The Markets
(bullet) From June 30 to December 31, 1996, stocks and bonds offered positive
performance overall, peppered with short-term corrections in some
sectors.
(bullet) The stock market continued its rise, with the S&P 500 up +11.68% for
the six months ended December 31, 1996.(1)
(bullet) Bond performance improved in the third quarter before losing
momentum late in the fourth quarter. The Lehman Brothers Aggregate
Bond Index gained +4.90% for the period.(1)
The Fund
Over the past six months
(bullet) For the six months ended December 31, 1996, Class A shares of Global
Resources Fund returned +28.57% (does not reflect sales charge).(2) The
Fund outperformed the average six-month return for the 40 fund classes
in Lipper Analytical Services' Natural Resources Funds category, which
was +13.31% (does not reflect sales charge).
(bullet) Global Resources Fund was the number one mutual fund for the 12 months
ended December 31, 1996, as ranked by Lipper Analytical Services, Inc.
(Lipper equity universe of 3,888 share classes).
(bullet) The Fund benefited from several takeovers this year, including some of
its top holdings.
(bullet) Low supply of and high demand for crude oil drove prices up, helping
boost fund performance.
Current strategy
(bullet) The Fund's portfolio is made up of stocks of primarily small-cap energy
and natural resources companies.
(bullet) We are maintaining a dominant position in oil and gas producer stocks
at about 54% of the portfolio.
(bullet) We continue to find good companies in the energy and natural resources
industries that meet our investment criteria.
December 31, 1996
(1)The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The Lehman Brothers Aggregate Bond Index is a commonly used measure
of bond market performance. The indices are unmanaged and do not take sales
charges into consideration. Direct investment in the indices is not possible;
results are for illustrative purposes only.
(2)+28.11% for Class B shares; +28.75% for Class C shares; +28.02% for Class D
shares.
(3)Ranking is based on combined ranking of all classes of the Fund. Classes A,
B, C, and D ranked #2, 3, 1, and 4, respectively, of 3,888 share classes in the
Lipper equity universe (2,636 fund portfolios) for the calendar year 1996. Class
A shares ranked #18 of 1,242 share classes in the equity universe (985 fund
portfolios) for the 5 years ended December 31, 1996. Rankings are based on total
return and do not reflect maximum 4.5% "A" share front-end sales charge. All
classes of the Fund's shares have a common portfolio.
(4)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance for a class may include periods
prior to the adoption of class designations in 1993, which resulted in new or
increased 12b-1 fees of up to 1% per class thereafter and which will reduce
subsequent performance. "C" shares, offered without a sales charge, are
available only to certain employee benefit plans and large institutions.
(5)Performance reflects maxi mum 4.5% "A" share front-end sales charge, or 5%
"B" share or 1% "D" share contingent deferred sales charges where applicable.
(6)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
(7)Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses. The first figure reflects expense reduction; the second
shows what results would have been without subsidization.
An investment in the Fund may involve greater-than-average risk and
above-average price fluctuation because small-company stocks are more volatile
than large-company stocks. Please note that the discussion throughout this
shareholder report is dated as indicated and, because of possible changes in
viewpoint, data and transactions, should not be relied upon as being current
thereafter.
