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As filed with the Securities and Exchange Commission on June 2, 1998
Securities Act of 1933 Registration No. 33-4296
Investment Company Act of 1940 File No. 811-4624
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 22 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 23 [X]
----------------------------
STATE STREET RESEARCH EQUITY TRUST
-------------------------------------
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617) 357-1200
Francis J. McNamara, III
Executive Vice President, Secretary & General Counsel
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Copy to:
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place, Boston, Massachusetts 02109
It is proposed that this filing will become effective under Rule 485:
[ ] Immediately upon filing [ ] 75 days after filing pursuant
pursuant to paragraph (b). to paragraph (c)(2).
[ ] On ________________ pursuant [ ] On _____________ pursuant to
to paragraph (b). paragraph (a)(2).
[ ] 60 days after filing pursuant If appropriate, check the
to paragraph (a)(1). following box:
[X] On August 1, 1998 pursuant to
paragraph (a)(1).
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
--------------------------------------
<PAGE>
The Prospectus and Statement of Additional Information of the State Street
Research Global Resources Fund series of the State Street Research Equity Trust
(the "Registrant") are included herein.
The Prospectuses and Statements of Additional Information of the Registrant's
other series were included in the Post-Effective Amendments to the Registrant's
Registration Statement on Form N-1A (File No. 33-4296) as noted below and filed
with the Securities and Exchange Commission as follows:
<TABLE>
<CAPTION>
Securities Act of 1933
Series Registration/Amendment Date Filed
- ------ ---------------------- ----------
<S> <C> <C>
State Street Research Alpha Fund
(formerly, State Street Research
Equity Income Fund) Post-Effective Amendment No. 19 August 22, 1997
State Street Research Equity
Investment Fund Post-Effective Amendment No. 20 October 29, 1997
State Street Research Athletes Fund Post-Effective Amendment No. 21 January 9, 1998
</TABLE>
<PAGE>
[STATE STREET RESEARCH LOGO]
GLOBAL RESOURCES FUND
An aggressive growth
fund investing in
energy and natural
resources companies
PROSPECTUS
August 1, 1998
[sidebar text]
This prospectus has information you should know before you invest. Please read
it carefully and keep it with your investment records.
Although these securities have been registered with the Securities and Exchange
Commission, the SEC has not judged them for investment merit and does not
guarantee the accuracy or adequacy of the information in this prospectus. Anyone
who informs you otherwise is committing a federal crime.
[end of sidebar text]
[graphic of Boston's Custom House]
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
2 THE FUND
2 Goal and Strategies
3 Principal Risks
6 Volatility and Performance
8 Investor Expenses
10 Investment Management
11 YOUR INVESTMENT
11 Opening an Account
11 Choosing a Share Class
15 Dealer Compensation
16 Buying and Selling Shares
20 Account Policies
22 Distributions and Taxes
23 Investor Services
24 OTHER INFORMATION
24 Other Securities and Risks
26 Financial Highlights
BACK COVER For Additional Information
<PAGE>
[magnifying glass graphic] WHO MAY WANT TO INVEST
State Street Research Global Resources Fund is designed for investors who seek
one or more of the following:
* an aggressive stock fund for a long-term goal
* a fund to complement a well-diversified portfolio
* a focused fund with a global scope
The fund is NOT appropriate for investors who:
* want to avoid high volatility or possible losses
* want a fund that invests in a broad range of industries
* are making short-term investments
* are investing emergency reserve money
* are seeking regular income
[sidebar text]
The fund's shares will rise and fall in value. There is a risk that you could
lose money by investing in the fund.
The fund cannot be certain that it will achieve its goal.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
any financial institution, government entity or the FDIC.
[end of sidebar text]
<PAGE>
2 THE FUND
- --------------------------------------------------------------------------------
[chesspiece graphic] GOAL AND STRATEGIES
FUNDAMENTAL GOAL The fund seeks to provide long-term growth of capital.
PRINCIPAL STRATEGIES Under normal market conditions, the fund invests at least
65% of total assets in securities of energy and natural resources companies and
companies in associated businesses, as well as utilities. These typically
include companies involved in the exploration, production or distribution of
energy or natural resources, such as gas, oil, metals and minerals, as well as
related transportation companies and equipment manufacturers. The fund may
invest in companies located anywhere in the world and will generally invest in
at least three countries. It expects to invest primarily in developed markets,
particularly the U.S. and Canada, but may also invest in emerging markets.
In selecting investments, the fund looks for companies that appear to have the
potential for above-average long-term performance. These may include companies
that are expected to show above-average growth over
<PAGE>
3
the long term as well as those that appear to be trading below their
true worth. While the fund tends to emphasize smaller companies, from time to
time it may emphasize companies of other sizes. The fund's investments may
include common and preferred stocks, convertible securities, warrants and
depositary receipts.
The fund reserves the right to invest up to 35% of total assets in other U.S.
and foreign investments. These may include stocks of companies not associated
with energy or natural resources. They may also include debt securities,
although the fund may not invest more than 10% of total assets in junk bonds
(bonds that are in or below the Standard & Poor's BB or Moody's Ba rating
categories, or their unrated equivalents). The fund may buy and sell currencies,
either for immediate or future delivery, to hedge its positions in foreign
securities or to enhance returns.
The fund may adjust the composition of its portfolio as market conditions and
economic outlooks change. For more information about the fund's investments and
practices, see page 24.
[traffic sign graphic] PRINCIPAL RISKS
Because the fund invests primarily in stocks, including foreign stocks,
its major risks are those of stock investing, including sudden, unpredictable
drops in value and the potential for periods of lackluster performance.
Foreign stocks carry additional risks, including the risk of currency
fluctuations.
The fund's strategy of focusing on energy and natural resources companies means
that its performance will be closely tied to the performance of a particular
market segment. At times, the performance of these companies may lag the
performance of the broader stock market.
<PAGE>
4 THE FUND CONTINUED
- --------------------------------------------------------------------------------
Stocks of smaller energy and natural resources companies are especially affected
by variations in the commodities markets because smaller companies usually lack
the resources and the broad business lines to weather hard times. Similarly,
because the fund is non-diversified with regard to issuers of securities, it
does not have to invest in as many companies as a diversified fund, and could
therefore be more significantly affected by the performance of a small number of
its investments.
For these reasons, an investment in the fund should only be used to complement a
portfolio that is already well-diversified.
Foreign securities present additional risks beyond those of U.S. securities. In
particular, they are generally more volatile and less liquid than their
counterparts in the U.S., for reasons that may include unstable political or
economic climates, lack of standardized accounting practices and markets that
are smaller and therefore more sensitive to trading activity. Changes in
currency exchange rates have the potential to reduce or eliminate certain gains
achieved in securities markets or create net losses. These risks are usually
higher in less developed countries.
The success of the fund's investment strategy depends largely on the investment
manager's skill in anticipating commodity price trends, allocating assets
geographically and assessing the potential of the stocks the fund buys.
Information on other securities and risks appears on page 24.
A "snapshot" of the fund's investments may be found in the current annual or
semiannual report (see back cover).
<PAGE>
5
[magnifying glass graphic] WHAT DRIVES THE
ENERGY AND NATURAL
RESOURCES MARKETS?
Energy and natural resources companies are significantly affected by the markets
for the commodities associated with their businesses. The prices of individual
commodities can be influenced by broad economic trends, such as inflation. They
can also be influenced by specific supply and demand considerations that may not
affect the prices of other commodities, such as political developments in
critical producing regions.
In many cases, the price of a commodity will be determined by a complex
combination of factors, with various factors offsetting or reinforcing each
other. Oil prices, for example, can be influenced by global or regional economic
growth, climate patterns, government policies encouraging conservation or
consumption, technological advances, the policies of the OPEC cartel and
political developments in the Middle East or the former Soviet Union, to name
just a few. A fund investing in energy and natural resources companies,
therefore, must try to anticipate the general and specific factors that will
influence the prices of various commodities and adjust its portfolio
accordingly.
<PAGE>
6 VOLATILITY AND PERFORMANCE
- --------------------------------------------------------------------------------
[bar chart graphic]
<TABLE>
<CAPTION>
Years ended December 31
- ---------------------------------------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN (CLASS A) 1991 1992 1993 1994 1995 1996 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
80%
70%
60%
50%
40%
30%
20%
10%
0%
(10%)
(20%) (17.84) 6.78 32.08 (4.45) 22.63 70.25 5.56
</TABLE>
[upward pointing triangle dingbat] BEST QUARTER: first quarter 1993, up 34.55%
[downward pointing triangle dingbat] WORST QUARTER: fourth quarter 1997, down
19.66%
RETURN FROM 1/1/98 - 3/31/98 (not annualized): down 0.39%
<TABLE>
<CAPTION>
As of December 31, 1997
------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN 1 Year 5 Years Since Inception*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (%) 0.81 21.58 8.57
Class B (%) 0.06 21.80 8.80
Class C (%) 3.80 21.93 8.76
Class S (%) 5.86 23.09 9.42
S&P 500 Index (%) 33.35 20.25 17.84
Lipper Natural Resources Funds Average (%) 0.52 14.19 8.08
</TABLE>
*Since inception (3/2/90)
<PAGE>
7
[magnifying glass graphic] UNDERSTANDING
VOLATILITY AND
PERFORMANCE
The chart and table on the opposite page are designed to show two aspects of the
fund's track record:
* YEAR-BY-YEAR TOTAL RETURN shows how volatile the fund has been: how much the
difference has been, historically, between its best years and worst years. In
general, funds with higher average annual total returns will also have higher
volatility. The graph includes the effects of fund expenses, but not sales
charges. If sales charges had been included, returns would have been less than
shown.
* AVERAGE ANNUAL TOTAL RETURN is a measure of the fund's performance over time.
It is determined by taking the fund's performance over a given period and
expressing it as an average annual rate. Average annual total return includes
the effects of fund expenses and maximum sales charges for each class, and
assumes that you sold your shares at the end of the period.
Also included with the fund's average annual returns are two independent
measures of performance. The S&P 500 (officially, the "Standard & Poor's 500
Composite Stock Price Index") is an unmanaged index of 500 U.S. stocks. The
Lipper Natural Resources Funds Average shows the performance of a category of
mutual funds with similar goals. The Lipper average shows you how well the fund
has done compared to competing funds. While the fund does not seek to match the
returns or the volatility of the S&P 500 index, this index is a good indicator
of general stock market performance and can be used as a rough guide when
gauging the return of this and other investments. When making comparisons, keep
in mind that neither the S&P 500 nor the Lipper average includes the effects of
sales charges. Also, even if your stock portfolio were identical to the S&P 500,
your returns would always be lower, because the S&P 500 doesn't include
brokerage and administrative expenses.
In both the chart and the table, the returns shown for the fund include
performance from before the creation of share classes in 1993. If the returns
for Class B and Class C from before 1993 had reflected their current
distribution/service (12b-1) fee (as described on page 8), these returns would
have been lower.
Keep in mind that past performance is no guarantee of future results.
<PAGE>
8 INVESTOR EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class descriptions begin on page 11
------------------------------------------------
SHAREHOLDER FEES (% of offering price) Class A Class B Class C(1) Class S(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum front-end sales charge (load) 4.50 0.00 0.00 0.00
Maximum deferred sales charge (load) 0.00(2) 5.00 1.00 0.00
ANNUAL FUND EXPENSES (% of average net assets) Class A Class B Class C Class S
- -------------------------------------------------------------------------------------------------------------------------------
Management fee 0.75 0.75 0.75 0.75
Distribution/service (12b-1) fees 0.25 1.00 1.00 0.00
Other expenses 0.42 0.42 0.42 0.42
----- ------ ------ ------
Total annual fund operating expenses 1.42 2.17 2.17 1.17
===== ====== ====== ======
EXAMPLE Year Class A Class B Class C Class S
- -------------------------------------------------------------------------------------------------------------------------------
1 $ 588 $720/$220 $320/$220 $119
3 $ 879 $979/$679 $679 $372
5 $1,191 $1,364/$1,164 $1,164 $644
10 $2,075 $2,313 $2,503 $1,420
</TABLE>
[footnote text]
(1) Before November 1, 1997, Class C shares were designated Class D and Class S
shares were designated Class C.
(2) Except for investments of $1 million or more; see page 13.
[end footnote text]
<PAGE>
9
[magnifying glass graphic] UNDERSTANDING
INVESTOR EXPENSES
The information on the opposite page is designed to give you an idea of what you
should expect to pay in expenses as an investor in the fund:
* SHAREHOLDER FEES are costs that are charged to you directly. These fees are
not charged on reinvestments or exchanges.
* ANNUAL FUND EXPENSES are deducted from the fund's assets every year, and are
thus paid indirectly by all fund investors.
* The EXAMPLE is designed to allow you to compare the costs of this fund with
those of other funds. It assumes that you invested $10,000 over the years
indicated, reinvested all distributions, earned a hypothetical 5% annual
return and paid the maximum applicable sales charges. For Class B shares, it
also assumes the automatic conversion to Class A after eight years.
Where two numbers are shown separated by a slash, the first one assumes you
sold all your shares at the end of the period, while the second assumes you
stayed in the fund. Where there is only one number, the costs would be the
same either way.
Investors should keep in mind that the example is for comparison purposes only.
The fund's actual performance and expenses may be higher or lower.
<PAGE>
10 THE FUND CONTINUED
- --------------------------------------------------------------------------------
[thinker graphic] INVESTMENT MANAGEMENT
The fund's investment manager is State Street Research & Management Company, One
Financial Center, Boston, MA 02111. The firm traces its heritage back to 1924
and the founding of one of America's first mutual funds. Today the firm has more
than $___ billion in assets under management (as of ____________), including
more than $____ billion in mutual funds.
The investment manager is responsible for the fund's investment and business
activities, and receives the management fee (0.75% of net assets, annually) as
compensation.The investment manager is a subsidiary of Metropolitan Life
Insurance Company.
Daniel J. Rice III has been responsible for the fund's day-to-day portfolio
management since its inception in March 1990. A senior vice president, he joined
the firm in 1984 and has worked as an investment professional since 1979.
<PAGE>
11 Your Investment
- --------------------------------------------------------------------------------
[key graphic] OPENING AN ACCOUNT
If you are opening an account through a financial professional, he or she can
assist you with all phases of your investment.
If you are investing through a large retirement plan or other special program,
follow the instructions in your program materials.
To open an account without the help of a financial professional, please use the
instructions on these pages.
[pencil and paper graphic) CHOOSING A SHARE CLASS
The fund offers four share classes, each with its own sales charge and expense
structure.
If you are investing a substantial amount and plan to hold your shares for a
long period, Class A shares may make the most sense for you. If you are
investing a lesser amount, you may want to consider Class B shares (if investing
for at least five years) or Class C shares (if investing for less than five
years). If you are investing through a special program, such as a large
employer-sponsored retirement plan or certain programs available through
brokers, you may be eligible to purchase Class S shares.
Because all future investments in your account will be made in the share class
you designate when opening the account, you should make your decision carefully.
Your financial professional can help you choose the share class that makes the
most sense for you.
<PAGE>
12 YOUR INVESTMENT CONTINUED
- --------------------------------------------------------------------------------
[magnifying glass graphic] UNDERSTANDING
DISTRIBUTION/SERVICE
FEES
As noted in the descriptions at right, all share classes except Class S have an
annual distribution/service fee. This is also called a 12b-1 fee, after the SEC
rule that permits this type of fee.
Under its current 12b-1 plan, the fund may pay certain distribution and service
fees for these classes out of fund assets. Because 12b-1 fees are an ongoing
expense, they will increase the cost of your investment and, over time, could
potentially cost you more than if you had paid other types of sales charges. For
that reason, you should consider the effects of 12b-1 fees as well as sales
loads when choosing a share class (the example on page 8 in this prospectus can
be helpful in this regard).
Some of the 12b-1 fee is used to compensate those financial professionals who
sell fund shares and provide ongoing service to shareholders. The table on page
15 shows how these professionals' compensation is calculated.
CLASS A -- FRONT LOAD
* Initial sales charge of 4.5% or less
* Lower sales charges for larger investments; see sales charge schedule on
facing page
* Lower annual expenses than Class B or Class C shares because of lower
distribution/ service (12b-1) fee of 0.25%
CLASS C(1) -- LEVEL LOAD
* No initial sales charge
* Deferred sales charge of 1%, paid if you sell shares within one year of
purchase
* Lower deferred sales charge than Class B shares
* Annual distribution/service (12b-1) fee of 1.00%
* No conversion to Class A shares after eight years, so annual expenses do not
decrease
CLASS B -- BACK LOAD
* No initial sales charge
* Deferred sales charge of 5% or less on shares you sell within five years o
Annual distribution/service (12b-1) fee of 1.00%
* Automatic conversion to Class A shares after eight years, reducing future
annual expenses
CLASS S(2) -- SPECIAL PROGRAMS
* Available only through certain retirement accounts, advisory accounts of the
investment manager and other special programs, including broker programs with
recordkeeping and other services; these programs usually involve special
conditions and separate fees (consult your financial professional or your
program materials)
* No sales charges of any kind
* No distribution/service (12b-1) fees; annual expenses are lower than other
share classes
[footnote text]
(1) Before November 1, 1997, these were designated Class D.
(2) Before November 1, 1997, these were designated Class C.
[end footnote text]
<PAGE>
13
SALES CHARGES
CLASS A -- FRONT LOAD
<TABLE>
<CAPTION>
when you invest this % is which equals
this amount deducted this % of
for sales your net
charges investment
- --------------------------------------------------------------------------------
<S> <C> <C>
Up to $99,999 4.50 4.71
- --------------------------------------------------------------------------------
$100,000 - $249,999 3.50 3.63
- --------------------------------------------------------------------------------
$250,000 - $499,999 2.50 2.56
- --------------------------------------------------------------------------------
$500,000 - $999,999 2.00 2.04
- --------------------------------------------------------------------------------
$1 million or more see next column
</TABLE>
With Class A shares, you pay a sales charge only when you buy shares.
If you are investing $1 million or more (either as a lump sum or through any of
the methods described on the application), you can purchase Class A shares
without any sales charge. However, you may be charged a "contingent deferred
sales charge" (CDSC) of 1% of the purchase price of any shares you sell within
the first year. Other policies regarding the calculation of the CDSC are the
same as for Class B.
Class A shares are also offered with low or no sales charges through various
wrap-fee programs and other sponsored arrangements (consult your financial
professional or your program materials).
CLASS B -- BACK LOAD
<TABLE>
<CAPTION>
this % of net asset value
when you sell shares at the time of purchase (or
in this year after you of sale, if lower) is deduct-
bought them ed from your proceeds
- --------------------------------------------------------------------------------
<S> <C>
First year 5.00
- --------------------------------------------------------------------------------
Second year 4.00
- --------------------------------------------------------------------------------
Third year 3.00
- --------------------------------------------------------------------------------
Fourth year 3.00
- --------------------------------------------------------------------------------
Fifth year 2.00
- --------------------------------------------------------------------------------
Sixth year or later None
</TABLE>
With Class B shares, you pay no sales charge when you invest, but you are
charged a "contingent deferred sales charge" (CDSC) when you sell shares you
have held for five years or less, as described in the table above. Any shares
acquired through reinvestment are not subject to the CDSC. There is no CDSC on
exchanges into other State Street Research funds, and the
<PAGE>
14 YOUR INVESTMENT CONTINUED
- --------------------------------------------------------------------------------
date of your initial investment will continue to be used as the basis
for CDSC calculations when you exchange. To ensure that you pay the lowest CDSC
possible, the fund will always use the shares with the lowest CDSC to fill your
sell requests.
The CDSC is waived on shares sold for mandatory retirement distributions or
because of disability or death. Consult your financial professional or the State
Street Research Service Center.
Class B shares automatically convert to Class A shares after eight years; Class
A shares have lower annual expenses.
CLASS C (FORMERLY CLASS D) -- LEVEL LOAD
<TABLE>
<CAPTION>
this % of net asset value
when you sell shares at the time of purchase (or
in this year after you of sale, if lower) is deduct-
bought them ed from your proceeds
- --------------------------------------------------------------------------------
<S> <C>
First year 1.00
- --------------------------------------------------------------------------------
Second year or later None
</TABLE>
With Class C shares, you pay no sales charge when you invest, but you are
charged a "contingent deferred sales charge" (CDSC) when you sell shares you
have held for one year or less, as described in the table above. Policies
regarding the calculation of the CDSC are the same as for Class B.
Class C shares currently have the same annual expenses as Class B shares, but
never convert to Class A shares (with their lower annual expenses).
CLASS S (FORMERLY CLASS C) -- SPECIAL PROGRAMS
Class S shares have no sales charges.
<PAGE>
15
[graphic of a check] DEALER COMPENSATION
Financial professionals who sell shares of State Street Research funds and
perform services for fund investors may receive sales commissions and annual
fees. These are paid by the fund's distributor, using money from sales charges,
distribution/service (12b-1) fees and its other resources.
Financial professionals may impose a transaction fee on the purchase or sale of
shares by shareholders.The distributor may pay its affiliate MetLife Securities,
Inc. additional compensation of up to 0.25% of certain sales or assets.
BROKERS FOR PORTFOLIO TRADES
When placing trades for the fund's portfolio, State Street Research chooses
brokers that provide the best execution (a term defined by service as well as
price), but may also consider a broker's sales of fund shares.
<TABLE>
<CAPTION>
Maximum Dealer Compensation Class A Class B Class C Class S
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Initial commission (%) -- 4.00 1.00 0.00
Investments up to $100,000 (%) 4.00 -- -- --
$100,000 - $249,999 (%) 3.00 -- -- --
$250,000 - $499,999 (%) 2.00 -- -- --
$500,000 - $999,999 (%) 1.75 -- -- --
First $1-3 million (%) 1.00(1) -- -- --
Next $2 million (%) 0.50(1) -- -- --
Next $1 and above (%) 0.25(1) -- -- --
Annual fee (%) 0.25 0.25 0.90 0.00
</TABLE>
[footnote text]
(1) If your broker declines this commission, the one-year CDSC on your
investment is waived.
[end of footnote text]
<PAGE>
16 BUYING AND SELLING SHARES
- --------------------------------------------------------------------------------
[cash register graphic] POLICIES FOR
BUYING SHARES
Once you have chosen a share class, the next step is to determine the amount you
want to invest.
MINIMUM INITIAL INVESTMENTS:
* $1,000 for accounts that use the Investamatic program
* $2,000 for Individual Retirement Accounts
* $2,500 for all other accounts
MINIMUM ADDITIONAL INVESTMENTS:
* $50 for any account
Complete the enclosed application. You can avoid future inconvenience by signing
up now for any services you might later use.
TIMING OF REQUESTS All requests received by State Street Research before 4:00
p.m. eastern time will be executed the same day, at that day's closing share
price. Orders received after 4:00 p.m. will be executed the following day, at
that day's closing share price.
WIRE TRANSACTIONS Funds may be wired between 8:00 a.m. and 4:00 p.m. eastern
time. To make a same-day wire investment, please notify State Street Research by
12:00 noon of your intention to wire funds, and make sure your wire arrives by
4:00 p.m. Your bank may charge a fee for wiring money.
<PAGE>
INSTRUCTIONS FOR BUYING SHARES 17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
To Open an Account To Add to an Account
<S> <C> <C>
[graphic of briefcase] THROUGH A Consult your financial Consult your financial
PROFESSIONAL professional or your program professional or your program
OR PROGRAM materials. materials.
BY MAIL [graphic of Make your check payable to Fill out an investment slip or
mailbox] "State Street Research Funds." indicate the fund name and
Forward the check and your account number on your check.
application to State Street Make your check payable to
Research. "State Street Research Funds."
Forward the check and stub to
State Street Research.
[graphic of BY FEDERAL Call to obtain an account Call State Street Research to obtain a control number.
federal building] FUNDS WIRE number and forward your Instruct your bank to wire funds to:
application to State Street * State Street Bank and Trust Company, Boston, MA
Research. Wire funds using * ABA: 011000028
the instructions at right. * BNF: fund name and share class you want to buy
* AC: 99029761
* OBI: your name and your account number
* Control: the number given to you by State
Street Research
BY ELECTRONIC [graphic of Verify that your bank is a Call State Street Research to
FUNDS TRANSFER electrical member of the ACH (Automated verify that the necessary bank
(ACH) outlet] Clearing House) system. information is on file for
Forward your application to your account. If it is, you
State Street Research. Please may request a transfer with
be sure to include the the same phone call. If not,
appropriate bank information. please ask State Street
Call State Street Research to Research to provide you with
request a purchase. an EZ Trader application.
[graphic of
calendar] BY INVESTAMATIC Forward your application, with Call State Street Research to
all appropriate sections verify that Investamatic is in
completed, to State Street place on your account, or to
Research, along with a check request a form to add it.
for your initial investment Investments are automatic once
payable to "State Street Investamatic is in place.
Research Funds."
BY EXCHANGE [graphic of Call State Street Research or Call State Street Research or
exchange] visit our Web site. visit our Web site.
State Street Research Service Center PO Box 8408, Boston, MA 02266-8408
Call toll-free: 1-800-562-0032 (business days 8:00 a.m. - 6:00 p.m., eastern time)
Internet www.ssrfunds.com
</TABLE>
<PAGE>
18 YOUR INVESTMENT CONTINUED
- --------------------------------------------------------------------------------
[graphic of receipt] POLICIES FOR
SELLING SHARES
CIRCUMSTANCES THAT REQUIRE WRITTEN REQUESTS Please submit instructions in
writing when any of the following apply: o you are selling more than $100,000
worth of shares
* the name or address on the account has changed within the last 30 days
* you want the proceeds to go to a name or address not on the account
registration
* you are transferring shares to an account with a different registration or
share class
* you are selling shares held in a corporate or fiduciary account; for these
accounts, additional documents are required:
corporate accounts: certified copy of a corporate resolution
fiduciary accounts: copy of power of attorney or other governing document
To protect your account against fraud, all signatures on these documents must be
guaranteed. You may obtain a signature guarantee at most banks and securities
dealers. A notary public cannot provide a signature guarantee.
INCOMPLETE SELL REQUESTS State Street Research will attempt to notify you
promptly if any information necessary to process your request is missing.
TIMING OF REQUESTS All requests received in good order by State Street Research
before 4:00 p.m. eastern time will be executed the same day, at that day's
closing share price. Requests received after 4:00 p.m. will be executed the
following day, at that day's closing share price.
WIRE TRANSACTIONS Proceeds sent by federal funds wire must total at least
$5,000. A fee of $7.50 will be deducted from all proceeds sent by wire, and your
bank may charge an additional fee to receive wired funds.
SELLING RECENTLY PURCHASED SHARES If you sell shares before the check or
electronic funds transfer (ACH) for those shares has been collected, you will
not receive the proceeds until your initial payment has cleared. This may take
up to 15 days after your purchase was recorded (in rare cases, longer). If you
open an account with shares purchased by wire, you cannot sell those shares
until your application has been processed.
<PAGE>
INSTRUCTIONS FOR SELLING SHARES 19
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TO SELL SOME OR ALL OF YOUR SHARES
<S> <C>
[graphic of THROUGH A Consult your financial professional or your program materials.
briefcase] PROFESSIONAL
OR PROGRAM
BY MAIL [graphic of mailbox] Send a letter of instruction, an endorsed stock power or share certificates (if you hold certificate
shares) to State Street Research. Specify the fund, the account number and the dollar value or number
of shares. Be sure to include all necessary signatures and any additional documents, as well as
signature guarantees if required (see facing page).
[graphic of BY FEDERAL Check with State Street Research to make sure that a wire redemption privilege, including a bank
federal FUNDS WIRE designation, is in place on your account. Once this is established, you may place your request to sell
building] shares with State Street Research. Proceeds will be wired to your pre-designated bank account. (See
"Wire Transactions" on facing page.)
BY ELECTRONIC [graphic of Check with State Street Research to make sure that the EZ Trader feature, including a bank
FUNDS TRANSFER electrical designation, is in place on your account. Once this is established, you may place your request to sell
(ACH) outlet] shares with State Street Research. Proceeds will be sent to your pre-designated bank account.
[graphic of BY TELEPHONE As long as the transaction does not require a written request (see facing page), you or your financial
telephone] professional can sell shares by calling State Street Research. A check will be mailed to you on the
following business day.
BY EXCHANGE [graphic of Read the prospectus for the fund into which you are exchanging. Call State Street Research or visit
exchange] our Web site.
[graphic of BY SYSTEMATIC See plan information on page 23.
calendar] WITHDRAWAL PLAN
State Street Research Service Center PO Box 8408, Boston, MA 02266-8408
Call toll-free: 1-800-562-0032 (business days 8:00 a.m. - 6:00 p.m., eastern time)
Internet www.ssrfunds.com
</TABLE>
<PAGE>
20 YOUR INVESTMENT CONTINUED
- --------------------------------------------------------------------------------
[graphic of policies] ACCOUNT POLICIES
TELEPHONE REQUESTS When you open an account you automatically receive telephone
privileges, allowing you to place requests for your account by telephone. Your
financial professional can also use these privileges to request exchanges on
your account and, with your written permission, redemptions. For your
protection, all telephone calls are recorded.
As long as State Street Research takes certain measures to authenticate
telephone requests on your account, you may be held responsible for unauthorized
requests. Unauthorized telephone requests are rare, but if you want to protect
yourself completely, you can decline the telephone privilege on your
application. The fund may suspend or eliminate the telephone privilege at any
time.
EXCHANGE PRIVILEGES There is no fee to exchange shares among State Street
Research funds. Your new fund shares will be the equivalent class of your
current shares. Any contingent deferred sales charges will continue to be
calculated from the date of your initial investment.
Frequent exchanges can interfere with fund management and drive up costs for all
shareholders. Because of this, the fund currently limits each account, or group
of accounts under common ownership or control, to six exchanges per calendar
year. The fund may change or eliminate the exchange privilege at any time, may
limit or cancel any shareholder's exchange privilege and may refuse to accept
any exchange request, particularly those associated with "market timing"
strategies.
For Merrill Lynch customers, exchange privileges extend to Summit Cash Reserves
Fund, which is related to the fund for purposes of investment and investor
services.
ACCOUNTS WITH LOW BALANCES If the value of your account falls below $1,500,
State Street Research may mail you a notice asking you to bring the account back
up to $1,500 or close it out. If you do not take action within 60 days, State
Street Research may either sell your shares and mail the proceeds to you at the
address of record or, depending on the circumstances, may deduct an annual
maintenance fee (currently $18).
<PAGE>
21
THE FUND'S BUSINESS HOURS The fund is open the same days as the New York Stock
Exchange (generally Monday through Friday). Fund representatives are available
from 8:00 a.m. to 6:00 p.m. eastern time on these days.
CALCULATING SHARE PRICE The fund calculates its share price every business day
at the close of regular trading on the New York Stock Exchange (usually at 4:00
p.m. eastern time). The share price is the fund's total assets minus its
liabilities (net asset value, or NAV) divided by the number of existing shares.
In calculating its NAV, the fund uses the last reported sale price or quotation
for portfolio securities. However, in cases where these are unavailable, or when
the investment manager believes that subsequent events have rendered them
unreliable, the fund may use fair-value estimates instead.
Because foreign securities markets are sometimes open on different days from
U.S. markets, there may be instances when the fund's share price changes on days
when you cannot buy or sell fund shares.
REINSTATING RECENTLY SOLD SHARES For 120 days after you sell shares, you have
the right to "reinstate" your investment by putting some or all of the proceeds
into any currently available State Street Research fund at net asset value. Any
CDSC you paid on the amount you are reinstating will be credited to your
account. You may only use this privilege once in any twelve-month period with
respect to your shares of a given fund.
ADDITIONAL POLICIES Please note that the fund maintains additional policies and
reserves certain rights, including:
* The fund may vary its requirements for initial or additional investments,
exchanges, reinvestments, periodic investment plans, retirement and employee
benefit plans, sponsored arrangements and other similar programs
* All orders to purchase shares are subject
to acceptance by the fund
* At any time, the fund may change or discontinue its sales charge waivers and
any of its order acceptance practices, and may suspend the sale of its shares
* To permit investors to obtain the current price, dealers are responsible for
transmitting all orders to the State Street Research Service Center promptly
<PAGE>
22 YOUR INVESTMENT CONTINUED
- --------------------------------------------------------------------------------
[sidebar text]
[Magnifying glass graphic] TAX CONSIDERATIONS
Unless your investment is in a tax-deferred account, you may want to avoid:
* investing a large amount in the fund close to the end of its fiscal year or a
calendar year (if the fund makes a capital gains distribution, you will
receive some of your investment back as a taxable distribution)
* selling shares at a loss for tax purposes and investing in a substantially
identical investment within 30 days before or after that sale (such a
transaction is usually considered a "wash sale," and you will not be allowed
to claim a tax loss)
[end of sidebar text]
[graphic of Uncle Sam] DISTRIBUTIONS AND TAXES
INCOME AND CAPITAL GAINS DISTRIBUTIONS The fund typically distributes any net
income and net capital gains to shareholders around the end of the fund's fiscal
year, which is June 30. To comply with tax regulations, the fund may also pay an
additional capital gains distribution in December.
You may have your distributions reinvested in the fund, invested in a different
State Street Research fund, deposited in a bank account, or mailed out by check.
If you do not give State Street Research other instructions, your distributions
will automatically be reinvested in the fund.
TAX EFFECTS OF DISTRIBUTIONS AND TRANSACTIONS In general, any dividends and
short-term capital gains distributions you receive from the fund are taxable as
ordinary income. Distributions of other capital gains are generally taxable as
capital gains -- in most cases, at different rates from those that apply to
ordinary income.
The tax you pay on a given capital gains distribution generally depends on how
long the fund has held the portfolio securities it sold. It does not depend on
how long you have owned your fund shares or whether you reinvest your
distributions.
<PAGE>
23
Every year, the fund will send you information detailing the amount of ordinary
income and capital gains distributed to you for the previous year.
The sale of shares in your account may produce a gain or loss, and is a taxable
event. For tax purposes, an exchange is the same as a sale.
Your investment in the fund could have additional tax consequences. Please
consult your tax professional for assistance.
BACKUP WITHHOLDING By law, the fund must withhold 31% of your distributions and
proceeds if you have not provided complete, correct taxpayer information.
