<PAGE>
STATE STREET RESEARCH
EQUITY INVESTMENT FUND
SEMIANNUAL REPORT
December 31, 1997
WHAT'S INSIDE
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
[Graphic Omitted]
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
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INVESTMENT UPDATE
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INVESTMENT ENVIRONMENT
THE ECONOMY
o The economy benefited consumers, investors, business and government in the
second half of 1997. Personal income rose; capital gains tax rates fell;
and productivity gains continued to offset wage gains, keeping inflation
under control. The federal deficit for the current year has all but
disappeared, the result of higher tax revenues and a strong economy.
o The Federal Reserve Board left interest rates unchanged, because of the
positive inflation picture and concerns that currency and economic
difficulties in the emerging markets of Southeast Asia could have a
negative effect on the U.S. economy.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, gained 10.58% for
the six month period.(1) Small stocks were strong at the beginning of the
period, but gave back some of their gains as investors expressed their
concern about the potential impact of Southeast Asia and retreated to
large-capitalization brand-name companies.
o Bonds gained momentum during the period. The Lehman Brothers Aggregate Bond
Index, a broad measure of investment-grade corporate and government bonds,
actually outperformed the S&P 500, 2.94% versus 2.87% in the fourth
quarter.(1)
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1997, Class A shares of Equity
Investment Fund returned +7.09% [does not reflect sales charge].(2) During
the period, the Fund lagged the average growth and income fund, which
gained +9.93% according to Lipper Analytical Services, but it slightly
outperformed the average for the year.
o The Fund's investments in high-quality companies in sectors with more
stable earnings, such as retail drugstores and food retailers, added to
performance.
o After a strong third calendar quarter, the Fund fell behind its peer group
in the fourth quarter. Technology investments impacted performance, as most
technology stocks were hurt by events in Southeast Asia.
CURRENT STRATEGY
o The Fund continues to look for companies with strong market franchises,
with an emphasis on market share leaders, solid brand names and high
earnings consistency. With the Fund's strong bias for quality, we believe
it is well positioned to withstand concerns over slowing profit growth and
continued turmoil in Southeast Asia.
o Because Europe lags the U.S. in its economic rebound and corporate
restructuring program, the Fund may consider opportunities in overseas
markets.
o Given Asian concerns and the very strong equity returns over the past 3
years, it may not be realistic to expect stocks to deliver another year of
double digit returns. However, our outlook for stocks remains relatively
positive for 1998.
(1) The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely traded common stocks. The Lehman
Brothers Aggregate Bond Index is a market- value weighted index of fixed-
rate debt issues, including U.S. treasury, agency and corporate bond issues,
and mortgage-backed securities. 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) +6.70% for Class B shares; +6.70% for Class C shares; +7.23% for Class S
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. "S" shares, offered without a sales
charge, are available through certain employee benefit plans and special
programs.
(4) Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges where applicable.
(5) Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
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.
December 31, 1997
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FUND INFORMATION (all data are for periods ended December 31, 1997)
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SEC AVERAGE ANNUAL COMPOUND RATES OF RETURN
(at maximum applicable sales charge)(3)(4)(5)
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10 YEARS 5 YEARS 1 YEAR
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Class A +14.76% +16.23% +21.45%
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Class B +14.94% +16.37% +21.20%
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Class C +14.93% +16.57% +25.21%
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Class S +15.46% +17.65% +27.51%
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AVERAGE ANNUAL RETURNS
(do not reflect sales charge)(3)(5)
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10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------------
Class A +15.29% +17.30% +27.17%
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Class B +14.94% +16.59% +26.20%
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Class C +14.93% +16.57% +26.21%
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Class S +15.46% +17.65% +27.51%
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Performance results for the Fund are increased by the Distributor's voluntary
reduction of Fund fees and expenses; without subsidization, performance would
have been lower.
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 GENERAL ELECTRIC Electrical equipment 3.2%
2 TYCO Diversified manufacturer 3.0%
3 BANKAMERICA Banking 2.3%
4 ROHM & HAAS Chemical company 2.3%
5 E.I. DU PONT DE NEMOURS Chemical company 2.1%
6 PHILIP MORRIS Consumer products 2.1%
7 ACE Insurance 2.0%
8 TIME WARNER Media and entertainment 2.0%
9 BRISTOL-MYERS SQUIBB Medical and drug company 1.9%
10 BANC ONE Banking 1.9%
These securities represent an aggregate of 22.8% 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 or in the text
above.
TOP 5 EQUITY INDUSTRIES
(by percentage of net assets)
RETAIL TRADE 10.7%
BANK 8.9%
OIL 7.6%
RECREATION 7.1%
INSURANCE 6.9%
Total: 41.2%
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
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INVESTMENT PORTFOLIO
December 31, 1997 (Unaudited)
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Value
Shares (Note 1)
- -------------------------------------------------------------------------------
COMMON STOCKS 94.3%
BASIC INDUSTRIES 14.4%
CHEMICAL 4.6%
E.I. Du Pont De Nemours & Co. ................... 66,000 $ 3,964,125
Monsanto Co. .................................... 9,500 399,000
Rohm & Haas Co. ................................. 44,000 4,213,000
------------
8,576,125
------------
ELECTRICAL EQUIPMENT 3.2%
General Electric Co. ............................ 82,000 6,016,750
------------
FOREST PRODUCT 2.5%
Fort James Corp. ................................ 46,700 1,786,275
IKON Office Solutions Inc. ...................... 31,200 877,500
Weyerhaeuser Co. ................................ 39,000 1,913,438
------------
4,577,213
------------
MACHINERY 3.1%
Tyco International Ltd. ......................... 125,600 5,659,850
------------
METAL & MINING 1.0%
British Steel PLC ADR ........................... 79,200 1,697,850
Ispat International NV Cl. A* ................... 9,800 211,925
------------
1,909,775
------------
Total Basic Industries .......................... 26,739,713
------------
CONSUMER CYCLICAL 19.7%
AUTOMOTIVE 1.9%
General Motors Corp. ............................ 28,300 1,715,688
Renault SA* ..................................... 62,700 1,764,520
------------
3,480,208
------------
RECREATION 7.1%
CBS Corp. ....................................... 67,300 1,981,144
International Game Technology Inc. .............. 73,500 1,855,875
Time Warner Inc. ................................ 59,800 3,707,600
US West Inc.* ................................... 105,000 3,031,875
Viacom Inc. Cl. B* .............................. 22,200 919,912
Walt Disney Co. ................................. 18,343 1,817,103
------------
13,313,509
------------
RETAIL TRADE 10.7%
Cendant Corp.* .................................. 32,682 1,123,449
CVS Corp. ....................................... 43,000 2,754,688
Dayton Hudson Corp. ............................. 40,700 2,747,250
Home Depot Inc. ................................. 34,600 2,037,075
Kroger Co.* ..................................... 80,600 2,977,162
Rite Aid Corp. .................................. 50,000 2,934,375
Safeway Inc. .................................... 46,100 2,915,825
Toys "R" Us Inc.* ............................... 76,500 2,404,969
------------
19,894,793
------------
Total Consumer Cyclical ......................... 36,688,510
------------
CONSUMER STAPLE 18.3%
BUSINESS SERVICE 3.2%
Browning-Ferris Industries Inc. ................. 35,900 1,328,300
HBO & Co. ....................................... 20,200 969,600
Interpublic Group of Companies, Inc. ............ 41,550 2,069,710
Republic Industries Inc.* ....................... 63,700 1,485,006
------------
5,852,616
------------
DRUG 6.6%
Bristol-Myers Squibb Co. ........................ 38,200 $ 3,614,675
Novartis AG ADR* ................................ 25,266 2,052,736
Pfizer Inc. ..................................... 29,100 2,169,769
Schering-Plough Corp. ........................... 28,800 1,789,200
Warner-Lambert Co. .............................. 21,800 2,703,200
------------
12,329,580
------------
FOOD & BEVERAGE 3.3%
Coca-Cola Co. ................................... 19,100 1,272,537
General Mills Inc. .............................. 28,200 2,019,825
H.J. Heinz Co. .................................. 54,800 2,784,525
------------
6,076,887
------------
HOSPITAL SUPPLY 2.0%
Boston Scientific Corp.* ........................ 17,100 784,462
Guidant Corp. ................................... 12,500 778,125
Johnson & Johnson ............................... 34,000 2,239,750
------------
3,802,337
------------
PERSONAL CARE 1.1%
Gillette Co. .................................... 20,800 2,089,100
------------
TOBACCO 2.1%
Philip Morris Companies, Inc. ................... 85,900 3,892,344
------------
Total Consumer Staple ........................... 34,042,864
------------
ENERGY 7.6%
OIL 7.6%
Anadarko Petroleum Corp. ........................ 26,400 1,602,150
ENI SPA ADR ..................................... 16,900 964,356
Exxon Corp. ..................................... 26,100 1,596,994
Oryx Energy Co. ................................. 57,700 1,471,350
Royal Dutch Petroleum Co. ....................... 36,000 1,950,750
Seagull Energy Corp.* ........................... 80,400 1,658,250
Total SA Cl. B ADR .............................. 55,100 3,058,050
Unocal Corp. .................................... 49,900 1,936,744
------------
14,238,644
------------
Total Energy .................................... 14,238,644
------------
FINANCE 15.8%
BANK 8.9%
Banc One Corp. .................................. 66,300 3,600,919
BankAmerica Corp. ............................... 59,900 4,372,700
H.F. Ahmanson & Co. ............................. 51,300 3,433,894
NationsBank Corp. ............................... 49,700 3,022,381
Washington Mutual Inc.* ......................... 33,200 2,118,575
------------
16,548,469
------------
INSURANCE 6.9%
Ace Ltd. ........................................ 39,200 3,782,800
General Re Corp. ................................ 11,200 2,374,400
Mid Ocean Ltd. .................................. 42,900 2,327,325
Saint Paul Companies, Inc. ...................... 18,700 1,534,569
Travelers Group Inc. ............................ 54,450 2,933,493
------------
12,952,587
------------
Total Finance ................................... 29,501,056
------------
SCIENCE & TECHNOLOGY 11.3%
AEROSPACE 2.4%
Boeing Co. ...................................... 54,400 $ 2,662,200
Raytheon Co. Cl. A .............................. 1,805 88,994
Raytheon Co. Cl. B .............................. 35,800 1,807,900
------------
4,559,094
------------
COMPUTER SOFTWARE & SERVICE 2.0%
Cisco Systems Inc.* ............................. 30,150 1,680,862
Microsoft Corp.* ................................ 16,400 2,119,700
------------
3,800,562
------------
ELECTRONIC COMPONENTS 1.4%
Analog Devices Inc.* ............................ 19,800 548,213
Intel Corp.* .................................... 17,400 1,222,350
Texas Instruments Inc. .......................... 17,200 774,000
------------
2,544,563
------------
ELECTRONIC EQUIPMENT 2.1%
L.M. Ericsson Telephone Co. ADR Cl. B* .......... 28,640 1,068,630
Lucent Technologies Inc.* ....................... 23,500 1,877,062
Teradyne Inc.* .................................. 29,400 940,800
------------
3,886,492
------------
OFFICE EQUIPMENT 3.4%
Compaq Computer Corp. ........................... 33,200 1,873,725
International Business Machines Corp. ........... 22,400 2,342,200
Xerox Corp. ..................................... 28,000 2,066,750
------------
6,282,675
------------
Total Science & Technology ...................... 21,073,386
------------
UTILITY 7.2%
ELECTRIC 2.4%
FPL Group Inc. .................................. 31,200 1,846,650
Texas Utilities Co. ............................. 64,700 2,689,094
------------
4,535,744
------------
TELEPHONE 4.8%
Bell Atlantic Corp. ............................. 39,400 3,585,400
Ciena Corp.* .................................... 38,800 2,371,650
WorldCom Inc.* .................................. 96,400 2,916,100
------------
8,873,150
------------
Total Utility ................................... 13,408,894
------------
Total Common Stocks (Cost $137,360,671) ......... 175,693,067
------------
SHORT-TERM INVESTMENTS 14.3%
Navigator Securities Lending Prime Portfolio .... 26,699,207 26,699,207
------------
Total Short-Term Investments (Cost $26,699,207) . 26,699,207
------------
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Principal Maturity
Amount Date
- -------------------------------------------------------------------------------
COMMERCIAL PAPER 9.3%
American Express Credit Corp., 6.10% 667,000 1/05/1998 667,000
American Express Credit Corp., 5.75% 5,877,000 1/09/1998 5,877,000
Deere & Co., 6.10% .................. 6,645,000 1/07/1998 6,645,000
Ford Motor Credit Co., 5.95% ........ 1,070,000 1/05/1998 1,070,000
Ford Motor Credit Co., 6.15% ........ 1,203,000 1/05/1998 1,203,000
General Electric Capital Corp., 5.95% 199,000 1/05/1998 199,000
General Electric Capital Corp., 6.08% 1,749,000 1/05/1998 1,749,000
------------
Total Commercial Paper (Cost $17,410,000) .................... 17,410,000
------------
Total Investments (Cost $181,469,878) - 117.9% ............... 219,802,274
Cash and Other Assets, Less Liabilities - (17.9)% ............ (33,420,616)
------------
Net Assets - 100.0% .......................................... $186,381,658
============
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Value
(Note 1)
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Federal Income Tax Information:
At December 31, 1997, the net unrealized appreciation of
investments based on cost for Federal income tax purposes
of $181,469,878 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost ......... $ 41,240,024
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value ............ (2,907,628)
------------
$ 38,332,396
------------
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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.