- -----------------------------------------------------------------------------
Fund Information (all data are for periods ended December 31, 1996)
- -----------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(4,5,7)
- -------------------------------------------------------------------------
Life of Fund
(since 3/2/90) 5 Years 1 Year
- ---------- ------------------ ------------------ ------------------
Class A +9.01%/+8.46% +21.86%/+21.17% +62.59%/+62.12%
- ---------- ------------------ ------------------ ------------------
Class B +9.39%/+8.82% +22.26%/+21.53% +63.97%/+63.57%
- ---------- ------------------ ------------------ ------------------
Class C +9.95%/+9.35% +23.30%/+22.53% +70.64%/+70.15%
- ---------- ------------------ ------------------ ------------------
Class D +9.36%/+8.78% +22.40%/+21.66% +67.92%/+67.42%
- ---------- ------------------ ------------------ ------------------
Cumulative Total Returns
(do not reflect sales charge)(4,6,7)
- ---------------------------------------------------------------------------
Life of Fund
(since 3/2/90) 5 Years 1 Year
- ---------- ------------------ -------------------- ------------------
Class A +88.96%/+82.49% +181.33%/+173.50% +70.25%/+69.76%
- ---------- ------------------ -------------------- ------------------
Class B +84.83%/+78.24% +175.19%/+167.12% +68.97%/+68.57%
- ---------- ------------------ -------------------- ------------------
Class C +91.40%/+84.30% +184.97%/+176.21% +70.64%/+70.15%
- ---------- ------------------ -------------------- ------------------
Class D +84.49%/+77.88% +174.68%/+166.58% +68.92%/+68.42%
- ---------- ------------------ -------------------- ------------------
Top 10 Stock Positions
(by percentage of net assets)
1 Nuevo Energy Oil and gas exploration 4.4%
2 Seagull Energy Oil and gas exploration 4.1%
3 TransTexas Gas Oil and gas exploration 3.9%
4 KCS Energy Oil and gas exploration 3.7%
5 Noble Drilling Oil service/gas drilling 3.5%
6 Atwood Oceanics Oil service 3.1%
7 Oil Search Oil and gas exploration 3.1%
8 Abacan Resources Oil and gas exploration 3.0%
9 Ranger Oil International oil exploration 3.0%
10 Ensco Oil service 2.2%
These securities represent an aggregate of 34.0% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
Asset Allocation
(by percentage of net assets)
[PIE CHART]
Other 2%
Cash and short-term debt 9%
Metal and mining stocks 12%
Oil service stocks 23%
Oil and gas producer stocks 54%
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -----------------------------------------------------------------------------
Investment Portfolio
- -----------------------------------------------------------------------------
December 31, 1996 (Unaudited)
- ------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------- ------------ -------------
COMMON STOCKS 91.7%
Basic Industries 14.3%
Chemical 1.1%
Agrium Inc.* 97,500 $ 1,340,625
-------------
Metal & Mining 11.9%
Aber Resources Ltd.* 30,000 406,406
Aluminum Company of America 10,000 637,500
AMAX Gold Inc* 150,000 956,250
American Gem Corp.* 202,400 199,547
AUR Resources Inc.* 50,000 292,120
Bema Gold Corp* 100,000 593,750
Campbell Resources Inc.* 250,000 234,375
Carpenter Technology Corp.* 25,000 915,625
Crown Resources Corp.* 120,000 742,500
DeBeers Consolidated Mines Ltd. ADR 30,000 847,500
Delta Gold NL 250,000 468,961
Denison Mines Ltd.* 1,500,000 356,021
Dia Met Minerals Ltd. Cl. A* 5,000 69,379
Dia Met Minerals Ltd. Cl. B* 20,000 308,552
Impala Platinum Holdings ADR* 50,000 499,730
Lihir Gold Ltd. ADR* 40,000 1,525,000
Newmont Mining Corp. 5,000 223,750
Orogen Minerals Inc.* 1,000,000 2,328,909
Royal Oak Mines Inc.* 130,000 422,500
South Pacific Resources Inc.* 50,000 115,022
Southernera Resources Ltd.* 100,000 569,634
Stillwater Mining Co.* 50,000 906,250
TVX Gold Inc.* 30,000 232,500
Vaal Reefs Exploration & Mining Ltd. ADR 75,000 464,063
-------------
14,315,844
-------------
Railroad 1.3%
OMI Corp. 183,500 1,605,625
------------
Total Basic Industries 17,262,094
-------------
Energy 73.0%
Oil 49.7%
3DX Technologies Inc.* 18,300 201,300
Abacan Resources Corp.* 424,500 3,687,844
Abraxas Petroleum Corp.* 80,000 790,000
Apache Corp. 45,025 1,592,759
Arakis Energy Corp.* 600,000 1,987,500