[interlocked hands graphic] INVESTOR SERVICES
INVESTAMATIC PROGRAM Use Investamatic to set up regular automatic investments in
the fund from your bank account. You determine the frequency and amount of your
investments.
SYSTEMATIC WITHDRAWAL PLAN This plan is designed for retirees and other
investors who want regular withdrawals from a fund account. The plan is free and
allows you to withdraw up to 8% of your fund assets a year without incurring any
contingent deferred sales charges. Certain terms and minimums apply.
EZ TRADER This service allows you to purchase or sell fund shares over the
telephone through the ACH (Automated Clearing House) system.
DIVIDEND ALLOCATION PLAN This plan automatically invests your distributions from
the fund into another fund of your choice, without any fees or sales charges.
AUTOMATIC BANK CONNECTION This plan lets you route any distributions or
Systematic Withdrawal Plan payments directly to your bank account.
RETIREMENT PLANS State Street Research also offers a full range of prototype
retirement plans for individuals, sole proprietors, partnerships, corporations
and employees.
Call 1-800-562-0032 for information on any of the services described above.
<PAGE>
24 OTHER INFORMATION
- --------------------------------------------------------------------------------
[graphic of securities certificates] OTHER SECURITIES
AND RISKS
Each of the fund's portfolio securities and investment practices offers certain
opportunities and carries various risks. Major investments and risk factors are
outlined in the fund description starting on page 2. Below are brief
descriptions of other securities and practices, along with their associated
risks.
RESTRICTED AND ILLIQUID SECURITIES Any securities that are thinly traded or
whose resale is restricted can be difficult to sell at a desired time and price.
Some of these securities are new and complex, and trade only among institutions;
the markets for these securities are still developing, and may not function as
efficiently as established markets. Owning a large percentage of restricted and
illiquid securities could hamper the fund's ability to raise cash to meet
redemptions. Also, because there may not be an established market price for
these securities, the fund may have to estimate their value, which means that
their valuation (and, to a much smaller extent, the valuation of the fund) may
have a subjective element.
BONDS The value of any bonds held by the fund is likely to decline when interest
rates rise; this risk is greater for bonds with longer maturities. A less
significant risk is that a bond issuer could default on principal or interest
payments, causing a loss for the fund. However, junk bonds have a higher risk of
default than investment grade bonds, and their market prices can be more
volatile.
<PAGE>
25
DERIVATIVES Derivatives, a category that includes options and futures, are
financial instruments whose value derives from one or more securities, indices
or currencies. The fund may use certain derivatives for hedging (attempting to
offset a potential loss in one position by establishing an interest in an
opposite position). The fund may also use certain derivatives for speculation
(investing for potential income or capital gain).
While hedging can guard against potential risks, it adds to the fund's expenses
and can eliminate some opportunities for gains. There is also a risk that a
derivative intended as a hedge may not perform as expected.
The main risk with derivatives is that some types can amplify a gain or loss,
potentially earning or losing substantially more money than the actual cost of
the derivative.
With some derivatives, whether used for hedging or speculation, there is also
the risk that the counterparty may fail to honor its contract terms, causing a
loss for the fund.
SECURITIES LENDING The fund may seek additional income by lending portfolio
securities to qualified institutions. By reinvesting any cash collateral it
receives in these transactions, the fund could realize additional gains or
losses. If the borrower fails to return the securities and the invested
collateral has declined in value, the fund could lose money.
SHORT-TERM TRADING While the fund ordinarily does not trade securities for
short-term profits, it will sell any security at the time it believes best,
which may result in short-term trading. Short-term trading can increase the
fund's transaction costs and may increase your tax liability. In addition,
foreign securities generally involve higher brokerage costs per share traded.
DEFENSIVE INVESTING During unusual market conditions, the fund may place up to
100% of total assets in cash or high-quality, short-term debt securities.
YEAR 2000 The investment manager does not currently anticipate that computer
problems related to the year 2000 will have a material effect on the fund.
However, there can be no assurances in this area, including the possibility that
year 2000 computer problems could negatively affect communication systems,
investment markets or the economy in general.
<PAGE>
26 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These highlights are intended to help you understand the fund's performance over
the past five years. Except for the figures for the period 7/1/97 to 12/31/97,
the information in these tables has been audited by Price Waterhouse LLP, the
fund's independent accountants. Total return figures assume reinvestment of all
distributions.
<TABLE>
<CAPTION>
CLASS A
- -------------------------------------------------------------------------------------------------------------
Years ended June 30 7/1/97 -
Per Share Data 1993 1994(1) 1995(1) 1996(1) 1997(1) 12/31/97(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 ($)* (0.13) (0.17) (0.16) (0.20) (0.15) (0.10)
Net realized and unrealized
gain (loss) on investments ($) 5.62 (1.50) 0.48 5.48 5.86 0.71
----- ----- ----- ---- ----- ----
TOTAL FROM INVESTMENT OPERATIONS ($) 5.49 (1.67) 0.32 5.28 5.71 0.61
----- ----- ----- ---- ----- -----
Distributions from capital gains ($) -- -- -- -- (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(4)
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets at end of period ($ thousands) 33,513 30,679 25,692 30,943 80,029 99,245
Expense ratio (%)* 1.75 1.75 1.75 1.75 1.42 1.34(5)
Ratio of net investment loss
to average net assets (%)* (1.44) (1.46) (1.41) (1.47) (0.73) (0.78)(5)
Portfolio turnover rate (%) 61.00 30.98 62.94 92.33 51.67 46.87
*Reflects voluntary reduction of
expenses per share of these amounts ($) 0.03 0.11 0.09 0.05 0.00 --
</TABLE>
<TABLE>
<CAPTION>
<
CLASS B
- -------------------------------------------------------------------------------------------------------
Years ended June 30 7/1/97 -
Per Share Data 1993(2) 1994(1) 1995(1) 1996(1) 1997(1) 12/31/97(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD 12.99 13.51 11.78 12.03 17.12 21.80
---- ----- ----- ----- ----- -----
Net investment loss ($)* (0.02) (0.23) (0.23) (0.30) (0.30) (0.19)
Net realized and unrealized
gain (loss) on investments ($) 0.54 (1.50) 0.48 5.39 5.74 0.71
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.52 (1.73) 0.25 5.09 5.44 0.52
---- ----- ----- ----- ----- -----
Distributions from capital 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 2,828 78,701 98,849
Expense ratio (%)* 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
*Reflects voluntary reduction of
expenses per share of these amounts 0.00 0.14 0.09 0.04 0.00 --
</TABLE>
<PAGE>
27
<TABLE>
<CAPTION>
Class C (formerly Class D)
- -------------------------------------------------------------------------------------------------------
Years ended June 30 7/1/97 -
Per Share Data 1993(2) 1994(1) 1995(1) 1996(1) 1997(1) 12/31/97(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 ($) 0.54 (1.51) 0.48 5.38 5.72 0.70
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.52 (1.74) 0.25 5.08 5.42 0.51
---- ----- ----- ----- ----- -----
Distributions from capital 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
Expense ratio (%)* 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
*Reflects voluntary reduction of
expenses per share of these amounts ($) 0.00 0.13 0.09 0.05 0.00 --
</TABLE>
<TABLE>
<CAPTION>
Class S (formerly Class C)
- -------------------------------------------------------------------------------------------------------
Years ended June 30 7/1/97 -
Per Share Data 1993(2) 1994(1) 1995(1) 1996(1) 1997(1) 12/31/97(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD 12.99 13.52 11.90 12.27 17.64 22.72
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.00) (0.15) (0.11) (0.17) (0.10) (0.07)
Net realized and unrealized
gain (loss) on investments ($) 0.53 (1.47) 0.48 5.54 5.94 0.72
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.53 (1.62) 0.37 5.37 5.84 0.65
----- ----- ----- ----- ----- -----
Distributions from capital 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 22.72 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
Expense ratio (%)* 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
*Reflects voluntary reduction of
expenses per share of these amounts -- 0.00 0.16 0.08 0.05 0.00 --
</TABLE>
[footnote text]
(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.
[end of footnote text]
<PAGE>
28 NOTES
- --------------------------------------------------------------------------------
<PAGE>
NOTES 29
- --------------------------------------------------------------------------------
<PAGE>
FOR ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
If you have questions about the fund or would like to request a free copy of the
current annual/semiannual report or SAI, contact State Street Research or your
financial professional.
[State Street Research Logo]
Service Center
P.O. Box 8408, Boston, MA 02266
Telephone: 1-800-562-0032
Internet: www.ssrfunds.com
You can also obtain information about the fund, including the SAI and certain
other fund documents, on the Internet at www.sec.gov, in person at the SEC's
Public Reference Room in Washington, DC (telephone 1-800-SEC-0330) or by mail by
sending your request, along with a duplicating fee, to the SEC's Public
Reference Section, Washington, DC 20549-6009.
prospectus
- -------------------------
SEC File Number: 811-4624
You can find additional information on the fund's structure and its performance
in the following documents:
ANNUAL/SEMIANNUAL REPORTS While the prospectus describes the fund's potential
investments, these reports detail the fund's actual investments as of the report
date. Reports include a discussion by fund management of recent economic and
market trends and fund performance. The annual report also includes the report
of the fund's independent accountants.
<TABLE>
<CAPTION>
TICKER SYMBOLS
- -------------------------------------------------------------------------------
<S> <C>
Class A SSGRX
Class B SSBGX
Class C SSGDX
Class S (proposed) SSGCX
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION (SAI) A supplement to the prospectus,
the SAI contains further information about the fund and its investment
limitations and policies. It also includes the most recent annual report and the
independent accountants' report. A current SAI for this fund is on file with the
Securities and Exchange Commission and is incorporated by reference (is legally
part of this prospectus).
GR-036F-798 IBS
Control Number: 4815-980601(1198)SSR-LD
<PAGE>
State Street Research Global Resources Fund
a series of
State Street Research Equity Trust
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVE..............................................................................................2
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS...................................................................2
ADDITIONAL INFORMATION CONCERNING
CERTAIN RISKS AND INVESTMENT TECHNIQUES..................................................................4
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS..................................................................16
THE TRUST, THE FUND AND ITS SHARES..............................................................................23
TRUSTEES AND OFFICERS............................................................................................25
MANAGEMENT OF THE FUND AND INVESTMENT ADVISORY SERVICES..........................................................30
PURCHASE AND REDEMPTION OF SHARES................................................................................31
SHAREHOLDER ACCOUNTS.............................................................................................36
NET ASSET VALUE..................................................................................................40
PORTFOLIO TRANSACTIONS...........................................................................................41
CERTAIN TAX MATTERS..............................................................................................45
DISTRIBUTION OF SHARES OF THE FUND...............................................................................49
CALCULATION OF PERFORMANCE DATA..................................................................................53
CUSTODIAN........................................................................................................56
INDEPENDENT ACCOUNTANTS..........................................................................................56
FINANCIAL STATEMENTS.............................................................................................56
</TABLE>
The following Statement of Additional Information is not a Prospectus.
It should be read in conjunction with the Prospectus of State Street Research
Global Resources Fund (the "Fund") dated August 1, 1998, which may be obtained
without charge from the offices of State Street Research Equity Trust (the
"Trust") or State Street Research Investment Services, Inc. (the "Distributor"),
One Financial Center, Boston, Massachusetts 02111-2690.
CONTROL NUMBER: 1285S-980715(1298) SSR-LD GR-879D-739
<PAGE>
INVESTMENT OBJECTIVE
As set forth under "The Fund--Goal and Strategies--Fundamental Goal" in
the Prospectus of State Street Research Global Resources Fund (the "Fund"), the
Fund's investment goal, which is to provide long-term growth of capital, is
fundamental and may not be changed by the Fund except by the affirmative vote of
a majority of the outstanding voting securities of the Fund, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). (Under the 1940
Act, a "vote of the majority of the outstanding voting securities" means the
vote, at the annual or a special meeting of security holders duly called, (i) of
67% or more of the voting securities present at the meeting if the holders of
more than 50% of the outstanding voting securities are present or represented by
proxy or (ii) of more than 50% of the outstanding voting securities, whichever
is less.)
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS
As set forth under "The Fund--Principal Risks" and "Other
Information--Other Securities and Risks" in the Fund's Prospectus, the Fund has
adopted certain investment restrictions, and those investment restrictions are
either fundamental or not fundamental. Fundamental restrictions may not be
changed by the Fund except by the affirmative vote of a majority of the
outstanding voting securities of the Fund. Restrictions that are not fundamental
may be changed by a vote of a majority of the Trustees of the Trust.
The Fund's fundamental investment restrictions are set forth below.
Under these restrictions, it is the Fund's policy:
(1) not to invest in a security if the transaction would result in
the Fund owning more than 10% of any class of voting
securities of an issuer, except that this restriction does not
apply to investments in securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities or backed
by the U.S. Government;
(2) not to issue senior securities;
(3) not to underwrite or participate in the marketing of
securities of other issuers, except (a) the Fund may purchase
or otherwise acquire securities of other issuers for
investment, either from the issuers or from persons in a
control relationship with the issuers or from underwriters of
such securities; and (b) to the extent that, in connection
with the disposition of the Fund's securities, the Fund may be
deemed to be an underwriter under certain federal securities
laws;
2
<PAGE>
(4) not to purchase or sell fee simple interests in real estate or
illiquid interests in limited partnerships that invest in real
estate, although the Fund may purchase and sell other
interests in real estate including readily marketable
interests in real estate investment trusts or companies which
own or invest or deal in real estate;
(5) not to invest in physical commodities or physical commodity
contracts or options in excess of 10% of the Fund's total
assets, except that investments in essentially financial items
or arrangements such as, but not limited to, swap
arrangements, hybrids, currencies, currency and other forward
contracts, futures contracts and options on futures contracts
on securities, securities indices, interest rates and
currencies shall not be deemed investments in commodities or
commodities contracts;
(6) not to make loans, except that the Fund may lend portfolio
securities and purchase bonds, debentures, notes and similar
obligations (including repurchase agreements with respect
thereto);
(7) not to conduct arbitrage transactions (provided that
investments in futures and options shall not be deemed
arbitrage transactions);
(8) not to invest directly as a joint venturer or general partner
in oil, gas or other mineral exploration or development joint
ventures or general partnerships (provided that the Fund may
invest in securities issued by companies which invest in or
sponsor such programs and in securities indexed to the price
of oil, gas or other minerals);
(9) not to borrow money except for borrowings from banks for
extraordinary and emergency purposes, such as permitting
redemption requests to be honored, and then not in an amount
in excess of 25% of the value of its total assets, and except
insofar as reverse repurchase agreements may be regarded as
borrowing. The Fund will not purchase additional portfolio
securities at any time when it has outstanding money
borrowings in excess of 5% of the Fund's total assets (taken
at current value); and
(10) not to make any investment which would cause more than 25% of
the value of the Fund's total assets to be invested in
securities of issuers principally engaged in any one industry
other than any energy industry [for purposes of this
restriction, (a) energy and nonenergy industries will be
divided according to their services, so that, for example, in
the case of (i) utilities, gas, gas transmission, electric and
telephone companies each will be deemed to be in a separate
industry, and (ii) oil and oil related companies will be
divided by types, with oil production companies, oil service
companies and marketing companies each deemed to be in a
separate industry, (b) finance companies will be
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<PAGE>
classified according to the industries of their parent
companies and (c) securities issued or guaranteed by the U.S.
Government, or its agencies or instrumentalities (including
repurchase agreements involving such U.S. Government
securities to the extent excludable under relevant regulatory
interpretations) shall be excluded].
The following investment restrictions may be changed by a vote of a
majority of the Trustees. Under these restrictions, it is the Fund's policy:
(1) not to engage in transactions in options except in connection
with options on securities, securities indices and currencies,
and options on futures contracts on securities, securities
indices and currencies;
(2) not to purchase securities on margin or make short sales of
securities or maintain a short position except for short sales
"against the box";
(3) not to hypothecate, mortgage or pledge any of its assets
except as may be necessary in connection with permitted
borrowings (for the purpose of this restriction, futures and
options, and related escrow or custodian receipts or letters,
margin or safekeeping accounts, or similar arrangements used
in the industry in connection with the trading of futures and
options, are not deemed to involve a hypothecation, mortgage
or pledge of assets);
(4) not to purchase a security issued by another investment
company, except to the extent permitted under the 1940 Act or
except by purchases in the open market involving only
customary brokers' commissions, or securities acquired as
dividends or distributions or in connection with a merger
consolidation or similar transaction or other exchange;
(5) not to invest in companies for the purpose of exercising
control over their management, although the Fund may from time
to time present its views on various matters to the management
of issuers in which it holds investments; and
(6) not to purchase any security or enter into a repurchase
agreement if as a result more than 15% of its net assets would
be invested in securities that are illiquid (including
repurchase agreements not entitling the holder to payment of
principal and interest within seven days);
ADDITIONAL INFORMATION CONCERNING
CERTAIN RISKS AND INVESTMENT TECHNIQUES
Derivatives
4
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The Fund may buy and sell certain types of derivatives, such as
options, futures contracts , options on futures contracts, and swaps under
circumstances in which such instruments are expected by State Street Research &
Management Company, the Fund's Investment Manager (the "Investment Manager"), to
aid in achieving the Fund's investment objective . The Fund may also purchase
instruments with characteristics of both futures and securities (e.g., debt
instruments with interest and principal payments determined by reference to the
value of a commodity or a currency at a future time) and which, therefore,
possess the risks of both futures and securities investments.
Derivatives, such as options, futures contracts, options on futures
contracts, and swaps enable the Fund to take both "short" positions (positions
which anticipate a decline in the market value of a particular asset or index)
and "long" positions (positions which anticipate an increase in the market value
of a particular asset or index). The Fund may also use strategies which involve
simultaneous short and long positions in response to specific market conditions,
such as where the Investment Manager anticipates unusually high or low market
volatility.
The Investment Manager may enter into derivative positions for the Fund
for either hedging or non-hedging purposes. The term hedging is applied to
defensive strategies designed to protect the Fund from an expected decline in
the market value of an asset or group of assets that the Fund owns (in the case
of a short hedge) or to protect the Fund from an expected rise in the market
value of an asset or group of assets which it intends to acquire in the future
(in the case of a long or "anticipatory" hedge). Non- hedging strategies include
strategies designed to produce incremental income (such as the option writing
strategy described below) or "speculative" strategies which are undertaken to
profit from (i) an expected decline in the market value of an asset or group of
assets which the Fund does not own or (ii) expected increases in the market
value of an asset which it does not plan to acquire. Information about specific
types of instruments is provided below.
Futures Contracts.
Futures contracts are publicly traded contracts to buy or sell an
underlying asset or group of assets, such as a currency or an index of
securities, at a future time at a specified price. A contract to buy establishes
a long position while a contract to sell establishes a short position.
The purchase of a futures contract on an equity security or an index of
equity securities normally enables a buyer to participate in the market movement
of the underlying asset or index after paying a transaction charge and posting
margin in an amount equal to a small percentage of the value of the underlying
asset or index. The Fund will initially be required to deposit with the Trust's
custodian or the broker effecting the futures transaction an amount of "initial
margin" in cash or securities, as permitted under applicable regulatory
policies.
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<PAGE>
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin is
like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on a
daily basis as the price of the underlying asset fluctuates. This process is
known as "marking to market." For example, when the Fund has taken a long
position in a futures contract and the value of the underlying asset has risen,
that position will have increased in value and the Fund will receive from the
broker a maintenance margin payment equal to the increase in value of the
underlying asset. Conversely, when the Fund has taken a long position in a
futures contract and the value of the underlying instrument has declined, the
position would be less valuable, and the Fund would be required to make a
maintenance margin payment to the broker.
At any time prior to expiration of the futures contract, the Fund may
elect to close the position by taking an opposite position which will terminate
the Fund's position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain. While futures
contracts with respect to securities do provide for the delivery and acceptance
of such securities, such delivery and acceptance are seldom made.
In transactions establishing a long position in a futures contract,
assets equal to the face value of the futures contract will be identified by the
Fund to the Trust's custodian for maintenance in a separate account to insure
that the use of such futures contracts is unleveraged. Similarly, assets having
a value equal to the aggregate face value of the futures contract will be
identified with respect to each short position. The Fund will utilize such
assets and methods of cover as appropriate under applicable exchange and
regulatory policies.
Options.
The Fund may use options to implement its investment strategy. There
are two basic types of options: "puts" and "calls." Each type of option can
establish either a long or a short position, depending upon whether the Fund is
the purchaser or the writer of the option. A call option on a security, for
example, gives the purchaser of the option the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. Conversely, a put option on a security gives the purchaser the right to
sell, and the writer the obligation to buy, the underlying asset at the exercise
price during the option period.
Purchased options have defined risk, that is, the premium paid for the
option, no matter how adversely the price of the underlying asset moves, while
affording an opportunity for gain corresponding to the increase or decrease in
the value of the optioned asset. In general, a purchased put increases in value
as the value of the underlying security falls and a purchased call increases in
value as the value of the underlying security rises.
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<PAGE>
The principal reason to write options is to generate extra income (the
premium paid by the buyer). Written options have varying degrees of risk. An
uncovered written call option theoretically carries unlimited risk, as the
market price of the underlying asset could rise far above the exercise price
before its expiration. This risk is tempered when the call option is covered,
that is, when the option writer owns the underlying asset. In this case, the
writer runs the risk of the lost opportunity to participate in the appreciation
in value of the asset rather than the risk of an out-of-pocket loss. A written
put option has defined risk, that is, the difference between the agreed-upon
price that the Fund must pay to the buyer upon exercise of the put and the
value, which could be zero, of the asset at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
its obligation to deliver the underlying asset in the case of a call option, or
to pay for the underlying asset in the case of a put option, a covered writer is
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the applicable clearing corporation and exchanges.
Among the options which the Fund may enter are options on securities
indices. In general, options on indices of securities are similar to options on
the securities themselves except that delivery requirements are different. For
example, a put option on an index of securities does not give the holder the
right to make actual delivery of a basket of securities but instead gives the
holder the right to receive an amount of cash upon exercise of the option if the
value of the underlying index has fallen below the exercise price. The amount of
cash received will be equal to the difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple. As with options on equity securities or futures contracts,
the Fund may offset its position in index options prior to expiration by
entering into a closing transaction on an exchange or it may let the option
expire unexercised.
A securities index assigns relative values to the securities included
in the index and the index options are based on a broad market index. In
connection with the use of such options, the Fund may cover its position by
identifying assets having a value equal to the aggregate face value of the
option position taken.
Options on Futures Contracts.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option.
Limitations and Risks of Options and Futures Activity.
The Fund may not establish a position in a commodity futures contract
or purchase or sell a commodity option contract for other than bona fide hedging
purposes if
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<PAGE>
immediately thereafter the sum of the amount of initial margin deposits and
premiums required to establish such positions for such non-hedging purposes
would exceed 5% of the market value of the Fund's net assets. The Fund applies
a similar policy to options that
are not commodities.
As noted above, the Fund may engage in both hedging and nonhedging
strategies. Although effective hedging can generally capture the bulk of a
desired risk adjustment, no hedge is completely effective. The Fund's ability to
hedge effectively through transactions in futures and options depends on the
degree to which price movements in its holdings correlate with price movements
of the futures and options.
Non-hedging strategies typically involve special risks. The
profitability of the Fund's non-hedging strategies will depend on the ability of
the Investment Manager to analyze both the applicable derivatives market and the
market for the underlying asset or group of assets. Derivatives markets are
often more volatile than corresponding securities markets and a relatively small
change in the price of the underlying asset or group of assets can have a
magnified effect upon the price of a related derivative instrument.
Derivatives markets also are often less liquid than the market for the
underlying asset or group of assets. Some positions in futures and options may
be closed out only on an exchange which provides a secondary market therefor.
There can be no assurance that a liquid secondary market will exist for any
particular futures contract or option at any specific time. Thus, it may not be
possible to close such an option or futures position prior to maturity. The
inability to close options and futures positions also could have an adverse
impact on the Fund's ability to effectively carry out their derivative
strategies and might, in some cases, require a Fund to deposit cash to meet
applicable margin requirements. The Fund will enter into an option or futures
position only if it appears to be a liquid investment.
Securities of Public Utilities
The Fund may invest from time to time in equity securities of public
utilities. Such issuers are subject to regulation by local government
authorities which may inhibit the potential for capital appreciation of their
securities.
Short Sales Against the Box
The Fund may effect short sales, but only if such transactions are
short sale transactions known as short sales "against the box." A short sale is
a transaction in which the Fund sells a security it does not own by borrowing it
from a broker, and consequently becomes obligated to replace that security. A
short sale against the box is a short sale where the Fund owns the security sold
short or has an immediate and unconditional right to acquire that security
without additional cash consideration upon conversion, exercise or exchange of
options with respect to securities held in its portfolio.
8
<PAGE>
The effect of selling a security short against the box is to insulate that
security against any future gain or loss.
Swap Arrangements
The Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates or indices,
including purchase of caps, floors and collars as described below, although the
Fund does not presently expect to invest more than 5% of its net assets in such
items. In an interest rate swap, the Fund could agree for a specified period to
pay a bank or investment banker the floating rate of interest on a so-called
notional principal amount (i.e., an assumed figure selected by the parties for
this purpose) in exchange for agreement by the bank or investment banker to pay
the Fund a fixed rate of interest on the notional principal amount. In a
currency swap, the Fund would agree with the other party to exchange cash flows
based on the relative differences in values of a notional amount of two (or
more) currencies; in an index swap, the Fund would agree to exchange cash flows
on a notional amount based on changes in the values of the selected indices.
Purchase of a cap entitles the purchaser to receive payments from the seller on
a notional amount to the extent that the selected index exceeds an agreed upon
interest rate or amount whereas purchase of a floor entitles the purchaser to
receive such payments to the extent the selected index falls below an
agreed-upon interest rate or amount. A collar combines a cap and a floor.
The Fund may enter credit protection swap arrangements involving the
sale by the Fund of a put option on a debt security which is exercisable by the
buyer upon certain events, such as a default by the referenced creditor on the
underlying debt or a bankruptcy event of the creditor.
Most swaps entered into by the Fund will be on a net basis; for
example, in an interest rate swap, amounts generated by application of the fixed
rate and the floating rate to the notional principal amount would first offset
one another, with the Fund either receiving or paying the difference between
such amounts. In order to be in a position to meet any obligations resulting
from swaps, the Fund will set up a segregated custodial account to hold
appropriate liquid assets, including cash; for swaps entered into on a net
basis, assets will be segregated having a daily net asset value equal to any
excess of the Fund's accrued obligations over the accrued obligations of the
other party, while for swaps on other than a net basis assets will be segregated
having a value equal to the total amount of the Fund's obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a portion of the Fund's portfolio.
However, the Fund may, as noted above, enter into such arrangements for income
purposes to the extent permitted by the Commodities Futures Trading Commission
(the "CFTC") for entities which are not commodity pool operators, such as the
Fund. In entering a swap arrangement, the Fund is dependent upon the
creditworthiness and good faith of the counterparty. The
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<PAGE>
Fund attempts to reduce the risks of nonperformance by the counterparty by
dealing only with established, reputable institutions. The swap market is still
relatively new and emerging; positions in swap arrangements may become illiquid
to the extent that nonstandard arrangements with one counterparty are not
readily transferable to another counterparty or if a market for the transfer of
swap positions does not develop. The use of interest rate swaps is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If the
Investment Manager is incorrect in its forecasts of market values, interest
rates and other applicable factors, the investment performance of the Fund would
diminish compared with what it would have been if these investment techniques
were not used. Moreover, even if the Investment Manager is correct in its
forecasts, there is a risk that the swap position may correlate imperfectly with
the price of the asset or liability being hedged.
Repurchase Agreements
The Fund may enter into repurchase agreements. Repurchase agreements
occur when the Fund acquires a security and the seller, which may be either (i)
a primary dealer in U.S. Government securities or (ii) an FDIC-insured bank
having gross assets in excess of $500 million, simultaneously commits to
repurchase it at an agreed-upon price on an agreed-upon date within a specified
number of days (usually not more than seven) from the date of purchase. The
repurchase price reflects the purchase price plus an agreed-upon market rate of
interest which is unrelated to the coupon rate or maturity of the acquired
security. The Fund will only enter into repurchase agreements involving U.S.
Government securities. Repurchase agreements could involve certain risks in the
event of default or insolvency of the other party, including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.
Repurchase agreements will be limited to 30% of the Fund's net assets, except
that repurchase agreements extending for more than seven days when combined with
any other illiquid securities held by the Fund will be limited to 15% of the
Fund's net assets.
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements. In a reverse
repurchase agreement the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker or dealer, in return for
a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed-upon rate.
The ability to use reverse repurchase agreements may enable, but does not ensure
the ability of, the Fund to avoid selling portfolio instruments at a time when a
sale may be deemed to be disadvantageous.
When effecting reverse repurchase agreements, assets of the Fund in a
dollar amount sufficient to make payment of the obligations to be purchased are
segregated on the Fund's records at the trade date and maintained until the
transaction is settled.
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<PAGE>
When-Issued Securities
The Fund may purchase "when-issued" securities, which are traded on a
price or yield basis prior to actual issuance. Such purchases will be made only
to achieve the Fund's investment objective and not for leverage. The when-issued
trading period generally lasts from a few days to months, or over a year or
more; during this period dividends or interest on the securities are not
payable. A frequent form of when-issued trading occurs when corporate securities
to be created by a merger of companies are traded prior to the actual
consummation of the merger. Such transactions may involve a risk of loss if the
value of the securities falls below the price committed to prior to actual
issuance. The Trust's custodian will establish a segregated account when the
Fund purchases securities on a when-issued basis consisting of cash or liquid
securities equal to the amount of the when-issued commitments. Securities
transactions involving delayed deliveries or forward commitments are frequently
characterized as when-issued transactions and are similarly treated by the Fund.
Restricted Securities
It is the Fund's policy not to make an investment in restricted
securities, including restricted securities sold in accordance with Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities") if, as a result, more
than 35% of the Fund's total assets are invested in restricted securities,
provided not more than 10% of the Fund's total assets are invested in restricted
securities other than Rule 144A Securities.
Securities may be resold pursuant to Rule 144A under certain
circumstances only to qualified institutional buyers as defined in the rule, and
the markets and trading practices for such securities are relatively new and
still developing; depending on the development of such markets, Rule 144A
Securities may be deemed to be liquid as determined by or in accordance with
methods adopted by the Trustees. Under such methods the following factors are
considered, among others: the frequency of trades and quotes for the security,
the number of dealers and potential purchasers in the market, market making
activity, and the nature of the security and marketplace trades. Investments in
Rule 144A Securities could have the effect of increasing the level of the Fund's
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing such securities. Also, the Fund may be
adversely impacted by the subjective valuation of such securities in the absence
of a market for them. Restricted securities that are not resalable under Rule
144A may be subject to risks of illiquidity and subjective valuations to a
greater degree than Rule 144A Securities.
Foreign Investments
The Fund reserves the right to invest without limitation in securities
of non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary
Receipts ("GDRs").
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ADRs are receipts, typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities issued by a foreign
corporation or other entity. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. GDRs are receipts issued in one country which
also evidence a similar ownership arrangement. Generally, ADRs in registered
form are designed for use in U.S. securities markets and EDRs are designed for
use in European securities markets. GDRs are designed for use when the issuer is
raising capital in more than one market simultaneously, such as the issuer's
local market and the U.S., and have been used to overcome local selling
restrictions to foreign investors. In addition, many GDRs are eligible for
book-entry settlement through Cedel, Euroclear and DTC. The underlying
securities are not always denominated in the same currency as the ADRs, EDRs or
GDRs. Although investment in the form of ADRs, EDRs or GDRs facilitates trading
in foreign securities, it does not mitigate all the risks associated with
investing in foreign securities.
ADRs are available through facilities which may be either "sponsored"
or "unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the foreign
issuer is not involved, and the ADR holders pay the fees of the depository.
Sponsored ADRs are generally more advantageous to the ADR holders and the issuer
than are unsponsored ADRs. More and higher fees are generally charged in an
unsponsored program compared to a sponsored facility. Only sponsored ADRs may be
listed on the New York or American Stock Exchanges. Unsponsored ADRs may prove
to be more risky due to (a) the additional costs involved to the Fund; (b) the
relative illiquidity of the issue in U.S. markets; and (c) the possibility of
higher trading costs in the over-the-counter market as opposed to exchange based
tradings. The Fund will take these and other risk considerations into account
before making an investment in an unsponsored ADR.
The risks associated with investments in foreign securities include
those resulting from fluctuations in currency exchange rates, revaluation of
currencies, future political and economic developments, including the risks of
nationalization or expropriation, the possible imposition of currency exchange
blockages, higher operating expenses, foreign withholding and other taxes which
may reduce investment return, reduced availability of public information
concerning issuers, the difficulties in obtaining and enforcing a judgment
against a foreign issuer and the fact that foreign issuers are not generally
subject to uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements comparable to those applicable to
domestic issuers. Moreover, securities of many foreign issuers may be less
liquid and their prices more volatile than those of securities of comparable
domestic issuers.
These risks are usually higher in less-developed countries. Such
countries include countries that have an emerging stock market on which trade a
small number of securities and/or countries with economies that are based on
only a few industries. The Fund may invest in the securities of issuers in
countries with less developed economies as deemed
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<PAGE>
appropriate by the Investment Manager. However, it is anticipated that a
majority of the foreign investments by the Fund will consist of securities of
issuers in countries with developed economies.
Currency Transactions
The Fund may engage in currency exchange transactions in order to
protect against the effect of uncertain future exchange rates on securities
denominated in foreign currencies. The Fund will conduct its currency exchange
transactions either on a spot (i.e., cash) basis at the rate prevailing in the
currency exchange market, or by entering into forward contracts to purchase or
sell currencies. The Fund's dealings in forward currency exchange contracts will
be limited to hedging involving either specific transactions or aggregate
portfolio positions. A forward currency contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are not commodities and
are entered into in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. In entering a
forward currency contract, the Fund is dependent upon the creditworthiness and
good faith of the counterparty. The Fund attempts to reduce the risks of
nonperformance by the counterparty by dealing only with established, reputable
institutions. Although spot and forward contracts will be used primarily to
protect the Fund from adverse currency movements, they also involve the risk
that anticipated currency movements will not be accurately predicted, which may
result in losses to the Fund. This method of protecting the value of the Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange that can be achieved at some future point in
time. Although such contracts tend to minimize the risk of loss due to a decline
in the value of hedged currency, they tend to limit any potential gain that
might result should the value of such currency increase.