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
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STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1997 (Unaudited)
ASSETS
Investments, at value (Cost $181,469,878) (Note 1) .......... $219,802,274
Cash ........................................................ 1,983
Receivable for securities sold .............................. 1,268,616
Dividends and interest receivable ........................... 308,735
Receivable for Fund shares sold ............................. 281,091
Receivable from Distributor (Note 3) ........................ 9,133
Other assets ................................................ 11,390
------------
221,683,222
LIABILITIES
Payable for collateral received on securities loaned ........ 26,699,207
Payable for Fund shares redeemed ............................ 5,857,616
Payable for securities purchased ............................ 2,419,846
Accrued management fee (Note 2) ............................. 107,660
Accrued transfer agent and shareholder services (Note 2) 81,011
Accrued distribution and service fees (Note 5) .............. 44,595
Accrued trustees' fees (Note 2) ............................. 10,088
Other accrued expenses ...................................... 81,541
------------
35,301,564
------------
NET ASSETS $186,381,658
============
Net Assets consist of:
Undistributed net investment income ....................... $ 26,878
Unrealized appreciation of investments .................... 38,332,396
Accumulated net realized gain ............................. 4,106,951
Paid-in capital ........................................... 143,915,433
------------
$186,381,658
============
Net Asset Value and redemption price per share of Class
A shares ($61,809,175 / 3,393,690 shares) ................ $18.21
======
Maximum Offering Price per share of Class A shares
($18.21 / .955) ........................................... $19.07
======
Net Asset Value and offering price per share of
Class B shares ($35,102,837 / 1,960,703 shares)* $17.90
======
Net Asset Value and offering price per share of
Class C shares ($1,070,097 / 59,811 shares)* $17.89
======
Net Asset Value, offering price and redemption price
per share of Class S shares ($88,399,549 / 4,859,266 shares) $18.19
======
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* Redemption price per share for Class B and Class C is equal to
net asset value less any applicable contingent deferred sales charge.
<PAGE>
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STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the six months ended December 31, 1997 (Unaudited)
INVESTMENT INCOME
Dividends, net of foreign taxes of $13,861 ................... $ 1,185,206
Interest (Note 1) ............................................ 334,162
------------
1,519,368
EXPENSES
Management fee (Note 2) ....................................... 609,130
Transfer agent and shareholder services (Note 2) .............. 191,169
Custodian fee ................................................. 59,320
Registration fees ............................................. 29,574
Trustees' fees (Note 2) ....................................... 20,648
Reports to shareholders ....................................... 18,259
Audit fee ..................................................... 14,080
Service fee - Class A (Note 5) ................................ 76,321
Distribution and service fees - Class B (Note 5) .............. 156,887
Distribution and service fees - Class C (Note 5) .............. 9,606
Legal fees .................................................... 3,328
Miscellaneous ................................................. 3,085
------------
1,191,407
Expenses borne by the Distributor (Note 3) .................... (13,150)
------------
1,178,257
------------
Net investment income ......................................... 341,111
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments (Notes 1 and 4) .............. 15,419,473
Net unrealized depreciation of investments .................... (3,944,056)
------------
Net gain on investments ....................................... 11,475,417
------------
Net increase in net assets resulting from operations .......... $ 11,816,528
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
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STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ....................................... $ 743,016 $ 341,111
Net realized gain on investments ............................ 20,424,213 15,419,473
Net unrealized appreciation (depreciation) of investments ... 15,781,474 (3,944,056)
------------ ------------
Net increase resulting from operations 36,948,703 11,816,528
------------ ------------
Dividends from net investment income:
Class A ................................................... (233,439) (125,347)
Class S ................................................... (560,477) (306,388)
------------ ------------
(793,916) (431,735)
------------ ------------
Distributions from net realized gains:
Class A ................................................... (4,782,504) (8,161,193)
Class B ................................................... (1,764,902) (4,307,362)
Class C ................................................... (116,740) (267,380)
Class S ................................................... (7,753,956) (12,405,469)
------------ ------------
(14,418,102) (25,141,404)
------------ ------------
Net increase from Fund share transactions (Note 6) .......... 21,085,516 33,779,531
------------ ------------
Total increase in net assets ................................ 42,822,201 20,022,920
NET ASSETS
Beginning of period ......................................... 123,536,537 166,358,738
------------ ------------
End of period (including undistributed net investment income
of $117,502 and $26,878, respectively) .................... $166,358,738 $186,381,658
============ ============
</TABLE>
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NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1997
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 three separate funds: State Street Research Equity
Investment Fund, State Street Research Alpha 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. Before November 1, 1997, Class C
shares were designated Class D and Class S shares were designated Class C.
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 subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class C shares also pay annual distribution and service fees of 1.00%. Class S
shares are only offered through certain retirement accounts, advisory accounts
of State Street Research & Management Company (the "Adviser"), an indirect
wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), and special programs. No sales charge is imposed at the time
of purchase or redemption of Class S shares. Class S shares do not pay any
distribution or service fees. The Fund's expenses are borne pro-rata by each
class, except that each class bears expenses, and has exclusive voting rights
with respect to provisions of the Plan of Distribution, related specifically
to that class. The Trustees declare separate dividends on each class of
shares.
The following significant policies are consistently followed by the Fund in
preparing its financial statements, and such policies are in conformity with
generally accepted accounting principles for investment companies.
A. INVESTMENT VALUATION
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange. Over-the-
counter securities quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at closing prices supplied
through such system. In the absence of recorded sales and for those over-the-
counter securities not quoted on the NASDAQ system, valuations are at the mean
of the closing bid and asked quotations. Short-term securities maturing
within sixty days are valued at amortized cost. Other securities, if any, are
valued at their fair value as determined in accordance with established
methods consistently applied.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Trust.
D. DIVIDENDS
Dividends from net investment income, if any, are declared and paid or
reinvested quarterly. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
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.
G. SECURITIES LENDING
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. If the borrower fails to return the
securities and the value of the collateral has declined during the term of the
loan, the Fund will bear the loss. At December 31, 1997, the value of the
securities loaned and the value of collateral were $25,881,380 and
$26,699,207, respectively. During the six months ended December 31, 1997,
<PAGE>
income from securities lending amounted to $220 and is included in interest
income.
NOTE 2
The Trust and the Adviser 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, 1997, the
fees pursuant to such agreement amounted to $609,130.
State Street Research Service Center, 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, 1997, the amount of such shareholder servicing and account
maintenance expenses was $104,287.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$20,648 during the six months ended December 31, 1997.
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, 1997, the amount of such
expenses assumed by the Distributor and its affiliates was $13,150.
NOTE 4
For the six months ended December 31, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $84,769,552 and $76,062,160,
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 C shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily net
assets for Class B and Class C 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,
1997, fees pursuant to such plan amounted to $76,321, $156,887 and $9,606 for
Class A, Class B and Class C shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $18,620 and $89,090, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1997, and that MetLife
Securities, Inc. earned commissions aggregating $242,939 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $21,018 on redemptions of Class B shares 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.
<PAGE>
Share transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
------------------------------- ------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ............. 588,308 $ 10,233,943 402,578 $ 7,938,202
Issued upon reinvestment of:
Distributions from net
realized gains .......... 289,030 4,652,507 434,560 7,946,783
Dividends from net
investment income ..... 13,002 224,603 6,336 118,338
Shares repurchased ...... (389,733) (6,723,255) (256,607) (5,077,324)
---------- ------------ ---------- ------------
Net increase ............ 500,607 $ 8,387,798 586,867 $ 10,925,999
========== ============ ========== ============
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ............. 589,345 $ 10,270,072 509,272 $ 9,846,980
Issued upon reinvestment
of distributions from
net realized gains .... 108,323 1,728,240 235,125 4,221,732
Shares repurchased ...... (172,399) (2,918,908) (95,714) (1,858,609)
---------- ------------ ---------- ------------
Net increase ............ 534,269 $ 9,079,404 648,683 $ 12,210,103
========== ============ ========== ============
<CAPTION>
CLASS C (FORMERLY CLASS D) SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ............. 123,109 $ 2,168,941 87,572 $ 1,612,421
Issued upon reinvestment
of distributions from
net realized gains .... 7,066 112,590 14,256 256,153
Shares repurchased ...... (100,734) (1,774,305) (126,624) (2,264,977)
---------- ------------ ---------- ------------
Net increase (decrease) . 29,441 $ 507,226 (24,796) $ (396,403)
========== ============ ========== ============
<CAPTION>
CLASS S (FORMERLY CLASS C) SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ............. 1,943,280 $ 33,489,577 942,384 $ 18,573,277
Issued upon reinvestment of:
Distributions from net
realized gains .......... 481,543 7,753,590 679,221 12,405,458
Dividends from net
investment income ... 32,449 560,098 16,270 303,501
Shares repurchased ...... (2,305,882) (38,692,177) (1,051,644) (20,242,404)
---------- ------------ ---------- ------------
Net increase ............ 151,390 $ 3,111,088 586,231 $ 11,039,832
========== ============ ========== ============
</TABLE>
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
Class A
-----------------------------------------------------------------------------------------
Years ended June 30 Six months ended
------------------------------------------------------------------ December 31, 1997
1993 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 13.16 14.52 12.44 14.28 17.04 19.68
----- ----- ----- ----- ----- -----
Net investment income ($)* 0.04 0.01 0.08 0.12 0.09 0.04
Net realized and
unrealized gain on
investments ($) 2.48 0.18 2.14 3.38 4.63 1.27
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 2.52 0.19 2.22 3.50 4.72 1.31
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.04) -- (0.05) (0.11) (0.09) (0.04)
Distributions from net
realized gains ($) (1.12) (2.27) (0.33) (0.63) (1.99) (2.74)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (1.16) (2.27) (0.38) (0.74) (2.08) (2.78)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.52 12.44 14.28 17.04 19.68 18.21
===== ===== ===== ===== ===== =====
Total return(3) (%) 20.37 0.93 18.34 25.33 30.91 7.09(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 26,933 29,821 31,174 39,300 55,239 61,809
Ratio of operating
expenses to average
net assets (%)* 1.50 1.50 1.42 1.25 1.25 1.25(5)
Ratio of net investment
income to average net
assets (%)* 0.23 0.08 0.64 0.79 0.54 0.37(5)
Portfolio turnover rate (%) 92.35 62.93 47.93 44.44 88.07 44.39
Average commission rate
(6) ($) -- -- -- 0.0331 0.0583 0.0486
*Reflects voluntary
assumption of fees or
expenses per share
in each period (Note 3) ($) 0.02 0.04 0.06 0.03 0.03 0.00
<CAPTION>
Class B
----------------------------------------------------------------------------------------
Years ended June 30 Six months ended
----------------------------------------------------------------- December 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 14.78 14.51 12.36 14.16 16.88 19.42
----- ----- ----- ----- ----- -----
Net investment income
(loss) ($)* 0.00 (0.02) 0.01 0.01 (0.03) (0.04)
Net realized and
unrealized gain (loss)
on investments ($) (0.26) 0.14 2.12 3.34 4.56 1.26
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) (0.26) 0.12 2.13 3.35 4.53 1.22
----- ----- ----- ----- ----- -----
Dividend from net
investment income ($) (0.01) -- -- -- -- --
Distributions from net
realized gains ($) -- (2.27) (0.33) (0.63) (1.99) (2.74)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.01) (2.27) (0.33) (0.63) (1.99) (2.74)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.51 12.36 14.16 16.88 19.42 17.90
===== ===== ===== ===== ===== =====
Total return(3) (%) (1.77)(4) 0.37 17.70 24.39 29.91 6.70(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 663 4,029 5,933 13,129 25,478 35,103
Ratio of operating
expenses to average
net assets (%)* 2.00(5) 2.00 2.00 2.00 2.00 2.00(5)
Ratio of net investment
income (loss) to
average net assets (%)* 0.03(5) (0.39) 0.08 0.05 (0.20) (0.37)(5)
Portfolio turnover rate (%) 92.35 62.93 47.93 44.44 88.07 44.39
Average commission rate
(6) ($) -- -- -- 0.0331 0.0583 0.0486
*Reflects voluntary
assumption of fees or
expenses per share
in each period (Note 3) ($) 0.00 0.04 0.06 0.03 0.03 0.00
- -------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on which commissions are charged
beginning with the fiscal year ended June 30, 1996.