Barrington Petroleum Ltd.* 89,400 365,617
Basin Exploration Inc.* 100,000 625,000
Belden & Blake Corp.* 30,000 765,000
Cabot Oil & Gas Corp. 25,000 428,125
Callon Petroleum Co.* 100,000 1,900,000
Canadian 88 Energy Corp.* 66,600 291,828
Canadian Conquest Exploration Inc.* 165,000 295,218
Clayton Williams Energy Inc.* 41,330 718,109
COHO Energy Inc.* 228,300 1,626,638
Crystal Oil Co.* 41,600 1,497,600
CS Resources Ltd.* 75,000 $ 712,043
Elk Point Resources Inc.* 183,700 872,015
Flores & Rucks Inc.* 20,000 1,065,000
Forcenergy Gas Explorations, Inc.* 14,700 532,875
Intensity Resources Ltd.* 250,000 365,150
KCS Energy Inc. 125,000 4,468,750
Mercantile International Inc. 160,000 328,000
Mercantile International Petroleum Inc.* 90,000 184,500
Monterey Resources Inc.* 57,000 919,125
Morrison Middlefield Ltd.* 100,000 1,478,858
New Cache Petroleums Ltd.* 80,000 455,707
Novus Petroleum Ltd.* 750,000 1,716,875
Nuevo Energy Co.* 102,500 5,330,000
Oil Search Ltd.* 1,939,100 3,776,166
Pan East Petroleum Inc.* 135,800 485,956
Plains Resources Inc.* 132,400 2,068,750
Ranger Oil Ltd.* 367,400 3,628,075
Seagull Energy Corp.* 225,000 4,950,000
Southwestern Energy Co. 53,700 812,213
Stampeder Exploration Ltd.* 221,650 1,246,781
Stone Energy Corp.* 40,000 1,195,000
Tarragon Oil & Gas Ltd.* 138,052 1,512,291
Tom Brown, Inc.* 98,000 2,045,750
Triton Energy Ltd. 46,400 2,250,400
Ulster Petroleum Ltd.* 137,500 963,996
-------------
60,136,814
-------------
Oil Service 23.3%
Atwood Oceanics Inc.* 59,800 3,797,300
Cliffs Drilling Co.* 20,000 1,265,000
Daniel Industries Inc. 48,400 713,900
Dreco Energy Services Ltd. Cl. A* 36,400 1,333,150
Energy Ventures Inc.* 26,600 1,353,275
Ensco International Inc.* 54,975 2,666,287
Global Industries, Ltd.* 60,000 1,117,500
Global Marine Inc.* 97,600 2,013,000
Grant Geophysical Inc. 100,000 9,375
J. Ray McDermott SA 70,400 1,548,800
Marine Drilling Companies, Inc.* 47,300 931,219
Noble Drilling Corp.* 211,300 4,199,587
Oceaneering International Inc.* 53,000 841,375
Patterson Energy, Inc.* 58,954 1,518,066
Pendaries Petroleum Ltd.* 100,000 858,103
Pool Energy Services Co.* 74,200 1,140,825
Rowan Companies, Inc.* 25,300 572,413
Solid State Geophysical Inc.* 50,000 37,610
Timber/Sharp Drilling Inc.* 103,400 1,240,800
Unit Corp.* 100,000 987,500
-------------
28,145,085
-------------
Total Energy 88,281,899
-------------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- -------------------------------------------------------------------------------
Value
Shares (Note 1)
- ------------------------------------------------ ------------ -------------
Utility 4.4%
Natural Gas 4.4%
Markwest Hydrocarbon Inc.* 37,500 $ 581,250
TransTexas Gas Corp.* 326,700 4,737,150
-------------
5,318,400
-------------
Total Utility 5,318,400
-------------
Total Common Stocks (Cost $81,796,462) 110,862,393
-------------
---------------------------------------------- ------------ --------------
Principal Maturity
Amount Date
---------------------------------------------- ------------ --------------
Short-Term Obligations 7.7%
Beneficial Corp., 5.95% $3,693,000 1/02/1997 3,693,000
Ford Motor Credit Co., 6.10% 3,004,000 1/03/1997 3,004,000
Ford Motor Credit Co., 5.80% 2,679,000 1/06/1997 2,679,000
--------------
Total Short-Term Obligations (Cost $9,376,000) 9,376,000
--------------
Total Investments (Cost $91,172,462)--99.4% 120,238,393
Cash and Other Assets, Less Liabilities--0.6% 688,206
--------------
Net Assets--100.0% $120,926,599
==============
Federal Income Tax Information:
At December 31, 1996, the net unrealized
appreciation of investments based on
cost for Federal income tax purposes of
$91,277,586 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an excess
of value over tax cost $ 31,324,692
Aggregate gross unrealized depreciation for
all investments in which there is an excess
of tax cost over value (2,363,885)
--------------
$ 28,960,807
==============
- -------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of foreign
securities. Diversification of Equity Securities at December 31, 1996 (as a
percentage of net assets) was United States 66.9%, Canada 23.2%, Australia
6.2%, Papua New Guinea 1.9%, South Africa 1.5%, and British Virgin Islands
0.3%.