Securities Lending
The Fund may lend portfolio securities with a value of up to 33 1/3% of
its total assets. The Fund will receive cash or cash equivalents (e.g., U.S.
Government obligations) as collateral in an amount equal to at least 100% of the
current market value of any loaned securities plus accrued interest. Collateral
received by the Fund will generally be held in the form tendered, although cash
may be invested in unaffiliated mutual funds with quality short-term portfolios,
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities or certain unaffiliated mutual funds, repurchase agreements or
other similar investments. The investing of cash collateral received from
loaning portfolio securities involves leverage which magnifies the potential for
gain or loss on monies invested and, therefore, results in an increase in the
volatility of the Fund's outstanding securities. Such loans may be terminated at
any time.
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The Fund will retain rights to dividends, interest or other
distributions, on the loaned securities. Voting rights pass with the lending,
although the Fund may call loans to vote proxies if desired. Should the borrower
of the securities fail financially, there is a risk of delay in recovery of the
securities or loss of rights in the collateral. Loans are made only to borrowers
which are deemed by the Investment Manager or its agents to be of good financial
standing.
Short-Term Trading
The Fund may engage in short-term trading of securities and reserves
full freedom with respect to portfolio turnover. In periods where there are
rapid changes in economic conditions and security price levels or when
reinvestment strategy changes significantly, portfolio turnover may be higher
than during times of economic and market price stability or when investment
strategy remains relatively constant. The Fund's portfolio turnover rate may
involve greater transaction costs, relative to other funds in general, and may
have tax and other consequences.
Temporary and Defensive Investments
The Fund may hold up to 100% of its assets in cash or short-term debt
securities for temporary defensive purposes. The Fund will adopt a temporary
defensive position when, in the opinion of the Investment Manager, such a
position is more likely to provide protection against adverse market conditions
than adherence to the Fund's other investment policies. The types of short-term
instruments in which the Fund may invest for such purposes include short-term
money market securities, such as repurchase agreements, and securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
certificates of deposit, time deposits and bankers' acceptances of certain
qualified financial institutions and corporate commercial paper, which at the
time of purchase are rated at least within the "A" major rating category by
Standard & Poor's Corporation ("S&P") or the "Prime" major rating category by
Moody's Investor's Service, Inc. ("Moody's"), or, if not rated, issued by
companies having an outstanding long-term unsecured debt issued rated at least
within the "A" category by S&P or Moody's.
Industry Classifications
In determining how much of the portfolio is invested in a given
industry, the following industry classifications are currently used. Securities
issued or guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities or mixed-ownership Government corporations or
sponsored enterprises (including repurchase agreements involving U.S. Government
securities to the extent excludable under relevant regulatory interpretations)
are excluded. Securities issued by foreign governments are also excluded.
Companies engaged in the business of financing may be classified according to
the industries of their parent or sponsor companies, or industries that
otherwise most affect such financing
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companies. Issuers of asset-backed pools will be classified as separate
industries based on the nature of the underlying assets, such as mortgages and
credit card receivables. "Asset- backed--Mortgages" includes private pools of
nongovernment backed mortgages.
<TABLE>
<S> <C> <C>
Basic Industries Consumer Staple Science & Technology
- ---------------- --------------- --------------------
Chemical Business Service Aerospace
Diversified Container Computer Software & Service
Electrical Equipment Drug Electronic Components
Forest Products Food & Beverage Electronic Equipment
Machinery Hospital Supply Office Equipment
Metal & Mining Personal Care
Railroad Printing & Publishing Consumer Cyclical
Truckers Tobacco -----------------
Airline
Automotive
Utility Energy Building
- ---------------- --------------- Hotel & Restaurant
Electric Oil Refining & Photography
Gas Marketing Recreation
Gas Transmission Oil Production Retail Trade
Telephone Oil Service Textile & Apparel
Other Finance
- ---------------- ---------------
Trust Certificates-- Bank
Government Related Lending Financial Service
Asset-backed--Mortgages Insurance
Asset-backed--Credit Card
Receivables
</TABLE>
Computer-Related Risks
Many mutual funds and other companies that issue securities, as well as
government entities upon whom those mutual funds and companies depend, may be
adversely affected by computer systems (whether their own systems or systems of
their service providers) that do not properly process dates beginning with
January 1, 2000 and information related to those dates. In addition, many funds
and other companies, especially those funds and companies that do business in
one or more national currencies of the countries in the European Union (the
"EU"), may be adversely affected by computer systems that cannot accommodate
concurrent references to two currencies, the national currency and the euro (the
proposed currency unit of the EU). Beginning on January 1, 1999 and for the
three years thereafter, businesses and governments in most EU countries
generally must be prepared to conduct their businesses in their national
currency and the euro. After such three-year period, they must conduct their
businesses only in the euro.
15
<PAGE>
The euro conversion presents additional risks for the Fund to the
extent that it invests in securities denominated in a national currency that
eventually will be replaced by the euro. For example, trading, accounting and
other administrative systems must be able to reflect exchange rates between a
national currency of an EU member and the euro and to redenominate outstanding
tradeable debt securities into the euro in accordance with specific technical
requirements.
The Investment Manager currently is in the process of reviewing its
internal computer systems as they relate to the Fund, as well as the computer
systems of those service providers upon which the Fund relies, in order to
obtain reasonable assurances that the Fund will not experience a material
adverse impact related to either problem. The Fund does not currently anticipate
that either problem will have a material adverse impact on its portfolio
investments, taken as a whole. There can be no assurances in either area,
however, including the possibility that either or both problems could negatively
affect the investment markets or the economy generally.
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS
The Fund may invest in long-term and short-term debt securities.
Certain debt securities and money market instruments in which the Fund may
invest are described below.
U.S. Government and Related Securities.
U.S. Government securities are securities which are issued or
guaranteed as to principal or interest by the U.S. Government, a U.S. Government
agency or instrumentality, or certain mixed-ownership Government corporations as
described herein. The U.S. Government securities in which the Fund invests
include, among others:
o direct obligations of the U.S. Treasury, i.e., U.S. Treasury bills,
notes, certificates and bonds;
o obligations of U.S. Government agencies or instrumentalities such
as the Federal Home Loan Banks, the Federal Farm Credit Banks, the
Federal National Mortgage Association, the Government National
Mortgage Association and the Federal Home Loan Mortgage
Corporation; and
o obligations of mixed-ownership Government corporations such as
Resolution Funding Corporation.
U.S. Government securities which the Fund may buy are backed in a
variety of ways by the U.S. Government, its agencies or instrumentalities. Some
of these obligations, such as Government National Mortgage Association
mortgage-backed securities, are backed by the full
16
<PAGE>
faith and credit of the U.S. Treasury. Other obligations, such as those of the
Federal National Mortgage Association, are backed by the discretionary authority
of the U.S. Government to purchase certain obligations of agencies or
instrumentalities, although the U.S. Government has no legal obligation to do
so. Obligations such as those of the Federal Home Loan Bank, the Federal Farm
Credit Bank, the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation are backed by the credit of the agency or instrumentality
issuing the obligations. Certain obligations of Resolution Funding Corporation,
a mixed-ownership Government corporation, are backed with respect to interest
payments by the U.S. Treasury, and with respect to principal payments by U.S.
Treasury obligations held in a segregated account with a Federal Reserve Bank.
Except for certain mortgage-related securities, the Fund will only invest in
obligations issued by mixed-ownership Government corporations where such
securities are guaranteed as to payment of principal or interest by the U.S.
Government or a U.S. Government agency or instrumentality, and any unguaranteed
principal or interest is otherwise supported by U.S. Government obligations held
in a segregated account.
U.S. Government securities may be acquired by the Fund in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book entry
records of the Federal Reserve Banks.
In addition, the Fund may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury Securities" ("CATS"), and may
not be deemed U.S. Government securities.
The Fund may also invest from time to time in collective investment
vehicles, the assets of which consist principally of U.S. Government securities
or other assets substantially collateralized or supported by such securities,
such as Government trust certificates.
Bank Money Investments.
Bank money investments include, but are not limited to, certificates of
deposit, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term (i.e., less than one year), interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution. A banker's acceptance is a
17
<PAGE>
time draft drawn on a commercial bank by a borrower, usually in connection with
an international commercial transaction (to finance the import, export, transfer
or storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank, including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nonnegotiable deposits for a fixed period of time at
a stated interest rate. The Fund will not invest in any such bank money
investment unless the investment is issued by a U.S. bank that is a member of
the Federal Deposit Insurance Corporation ("FDIC"), including any foreign branch
thereof, a U.S. branch or agency of a foreign bank, a foreign branch of a
foreign bank, or a savings bank or savings and loan association that is a member
of the FDIC and which at the date of investment has capital, surplus and
undivided profits (as of the date of its most recently published financial
statements) in excess of $50 million. The Fund will not invest in time deposits
maturing in more than seven days and will not invest more than 10% of its total
assets in time deposits maturing in two to seven days.
U.S. branches and agencies of foreign banks are offices of foreign
banks and are not separately incorporated entities. They are chartered and
regulated either federally or under state law. U.S. federal branches or agencies
of foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect FDIC insurance. Unlike U.S. branches of foreign banks,
U.S. agencies of foreign banks may not accept deposits and thus are not eligible
for FDIC insurance. Both branches and agencies can maintain credit balances,
which are funds received by the office incidental to or arising out of the
exercise of their banking powers and can exercise other commercial functions,
such as lending activities.
Short-Term Corporate Debt Instruments.
Short-term corporate debt instruments include commercial paper to
finance short-term credit needs (i.e., short-term, unsecured promissory notes)
issued by, among others, (a) corporations and (b) domestic or foreign bank
holding companies or their subsidiaries or affiliates where the debt instrument
is guaranteed by the bank holding company or an affiliated bank or where the
bank holding company or the affiliated bank is unconditionally liable for the
debt instrument. Commercial paper is usually sold on a discounted basis and has
a maturity at the time of issuance not exceeding nine months.
Lower Rated Debt Securities.
The Fund may invest up to 10% of its total assets in debt securities
within the BB major rating category or lower by S&P or the Ba major rating
category or lower by Moody's or debt securities that are unrated but considered
by the Investment Manager to
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<PAGE>
be of equivalent investment quality to comparable rated securities. Such
securities generally involve more credit risk than higher rated securities and
are considered by S&P and Moody's to be predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the terms of
the obligation. Further, such securities may be subject to greater market
fluctuations and risk of loss of income and principal than lower yielding,
higher rated debt securities. Risks of lower quality debt securities include (i)
limited liquidity and secondary market support, (ii) substantial market price
volatility resulting from changes in prevailing interest rates an/or investor
perception, (iii) subordination to the prior claims of banks and other senior
lenders, (iv) the operation of mandatory sinking fund or call/redemption
provisions during periods of declining interest rates when the fund may be
required to reinvest premature redemption proceeds in lower yielding portfolio
securities; (v) the possibility that earnings of the issuer may be insufficient
to meet its debt service; and (vi) the issuer's low creditworthiness and
potential for insolvency during periods of rising interest rates and economic
downturn. For further information concerning the ratings of debt securities, see
"--Commercial Paper Ratings" and "--Rating Categories of Debt Securities,"
below. In the event the rating of a security is downgraded, the Investment
Manager will determine whether the security should be retained or sold depending
on an assessment of all facts and circumstances at that time.
Certain Securities Ratings.
Commercial Paper Ratings.
Commercial paper investments at the time of purchase will be rated
within the "A" major rating category by S&P or within the "Prime" major rating
category by Moody's, or, if not rated, issued by companies having an outstanding
long-term unsecured debt issue rated at least within the "A" category by S&P or
by Moody's. The money market investments in corporate bonds and debentures
(which must have maturities at the date of settlement of one year or less) must
be rated at the time of purchase at least within the "A" category by S&P or
within the "Prime" category by Moody's.
Commercial paper rated within the "A" category (highest quality) by S&P
is issued by entities which have liquidity ratios which are adequate to meet
cash requirements. Long-term senior debt is rated within the "A" category or
better, although in some cases credits within the "BBB" category may be allowed.
The issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality of
management are unquestioned. The relative strength or weakness of the above
factors determines whether the issuer's commercial paper is rated A-1, A-2 or
A-3. (Those A-1 issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign: A-1+.)
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<PAGE>
The rating "Prime" is the highest commercial paper rating category
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: evaluation of the management of the issuer; economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; evaluation of the
issuer's products in relation to competition and customer acceptance; liquidity;
amount and quality of long-term debt; trend of earnings over a period of 10
years; financial management of obligations which may be present or may arise as
a result of public interest questions and preparations to meet such obligations.
These factors are all considered in determining whether the commercial paper is
rated Prime-1, Prime-2 or Prime-3.
Rating Categories of Debt Securities.
Set forth below is a description of S&P corporate bond and debenture
rating categories:
AAA: An obligation rated within the AAA category has the highest rating
assigned by S&P. Capacity to meet the financial commitment on the obligation is
extremely strong.
AA: An obligation rated within the AA category differs from the highest
rated obligation only in small degree. Capacity to meet the financial obligation
is very strong.
A: An obligation rated within the A category is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. However, capacity to meet the
financial commitment on the obligation is still strong.
BBB: An obligation rated within the BBB category exhibits adequate
protection parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to meet the
financial commitment on the obligation.
Obligations rated within the BB, B, CCC, CC and C categories are
regarded as having significant speculative characteristics. BB indicates the
least degree of speculation and C the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB: An obligation rated within the BB category is less vulnerable to
nonpayment than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet the financial commitment on the
obligation. The BB rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BBB rating.
B: An obligation rated within the B category is more vulnerable to
nonpayment than obligations rated within the BB category, but currently has the
capacity to meet the financial commitment on the obligation. Adverse business,
financial or economic conditions will likely
20
<PAGE>
impair capacity or willingness to meet the financial commitment on the
obligation. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
CCC: An obligation rated within the CCC category is vulnerable to
nonpayment and is dependent upon favorable business, financial and economic
conditions to meet the financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to meet the financial commitment on the obligation.
CC: An obligation rated within the CC category is currently highly
vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy
petition has been filed, but payments on this obligation are being continued.
D: An obligation rated within the D category is in payment default. The
D rating category is used when payments on an obligation are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
S&P may attach the "r" symbol to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayments risks-such as interest only (IO) and
principal only (PO) mortgage securities; and obligations with unusually risky
terms, such as inverse floaters.
Set forth below is a description of Moody's corporate bond and
debenture rating categories:
Aaa: Bonds which are rated within the Aaa category are judged to be of
the best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest payments are protected by a large
or by an exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated within the Aa category are judged to be of
high quality by all standards. Together with the Aaa group they comprise what
are generally known as
21
<PAGE>
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated within the A category possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa: Bonds which are rated within the Baa category are considered as
medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba: Bonds which are rated within the Ba category are judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated within the B category generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small.
Caa: Bonds which are rated within the Caa category are of poor
standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca: Bonds which are rated within the Ca category represent obligations
which are speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C: Bonds which are rated within the C category are the lowest rated
class of bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
1, 2 or 3: The ratings from Aa through B may be modified by the
addition of a numeral indicating a bond's rank within its rating category.
Rating Downgrades.
In the event the lowering of ratings of debt instruments held by the
Fund by applicable rating agencies results in a material decline in the overall
quality of the Fund's
22
<PAGE>
portfolio, the Trustees of the Trust will review the situation and take such
action as they deem in the best interests of the Fund's shareholders, including,
if necessary, changing the composition of the portfolio.
THE TRUST, THE FUND AND ITS SHARES
The Fund was organized in 1990 as a separate series of State Street
Research Equity Trust, a Massachusetts business trust. A "series" is a separate
pool of assets of the Trust which is separately managed and may have a different
investment objective and different investment policies from the objective and
policies of another series. The Trust currently is comprised of four series:
State Street Research Alpha Fund, State Street Research Athletes Fund, State
Street Research Equity Investment Fund and State Street Research Global
Resources Fund. The Trustees of the Trust have authority to issue an unlimited
number of shares of beneficial interest of each separate series, $.001 par value
per share. The Trustees also have authority, without the necessity of a
shareholder vote, to create any number of new series or classes or to commence
the public offering of shares of any previously established series or classes.
The Trustees have authorized shares of the Fund to be issued in four classes:
Class A, Class B, Class C and Class S shares. Prior to November 1, 1997, the
Fund's current Class C shares were designated as Class D shares and the Fund's
current Class S shares were designated as Class C shares.
Each share of each class of shares represents an identical legal
interest in the same portfolio of investments of the Fund, has the same rights
and is identical in all respects, except that Class A, Class B and Class C
shares bear the expenses of the deferred sales arrangement and any expenses
(including the higher service and distribution fees) resulting from such sales
arrangement, and certain other incremental expenses related to a class. Each
class will have exclusive voting rights with respect to provisions of the Rule
12b-1 distribution plan pursuant to which the service and distribution fees, if
any, are paid. Although the legal rights of holders of each class of shares are
identical, it is likely that the different expenses borne by each class will
result in different net asset values and dividends. The different classes of
shares of the Fund also have different exchange privileges. Except for those
differences between classes of shares described above, in the Fund's Prospectus
and otherwise this Statement of Additional Information, each share of the Fund
has equal dividend, redemption and liquidation rights with other shares of the
Fund, and when issued, is fully paid and nonassessable by the Fund.
The rights of holders of shares may be modified by the Trustees at any
time, so long as such modifications do not have an adverse effect on the rights
of any shareholder. On any matter submitted to the shareholders, the holder of a
Fund share is entitled to one vote per share (with proportionate voting for
fractional shares) regardless of the relative net asset value thereof.
23
<PAGE>
Under the Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there ordinarily will be no shareholder meetings
unless required by the 1940 Act. Except as otherwise provided under the 1940
Act, the Board of Trustees will be a self-perpetuating body until fewer than
two-thirds of the Trustees serving as such are Trustees who were elected by
shareholders of the Trust. In the event less than a majority of the Trustees
serving as such were elected by shareholders of the Trust, a meeting of
shareholders will be called to elect Trustees. Under the Master Trust Agreement,
any Trustee may be removed by vote of two-thirds of the outstanding Trust
shares; holders of 10% or more of the outstanding shares of the Trust can
require that the Trustees call a meeting of shareholders for purposes of voting
on the removal of one or more Trustees. In connection with such meetings called
by shareholders, shareholders will be assisted in shareholder communications to
the extent required by applicable law.
Under Massachusetts law, the shareholders of the Trust could, under
certain circumstances, be held personally liable for the obligations for the
Trust. However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and provides for indemnification
for all losses and expenses of any shareholder of the Fund held personally
liable for the obligations of the Trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund would be unable to meet its obligations. The
Investment Manager believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Fund is an "open-end" management investment company, but it is not
a "diversified company" as those terms are defined in the 1940 Act. Among other
things, a diversified fund must, with respect to 75% of its total assets, not
invest more than 5% of its total assets in any one issuer. As a nondiversified
fund, the fund will not be subject to this limit. The Fund, therefore, could
invest in fewer issuers, which could increase the relative adverse effect on the
portfolio that one or a few poor performing investments could potentially have.
However, under the federal tax law, with respect to 50% of its total assets, the
fund may not invest more than 5% of its total assets in any single issuer.
24
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and principal officers of the Trust, their addresses, and
their principal occupations and positions with certain affiliates of the
Investment Manager are set forth below.
*+Peter C. Bennett, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 59. His principal occupation is currently,
and during the past five years has been, Executive Vice President of State
Street Research & Management Company. Mr. Bennett is also a Director of State
Street Research & Management Company. Mr. Bennett's other principal business
affiliations include Director, State Street Research Investment Services, Inc.
and Executive Vice President, GFM International Investors, Inc. (a wholly-owned
subsidiary of Metropolitan Life Insurance Company).
+Steve A. Garban, The Pennsylvania State University, 210 Old Main,
University Park, PA 16802, serves as Trustee of the Trust. He is 60. He is
retired and was formerly Senior Vice President for Finance and Operations and
Treasurer of The Pennsylvania State University.
+Bartlett R. Geer, One Financial Center, Boston, MA 02111 serves as
Vice President of the Trust. He is 43. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of State Street Research & Management
Company.
+Malcolm T. Hopkins, 14 Brookside Road, Biltmore Forest, Asheville, NC
28803, serves as Trustee of the Trust. He is 70. He is engaged principally in
private investments. Previously, he was Vice Chairman of the Board and Chief
Financial Officer of St. Regis Corp.
*F. Gardner Jackson, Jr., One Financial Center, Boston, MA 02111,
serves as Vice President of the Trust. He is 55. His principal occupation is
Senior Vice President of State Street Research & Management Company. During the
past five years he has also served as Vice President of State Street Research &
Management Company.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791,
serves as Trustee of the Trust. He is 71. He is engaged principally in private
investments and civic affairs, and is an author of business history. Previously,
he was with an affiliate of J.P. Morgan & Co. in New York.
+Robert A. Lawrence, 175 Federal Street, Boston, MA 02110, serves as
Trustee of the Trust. He is 71. He is retired and was formerly a Partner in
Saltonstall & Co., a private investment firm.
- ---------------
* or + see footnotes on page 26
25
<PAGE>
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. He is 47. His principal occupation is currently, and
during the past five years has been, Executive Vice President, Treasurer, Chief
Financial Officer and Director of State Street Research & Management Company.
Mr. Maus's other principal business affiliations include Executive Vice
President, Treasurer, Chief Financial Officer and Director of State Street
Research Investment Services, Inc. and Executive Vice President, Chief Financial
Officer, Administrative Officer and Director, GFM International Investors, Inc.
*+Francis J. McNamara, III, One Financial Center, Boston, MA 02111,
serves as Secretary and General Counsel of the Trust. He is 42. His principal
occupation is Executive Vice President, General Counsel and Secretary of State
Street Research & Management Company. During the past five years he has also
served as Senior Vice President of State Street Research & Management Company
and as Senior Vice President, General Counsel and Assistant Secretary of The
Boston Company, Inc., Boston Safe Deposit and Trust Company and The Boston
Company Advisors, Inc. Mr. McNamara's other principal business affiliations
include Senior Vice President, Clerk and General Counsel of State Street
Research Investment Services, Inc. and Executive Vice President and General
Counsel, GFM International Investors, Inc.
*+Thomas P. Moore, Jr., One Financial Center, Boston, MA 02111, serves
as Vice President of the Trust. He is 59. His principal occupation is currently,
and during the past five years has been, Senior Vice President of State Street
Research & Management Company.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Trust. He is 66. He is retired, having served during the past
five years, until October 1992, as Executive Vice President, Chief Operating
Officer and Director of Hewlett-Packard Company.
*Brian O'Dell, One Financial Center, Boston, MA 02111 serves as Vice
President of the Trust. He is 32. His principal occupation is Assistant
Portfolio Manager for State Street Research & Management Company. During the
past five years, he has also served as a portfolio manager and analyst at
Freedom Capital Management Corporation.
*Daniel J. Rice III, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 46. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of State Street Research & Management
Company.
- ---------------
* or + see footnotes on page 26
26
<PAGE>
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118, serves
as Trustee of the Trust. He is 60. His principal occupations during the past
five years have been President of The Glen Ellen Company, a private investment
company, and Vice President of Founders Investments Ltd.
+Michael S. Scott Morton, Massachusetts Institute of Technology, 77
Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of the Trust. He is
60. His principal occupation during the past five years has been Jay W.
Forrester Professor of Management at Sloan School of Management, Massachusetts
Institute of Technology.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Trust. He is 55. His principal occupation is currently, and during the past five
years has been, Chairman of the Board, President, Chief Executive Officer and
Director of State Street Research & Management Company. Mr. Verni's other
principal business affiliations include Chairman of the Board and Director of
State Street Research Investment Services, Inc. and (until February 1996, prior
positions as President and Chief Executive Officer of that company) and Chairman
of the Board, President, and Chief Executive Officer and Director of GFM
International Investors, Inc.
*+James M. Weiss, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 51. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as President and Chief Investment Officer of IDS
Advisory Group, Inc. (Provider of Investment Advisory Service).
*+John T. Wilson, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 35. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as an analyst and portfolio manager at Phoenix Home
Life Mutual Insurance Company and, from 1995 to 1996, as a Vice President of
Phoenix Investment Counsel, Inc. (Provider of Investment Advisory Service).
- ------------------
*These Trustees and/or officers are or may be deemed to be "interested
persons" of the Trust under the 1940 Act because of their affiliations with the
Fund's investment adviser.
+Serves as a Trustee/Director and/or officer of one or more of the
following investment companies, each of which has an advisory relationship with
the Investment Manager or its parent, Metropolitan Life Insurance Company
("Metropolitan"): State Street Research Equity Trust, State Street Research
Financial Trust, State Street Research Income Trust, State Street Research Money
Market Trust, State Street Research Tax-Exempt Trust, State Street Research
Capital Trust, State Street Research Exchange Trust, State Street Research
Growth Trust, State Street Research Master Investment Trust, State Street
Research Securities Trust, State Street Research Portfolios, Inc. and
Metropolitan Series Fund, Inc.
27
<PAGE>
28
<PAGE>
Ownership of 25% or more of a voting security is deemed "control" as
defined in the 1940 Act. So long as 25% of a class of shares is so owned, such
owners will be presumed to be in control of such class of shares for purposes of
voting on certain matters submitted to a vote of shareholders, such as any
Distribution Plan for a given class.
As of April 30, 1998, the Trustees and principal officers of the Trust
as group owned less than 1% of the Fund's outstanding Class A shares and owned
no shares of the Fund's outstanding Class B, Class C or Class S shares.
Also as of April 30, 1998, the following persons or entities were the
record and/or beneficial owners of the approximate amounts of each class of
shares of the Fund as set forth beside their names:
<TABLE>
<CAPTION>
Shareholder %
<S> <C> <C>
Class A Merrill Lynch 15.4
Class B Merrill Lynch 27.8
Class C Merrill Lynch 29.8
Class S Chase Manhattan Bank 85.0
</TABLE>
The full name and address of each of the above persons or entities are
as follows:
Merrill Lynch, Pierce, Fenner & Smith, Inc. (b)
4800 Deerlake Drive East
Jacksonville, FL 32246
The Chase Manhattan Bank (b)(c)
770 Broadway
New York, New York 10003
- -----------------
(a) Prior to November 1, 1997, the Fund's current Class C shares were designated
as Class D shares and the Fund's current Class S shares were designated as Class
C shares.
(b) The Fund believes that the named record holder does not have beneficial
ownership of such shares.
(c) Chase Manhattan Bank holds such shares as a trustee under certain employee
benefit plans serviced by Metropolitan Life Insurance Company.
29
<PAGE>
The Trustees were compensated as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Total
Compensation
Aggregate From Trust and
Name of Compensation Complex Paid
Trustee From Trust(a) to Trustees(b)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Steve A. Garban $ 4,443 $ 75,899
Malcolm T. Hopkins $ 5,043 $ 78,499
Edward M. Lamont $ 11,325 $ 68,741
Robert A. Lawrence $ 11,725 $ 93,125
Dean O. Morton $ 12,525 $ 97,125
Toby Rosenblatt $ 11,325 $ 68,741
Michael S. Scott Morton $ 13,725 $ 103,625
Ralph F. Verni $ 0 $ 0
</TABLE>
- -----------------
(a) For the Fund's fiscal year ended June 30, 1997. See "The Trust, the
Fund and its Shares" in this Statement of Additional Information for a
listing of series.
(b) Includes compensation on behalf of all series of 12 investment
companies for which the Investment Manager or its parent, Metropolitan
served as investment adviser . "Total Compensation from Trust and
Complex Paid to Trustees" for the 12 months ended December 31, 1997.
The Trust does not provide any pension or retirement benefits for the
Trustees.
30
<PAGE>
MANAGEMENT OF THE FUND AND INVESTMENT ADVISORY SERVICES
Under the provisions of the Trust's Master Trust Agreement and the laws
of Massachusetts, responsibility for the management and supervision of the Fund
rests with the Trustees.
State Street Research & Management Company, the Investment Manager, a
Delaware corporation, with offices at One Financial Center, Boston,
Massachusetts 02111-2690, acts as investment adviser to the Fund. The Investment
Manager was founded by Paul Cabot, Richard Saltonstall and Richard Paine to
serve as investment adviser to one of the nation's first mutual funds, presently
known as State Street Research Investment Trust, which they had formed in 1924.
Their investment management philosophy emphasized comprehensive fundamental
research and analysis, including meetings with the management of companies under
consideration for investment. The Investment Manager's portfolio management
group has extensive investment industry experience managing equity and debt
securities.
The Investment Manager is charged with the overall responsibility for
managing the investments and business affairs of the Fund, subject to the
authority of the Board of Trustees. The Advisory Agreement provides that the
Investment Manager shall furnish the Fund with an investment program, office
facilities and such investment advisory, research and administrative services as
may be required from time to time. The Investment Manager compensates all
executive and clerical personnel and Trustees of the Trust if such persons are
employees of the Investment Manager or its affiliates. The Investment Manager is
an indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan").
The advisory fee payable monthly by the Fund to the Investment Manager
is computed as a percentage of the average of the value of the net assets of the
Fund as determined at the close of regular trading on the New York Stock
Exchange (the "NYSE") on each day the NYSE is open for trading, at the annual
rate of 0.75% of the net assets of the Fund.
The Distributor and its affiliates have from time to time and in
varying amounts voluntarily assumed some portion of fees or expenses relating to
the Fund. For the fiscal years ended June 30, 1995, 1996, and 1997 the Fund's
investment advisory fee prior to the assumption of fees or expenses was
$284,926, $307,977 and $940,108, respectively. For the same periods, the
voluntary reduction of fees or assumption of expenses amounted to $307,559,
$137,050 and $3,933, respectively.
The Advisory Agreement provides that it shall continue in effect with
respect to the Fund for a period of two years after its initial effectiveness
and will continue from year to year thereafter as long as it is approved at
least annually both (i) by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) or by the Trustees of the
Trust, and (ii) in either event by a vote of a majority of the Trustees who are
not parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting
31
<PAGE>
called for the purpose of voting on such approval. The Advisory Agreement may be
terminated on 60 days' written notice by either party and will terminate
automatically in the event of its assignment, as defined under the 1940 Act and
regulations thereunder. Such regulations provide that a transaction which does
not result in a change of actual control or management of an adviser is not
deemed an assignment.
Under the Code of Ethics of the Investment Manager, investment
management personnel are only permitted to engage in personal securities
transactions in accordance with certain conditions relating to such person's
position, the identity of the security, the timing of the transaction, and
similar factors. Such personnel must report their personal securities
transactions quarterly and supply broker confirmations of such transactions to
the Investment Manager.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are distributed by State Street Research Investment
Services, Inc. The Fund offers four classes of shares which may be purchased at
the next determined net asset value per share plus, in the case of all classes
except Class S shares, a sales charge which, at the election of the investor,
may be imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class C shares). General information on how to
buy shares of the Fund, as well as sales charges involved, is set forth under
"Your Investment" in the Prospectus. The following supplements that information.
Public Offering Price. The public offering price for each class of
shares is based on their net asset value determined as of the close of regular
trading on the NYSE on the day the purchase order is received by State Street
Research Service Center (the "Service Center"), provided that the order is
received prior to the close of regular trading on the NYSE on that day;
otherwise the net asset value used is that determined as of the close of the
NYSE on the next day it is open for unrestricted trading. When a purchase order
is placed through a dealer, that dealer is responsible for transmitting the
order promptly to the Service Center in order to permit the investor to obtain
the current price. Any loss suffered by an investor which results from a
dealer's failure to transmit an order promptly is a matter for settlement
between the investor and the dealer.
Class A Shares--Reduced Sales Charges. The reduced sales charges set
forth under "Your Investment--Choosing a Share Class" in the Prospectus apply to
purchases made at any one time by any "person," which includes: (i) an
individual, or an individual combining with his or her spouse and their children
and purchasing for his, her or their own account; (ii) a "company" as defined in
Section 2(a)(8) of the 1940 Act; (iii) a trustee or other fiduciary purchasing
for a single trust estate or single fiduciary account (including a pension,
profit sharing or other employee benefit trust created pursuant to a plan
qualified under Section
32
<PAGE>
401 of the Internal Revenue Code); (iv) a tax-exempt organization under Section
501(c)(3) or (13) of the Internal Revenue Code; and (v) an employee benefit plan
of a single employer or of affiliated employers.
Investors may purchase Class A shares of the Fund at reduced sales
charges by executing a Letter of Intent to purchase no less than an aggregate of
$100,000 of the Fund or any combination of Class A shares of "Eligible Funds"
(which include the Fund and other funds as designated by the Distributor from
time to time) within a 13-month period. The sales charge applicable to each
purchase made pursuant to a Letter of Intent will be that which would apply if
the total dollar amount set forth in the Letter of Intent were being bought in a
single transaction. Purchases made within a 90-day period prior to the execution
of a Letter of Intent may be included therein; in such case the date of the
earliest of such purchases marks the commencement of the 13-month period.
An investor may include toward completion of a Letter of Intent the
value (at the current public offering price) of all of his or her Class A shares
of the Fund and of any of the other Class A shares of Eligible Funds held of
record as of the date of his or her Letter of Intent, plus the value (at the
current offering price) as of such date of all of such shares held by any
"person" described herein as eligible to join with the investor in a single
purchase. Class B, Class C and Class S shares may also be included in the
combination under certain circumstances.
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 5% of the specified amount will, however, be taken
from the initial purchase (or, if necessary, subsequent purchases) and held in
escrow in the investor's account as collateral against the higher sales charge
which would apply if the total purchase is not completed within the allotted
time. The escrowed shares will be released when the Letter of Intent is
completed or, if it is not completed, when the balance of the higher sales
charge is, upon notice, remitted by the investor. All dividends and capital
gains distributions with respect to the escrowed shares will be credited to the
investor's account.