<CAPTION>
Class C (Formerly Class D)
-------------------------------------------------------------------------------------------
Years ended June 30 Six months ended
-------------------------------------------------------------------- December 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 14.78 14.51 12.36 14.15 16.87 19.41
---- ---- ---- ---- ---- ----
Net investment income
(loss) ($)* 0.00 (0.05) 0.01 0.01 (0.03) (0.04)
Net realized and
unrealized gain (loss)
on investments ($) (0.26) 0.17 2.11 3.34 4.56 1.26
---- ---- ---- ---- ---- ----
TOTAL FROM INVESTMENT
OPERATIONS ($) (0.26) 0.12 2.12 3.35 4.53 1.22
---- ---- ---- ---- ---- ----
Dividend from net
investment income ($) (0.01) -- -- -- -- --
Distributions from net
realized gains ($) -- (2.27) (0.33) (0.63) (1.99) (2.74)
---- ---- ---- ---- ---- ----
TOTAL DISTRIBUTIONS ($) (0.01) (2.27) (0.33) (0.63) (1.99) (2.74)
---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF
PERIOD ($) 14.51 12.36 14.15 16.87 19.41 17.89
---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
Total return(3) ($) (1.77)(4) 0.45 17.53 24.40 29.93 6.70(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 491 551 699 931 1,642 1,070
Ratio of operating
expenses to average
net assets (%)* 2.00(5) 2.00 2.00 2.00 2.00 2.00(5)
Ratio of net investment
income (loss) to
average net assets (%)* 0.12(5) (0.41) 0.08 0.04 (0.19) (0.37)(5)
Portfolio turnover rate (%) 92.35 62.93 47.93 44.44 88.07 44.39
Average commission rate
(6) ($) -- -- -- 0.0331 0.0583 0.0486
*Reflects voluntary
assumption of fees or
expenses per share
in each period (Note 3) ($) 0.00 0.06 0.06 0.03 0.03 0.00
<CAPTION>
Class S (Formerly Class C)
---------------------------------------------------------------------------------------
Years ended June 30 Six months ended
---------------------------------------------------------------- December 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 14.78 14.51 12.48 14.27 17.03 19.66
----- ----- ----- ----- ----- -----
Net investment income
(loss) ($)* (0.00) 0.07 0.14 0.17 0.13 0.06
Net realized and
unrealized gain (loss)
on investments ($) (0.25) 0.17 2.15 3.37 4.62 1.27
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) (0.25) 0.24 2.29 3.54 4.75 1.33
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.02) -- (0.17) (0.15) (0.13) (0.06)
Distributions from net
realized gains ($) -- (2.27) (0.33) (0.63) (1.99) (2.74)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.02) (2.27) (0.50) (0.78) (2.12) (2.80)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.51 12.48 14.27 17.03 19.66 18.19
===== ===== ===== ===== ===== =====
Total return(3) (%) (1.69)(4) 1.41 18.83 25.66 31.19 7.23(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 18,796 32,991 50,503 70,177 83,999 88,400
Ratio of operating
expenses to average
net assets (%)* 1.00(5) 1.00 1.00 1.00 1.00 1.00(5)
Ratio of net investment
income (loss) to
average net assets (%)* (0.39)(5) 0.59 1.09 1.06 0.77 0.62(5)
Portfolio turnover rate (%) 92.35 62.93 47.93 44.44 88.07 44.39
Average commission rate (6) ($) -- -- -- 0.0331 0.0583 0.0486
*Reflects voluntary
assumption of fees or
expenses per share
in each period (Note 3) ($) 0.00 0.06 0.06 0.03 0.03 0.00
- ------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on which commissions are charged
beginning with the fiscal year ended June 30, 1996.
</TABLE>
<PAGE>
STATE STREET RESEARCH EQUITY INVESTMENT FUND
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
FUND INFORMATION OFFICERS TRUSTEES
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
EQUITY INVESTMENT FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company
One Financial Center BARTLETT R. GEER STEVE A. GARBAN
Boston, MA 02111 Vice President Retired: formerly Senior Vice
President for Finance and
DISTRIBUTOR THOMAS P. MOORE, JR. Operations and Treasurer, The
State Street Research Vice President Pennsylvania State University
Investment Services, Inc.
One Financial Center DANIEL J. RICE III
Boston, MA 02111 Vice President MALCOLM T. HOPKINS
Former Vice Chairman of the
SHAREHOLDER SERVICES JAMES M. WEISS Board and Chief Financial Officer,
State Street Research Vice President St. Regis Corp.
Service Center
P.O. Box 8408 JOHN T. WILSON
Boston, MA 02266-8408 Vice President EDWARD M. LAMONT
1-800-562-0032 Formerly in banking
GERARD P. MAUS (Morgan Guaranty Trust
CUSTODIAN Treasurer Company of New York);
State Street Bank and presently engaged in private
Trust Company JOSEPH W. CANAVAN investments and civic affairs
225 Franklin Street Assistant Treasurer
Boston, MA 02110
DOUGLAS A. ROMICH ROBERT A. LAWRENCE
LEGAL COUNSEL Assistant Treasurer Associate, Saltonstall & Co.
Goodwin, Procter & Hoar LLP
Exchange Place FRANCIS J. MCNAMARA, III
Boston, MA 02109 Secretary and General Counsel DEAN O. MORTON
Retired; formerly Executive
DARMAN A. WING Vice President, Chief
Assistant Secretary and Operating Officer and Director,
Assistant General Counsel Hewlett-Packard Company
AMY L. SIMMONS
Assistant Secretary 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
</TABLE>
<PAGE>
-----------------
STATE STREET RESEARCH EQUITY INVESTMENT FUND Bulk Rate
One Financial Center U.S. Postage
Boston, MA 02111 PAID
Randolph, MA
Permit No. 600
-----------------
QUESTIONS? COMMENTS?
Call us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
[Graphic Omitted] 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, 1998, 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: 4103-970822(0998)SSR-LD EIV-382D-298 IBS
<PAGE>
STATE STREET RESEARCH
ALPHA FUND
(formerly Equity Income Fund)
SEMIANNUAL REPORT
December 31, 1997
WHAT'S INSIDE
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
[Graphic Omitted]
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH ALPHA FUND (FORMERLY EQUITY INCOME FUND)
- -------------------------------------------------------------------------------
INVESTMENT UPDATE
- -------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
THE ECONOMY
o The economy benefited consumers, investors, business and government in the
second half of 1997. Personal income rose; capital gains tax rates fell;
and productivity gains continued to offset wage gains, keeping inflation
under control. The federal deficit for the current year has all but
disappeared, the result of higher tax revenues and a strong economy.
o The Federal Reserve Board left interest rates unchanged, because of the
positive, inflation picture and concerns that currency and economic
difficulties in the emerging markets of Southeast Asia could have a
negative effect on the U.S. economy.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, gained 10.58%
for the six month period.(1) Small stocks were strong at the beginning of
the period, but gave back some of their gains as investors expressed their
concern about the potential impact of Southeast Asia and retreated to
large-capitalization brand-name companies.
o Bonds gained momentum during the period. U.S. Treasury bonds made a strong
showing late in the fourth quarter as long-term interest rates plunged below
6.0%. The Lehman Brothers Aggregate Bond Index, a broad measure of
investment-grade corporate and government bonds, returned 6.36% for the
six-month period.(1)
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1997, Class A shares of Alpha Fund
returned +14.31% [does not reflect sales charge.](2) The Fund solidly
outperformed both the S&P 500, which gained 10.58% over the same period,
and the Lipper equity income fund average, which was up 11.11%.
o The Fund held up well during the early months of the period, which were weak
for the U.S. stock market. It's equity position expanded because of favorable
stock valuations resulting from market dynamics. The proposed buyout of MAPCO,
a petroleum distribution company, by Williams Company, made a significant
contribution to performance, and high-yield bonds helped offset a weak October
for U.S. stocks.
CURRENT STRATEGY
o At the end of the year, approximately 84% of the Fund's assets were
invested in common and preferred stocks and 12% in high-yield bonds. Cash
and convertible bonds accounted for the remaining 4%.
o The Fund continues to seek companies that have demonstrated their ability to
meet earnings expectations. Lower historical volatility and a reasonable stock
price relative to the market are additional considerations.
(1) The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely traded common stocks. The Lehman
Brothers Aggregate Bond Index is a market- value weighted index of fixed
rate debt issues including U.S. treasury, agency and corporate bond issues,
and mortgage-backed securities. 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) +13.83% for Class B shares; +13.84% for Class C shares; +14.44% for
Class S 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.
(4) Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges where applicable.
"S" shares, offered without a sales charge, are available through certain
employee benefit plans and special programs.
(5) Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
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.
December 31, 1997
- -------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1997)
- -------------------------------------------------------------------------
SEC AVERAGE ANNUAL COMPOUND RATES OF RETURN
(at maximum applicable sales charge)(3)(4)(5)
- -------------------------------------------------------------------------
10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------------
Class A +14.80% +17.99% +21.81%
- -------------------------------------------------------------------------
Class B +14.99% +18.14% +21.55%
- -------------------------------------------------------------------------
Class C +14.99% +18.34% +25.47%
- -------------------------------------------------------------------------
Class S +15.53% +19.46% +27.83%
- -------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
(do not reflect sales charge)(3)(5)
- -------------------------------------------------------------------------
10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------------
Class A +15.31% +19.08% +27.54%
- -------------------------------------------------------------------------
Class B +14.96% +18.35% +26.55%
- -------------------------------------------------------------------------
Class C +14.95% +18.34% +26.47%
- -------------------------------------------------------------------------
Class S +15.50% +19.46% +27.83%
- -------------------------------------------------------------------------
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 MAPCO Oil service 3.3%
2 VALASSIS COMMUNICATIONS Newspaper promotions 3.0%
3 HOLLINGER INTERNATIONAL Newspaper publishing 3.0%
4 AMERICA WEST Airlines 1.9%
5 TOMKINS Industrial management 1.9%
6 HANNAFORD BROTHERS Retail foods 1.8%
7 EXIDE Battery company 1.8%
8 BANK OF NEW YORK Banking 1.8%
9 PINNACLE WEST CAPITAL Utility company 1.8%
10 LEXMARK INTERNATIONAL GROUP Printing products 1.8%
These securities represent an aggregate of 22.1% 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.