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $91,172,462) (Note 1) $120,238,393
Cash 386
Receivable for fund shares sold 1,583,397
Dividends and interest receivable 8,058
Other assets 12,585
---------------
121,842,819
Liabilities
Payable for fund shares redeemed 646,683
Accrued transfer agent and shareholder services (Note 2) 80,718
Accrued management fee (Note 2) 70,892
Accrued distribution and service fees (Note 5) 52,265
Accrued trustees' fees (Note 2) 5,387
Other accrued expenses 60,275
---------------
916,220
---------------
Net Assets $120,926,599
===============
Net Assets consist of:
Unrealized appreciation of investments $ 29,065,931
Accumulated net realized gain 2,310,451
Shares of beneficial interest 89,550,217
---------------
$120,926,599
===============
Net Asset Value and redemption price per share of Class A
shares ($57,148,734 / 2,639,602 shares of beneficial
interest) $21.65
======
Maximum Offering Price per share of Class A shares
($21.65 / .955) $22.67
======
Net Asset Value and offering price per share of
Class B shares ($36,519,031 / 1,726,145 shares of
beneficial interest)* $21.16
======
Net Asset Value, offering price and redemption price
per share of Class C shares
($9,804,348 / 446,775 shares of
beneficial interest) $21.94
======
Net Asset Value and offering price per share of
Class D shares ($17,454,486 / 826,517 shares
of beneficial interest)* $21.12
======
- --------------------------------------------------------------------------------
* 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.
3
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the six months ended December 31, 1996 (Unaudited)
Investment Income
Dividends, net of foreign taxes of $1,044 $ 75,949
Interest 202,296
-------------
278,245
Expenses
Management fee (Note 2) 309,151
Transfer agent and shareholder services (Note 2) 93,074
Service fee--Class A (Note 5) 52,917
Distribution and service fees--Class B (Note 5) 109,780
Distribution and service fees--Class D (Note 5) 51,233
Custodian fee 46,543
Registration fees 24,572
Reports to shareholders 19,502
Audit fee 13,227
Trustees' fees (Note 2) 6,936
Legal fees 6,138
Miscellaneous 4,723
-------------
737,796
Expenses borne by the Distributor (Note 3) (3,933)
-------------
733,863
Net investment loss (455,618)
-------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments (Notes 1 and 4) 6,346,958
Net realized loss on foreign currency (Note 1) (29,868)
-------------
Total net realized gain 6,317,090
-------------
Net unrealized appreciation of investments 14,962,668
-------------
Net gain on investments 21,279,758
-------------
Net increase in net assets resulting from operations $20,824,140
=============
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
-------------------------------------- ----------------- ----------------
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (455,618) $ (679,747)
Net realized gain on investments* 6,317,090 4,871,429
Net unrealized appreciation of
investments 14,962,668 11,106,956
----------------- ----------------
Net increase resulting from operations 20,824,140 15,298,638
----------------- ----------------
Distribution from net realized gains:
Class A (1,856,662) --
Class B (1,169,720) --
Class C (352,673) --
Class D (581,660) --
----------------- ----------------
(3,960,715) --
----------------- ----------------
Net increase from fund share
transactions (Note 7) 49,505,198 900,350
----------------- ----------------
Total increase in net assets 66,368,623 16,198,988
Net Assets
Beginning of period 54,557,976 38,358,988
----------------- ----------------
End of period $120,926,599 $54,557,976
================= ================
* Net realized gain for Federal income
tax purposes (Note 1) $ 6,346,958 $ 4,268,846
================= ================
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
December 31, 1996
Note 1
State Street Research Global Resources Fund (the "Fund"), is a series of State
Street Research 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 investment objective of the Fund is to provide long-term growth of capital.
In seeking to achieve its investment objective, the Fund invests primarily in
equity securities of domestic and foreign companies in the energy and natural
resources industries.
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. 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.
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.
F. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into 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, 1996, the fees pursuant to such
agreement amounted to $309,151.
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,
5
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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,
1996, the amount of such shareholder servicing and account maintenance expenses
was $33,180.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$6,936 during the six months ended December 31, 1996.
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, 1996, the amount of such expenses assumed by
the Distributor and its affiliates was $3,933.
Note 4
For the six months ended December 31, 1996, purchases and sales of securities,
exclusive of short-term obligations, aggregated $60,162,272 and $24,721,439,
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 or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing expenses.