Investors may purchase Class A shares of the Fund or a combination of
Eligible Funds at reduced sales charges pursuant to a Right of Accumulation. The
applicable sales charge under the right is determined on the amount arrived at
by combining the dollar amount of the purchase with the value (at the current
public offering price) of all Class A shares of the other Eligible Funds owned
as of the purchase date by the investor plus the value (at the current public
offering price) of all such shares owned as of such date by any "person"
described herein as eligible to join with the investor in a single purchase.
Class B, Class C and Class S shares may also be included in the combination
under certain circumstances. Investors must submit to the Distributor sufficient
information to show that they qualify for this Right of Accumulation.
Other Programs Related to Class A Shares. Class A shares of the Fund
may be sold or issued in an exchange at a reduced sales charge or without sales
charge pursuant
33
<PAGE>
to certain sponsored arrangements, which include programs under which a company,
employee benefit plan or other organization makes recommendations to, or permits
group solicitation of, its employees, members or participants, except any
organization created primarily for the purpose of obtaining shares of the Fund
at a reduced sales charge or without a sales charge. Sales without a sales
charge, or with a reduced sales charge, may also be made through brokers,
registered investment advisers, financial planners, institutions, and others,
under managed fee-based programs (e.g., "wrap fee" or similar programs) which
meet certain requirements established from time to time by the Distributor.
Information on such arrangements and further conditions and limitations is
available from the Distributor.
In addition, no sales charge is imposed in connection with the sale of
Class A shares of the Fund to the following entities and person: (A) the
Investment Manager, Distributor or any affiliated entities, including any direct
or indirect parent companies and other subsidiaries of such parents
(collectively "Affiliated Companies"); (B) employees, officers, sales
representatives or current or retired directors or trustees of the Affiliated
Companies or any investment company managed by any of the Affiliated Companies,
any relatives of any such individuals whose relationship is directly verified by
such individuals to the Distributor, or any beneficial account for such
relatives or individuals; and (C) employees, officers, sales representatives or
directors of dealers and other entities with a selling agreement with the
Distributor to sell shares of any aforementioned investment company, any spouse
or child of such person, or any beneficial account for any of them. The purchase
must be made for investment and the shares purchased may not be resold except
through redemption. This purchase program is subject to such administrative
policies, regarding the qualification of purchasers and any other matters, as
may be adopted by the Distributor from time to time.
Conversion of Class B Shares to Class A Shares. A shareholder's Class B
shares of the Fund, including all shares received as dividends or distributions
with respect to such shares, will automatically convert to Class A shares of the
Fund at the end of eight years following the issuance of such Class B shares;
consequently, they will no longer be subject to the higher expenses borne by
Class B shares. The conversion rate will be determined on the basis of the
relative per share net asset values of the two classes and may result in a
shareholder receiving either a greater or fewer number of Class A shares than
the Class B shares so converted. As noted above, holding periods for Class B
shares received in exchange for Class B shares of other Eligible Funds will be
counted toward the eight-year period.
Contingent Deferred Sales Charges. The amount of any contingent
deferred sales charge paid on Class A shares (on sales of $1 million or more and
which do not involve an initial sales charge) or on Class B or Class C shares of
the Fund will be paid to the Distributor. The Distributor will pay dealers at
the time of sale a 4% commission for selling Class B shares and a 1% commission
for selling Class C shares. In certain cases, a dealer may elect to waive the 4%
commission on Class B shares and receive in lieu thereof
34
<PAGE>
an annual fee, usually 1% with respect to such outstanding shares. The proceeds
of the contingent deferred sales charges and the distribution fees are used to
offset distribution expenses and thereby permit the sale of Class B and Class C
shares without an initial sales charge.
In determining the applicability and rate of any contingent deferred
sales charge of Class B or Class C shares, it will be assumed that a redemption
of the shares is made first of those shares having the greatest capital
appreciation, next of shares representing reinvestment of dividends and capital
gains distributions and finally of remaining shares held by shareholder for the
longest period of time. Class B shares that are redeemed within a five-year
period after their purchase, and Class C shares that are redeemed within a
one-year period after their purchase, will not be subject to a contingent
deferred sales charge to the extent that the value of such shares represents (1)
capital appreciation of Fund assets or (2) reinvestment of dividends or capital
gains distributions. The holding period for purposes of applying a contingent
deferred sales charge for a particular class of shares of the Fund acquired
through an exchange from another Eligible Fund will be measured from the date
that such shares were initially acquired in the other Eligible Fund, and shares
of the same class being redeemed will be considered to represent, as applicable,
capital appreciation or dividend and capital gains distribution reinvestments in
such other Eligible Fund. These determinations will result in any contingent
deferred sales charge being imposed at the lowest possible rate. For federal
income tax purposes, the amount of the contingent deferred sales charge will
reduce the gain or increase the loss, as the case may be, on the amount realized
on redemption.
Contingent Deferred Sales Charge Waivers. With respect to Class A
shares (on sales of $1 million or more and which do not involve an initial sales
charge), and Class B and Class C shares of the Fund, the contingent deferred
sales charge does not apply to exchanges or to redemptions under a systematic
withdrawal plan which meets certain conditions. In addition, the contingent
deferred sales charge will be waived for: (i) redemptions made within one year
of the death or total disability, as defined by the Social Security
Administration, of all shareholders of an account; (ii) redemptions made after
attainment of a specific age in an amount which represents the minimum
distribution required at such age under Section 401(a)(9) of the Internal
Revenue Code of 1986, as amended, for retirement accounts or plans (e.g., age 70
1/2 for Individual Retirement Accounts and Section 403(b) plans), calculated
solely on the basis of assets invested in the Fund or other Eligible Funds; and
(iii) a redemption resulting from a tax-free return of an excess contribution to
an Individual Retirement Account. (The foregoing waivers do not apply to a
tax-free rollover or transfer of assets out of the Fund). The Fund may modify or
terminate the waivers at any time; for example, the Fund may limit the
application of multiple waivers and establish other conditions for employee
benefit plans.
Class S Shares. Class S shares are currently available to certain
employee benefit plans such as qualified retirement plans which meet criteria
relating to number of participants, service arrangements, or similar factors;
insurance companies; investment
35
<PAGE>
companies; advisory accounts of the Investment Manager; endowment funds of
nonprofit organizations with substantial minimum assets (currently a minimum of
$10 million); and other similar institutional investors. Class S shares may be
acquired through programs or products sponsored by Metropolitan, its affiliates,
or both for which Class S shares have been designated. In addition, Class S
shares are available through programs under which, for example, investors pay an
asset-based fee and/or a transaction fee to intermediaries. Class S share
availability is determined by the Distributor and intermediaries based on the
overall direct and indirect costs of a particular program, expected assets,
account sizes and similar considerations.
Reorganizations. In the event of mergers or reorganizations with other
public or private collective investment entities, including investment companies
as defined in the 1940 Act, the Fund may issue its shares at net asset value (or
more) to such entities or to their security holders.
Redemptions. The Fund reserves the right to pay redemptions in kind
with portfolio securities in lieu of cash. In accordance with its election
pursuant to Rule 18f-1 under the 1940 Act, the Fund may limit the amount of
redemption proceeds paid in cash. Although it has no present intention to do so,
the Fund may, under unusual circumstances, limit redemptions in cash with
respect to each shareholder during any ninety-day period to the lesser of (i)
$250,000 or (ii) 1% of the net asset value of the Fund at the beginning of such
period. In connection with any redemptions paid in kind with portfolio
securities, brokerage and other costs may be incurred by the redeeming
shareholder in the sale of the securities received.
Systematic Withdrawal Plan. A shareholder who owns noncertificated
Class A or Class S shares with a value of $5,000 or more, or Class B or Class C
shares with a value of $10,000 or more, may elect, by participating in the
Fund's Systematic Withdrawal Plan, to have periodic checks issued for specified
amounts. These amounts may not be less than certain minimums, depending on the
class of shares held. The Plan provides that all income dividends and capital
gains distributions of the Fund shall be credited to participating shareholders
in additional shares of the Fund. Thus, the withdrawal amounts paid can only be
realized by redeeming shares of the Fund under the Plan. To the extent such
amounts paid exceed dividends and distributions from the Fund, a shareholder's
investment will decrease and may eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales
charges, no such charges will be imposed on withdrawals of up to 8% annually of
either (a) the value, at the time the Systematic Withdrawal Plan is initiated,
of the shares then in the account or (b) the value, at the time of a withdrawal,
of the same number of shares as in the account when the Systematic Withdrawal
Plan was initiated, whichever is higher.
Expenses of the Systematic Withdrawal Plan are borne by the Fund. A
participating shareholder may withdraw from the Systematic Withdrawal Plan, and
the Fund may terminate the Systematic Withdrawal Plan at any time on written
notice.
36
<PAGE>
Purchase of additional shares while a shareholder is receiving payments under a
Systematic Withdrawal Plan is ordinarily disadvantageous because of duplicative
sales charges. For this reason, a shareholder may not participate in the
Investamatic Program (see "Your Investment--Investor Services--Investamatic
Program" in the Fund's Prospectus) and the Systematic Withdrawal Plan at the
same time.
Request to Dealer to Repurchase. For the convenience of shareholders,
the Fund has authorized the Distributor as its agent to accept orders from
dealers by wire or telephone for the repurchase of shares by the Distributor
from the dealer. The Fund may revoke or suspend this authorization at any time.
The repurchase price is the net asset value for the applicable shares next
determined following the time at which the shares are offered for repurchase by
the dealer to the Distributor. The dealer is responsible for promptly
transmitting a shareholder's order to the Distributor.
Signature Guarantees. Signature guarantees are required for, among
other things: (1) written requests for redemptions for more than $100,000; (2)
written requests for redemptions for any amount if the proceeds are transmitted
to other than the current address of record (unchanged in the past 30 days); (3)
written requests for redemptions for any amount submitted by corporations and
certain fiduciaries and other intermediaries; and (4) requests to transfer the
registration of shares to another owner. Signatures must be guaranteed by a
bank, a member firm of a national stock exchange, or other eligible guarantor
institution. The Transfer Agent will not accept guarantees (or notarizations)
from notaries public. The above requirements may be waived in certain instances.
Dishonored Checks. If a purchaser's check is not honored for its full
amount, the purchaser could be subject to additional charges to cover collection
costs and any investment loss, and the purchase may be canceled.
Processing Charges. Purchases and redemptions processed through
securities dealers may be subject to processing charges imposed by the
securities dealer in addition to sales charges that may be imposed by the Fund
or the Distributor.
SHAREHOLDER ACCOUNTS
General information on shareholder accounts is included in the Fund's
Prospectus under "Your Investment." The following supplements that information.
Maintenance Fees and Involuntary Redemption. Because of the relatively
high cost of maintaining small shareholder accounts, the Fund reserves the right
to redeem at its option any shareholder account which remains below $1,500 for a
period of 60 days after notice is mailed to the applicable shareholder, or to
impose a maintenance fee on such account after 60-days' notice. Such
involuntarily redemptions will be subject to
37
<PAGE>
applicable sales charges, if any. The Fund may increase such minimum account
value above such amount in the future after notice to affected shareholders.
Involuntarily redeemed shares will be priced at the net asset value on the date
fixed for redemption by the Fund, and the proceeds of the redemption will be
mailed to the affected shareholder at the address of record. Currently, the
maintenance fee is $18 annually, which is paid to the Transfer Agent. The fee
does not apply to certain retirement accounts or if the shareholder has more
than an aggregate $50,000 invested in the Fund and other Eligible Funds
combined. Imposition of a maintenance fee on a small account could, over time,
exhaust the assets of such account.
To cover the cost of additional compliance administration, a $20 fee
will be charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Fund may not suspend the right of redemption or postpone the date
of payment of redemption proceeds for more than seven days, except that (a) it
may elect to suspend the redemption of shares or postpone the date of payment of
redemption proceeds: (1) during any period that the NYSE is closed (other than
customary weekend and holiday closings) or trading on the NYSE is restricted;
(2) during any period in which an emergency exists as a result of which disposal
of portfolio securities is not reasonably practicable or it is not reasonably
practicable to fairly determine the Fund's net asset values; or (3) during such
other periods as the Securities and Exchange Commission (the "SEC") may by order
permit for the protection of investors; and (b) the payment of redemption
proceeds may be postponed as otherwise provided under "Purchase and Redemption
of Shares" in this Statement of Additional Information.
The Open Account System. Under the Open Account System full and
fractional shares of the Fund owned by shareholders are credited to their
accounts by the Transfer Agent, State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110. Certificates representing Class B
or Class C shares will not be issued, while certificates representing Class A or
Class S shares will only be issued if specifically requested in writing and, in
any case, will only be issued for full shares, with any fractional shares to be
carried on the shareholder's account. Shareholders will receive periodic
statements of transactions in their accounts.
The Fund's Open Account System provides the following options:
1. Additional purchases of shares of the Fund may be made through
dealers, by wire or by mailing a check payable to "State
Street Research Funds" under the terms set forth above under
"Purchase and Redemption of Shares" in this Statement of
Additional Information.
2. The following methods of receiving dividends from investment
income and distributions from capital gains generally are
available:
38
<PAGE>
(a) All income dividends and capital gains distributions
reinvested in additional shares of the Fund.
(b) All income dividends and capital gains distributions
in cash.
(c) All income dividends and capital gains distributions
invested in any one available Eligible Fund
designated by the shareholder as described below.
See "--Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, that account will be automatically coded for reinvestment of all
dividends and distributions in additional shares of the same class of the Fund.
Selections may be changed at any time by telephone or written notice to the
Service Center. Dividends and distributions are reinvested at net asset value
without a sales charge.
Exchange Privileges. Shareholders of the Fund may exchange their shares
for available shares with corresponding characteristics of any of the other
Eligible Funds at any time on the basis of the relative net asset values of the
respective shares to be exchanged, subject to compliance with applicable
securities laws. Shareholders of any other Eligible Fund may similarly exchange
their shares for Fund shares with corresponding characteristics. Prior to making
an exchange, shareholders should obtain the Prospectus of the Eligible Fund into
which they are exchanging. Under the Direct Program, subject to certain
conditions, shareholders may make arrangements for regular exchanges from the
Fund into other Eligible Funds. To effect an exchange, Class A, Class B and
Class C shares may be redeemed without the payment of any contingent deferred
sales charge that might otherwise be due upon an ordinary redemption of such
shares. The State Street Research Money Market Fund issues Class E shares which
are sold without any sales charge. Exchanges of State Street Research Money
Market Fund Class E shares into Class A shares of the Fund or any other Eligible
Fund are subject to the initial sales charge or contingent deferred sales charge
applicable to an initial investment in such Class A shares, unless a prior Class
A sales charge has been paid directly or indirectly with respect to the shares
redeemed. For purposes of computing the contingent deferred sales charge that
may be payable upon disposition of any acquired Class A, Class B and Class C
shares, the holding period of the redeemed shares is "tacked" to the holding
period of any acquired shares. No exchange transaction fee is currently imposed
on any exchange.
Shares of the Fund may also be acquired or redeemed in exchange for
shares of the Summit Cash Reserves Fund ("Summit Cash Reserves") by customers of
Merrill Lynch, Pierce, Fenner & Smith Incorporated (subject to completion of
steps necessary to implement the program). The Fund and Summit Cash Reserves are
related mutual funds for purposes of investment and investor services. Upon the
acquisition of shares of Summit Cash Reserves by exchange for redeemed shares of
the Fund, (a) no sales charge
39
<PAGE>
is imposed by Summit Cash Reserves, (b) no contingent deferred sales charge is
imposed by the Fund on the Fund shares redeemed, and (c) any applicable holding
period of the Fund shares redeemed is "tolled," that is, the holding period
clock stops running pending further transactions. Upon the acquisition of shares
of the Fund by exchange for redeemed shares of Summit Cash Reserves, (a) the
acquisition of Class A shares shall be subject to the initial sales charges or
contingent deferred sales charges applicable to an initial investment in such
Class A shares, unless a prior Class A sales charge has been paid indirectly,
and (b) the acquisition of Class B or Class C shares of the Fund shall restart
any holding period previously tolled, or shall be subject to the contingent
deferred sales charge applicable to an initial investment in such shares.
The exchange privilege may be terminated or suspended or its terms
changed at any time, subject, if required under applicable regulations, to 60
days' prior notice. New accounts established for investments upon exchange from
an existing account in another fund will have the same telephone privileges with
respect to the Fund (see "Your Investment--Account Policies--Telephone Requests"
in the Fund's Prospectus and "--Telephone Privileges," below) as the existing
account unless the Service Center is instructed otherwise. Related
administrative policies and procedures may also be adopted with regard to a
series of exchanges, street name accounts, sponsored arrangements and other
matters.
The exchange privilege is not designed for use in connection with
short-term trading or market timing strategies. To protect the interests of
shareholders, the Fund reserves the right to temporarily or permanently
terminate the exchange privilege for any person who makes more than six
exchanges out of or into the Fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer identification
number, may be aggregated for purposes of the six exchange limit.
Notwithstanding the six exchange limit, the Fund reserves the right to refuse
exchanges by any person or group if, in the Investment Manager's judgment, the
Fund would be unable to invest effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely affected.
Exchanges may be restricted or refused if the Fund receives or anticipates
simultaneous orders affecting significant portions of the Fund's assets. In
particular, a pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to the Fund. The Fund may impose these restrictions
at any time. The exchange limit may be modified for accounts in certain
institutional retirement plans because of plan exchange limits, Department of
Labor regulations or administrative and other considerations. Subject to the
foregoing, if an exchange request in good order is received by the Service
Center and delivered by the Service Center to the Transfer Agent by 12 noon
Boston time on any business day, the exchange usually will occur that day. For
further information regarding the exchange privilege, shareholders should
contact the Service Center.
Reinvestment Privilege. A shareholder of the Fund who has redeemed
shares or had shares repurchased at his or her request may reinvest all or any
portion of the
40
<PAGE>
proceeds (plus that amount necessary to acquire a fractional share to round off
his or her reinvestment to full shares) in shares, of the same class as the
shares redeemed, of the Fund or any other Eligible Fund at net asset value and
without subjecting the reinvestment to an initial sales charge, provided such
reinvestment is made within 120 calendar days after a redemption or repurchase.
Upon such reinvestment, the shareholder will be credited with any contingent
deferred sales charge previously charged with respect to the amount reinvested.
The redemption of shares is, for federal income tax purposes, a sale on which
the shareholder may realize a gain or loss. If a redemption at a loss is
followed by a reinvestment within 30 days, the transaction may be a "wash sale"
resulting in a denial of the loss for federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject
to any applicable minimum account standards imposed by the fund into which the
reinvestment is made. Shares are sold to a reinvesting shareholder at the net
asset value thereof next determined following timely receipt by the Service
Center of such shareholder's written purchase request and delivery of the
request by the Service Center to the Transfer Agent. A shareholder may exercise
this reinvestment privilege only once per 12-month period with respect to his or
her shares of the Fund.
Dividend Allocation Plan. The Dividend Allocation Plan allows
shareholders to elect to have all their dividends and any other distributions
from the Fund or any Eligible Fund automatically invested at net asset value in
one other such Eligible Fund designated by the shareholder, provided the account
into which the dividends and distributions are directed is initially funded with
the requisite minimum amount.
Telephone Privileges. A shareholder with telephone privileges that are
offered with his or her Account (see "Your Investment--Account
Policies--Telephone Requests") is deemed to authorize the Service Center and the
Transfer Agent to: (1) act upon the telephone instructions of any person
purporting to be the shareholder or the shareholder's financial professional to
redeem or exchange, shares from any account; and (2) honor any written
instructions for a change of address regardless of whether such request is
accompanied by a signature guarantee. All telephone calls will be recorded.
Neither the Fund, the other Eligible Funds, the Transfer Agent, the Investment
Manager nor the Distributor will be liable for any loss, expense or cost arising
out of any request, including any fraudulent or unauthorized requests.
Shareholders assume the risk to the full extent of their accounts that telephone
requests may be unauthorized. Reasonable procedures will be followed to confirm
that instructions communicated by telephone are genuine. The shareholder will
not be liable for any losses arising from unauthorized or fraudulent
instructions if such procedures are not followed.
Alternative Means of Contacting the Fund. It is unlikely, during
periods of extraordinary market conditions, that a shareholder may have
difficulty in reaching the Service Center. In that event, however, the
shareholder should contact the Service Center
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<PAGE>
at 1-800-562-0032, 1-617-357-7800 or otherwise at its main office at One
Financial Center, Boston, Massachusetts 02111-2690.
NET ASSET VALUE
The net asset value of the shares of the Fund is determined once daily
as of the close of regular trading on the NYSE, ordinarily 4 P.M. New York City
time, Monday through Friday, on each day during which the NYSE is open for
unrestricted trading. The NYSE is currently closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of the Fund is computed by dividing the
sum of the value of the securities held by the Fund plus any cash or other
assets minus all liabilities by the total number of outstanding shares of the
Fund at such time. Any expenses, except for extraordinary or nonrecurring
expenses, borne by the Fund, including the investment management fee payable to
the Investment Manager, are accrued daily.
In determining the values of portfolio assets as provided below, the
Trustees may utilize one or more pricing services in lieu of market quotations
for certain securities which are not readily available on a daily basis. Such
services utilize information with respect to market transactions, quotations
from dealers and various relationships among securities in determining value and
may provide prices determined as of times prior to the close of the NYSE.
In general, securities are valued as follows. Securities which are
listed or traded on the New York or American Stock Exchange are valued at the
price of the last quoted sale on the respective exchange for that day.
Securities which are listed or traded on a national securities exchange or
exchanges, but not on the New York or American Stock Exchange, are valued at the
price of the last quoted sale on the exchange for that day prior to the close of
the NYSE. Securities not listed on any national securities exchange which are
traded "over the counter" and for which quotations are available on the National
Association of Securities Dealers, Inc.'s (the "NASD") NASDAQ System, or other
system, are valued at the closing price supplied through such system for that
day at the close of the NYSE. Other securities are, in general, valued at the
mean of the bid and asked quotations last quoted prior to the close of the NYSE
if there are market quotations readily available, or in the absence of such
market quotations, then at the fair value thereof as determined by or under
authority of the Trustees of the Trust with the use of such pricing services as
may be deemed appropriate or methodologies approved by the Trustees.
The Trustees have authorized the use of the amortized cost method to
value short-term debt instruments issued with a maturity of one year or less and
having a remaining maturity of 60 days or less when the value obtained is fair
value, provided that during any period in which more than 25% of the Fund's
total assets is invested in short-term
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<PAGE>
debt securities the current market value of such securities will be used in
calculating net asset value per share in lieu of the amortized cost method.
Under the amortized cost method of valuation, the security is initially valued
at cost on the date of purchase (or in the case of short-term debt instruments
purchased with more than 60 days remaining to maturity, the market value on the
61st day prior to maturity), and thereafter a constant amortization to maturity
of any discount or premium is assumed regardless of the impact of fluctuating
interest rates on the market value of the security.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Fund's portfolio turnover rate is determined by dividing the lesser
of securities purchases or sales for a year by the monthly average value of
securities held by the Fund (excluding, for purposes of this determination,
securities the maturities of which as of the time of their acquisition were one
year or less). The portfolio turnover rates for the fiscal years ended June 30,
1996 and 1997 were 92.33% and 51.67%, respectively.
The Investment Manager believes the portfolio turnover rate for the
fiscal year ended June 30, 1997 was significantly lower than that for the
previous fiscal year because in the prior year the Fund had significant
portfolio holdings which were subject to merger and acquisition activity which
resulted in changes in the holdings in the portfolio.
Brokerage Allocation
The Investment Manager's policy is to seek for its clients, including
the Fund, what in the Investment Manager's judgment will be the best overall
execution of purchase or sale orders and the most favorable net prices in
securities transactions consistent with its judgment as to the business
qualifications of the various broker or dealer firms with whom the Investment
Manager may do business, and the Investment Manager may not necessarily choose
the broker offering the lowest available commission rate. Decisions with respect
to the market where the transaction is to be completed, to the form of
transaction (whether principal or agency), and to the allocation of orders among
brokers or dealers are made in accordance with this policy. In selecting brokers
or dealers to effect portfolio transactions, consideration is given to their
proven integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to particular
markets or securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their willingness
to commit capital, and their clearance and settlement capability. The Investment
Manager makes every effort to keep informed of commission rate structures and
prevalent bid/ask spread characteristics of the markets and securities in which
transactions for the Fund occur. Against this background, the Investment Manager
evaluates the reasonableness of a commission or a net price with respect to a
particular transaction by considering such factors as difficulty of execution or
security positioning by the executing
43
<PAGE>
firm. The Investment Manager may or may not solicit competitive bids based on
its judgment of the expected benefit or harm to the execution process for that
transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may also be
given by the Investment Manager to services other than execution services which
certain of such firms have provided in the past or may provide in the future.
Negotiated commission rates and prices, however, are based upon the Investment
Manager's judgment of the rate which reflects the execution requirements of the
transaction without regard to whether the broker provides services in addition
to execution. Among such other services are the supplying of supplemental
investment research; general economic, political and business information;
analytical and statistical data; relevant market information, quotation
equipment and services; reports and information about specific companies,
industries and securities; purchase and sale recommendations for stocks and
bonds; portfolio strategy services; historical statistical information; market
data services providing information on specific issues and prices; financial
publications; proxy voting data and analysis services; technical analysis of
various aspects of the securities markets, including technical charts; computer
hardware used for brokerage and research purposes; computer software and
databases (including those contained in certain trading systems used for
portfolio analysis and modeling and also software providing investment personnel
with efficient access to current and historical data from a variety of internal
and external sources); and portfolio evaluation services and relative
performance of accounts.
In the case of the Fund and other registered investment companies
advised by the Investment Manager or its affiliates, the above services may
include data relating to performance, expenses and fees of those investment
companies and other investment companies; this information is used by the
Trustees or Directors of the investment companies to fulfill their
responsibility to oversee the quality of the Investment Manager's advisory
contracts between the investment companies and the Investment Manager. The
Investment Manager considers these investment company services only in
connection with the execution of transactions on behalf of its investment
company clients and not its other clients. Certain of the nonexecution services
provided by broker-dealers may in turn be obtained by the broker-dealers from
third parties who are paid for such services by the broker-dealers.
The Investment Manager regularly reviews and evaluates the services
furnished by broker-dealers. Among other measures, the Investment Manager's
investment management personnel conducts internal surveys and uses other methods
to evaluate the quality of research and other services provided by broker-dealer
firms, and the results of those efforts are made available to the equity trading
department, which sometimes uses this information as a consideration to the
extent described above in the selection of brokers to execute portfolio
transactions.
Some services furnished by broker-dealers may be used for research and
investment decision-making purposes, and also for marketing or administrative
purposes. Under these circumstances, the Investment Manager allocates the cost
of such services to determine the
44
<PAGE>
proportion that is allocable to research or investment decision-making and the
proportion that is allocable to other purposes. The Investment Manager pays
directly from its own funds for that portion that is allocable to uses other
than research or investment decision-making. Some research and execution
services may benefit the Investment Manager's clients as a whole, while others
may benefit a specific segment of clients. Not all such services will
necessarily be used exclusively in connection with the accounts which pay the
commissions to the broker-dealer producing the services.
The Investment Manager has no fixed agreements or understandings with
any broker-dealer as to the amount of brokerage business which the firm may
expect to receive for services supplied to the Investment Manager or otherwise.
There may be, however, understandings with certain firms that in order for such
firms to be able to continuously supply certain services, they need to receive
an allocation of a specified amount of brokerage business. These understandings
are honored to the extent possible in accordance with the policies set forth
above.
It is not the Investment Manager's policy to intentionally pay a firm a
brokerage commission higher than that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services) provided. However, the Investment Manager is aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, the Investment Manager relies on the provisions of
Section 28(e) of the Securities Exchange Act of 1934. Brokerage commissions paid
by the Fund in secondary trading during the last three fiscal years ended June
30 were as follows: 1995, $149,770; 1996, $207,690; and 1997, $539,481. The
Investment Manager believes the amount of brokerage commissions paid by the Fund
during the fiscal year ended June 30, 1997, was significantly higher than during
the previous year because of increased cash inflows for the Fund, from the sale
of Fund shares, which resulted in increased brokerage transactions and
commission in the course of investing the cash in securities for the portfolio.
During and at the end of its most recent fiscal year, the Fund did not hold in
its portfolio securities of any entity that might be deemed to be a regular
broker-dealer of the Fund as defined under the 1940 Act.
In the case of the purchase of fixed income securities in underwriting
transactions, the Investment Manager follows any instructions received from its
clients as to the allocation of new issue discounts, selling commissions and
designations to brokers or dealers which provide the client with research,
performance evaluation, master trustee and other services. In the absence of
instructions from the client, the Investment Manager may make such allocations
to broker-dealers which have provided the Investment Manager with research and
brokerage services.
In some instances, certain clients of the Investment Manager request
that it place all or part of the orders for their account with certain brokers
or dealers, which in some cases provide services to those clients. The
Investment Manager generally agrees to honor those requests to the extent
practicable. Clients may condition their requests by requiring
45
<PAGE>
the Investment Manager only to effect transactions with the specified
broker-dealers if the broker-dealers are competitive as to price and execution.
In other cases, the Investment Manager may be unable to negotiate commissions or
obtain volume discounts or best execution. In addition, a disparity may exist
among the commissions charged to clients who request the Investment Manager to
use particular brokers or dealers, and also between those clients and those who
do not make such requests. A client who requests the use of a particular
broker-dealer should understand that it may lose the possible advantage which
non-requesting clients derive from understandings with certain firms that in
order for such firms to be able to continuously supply certain services, they
need to receive an allocation of a specified amount of brokerage business. These
understandings are honored to the extent possible in accordance with the
policies set forth above.
When more than one client of the Investment Manager is seeking to buy
or sell the same security, the sale or purchase is carried out in a manner which
is considered fair and equitable to all accounts. In allocating investments
among various clients (including in what sequence orders for trades are placed),
the Investment Manager will use its best business judgment and will take into
account such factors as the investment objectives of the clients, the amount of
investment funds available to each, the size of the order, the amount already
committed for each client to a specific investment and the relative risks of the
investments, all in order to provide on balance a fair and equitable result to
each client over time. Although sharing in large transactions may sometimes
affect price or volume of shares acquired or sold, overall it is believed there
may be an advantage in execution. The Investment Manager may follow the practice
of grouping orders of various clients for execution to get the benefit of lower
prices or commission rates. In certain cases where the aggregate order may be
executed in a series of transactions at various prices, the transactions are
allocated as to amount and price in a manner considered equitable to each so
that each receives, to the extent practicable, the average price of such
transactions. Exceptions may be made based on such factors as the size of the
account and the size of the trade. For example, the Investment Manager may not
aggregate trades where it believes that it is in the best interests of clients
not to do so, including situations where aggregation might result in a large
number of small transactions with consequent increased custodial and other
transactional costs which may disproportionately impact smaller accounts. Such
disaggregation, depending on the circumstances, may or may not result in such
accounts receiving more or less favorable execution relative to other clients.
CERTAIN TAX MATTERS
Taxation Of The Fund--In General
The Fund intends to qualify and elects to be treated each taxable year
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), although it cannot give complete
assurance that it will qualify to do so. Accordingly, the Fund must, among other
things, (a) derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to securities loans, gains
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<PAGE>
from the sale or other disposition of stock, securities or foreign currencies,
or other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% test"); and (b) satisfy certain
diversification requirements on a quarterly basis.
If in any year the Fund derives more than 10% of its gross income (as
defined in the Code, which disregards losses for that purpose) from investments
made directly in commodities, including precious metal investments, or
commodity-related options, futures or indices, the Fund in such year may fail to
qualify as a regulated investment company under the Code. The Investment Manager
intends to manage the Fund's portfolio so as to minimize the risk of such
disqualification.
If the Fund should fail to qualify as a regulated investment company in
any year, it would lose the beneficial tax treatment accorded regulated
investment companies under Subchapter M of the Code and all of its taxable
income would be subject to tax at regular corporate rates without any deduction
for distributions to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings and profits. Also, the shareholders, if they received a
distribution in excess of current or accumulated earnings and profits, would
receive a return of capital that would reduce the basis of their shares of the
Fund to the extent thereof. Any distribution in excess of a shareholder's basis
in the shareholder's shares would be taxable as gain realized from the sale of
such shares.
The Fund will be liable for a nondeductible 4% excise tax on amounts
not distributed on a timely basis in accordance with a calendar year
distribution requirement. To avoid the tax, during each calendar year, the Fund
must distribute an amount equal to at least 98% of the sum of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, and its capital gain net income for the 12-month period ending on October
31, in addition to any undistributed portion of the respective balances from the
prior year. The Fund intends to make sufficient distributions to avoid this 4%
excise tax.
Taxation Of The Fund's Investments
Original Issue Discount; Market Discount. For federal income tax
purposes, debt securities purchased by the Fund may be treated as having
original issue discount. Original issue discount represents interest for federal
income tax purposes and can generally be defined as the excess of the stated
redemption price at maturity of a debt obligation over the issue price. Original
issue discount is treated for federal income tax purposes as income earned by
the Fund, whether or not any income is actually received, and therefore is
subject to the distribution requirements of the Code. Generally, the amount of
original issue discount is determined on the basis of a constant yield to
maturity which takes into account the compounding of accrued interest. Under
section 1286 of the Code, an investment in a stripped bond or stripped coupon
may result in original issue discount.
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<PAGE>
Debt securities may be purchased by the Fund at a discount that exceeds
the original issue discount, if any, at the time the Fund purchases the
securities. This additional discount represents market discount for income tax
purposes. In the case of any debt security having a fixed maturity date of more
than one year from the date of issue and having market discount, the gain
realized on disposition will be treated as interest to the extent it does not
exceed the accrued market discount on the security (unless the Fund elects to
include such accrued market discount in income in the tax year to which it is
attributable). For debt securities acquired before May 1, 1993, this rule
applies only if the debt security was issued after July 18, 1984. Generally,
market discount is accrued on a daily basis. The Fund may be required to
capitalize, rather than deduct currently, part or all of any direct interest
expense incurred to purchase or carry any debt security having market discount,
unless the Fund makes the election to include market discount in income
currently. Because the Fund must include original issue discount in income, it
will be more difficult for the Fund to make the distributions required for the
Fund to maintain its status as a regulated investment company under Subchapter M
of the Code or to avoid the 4% excise tax described above.