ASSET ALLOCATION
(by percentage of net assets)
COMMON AND PREFERRED STOCKS 84%
HIGH YIELD BONDS 12%
CASH/OTHER 4%
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
December 31, 1997 (Unaudited)
- -------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- -------------------------------------------------------------------------------
COMMON STOCKS 73.9%
BASIC INDUSTRIES 18.7%
CHEMICAL 7.5%
BOC Group PLC* ...................................... 165,200 $ 2,720,919
Cabot Corp. ......................................... 160,000 4,420,000
Lyondell Petrochemical Co. .......................... 170,545 4,519,442
Mississippi Chemical Corp. .......................... 129,800 2,368,850
Rohm & Haas Co. ..................................... 28,000 2,681,000
Thiokol Corp. ....................................... 54,200 4,403,750
------------
21,113,961
------------
DIVERSIFIED 5.7%
Johnson Controls Inc. ............................... 57,800 2,759,950
Mark IV Industries Inc. ............................. 196,695 4,302,703
Ogden Corp. ......................................... 133,000 3,748,938
Tomkins PLC* ........................................ 1,100,000 5,212,627
------------
16,024,218
------------
FOREST PRODUCT 2.3%
Abitibi-Consolidated Inc. ........................... 240,000 3,360,000
Stone Container Corp. ............................... 300,000 3,131,250
------------
6,491,250
------------
MACHINERY 1.4%
Howmet International Inc.* .......................... 138,700 2,080,500
Sundstrand Corp. .................................... 38,400 1,934,400
------------
4,014,900
------------
METAL & MINING 1.8%
Alumax Inc.* ........................................ 53,000 1,802,000
Kennametal Inc. ..................................... 63,600 3,295,275
Sheffield Steel Corp.* .............................. 2,500 5,000
------------
5,102,275
------------
Total Basic Industries .............................. 52,746,604
------------
CONSUMER CYCLICAL 12.6%
AIRLINE 2.0%
America West Holdings Corp. CI. B* .................. 294,700 5,488,787
------------
AUTOMOTIVE 3.9%
Exide Corp. ......................................... 197,100 5,099,963
Gencorp Inc. ........................................ 110,000 2,750,000
Renault SA* ......................................... 112,500 3,166,005
------------
11,015,968
------------
HOTEL & RESTAURANT 2.4%
AmeriKing Inc.* ..................................... 1,000 50,000
Harrah's Entertainment Inc.* ........................ 145,800 2,751,975
Mirage Resorts Inc.* ................................ 178,300 4,056,325
Motels of America Inc.*+ ............................ 500 5,000
------------
6,863,300
------------
RECREATION 2.0%
HSN Inc.* ........................................... 83,450 4,297,675
Seagram Ltd. ........................................ 40,000 1,299,900
------------
5,597,575
------------
RETAIL TRADE 2.3%
Hannaford Brothers Co. .............................. 119,500 5,190,781
Kroger Co.* ......................................... 35,800 1,322,363
------------
6,513,144
------------
Total Consumer Cyclical ............................ 35,478,774
------------
CONSUMER STAPLE 15.5%
BUSINESS SERVICE 2.5%
A.C. Nielson Corp.* ................................. 103,000 2,510,625
Hillenbrand Industries Inc. ......................... 56,300 2,881,856
Pagemart Nationwide Inc.*+ .......................... 1,750 18,594
USA Waste Services Inc.* ............................ 36,500 1,432,625
Vestar/LPA Investment Corp.*+ ....................... 3,125 43,750
Viatel Inc.* ........................................ 18,050 90,250
------------
6,977,700
------------
CONTAINER 1.3%
Ball Corp. .......................................... 100,200 3,538,313
------------
FOOD & BEVERAGE 1.1%
Seven-Up/RC Bottling Co. of Southern California* .... 8,750 105,000
Whitman Corp. ....................................... 114,000 2,971,125
------------
3,076,125
------------
HOSPITAL SUPPLY 3.9%
Pacificare Health Systems, Inc. Cl. A* .............. 49,000 2,462,250
Tenet Healthcare Corp. .............................. 93,700 3,103,812
Trigon Healthcare Inc.* ............................. 150,000 3,918,750
U.S. Surgical Corp. ................................. 50,000 1,465,625
------------
10,950,437
------------
PRINTING & PUBLISHING 5.5%
Hollinger International, Inc. Cl. A* ................ 118,900 1,664,600
Lagardere SCA* ...................................... 55,400 1,832,588
Torstar Corp. CI. B* ................................ 103,800 3,626,784
Valassis Communications Inc. ........................ 227,800 8,428,600
------------
15,552,572
------------
TOBACCO 1.2%
Imperial Tobacco Group PLC* ......................... 548,000 3,453,431
------------
Total Consumer Staple .............................. 43,548,578
------------
ENERGY 7.6%
OIL 3.5%
Oryx Energy Co. ..................................... 65,100 1,660,050
Seagull Energy Corp.* ............................... 137,000 2,825,625
Tosco Corp. ......................................... 108,600 4,106,437
Total SA Cl. B ADR .................................. 25,000 1,387,500
------------
9,979,612
------------
OIL SERVICE 4.1%
British Steel PLC* .................................. 1,032,900 2,226,389
MAPCO Inc. .......................................... 201,200 9,305,500
------------
11,531,889
------------
Total Energy ....................................... 21,511,501
------------
FINANCE 10.0%
BANK 4.6%
Bank of New York Inc. ............................... 88,200 5,099,063
Canadian Imperial Bank of Commerce .................. 124,800 3,889,589
National Bank of Canada ............................. 145,500 2,399,547
Royal Bank of Canada ................................ 31,100 1,648,300
------------
13,036,499
------------
FINANCIAL SERVICE 0.5%
Financial Security Assurance Co.* ................... 25,800 1,244,850
------------
INSURANCE 4.9%
Ace Ltd. ............................................ 50,000 4,825,000
AMBAC Inc. .......................................... 88,300 4,061,800
Mid Ocean Ltd. ...................................... 90,000 4,882,500
------------
13,769,300
------------
Total Finance ...................................... 28,050,649
------------
SCIENCE & TECHNOLOGY 3.6%
AEROSPACE 0.6%
Boeing Co. .......................................... 34,120 1,669,748
------------
OFFICE EQUIPMENT 3.0%
Lexmark International Group Inc. CI. A* ............. 130,000 4,940,000
Unisys Corp. ........................................ 252,700 3,506,212
------------
8,446,212
------------
Total Science & Technology ......................... 10,115,960
------------
UTILITY 5.9%
ELECTRIC 5.0%
Edison International Corp. .......................... 80,000 2,175,000
OGE Energy Corp. .................................... 45,000 2,460,938
Pinnacle West Capital Corp. ......................... 120,000 5,085,000
Western Resources Inc. .............................. 101,200 4,351,600
------------
14,072,538
------------
NATURAL GAS 0.2%
TransTexas Gas Corp.* ............................... 48,000 711,000
------------
TELEPHONE 0.7%
Celcaribe SA*+ ...................................... 69,918 279,672
RSL Communications Ltd. CI.A* ....................... 75,000 1,650,000
------------
1,929,672
------------
Total Utility ...................................... 16,713,210
------------
Total Common Stocks (Cost $171,344,974) ............ 208,165,276
------------
CONVERTIBLE PREFERRED STOCKS & OTHER 10.1%
Advanced Radio Telecom Corp. Wts.* .................. 3,750 38,887
AmeriKing Inc. Sr. Exch. Pfd.* ...................... 45,425 1,226,475
Clearnet Communications Inc. Wts.* .................. 3,300 31,350
Cooper Industries Inc. Exch. Note* .................. 128,000 2,336,000
Crown Packaging Holdings Ltd. Wts.*+ ................ 2,000 250
DECS Trust Exch. Pfd. ............................... 106,000 2,729,500
Econophone Inc. Wts.*+ .............................. 1,500 75,000
Food 4 Less Holdings Inc. Wts.*+ .................... 1,344 354,453
Golden Ocean Group Ltd. Wts.* ....................... 2,000 10,000
Granite Broadcasting Corp. Cv. Pfd. ................. 10,000 485,000
Heartland Wireless Communications, Inc. Wts.* ....... 1,500 15
Hollinger International, Inc. Cv. Pfd. .............. 525,100 6,760,662
ICG Holdings Inc. Exch. Pfd.* ....................... 617 697,210
KTI Inc. Cv. Pfd.+ .................................. 40,000 1,530,000
Nextel Communications Inc. Series D Exch. Pfd.# ..... 1,030 1,174,200
North Atlantic Trading Inc. Sr. Pfd.# ............... 52,361 1,413,747
NS Group Inc. Wts.* ................................. 250 43,750
Orion Network Systems Inc. Wts.* .................... 1,250 16,250
Pagemart Inc. Wts.*+ ................................ 3,450 31,913
Primus Telecommunications Group Wts.* ............... 500 500
RSL Communications Ltd. Wts.*+ ...................... 500 50,000
Salomon Inc. Cv. Pfd.* .............................. 45,000 1,822,500
Station Casinos Inc. Cv. Pfd. ....................... 77,800 3,189,800
Supermarkets General Holdings Corp. Exch. Pfd.# ..... 80,000 1,200,000
WBK STRYPES Trust Exch. Pfd. ........................ 100,000 3,350,000
Wireless One Inc. Wts.* ............................. 1,500 15
------------
Total Convertible Preferred Stocks & Other
(Cost $26,065,886) ................................ 28,567,477
------------
<PAGE>
STATE STREET RESEARCH ALPHA FUND
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- ------------------------------------------------------------------------------------------------------------------
PRINCIPAL MATURITY VALUE
AMOUNT DATE (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS 11.6%
Advanced Radio Telecom Corp. Sr. Note, 14.00% ..................... $ 250,000 2/15/2007 $ 242,500
Ameristar Casinos Inc. Sr. Sub. Note, 10.50% ...................... 750,000 8/01/2004 768,750
Archibald Candy Corp. Sr. Sec. Note, 10.25% ....................... 1,500,000 7/01/2004 1,571,250
Celcaribe SA Sr. Sec. Note, 0.00% to 3/14/98, 13.50%
from 3/15/98 to maturity ...................................... 430,000 3/15/2004 430,000
CHC Helicopter Corp. Sr. Sub. Note, 11.50% ....................... 442,000 7/15/2002 471,835
Clearnet Communications Inc. Sr. Note, 0.00% to 12/14/00, 14.75%
from from 12/15/00 to maturity ................................. 250,000 12/15/2005 197,500
Concentric Network Corp. Sr. Note, 12.75%+ ....................... 1,500,000 12/15/2007 1,530,000
Dobson Communications Corp. Sr. Note, 11.75% ..................... 250,000 4/15/2007 264,375
Drypers Corp. Sr. Note, 10.25% ................................... 750,000 6/15/2007 761,250
Econophone Inc. Sr. Note, 13.50% ................................. 1,500,000 7/15/2007 1,605,000
Elgin National Industries Inc. Sr. Note, 11.00%+ ................. 500,000 11/01/2007 518,750
Empire Gas Corp. Sr. Sec. Note, 7.00% to 7/14/99, 12.875% from
7/15/99 to maturity ............................................ 1,500,000 7/15/2004 1,350,000
Envirosource Inc. Note, 9.75% .................................... 1,250,000 6/15/2003 1,271,875
French Fragrances Inc. Series B Sr. Note, 10.375% ................ 500,000 5/15/2007 525,000
Golden Ocean Group Ltd. Sr. Note, 10.00%+ ........................ 2,000,000 8/31/2001 1,700,000
ICF International Inc. Sr. Sub. Note, 13.00% ..................... 250,000 12/31/2003 258,750
Intertek Finance PLC Series B Sr. Sub. Note, 10.25% .............. 1,000,000 11/01/2006 1,050,000
Ionic PLC Sr. Note, 13.50% ....................................... 500,000 8/15/2006 457,500
Johnstown America Industries Inc. Sr. Sub. Note, 11.75% .......... 250,000 8/15/2005 273,750
Krystal Co. Sr. Note, 10.25%+ .................................... 1,500,000 10/01/2007 1,537,500
La Petite Holdings Corp. Sr. Sec. Notes, 9.625% .................. 750,000 8/01/2001 767,812
North Atlantic Trading Inc. Sr. Note, 11.00% ..................... 1,000,000 6/15/2004 1,042,500
Orion Network Systems Inc. Sr. Note, 11.25% ...................... 1,250,000 1/15/2007 1,400,000
Packaging Resources Inc. Sr. Sec. Note, 11.625% .................. 250,000 5/01/2003 265,000
Pagemart Nationwide Inc. Sr. Note, 0.00% to 1/31/00,
15.00% from 2/1/00 to maturity ................................. 825,000 2/01/2005 678,563
Pegasus Shipping Hellas Ltd. Sr. Note, 11.875%+ .................. 500,000 11/15/2004 496,250
Primus Telecommunications Group Sr. Note, 11.75% ................. 500,000 8/01/2004 530,000
PT Indah Kiat Pulp & Paper Corp. Sr. Note, 10.00%+ ............... 500,000 7/01/2007 415,000
Real Time Data Inc. Units, 0.00% to 8/14/01, 13.50% from
8/15/01 to maturity+ ........................................... 1,250,000 8/15/2006 687,500
RSL Communications Ltd. Sr. Note, 12.25% ......................... 500,000 11/15/2006 550,000
Silgan Holdings Inc. Sub. Deb., 13.25% ........................... 279,000 7/15/2006 315,270
Spanish Broadcasting Systems Inc. Sr. Note, 12.50% ............... 500,000 6/15/2002 575,000
Transamerican Energy Corp. Sr. Note, 0.00% to 6/14/00, 13.00%
from 6/15/00 to maturity+ ...................................... 1,000,000 6/15/2002 807,500
Transamerican Energy Corp. Sr. Note, 11.50%+ ..................... 1,500,000 6/15/2002 1,507,500
U.S.A. Mobile Communications Inc. Sr. Note, 14.00% ............... 3,000,000 11/01/2004 3,345,000
Unilab Corp. Sr. Note, 11.00% .................................... 750,000 4/01/2006 765,000
Universal Outdoor Inc. Sr. Sub. Note, 9.75% ...................... 500,000 10/15/2006 561,250
Viatel Inc. Sr. Note, 0.00% to 1/14/00, 15.00% from 1/15/00
to maturity ................................................... 1,000,000 1/15/2005 800,000
Wireless One Inc. Sr. Note, 13.00% ............................... 750,000 10/15/2003 232,500
------------
Total Non-Convertible Bonds (Cost $31,492,189) .............................................. 32,527,230
------------
CONVERTIBLE BONDS 1.5%
Crown Resources Corp. Cv. Sub. Deb., 5.75% ...................... 1,100,000 8/27/2001 841,500
Rohr Inc. Cv. Sub. Note, 7.75% ................................... 500,000 5/15/2004 1,427,500
Winstar Communications Inc. Sr. Sub. Cv. Note, 0.00% to 10/14/00,
14.00% from 10/15/00 to maturity+ .............................. 2,150,000 10/15/2005 1,999,500
------------
Total Convertible Bonds (Cost $2,713,459) ................................................... 4,268,500
------------
COMMERCIAL PAPER 4.2%
American Express Credit Corp., 6.15% ............................ 3,831,000 1/05/1998 3,831,000
Ford Motor Credit Co.,6.10% ..................................... 2,855,000 1/05/1998 2,855,000
Ford Motor Credit Co.,6.15% ..................................... 1,186,000 1/05/1998 1,186,000
General Electric Capital Corp., 5.75% ........................... 4,000,000 1/08/1998 4,000,000
------------
Total Commercial Paper (Cost $11,872,000) ................................................... 11,872,000
------------
- ----------------------------------------------------------------------------------------------------------------
SHARES
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 16.0%
Navigator Securities Lending Prime Portfolio ................... 45,171,103 45,171,103
------------
Total Short-Term Investments (Cost $45,171,103) ................. 45,171,103
------------
Total Investments (Cost $288,659,611) -- 7.3% ................... 330,571,586
------------
Cash and Other Assets, Less Liabilities -- (17.3)% .............. (48,849,190)
------------
Net Assets -- 100.0% ............................................ $281,722,396
============
Federal Income Tax Information:
At December 31, 1997, the net unrealized appreciation of investments based on cost for
Federal income tax purposes of $288,834,327 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess
of value over tax cost ............................................................... $ 48,370,886
Aggregate gross unrealized depreciation for all investments in which there is an excess
of tax cost over value ............................................................... (6,633,627)
-----------
$41,737,259
===========
- ---------------------------------------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing
ownership of foreign securities.
# 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, 1997 was $12,647,787 and $14,762,332 (5.24% of net
assets), respectively.