For the six months ended December 31, 1996, fees pursuant to such plan amounted
to $52,917, $109,780 and $51,233 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 $18,115 and $99,230, respectively, on sales of Class A shares of the
Fund during the six months ended December 31, 1996, and that MetLife Securities,
Inc. earned commissions aggregating $247,926 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $13,985 and
$1,818 on redemptions of Class B and Class D shares, respectively, during the
same period.
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.
6
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
NOTES (cont'd)
- -------------------------------------------------------------------------------
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, 1996, the
Distributor owned one Class A share of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
December 31, 1996 Year ended
(Unaudited) June 30, 1996
---------------------------- ------------------------------
Class A Shares Amount Shares Amount
------------------------------------------------------------------------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 1,628,733 $ 32,701,794 723,940 $ 10,571,034
Issued upon reinvestment of distribution from net realized gains 82,889 1,767,355 -- --
Shares repurchased (846,738) (17,022,482) (1,062,091) (14,571,296)
------------ --------------- -------------- ---------------
Net increase (decrease) 864,884 $ 17,446,667 (338,151) $ (4,000,262)
============ =============== ============== ===============
Class B Shares Amount Shares Amount
------------------------------------------------------------------------------- --------------- -------------- ---------------
Shares sold 1,036,961 $ 20,437,995 438,451 $ 6,509,210
Issued upon reinvestment of distribution from net realized gains 51,654 1,077,181 -- --
Shares repurchased (111,849) (2,206,821) (273,265) (3,881,920)
------------ --------------- -------------- ---------------
Net increase 976,766 $ 19,308,355 165,186 $ 2,627,290
============ =============== ============== ===============
Class C Shares Amount Shares Amount
------------------------------------------------------------------------------- --------------- -------------- ---------------
Shares sold 381,766 $ 7,649,477 354,475 $ 5,359,929
Issued upon reinvestment of distribution from net realized gains 14,897 321,658 -- --
Shares repurchased (269,106) (5,494,101) (303,110) (4,509,482)
------------ --------------- -------------- ---------------
Net increase 127,557 $ 2,477,034 51,365 $ 850,447
============ =============== ============== ===============
Class D Shares Amount Shares Amount
------------------------------------------------------------------------------- --------------- -------------- ---------------
Shares sold 754,013 $ 15,017,633 210,219 $ 2,813,802
Issued upon reinvestment of distribution from net realized gains 25,665 534,412 -- --
Shares repurchased (254,598) (5,278,903) (104,262) (1,390,927)
------------ --------------- -------------- ---------------
Net increase 525,080 $ 10,273,142 105,957 $ 1,422,875
============ =============== ============== ===============
</TABLE>
7
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
Six months ended Year ended June 30
December 31, 1996 --------------------------------------------------------
(Unaudited)** 1996** 1995** 1994** 1993 1992
---------------------------------------------- ----------------- --------- --------------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.44 $12.16 $11.84 $13.51 $ 8.02 $9.12
Net investment loss* (0.08) (0.20) (0.16) (0.17) (0.13) (0.12)
Net realized and unrealized gain (loss) on
investments 5.05 5.48 0.48 (1.50) 5.62 (0.98)
Distribution from net realized gains (0.76) -- -- -- -- --
----------------- --------- --------------------- --------- ------------
Net asset value, end of period $21.65 $17.44 $12.16 $11.84 $13.51 $8.02
================= ========= ===================== ========= ============
Total return 28.57%+++ 43.42%+ 2.70%+ (12.36)%+ 68.45%+ (12.06)%+
Net assets at end of period (000s) $57,149 $30,943 $25,692 $30,679 $33,513 $19,227
Ratio of operating expenses to average net
assets* 1.52%++ 1.75% 1.75% 1.75% 1.75% 1.75%
Ratio of net investment loss to average net
assets* (0.85)%++ (1.47)% (1.41)% (1.46)% (1.44)% (1.16)%
Portfolio turnover rate 32.22% 92.33% 62.94% 30.98% 61.00% 47.09%
Average commission rate@ $0.02 $0.02 -- -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $0.00 $0.05 $0.09 $0.11 $0.03 $0.05
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------
Six months ended Year ended June 30
December 31, 1996 ---------------------------------------------
(Unaudited)** 1996** 1995** 1994** 1993***
- ------------------------------------------------------- ----------------- --------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.12 $12.03 $11.78 $13.51 $12.99
Net investment loss* (0.15) (0.30) (0.23) (0.23) (0.02)
Net realized and unrealized gain (loss) on investments 4.95 5.39 0.48 (1.50) 0.54
Distribution from net realized gains (0.76) -- -- -- --
----------------- --------- --------- ------------ -----------
Net asset value, end of period $21.16 $17.12 $12.03 $11.78 $13.51
================= ========= ========= ============ ===========
Total return 28.11%+++ 42.31%+ 2.12%+ (12.81)%+ 4.00%+++
Net assets at end of period (000s) $36,519 $12,828 $7,030 $6,333 $1,048
Ratio of operating expenses to average net assets* 2.27%++ 2.50% 2.33% 2.25% 2.25%++
Ratio of net investment loss to average net assets* (1.58)%++ (2.20)% (1.98)% (1.93)% (1.98)%++
Portfolio turnover rate 32.22% 92.33% 62.94% 30.98% 61.00%
Average commission rate@ $0.02 $0.02 -- -- --
*Reflects voluntary assumption of fees or expenses per
share in period (Note 3). $0.00 $0.04 $0.09 $0.14 $0.00
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
++ 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.