Options and Futures Transactions. Certain of the Fund's investments may
be subject to provisions of the Code that (i) require inclusion of unrealized
gains or losses in the Fund's income for purposes of the 90% test, the excise
tax and the distribution requirements applicable to regulated investment
companies; (ii) defer recognition of realized losses; and (iii) characterize
both realized and unrealized gain or loss as short-term or long-term gain or
loss. Such provisions generally apply to, among other investments, options on
debt securities, indices on securities and futures contracts. The Fund will
monitor its transactions and may make certain tax elections available to it in
order to mitigate the impact of these rules and prevent disqualification of the
Fund as a regulated investment company.
Gains or losses attributable to foreign currency contracts or
fluctuations in exchange rates that occur between the time the Fund accrues
income or expenses denominated in a foreign currency and the time the Fund
actually collects such income or pays such expenses are treated as ordinary
income or loss. The portion of any gain or loss on the disposition of a debt
security denominated in a foreign currency that is attributable to fluctuations
in the value of the foreign currency during the holding period of the debt
security will likewise be treated as ordinary income or loss. Such ordinary
income or loss will increase or decrease the amount of the Fund's net investment
income.
If the Fund invests in the stock of certain "passive foreign investment
companies" ("PFICs"), income of such companies may become taxable to the Fund
prior to its distribution to the Fund or, alternatively, ordinary income taxes
and interest charges may be imposed on the Fund on "excess distributions"
received by the Fund or on gain from the disposition of such investments by the
Fund. The Fund does not intend to invest in PFICs. Because of the broad scope of
the PFIC rules, however, there can be no assurance that the Fund can avoid doing
so.
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<PAGE>
Taxation Of The Fund's Shareholders
The Fund may be subject to foreign taxes, including foreign income
taxes. If so, the Fund intends to meet the requirements of the Code for passing
through to its shareholders the tax benefit of foreign income taxes paid,
although there is no assurance that it will be able to do so. Under this
provision, if more than half of the value of the total assets of the Fund at the
close of its taxable year consists of stock or securities of foreign
corporations, the Fund will be eligible and intends to elect to pass through to
its shareholders the amount of foreign taxes it paid if such amounts are
material. Pursuant to this election, a United States shareholder will, in
general, be required to (i) include in gross income, in addition to taxable
distributions actually received, his or her pro rata share of the foreign taxes
paid by the Fund, (ii) treat that share of taxes as having been paid directly by
him or her, and (iii) either deduct such share of taxes or treat such share of
taxes as a credit against United States income tax liability. A tax-exempt
shareholder will ordinarily not benefit from this election.
Generally, a credit for foreign taxes paid by the Fund may not exceed a
shareholder's United States income tax attributable to the shareholder's foreign
source income. This limitation applies separately to different categories of
income, one of which is foreign-source passive income, which is likely to
include all of the foreign-source income of the Fund. As a result of these
limitations, some shareholders may not be able to utilize fully any foreign tax
credits generated by an investment in the Fund. The Fund will provide its
shareholders with information about the source of its income and the foreign
taxes it has paid for use in preparing the shareholder's United States income
tax return.
Dividends from domestic corporations are not expected to comprise a
substantial part of the income of the Fund. If such dividends are earned by the
Fund, then a portion of the dividends paid by the Fund may qualify for the 70%
deduction for dividends received which is available to corporate shareholders of
the Fund. Shareholders will be informed of any portion of the dividends paid by
the Fund which qualifies for this deduction. The dividends-received deduction is
reduced to the extent the dividends received are treated as debt-financed, under
the Code, and is eliminated if the stock is held for less than 46 days.
Any dividend declared in October, November or December and made payable
to shareholders of record in any such month is treated as received by such
shareholder on December 31, provided that the Fund pays the dividend during
January of the following calendar year.
Distributions by the Fund result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless may be taxable
to the shareholder as ordinary income or long-term capital gain, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
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<PAGE>
buying shares just prior to a taxable distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a taxable distribution will then
receive a return of investment upon distribution which will nevertheless be
taxable to them.
The foregoing discussion of United States federal income tax law
relates solely to the application of that law to United States persons, that is,
United States citizens and residents and United States corporations,
partnerships, trusts and estates. Each shareholder who is not a United States
person should consider the United States and foreign tax consequences of
ownership of shares of the Fund, including the possibility that such a
shareholder may be subject to United States withholding at a rate of 30% (or at
a lower rate under an applicable treaty) on amounts constituting ordinary income
received by him or her, where such amounts are treated as income from United
States sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this Statement of Additional Information
in light of their particular tax situations.
DISTRIBUTION OF SHARES OF THE FUND
The Trust has entered into a Distribution Agreement with State Street
Research Investment Services, Inc., as Distributor, whereby the Distributor acts
as agent to sell and distribute shares of the Fund. Shares of the Fund are sold
through dealers who have entered into sales agreements with the Distributor. The
Distributor distributes shares of the Fund on a continuous basis at an offering
price which is based on the net asset value per share of the Fund plus (subject
to certain exceptions) a sales charge which, at the election of the investor,
may be imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (Class B and Class C shares). The Distributor may reallow all or
portions of such sales charges as concessions to dealers. For the fiscal years
ended June 30, 1995, 1996 and 1997, total sales charges on Class A shares paid
to the Distributor amounted to $93,586, $169,918 and $1,357,717, respectively.
For the same periods, the Distributor retained $10,670, $20,357 and $169,805,
respectively, after reallowance of concessions to dealers. The Distributor may
also pay its affiliate MetLife Securities, Inc. additional sales compensation of
up to 0.25% of certain sales.
The differences in the price at which the Fund's Class A shares are
offered due to scheduled variations in sales charges, as described in the Fund's
Prospectus, result from cost savings inherent in economies of scale. Management
believes that the cost of sales efforts of the Distributor and broker-dealers
tends to decrease as the size of purchases increases, or does not involve any
incremental sales expenses as in the case of, for example, exchanges,
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reinvestments or dividend investments at net asset value. Similarly, no
significant sales effort is necessary for sales of shares at net asset value to
certain Directors, Trustees, officers, employees, their relatives and other
persons directly or indirectly related to the Fund or associated entities. Where
shares of the Fund are offered at a reduced sales charge or without a sales
charge pursuant to sponsored arrangements, managed fee-based programs and
so-called "mutual fund supermarkets," among other programs, the amount of the
sales charge reduction will similarly reflect the anticipated reduction in sales
expenses associated with such arrangements. The reductions in sales expenses,
and therefore the reduction in sales charges, will vary depending on factors
such as the size and other characteristics of the organization or program, and
the nature of its membership or the participants. The Fund reserves the right to
make variations in, or eliminate, sales charges at any time or to revise the
terms of or to suspend or discontinue sales pursuant to sponsored arrangements
or similar programs at any time.
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
making such sale a commission based on the aggregate of such sales. Such
commission also is payable to authorized securities dealers upon sales of Class
A shares made pursuant to a Letter of Intent to purchase shares having a net
asset value of $1,000,000 or more. Shares sold with such commissions payable are
subject to a one-year contingent deferred sales charge of 1.00% on any portion
of such shares redeemed within one year following their sale. After a particular
purchase of Class A shares is made under the Letter of Intent, the commission
will be paid only in respect of that particular purchase of shares. If the
Letter of Intent is not completed, the commission paid will be deducted from any
discounts or commissions otherwise payable to such dealer in respect of shares
actually sold. If an investor is eligible to purchase shares at net asset value
on account of the Right of Accumulation, the commission will be paid only in
respect of the incremental purchase at net asset value.
For the periods shown below, the Distributor received contingent
deferred sales charges upon redemption of Class A, Class B and Class C shares of
the Fund and paid initial commissions to securities dealers for sales of such
Class A, Class B and Class C shares as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
June 30, 1997 June 30, 1996 June 30, 1995
------------------------------------------------------------------------------------------------------
Contingent Commissions Contingent Commissions Contingent Commissions
Deferred Paid to Deferred Paid to Deferred Paid to
Sales Charges Dealers Sales Charges Dealers Sales Charges Dealers
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Class A $0 $1,187,912 $0 $149,561 $21,450 $82,916
Class B $109,834 $2,384,944 $45,288 $207,595 $36,122 $29,957
Class C $33,827 $255,818 $100 $17,788 $1,185 $0
</TABLE>
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The Fund has adopted a "Plan of Distribution Pursuant to Rule 12b-1"
(the "Distribution Plan") under which the Fund may engage, directly or
indirectly, in financing any activities primarily intended to result in the sale
of Class A, Class B and Class C shares, including, but not limited to, (1) the
payment of commissions and/or reimbursement to underwriters, securities dealers
and others engaged in the sale of shares, including payments to the Distributor
to be used to pay commissions and/or reimbursement to securities dealers (which
securities dealers may be affiliates of the Distributor) engaged in the
distribution and marketing of shares and furnishing ongoing assistance to
investors, (2) reimbursement of direct out-of-pocket expenditures incurred by
the Distributor in connection with the distribution and marketing of shares and
the servicing of investor accounts including special promotional fees and cash
and noncash incentives based upon sales by securities dealers, expenses relating
to the formulation and implementation of marketing strategies and promotional
activities such as direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising, the preparation, printing and
distribution of Prospectuses of the Fund and reports for recipients other than
existing shareholders of the Fund, and obtaining such information, analyses and
reports with respect to marketing and promotional activities and investor
accounts as the Fund may, from time to time, deem advisable, and (3)
reimbursement of expenses incurred by the Distributor in connection with the
servicing of shareholder accounts including payments to securities dealers and
others in consideration of the provision of personal services to investors
and/or the maintenance or servicing of shareholder accounts and expenses
associated with the provision of personal services by the Distributor directly
to investors. In addition, the Distribution Plan is deemed to authorize the
Distributor and the Investment Manager to make payments out of general profits,
revenues or other sources to underwriters, securities dealers and others in
connection with sales of shares, to the extent, if any, that such payments may
be deemed to be within the scope of Rule 12b-1 under the 1940 Act.
Some or all of the service fees are used to pay or reimburse dealers
(including dealers that are affiliates of the Distributor) or others for
personal services and/or the maintenance of shareholder accounts. A portion of
any initial commission paid to dealers for the sale of shares of the Fund
represents payment for personal services and/or the maintenance or servicing of
shareholder accounts by such dealers. Dealers who have sold Class A shares are
eligible for further reimbursement commencing as of the time of such sale.
Dealers who have sold Class B and Class C shares are eligible for further
reimbursement after the first year during which such shares have been held of
record by such dealer as nominee for its clients (or by such clients directly).
Any service fees received by the Distributor and not allocated to dealers may be
applied by the Distributor in reduction of expenses incurred by it directly for
personal services and the maintenance or servicing of shareholder accounts.
The distribution fees are used primarily to offset initial and ongoing
commissions paid to dealers for selling such shares. Any distribution fees
received by the Distributor and not allocated to dealers may be applied by the
Distributor in connection with sales or marketing efforts, including special
promotional fees and cash and noncash incentives based upon sales by dealers.
52
<PAGE>
The Distributor provides distribution services on behalf of other funds
having distribution plans and receives similar payments from, and incurs similar
expenses on behalf of, such other funds. When expenses of the Distributor cannot
be identified as relating to a specific fund, the Distributor allocates expenses
among the funds in a manner deemed fair and equitable to each fund.
Commissions and other cash and noncash incentives and payments to
dealers, to the extent payable out of the general profits, revenues or other
sources of the Distributor (including the advisory fees paid by the Fund), have
also been authorized pursuant to the Distribution Plan.
The expenditures to be made pursuant to the Distribution Plan may not
exceed (i) with respect to Class A shares, an annual rate of 0.25% of the
average daily value of net assets represented by such Class A shares, and (ii)
with respect to Class B and Class C shares, an annual rate of 0.75% of the
average daily value of the net assets represented by such Class B or Class C
shares (as the case may be) to finance sales or promotion expenses and an annual
rate of 0.25% of the average daily value of the net assets represented by such
Class B or Class C shares (as the case may be) to make payments for personal
services and/or the maintenance or servicing of shareholder accounts. The
distribution and servicing expenses of a particular class will be borne solely
by that class. In addition, a rule of the NASD limits annual expenditures that
the Fund may incur under the Distribution Plan to 1%, of which 0.75% may be used
to pay distribution expenses and 0.25% may be used to pay shareholder service
fees. The NASD rule also limits the aggregate amount that the Fund may pay for
such distribution costs to 6.25% of gross share sales of a class since the
inception of any asset-based sales charge plus interest at the prime rate plus
1% on unpaid amounts thereof (less any contingent deferred sales charges). Such
limitation does not apply to shareholder service fees. Payments to the
Distributor or to dealers funded under the Distribution Plan may be discontinued
at any time.
The Distributor may pay certain dealers and other intermediaries
additional compensation for sales and administrative services. The Distributor
may provide cash and noncash incentives to intermediaries who, for example, sell
significant amounts of shares or develop particular distribution channels. The
Distributor may compensate dealers with clients who maintain their investments
in the Fund over a period of years. The incentives can include merchandise and
trips to, and attendance at, sales seminars at resorts. The Distributor may pay
for administrative services, such as technological and computer systems support
for the maintenance of pension plan participant records, for subaccounting, and
for distribution through mutual fund supermarkets or similar arrangements.
53
<PAGE>
During the fiscal year ended June 30, 1997, the Fund paid the
Distributor fees under the Distribution Plan and the Distributor used all of
such payments for expenses incurred on behalf of the Fund as follows:
<TABLE>
<CAPTION>
Class A Class B Class C*
-------------- --------------- ---------------
<S> <C> <C> <C>
Advertising $ 0 $ 11,853 $ 0
Printing and mailing
of prospectuses to
other than current
shareholders 0 4,783 0
Compensation to dealers 142,417 347,130 170,898
Compensation to sales
personnel 0 37,483 0
Interest 0 0 0
Carrying or other
financing charges 0 0 0
Other expenses: marketing;
general 0 19,787 0
----------- ----------- -----------
Total fees $ 142,417 $ 421,036 $ 170,898
=========== =========== ===========
</TABLE>
- -----------------
* Prior to November 1, 1997, the Fund's current Class C shares were designated
as Class D shares.
The Distributor may have also used additional resources of its own for
further expenses on behalf of the Fund.
No interested Trustee of the Trust has any direct or indirect financial
interest in the operation of the Distribution Plan or any related agreements
thereunder. The Distributor's interest in the Distribution Plan is described
above.
To the extent that the Glass-Steagall Act may be interpreted as
prohibiting banks and other depository institutions from being paid for
performing services under the Distribution Plan, the Fund will make alternative
arrangements for such services for shareholders who acquired shares through such
institutions.
54
<PAGE>
CALCULATION OF PERFORMANCE DATA
From time to time, in advertisements or in communications to
shareholders or prospective investors, the Fund may compare the performance of
its Class A, Class B, Class C or Class S shares to the performance of other
mutual funds with similar investment objectives, to certificates of deposit
and/or to other financial alternatives. The Fund may also compare its
performance to appropriate indices, such as Standard & Poor's 500 Index,
Consumer Price Index and Dow Jones Industrial Average and/or to appropriate
rankings and averages such as those compiled by Lipper Analytical Services,
Inc., Morningstar, Inc., Money Magazine, Business Week, Forbes Magazine, The
Wall Street Journal and Investor's Daily. For example, the performance of the
Fund might be compared to the Lipper Capital Appreciation Funds Index.
The average annual total return ("standard total return") of the Class
A, Class B, Class C and Class S shares of the Fund will be calculated as set
forth below. Total return is computed separately for each class of shares of the
Fund. Performance data for a specified class includes periods prior to the
adoption of class designations on June 1, 1993, when designations were assigned
based on the pricing and Rule 12b-1 fees applicable to shares sold thereafter.
The application of the additional Rule 12b-1 fees, if any, of up to 1% will, for
periods after June 1, 1993, adversely affect Fund performance results. Thus,
performance data or rankings for a given class of shares should be interpreted
carefully by investors who hold or may invest in a different class of shares.
The performance data below reflect Rule 12b-1 fees, where applicable,
sales charges as follows:
<TABLE>
<CAPTION>
Rule 12b-1 Fees Sales Charges
---------------------------------------------------------- --------------------------------------
Current
Class Amount Period
- ----- ------ ------
<S> <C> <C> <C>
A 0.25% 0.50% until March 10, 1995; Maximum 4.5% sales charge reflected
0.25% thereafter
B 1.00% 0.50% until June 1, 1993; 1.00% 1- and 5-year periods reflect a 5% and
June 1, 1993 to present; fee will reduce a 2% contingent deferred sales charge,
performance for periods after June 1, respectively
1993
C 1.00% 0.50% until June 1, 1993; 1.00% 1-year period reflects a 1% contingent
June 1, 1993 to present; fee will reduce deferred sales charge
performance for periods after June 1,
1993
S None 0.50% until June 1, 1993; None
0% thereafter
</TABLE>
- --------------------
* Prior to November 1, 1997, the Fund's current Class C shares were
designated as Class D shares and the Fund's current Class S shares were
designated as Class C shares.
55
<PAGE>
All calculations of performance data in this section reflect the
voluntary measures, if any, by the Fund's affiliates to reduce fees or expenses
relating to the Fund; see "Accrued Expenses and Recurring Charges" later in this
section.
Total Return
The Fund's standard average annual total returns ("standard total
return") of each class of shares were as follows:
<TABLE>
<CAPTION>
Commencement of
Operations Five Years One Year
(March 2, 1990) Ended Ended
to June 30, 1997 June 30, 1997 June 30, 1997
---------------- ------------- -------------
<S> <C> <C> <C>
Class A 8.88% 22.52% 26.98%
Class B 9.17% 22.84% 26.98%
Class C 9.77% 24.01% 33.33%
Class D 9.15% 22.97% 30.90%
</TABLE>
Standard total return is computed separately for each class of shares
by determining the average annual compounded rates of return over the designated
periods that, if applied to the initial amount invested, would produce the
ending redeemable value in accordance with the following formula:
<TABLE>
<S> <C> <C> <C>
P(1+T)(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the designated period
assuming a hypothetical $1,000 payment made at the beginning of
the designated period
</TABLE>
The calculation is based on the further assumptions that the highest
applicable initial or contingent deferred sales charge is deducted, and that all
dividends and distributions by the Fund are reinvested at net asset value on the
reinvestment dates during the periods. All accrued expenses and recurring
charges are also taken into account as described later herein.
Accrued Expenses and Recurring Charges
Accrued expenses include all recurring charges that are charged to all
shareholder accounts in proportion to the length of the base period. The
standard total return results take
56
<PAGE>
sales charges, if applicable, into account, although the results do not take
into account recurring and nonrecurring charges for optional services which only
certain shareholders elect and which involve nominal fees, such as the $7.50 fee
for wire orders.
Accrued expenses do not include the subsidization, if any, by
affiliates of fees or expenses during the subject period. In the absence of such
subsidization, the performance of the Fund would have been lower.
Nonstandardized Total Return
The Fund may provide the above described standard total return results
for Class A, Class B, Class C and Class S shares for periods which end no
earlier than the most recent calendar quarter end and which begin twelve months
before, five years before and at the time of commencement of the Fund's
operations. In addition, the Fund may provide nonstandardized total return
results for differing periods, such as for the most recent six months, and/or
without taking sales charges into account. Such nonstandardized total return is
computed as otherwise described under "Total Return" except the result may or
may not be annualized, and as noted any applicable sales charge, if any, may not
be taken into account and therefore not deducted from the hypothetical initial
payment of $1,000. For example, the Fund's nonstandardized total returns for the
six months ended June 30, 1997 without taking sales charges into account, were
as follows:
<TABLE>
<CAPTION>
<S> <C>
Class A 3.42%
Class B 3.02%
Class C 3.03%
Class S 3.56%
</TABLE>
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trust's custodian. As custodian State Street Bank
and Trust Company is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities and collecting interest and dividends on the Fund's investments.
State Street Bank and Trust Company is not an affiliate of the Investment
Manager or its affiliates.
57
<PAGE>
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as the Trust's independent accountants, providing professional services
including (1) audits of the Fund's annual financial statements, (2) assistance
and consultation in connection with SEC filings and (3) review of the annual
income tax returns filed on behalf of the Fund.
FINANCIAL STATEMENTS
In addition to the reports provided to holders of record on a
semiannual basis, other supplementary financial reports may be made available
from time to time through electronic or other media. Shareholders with
substantial holdings in one or more State Street Research Funds may also receive
reports and other information which reflect or analyze their positions in a
consolidated manner. For more information, call State Street Research Service
Center.
Information in the financial statements pertaining to Class C and
Class D now pertains to Class S and Class C, respectively. The financial
statements for the Fund's fiscal year ended June 30, 1997 reflect the Fund's
class designations prior to November 1, 1997. The financial statements for the
six-month period ended December 31, 1997 reflect the Fund's class designations
as of November 1, 1997.
58
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
June 30, 1997
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- --------------
<S> <C> <C>
EQUITY SECURITIES 96.8%
Basic Industries 16.1%
Chemical 0.4%
Agrium Inc. ........................... 70,000 $ 805,000
-------------
Machinery 0.2%
Hanover Compressor Co.* ............... 19,200 374,400
-------------
Metal & Mining 13.3%
Ashanti Goldfields Co. Ltd. GDR ......... 100,000 1,168,750
Battle Mountain Gold Co. ............... 150,000 853,125
Bema Gold Corp.* ........................ 120,000 720,000
Boliden Ltd.* ........................... 380,000 2,022,521
Cameco Corp. ........................... 40,000 1,491,727
Corriente Resources Inc.* ............... 150,000 358,449
Crown Resources Corp.* .................. 120,000 765,000
Crystallex International Corp.* ......... 150,000 760,346
Delta Gold NL* ........................ 300,000 501,062
Denison Mines Ltd.* ..................... 1,500,000 418,190
Great Central Mines Ltd.* ............... 400,000 762,400
Homestake Mining Co. .................. 60,000 783,750
Impala Platinum Holdings ADR* ......... 50,000 559,465
Menzies Gold NL* ........................ 1,000,000 302,300
Newcrest Mining Ltd.* .................. 300,000 829,587
Newmont Mining Corp. .................. 20,000 780,000
Normandy Mining Ltd.* .................. 700,000 788,247
Orogen Minerals Inc.* .................. 1,250,000 3,580,365
Pan African Resources Corp* ............ 287,400 54,111
Pangea Goldfields Inc.* ............... 100,000 289,656
Placer Dome Inc. ........................ 50,000 818,750
Randgold Resources Inc. GDR*+ ......... 55,000 907,500
South Pacific Resources Inc.* ......... 350,000 149,535
Southernera Resources Ltd.* ............ 100,000 564,828
Southwestern Gold Corp.* ............... 80,000 544,553
Special Metals Corp.* .................. 26,100 508,950
Stelco Inc. Cl. A ..................... 35,000 261,052
Stillwater Mining Co.* .................. 70,000 1,557,500
Sutton Resources Ltd.* .................. 125,000 1,011,719
TVX Gold Inc.* ........................ 70,000 371,875
Vaal Reefs Exploration & Mining Ltd. ADR 125,000 601,562
Valerie Gold Resources Ltd.* ............ 100,000 102,828
Viceroy Resource Corp.* ............... 150,000 488,794
X-Cal Resources Ltd.* .................. 840,000 395,380
-------------
26,073,877
-------------
Railroad 2.2%
Mosvold Shipping Ltd.* .................. 2,000,000 2,578,726
OMI Corp. .............................. 183,500 1,754,719
-------------
4,333,445
-------------
Total Basic Industries ........................... 31,586,722
-------------
<CAPTION>
Value
Shares (Note 1)
----------- --------------
<S> <C> <C>
Energy 76.7%
Oil 53.1%
3DX Technologies Inc.* .................. 100,000 $ 975,000
Abacan Resource Corp.* .................. 545,900 1,740,056
Apache Corp. ........................... 50,025 1,625,812
Arakis Energy Corp.* .................. 1,000,000 3,781,250
Barrett Resources Corp.* ............... 150,100 4,493,619
Barrington Petroleum Ltd.* ............ 120,000 477,932
Basin Exploration Inc.* ............... 200,000 1,550,000
Brigham Exploration Co.* ............... 91,700 767,988
Cabot Oil & Gas Corp. .................. 100,000 1,762,500
Cairn Energy USA Inc.* .................. 150,000 1,968,750
Callon Petroleum Co.* .................. 100,000 1,600,000
Canadian 88 Energy Corp.* ............... 166,600 675,593
Canadian Conquest Exploration Inc.* ... 165,000 162,497
Chesapeake Energy Corp.* ............... 75,000 735,938
Clayton Williams Energy Inc.* ......... 24,930 283,579
COHO Energy Inc.* ..................... 85,700 910,562
Crystal Oil Co.* ........................ 41,600 1,476,800
Elk Point Resources Inc. Cl. A* ......... 300,000 1,890,003
Forcenergy, Inc.* ..................... 60,000 1,822,500
KCS Energy Inc. ........................ 490,000 9,983,750
Kelley Oil & Gas Corp.* ............... 300,000 918,750
Maxx Petroleum Ltd.* .................. 400,000 680,691
Mercantile International Inc.* ......... 72,500 79,750
Morrison Middlefield Ltd. ............... 240,000 2,476,556
New Cache Petroleum Ltd.* ............... 80,000 521,380
Novus Petroleum Ltd.* .................. 892,600 3,069,350
Nuevo Energy Co.* ..................... 210,000 8,610,000
Ocean Energy Inc.* ..................... 98,600 4,560,250
Oil Search Ltd.* ........................ 2,139,100 5,819,849
Pan East Petroleum Inc.* ............... 135,800 354,017
Pendaries Petroleum Ltd.* ............... 141,200 1,610,413
Plains Resources Inc.* .................. 250,000 3,687,500
Ranger Oil Ltd.* ........................ 400,000 3,725,000
Seagull Energy Corp.* .................. 500,000 8,750,000
Seven Seas Petroleum Inc.* ............... 150,000 1,770,000
Southern Mineral Corp.* .................. 150,000 750,000
Southwestern Energy Co.* ............... 100,000 1,300,000
Stampeder Exploration Ltd.* ............ 249,950 984,178
Stone Energy Corp.* ..................... 117,500 3,216,562
Tarragon Oil & Gas Ltd.* ............... 250,052 2,933,374
Thunder Energy Inc.* .................. 300,000 358,449
Titan Exploration Inc.* ............... 124,600 1,510,775
Tom Brown, Inc.* ........................ 200,000 4,250,000
Triton Energy Ltd. Cl. A ............... 46,400 2,125,700
Ulster Petroleum Ltd.* .................. 200,000 1,810,348
-------------
104,557,021
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -------------
<S> <C> <C>
Oil Service 23.6%
Atwood Oceanics Inc.* ............... 69,800 $ 4,676,600
Cliffs Drilling Co.* ............... 100,000 3,650,000
Dailey Petroleum Services Corp.* ... 200,000 1,350,000
Daniel Industries Inc. ............ 200,000 3,087,500
Dreco Energy Services Ltd. Cl. A* ... 45,000 2,362,500
Ensco International Inc.* ......... 59,975 3,163,681
Global Marine Inc.* ............... 62,700 1,457,775
Grant Geophysical Inc.* ............ 100,000 3,500
J. Ray McDermott SA* ............... 150,700 4,068,900
Noble Drilling Corp.* ............... 350,000 7,896,875
Oceaneering International Inc.* ... 53,000 980,500
Offshore Energy Development Corp.* 40,000 185,000
Patterson Energy, Inc.* ............ 21,254 964,400
Pool Energy Services Co.* ......... 74,200 1,344,875
Post Energy Corp.* .................. 369,000 1,002,028
Precision Drilling Corp.* ......... 44,200 2,138,175
Reading & Bates Corp.* ............ 10,000 267,500
Rowan Companies, Inc.* ............ 70,700 1,992,856
Solid State Geophysical Inc. Cl. A 47,300 119,881
TMBR/Sharp Drilling Inc.* ......... 136,800 1,846,800
Unit Corp.* ........................ 200,000 2,087,500
Weatherford Enterra Inc.* ......... 50,000 1,925,000
-------------
46,571,846
-------------
Total Energy ................................. 151,128,867
-------------
Utility 4.0%
Natural Gas 4.0%
Markwest Hydrocarbon Inc.* ......... 37,500 567,188
Questar Corp. ..................... 50,000 2,018,750
TransTexas Gas Corp.* ............... 330,600 5,289,600
-------------
7,875,538
-------------
Total Utility .............................. 7,875,538
-------------
Total Equity Securities (Cost $163,177,350) ... 190,591,127
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
------------ ----------- ----------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 3.8%
American Express Credit Corp.,
5.70% ..................... $ 993,000 7/03/1997 $ 993,000
Ford Motor Credit Co., 5.50% . 6,538,000 7/01/1997 6,538,000
------------
Total Short-Term Obligations (Cost $7,531,000) ......... 7,531,000
------------
Total Investments (Cost $170,708,350)--100.6% ............ 198,122,127
Cash and Other Assets, Less Liabilities--(0.6%) ......... (1,117,243)
------------
Net Assets--100.0% ....................................... $197,004,884
============
</TABLE>
<TABLE>
<CAPTION>
Federal Income Tax Information:
<S> <C>
At June 30, 1997, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $170,925,485 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost ............................................... $ 36,175,097
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ............................................ (8,978,455)
-------------
$ 27,196,642
=============
</TABLE>
- -------------------------------------
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global Depositary Receipt,
respectively, representing ownership of foreign securities.
[dag]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 June 30, 1997 were $907,500 and $907,500 (0.46% of net assets),
respectively.
Diversification of Equity Securities at June 30, 1997 (as a percentage of net
assets) was United States 66.8%, Canada 22.8%, Australia 6.1%, Papua New Guinea
1.8%, Norway 1.3%, South Africa 0.6%, Ghana 0.6%, and British Virgin Islands
0.0%.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------
June 30, 1997
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $170,708,350) (Note 1) ... $198,122,127
Cash ................................................ 22,916
Receivable for fund shares sold ..................... 790,749
Receivable for securities sold ........................ 267,339
Dividends and interest receivable ..................... 24,016
Other assets .......................................... 2,034
-------------
199,229,181
Liabilities
Payable for securities purchased ..................... 1,366,621
Payable for fund shares redeemed ..................... 453,620
Accrued management fee (Note 2) ..................... 122,363
Accrued distribution and service fees (Note 5) ...... 104,003
Accrued transfer agent and shareholder services
(Note 2) .......................................... 77,279
Accrued trustees' fees (Note 2) ..................... 7,587
Other accrued expenses .............................. 92,824
-------------
2,224,297
-------------
Net Assets $197,004,884
=============
Net Assets consist of:
Unrealized appreciation of investments ............... $ 27,413,777
Accumulated net realized gain ........................ 7,125,672
Shares of beneficial interest ........................ 162,465,435
-------------
$197,004,884
=============
Net Asset Value and redemption price per share of
Class A shares ($80,028,888[divided by]3,574,507 shares of
beneficial interest) ................................. $22.39
=============
Maximum Offering Price per share of Class A shares
($22.39 [divided by] .955) ........................... $23.45
=============
Net Asset Value and offering price per share of Class
B shares ($78,701,053 [divided by] 3,610,815 shares of
beneficial interest)* .............................. $21.80
=============
Net Asset Value, offering price and redemption price
per share of Class C shares ($10,746,753 [divided by]
473,002 shares of beneficial interest) ............... $22.72
=============
Net Asset Value and offering price per share of Class
D shares ($27,528,190 [divided by] 1,265,314 shares of
beneficial interest)* .............................. $21.76
=============
</TABLE>
- -------------------------------------
*Redemption price per share for Class B and Class D is equal to net asset value
less any applicable contingent deferred sales charge.
- -------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------
For the year ended June 30, 1997
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $20,985 ............... $ 407,643
Interest ................................................ 459,027
------------
866,670
Expenses
Management fee (Note 2) ................................. 940,108
Transfer agent and shareholder services (Note 2) ...... 226,295
Service fee--Class A (Note 5) ........................... 142,417
Distribution and service fees--Class B (Note 5) ......... 421,036
Distribution and service fees--Class D (Note 5) ......... 170,898
Custodian fee .......................................... 128,281
Registration fees ....................................... 75,418
Reports to shareholders ................................. 41,085
Audit fee ............................................. 26,983
Trustees' fees (Note 2) ................................. 14,061
Miscellaneous .......................................... 8,126
------------
2,194,708
Expenses borne by the Distributor (Note 3) ............ (3,933)
------------
2,190,775
------------
Net investment loss .................................... (1,324,105)
------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments (Notes 1 and 4) ...... 12,486,164
Net realized loss on foreign currency .................. (27,759)
------------
Total net realized gain .............................. 12,458,405
Net unrealized appreciation of investments ............ 13,310,514
------------
Net gain on investments ................................. 25,768,919
------------
Net increase in net assets resulting from operations . $24,444,814
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss ......... $ (1,324,105) $ (679,747)
Net realized gain on
investments ............... 12,458,405 4,871,429
Net unrealized appreciation of
investments ............... 13,310,514 11,106,956
------------- -----------
Net increase resulting from
operations .................. 24,444,814 15,298,638
------------- -----------
Distribution from net realized
gains:
Class A ..................... (1,857,796) --
Class B ..................... (1,170,575) --
Class C ..................... (352,673) --
Class D ..................... (581,660) --
------------- -----------
(3,962,704) --
------------- -----------
Net increase from fund share
transactions (Note 7) ...... 121,964,798 900,350
------------- -----------
Total increase in net assets 142,446,908 16,198,988
Net Assets
Beginning of year ............ 54,557,976 38,358,988
------------- -----------
End of year .................. $ 197,004,884 $54,557,976
============= ===========
</TABLE>
- -------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------
June 30, 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 Fund commenced operations in March, 1990. The Trust presently
consists of four separate funds: State Street Research Global Resources Fund,
State Street Research Capital Appreciation Fund, State Street Research Equity
Income Fund and State Street Research Equity Investment Fund.