Forward currency exchange contracts outstanding at December 31, 1997, are as
follows:
UNREALIZED
CONTRACT APPRECIATION DELIVERY
TOTAL VALUE PRICE (DEPRECIATION) DATE
- --------------------------------------------------------------------------------------------------------------
Sell French francs,
Buy U.S. dollars .................... 26,000,000 FRF 0.17406 FRF $176,381 4/30/98
Sell Pound sterling,
Buy U.S. dollars .................... 525,000 GBP 1.62320 GBP (5,082) 4/30/98
Sell Pound sterling,
Buy U.S. dollars .................... 8,000,000 GBP 1.67732 GBP 355,523 4/30/98
Buy Pound sterling,
Sell U.S. dollars ................... 700,000 GBP 1.64610 GBP (9,254) 4/30/98
--------
$517,568
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1997 (Unaudited)
ASSETS
Investments, at value (Cost $288,659,611) (Note 1) .......... $330,571,586
Cash ........................................................ 818
Receivable for securities sold .............................. 3,155,473
Dividends and interest receivable ........................... 1,376,217
Receivable for Fund shares sold ............................. 1,360,418
Receivable for open forward contracts ....................... 531,904
Receivable from Distributor (Note 3) ........................ 3,472
Other assets ................................................ 29,909
------------
337,029,797
LIABILITIES
Payable for collateral received on securities loaned ........ 45,171,103
Payable for securities purchased ............................ 8,275,403
Payable for Fund shares redeemed ............................ 1,386,541
Accrued management fee (Note 2) ............................. 153,314
Accrued distribution and service fees (Note 5) .............. 121,754
Accrued transfer agent and shareholder services
(Note 2) .................................................. 70,802
Payable for open forward contracts .......................... 14,336
Accrued trustees' fees (Note 2) ............................. 5,502
Other accrued expenses ...................................... 108,646
------------
55,307,401
------------
NET ASSETS $281,722,396
============
Net Assets consist of:
Undistributed net investment income ....................... $ 535,061
Unrealized appreciation of investments .................... 41,911,975
Unrealized appreciation of foreign currency and
forward contracts ....................................... 514,256
Accumulated net realized gain ............................. 5,672,932
Paid-in capital ........................................... 233,088,172
------------
$281,722,396
============
Net Asset Value and redemption price per share of
Class A shares ($93,989,831 / 6,221,597 shares) .......... $15.11
======
Maximum Offering Price per share of Class A shares
($15.11 / .955) .......................................... $15.82
======
Net Asset Value and offering price per share of Class B
shares ($109,873,921 / 7,303,316 shares)* ................ $15.04
======
Net Asset Value and offering price per share of Class C
shares ($14,048,880 / 935,059 shares)* ................... $15.02
======
Net Asset Value, offering price and redemption price
per share of Class S shares ($63,809,764 / 4,224,236
shares) .................................................. $15.11
======
*Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the six months ended December 31, 1997 (Unaudited)
INVESTMENT INCOME
Dividends, net of foreign taxes of $49,151 ................... $ 2,390,330
Interest (Note 1) ............................................ 1,695,887
-----------
4,086,217
EXPENSES
Management fee (Note 2) ...................................... 822,738
Transfer agent and shareholder services (Note 2) ............. 240,265
Custodian fee ................................................ 78,357
Service fee-Class A (Note 5) ................................. 104,631
Distribution and service fees-Class B (Note 5) ............... 459,214
Distribution and service fees-Class C (Note 5) ............... 58,451
Registration fees ............................................ 33,479
Reports to shareholders ...................................... 20,786
Trustees' fees (Note 2) ...................................... 23,710
Audit fee .................................................... 16,026
Legal fees ................................................... 3,565
Miscellaneous ................................................ 3,226
-----------
1,864,448
Expenses borne by the Distributor (Note 3) ................... (3,472)
-----------
1,860,976
-----------
Net investment income ........................................ 2,225,241
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY AND FORWARD CONTRACTS
Net realized gain on investments (Notes 1 and 4) ............. 21,009,555
Net realized loss on foreign currency and forward
contracts (Note 1) ......................................... (675,360)
-----------
Total net realized gain .................................. 20,334,195
-----------
Net unrealized appreciation of investments ................... 8,453,848
Net unrealized appreciation of foreign currency
and forward contracts ...................................... 677,455
-----------
Total net unrealized appreciation ........................ 9,131,303
-----------
Net gain on investments, foreign currency and
forward contracts .......................................... 29,465,498
-----------
Net increase in net assets resulting from operations ......... $31,690,739
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ...................... $ 3,408,908 $ 2,225,241
Net realized gain on investments, foreign
currency and forward contracts ........... 12,970,640 20,334,195
Net unrealized appreciation of investments,
foreign currency and forward contracts ... 20,158,095 9,131,303
------------ ------------
Net increase resulting from operations ..... 36,537,643 31,690,739
------------ ------------
Dividends from net investment income:
Class A .................................. (1,175,982) (804,670)
Class B .................................. (613,879) (432,112)
Class C .................................. (1,191,787) (71,011)
Class S .................................. (66,794) (679,059)
------------ ------------
(3,048,442) (1,986,852)
------------ ------------
Distributions from net realized gains:
Class A .................................. (6,343,780) (8,828,000)
Class B .................................. (3,837,994) (9,977,340)
Class C .................................. (5,623,211) (1,257,633)
Class S .................................. (219,488) (6,735,342)
------------ ------------
(16,024,473) (26,798,315)
------------ ------------
Net increase from Fund share
transactions (Note 6) .................... 83,963,174 66,698,030
------------ ------------
Total increase in net assets ............... 101,427,902 69,603,602
NET ASSETS
Beginning of period ........................ 110,690,892 212,118,794
------------ ------------
End of period (including undistributed
net investment income of $296,672
and $535,061, respectively) .............. $212,118,794 $281,722,396
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
- -------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
December 31, 1997
NOTE 1
State Street Research Alpha Fund, formerly 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 three separate funds: State
Street Research Alpha 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. Before November 1, 1997, Class C
shares were designated Class D and Class S shares were designated Class C.
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 subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class C shares also pay annual distribution and service fees of 1.00%. Class S
shares are only offered through certain retirement accounts, advisory accounts
of State Street Research & Management Company (the "Adviser"), an indirect
wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), and special programs. No sales charge is imposed at the time
of purchase or redemption of Class S shares. Class S shares do not pay any
distribution or service fees. The Fund's expenses are borne pro-rata by each
class, except that each class bears expenses, and has exclusive voting rights
with respect to provisions of the Plan of Distribution, related specifically
to that class. The Trustees declare separate dividends on each class of
shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. INVESTMENT VALUATION
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange. Over-the-
counter securities quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at closing prices supplied
through such system. In the absence of recorded sales and for those over-the-
counter securities not quoted on the NASDAQ system, valuations are at the mean
of the closing bid and asked quotations. Fixed income securities are valued by
a pricing service, approved by the Trustees, which utilizes market
transactions, quotations from dealers, and various relationships among
securities in determining value. Short-term securities maturing within sixty
days are valued at amortized cost. Other securities, if any, are valued at
their fair value as determined in accordance with established methods
consistently applied.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. Discount on debt obligations is amortized under the
effective yield method. Certain preferred securities held by the Fund pay
dividends in the form of additional securities (payment-in-kind securities).
Dividend income on payment-in-kind preferred securities is recorded at the
market value of securities received. Differences between the market value of
securities received and the corresponding amounts of income accrued are
recorded as adjustments to income. The Fund is charged for expenses directly
attributable to it, while indirect expenses are allocated among all funds in
the Trust.
D. DIVIDENDS
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually,
unless additional distributions are required for compliance with applicable
tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
F. FORWARD CONTRACTS AND FOREIGN CURRENCIES
The Fund enters into forward foreign currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings and to hedge certain purchase and sale commitments
denominated in foreign currencies. A forward foreign currency exchange
contract is an obligation by the Fund to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the origination
date of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the
U.S. dollar. The aggregate principal amount of forward currency exchange
contracts is recorded in the Fund's accounts. All commitments are marked-to-
market at the applicable transaction rates resulting in unrealized gains or
losses. The Fund records realized gains or losses at the time the forward
contracts are extinguished by entry into a closing contract or by delivery of
the currency. Neither spot transactions nor forward currency exchange
contracts eliminate fluctuations in the prices of the Fund's portfolio
securities or in foreign exchange rates, or prevent loss if the price of these
securities should decline.
G. 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.
H. SECURITIES LENDING
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. If the borrower fails to return the
securities and the value of the collateral has declined during the term of the
loan, the Fund will bear the loss. At December 31, 1997, the value of the
securities loaned and the value of collateral were $44,206,979 and
$45,171,103, respectively. During the six months ended December 31, 1997,
income from securities lending amounted to $240 and is included in interest
income.
NOTE 2
The Trust and the Adviser 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, 1997, the
fees pursuant to such agreement amounted to $822,738.
State Street Research Service Center, 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, 1997, the amount of such shareholder servicing and account
maintenance expenses was $130,195.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$23,710 during the six months ended December 31, 1997.
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, 1997, the amount of such
expenses assumed by the Distributor and its affiliates was $3,472.
NOTE 4
For the six months ended December 31, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $141,598,874 and $98,419,761,
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 C shares. In addition,
the Fund pays annual distribution fees of 0.75% of average daily net assets
for Class B and Class C 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,
1997, fees pursuant to such plan amounted to $104,631, $459,214 and $58,451
for Class A, Class B and Class C shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $46,342 and $313,688, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1997, and that MetLife
Securities, Inc. earned commissions aggregating $858,142 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $51,145 and $829 on redemptions of Class B and Class C shares,
respectively, during the same period.
<PAGE>
NOTE 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
---------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 1,551,622 $ 21,339,862 1,229,745 $ 18,906,581
Issued upon reinvestment of:
Distributions from net
realized gains ............ 497,882 5,949,190 553,080 8,327,638
Dividends from net investment
income .................... 78,757 1,077,039 48,346 732,456
Shares repurchased ............ (554,634) (7,538,567) (393,002) (6,095,812)
--------- ------------ --------- ------------
Net increase .................. 1,573,627 $ 20,827,524 1,438,169 $ 21,870,863
========= ============ ========= ============
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 3,152,047 $ 43,148,521 2,113,787 $ 32,399,380
Issued upon reinvestment of:
Distributions from net
realized gains ............ 296,462 3,540,487 616,819 9,237,865
Dividends from net investment
income .................... 32,330 444,756 24,843 376,664
Shares repurchased ............ (469,237) (6,363,046) (312,378) (4,821,472)
--------- ------------ --------- ------------
Net increase .................. 3,011,602 $ 40,770,718 2,443,071 $ 37,192,437
========= ============ ========= ============
CLASS C (FORMERLY CLASS D) SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 657,453 $ 9,099,018 331,550 $ 5,107,861
Issued upon reinvestment of:
Distributions from net
realized gains ............ 17,516 208,976 77,469 1,158,998
Dividends from net investment
income .................... 4,050 56,205 4,253 63,951
Shares repurchased ............ (130,981) (1,774,765) (126,561) (1,959,011)
--------- ------------ --------- ------------
Net increase .................. 548,038 $ 7,589,434 286,711 $ 4,371,799
========= ============ ========= ============
CLASS S (FORMERLY CLASS C) SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 1,772,262 $ 23,914,041 719,121 $ 11,120,538
Issued upon reinvestment of:
Distributions from net
realized gains ............ 470,421 5,622,233 447,035 6,734,398
Dividends from net investment
income .................... 87,937 1,191,070 44,631 677,784
Shares repurchased ............ (1,167,373) (15,951,846) (987,973) (15,269,789)
--------- ------------ --------- ------------
Net increase .................. 1,163,247 $ 14,775,498 222,814 $ 3,262,931
========= ============ ========= ============
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH ALPHA FUND
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
-------------------------------------------------------------------------- DECEMBER 31, 1997
1993 1994 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 9.19 10.79 10.87 11.70 13.85 14.86
----- ----- ----- ----- ----- -----
Net investment income ($)* 0.44 0.24 0.28 0.23 0.33 0.16
Net realized and unrealized
gain on investments,
foreign currency and
forward contracts ($) 1.52 0.25 1.37 2.36 2.90 1.90
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 1.96 0.49 1.65 2.59 3.23 2.06
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.36) (0.26) (0.28) (0.28) (0.28) (0.14)
Distributions from net
realized gains ($) -- (0.15) (0.54) (0.16) (1.94) (1.67)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.36) (0.41) (0.82) (0.44) (2.22) (1.81)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 10.79 10.87 11.70 13.85 14.86 15.11
===== ===== ===== ===== ===== =====
Total return(3) (%) 21.64 4.30 16.12 22.41 27.45 14.31(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 28,995 40,484 37,327 44,464 71,087 93,990
Ratio of operating
expenses to average net
assets (%)* 1.50 1.50 1.42 1.25 1.25 1.23(5)
Ratio of net investment
income to average net
assets (%)* 3.76 2.42 2.55 1.78 2.43 2.00(5)
Portfolio turnover
rate(%) 80.42 73.96 67.50 111.13 63.33 40.14
Average commission
rate(6) ($) -- -- -- 0.0140 0.0512 0.0328
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) ($) 0.01 0.05 0.05 0.03 0.02 0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
--------------------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 10.81 10.79 10.86 11.68 13.82 14.81
----- ----- ----- ----- ----- -----
Net investment income ($)* 0.02 0.21 0.21 0.13 0.22 0.10
Net realized and
unrealized gain
(loss) on
investments, foreign
currency and forward
contracts ($) (0.02) 0.21 1.38 2.36 2.89 1.89
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.00 0.42 1.59 2.49 3.11 1.99
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.02) (0.20) (0.23) (0.19) (0.18) (0.09)
Distributions from net
realized gains ($) -- (0.15) (0.54) (0.16) (1.94) (1.67)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.02) (0.35) (0.77) (0.35) (2.12) (1.76)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 10.79 10.86 11.68 13.82 14.81 15.04
===== ===== ===== ===== ===== =====
Total return(3) (%) 0.05(4) 3.79 15.43 21.60 26.45 13.83(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 1,060 10,752 16,130 25,543 71,986 109,874
Ratio of operating
expenses to average net
assets (%)* 2.00(5) 2.00 2.00 2.00 2.00 1.98(5)
Ratio of net investment
income to average net
assets (%)* 1.53(5) 1.80 1.95 1.05 1.65 1.26(5)
Portfolio turnover rate (%) 80.42 73.96 67.50 111.13 63.33 40.14
Average commission
rate(6) ($) -- -- -- 0.0140 0.0512 0.0328
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) ($) 0.00 0.07 0.05 0.03 0.02 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
June 30, 1996.