@ For fiscal years beginning on or after July 1, 1996, the Fund is required to
disclose its average commission rate per share paid for security trades. For
the year ended June 30, 1996, the Fund elected to disclose its average
commission rate per share paid for security trades.
8
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------
Six months ended Year ended June 30
December 31, 1996 ---------------------------------------------
(Unaudited)** 1996** 1995** 1994** 1993***
---------------------------------------------- --------------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.64 $12.27 $11.90 $13.52 $12.99
Net investment loss* (0.06) (0.17) (0.11) (0.15) (0.00)
Net realized and unrealized gain (loss) on
investments 5.12 5.54 0.48 (1.47) 0.53
Distribution from net realized gains (0.76) -- -- -- --
----------------- --------- --------------------- -----------
Net asset value, end of period $21.94 $17.64 $12.27 $11.90 $13.52
================= ========= ===================== ===========
Total return 28.75%+++ 43.77%+ 3.11%+ (11.98)%+ 4.08%+++
Net assets at end of period (000s) $9,804 $5,632 $3,288 $960 $146
Ratio of operating expenses to average net
assets* 1.27%++ 1.50% 1.33% 1.25% 1.25%++
Ratio of net investment loss to average net
assets* (0.59)%++ (1.20)% (1.01)% (0.95)% (1.05)%++
Portfolio turnover rate 32.22% 92.33% 62.94% 30.98% 61.00%
Average commission rate@ $0.02 $0.02 -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $0.00 $0.05 $0.08 $0.16 $0.00
</TABLE>
<TABLE>
<CAPTION>
Class D
----------------------------------------------------------------
Six months ended Year ended June 30
December 31, 1996 ----------------------------------------------
(Unaudited)** 1996** 1995** 1994** 1993***
---------------------------------------------- ---------------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.10 $12.02 $11.77 $13.51 $12.99
Net investment loss* (0.15) (0.30) (0.23) (0.23) (0.02)
Net realized and unrealized gain (loss) on
investments 4.93 5.38 0.48 (1.51) 0.54
Distribution from net realized gains (0.76) -- -- -- --
----------------- --------- --------------------- -----------
Net asset value, end of period $21.12 $17.10 $12.02 $11.77 $13.51
================= ========= ===================== ===========
Total return 28.02%+++ 42.26%+ 2.12%+ (12.88)%+ 4.00%+++
Net assets at end of period (000s) $17,454 $5,154 $2,350 $1,931 $588
Ratio of operating expenses to average net
assets* 2.27%++ 2.50% 2.33% 2.25% 2.25%++
Ratio of net investment loss to average net
assets* (1.56)%++ (2.20)% (1.99)% (1.94)% (2.00)%++
Portfolio turnover rate 32.22% 92.33% 62.94% 30.98% 61.00%
Average commission rate@ $0.02 $0.02 -- -- --
*Reflects voluntary assumption of fees or
expenses per share in period (Note 3). $0.00 $0.05 $0.09 $0.13 $0.00
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
++ 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.
@ For fiscal years beginning on or after July 1, 1996, the Fund is required to
disclose its average commission rate per share paid for security trades. For
the year ended June 30, 1996, the Fund elected to disclose its average
commission rate per share paid for security trades.
9
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEAARCH 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 LLP
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
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Daniel J. Rice III
Vice President
James M. Weiss
Vice President
John T. Wilson
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Steve A. Garban
Retired; formerly Senior Vice
President for Finance and Operations and
Treasurer, The Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial Officer,
St. Regis Corp.
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
10