The investment objective of the Fund is to provide long-term growth of capital.
In seeking to achieve its investment objective, the Fund invests primarily in
equity securities of domestic and foreign companies in the energy and natural
resources industries.
The Fund offers four classes of shares. Class A shares are subject to an initial
sales charge of up to 4.50% and an annual service fee of 0.25% of average daily
net assets. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight years
after the issuance of the Class B shares. Class C shares are only offered to
certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class C shares. Class C shares
do not pay any distribution or service fees. Class D shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one year
of their purchase. Class D shares also pay annual distribution and service fees
of 1.00%. The Fund's expenses are borne pro-rata by each class, except that each
class bears expenses, and has exclusive voting rights with respect to provisions
of the Plan of Distribution, relating specifically to that class. The Trustees
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. Investment Valuation
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at closing prices
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are at
the mean of the closing bid and asked quotations. Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange rate. Gains
and losses that arise from changes in exchange rates are not segregated from
gains and losses that arise from changes in market prices of investments.
Short-term securities maturing within sixty days are valued at amortized cost.
Other securities, if any, are valued at their fair value as determined in
accordance with established methods consistently applied.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered.
C. Net Investment Income
Investment income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to it,
while indirect expenses are allocated among all funds in the Trust.
D. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested semiannually. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gains distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods.
F. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser earns
monthly fees at an annual rate of 0.75% of the Fund's average daily net assets.
In consideration of these fees, the Adviser furnishes the Fund with management,
investment advisory, statistical and research facilities and services. The
Adviser also pays all salaries, rent and certain other expenses of management.
During the year ended June 30, 1997, the fees pursuant to such agreement
amounted to $940,108.
State Street Research Shareholder Services, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. In addition, Metropolitan receives a fee for maintenance of
the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through or
under which shares of the Fund may be purchased. During the year ended June 30,
1997, the amount of such shareholder servicing and account maintenance expenses
was $112,253.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$14,061 during the year ended June 30, 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 year ended June 30, 1997, the amount of such expenses assumed by the
Distributor and its affiliates was $3,933.
Note 4
For the year ended June 30, 1997, purchases and sales of securities, exclusive
of short-term obligations, aggregated $172,476,754 and $61,225,861,
respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the "Plan")
under the Investment Company Act of 1940, as amended. Under the Plan, the Fund
pays annual service fees to the Distributor at a rate of 0.25% of average daily
net assets for Class A, Class B and Class D shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class D shares. The Distributor uses such payments for personal services and/or
the maintenance or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing expenses.
For the year ended June 30, 1997, fees pursuant to such plan amounted to
$142,417, $421,036 and $170,898 for Class A, Class B and Class D 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 $169,805 and $114,790, respectively, on sales of Class A shares of
the Fund during the year ended June 30, 1997, and that MetLife Securities, Inc.
earned commissions aggregating $217,475 on sales of Class B shares, and that the
Distributor collected contingent deferred sales charges of $109,834 and $33,827
on redemptions of Class B and Class D shares, respectively, during the same
period.
Note 6
Under normal market conditions the Fund invests not less than 65% of its total
assets in equity securities of domestic and foreign companies in the energy and
natural resources industries. Also, the Fund may invest up to 35% of its total
assets in the securities of issuers in industries that are not related to the
energy or natural resources industries. Accordingly, the Fund's investments will
fluctuate in response to a variety of economic, political and other factors
peculiar to the energy industries and may fluctuate more widely than a portfolio
that invests in a broader range of industries.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Note 7
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At June 30, 1997, the
Distributor owned one Class A share of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------------------------------------------
1997 1996
------------------------------------ --------------------------------
Class A Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold .................................... 3,660,723 $ 77,832,076 723,940 $ 10,571,034
Issued upon reinvestment of distribution from net
realized gains .............................. 82,889 1,767,355 -- --
Shares repurchased ........................... (1,943,823) (40,902,436) (1,062,091) (14,571,296)
------------ ------------ ------------ ------------
Net increase (decrease) ........................ 1,799,789 $ 38,696,995 (338,151) $ (4,000,262)
============ ============ ============ ============
Class B Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 3,312,555 $ 69,477,881 438,451 $ 6,509,210
Issued upon reinvestment of distribution from net
realized gains .............................. 51,654 1,077,181 -- --
Shares repurchased ........................... (502,773) (10,470,845) (273,265) (3,881,920)
------------ ------------ ------------ ------------
Net increase ................................. 2,861,436 $ 60,084,217 165,186 $ 2,627,290
============ ============ ============ ============
Class C Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 736,188 $ 15,558,855 354,475 $ 5,359,929
Issued upon reinvestment of distribution from net
realized gains .............................. 14,897 321,658 -- --
Shares repurchased ........................... (597,301) (12,708,131) (303,110) (4,509,482)
------------ ------------ ------------ ------------
Net increase ................................. 153,784 $ 3,172,382 51,365 $ 850,447
============ ============ ============ ============
Class D Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 1,676,809 $ 34,986,489 210,219 $ 2,813,802
Issued upon reinvestment of distribution from net
realized gains .............................. 25,665 534,412 -- --
Shares repurchased ........................... (738,597) (15,509,697) (104,262) (1,390,927)
------------ ------------ ------------ ------------
Net increase ................................. 963,877 $ 20,011,204 105,957 $ 1,422,875
============ ============ ============ ============
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Year ended June 30
---------------------------------------------------------------
1997** 1996** 1995** 1994** 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 17.44 $ 12.16 $ 11.84 $ 13.51 $ 8.02
---------- ---------- ---------- ----------- ----------
Net investment loss* (0.15) (0.20) (0.16) (0.17) (0.13)
Net realized and unrealized gain (loss) on investments 5.86 5.48 0.48 (1.50) 5.62
---------- ---------- ---------- ----------- ----------
Total from investment operations 5.71 5.28 0.32 (1.67) 5.49
---------- ---------- ---------- ----------- ----------
Distribution from net realized gains (0.76) -- -- -- --
---------- ---------- ---------- ----------- ----------
Total distributions (0.76) -- -- -- --
---------- ---------- ---------- ----------- ----------
Net asset value, end of year $ 22.39 $ 17.44 $ 12.16 $ 11.84 $ 13.51
========== ========== ========== =========== ==========
Total return 32.96%[dag] 43.42%[dag] 2.70%[dag] (12.36)%[dag] 68.45%[dag]
Net assets at end of year (000s) $ 80,029 $ 30,943 $ 25,692 $ 30,679 $ 33,513
Ratio of operating expenses to average net assets* 1.42% 1.75% 1.75% 1.75% 1.75%
Ratio of net investment loss to average net assets* (0.73)% (1.47)% (1.41)% (1.46)% (1.44)%
Portfolio turnover rate 51.67% 92.33% 62.94% 30.98% 61.00%
Average commission rate@ $ 0.0233 $ 0.0237 -- -- --
*Reflects voluntary assumption of fees or expenses per share in
each year (Note 3). $ 0.00 $ 0.05 $ 0.09 $ 0.11 $ 0.03
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------
Year ended June 30
-----------------------------------
1997** 1996** 1995** 1994** 1993***
- -------------------------------------------------------------------------------------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 17.12 $ 12.03 $ 11.78 $ 13.51 $ 12.99
---------- ----------- ----------- ------------ -----------
Net investment loss* (0.30) (0.30) (0.23) (0.23) (0.02)
Net realized and unrealized gain (loss) on investments 5.74 5.39 0.48 (1.50) 0.54
---------- ----------- ----------- ------------ -----------
Total from investment operations 5.44 5.09 0.25 (1.73) 0.52
---------- ----------- ----------- ------------ -----------
Distribution from net realized gains (0.76) -- -- -- --
---------- ----------- ----------- ------------ -----------
Total distributions (0.76) -- -- -- --
---------- ----------- ----------- ------------ -----------
Net asset value, end of year $ 21.80 $ 17.12 $ 12.03 $ 11.78 $ 13.51
========== =========== =========== ============ ===========
Total return 31.98%[dag] 42.31%[dag] 2.12%[dag] (12.81)%[dag] 4.00%++
Net assets at end of year (000s) $ 78,701 $ 12,828 $ 7,030 $ 6,333 $ 1,048
Ratio of operating expenses to average net assets* 2.17% 2.50% 2.33% 2.25% 2.25%[dbldag]
Ratio of net investment loss to average net assets* (1.47)% (2.20)% (1.98)% (1.93)% (1.98)%[dbldag]
Portfolio turnover rate 51.67% 92.33% 62.94% 30.98% 61.00%
Average commission rate@ $ 0.0233 $ 0.0237 -- -- --
*Reflects voluntary assumption of fees or expenses per
share in each year (Note 3). $ 0.00 $ 0.04 $ 0.09 $ 0.14 $ 0.00
</TABLE>
- --------------------------------------------------------------------------------
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
[dbldag] Annualized.
[dag]Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
@ Average commission rate per share paid for security trades beginning with the
fiscal year ended June 30, 1996.
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------
Year ended June 30
----------------------------------
1997** 1996** 1995**
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year $ 17.64 $ 12.27 $ 11.90
----------- ----------- ----------
Net investment loss* (0.10) (0.17) (0.11)
Net realized and unrealized gain (loss) on investments 5.94 5.54 0.48
----------- ----------- ----------
Total from investment operations 5.84 5.37 0.37
----------- ----------- ----------
Distribution from net realized gains (0.76) -- --
----------- ----------- ----------
Total distributions (0.76) -- --
----------- ----------- ----------
Net asset value, end of year $ 22.72 $ 17.64 $ 12.27
=========== =========== ==========
Total return 33.33%[dag] 43.77%[dag] 3.11%[dag]
Net assets at end of year (000s) $ 10,747 $ 5,632 $ 3,288
Ratio of operating expenses to average net assets* 1.17% 1.50% 1.33%
Ratio of net investment loss to average net assets* (0.48)% (1.20)% (1.01)%
Portfolio turnover rate 51.67% 92.33% 62.94%
Average commission rate@ $ 0.0233 $ 0.0237 --
*Reflects voluntary assumption of fees or expenses per share in
each year (Note 3). $ 0.00 $ 0.05 $ 0.08
<CAPTION>
1994** 1993***
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $ 13.52 $12.99
-------- -------
Net investment loss* (0.15) (0.00)
Net realized and unrealized gain (loss) on investments (1.47) 0.53
-------- -------
Total from investment operations (1.62) 0.53
-------- -------
Distribution from net realized gains -- --
-------- -------
Total distributions -- --
-------- -------
Net asset value, end of year $ 11.90 $ 13.52
======== =======
Total return (11.98)%[dag] 4.08%++
Net assets at end of year (000s) $ 960 $ 146
Ratio of operating expenses to average net assets* 1.25% 1.25%[dbldag]
Ratio of net investment loss to average net assets* (0.95)% (1.05)%[dbldag]
Portfolio turnover rate 30.98% 61.00%
Average commission rate@ -- --
*Reflects voluntary assumption of fees or expenses per share in
each year (Note 3). $ 0.16 $ 0.00
</TABLE>
<TABLE>
<CAPTION>
Class D
-----------------------------------
Year ended June 30
-----------------------------------
1997** 1996** 1995**
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of year $ 17.10 $12.02 $11.77
--------- -------- --------
Net investment loss* (0.30) (0.30) (0.23)
Net realized and unrealized gain (loss) on investments 5.72 5.38 0.48
--------- -------- --------
Total from investment operations 5.42 5.08 0.25
--------- -------- --------
Distribution from net realized gains (0.76) -- --
--------- -------- --------
Total distributions (0.76) -- --
--------- -------- --------
Net asset value, end of year $ 21.76 $17.10 $12.02
========= ======== ========
Total return 31.90%[dag] 42.26%[dag] 2.12%[dag]
Net assets at end of year (000s) $27,528 $5,154 $2,350
Ratio of operating expenses to average net assets* 2.17% 2.50% 2.33%
Ratio of net investment loss to average net assets* (1.45)% (2.20)% (1.99)%
Portfolio turnover rate 51.67% 92.33% 62.94%
Average commission rate@ $0.0233 $0.0237 --
*Reflects voluntary assumption of fees or expenses per share in
each year (Note 3). $ 0.00 $ 0.05 $ 0.09
<CAPTION>
1994** 1993***
---------- --------
<S> <C> <C>
Net asset value, beginning of year $ 13.51 $12.99
-------- -------
Net investment loss* (0.23) (0.02)
Net realized and unrealized gain (loss) on investments (1.51) 0.54
-------- -------
Total from investment operations (1.74) 0.52
-------- -------
Distribution from net realized gains -- --
-------- -------
Total distributions -- --
-------- -------
Net asset value, end of year $ 11.77 $13.51
======== =======
Total return (12.88)%[dag] 4.00%++
Net assets at end of year (000s) $ 1,931 $ 588
Ratio of operating expenses to average net assets* 2.25% 2.25%[dbldag]
Ratio of net investment loss to average net assets* (1.94)% (2.00)%[dbldag]
Portfolio turnover rate 30.98% 61.00%
Average commission rate@ -- --
*Reflects voluntary assumption of fees or expenses per share in
each year (Note 3). $ 0.13 $ 0.00
</TABLE>
- --------------------------------------------------------------------------------
** Per-share figures have been calculated using the average shares method.
*** June 1, 1993 (commencement of share class designations) to June 30, 1993.
[dbldag] Annualized.
[dag]Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
@ Average commission rate per share paid for security trades beginning with
the fiscal year ended June 30, 1996.
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees of State Street Research
Equity Trust and the Shareholders of
State Street Research Global Resources Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of State Street Research Global
Resources Fund (a series of State Street Research Equity Trust, hereafter
referred to as the "Trust") at June 30, 1997, and the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1997 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
August 8, 1997
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
Global Resources Fund was among the top performers in its category for the year
ended June 30, 1997. The Fund's total return was +32.96%, double the average of
the 42 natural resources fund classes tracked by Lipper Analytical Services.
Rising oil and gas prices, increased output among exploration and production
companies, and an emphasis on smaller capitalization stocks all contributed to
the Fund's successful year.
Portfolio strategy changed little over the period. Approximately 70% of the
portfolio was held in energy exploration and production stocks, of which 24% was
oil service stocks. Oil service stocks have substantially outperformed the
broader exploration and production indices year-to-date. The Fund held a 13%
position in metals and mining shares at year-end.
Industry consolidations continued to be prevalent in the natural resources
sector. The portfolio benefited from consolidations among two of its mid-cap
holdings, CS Resources and Dreco Energy Services. Two of last year's top-ten
holdings, Nowsco and Global Natural Resources, were also subjects of takeover.
Less positively, Abacan Resources lost nearly two-thirds of its value, as their
key oil field in Nigeria experienced a sudden short-term decline in production.
Abacan had been a top-ten holding.
June 30, 1997
The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely traded
common stocks and is a commonly used measure of U.S. stock market performance.
The index is unmanaged and does not take sales charges into consideration.
Direct investment in the index is not possible; results are for illustrative
purposes only. All returns represent past performance, which is no guarantee of
future results. The investment return and principal value of an investment made
in the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance for a class includes 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. Performance reflects maximum 4.5% "A" share front-end
sales charge or 5% "B" share or 1% "D" share contingent deferred sales charges.
"C" shares, offered without a sales charge, are available only to certain
employee benefit plans and large institutions. 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.
Change in Value of $10,000 Based on
the S&P 500 Compared to Change in Value
of $10,000 Invested in the Fund
<TABLE>
<CAPTION>
Class A Shares
Average Annual Total Return
1 Year 5 Years Life of Fund
26.98% 22.52% 8.88%
<S> <C> <C>
3/2/90 95 10000
6/30/90 8982 10901
6/30/91 734 11704
6/30/92 645 13271
6/30/93 10873 15076
6/30/94 952 15287
6/30/95 978 19267
6/30/96 14036 24272
6/30/97 18662 32689
Class B Shares
Average Annual Total Return
1 Year 5 Years Life of Fund
26.98% 22.84% 9.17%
3/2/90 10000 10000
6/30/90 9405 10901
6/30/91 7686 11704
6/30/92 6759 13271
6/30/93 11385 15076
6/30/94 9927 15287
6/30/95 10138 19267
6/30/96 14427 24272
6/30/97 19042 32689
Class C Shares
Average Annual Total Return
1 Year 5 Years Life of Fund
33.33% 24.01% 9.77%
3/2/90 10000 10000
6/30/90 9405 10901
6/30/91 7686 11704
6/30/92 6759 13271
6/30/93 11394 15076
6/30/94 10028 15287
6/30/95 10340 19267
6/30/96 14866 24272
6/30/97 19820 32689
Class D Shares
Average Annual Total Return
1 Year 5 Years Life of Fund
30.90% 22.97% 9.15%
3/2/90 10000 10000
6/30/90 9405 10901
6/30/91 7686 11704
6/30/92 6759 13271
6/30/93 11385 15076
6/30/94 9919 15287
6/30/95 10130 19267
6/30/96 14411 24272
6/30/97 19008 32689
_____ Global Resources Fund - - - - S&P 500
</TABLE>
<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 EQUITY TRUST
PART C
OTHER INFORMATION
Item 23. Exhibits
(1)(a) First Amended and Restated Master Trust Agreement, Amendment No.
1, Amendment No. 2 and Amendment No. 3(17)
(1)(b) Amendment No. 4 to First Amended and Restated Master Trust
Agreement(18)
(1)(c) Amendment No. 5 to First Amended and Restated Master Trust
Agreement(18)
(1)(d) Amendments No. 6 and 7 to First Amended and Restated Master
Trust Agreement
(2)(a) By-Laws of the Registrant(1)***
(2)(b) Amendment No. 1 to By-Laws effective September 30, 1992(13)***
(3) Not Applicable
(4)(a) Deleted
(4)(b) Deleted
(4)(c) Deleted
(5)(a) Advisory Agreement with MetLife - State Street Investment
Services, Inc.(2)**,***
(5)(c) Letter Agreement with respect to the Advisory Agreement relating
to MetLife - State Street Energy Fund(11)*,***
(5)(d) Form of Letter Agreement with respect to the Advisory Agreement
relating to State Street Research Athletes Fund (21)
(5)(e) Transfer and Assumption of Responsibilities and Rights relating
to the Advisory Agreement between State Street Financial
Services, Inc. and State Street Research & Management
Company(12)**,***
(6)(a) Distribution Agreement with MetLife - State Street Investment
Services, Inc.(2)**,***
(6)(b) Form of Selected Dealer Agreement(17)
(6)(c) Form of Bank and Bank-Affiliated Broker-Dealer Agreement
(6)(d) Letter Agreement with respect to the Distribution Agreement
relating to MetLife - State Street Energy Fund(11)*,***
(6)(e) Form of Supplement No. 1 to Selected Dealer Agreement(18)
(6)(f) Form of Letter Agreement with respect to the Distribution
Agreement relating to State Street Research Athletes Fund (21)
(7) Not applicable
C-1
<PAGE>
(8)(a) Custodian Contract with State Street Bank and Trust Company(2)***
(8)(b) Amendment to Custodian Contract with State Street Bank and Trust
Company(6)***
(8)(e) Letter Agreement with respect to the Custodian Contract relating
to MetLife - State Street Energy Fund(11)*,***
(8)(f) Form of Letter Agreement with respect to the Custodian
Contract relating to State Street Research Athletes Fund (21)
(8)(g) Amendment to Custodian Contract
(9) Not applicable
(10)(a) Opinion and Consent of Goodwin, Procter & Hoar with respect to
the MetLife - State Street Equity Income, MetLife - State Street
Equity Investment and MetLife - State Street Capital Appreciation
Funds(2)*,***
(10)(b) Opinion and Consent of Goodwin, Procter & Hoar with respect to
MetLife - State Street Energy Fund(7)*,***
(10)(c) Opinion and Consent of Goodwin, Procter & Hoar LLP with respect
to State Street Research Athletes Fund (21)
(11) Consent of Price Waterhouse LLP
(12) Not applicable
(13)(a) Purchase Agreement and Investment Letter(2)***
(13)(b) Purchase Agreement and Investment Letter(2)***
(13)(c) Subscription and Investment Letter -- MetLife - State Street
Energy Fund(11)*,***
(13)(d) Form of Subscription and Investment Letter relating to State
Street Research Athletes Fund (21)
(14)(a) Deleted.
(14)(b) Deleted.
(14)(c) Deleted.
(15)(a) First Amended and Restated Plan of Distribution Pursuant to
Rule 12b-1(14)***
(15)(b) Amendment No. 1 to First Amended and Restated Plan of
Distribution Pursuant to Rule 12b-1(16)***
(15)(c) Form of Letter Agreement with respect to Plan of Distribution
Pursuant to Rule 12b-1 relating to State Street Research
Athletes Fund (21)
(16)(a) Deleted.
(16)(b) Deleted.
(16)(c) Deleted.
(16)(d) Deleted.
(17) First Amended and Restated Multiple Class Expense Allocation Plan
(18)
(18) Powers of Attorney(19)
(19) Certificate of Board Resolution respecting Powers of Attorney(19)
(20) Application Forms(19)
(27)(a) Financial Data Schedules for State Street Research Alpha Fund(19)
(27)(b) Financial Data Schedules for State Street Research Equity
Investment Fund (20)
(27)(c) Financial Data Schedules for State Street Research Global
Resources Fund
C-2
<PAGE>
- -----------------
* The Series of the Registrant have changed their names at various times.
Documents in this listing of Financial Statements and Exhibits which
were effective prior to the most recent name change accordingly refer to
a former name of such Series.
** MetLife - State Street Investment Services, Inc. changed its name to
State Street Financial Services, Inc. effective as of June 18, 1992, and
subsequently changed its name to State Street Research Investment
Services, Inc. effective October 28, 1992. Documents in this listing of
Exhibits which were effective prior to the relevant name change
accordingly refer to MetLife - State Street Investment Services, Inc. or
State Street Financial Services, Inc.
*** Restated in electronic format in Post-Effective Amendment No. 22 filed
on June 2, 1998.
C-3
<PAGE>
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
<TABLE>
<CAPTION>
Footnote Securities Act of 1933
Reference Registration/Amendment Date Filed
<S> <C> <C> <C>
1 Initial Registration March 25, 1986
2 Pre-Effective Amendment No. 1 July 18, 1986
3 Post-Effective Amendment No. 1 August 12, 1986
4 Post-Effective Amendment No. 3 October 29, 1987
5 Post-Effective Amendment No. 5 October 25, 1988
6 Post-Effective Amendment No. 6 October 30, 1989
7 Post-Effective Amendment No. 7 November 27, 1989
8 Post-Effective Amendment No. 8 July 24, 1990
9 Post-Effective Amendment No. 9 August 31, 1990
10 Post-Effective Amendment No. 10 October 30, 1990
11 Post-Effective Amendment No. 11 October 31, 1991
12 Post-Effective Amendment No. 12 October 30, 1992
13 Post-Effective Amendment No. 13 April 2, 1993
14 Post-Effective Amendment No. 14 October 27, 1993
15 Post-Effective Amendment No. 15 September 1, 1994
16 Post-Effective Amendment No. 16 April 28, 1995
17 Post-Effective Amendment No. 17 August 29, 1995
18 Post-Effective Amendment No. 18 October 16, 1996
19 Post-Effective Amendment No. 19 August 22, 1997
20 Post-Effective Amendment No. 20 October 29, 1997
21 Post-Effective Amendment No. 21 January 9, 1998
</TABLE>
Item 24. Persons Controlled by or Under Common Control with the Fund
Inapplicable.
C-4
<PAGE>
Item 25. Indemnification
Under Article VI of the Registrant's First Amended and Restated Master
Trust Agreement, as further amended ("Master Trust Agreement") each of its
Trustees and officers or persons serving in such capacity with another entity at
the request of the Registrant ("Covered Person") shall be indemnified against
all liabilities, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office (such conduct
being referred to hereafter as "Disabling Conduct"). A determination that the
Covered Person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before which the proceeding was
brought that the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative proceeding
against a Covered Person for insufficiency of evidence of Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Registrant as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion.
Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's distributor, the Registrant
has agreed to indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may hereafter be an officer,
director, employee or agent of State Street Research Investment Services, Inc.
against any loss, damage or expense reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon a violation of any of its covenants herein contained or
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements made
not misleading, in a Registration Statement or Prospectus of the Registrant, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written information furnished by State Street Research
Investment Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 may be permitted to trustees, officers,
underwriters and controlling persons of the Registrant, pursuant to Article VI
of the Registrant's Master Trust Agreement, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
C-5
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Investment Adviser Various investment Boston, MA
Research & advisory clients
Management
Company
Arpiarian, Tanya None
Vice President
Bangs, Linda L. None
Vice President
Bennett, Peter C. Vice President State Street Research Capital Trust Boston, MA
Director and Vice President State Street Research Exchange Trust Boston, MA
Executive Vice Vice President State Street Research Financial Trust Boston, MA
President Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust
Vice President State Street Research Income Trust Boston, MA
Director State Street Research Investment Services, Inc Boston, MA
Director State Street Research Luxembourg
Director Boston Private Bank & Trust Co. Boston, MA
President and Director Christian Camps & Conferences, Inc. Boston, MA
Chairman and Trustee Gordon College Wenham, MA
Executive Vice President GFM International Investors, Inc. London, England
Bochman, Kathleen None
Vice President
Borzilleri, John Vice President Montgomery Securities San Francisco, CA
Senior Vice (until 6/97)
President
(Vice President
until 4/98)
Bray, Michael J. Employee Merrill Lynch & Co. Boston, MA
Senior Vice (until 7/96)
President
(Vice President
until 4/98)
Brezinsk, Karen None
Vice President
Brown, Susan H. None
Vice President
Buffum, Andrea Project Manager BankBoston Boston, MA
Vice President (until 12/96)
Burbank, John F. None
Senior Vice President
(Vice President until
7/96)
Cabrera, Jesus A. Vice President State Street Research Capital Trust Boston, MA
Senior Vice
President
(Vice President
until 4/98)
Calame, Mara D. Assistant Vice President GFM International Investors, Inc. London, England
Vice President and Assistant Secretary
Canavan, Joseph W. Assistant Treasurer State Street Research Equity Trust Boston, MA
Senior Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
(Vice President until Assistant Treasurer State Street Research Income Trust Boston, MA
4/98) Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust Boston, MA
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Treasurer State Street Research Portfolios, Inc. Boston, MA
Vice President GFM International Investors, Inc. London, England
C-6
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President
Coleman, Thomas J. Account Manager MetLife Investment Management New York, NY
Vice President (until 9/96)
Cowling, Dyann Vice President State Street Research Boston, MA
Vice President Money Market Trust
Cullen, Terrence J. Vice President and Counsel Keystone-Evergreen Boston, MA
Vice President (until 2/98)
and Counsel
D'Vari, Ronald None
Vice President
DeVeuve, Donald None
Vice President
DiFazio, Susan M.W. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Dillman, Thomas J Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
Drake, Susan W. None
Vice President
Dudley, Catherine Senior Portfolio Manager Chancellor Capital Management Boston, MA
Senior Vice President
Duggan, Peter J. None
Senior Vice
President
Even, Karen None
Vice President
Federoff, Alex G. None
Vice President
Fee, Richard None
Vice President
Feliciano, Rosalina None
Vice President
Ficco, Bonnie None
Vice President
Fochtman, Jr., Leo None
Vice President
Fromm, Stuart Vice President State Street Research Boston, MA
Vice President Investment Services, Inc.
Gardner, Michael D. None
Senior Vice President
Geer, Bartlett R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Giroux, June M. None
Vice President
Govoni, Electra None
Vice President
C-7
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Grace, Evan None
Vice President
Granger, Allison None
Vice President
Haggerty, Bryan D. None
Vice President
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
Treasurer and Director North Conway Institute Boston, MA
Hanson, Phyllis None
Vice President
Haverty, Jr., Lawrence J. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
Healy, Laura J. None
Vice President
Heineke, George R. None
Vice President
Hickman, Joanne Managing Director (until 1/98) Zurich Investment Management Chicago, IL
Senior Vice President
Huang, Jesse C. None
Vice President
Jackson, Jr., F. Gardner Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Trustee Certain trusts of related and
non-related individuals
Trustee and Chairman Vincent Memorial Hospital Boston, MA
of the Board
Jamieson, Frederick H. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
and Asst. Treasurer
Senior Vice President Vice President and Asst. Treasurer SSRM Holdings, Inc. Boston, MA
Vice President and Controller MetLife Securities, Inc. New York, NY
(until 1/97)
Senior Vice President GFM International Investors, Inc. London, England
Jodka, Richard Portfolio Manager (until 1/98) Frontier Capital Management Boston, MA
Senior Vice President
Vice President State Street Research Capital Trust Boston, MA
Kallis, John H. Vice President State Street Research Financial Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Money Market Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Director and President K&G Enterprises Washington, D.C.
Kasper, M. Katherine None
Vice President
C-8
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Kern, Stephen None
Vice President
King, Stephen Vice President State Street Research Investment Boston, MA
Vice President Services, Inc.
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
(Vice President
until 4/98)
Langholm, Knut Director State Street Research Luxembourg
Vice President
Leary, Eileen M. None
Vice President
Lomasney, Mary T. Business Analyst Fidelity Boston, MA
Vice President (until 6/97)
Mauer, Jacqueline J. None
Vice President
McNamara, III, Francis J. Executive Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Executive Vice and General Counsel
President, Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
Secretary and Secretary and General Counsel State Street Research Capital Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Exchange Trust Boston, MA
(Senior Vice President Secretary and General Counsel State Street Research Growth Trust Boston, MA
until 7/96) Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel State Street Research Equity Trust Boston, MA
Secretary and General Counsel State Street Research Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money Market Trust Boston, MA
Secretary and General Counsel State Street Research Portfolios, Inc. Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Executive Vice President, GFM International Investors, Inc. London, England
Secretary and General Counsel
C-9
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Maus, Gerard P. Treasurer State Street Research Equity Trust Boston, MA
Director, Executive Treasurer State Street Research Financial Trust Boston, MA
Vice President Treasurer State Street Research Income Trust Boston, MA
and Treasurer Treasurer State Street Research Money Market Trust Boston, MA
Treasurer State Street Research Tax-Exempt Trust Boston, MA
Treasurer State Street Research Capital Trust Boston, MA
Treasurer State Street Research Exchange Trust Boston, MA
Treasurer State Street Research Growth Trust Boston, MA
Treasurer State Street Research Master Investment Trust Boston, MA
Treasurer State Street Research Portfolios, Inc. Boston, MA
Treasurer State Street Research Securities Trust Boston, MA
Director, Executive Vice President, State Street Research Investment Services, Inc. Boston, MA
Treasurer and Chief Financial Officer
Executive Vice President, Chief
Financial Officer, Chief
Administrative Officer and Director GFM International Investors, Inc. London, England
Director State Street Research Luxembourg
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Treasurer and Chief Financial SSRM Holdings, Inc. Boston, MA
Officer
Treasurer (until 1/97) MetLife Securities, Inc. New York, NY
Milder, Judith J. None
Senior Vice President
Miller, Joan D. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Senior Vice President
(Vice President
until 7/96)
Moore, Jr., Thomas P. Vice President State Street Research Capital Trust Boston, MA
Senior Vice (until 11/96)
President Vice President State Street Research Exchange Trust Boston, MA
(until 2/97)
Vice President State Street Research Growth Trust Boston, MA
(until 2/97)
Vice President State Street Research Master Investment Trust Boston, MA
(until 2/97)
Vice President State Street Research Equity Trust Boston, MA
Vice President State Street Research Energy, Inc. Boston, MA
Director Hibernia Savings Bank Quincy, MA
Governor on the Association for Investment Management
Board of Governors and Research Charlottesville, VA
Morey, Andrew None
Vice President
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Senior Vice President
(Vice President
until 7/96)
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
C-10
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Paddon, Steven W. Employee Metropolitan Life Insurance Company New York, NY
Vice President (until 10/96)
Pannell, James C. None
Senior Vice President
(Vice President
until 4/97)
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
Pierce, James D. None
Vice President
Poritzky, Dean E. Portfolio Manager Fidelity Investments Boston, MA
Vice President (until 4/97)
Pyle, David J. Analyst Oak Value Capital Management Durham, NC
Vice President (until 4/97)
Ragsdale, E.K. Easton Senior Vice President GFM International Investors, Inc. London, England
Senior Vice President
(Vice President
until 7/96)
Ransom, Clifford Directory of Special NatWest Markets
Vice President Situations (until 2/97)
Rawlins, Jeffrey A. None
Senior Vice President
(Vice President
until 7/96)
Rice III, Daniel Joseph Vice President State Street Research Equity Trust Boston, MA
Senior Vice President
Richards, Scott None
Vice President
Romich, Douglas A. Assistant Treasurer State Street Research Equity Trust Boston, MA
Senior Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
(Vice President Assistant Treasurer State Street Research Income Trust Boston, MA
until 4/98) Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Treasurer State Street Research Portfolios, Inc. Boston, MA
Vice President GFM International Investors, Inc. London, England
Ryan, Michael Senior Vice President Delaware Management Philadelphia, PA
Senior Vice President
Sanderson, Derek Senior Vice President Freedom Capital Management Boston, MA
Senior Vice President
Saperstone, Paul None
Vice President
C-11
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Schrage, Michael None
Vice President
Schultz, David C. Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
Executive Vice Member Association of Investment
President Management Sales Executives Atlanta, GA
Member, Investment Committee Lexington Christian Academy Lexington, MA
Shaver, Jr. C. Troy President, Chief Executive State Street Research Investment Services, Inc. Boston, MA
Executive Vice Officer and Executive Vice
President President
Shean, William G. None
Vice President
Shively, Thomas A. Vice President State Street Research Financial Trust Boston, MA
Director and Vice President State Street Research Money Market Trust Boston, MA
Executive Vice Vice President State Street Research Tax-Exempt Trust
President Director State Street Research Investment Services, Inc Boston, MA
Vice President State Street Research Luxembourg
Director State Street Research Securities Trust Boston, MA
Shoemaker, Richard D.