</TABLE>
<PAGE>
<TABLE>
CLASS C (FORMERLY CLASS D)
--------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
----------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.81 10.79 10.86 11.67 13.82 14.79
----- ----- ----- ----- ----- -----
Net investment income($)* 0.02 0.21 0.22 0.13 0.21 0.10
Net realized and unrealized gain
(loss) on investments, foreign
currency and forward contracts ($) (0.02) 0.21 1.36 2.37 2.90 1.89
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.00 0.42 1.58 2.50 3.11 1.99
----- ----- ----- ----- ----- -----
Dividends from net investment income ($) (0.02) (0.20) (0.23) (0.19) (0.20) (0.09)
Distributions from net realized gains ($) -- (0.15) (0.54) (0.16) (1.94) (1.67)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.02) (0.35) (0.77) (0.35) (2.14) (1.76)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ($) 10.79 10.86 11.67 13.82 14.79 15.02
===== ===== ===== ===== ===== =====
Total return(3) (%) 0.04(4) 3.78 15.33 21.68 26.42 13.84(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ($ thousands) 628 1,280 1,366 1,386 9,592 14,049
Ratio of operating expenses to average net
assets (%)* 2.00(5) 2.00 2.00 2.00 2.00 1.98(5)
Ratio of net investment income to average
net assets (%)* 1.49(5) 1.88 1.96 1.03 1.59 1.27(5)
Portfolio turnover rate (%) 80.42 73.96 67.50 111.13 63.33 40.14
Average commission rate (6) ($) -- -- -- 0.0140 0.0512 0.0328
*Reflects voluntary assumption of fees or
expenses per share in each period
(Note 3) ($) 0.00 0.06 0.05 0.03 0.01 0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS S (FORMERLY CLASS C)
-------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
----------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.81 10.79 10.86 11.70 13.85 14.86
----- ----- ----- ----- ----- -----
Net investment income ($)* 0.03 0.33 0.32 0.26 0.36 0.18
Net realized and unrealized gain (loss)
on investments, foreign currency and
forward contracts ($) (0.02) 0.21 1.39 2.36 2.90 1.90
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.01 0.54 1.71 2.62 3.26 2.08
----- ----- ----- ----- ----- -----
Dividends from net investment income ($) (0.03) (0.32) (0.33) (0.31) (0.31) (0.16)
Distributions from net realized gains ($) -- (0.15) (0.54) (0.16) (1.94) (1.67)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.03) (0.47) (0.87) (0.47) (2.25) (1.83)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD ($) 10.79 10.86 11.70 13.85 14.86 15.11
===== ===== ===== ===== ===== =====
Total return(3) (%) 0.14(4) 4.84 16.64 22.82 27.75 14.44(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ($ thousands) 15,988 20,266 34,827 39,298 59,453 63,810
Ratio of operating expenses to average
net assets (%)* 1.00(5) 1.00 1.00 1.00 1.00 0.98(5)
Ratio of net investment income to average
net assets (%)* 1.65(5) 2.92 2.93 2.03 2.68 2.23(5)
Portfolio turnover rate (%) 80.42 73.96 67.50 111.13 63.33 40.14
Average commission rate (6) ($) -- -- -- 0.0140 0.0512 0.0328
*Reflects voluntary assumption of fees or
expenses per share in each period
(Note 3) ($) 0.00 0.06 0.05 0.03 0.02 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
June 30, 1996.
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH ALPHA FUND
- ------------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
FUND INFORMATION OFFICERS TRUSTEES
<S> <C> <C>
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
ALPHA FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company
One Financial Center BARTLETT R. GEER STEVE A. GARBAN
Boston, MA 02111 Vice President Retired; formerly Senior Vice
President for Finance and
DISTRIBUTOR THOMAS P. MOORE, JR. Operations and Treasurer, The
State Street Research Vice President Pennsylvania State University
Investment Services, Inc.
One Financial Center DANIEL J. RICE III
Boston, MA 02111 Vice President MALCOLM T. HOPKINS
Former Vice Chairman of the
SHAREHOLDER SERVICES JAMES M. WEISS Board and Chief Financial
State Street Research Vice President Officer, St. Regis Corp.
Service Center
P.O. Box 8408 JOHN T. WILSON
Boston, MA 02266-8408 Vice President EDWARD M. LAMONT
1-800-562-0032 Formerly in banking (Morgan
GERARD P. MAUS Guaranty Trust Company of
CUSTODIAN Treasurer New York); presently engaged
State Street Bank and in private investments and
Trust Company JOSEPH W. CANAVAN civic affairs
225 Franklin Street Assistant Treasurer
Boston, MA 02110
DOUGLAS A. ROMICH ROBERT A. LAWRENCE
LEGAL COUNSEL Assistant Treasurer Associate, Saltonstall & Co.
Goodwin, Procter & Hoar LLP
Exchange Place FRANCIS J. MCNAMARA, III
Boston, MA 02109 Secretary and General Counsel DEAN O. MORTON
Retired; formerly Executive
DARMAN A. WING Vice President, Chief
Assistant Secretary and Operating Officer and Director,
Assistant General Counsel Hewlett-Packard Company
AMY L. SIMMONS
Assistant Secretary 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
</TABLE>
<PAGE>
-----------------
STATE STREET RESEARCH ALPHA FUND Bulk Rate
One Financial Center U.S. Postage
Boston, MA 02111 PAID
Randolph, MA
Permit No. 600
-----------------
QUESTIONS? COMMENTS?
CALL us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at
[email protected]
[Graphic Omitted] 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 Alpha Fund
prospectus. When used after March 31, 1998, 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: 4105-970822(0998)SSR-LD AL-820C-298IBS
<PAGE>
STATE STREET RESEARCH
GLOBAL RESOURCES FUND
SEMIANNUAL REPORT
December 31, 1997
WHAT'S INSIDE
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
[Graphic Omitted]
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
THE ECONOMY
o The economy benefited consumers, investors, businesses and government in the
second half of 1997. Personal income rose; capital gains tax rates fell; and
productivity gains continued to offset wage gains, keeping inflation under
control. The federal deficit for the current year has all but disappeared, the
result of higher tax revenues and a strong economy.
o The Federal Reserve Board left interest rates unchanged because of concerns
that currency and economic difficulties in the emerging markets of Southeast
Asia could have a negative effect on the U.S. economy.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, gained 10.58% for
the six month period.(1) Small stocks were strong at the beginning of the
period, but gave back some of their gains as investors expressed their concern
about the potential impact of Southeast Asia and retreated to
large-capitalization brand-name companies.
o Bonds gained momentum during the period. In fact, the Lehman Brothers
Aggregate Bond Index, a broad measure of investment-grade corporate and
government bonds, actually outperformed the S&P 500, 2.94% vs 2.87% in the
fourth quarter.(1)
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1997, Class A shares of Global Resources
Fund returned +2.07% [does not reflect sales charge.](2) The Fund solidly
outperformed other natural resources funds, which averaged a loss of -3.84%
for the period, according to Lipper Analytical Services.
o Because Asia represents approximately 50% of the growth in demand for natural
resources, the economic crises that rocked the area had a negative impact on
most segments of the natural resources sector.
o Energy stocks held up better than other natural segments, and the Fund's heavy
emphasis on energy is the primary reason it outperformed its peers.
o The Fund's 10% position in gold depreciated to approximately 7% by the end of
the period as gold stocks continued to lose ground.
CURRENT STRATEGY
o We expect oil prices to come down, due to a perceived surplus of crude oil
brought about by lack of demand from Asian countries.
o We have eliminated our positions in oil service stocks that have been very
vulnerable since October.
o We remain bullish on natural gas and have increased our holdings in gold
because of attractive buying opportunities.
(1) The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely traded common stocks. The Lehman
Brothers Aggregate Bond Index is a market- value weighted index of fixed-
rate debt issues, including U.S. treasury, agency, and corporate bond
issues, and mortgage-backed securities. 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) +1.71% for Class B shares; +1.66% for Class C shares; +2.22% for Class S
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. "S" shares, offered without a sales
charge, are available through certain employee benefits plans and special
programs.
(4) Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges where applicable.
(5) Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
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.
December 31, 1997
- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1997)
- --------------------------------------------------------------------------------
SEC AVERAGE ANNUAL COMPOUND RATES OF RETURN
(at maximum applicable sales charge)(3)(4)(5)
- ---------------------------------------------------------------------
Life of Fund
(since 3/2/90) 5 years 1 year
- ---------------------------------------------------------------------
Class A +8.57% +21.58% +0.81%
- ---------------------------------------------------------------------
Class B +8.80% +21.80% +0.06%
- ---------------------------------------------------------------------
Class C +8.76% +21.93% +3.80%
- ---------------------------------------------------------------------
Class S +9.42% +23.09% +5.86%
- ---------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
(do not reflect sales charge)(3)(5)
- --------------------------------------------------------------------------------
Life of Fund
(since 3/2/90) 5 years 1 year
- ---------------------------------------------------------------------
Class A +9.21% +22.70% +5.56%
- ---------------------------------------------------------------------
Class B +8.80% +21.98% +4.78%
- ---------------------------------------------------------------------
Class C +8.76% +21.93% +4.74%
- ---------------------------------------------------------------------
Class S +9.42% +23.09% +5.86%
- ---------------------------------------------------------------------
Performance results for the Fund are increased by the Distributor's voluntary
reduction of Fund fees and expenses; without subsidization, performance would
have been lower.
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 SEAGULL ENERGY Oil and gas exploration 5.0%
2 RANGER OIL International oil exploration 4.9%
3 KCS ENERGY Oil and gas exploration 4.5%
4 NUEVO ENERGY Oil and gas exploration 3.1%
5 OCEAN ENERGY Oil and gas exploration service 2.9%
6 SEVEN SEAS PETROLEUM Oil and gas exploration company 2.8%
7 TRANSTEXAS GAS Oil and gas exploration 2.6%
8 PROBE EXPLORATION Oil and gas exploration and production 1.9%
9 OMI International shipping 1.8%
10 ULSTER PETROLEUM Oil and gas exploration 1.8%
These securities represent an aggregate of 31.3% 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)
Oil and gas production 68%
Cash 16%
Metal and mining 10%
Other 4%
Oil service 2%
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
December 31, 1997 (Unaudited)
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
EQUITY SECURITIES 84.4%
BASIC INDUSTRIES 13.9%
CHEMICAL 0.4%
Agrium Inc. ...................................... 70,000 $ 853,125
------------
MACHINERY 0.6%
US Filter Corp.* ................................. 50,000 1,496,875
------------
METAL & MINING 9.9%
Aber Resources Ltd.* ............................. 75,100 769,775
Ashanti Goldfields Co. Ltd. GDR .................. 200,000 1,500,000
Battle Mountain Gold Co. ......................... 200,000 1,175,000
Boliden Ltd.* .................................... 200,000 510,829
Cameco Corp. ..................................... 40,000 1,290,000
Canyon Resources Corp.* .......................... 500,000 500,000
Corriente Resources Inc.* ........................ 323,200 386,741
Crown Resources Corp.* ........................... 120,000 502,500
Delta Gold NL* ................................... 750,000 789,921
Denison Mines Ltd.* .............................. 1,500,000 388,370
Great Central Mines Ltd.* ........................ 400,000 430,155
Homestake Mining Co. ............................. 80,000 710,000
Impala Platinum Holdings ADR* .................... 50,000 477,770
Menzies Gold NL* ................................. 1,000,000 117,315
Nevsun Resources Ltd.* ........................... 350,000 891,501
Newcrest Mining Ltd.* ............................ 500,000 544,211
Newmont Mining Corp. ............................. 20,000 587,500
Normandy Mining Ltd.* ............................ 1,271,739 1,234,995
Orogen Minerals Ltd.* ............................ 625,000 1,222,031
Pan African Resources Corp.* ..................... 287,400 16,089
Pangea Goldfields Inc.* .......................... 100,000 118,960
Placer Dome Inc. ................................. 75,000 951,562
Randgold Resources Inc. GDR*+ .................... 55,000 275,000
Romarco Minerals Inc.* ........................... 300,000 640,286
South Pacific Resources Inc.* .................... 500,000 97,967
Southernera Resources Ltd.* ...................... 202,400 2,025,346
Southwestern Gold Corp.* ......................... 300,000 997,166
Stillwater Mining Co.* ........................... 70,000 1,172,500
Sutton Resources Ltd.* ........................... 200,000 1,300,000
Tombstone Exploration Co. Ltd.* .................. 350,000 93,069
Trillion Resources Ltd.* ......................... 200,000 334,488
Vaal Reefs Exploration & Mining Ltd. ADR ......... 200,000 768,750
Valerie Gold Resources Ltd.* ..................... 300,000 254,015
Viceroy Resource Corp.* .......................... 500,000 927,189
X-Cal Resources Ltd.* ............................ 1,000,000 559,812
------------
24,560,813
------------
RAILROAD 3.0%
Mosvold Shipping Ltd.(+) ......................... 2,000,000 2,707,899
Mosvold Shipping Ltd.+ ........................... 200,000 258,848
OMI Corp. ........................................ 494,900 4,546,894
------------
7,513,641
------------
Total Basic Industries ......................................... 34,424,454
------------
ENERGY 65.7%
OIL 63.4%
3DX Technologies Inc.* ........................... 100,000 400,000
Abacan Resource Corp.* ........................... 793,000 1,239,063
Apache Corp. ..................................... 25,025 877,439
Arakis Energy Corp.* ............................. 1,000,000 2,062,500
Barrett Resources Corp.* ......................... 125,000 3,781,250
Barrington Petroleum Ltd.*+ ...................... 313,900 1,010,420
Basin Exploration Inc.* .......................... 200,000 3,550,000
Benton Oil & Gas Co.* ............................ 57,800 747,788
Brigham Exploration Co.* ......................... 68,800 1,006,200
Cabot Oil & Gas Corp. Cl. A ...................... 146,400 2,845,650
Callon Petroleum Co.* ............................ 95,500 1,554,859
Canadian 88 Energy Corp.* ........................ 969,500 2,883,297
Canadian Conquest Exploration Inc.* .............. 165,000 121,234
Clayton Williams Energy Inc.* .................... 17,530 262,950
COHO Energy Inc.* ................................ 89,400 815,775
Crystal Oil Co.* ................................. 41,600 1,820,000
Cultus Petroleum NL* ............................. 500,000 857,051
EEX Corp. ........................................ 219,200 1,986,500
Elk Point Resources Inc. Cl. A* .................. 300,000 1,563,976
Forcenergy Inc.* ................................. 123,200 3,226,300
Forest Oil Corp.* ................................ 174,300 2,875,950
FX Energy Inc.* .................................. 100,000 650,000
Gulfstream Resources Canada Ltd. ................. 347,000 1,651,167
Interoil Corp.* .................................. 156,500 1,330,250
KCS Energy Inc. .................................. 540,000 11,205,000
Kelley Oil & Gas Corp.* .......................... 400,000 875,000
Maxx Petroleum Ltd.* ............................. 1,203,900 1,558,528
Meridian Resource Corp.* ......................... 281,700 2,693,756
Merit Energy Ltd.* ............................... 49,000 152,584
Morrison Middlefield Ltd. ........................ 240,000 1,763,409
New Cache Petroleum Ltd.* ........................ 80,000 363,878
Novus Petroleum Ltd.* ............................ 222,900 581,100
Nuevo Energy Co.* ................................ 189,000 7,701,750
Ocean Energy Inc.* ............................... 143,900 7,096,069
Oil Search Ltd.* ................................. 1,604,300 2,900,501
Oxbow Exploration Inc.+ .......................... 400,000 302,747
Patina Oil & Gas Corp.* .......................... 94,700 728,006
Pease Oil & Gas Co.* ............................. 200,000 375,000
Pease Oil & Gas Co.*(+) .......................... 87,500 129,199
Pendaries Petroleum Ltd.* ........................ 167,000 1,314,685
Plains Resources Inc.* ........................... 250,000 4,296,875
Post Energy Corp.* ............................... 400,000 895,700
Probe Exploration Inc.*(+) ....................... 1,500,000 4,775,900
Purcell Energy Ltd.* ............................. 229,000 208,320
Ranger Oil Ltd.* ................................. 1,784,200 12,266,375
Santa Fe Energy Resources Inc. ................... 195,900 2,203,875
Seagull Energy Corp.* ............................ 608,600 12,552,375
Seven Seas Petroleum Inc.* ....................... 399,600 6,873,120
Snyder Oil Corp. ................................. 156,600 2,857,950
Southern Mineral Corp.* .......................... 213,500 1,174,250
Southwestern Energy Co. .......................... 296,300 3,814,862
St. Mary Land & Exploration Co. .................. 58,400 2,044,000
Stone Energy Corp.* .............................. 100,000 3,350,000
Tap Oil NL* ...................................... 1,500,000 1,740,172
Tarragon Oil & Gas Ltd.* ......................... 250,052 1,959,751
Thunder Energy Inc.* ............................. 300,000 457,647
Tipperary Corp.* ................................. 100,000 406,250
Titan Exploration Inc.* .......................... 446,723 4,243,868
Tom Brown, Inc.* ................................. 150,000 2,887,500
Ulster Petroleum Ltd.* ........................... 452,300 4,367,755
United Meridian Corp.* ........................... 131,200 3,690,000
Vermilion Resources Ltd.* ........................ 200,000 1,154,613
Virginia Gold Mines Inc.* ........................ 300,000 367,377
Wolverine Energy Corp.* .......................... 165,000 136,244
------------
157,585,610
------------
OIL SERVICE 2.3%
Daniel Industries Inc. ........................... 93,200 1,794,100
Dreco Energy Services Ltd.* ...................... 33,530 1,130,923
TMBR/Sharp Drilling Inc.* ........................ 136,800 2,496,600
Willbros Group Inc.* ............................. 29,100 436,500
------------
5,858,123
------------
Total Energy ..................................... 163,443,733
------------
UTILITY 4.8%
NATURAL GAS 4.8%
Markwest Hydrocarbon Inc.* ....................... 37,500 825,000
Questar Corp. .................................... 69,000 3,079,125
TransTexas Gas Corp.* ............................ 442,000 6,547,125
Valero Refining Marketing Co. .................... 44,500 1,398,969
------------
11,850,219
------------
Total Utility .................................... 11,850,219
------------
Total Equity Securities (Cost $217,956,508) ...... 209,718,406
------------
- -------------------------------------------------------------------------------
PRINCIPAL MATURITY
AMOUNT DATE
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS 14.9%
American Express Credit Corp., 5.55% .... $ 1,000,000 1/02/1998 1,000,000
American Express Credit Corp., 5.85% .... 10,848,000 1/08/1998 10,848,000
Associates Corp. of North America, 5.95% 10,955,000 1/12/1998 10,955,000
Ford Motor Credit Co., 6.05% ............ 726,000 1/05/1998 726,000
General Electric Capital Corp., 5.85% ... 4,349,000 1/05/1998 4,349,000
Household Finance Corp., 6.08% .......... 9,221,000 1/05/1998 9,221,000
------------
Total Short-Term Obligations (Cost $37,099,000) .................. 37,099,000
------------
REPURCHASE AGREEMENTS 0.2%
State Street Bank and Trust Co., dated 12/31/97,
repurchase proceeds $601,142, collateralized by
$610,000 U.S. Treasury Note, 5.875%, due
8/31/99, market value $624,240 ........ 601,000 1/02/1998 601,000
------------
Total Repurchase Agreements (Cost $601,000) ...................... 601,000
------------
Total Investments (Cost $255,656,508) - 99.5% .................... 247,418,406
Cash and Other Assets, Less Liabilities - 0.5% ................... 1,214,019
------------
Net Assets - 100.0% .............................................. $248,632,425
============
Federal Income Tax Information:
At December 31, 1997, the net unrealized depreciation of
investments based on cost for Federal income tax purposes of
$255,665,836 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost ............... $ 23,932,116
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value ............... (32,179,546)
------------
$ (8,247,430)
============
- -------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global Depositary
Receipt, respectively, representing ownership of foreign securities.
+ Security restricted in accordance with Rule 144A under the Securities Act
of 1933, which allows for the resale of such securities among certain
qualified institutional buyers. The total cost and market value of Rule 144A
securities owned at December 31, 1997 were $2,965,560 and $1,847,015 (0.74%
of net assets), respectively.
(+) Security restricted as to public resale. The total cost and market value
of restricted securities owned at December 31, 1997 were $5,194,837 and
$7,612,998 (3.06% of net assets), respectively.
Diversification of Equity Securities at December 31, 1997 (as a percentage
of net assets) was United States 60.4%, Canada 31.8%, Australia 4.4%, Norway
1.4%, Ghana 0.7%, Papua New Guinea 0.6%, South Africa 0.6%, and United
Kingdom 0.1%.
Forward currency exchange contracts outstanding at December 31, 1997, are as
follows:
UNREALIZED
CONTRACT APPRECIATION DELIVERY
TOTAL VALUE PRICE (DEPRECIATION) DATE
- --------------------------------------------------------------------------------
Sell Australian dollars,
Buy U.S. dollars .... 23,100,000 AUD 0.70620 AUD $1,246,781 2/8/98
==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1997 (Unaudited)
ASSETS
Investments, at value (Cost $255,656,508) (Note 1) ......... $247,418,406
Cash ....................................................... 666
Receivable for fund shares sold ............................ 1,656,804
Receivable for open forward contracts ...................... 1,246,781
Receivable for securities sold ............................. 1,106,507
Dividends and interest receivable .......................... 76,961
Other assets ............................................... 19,140
------------
251,525,265
LIABILITIES
Payable for fund shares redeemed ........................... 1,916,123
Payable for securities purchased ........................... 500,001
Accrued management fee (Note 2) ............................ 165,060
Accrued distribution and service fees (Note 4) ............. 144,644
Accrued transfer agent and shareholder services
(Note 2) ................................................. 43,320
Accrued trustees' fees (Note 2) ............................ 6,200
Other accrued expenses ..................................... 117,492
------------
2,892,840
------------
NET ASSETS 248,632,425
============
Net Assets consist of:
Unrealized depreciation of investments ................... $ (8,238,102)
Unrealized appreciation of foreign currency and
forward contracts ...................................... 1,246,776
Accumulated net realized gain ............................ 11,218,369
Paid-in capital .......................................... 244,405,382
-------------
$248,632,425
============
Net Asset Value and redemption price per share of Class A
shares ($99,245,175 / 4,802,592 shares) .................. $20.66
======
Maximum Offering Price per share of Class A shares
($20.66 / .955) .......................................... $21.63
======
Net Asset Value and offering price per share of Class B
shares ($98,849,153 / 4,947,710 shares)* ................. $19.98
======
Net Asset Value and offering price per share of Class C
shares ($40,596,747 / 2,037,004 shares)* ................. $19.93
======
Net Asset Value, offering price and redemption price per
share of Class S shares ($9,941,350 / 472,612 shares) .... $21.03
======
- ------------------------------------------------------------------------------
*Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
<PAGE>
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the six months ended December 31, 1997 (Unaudited)
INVESTMENT INCOME
Dividends, net of foreign taxes of $12,017 ................. $ 318,330
Interest (Note 1) .......................................... 406,265
------------
724,595
EXPENSES
Management fee (Note 2) .................................... 969,939
Transfer agent and shareholder services (Note 2) ........... 244,240
Service fee-Class A (Note 4) ............................... 129,939
Distribution and service fees-Class B (Note 4) ............. 509,294
Distribution and service fees-Class C (Note 4) ............. 200,389
Custodian fee .............................................. 77,454
Reports to shareholders .................................... 20,168
Registration fees .......................................... 54,074
Audit fee .................................................. 14,208
Trustees' fees (Note 2) .................................... 24,144
Legal fees ................................................. 3,328
Miscellaneous .............................................. 3,963
----------
2,251,140
------------
Net investment loss ........................................ (1,526,545)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY AND FORWARD CONTRACTS
Net realized gain on investments (Notes 1 and 3) ........... 30,685,882
Net realized loss on foreign currency and
forward contracts (Note 1) ............................... (16,201)
------------
Total net realized gain ................................ 30,669,681
------------
Net unrealized depreciation of investments ................. (35,651,879)
Net unrealized appreciation of foreign currency
and forward contracts .................................... 1,246,776
------------
Total net unrealized depreciation ...................... (34,405,103)
------------
Net loss on investments, foreign currency and
forward contracts ........................................ (3,735,422)
-----------
Net decrease in net assets resulting from operations ....... $ (5,261,967)
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- ------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment loss ........................................ $ (1,324,105) $ (1,526,545)
Net realized gain on investments, foreign currency and
forward contracts ........................................ 12,458,405 30,669,681
Net unrealized appreciation (depreciation) of investments,
foreign currency and forward contracts ................... 13,310,514 (34,405,103)
------------ ------------
Net increase (decrease) resulting from operations .......... 24,444,814 (5,261,967)
------------ ------------
Distributions from net realized gains:
Class A .................................................. (1,857,796) (9,934,031)
Class B .................................................. (1,170,575) (10,104,519)
Class C .................................................. (581,660) (3,893,807)
Class S .................................................. (352,673) (1,118,082)
------------ ------------
(3,962,704) (25,050,439)
------------ ------------
Net increase from fund share transactions (Note 6) ......... 121,964,798 81,939,947
------------ ------------
Total increase in net assets ............................... 142,446,908 51,627,541
NET ASSETS
Beginning of period ........................................ 54,557,976 197,004,884
------------ ------------
End of period .............................................. $197,004,884 $248,632,425
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
Notes to Unaudited Financial Statements
- -------------------------------------------------------------------------------
December 31, 1997
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 Trust commenced operations in March, 1990. The Trust
presently consists of three separate funds: State Street Research Global
Resources Fund, State Street Research Alpha 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. Before November 1, 1997, Class C
shares were designated Class D and Class S shares were designated Class C.