Senior Vice President Senior Vice President GFM International Investors, Inc. London, England
Stambaugh, Kenneth None
Vice President
(Assistant Vice
President until 9/97)
Strelow, Dan R. None
Senior Vice President
Stolberg, Thomas None
Vice President
C-12
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Swanson, Amy McDermott None
Senior Vice President
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
Verni, Ralph F. Chairman, President, Chief State Street Research Capital Trust Boston, MA
Chairman, President, Executive Officer and Trustee
Chief Executive Chairman, President, Chief State Street Research Exchange Trust Boston, MA
Officer and Executive Officer and Trustee
Director Chairman, President, Chief State Street Research Growth Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Master Investment Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Securities Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Equity Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Financial Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Income Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Money Market Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Portfolios, Inc. Boston, MA
Executive Officer and Director
Chairman, President, Chief State Street Research Tax-Exempt Trust Boston, MA
Executive Officer and Trustee
Chairman and Director State Street Research Investment Services, Inc. Boston, MA
Chairman, President, GFM International Investors, Inc. London, England
CEO and Director
Director State Street Research Luxembourg
Chairman and Director Metric Holdings, Inc. San Francisco, CA
Director and Officer Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Chairman of the Board and Director MetLife Securities, Inc. New York, NY
(until 1/97)
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
Director Colgate University Hamilton, NY
C-13
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
Walsh, Tucker None
Vice President
Weiss, James M. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Exchange Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Capital Trust Boston, MA
Welch, Timothy M. None
Vice President
Westvold, Vice President State Street Research Securities Trust Boston, MA
Elizabeth McCombs
Senior Vice President
(Vice President
until 7/96)
Wilkins, Kevin Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Various Positions Fidelity Investments Boston, MA
(until 10/96)
Wilson, John T. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Master Investment Trust Boston, MA
Vice President
(until 6/96)
Wing, Darman A.
Senior Vice President, Senior Vice President and State Street Research Investment Services, Inc. Boston, MA
Assistant Secretary Asst. Clerk
and Assistant Assistant Secretary and State Street Research Capital Trust Boston, MA
General Counsel Assistant General Counsel
(Vice President Assistant Secretary and State Street Research Exchange Trust Boston, MA
until 4/98) Assistant General Counsel
Assistant Secretary and State Street Research Growth Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Master Investment Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Securities Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Equity Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Financial Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Income Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Money Market Trust Boston, MA
Assistant General Counsel
Assisstant General Counsel State Street Research Portfolios, Inc. Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Tax-Exempt Trust Boston, MA
Assistant General Counsel
Assistant Secretary and SSRM Holdings, Inc. Boston, MA
Assistant General Counsel
Vice President and GFM International Investors, Inc. London, England
Assistant General Counsel
Woodbury, Robert S. None
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Growth Trust Boston, MA
President Vice President State Street Research Securities Trust Boston, MA
C-14
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
Yannone, John T. Vice President State Street Research Investment Boston, MA
Vice President Services, Inc.
</TABLE>
C-15
<PAGE>
Item 27: Principal Underwriters
(a) State Street Research Investment Services, Inc., serves as principal
underwriter for State Street Research Equity Trust, State Street Research
Financial Trust, State Street Research Income Trust, State Street Research
Money Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Growth Trust, State Street
Research Master Investment Trust, State Street Research Securities Trust, and
State Street Research Portfolios, Inc.
(b) Directors and Officers of State Street Research Investment Services,
Inc. are as follows:
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Fund
Ralph F. Verni Chairman of Chairman of the
One Financial Center the Board and Board, President,
Boston, MA 02111 Director Chief Executive Officer
and Trustee
Peter C. Bennett Director Vice President
One Financial Center
Boston, MA 02111
Gerard P. Maus Executive Vice President Treasurer
One Financial Center Treasurer, Chief
Boston, MA 02111 Financial Officer and
Director
Thomas A. Shively Director None
One Financial Center
Boston, MA 02111
C. Troy Shaver, Jr. President, Chief None
One Financial Center Executive Officer
Boston, MA 02111 and Executive Vice
President
Francis J. McNamara, III Executive Vice President, Secretary
One Financial Center General Counsel
Boston, MA 02111 and Clerk
Peter Borghi Senior Vice President None
One Financial Center
Boston, MA 02111
Paul V. Daly Senior Vice President None
One Financial Center
Boston, MA 02111
C-16
<PAGE>
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Fund
Susan M.W. DiFazio Senior Vice President None
One Financial Center
Boston, MA 02111
Frederick H. Jamieson Senior Vice President None
One Financial Center and Assistant
Boston, MA 02111 Treasurer
Russell A. Labrasca Senior Vice President None
One Financial Center
Boston, MA 02111
Joan D. Miller Senior Vice President None
One Financial Center
Boston, MA 02111
Darman A. Wing Senior Vice President, Assistant Secretary
One Financial Center Assistant General Counsel
Boston, MA 02111 and Assistant Clerk
Terrence J. Cullen Vice President None
One Financial Center and Counsel
Boston, MA 02111
Donald Doherty Vice President None
One Financial Center
Boston, MA 02111
Robert M. Gunville Vice President None
One Financial Center
Boston, MA 02111
Amy L. Simmons Vice President Assistant Secretary
One Financial Center
Boston, MA 02111
Kevin Wilkins Vice President None
One Financial Center
Boston, MA 02111
C-17
<PAGE>
Item 28. Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 29. Management Services
Under a Shareholders' Administrative Services Agreement between the
Registrant and the Distributor, the Distributor provides shareholders'
administrative services, such as responding to inquiries and
instructions from investors respecting the purchase and redemption of
shares of series of the Registrant, and received the amounts set forth
below:
<TABLE>
<CAPTION>
Year-end Year-end Year-end
Fund June 30, 1995 June 30, 1996 June 30, 1997
---- ------------- ------------- -------------
<S> <C> <C> <C>
State Street Research
Equity Investment Fund $70,195 $65,618 $71,588
State Street Research
Global Resources Fund $55,725 $38,159 $66,532
State Street Research
Alpha Fund $72,784 $66,907 $83,958
</TABLE>
Item 30. Undertakings
(a) Inapplicable.
(b) Deleted.
(c) Deleted.
(d) The Registrant undertakes to hold a special meeting of shareholders
of State Street Research Equity Trust for the purpose of voting upon the
question of removal of any trustee or trustees when requested in writing so to
do by the record holders of not less than 10 per centum of the outstanding
shares of State Street Research Equity Trust and, in connection with such
meeting, to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
(e) Deleted.
(f) Deleted.
C-18
<PAGE>
Notice
A copy of the First Amended and Restated Master Trust Agreement, as
further amended ("Master Trust Agreement") of the Registrant is on file with
the Secretary of State of the Commonwealth of Massachusetts and notice is hereby
given that the obligations of the Registrant hereunder, and the authorization,
execution and delivery of this amendment to the Registrant's Registration
Statement, shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Registrant as individuals or
personally, but shall bind only the property of the Funds of the Registrant, as
provided in the Master Trust Agreement. Each Fund of the Registrant shall be
solely and exclusively responsible for all of its direct or indirect debts,
liabilities and obligations, and no other Fund shall be responsible for the
same.
C-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 22 to its Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Boston and The Commonwealth of Massachusetts on the 2nd day of June, 1998.
STATE STREET RESEARCH EQUITY TRUST
By *
-------------------------------------
Ralph F. Verni
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed on the
above date by the following persons in the capacities indicated:
Signature Capacity
* Trustee & Chief
_________________________________ Executive Officer
Ralph F. Verni (principal executive
officer)
* Treasurer (principal
_________________________________ financial and
Gerard P. Maus accounting officer)
*
_________________________________
Steve A. Garban Trustee
*
_________________________________
Malcolm T. Hopkins Trustee
*
_________________________________ Trustee
Edward M. Lamont
*
_________________________________ Trustee
Robert A. Lawrence
<PAGE>
*
_________________________________ Trustee
Dean O. Morton
*
_________________________________ Trustee
Toby Rosenblatt
*
_________________________________ Trustee
Michael S. Scott Morton
*By: /s/ Francis J. McNamara, III
__________________________________
Francis J. McNamara, III,
Attorney-in-Fact under
Powers of Attorney dated
August 22, 1997, incorporated
by reference from Post-Effective
Amendment No. 19.
<PAGE>
1933 Act Registration No. 33-4296
1940 Act File No. 811-4624
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 22 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 23 [X]
____________________
STATE STREET RESEARCH EQUITY TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
____________________
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(1)(d) Amendments No. 6 and 7 to First Amended and Restated Master Trust
Agreement
(2)(a) By-Laws of Registrant*
(2)(b) Amendment No. 1 to By-Laws effective September 30, 1992*
(5)(a) Advisory Agreement with MetLife - State Street Investment
Services, Inc.*
(5)(c) Letter Agreement with respect to the Advisory Agreement relating
to MetLife - State Street Energy Fund*
(5)(e) Transfer and Assumption of Responsibilities and Rights relating
to the Advisory Agreement between State Street Financial
Services, Inc. and State Street Research & Management Company*
(6)(a) Distribution Agreement with MetLife - State Street Investment
Services, Inc.*
(6)(c) Form of Bank and Bank-Affiliated Broker-Dealer Agreement
(6)(d) Letter Agreement with respect to the Distribution Agreement
relating to MetLife - State Street Energy Fund*
(8)(a) Custodian Contract with State Street Bank and Trust Company*
(8)(b) Amendment to Custodian Contract with State Street Bank and Trust
Company*
(8)(e) Letter Agreement with respect to the Custodian Contract relating
to MetLife - State Street Energy Fund*
(8)(g) Amendment to Custodian Contract
(10)(a) Opinion and Consent of Goodwin, Procter & Hoar with respect to
the MetLife - State Street Equity Income, MetLife - State Street
Equity Investment and MetLife - State Street Capital Appreciation
Funds*
(10)(b) Opinion and Consent of Goodwin, Procter & Hoar with respect to
MetLife - State Street Energy Fund*
(11) Consent of Price Waterhouse LLP
(13)(a) Purchase Agreement and Investment Letter*
(13)(b) Purchase Agreement and Investment Letter*
(13)(c) Subscription and Investment Letter -- MetLife - State Street
Energy Fund*
(15)(a) First Amended and Restated Plan of Distribution Pursuant to
Rule 12b-1*
(15)(b) Amendment No. 1 to First Amended and Restated Plan of
Distribution Pursuant to Rule 12b-1*
(27)(c) Financial Data Schedules for State Street Research Global
Resources Fund
Exhibit (1)(d)
STATE STREET RESEARCH EQUITY TRUST
Amendment No. 6 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article IV, Sections 4.1 and 4.2 and Article VII, Section
7.3 of the First Amended and Restated Master Trust Agreement of the State Street
Research Equity Trust (the "Trust") dated June 1, 1993 ("Master Trust
Agreement"), as heretofore amended, the Master Trust Agreement is hereby amended
to change the name of one of the series of shares under such Trust, currently a
Sub-Trust designated as
"State Street Research Equity Income Fund"
to
"State Street Research Alpha Fund."
This Amendment shall be effective as of January 21, 1998.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts
the foregoing on behalf of the Trust pursuant to authorization by the Trustees
of the Trust.
/s/ Francis J. McNamara, III
------------------------------
Francis J. McNamara, III
Secretary
<PAGE>
STATE STREET RESEARCH EQUITY TRUST
Amendment No. 7 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article IV, Sections 4.1 and 4.2 and Article VII, Section
7.3 of the First Amended and Restated Master Trust Agreement of the State Street
Research Equity Trust (the "Trust") dated June 1, 1993 ("Master Trust
Agreement"), as heretofore amended, the following actions are taken:
1. The Master Trust Agreement is hereby amended to establish and designate
an additional series of shares to be known as State Street Research
Athletes Fund, such series to have the relative rights and preferences
set forth in Article IV, Section 4.2, subsection (a) through (l) of the
Master Trust Agreement.
2. The first sentence of the first paragraph of Section 4.2 of Article IV
of the Master Trust Agreement is hereby amended to read as follows:
"Section 4.2 Establishment and Designation of Sub-Trust. Without
limiting the authority of the Trustees set forth in Section 4.1
to establish and designate any further Sub-Trusts, the Trustees
hereby establish and designate four Sub-Trusts: The 'State Street
Research Alpha Fund', the 'State Street Research Equity
Investment Fund', the 'State Street Research Global Resources
Fund' and the 'State Street Research Athletes Fund'."
This Amendment shall operate to abolish State Street Research Capital
Appreciation Fund effective as of the completion of a certain
reorganization on or about August 18, 1997.
3. The last sentence of Article IV, Section 4.2(d) of the Master Trust is
deleted and replaced in its entirety with the following:
"The liquidation of any particular Sub-Trust or class thereof may
be authorized by vote of a
<PAGE>
majority of the Trustees then in office without the approval of
shareholders of such Sub-Trust or class; provided, however, that
the liquidation of State Street Research Alpha Fund, State Street
Research Equity Investment Fund or State Street Research Global
Resources, or a class thereof, shall be subject to the approval
by the affirmative vote of the holders of a majority of the
outstanding voting Shares, within the meaning of the 1940 Act, of
the applicable Sub-Trust or class."
4. The following is added immediately prior to the last sentence of
Article V, Section 5.1:
"Execution of a proxy by a person or organization, which has been
authorized to do so by a Shareholder pursuant to telephonic or
electronic transmitted instructions, shall constitute execution
of such proxy by or on behalf of such Shareholder."
5. Article VII, Section 7.2 of the Master Trust Agreement is deleted and
replaced in its entirety with the following:
"Section 7.2 Reorganization. The Trust, on behalf of any one or
more Sub-Trust, may, either as the successor, survivor, or
non-survivor, (1) consolidate or merge with one or more other
trusts, sub-trusts, partnerships, limited liability companies,
associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United
States, to form a consolidated or merged trust, sub-trust,
partnership, limited liability company, association or
corporation under the laws of which any one of the constituent
entities is organized, with the Trust to be the survivor or
non-survivor of such consolidation or merger or (2) transfer its
assets to one or more other trusts, sub-trusts, partnerships,
limited liability companies, associations or corporations
organized under the laws of the Commonwealth of Massachusetts or
any other state of the United States, or have one or more such
trusts, sub-trusts, partnerships, limited liability companies,
associations, or corporations transfer its assets to it, any such
<PAGE>
consolidation, merger or transfer to be upon such terms and
conditions as are specified in any agreement and plan of
reorganization authorized and approved by the Trustees and
entered into by the Trust on behalf of one or more Sub-Trusts, as
the case may be, in connection therewith. Any such consolidation,
merger or transfer may be authorized by vote of a majority of the
Trustees then in office without the approval of shareholders of
any Sub-Trust; provided, however, that the approval by the
affirmative vote of the holders of a majority of the outstanding
voting Shares, within the meaning of the 1940 Act, of State
Street Research Alpha Fund, State Street Research Equity
Investment Fund or State Street Research Global Resources Fund,
as applicable, shall be required to authorize a consolidation,
merger or transfer involving any such Sub-Trust."
This Amendment shall be effective as of March 25, 1998.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts
the foregoing on behalf of the Trust pursuant to authorization by the Trustees
of the Trust.
/s/ Darman A. Wing
------------------------------
Darman A. Wing
Assistant Secretary
Exhibit (2)(a)
BY-LAWS
OF
METLIFE - STATE STREET EQUITY TRUST
ARTICLE 1
Agreement and Declaration
of Trust; Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust (also referred to as the Master Trust
Agreement), as from time to time in effect (the "Declaration of Trust"), of
MetLife - State Street Equity Trust, the Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust
shall be located in Boston, Massachusetts.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 Specia1 Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board of Trustees, the President or the Treasurer or by two
or more Trustees, sufficient notice thereof being given to each Trustee by the
Secretary or an Assistant Secretary or by the officer or the Trustees calling
the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his usual
or last known business or residence address or to give notice to him in person
or by telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by him before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior
<PAGE>
thereto or at the commencement thereof the lack of notice to him. Neither notice
of a meeting nor a waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees one-half of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including a
Chairman of the Board of Trustees, one or more Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. The Chairman of the Board of Trustees shall be a Trustee and may, but
need not be, a shareholder of the Trust; and any other officer may, but need not
be, a Trustee or shareholder of the Trust. Any two or more offices may be held
by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees at a meeting held within the first four months
of the Trust's fiscal year. The meeting at which the officers are elected shall
be known as the annual meeting of Trustees. Other officers, if any, may be
elected or appointed by the Trustees at said meeting or at any other time.
Vacancies in any office may be filled at any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office until the next annual meeting of the Trustees and until their respective
successors are chosen and qualified, or in each case until he sooner dies,
resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain authority at the pleasure of the Trustees.
2
<PAGE>
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman of the Board of Trustees. The Chairman of the Board of
Trustees, if any, shall preside at all meetings of the shareholders and of the
Trustees unless otherwise provided by the Trustees, and shall perform such other
duties and shall have such other powers as the Trustees may determine from time
to time.
3.6 President. The President shall be the chief executive officer of
the Trust. In the absence of the Chairman of the Board of Trustees, the
President shall preside at meetings of the shareholders and of the Trustees
unless otherwise provided by the Trustees.
3.7 Vice President. The Vice President, or if there be more than one
Vice President, the Vice Presidents in the order determined by the Trustees (or
if there be no such determination, then in the order of their election), shall
in the absence of the President or in the event of his inability or refusal to
act, perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Trustees may from time to time prescribe.
3.8 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.9 Assistant Treasurer. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Trustees
(or if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Trustees may from time to time prescribe.
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3.10 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he is absent, a temporary secretary chosen
at such meeting, shall record the proceedings thereof in the aforesaid books.
3.11 Assistant Secretary. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Trustees (or
if there be no determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.
3.12 Resignations and Removals. Any Trustee or officer may resign at
any time by written instrument signed by him and delivered to the Chairman of
the Board of Trustees, the President or the Secretary or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. The Trustees may remove any officer elected by
them with or without cause. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his
resignation or removal, or any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the
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Trustees. The Trustees shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any applicable
law. Officers and committees shall render such additional reports as they may
deem desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed by resolution
of the Trustees.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon, but, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
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ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all shareholders. In that event, a
shareholder may receive a certificate stating the number of shares owned by him,
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the President or a Vice President and by the
Treasurer or Assistant Treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction
or the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled to vote
thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at
any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of shares certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
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ARTICLE 10
Dealings with Trustees and Officers
10.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which any Trustee,
officer or other agent of the Trust may have an interest.
ARTICLE 11
Amendments to the By-Laws
11.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
The foregoing By-Laws were adopted by the Board of Trustees on March
18, 1986.
/s/ Constantine Hutchins, Jr.
---------------------------------
Constantine Hutchins, Jr.
Secretary
VS-1185/c
3/7/86
7
Exhibit (2)(b)
MetLife - State Street Equity Trust
Amendment No. 1 to the By-Laws
That the first sentence of Section 3.6 of Article III of the By-Laws
of the MetLife - State Street Equity Trust is hereby amended to read as follows:
"Unless otherwise determined by the Trustees, the President shall be
the Chief Executive Officer of the Trust."
Effective as of:
September 30, 1992 /s/ Constantine Hutchins, Jr.
-------------------------------------
Constantine Hutchins, Jr.
Secretary
Exhibit (5)(a)
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this 17th day of July, 1986, by and between
METLIFE - STATE STREET INVESTMENT SERVICES, INC., a corporation organized under
the laws of the Commonwealth of Massachusetts having its principal place of
business in Boston, Massachusetts (the "Manager"), and METLIFE - STATE STREET
EQUITY TRUST, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end diversified
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust has established three series, the MetLife - State Street
Capital Appreciation Fund, the MetLife - State Street Equity Investment Fund and
the MetLife - State Street Equity Income Fund, such series (the "Initial
Funds"), together with all other series subsequently established by the Trust
with respect to which the Manager renders management and investment advisory
services pursuant to the terms of this Agreement, being herein collectively
referred to as the "Funds" and individually as a "Fund."
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF MANAGER.
(a) Initial Funds. The Trust hereby appoints the Manager to act as manager
and investment adviser to each of the Initial Funds for the period and on the
terms herein set forth. The Manager accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or more
series of shares other than the Initial
<PAGE>
Funds with respect to which it desires to retain the Manager to render
management and investment advisory services hereunder, it shall so notify the
Manager in writing, indicating the advisory fee to be payable with respect to
the additional series of shares. If the Manager is willing to render such
services, it shall so notify the Trust in writing, whereupon such series of
shares shall become a Fund hereunder. In such event a writing signed by both the
Trust and the Manager shall be annexed hereto as a part hereof indicating that
such additional series of shares has become a Fund hereunder and reflecting the
agreed-upon fee schedule for such Fund to the extent the provisions of Section 4
shall not apply with respect thereto.
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services and
facilities to the Trust:
(a) Investment Program. The Manager shall (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what investments
shall be purchased, held, sold or exchanged by each Fund and what portion, if
any, of the assets of each Fund shall be held uninvested, and (iii) make changes
on behalf of the Trust in the investments of each Fund. The Manager shall also
manage, supervise and conduct the other affairs and business of the Trust and
each Fund thereof and matters incidental thereto, subject always to the control
of the Board of Trustees of the Trust and to the provisions of the Master Trust
Agreement and By-laws of the Trust, as amended, and the Prospectus of the Trust
as from time to time amended and in effect and the 1940 Act. Subject to the
foregoing, the Manager shall have the authority to engage one or more
sub-advisers in connection with the management of the Funds, which sub-advisers
may be affiliates of the Manager.
(b) Regulatory Reports. The Manager shall furnish to the Trust necessary
assistance in:
(i) the preparation of all reports now or hereafter required by
federal or other laws; and
(ii) the preparation of prospectuses, registration statements and
amendments thereto that may be required by federal or other laws or by the rules
or regulations of any duly authorized commission or administrative body.
(c) Office Space and Facilities. The Manager shall furnish the Trust office
space in the offices of the Manager, or in such other place or places as may be
agreed upon from time to time, and all necessary office facilities, simple
business
2
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equipment, supplies, utilities, and telephone service for managing the affairs
and investments of the Trust.
(d) Services of Personnel. The Manager shall provide all necessary
executive and administrative personnel for managing the affairs of the Trust,
including personnel to perform clerical, bookkeeping, accounting and other
office functions. These services are exclusive of the bookkeeping and accounting
services of any dividend disbursing agent, transfer agent, registrar or
custodian. The Manager shall compensate all personnel, officers and Trustees of
the Trust if such persons are also employees of the Manager or its affiliates.
(e) Fidelity Bond. The Manager shall arrange for providing and maintaining
a bond issued by a reputable insurance company authorized to do business in the
place where the bond is issued against larceny and embezzlement covering each
officer and employee of the Trust and/or the Manager who may singly or jointly
with others have access to funds or securities of the Trust, with direct or
indirect authority to draw upon such funds or to direct generally the
disposition of such funds. The bond shall be in such reasonable amount as a
majority of the Trustees who are not "interested persons" of the Trust, as
defined in the 1940 Act, shall determine, with due consideration given to the
aggregate assets of the Trust to which any such officer or employee may have
access. The premium for the bond shall be payable by the Trust in accordance
with paragraph 3(o).
(f) Portfolio Transactions. The Manager shall place all orders for the
purchase and sale of portfolio securities for the account of each Fund with
brokers or dealers selected by the Manager, although the Trust will pay the
actual brokerage commissions on portfolio transactions in accordance with
paragraph 3(d).
3. ALLOCATION OF EXPENSE
Except for the services and facilities to be provided by the Manager as set
forth in paragraph 2 above, the Trust assumes and shall pay all expenses for all
other Trust operations and activities and shall reimburse the Manager for any
such expenses incurred by the Manager (it being understood that the Trust shall
allocate such expenses between or among its Funds to the extent contemplated by
its Master Trust Agreement). The expenses to be borne by the Trust shall
include, without limitation:
(a) all expenses of organizing the Trust or forming any Fund thereof;
3
<PAGE>
(b) the charges and expenses of any registrar, stock transfer or dividend
disbursing agent, shareholder servicing agent, custodian, or depository
appointed by the Trust for the safekeeping of its cash, portfolio securities and
other property, including the costs of servicing shareholder investment accounts
and bookkeeping, accounting and pricing services;
(c) the charges and expenses of auditors;
(d) brokerage commissions and other costs incurred in connection with
transactions in the portfolio securities of the Trust, including any portion of
such commissions attributable to brokerage and research services as defined in
Section 28(e) of the Exchange Act;
(e) taxes, including issuance and transfer taxes, and corporate
registration, filing or other fees payable by the Trust to federal, state or
other governmental agencies;
(f) expenses, including the cost of printing certificates, relating to the
issuance of shares of the Trust;
(g) expenses involved in registering and maintaining registrations of the
Trust and of its shares with the Securities and Exchange Commission and various
states and other jurisdictions, including reimbursement of actual expenses
incurred by the Manager in performing such functions for the Trust, and
including compensation of persons who are employees of the Manager, in
proportion to the relative time spent on such matters;
(h) expenses related to the redemption of shares of the Trust, including
expenses attributable to any program of periodic redemption;
(i) expenses of shareholders' and Trustees' meetings, including meetings of
committees, and of preparing, printing and mailing proxy statements, quarterly
reports, semi-annual reports, annual reports and other communications to
existing shareholders;
(j) expenses of preparing and setting in type prospectuses, and expenses of
printing and mailing the same to existing shareholders (but not expenses of
printing and mailing of prospectuses and literature used for promotional
purposes);
(k) compensation and expenses of Trustees who are not "interested persons"
within the meaning of the 1940 Act;
(l) expense of maintaining shareholder accounts and furnishing, or causing
to be furnished, to each shareholder a statement of his account, including the
expense of mailing;
4
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(m) charges and expenses of legal counsel in connection with matters
relating to the Trust, including, without limitation, legal services rendered in
connection with the Trust's corporate and financial structure and relations with
its shareholders, issuance of shares of the Trust, and registration and
qualification of securities under federal, state and other laws;
(n) the cost and expense of maintaining the books and records of the Trust,
including general ledger accounting;
(o) insurance premiums on fidelity, errors and omissions and other
coverages including the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
(p) interest payable on Trust borrowings; and
(q) such other non-recurring expenses of the Trust as may arise, including
expenses of actions, suits, or proceedings to which the Trust is a party and
expenses resulting from the legal obligation which the Trust may have to provide
indemnity with respect thereto.
4. ADVISORY FEE.
For the services and facilities to be provided by the Manager as set forth
in paragraph 2 hereof, the Trust agrees that each Fund shall pay to the Manager
a monthly fee as soon as practical after the last day of each calendar month,
which fee shall be paid at a rate equal to sixty-five one hundredths of one
percent (.65%) in the case of the Equity Investment Fund and the Equity Income
Fund and seventy-five one hundredths of one percent (.75%) in the case of the
Capital Appreciation Fund, in each case on an annual basis of the average daily
net asset value of such Fund for such calendar month, commencing as of the date
on which this Agreement becomes effective with respect to such Fund.
In the case of commencement or termination of this Agreement with respect
to any Fund during any calendar month, the fee with respect to such Fund for
that month shall be reduced proportionately based upon the number of calendar
days during which this Agreement is in effect with respect to such Fund, and the
fee shall be computed based upon the average daily net asset value of such Fund
during such period.
5. EXPENSE LIMITATION.
The Manager agrees that if the total expenses of any Fund (exclusive of
interest, taxes, payments to fund certain distribution expenses pursuant to the
Trust's 12b-1 Distribution
5
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Plan, brokerage expenses and extraordinary items such as litigation expenses)
for any fiscal year of the Trust exceed the lowest expense limitation imposed in
any jurisdiction in which that Fund is then making sales of its shares or in
which its shares are then qualified for sale, if any, the Manager will pay or
reimburse such Fund for that excess up to the amount of its advisory fees
payable with respect to that Fund during that fiscal year. The amount of the
monthly advisory fee payable by any Fund under paragraph 4 hereof shall be
reduced to the extent that the monthly expenses of that Fund, on an annualized
basis, would exceed the foregoing limitation. At the end of each fiscal year of
the Trust, if the aggregate annual expenses chargeable to any Fund for that year
exceed the foregoing limitation based upon the average of the monthly average
net asset value of that Fund for the year, the Manager will promptly reimburse
that Fund for the amount of such excess to the extent not already reimbursed by
reduction of the monthly advisory fee, but if such expenses are within the
foregoing limitation, any excess amount previously withheld from the monthly
advisory fee during that fiscal year will be promptly paid over to the Manager.
In the event that this Agreement (i) is terminated with respect to any one
or more Funds as of a date other than the last day of the fiscal year of the
Trust or (ii) commences with respect to one or more Funds as of a date other
than the first day of the fiscal year of the Trust, then the expenses of such
Fund or Funds shall be annualized and the Manager shall pay to, or receive from,
the applicable Fund or Funds a pro rata portion of the amount that the Manager
would have been required to pay or would have been entitled to receive, if any,
had this Agreement been in effect with respect to such Fund or Funds for the
full fiscal year.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Master Trust Agreement and By-laws of
the Trust and the Articles of Organization and By-laws of the Manager, it is
understood that Trustees, officers, agents and shareholders of the Trust are or
may be interested in the Manager (or any successor thereof) as directors,
officers or otherwise, that directors, officers, agents and shareholders of the
Manager (or any successor thereof) are or may be interested in the Trust as
Trustees, officers, agents, shareholders or otherwise, that the Manager (or any
such successor thereof) is or may be interested in the Trust as a shareholder or
otherwise and that the effect of any such adverse interests shall be governed by
said Master Trust Agreement, Articles of Organization and By-laws.
6
<PAGE>
7. LIABILITY OF MANAGER.
The Manager shall not be liable to the Trust for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates; provided, however, that no provision of
this Agreement shall be deemed to protect the Manager against any liability to
the Trust or its shareholders to which it might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the performance of
its duties or the reckless disregard of its obligations and duties under this
Agreement, nor shall any provision hereof be deemed to protect any Trustee or
officer of the Trust against any such liability to which he might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of his duties or the reckless disregard of his obligations and
duties. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to each
Initial Fund on the later of (i) the date on which a Registration Statement with
respect to its shares under the Securities Act of 1933, as amended, is first
declared effective by the Securities and Exchange Commission or (ii) the date on
which such Initial Fund commences offering its shares to the public, and, with
respect to any additional Fund, on the date of receipt by the Trust of notice
from the Manager in accordance with paragraph l(b) hereof that the Manager is
willing to serve as Manager with respect to such Fund. Unless terminated as
herein provided, this Agreement shall remain in full force and effect with
respect to each Initial Fund until the date which is two years after the
effective date of this Agreement with respect to such Initial Fund and, with
respect to each additional Fund, for two years from the date on which such Fund
becomes a Fund hereunder. Subsequent to such initial periods of effectiveness
this Agreement shall continue in full force and effect, subject to Section 8(c),
for successive one-year periods with respect to each Fund so long as such
continuance with respect to such Fund is approved at least annually (a) by
either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of such Fund, and (b) in either
event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. Notwithstanding the foregoing provisions of this Section 8(a),
the continuance of this Agreement with respect to the Initial Funds or any
additional Fund is subject to the approval of this Agreement by a
7
<PAGE>
majority of the outstanding voting securities thereof (as defined in the 1940
Act) at the initial meeting of shareholders after this Agreement becomes
effective with respect thereto.
(b) Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendments of this Agreement shall be effective
with respect to any Fund until approved by vote of the holders of a majority of
that Fund's outstanding voting securities (as defined in the 1940 Act).
(c) Termination. This Agreement may be terminated with respect to any Fund
at any time, without payment of any penalty, by vote of the Trustees or by vote
of a majority of the outstanding voting securities (as defined in the 1940 Act)
of that Fund, or by the Manager, in each case on sixty (60) days' prior written
notice to the other party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) Approval, Amendment or Termination by Individual Fund. Any approval,
amendment or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act) of any Fund shall be
effective to continue, amend or terminate this Agreement with respect to such
Fund notwithstanding (i) that such action has not been approved by the holders
of a majority of the outstanding voting securities of any other Fund affected
thereby, and (ii) that such action has not been approved by the vote of a
majority of the outstanding voting securities of the Trust, unless such action
shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Trust hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
10. NAME OF TRUST.
It is understood that the names "State Street" and "MetLife" and any logos
associated with those names are the valuable property of, respectively, State
Street Research & Management Company ("SSRM"), the parent company of the
Manager, and Metropolitan Life Insurance Company, the ultimate parent company of
SSRM, and that the Trust has the right to include
8
<PAGE>
such names as a part of its name and the names of its Funds only so long as this
Agreement shall continue. Upon termination of this Agreement the Trust shall
forthwith cease to use the State Street and MetLife names and logos and shall
submit to its shareholders an amendment to its Master Trust Agreement changing
the Trust's name and the names of any Funds then utilizing such name or names or
any portion thereof.
11. PRIOR AGREEMENTS SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties hereto.
12. NOTICES.
Notices under this Agreement shall be in writing and shall be addressed,
and delivered or mailed postage prepaid, to the other party at such address as
such other party may designate from time to time for the receipt of such
notices. Until further notice to the other party, the address of each party to
this Agreement for this purpose shall be One Financial Center, Boston,
Massachusetts 02111.
13. GOVERNING LAW; COUNTERPARTS.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
14. LIMITATION OF LIABILITY.
The term "MetLife - State Street Equity Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Trust
dated March 18, 1986 as the same may subsequently hereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust provides, and it is expressly agreed, that each
Fund of the Trust shall be solely and exclusively responsible for the payment of
its debts,
9
<PAGE>
liabilities and obligations, and that no other Fund shall be responsible for the
same.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
METLIFE - STATE STREET
Attest: INVESTMENT SERVICES, INC.
/s/ Constantine Hutchins, Jr. By: /s/ Herbert P. Hess
- ----------------------------------- -------------------------------
Constantine Hutchins, Jr., Herbert P. Hess
Clerk Senior Vice President
METLIFE - STATE STREET
Attest: EQUITY TRUST
/s/ Constantine Hutchins, Jr. By: /s/ Charles L. Smith, Jr.
- ----------------------------------- --------------------------------
Constantine Hutchins, Jr., Charles L. Smith, Jr.,
Secretary President
VS-1922/c
10
Exhibit (5)(c)
METLIFE - STATE STREET EQUITY TRUST
One Financial Center
Boston, MA 02111
January 25, 1990
MetLife - State Street
Investment Services, Inc.