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 subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class C shares also pay annual distribution and service fees of 1.00%. Class S
shares are only offered to certain retirement accounts, advisory accounts of
State Street Research & Management Company (the "Adviser"), an indirect wholly
owned subsidiary of Metropolitan Life Insurance Company ("Metropolitan"), and
special programs. No sales charge is imposed at the time of purchase or
redemption of Class S shares. Class S shares do not pay any distribution or
service fees. 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. Securities quoted in foreign
currencies are translated into 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
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. FORWARD CONTRACTS AND FOREIGN CURRENCIES
The Fund enters into forward foreign currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings and to hedge certain purchase and sale commitments
denominated in foreign currencies. A forward foreign currency exchange
contract is an obligation by the Fund to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the origination
date of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the
U.S. dollar. The aggregate principal amount of forward currency exchange
contracts is recorded in the Fund's accounts. All commitments are marked-to-
market at the applicable transaction rates resulting in unrealized gains or
losses. The Fund records realized gains or losses at the time the forward
contracts are extinguished by entry into a closing contract or by delivery of
the currency. Neither spot transactions nor forward currency exchange
contracts eliminate fluctuations in the prices of the Fund's portfolio
securities or in foreign exchange rates, or prevent loss if the price of these
securities should decline.
G. 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.
H. SECURITIES LENDING
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. If the borrower fails to return the
securities and the value of the collateral has declined during the term of the
loan, the Fund will bear the loss. At December 31, 1997, the value of the
securities loaned and the value of collateral were $10,386,024 and
$10,651,811, respectively.
NOTE 2
The Trust and the Adviser 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, 1997, the
fees pursuant to such agreement amounted to $969,939.
State Street Research Service Center, 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, 1997, the amount of such shareholder servicing and account
maintenance expenses was $84,672.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$24,144 during the six months ended December 31, 1997.
NOTE 3
For the six months ended December 31, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $133,266,147 and $111,133,221,
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 C shares. In addition,
the Fund pays annual distribution fees of 0.75% of average daily net assets
for Class B and Class C 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,
1997, fees pursuant to such plan amounted to $129,939, $509,294 and $200,389
for Class A, Class B and Class C shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $89,281 and $59,572, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1997, and that MetLife
Securities, Inc. earned commissions aggregating $166,335 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $197,398 and $16,639 on redemptions of Class B and Class C shares,
respectively, during the same period.
NOTE 5
Under normal market conditions the Fund invests not less than 65% of its total
assets in equity securities of domestic and foreign companies in the energy
and natural resources industries. Also, the Fund may invest up to 35% of its
total assets in the securities of issuers in industries that are not related
to the energy or natural resources industries. Accordingly, the Fund's
investments will fluctuate in response to a variety of economic, political and
other factors peculiar to the energy industries and may fluctuate more widely
than a portfolio that invests in a broader range of industries.
NOTE 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1997
JUNE 30, 1997 (UNAUDITED)
---------------------------------- ----------------------------------
Class A Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 3,660,723 $ 77,832,076 2,237,313 $ 57,340,076
Issued upon reinvestment of
distributions from net
realized gains .............. 82,889 1,767,355 408,880 9,169,116
Shares repurchased ............ (1,943,823) (40,902,436) (1,418,108) (35,254,001)
---------- ------------ ---------- ------------
Net increase .................. 1,799,789 $ 38,696,995 1,228,085 $ 31,255,191
========== ============ ========== ============
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
Shares sold ................... 3,312,555 $ 69,477,881 1,497,457 $ 36,510,883
Issued upon reinvestment of
distributions from net
realized gains .............. 51,654 1,077,181 437,810 9,510,796
Shares repurchased ............ (502,773) (10,470,845) (598,372) (13,683,026)
---------- ------------ ---------- ------------
Net increase .................. 2,861,436 $ 60,084,217 1,336,895 $ 32,338,653
========== ============ ========== ============
CLASS C (FORMERLY CLASS D) SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
Shares sold ................... 1,676,809 $ 34,986,489 944,743 $ 22,442,600
Issued upon reinvestment of
distributions from net
realized gains .............. 25,665 534,412 167,922 3,639,263
Shares repurchased ............ (738,597) (15,509,697) (340,975) (7,785,353)
---------- ------------- ---------- ------------
Net increase .................. 963,877 $ 20,011,204 771,690 $ 18,296,510
========== ============ ========== ============
CLASS S (FORMERLY CLASS C) SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
Shares sold ................... 736,188 $ 15,558,855 283,220 $ 7,188,252
Issued upon reinvestment of
distributions from net
realized gains .............. 14,897 321,658 48,358 1,107,030
Shares repurchased ............ (597,301) (12,708,131) (331,968) (8,245,689)
---------- ------------ ---------- ------------
Net increase (decrease) ....... 153,784 $ 3,172,382 (390) $ 49,593
========== ============ ========== ============
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
-------------------------------------------------------------------- DECEMBER 31, 1997
1993 1994(1) 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD 8.02 13.51 11.84 12.16 17.44 22.39
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.13) (0.17) (0.16) (0.20) (0.15) (0.10)
Net realized and
unrealized gain
(loss) on investments,
foreign currency and
forward contracts ($) 5.62 (1.50) 0.48 5.48 5.86 0.71
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 5.49 (1.67) 0.32 5.28 5.71 0.61
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 13.51 11.84 12.16 17.44 22.39 20.66
===== ===== ===== ===== ===== =====
Total return(3)(%) 68.45 (12.36) 2.70 43.42 32.96 2.07
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 33,513 30,679 25,692 30,943 80,029 99,245
Ratio of operating
expenses to average
net assets (%)* 1.75 1.75 1.75 1.75 1.42 1.34
Ratio of net investment
loss to average net
assets (%)* (1.44) (1.46) (1.41) (1.47) (0.73) (0.78)
Portfolio turnover rate (%) 61.00 30.98 62.94 92.33 51.67 46.87
Average commission
rate (6) ($) -- -- -- 0.0237 0.0233 0.0215
*Reflects voluntary
assumption of fees or
expenses per share in
each period ($) 0.03 0.11 0.09 0.05 0.00 --
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
-------------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994(1) 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.99 13.51 11.78 12.03 17.12 21.80
----- ----- ----- ----- ----- -----
Net investment loss($)* (0.02) (0.23) (0.23) (0.30) (0.30) (0.19)
Net realized and
unrealized gain
(loss) on investments,
foreign currency and
forward contracts ($) 0.54 (1.50) 0.48 5.39 5.74 0.71
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.52 (1.73) 0.25 5.09 5.44 0.52
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 13.51 11.78 12.03 17.12 21.80 19.98
===== ===== ===== ===== ===== =====
Total return(3) (%) 4.00(4) (12.81) 2.12 42.31 31.98 1.71(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 1,048 6,333 7,030 12,828 78,701 98,849
Ratio of operating
expenses to average
net assets (%)* 2.25(5) 2.25 2.33 2.50 2.17 2.09(5)
Ratio of net investment
loss to average net
assets (%)* (1.98)(5) (1.93) (1.98) (2.20) (1.47) (1.53)(5)
Portfolio turnover rate (%) 61.00 30.98 62.94 92.33 51.67 46.87
Average commission
rate (6) ($) -- -- -- 0.0237 0.0233 0.0215
*Reflects voluntary
assumption of fees or
expenses per share in
each period ($) 0.00 0.14 0.09 0.04 0.00 --
- -----------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) Does not reflect any front-end or contingent deferred sales charges.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on which commissions are charged
beginning with the fiscal year ended June 30, 1996.
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C (FORMERLY CLASS D)
-------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
-------------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994(1) 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.99 13.51 11.77 12.02 17.10 21.76
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.02) (0.23) (0.23) (0.30) (0.30) (0.19)
Net realized and
unrealized gain (loss)
on investments, foreign
currency and forward
contracts ($) 0.54 (1.51) 0.48 5.38 5.72 0.70
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.52 (1.74) 0.25 5.08 5.42 0.51
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 13.51 11.77 12.02 17.10 21.76 19.93
===== ===== ===== ===== ===== =====
Total return(3) (%) 4.00(4) (12.88) 2.12 42.26 31.90 1.66(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 588 1,931 2,350 5,154 27,528 40,597
Ratio of operating
expenses to average
net assets (%)* 2.25(5) 2.25 2.33 2.50 2.17 2.09(5)
Ratio of net investment
loss to average net
assets (%)* (2.00)(5) (1.94) (1.99) (2.20) (1.45) (1.53)(5)
Portfolio turnover rate (%) 61.00 30.98 62.94 92.33 51.67 46.87
Average commission
rate (6) ($) -- -- -- 0.0237 0.0233 0.0215
*Reflects voluntary
assumption of fees or
expenses per share in
each period ($) 0.00 0.13 0.09 0.05 0.00 --
</TABLE>
<TABLE>
<CAPTION>
CLASS S (FORMERLY CLASS C)
-------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
-------------------------------------------------------------------- DECEMBER 31, 1997
1993(2) 1994(1) 1995(1) 1996(1) 1997(1) (UNAUDITED)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.99 13.52 11.90 12.27 17.64 22.72
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.00) (0.15) (0.11) (0.17) (0.10) (0.07)
Net realized and
unrealized gain
(loss) on investments,
foreign currency and
forward contracts ($) 0.53 (1.47) 0.48 5.54 5.94 0.72
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.53 (1.62) 0.37 5.37 5.84 0.65
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- -- -- (0.76) (2.34)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 13.52 11.90 12.27 17.64 22.2 21.03
===== ===== ===== ===== ==== =====
Total return(3) (%) 4.08(4) (11.98) 3.11 43.77 33.33 2.22(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 146 960 3,288 5,632 10,747 9,941
Ratio of operating
expenses to average
net assets (%)* 1.25(5) 1.25 1.33 1.50 1.17 1.09(5)
Ratio of net investment
loss to average net
assets (%)* (1.05)(5) (0.95) (1.01) (1.20) (0.48) (0.54)(5)
Portfolio turnover rate (%) 61.00 30.98 62.94 92.33 51.67 46.87
Average commission
rate (6) ($) -- -- -- 0.0237 0.0233 0.0215
*Reflects voluntary
assumption of fees or
expenses per share in
each period ($) 0.00 0.16 0.08 0.05 0.00 --
- ---------------------------------------------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) June 1, 1993 (commencement of share class designations) to June 30, 1993.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on which commissions are charged beginning
with the fiscal year ended June 30, 1996.
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FUND INFORMATION OFFICERS TRUSTEES
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
GLOBAL RESOURCES FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
Management Company
INVESTMENT ADVISER PETER C. BENNETT
State Street Research & Vice President
Management Company STEVE A. GARBAN
One Financial Center Retired; formerly Senior Vice
Boston, MA 02111 BARTLETT R. GEER President for Finance and
Vice President Operations and Treasurer, The
Pennsylvania State University
DISTRIBUTOR
State Street Research THOMAS P. MOORE, JR.
Investment Services, Inc. Vice President MALCOLM T. HOPKINS
One Financial Center Former Vice Chairman of the
Boston, MA 02111 Board and Chief Financial
DANIEL J. RICE III Officer, St. Regis Corp.
Vice President
SHAREHOLDER SERVICES
State Street Research EDWARD M. LAMONT
Service Center JAMES M. WEISS Formerly in banking
P.O. Box 8408 Vice President (Morgan Guaranty Trust
Boston, MA 02266-8408 Company of New York);
1-800-562-0032 presently engaged in private
JOHN T. WILSON investments and civic affairs
Vice President
CUSTODIAN
State Street Bank and ROBERT A. LAWRENCE
Trust Company GERARD P. MAUS Associate, Saltonstall & Co.
225 Franklin Street Treasurer
Boston, MA 02110
DEAN O. MORTON
JOSEPH W. CANAVAN Retired; formerly Executive
LEGAL COUNSEL Assistant Treasurer Vice President, Chief
Goodwin, Procter & Hoar LLP Operating Officer and Director,
Exchange Place Hewlett-Packard Company
Boston, MA 02109 DOUGLAS A. ROMICH
Assistant Treasurer
THOMAS L. PHILLIPS
Retired; formerly Chairman of
FRANCIS J. MCNAMARA, III the Board and Chief Executive
Secretary and General Counsel Officer, Raytheon Company
DARMAN A. WING TOBY ROSENBLATT
Assistant Secretary and President,
Assistant General Counsel The Glen Ellen Company
Vice President,
Founders Investments Ltd.
AMY L. SIMMONS
Assistant Secretary
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
</TABLE>
<PAGE>
-----------------
STATE STREET RESEARCH GLOBAL RESOURCES FUND Bulk Rate
One Financial Center U.S. Postage
Boston, MA 02111 PAID
Randolph, MA
Permit No. 600
-----------------
QUESTIONS? COMMENTS?
Call us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
[Graphic Omitted] 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 by a current State Street Research Global Resources Fund
prospectus. When used after March 31, 1998, 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: 4099-970821(0998)SSR-LD GR-384D-298IBS