One Financial Center
Boston, MA 02111-2690
Gentlemen:
This letter is to confirm to you that MetLife - State Street Equity Trust
(the "Trust") has created a new series of shares to be known as MetLife - State
Street Energy Fund (the "Fund"), and that pursuant to Section l(b) of the
Advisory Agreement dated as of July 17, 1986 between the Trust and you (the
"Agreement"), the Trust desires to retain you to render management and
investment advisory services under the Advisory Agreement to the Fund as a
"Series" thereunder for a fee equal to 0.75% on an annual basis of the average
daily net asset value of the Fund.
Please indicate your acceptance of this responsibility in accordance with
the terms of the Agreement by signing this letter as indicated below.
The term "MetLife - State Street Equity Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Trust
dated March 18, 1986 as the same may subsequently thereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust provides, and it is expressly agreed, that each
Fund of the Trust shall be solely and exclusively responsible for the payment of
its debts,
<PAGE>
liabilities and obligations, and that no other fund shall be responsible for the
same.
METLIFE - STATE STREET
EQUITY TRUST
By: /s/ Constantine Hutchins, Jr.
----------------------------------
Constantine Hutchins, Jr.
Title: Secretary
ACCEPTED AND AGREED TO:
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By: /s/ David P. McLean
--------------------------------------
David P. McLean
Title: President
DP-7081/w
Exhibit (5)(e)
TRANSFER AND ASSUMPTION OF RESPONSIBILITIES AND RIGHTS
In accordance with the vote unanimously adopted by all of the Trustees of
MetLife - State Street Equity Trust ("Trust") who were present at a meeting of
such Trustees duly called and held on September 14, 1992, being a majority of
such Trustees, including a majority of Trustees who are not parties to the
attached Advisory Agreement dated July 17, 1986, by and between State Street
Financial Services, Inc. (formerly MetLife - State Street Investment Services,
Inc.) and the Trust ("Advisory Agreement"), or "interested persons" (as defined
in the Investment Company Act of 1940) of any such party, effective as of the
commencement of business on July 1, 1992, all of the duties and responsibilities
of the Manager to provide services and facilities to the Trust as set forth in
the Advisory Agreement and all the rights of the Manager, including but not
limited to the right to be compensated by the Trust as described in the Advisory
Agreement, are hereby transferred from State Street Financial Services, Inc., a
Massachusetts corporation, to State Street Research & Management Company, a
Delaware corporation, formerly sub-adviser to the Trust, and State Street
Research & Management Company hereby assumes such responsibilities and rights,
all of the foregoing transactions being effected in reliance on Rule 2a-6 under
the Investment Company Act of 1940, as amended.
STATE STREET FINANCIAL
SERVICES, INC.
by /s/ Donald E. Webber
----------------------------------------
Donald E. Webber, President and
Chief Executive Officer
STATE STREET RESEARCH &
MANAGEMENT COMPANY
by /s/ Ralph F. Verni
-----------------------------------------
Ralph F. Verni, Chairman and
Chief Executive Officer
Dated: October 6, 1992.
Exhibit (6)(a)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT made as of this 17th day of July, 1986, by and
between METLIFE - STATE STREET INVESTMENT SERVICES, INC., a corporation
organized under the laws of the Commonwealth of Massachusetts having its place
of business in Boston, Massachusetts (the "Distributor"), and METLIFE - STATE
STREET EQUITY TRUST, a Massachusetts business trust having its principal place
of business in Boston, Massachusetts (the "Trust"), which Trust proposes to
offer shares of beneficial interest in different series representing interests
in separate portfolios of assets (each series being referred to herein as a
"Fund" and such series being referred to herein collectively as the "Funds").
WITNESSETH:
In consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, it is agreed:
1. Appointment of Distributor.
(a) Appointment. The Trust hereby appoints the Distributor as its exclusive
agent to sell and distribute shares of each Fund in existence as of the date
hereof (the "Initial Funds") and the Distributor hereby accepts such appointment
and agrees during the term of this Agreement to provide the services and to
assume the obligations herein set forth. In the event that the Trust establishes
one or more series of shares other than the Initial Funds with respect to which
it desires to retain the Distributor to serve as distributor and principal
underwriter hereunder, it shall so notify the Distributor in writing, indicating
the advisory fee to be payable with respect to the additional series of shares.
If the Distributor is willing to render such services, it shall so notify the
Trust in writing, whereupon such series of shares shall become a Fund hereunder.
In such event a writing signed by both the Trust and the Distributor shall be
annexed hereto as a part hereof indicating that such additional series of shares
has become a Fund hereunder.
(b) Sale of Shares. Shares of each Fund shall be sold at the offering price
thereof as from time to time determined in the manner herein provided. The Trust
agrees that it will not, without the Distributor's consent, sell or agree to
sell any shares of a Fund otherwise than through the Distributor, except that
the Trust may (a) sell shares for not less than the net asset value thereof as
an investment to such persons or classes
<PAGE>
of persons as may be indicated in the Prospectus of the Trust as amended and in
effect from time to time, (b) issue or sell shares for not less than the net
asset value thereof directly to holders of shares of any Fund upon such terms
and for such consideration, if any, as it may determine, whether in connection
with the distribution of subscription or purchase rights, the payment or
reinvestment of distributions or dividends, the exercise of any applicable
reinvestment privilege, or otherwise; (c) issue or sell shares for not less than
the net asset value thereof of any Fund to the shareholders of any other Fund or
investment company for which the Trust's investment adviser acts as investment
adviser in connection with the exercise of exchange privileges offered by the
Trust; and (d) issue shares for not less than the net asset value thereof in
connection with a merger, consolidation or acquisition of assets on such basis
as may be authorized or permitted under the Investment Company Act of 1940, as
amended (the "1940 Act").
2. Basis of Sale of Shares; Selected Dealers. The Distributor does not
agree to sell any specific number of shares. Shares will be sold by the
Distributor as agent for the Funds and the Trust only against orders therefor.
The Distributor will not purchase shares except as agent for the Trust.
Notwithstanding anything herein to the contrary, the Trust may terminate,
suspend or withdraw the offering of shares whenever, in its sole discretion, it
deems such action desirable. In connection with its performance of services
hereunder, the Distributor may engage other members in good standing of the
National Association of Securities Dealers, Inc., to act as selected dealers in
accordance with the terms of a selected dealer agreement in substantially the
form attached hereto.
3. Compensation.
(a) Offering Price/Sales Charge. The offering price for shares of any Fund
of the Trust shall be the "net asset value per share" for that Fund determined
in accordance with the Master Trust Agreement of the Trust, as amended (the
"Master Trust Agreement"), plus a sales charge payable to the Distributor as set
forth in the Trust's Prospectus as from time to time amended and in effect. The
Distributor may reallow such portions of such sales charges as dealer
concessions to dealers through whom sales are made as the Distributor may
determine consistent with the terms of the Trust's Prospectus as from time to
time amended and in effect; provided, however, that the sales charge to each
purchaser of shares shall not exceed that set forth for such category of
purchaser in the Trust's Prospectus as from time to time amended and in effect.
The
2
<PAGE>
Distributor may also pay from its own funds a monthly commission, if any, with
respect to sales to the extent consistent with and as contemplated by the
Trust's Prospectus as from time to time amended and in effect. The net asset
value per share for each Fund shall be determined at such time and on such days
as are established by the Board of Trustees of the Trust from time to time.
(b) 12b-1 Expenses. The Trust has adopted a Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act (the "12b-1 Plan") pursuant to which the
Distributor shall receive quarterly payments from each Fund during such periods
as the 12b-1 Plan shall be in effect with respect to it, commencing as of the
date on which the 12b-1 Plan becomes effective with respect to such Fund. The
Distributor shall use such 12b-1 payments to promote and foster sales of the
shares of the Funds in such manner as it shall determine consistent with the
Prospectus of the Trust as from time to time amended and in effect.
4. Manner of Offering. The Distributor will conform to the securities laws
of any jurisdiction in which it sells, directly or indirectly, any shares of the
Trust. The Distributor also agrees to furnish to the Trust sufficient copies of
any sales literature it intends to use in connection with any sales of shares in
adequate time for the Trust to review such sales literature. The Distributor
agrees that it will be responsible for filing and clearing all such sales
literature with the proper authorities before the same is put in use to the
extent required by applicable law, and not to use the same until so filed and
cleared.
The Distributor and the Trust each shall have the right to accept or reject
orders for the purchase of shares of the Trust. Any consideration which the
Distributor may receive in connection with a rejected purchase order will be
returned promptly to the prospective purchaser. The Distributor agrees promptly
to issue confirmations of all accepted purchase orders and to transmit a copy of
such confirmations to the Trust, or, if so directed, to any duly appointed
transfer or shareholder servicing agent of the Trust. If the originating dealer
shall fail to make timely settlement of its purchase order in accordance with
the rules of the National Association of Securities Dealers, Inc., the
Distributor shall have the right to cancel such purchase order and to hold the
originating dealer responsible. The Distributor agrees promptly to reimburse the
Trust for any amount by which the Trust's losses attributable to any such
cancellations or to accepted purchase orders exceed gains realized by the Trust
for either of such reasons in respect of other purchase orders. The Trust shall
register or cause to be registered all shares sold by the
3
<PAGE>
Distributor pursuant to the provisions hereof in such name or names and amounts
as the Distributor may request from time to time.
The Distributor agrees that if any person tenders to the Trust for
redemption any shares purchased from the Trust within seven days of the
redemption request, the Distributor will promptly pay to the Trust the full
sales commission paid with respect to the shares so tendered for redemption (in
the case of sales by selected dealers, such payment shall be made promptly after
the Distributor's receipt of the same from the selected dealer responsible for
the sale), and no 12b-1 or other payments shall be payable with respect thereto.
The Distributor hereby agrees to act as agent for the Trust in connection
with any share repurchase arrangements from time to time offered by the Trust in
accordance with the terms of the Trust's Prospectus as from time to time
amended.
5. Securities Laws. The Trust has delivered to the Distributor a copy of
its current Prospectus. The Trust agrees that it will use its best efforts to
continue the effectiveness of its Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act"), and the 1940 Act. The Trust
further agrees to prepare and file any amendments to such Registration Statement
and any supplemental data as may be necessary in order to comply with the
Securities Act and the 1940 Act. The Trust is presently registered under the
1940 Act as an investment company, and it will use its best efforts to maintain
such registration and to comply with the requirements of said Act.
At the Distributor's request, the Trust will take such steps as may be
necessary and feasible to qualify shares of the Funds for sale in states,
territories or dependencies of the United States of America, in the District of
Columbia and in foreign countries, in accordance with the laws thereof, and to
renew or extend any such qualification; provided, however, that the Trust shall
not be required to qualify shares or to maintain the qualification of shares in
any state, territory, dependency, district or country where it shall deem such
qualification disadvantageous to the Trust.
The Distributor agrees that it will (i) not use, distribute or disseminate
or authorize the use, distribution or dissemination by others in connection with
the sale of shares of the Funds, any statement, other than those contained in
the Trust's current Prospectus, except such supplemental literature or
advertising as shall be approved by the Trust, (ii) conform to the requirements
of all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. relating to the sale of shares of the
Trust (includ-
4
<PAGE>
ing, without limitation, the maintenance of effective broker-dealer
registrations as required), and (iii) observe and be bound by all the provisions
of the Master Trust Agreement (and of any fundamental policies adopted by the
Trust pursuant to the 1940 Act, notice of which shall have been given to the
Distributor) which at the time in any way require, limit, restrict or prohibit
or otherwise regulate any action on the part of the Distributor.
The Distributor further agrees that:
(a) the Distributor shall furnish to the Trust any information with respect
to the Distributor within the purview of any reports or registrations required
to be filed with any governmental authority; and
(b) the Distributor will not make any representations inconsistent with the
Registration Statement of the Trust filed under the Securities Act, as from time
to time amended and in effect.
6. Allocation of Expenses.
(a) The Funds, either directly or through their investment adviser or
investment advisers, will be responsible for, and shall pay their allocable
portions of the expenses of:
(i) providing all necessary services, including fees and disbursements
of counsel, related to the preparation, setting in type, printing and filing of
any registration statement and/or prospectus required under the Securities Act
or the 1940 Act or under state securities laws covering their shares, and all
amendments and supplements thereto, the mailing of any such prospectus to
existing shareholders, and preparing, setting in type, printing and mailing of
periodic reports to existing shareholders;
(ii) the cost of all registration or qualification fees relating to
the Funds' shares, including the fees or expenses of qualifying the Trust as a
broker or dealer under laws of any state, if any;
(iii) the cost of preparing temporary and permanent share certificates
for shares, if any; and
(iv) any and all federal and state issue and/or transfer taxes payable
upon the issue by or (in the case of treasury shares) transfer from a Fund of
the shares distributed hereunder.
5
<PAGE>
(b) The Distributor agrees that, after the Trust's Prospectus and periodic
reports have been set in type, it will bear the expense of printing and
distributing any copies thereof which are to be used in connection with the
offering of shares to prospective investors. The Distributor further agrees that
it will bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use in connection with
the offering of the shares for sale to the public, and any expenses of
advertising in connection with such offering. The Distributor will also pay fees
and expenses related to its registrations as a broker-dealer and fees for
services rendered by the Trust's transfer agent on behalf of the Distributor.
(c) The Funds will be responsible for, and shall pay the expenses of,
maintaining shareholder accounts and furnishing or causing to be furnished to
each shareholder a statement of his account.
7. Distributor Is Independent Contractor. The Distributor shall be an
independent contractor. The Distributor is responsible for its own conduct, for
the employment, control and conduct of its agents and employees and for injury
to such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable laws and agrees to pay all employer taxes relating thereto.
8. Term and Termination; Amendment.
(a) Term and Termination. This Agreement shall become effective with
respect to each Initial Fund as of the later of (i) the date on which a
Registration Statement with respect to its shares becomes effective under the
Securities Act or (ii) the date on which such Initial Fund commences offering
its shares to the public, and, with respect to any additional Fund, on the date
of receipt by the Trust of notice from the Distributor in accordance with
Section l(a) hereof that the Distributor is willing to serve as Distributor with
respect to such Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect with respect to each Initial Fund until the date
which is two years after the effective date of this Agreement with respect to
such Initial Fund, and, with respect to each additional Fund, for twelve months
from the date on which such Fund becomes a Fund hereunder. Subsequent to such
initial periods of effectiveness this Agreement shall continue in full force and
effect, subject to the last sentence of this Section 8(a), for successive
one-year periods with respect to each Fund so long as such continuance with
respect to such Fund is approved at least annually (a) by either the Trustees of
the Trust or by vote of a majority of
6
<PAGE>
the outstanding voting securities (as defined in the 1940 Act) of such Fund, and
(b) in either event, by the vote of a majority of the Trustees of the Trust who
are not parties to this Agreement or "interested persons" (as defined in the
1940 Act) of any such party, or the Trust and who have no direct or indirect
financial interest in the operation of the 12b-1 Plan or this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated with respect to the Trust or any Fund at any time,
without payment of any penalty, by a vote of (a) a majority of the Trustees who
are not "interested persons" of the Trust (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of the 12b-1 Plan
or this Agreement or (b) a majority of the outstanding voting securities of the
Trust or that Fund, or by the Distributor, as the case may be, in each case on
sixty (60) days' prior written notice to the other party.
(b) Amendment. Any amendment to this Agreement shall become effective with
respect to a Fund upon approval in writing of the Distributor and the Trust
(subject in the latter case to approval by a majority of the Trustees and a
majority of the Trustees who are not "interested persons" of the Trust (as
defined in the 1940 Act) and who have no direct or indirect financial interest
in the operation of the 12b-1 Plan; provided, however, that amendments relating
to the Trust's 12b-1 Plan shall not require the consent of the Distributor.
(c) Approval, Amendment or Termination bY Individual Fund. Any approval,
amendment or termination of this Agreement with respect to any Fund shall be
effective to continue, amend or terminate this Agreement with respect to such
Fund notwithstanding (i) that such action has not been approved with respect to
any other Fund affected thereby, and (ii) that such action has not been approved
by the shareholders of such Fund, unless such action shall be required by any
applicable law or otherwise.
9. Assignment. This Distribution Agreement may not be assigned by the
Distributor and shall automatically terminate in the event of an attempted
assignment by the Distributor; provided, however, that the Distributor may
employ or enter into agreements with such other person, persons, corporation or
corporations, as it shall determine in order to assist it in carrying out this
Agreement, including, without limitation, selected dealers as contemplated by
Section 2.
10. Indemnification by Distributor. The Distributor agrees to indemnify and
hold harmless the Trust or any other person who has been, is, or may hereafter
be an officer, Trustee, employee or agent of the Trust against any loss, dam-
7
<PAGE>
age or expense reasonably incurred by any of them in connection with any claim
or in connection with any action, suit or proceeding to which any of them may be
a party, which arises out of or is alleged to arise out of or is based upon any
violation of any of its representations or covenants herein contained or any
untrue statement or alleged untrue statement of a material fact, or the omission
or alleged omission to state a material fact necessary to make the statements
made not misleading, on the part of the Distributor or any agent or employee of
the Distributor or any other person for whose acts the Distributor is
responsible or is alleged to be responsible (such as any selected dealer or
person through whom sales are made pursuant to an agreement with the
Distributor), whether made orally or in writing, unless such statement or
omission was made in or in reliance upon written information furnished by the
Trust. The term "expenses" for purposes of this and the next paragraph includes
reasonable attorneys' fees and amounts paid in satisfaction of judgments or in
settlements which are made with the Distributor's consent. The foregoing rights
of indemnification shall be in addition to any other rights to which any of the
foregoing indemnified parties may be entitled as a matter of law.
11. Indemnification by Trust. The Trust agrees to indemnify and hold
harmless the Distributor and each person who has been, is, or may hereafter be
an officer, director, employee or agent of the Distributor against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit or proceeding to which any of them
may be a party, which arises out of or is alleged to arise out of or is based
upon a violation of any of its covenants herein contained or any untrue or
alleged untrue statement of material fact, or the omission or alleged omission
to state a material fact necessary to make the statements made not misleading,
in a Registration Statement or Prospectus of the Trust, or any amendment or
supplement thereto, unless such statement or omission was made in reliance upon
written information furnished by the Distributor. The foregoing rights of
indemnification shall be in addition to any other rights to which any of the
foregoing indemnified parties may be entitled as a matter of law. Nothing
contained herein shall relieve the Distributor of any liability to the Trust or
its shareholders to which the Distributor would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties hereunder.
12. Non-Exclusive Agreement. The services of the Distributor to the Trust
hereunder shall not be deemed to be exclusive, and the Distributor shall be free
to (a) render similar services to, and act as underwriter or distributor in
8
<PAGE>
connection with the distribution of shares of, other investment companies, and
(b) engage in any other businesses and activities from time to time.
13. Governing Law: Counterparts. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together, constitute only one
instrument.
14. Prior Aqreements Superseded; Construction. This Agreement supersedes
any prior agreement relating to the subject matter hereof between the parties
hereto. Where the context of this Agreement so permits, each of the masculine,
feminine and neuter genders shall be deemed to denote the other two genders, the
singular to denote the plural and the plural to denote the singular. Without
limiting the generality of the foregoing, all references to the Trust's
Prospectus shall include all Prospectuses thereunder.
15. Notices. Notices under this Agreement shall be in writing and shall be
addressed, and delivered or mailed postage prepaid, to the other party at such
address as such other party may designate from time to time for the receipt of
such notices. Until further notice to the other party, the address of each party
to this Agreement for this purpose shall be One Financial Center, Boston,
Massachusetts 02111.
16. Limitation of Liability. The term "MetLife - State Street Equity Trust"
means and refers to the Trustees from time to time serving under the Master
Trust Agreement of the Trust dated March 18, 1986 as the same may subsequently
hereto have been, or subsequently hereto may be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust further provides, and it is expressly agreed, that
each Fund of the Trust shall be solely and exclusively responsible for the
payment of its debts, liabilities and obligations and that no other Fund shall
be responsible or liable for the same.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed for the Distributor
and the Trust by their duly authorized officers, as of the date first set forth
above.
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By: /s/ David P. McLean
-------------------------------
David P. McLean
President
Attest:
/s/ Constantine Hutchins, Jr.
- --------------------------------------
Constantine Hutchins, Jr.,
Clerk
METLIFE - STATE STREET
EQUITY TRUST
By /s/ Charles L. Smith, Jr.
--------------------------------
Charles L. Smith, Jr.
President
Attest:
/s/ Constantine Hutchins, Jr.
- ---------------------------------------
Constantine Hutchins, Jr.,
Secretary
VS-1909/c
10
BANK AND BANK AFFILIATED BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Dated as of: ________________________________
To: _________________________________________________
(Exact legal name of bank or bank affiliate)
_________________________________________________
(Address)
_________________________________________________
_________________________________________________
(Attn)
We have been appointed to serve as an agent and a principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series, as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife - State Street trusts, the State
Street trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio
series shall be denoted individually as "Fund" and collectively as "Funds," and
the investment companies shall be denoted individually as "Investment Company"
and collectively as "Investment Companies" solely for purposes of this
agreement. We are hereby inviting you, subject to the terms and conditions set
forth below, to make available to your customers Shares of the Funds.
1. Acceptance of Orders.
(a) The customers in question are for all purposes your customers and
not our customers. We shall execute transactions for each of your customers only
upon your
<PAGE>
authorization, it being understood in all cases that (i) you are acting as the
agent for the customer; (ii) the transactions are subject to the federal and
state securities laws without recourse against you by the customer; (iii) as
between you and the customer, the customer will have beneficial ownership of the
securities; (iv) each transaction is initiated solely upon the order of the
customer; (v) each transaction is for the account of the customer and not for
your account; and (vi) you shall not have any authority in any transactions to
act as our agent or agent of the Funds.
(b) Orders received from you will be accepted by us and the Investment
Companies only at the public offering price applicable to each order. The public
offering price shall be the net asset value per Share plus any sales charge
payable upon the purchase of Shares of such Fund or class thereof as specified
in the then current prospectus applicable to such Shares, as amended and in
effect from time to time (the "Prospectus"). The public offering price may
reflect scheduled variations in, or the elimination of the sales charge on sales
of the Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus and related Statement of
Additional Information. You agree that you will apply any scheduled variation
in, or elimination of, the sales charge uniformly to all offerees in the class
specified in the Prospectus. Upon acceptance of an order we shall confirm the
order directly to the customer on a fully disclosed basis in writing and a copy
of each confirmation shall be sent simultaneously to you. The procedures
relating to the handling of orders shall be subject to instructions which we
shall provide from time to time to you. We and the Investment Companies reserve
the right to reject any purchase request in our sole discretion.
2. Agency Commission. Any compensation received by you with respect to the
sale of shares of a Fund shall be deemed to be charged by you to your customer
as an agency commission. The schedule of sales charges, commissions and dealer
concessions described in the applicable Prospectus and related Statement of
Additional Information shall apply and the amount of the agency commission shall
equal the applicable amount payable as compensation to a dealer in connection
with the sale of shares of a Fund. You agree that you will not combine customer
orders to reach breakpoints in commissions for any purpose unless authorized by
the Prospectus or in writing. You agree that you will apply any scheduled
variation, or elimination of, the sales charge uniformly to all offerees in the
class specified in the
2
<PAGE>
Prospectus. All compensation amounts are subject to change without notice by us.
3. Rule 12b-1 Plans.
(a) As consideration for your providing services in our promotion of
the sale of Shares of certain Funds or classes thereof which have a sales charge
and which have adopted Distribution Plans pursuant to Rule 12b-1 under the 1940
Act, and for providing personal services to, and/or the maintenance of the
accounts of, your customers who invest in and own such Shares of such Funds or
classes thereof, we shall pay you such fee as is described in the applicable
Prospectus and otherwise established by us from time to time, on Shares which
are owned of record by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as maintained by such Fund
or its agent, designate your firm as the customer's dealer of record. The fees
payable hereunder shall be computed and accrued daily and for each month shall
be based on the average daily net asset value of the relevant Shares which
remain outstanding during such month. No such fee will be paid to you with
respect to Shares redeemed or repurchased by such Fund within seven business
days after the date of our confirmation of such purchase. No such fee will be
paid to you with respect to any of your customers if the amount of such fee
based upon the value of such customer's Shares will be less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect
to any Fund or class thereof in accordance with the provisions of Rule 12b-1
under the 1940 Act or the rules of the National Association of Securities
Dealers, Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time
to time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Redemption and Repurchase of Shares. If any Shares with a sales charge
are sold through you hereunder and are redeemed by such Fund or repurchased by
us as agent for such Fund within seven business days after confirmation of the
original purchase, it is agreed that you shall forfeit your right to the entire
agency commission and any other related
3
<PAGE>
commission received by you on such Shares. We will notify you of any such
repurchase or redemption within ten business days from the date thereof and you
shall forthwith refund to us the entire agency commission and other commission,
if any, received by you on such sale. We agree, in the event of any such
repurchase or redemption, to refund to such Fund our share of the sales charge
retained by us, if any, and upon receipt from you of the refund of the agency
commission allowed to you, to pay such refund forthwith to such Fund.
If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to a Fund, you agree not
to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
5. Payment for Shares.
(a) Payment for Shares sold through you shall be made on or before the
settlement date specified in the applicable confirmation, at the office of our
clearing agent, and by check payable to the order of such Fund or, if
applicable, by Federal Funds wire for credit to such Fund in accordance with the
procedures and conditions described in the Prospectus. Each Fund reserves the
right to delay issuance or transfer of Shares until such check has cleared. If
such payment is not received by us, we reserve the right, without notice,
forthwith to cancel the sale. Unless other instructions are received by us on or
before the settlement date, orders accepted by us may be placed in an Open
Account in your name. If such payment or instructions are not timely received by
us, we may hold you responsible for any expense or loss, including loss of
profit, suffered by us or by such Fund resulting from your failure to make
payment as aforesaid.
(b) You will also act as agent in all purchases by a shareholder for
whom, on the records of the Fund or its Shareholders' Servicing and Transfer
Agent as defined in the Prospectus, you are the designated dealer of record of
Shares where payments are sent directly by such shareholders to the
4
<PAGE>
Agent, and you authorize and appoint the Agent to execute and confirm such
purchases to such shareholder on your behalf.
6. Manner of Offering.
(a) No person is authorized to make any representations concerning
Shares except those contained in the then current applicable Prospectuses and in
sales literature and other materials issued by us supplemental to such
Prospectuses. Shares of Funds shall only be offered by means of the then current
applicable Prospectus and you shall be obligated to deliver such Prospectus to
your customers in accordance with all applicable federal and state securities
laws. All offerings of Shares by you shall be subject to the conditions set
forth in the applicable Prospectus (including the condition relating to minimum
purchases) and to the terms and conditions herein set forth. We will furnish
additional copies of the Prospectuses and such sales literature and other
material issued by us in reasonable quantities upon request. You will provide
all customers with the applicable Prospectus prior to or at the time such
customer purchases Shares and will forward promptly to us any customer request
for a copy of the applicable Statement of Additional Information. Sales and
exchanges of Shares may only be made in those states and jurisdictions where the
Shares are registered or qualified for sale to the public. We agree to advise
you currently of the identity of those states and jurisdictions in which the
Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that
we may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
(c) We recognize that you may be subject to the provisions of the
Glass-Steagall Act and other laws governing, among other things, the conduct of
activities by federal or state chartered or supervised banks and affiliated
organizations. BECAUSE ONLY YOU WILL HAVE A DIRECT RELATIONSHIP WITH YOUR
CUSTOMER, YOU COVENANT AND AGREE TO COMPLY WITH ALL LAWS AND REGULATIONS
INCLUDING THOSE OF THE REGULATORY AUTHORITIES DIRECTLY APPLICABLE TO YOU AND ANY
OTHER FEDERAL OR STATE REGULATORY BODY HAVING JURISDICTION OVER YOU OR YOUR
CUSTOMERS TO THE EXTENT APPLICABLE TO SECURITIES PURCHASES HEREUNDER FOR THE
ACCOUNT OF YOUR CUSTOMER.
5
<PAGE>
(d) We and the Investment Companies shall have the right to accept or
reject orders for the purchase of Shares of any Fund or class thereof. It is
understood that for the purposes hereof no Share shall be considered to have
been sold by you and no compensation will be payable to you with respect to any
order for Shares which is rejected by us or an Investment Company. Any
consideration which you may receive in connection with a rejected purchase order
is to be returned promptly by you. Confirmations of all accepted purchase orders
will be transmitted by the applicable Investment Company or us to investors, or,
if so directed, to any duly appointed transfer or shareholder servicing agent of
the Fund or class of Shares thereof.
7. Your Status.
Nothing herein shall make you a partner with us or render our relationship
an association. You are responsible for your own conduct, for the employment,
control and conduct of your employees and agents and for injury to such
employees or agents or to others through such employees or agents. You assume
full responsibility for your employees and agents under applicable laws and
agree to pay all employer taxes relating thereto.
8. No Liability.
As distributor of the Shares, we shall have full authority to take such
action as we may deem advisable in respect of all matters pertaining to the
distribution of such Shares. We shall not be under any liability to you, except
for lack of good faith and for obligations expressly assumed by us in this
Agreement; provided, however, that nothing in this sentence shall be deemed to
relieve any of us from any liability imposed by the Securities Act of 1933, as
amended.
9. Term of Contract; Amendments; Termination.
This Agreement shall become effective on the date hereof. We and each Fund
reserve the right, in our discretion upon notice to you, to amend, modify or
terminate this Agreement at any time, to change the sales charges, commissions,
concessions and other fees described in the applicable Prospectus or to suspend
sales or withdraw the offering of Shares of a Fund or class of Shares thereof
entirely. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has
6
<PAGE>
been sent to you shall constitute your agreement to such amendment.
10. Miscellaneous.
This Agreement supersedes any and all prior agreements between us.
References to a Selected Dealer Agreement, dealer agreement or sales agreement
contained in a Prospectus, new account Application, Statement of Additional
Information or related documents with respect to Shares shall be deemed to
include this Agreement and references to dealer(s) or securities dealer(s) shall
be deemed to include you. All communications to us should be sent to the above
address. Any notice to you shall be duly given if mailed or telefacsmiled to you
at the address specified by you above. This Agreement shall be effective when
accepted by you below and shall be construed under the laws of the Commonwealth
of Massachusetts.
11. Bank or Bank Affiliate.
Check applicable box:
[ ] (a) You represent and warrant that you are a member of the NASD or
in the alternative, that you are a foreign dealer not eligible for membership in
the NASD. You and we agree to abide by the Rules and Regulations of the NASD
including Rule 26 of its Rules of Fair Practice, and all applicable federal,
state, and foreign laws, rules and regulations.
[ ] (b) [Note: This box relates to "banks." Before checking this box,
please be aware that certain financial institutions such as savings and loan
associations and credit unions are not deemed to be a "bank" under the Exchange
Act of 1934, as amended (the "Exchange Act") and may need to register as a
broker/dealer with the Securities and Exchange Commission.] You represent and
warrant to us that (i) you are a "bank" as such term is defined in Section
3(a)(6) of the Exchange Act; (ii) you are a duly organized and validly existing
"bank" in good standing under the laws of the jurisdiction in which you are
organized; (iii) all authorization (if any) required for your lawful execution
of this Agreement and your performance hereunder have been obtained; and (iv)
this Agreement will constitute a valid and binding agreement, enforceable
against you in accordance with its terms. You agree to give written notice to us
promptly in the event that you cease to be a "bank" as such term is defined in
Section 3(a)(6) of the Exchange Act. Upon such
7
<PAGE>
written notice, this Agreement shall automatically terminate. You also agree to
abide by all of the Rules of Fair Practice of the NASD applicable to the sale of
investment company shares to your customers.
The following provision, as marked, applies to this Agreement.
[ ] This document constitutes an amendment to and restatement of the
Agreement currently in effect between you and us.
[ ] Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: State Street Research
Investment Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us.
State Street Research
Investment Services, Inc.
(Distributor)
By: __________________________________
We have checked box 11(a) or 11(b) above and accept this Agreement:
*_________________________________________________________________*
(Exact legal name of bank or bank affiliate)
By: ______________________________________________
Contract/bank2
(new)
8
Exhibit (6)(d)
METLIFE - STATE STREET EQUITY TRUST
One Financial Center
Boston, MA 02111
January 25, 1990
MetLife - State Street
Investment Services, Inc.
One Financial Center
Boston, MA 02111-2690
Gentlemen:
This letter is to confirm to you that MetLife - State Street Equity Trust
(the "Trust"), has created a new series of shares to be known as MetLife - State
Street Energy Fund (the "Fund"), and that pursuant to the Distribution Agreement
between the Trust and you dated as of July 17, 1986 (the "Agreement"), you will
serve as distributor and principal underwriter of the Fund (which shall be
deemed a "Fund" under the Agreement) with respect to the sale of its shares.
Shares of the Fund will be sold at the "net asset value per share" of the Fund
plus the applicable sales charge in accordance with the then current prospectus
and statement of additional information of the Fund, as from time to time
amended.
Please indicate your acceptance of the above in accordance with the terms
of the Agreement by signing this letter as indicated below.
The term "MetLife - State Street Equity Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Trust
dated March 18, 1986 as the same may subsequently thereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust provides, and it is expressly agreed, that each
Fund of the Trust shall be solely and exclusively responsible for the payment of
its debts,
<PAGE>
liabilities and obligations, and that no other fund shall be responsible for the
same.
METLIFE - STATE STREET
EQUITY TRUST
By: /s/ Constantine Hutchins, Jr.
--------------------------------------
Constantine Hutchins, Jr.
Title: Secretary
ACCEPTED AND AGREED TO:
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By /s/ David P. McLean
--------------------------------
David P. McLean
Title: President
DP-7083/w
2
Exhibit (8)(a)
CUSTODIAN CONTRACT
Between
METLIFE - STATE STREET EQUITY TRUST
and
STATE STREET BANK AND TRUST COMPANY
Clg 2/86
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be
Held By It.......................................................................................2
2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States..............................................3
2.1 Holding Securities........................................................................3
2.2 Delivery of Securities....................................................................3
2.3 Registration of Securities................................................................7
2.4 Bank Accounts.............................................................................8
2.5 Investment and Availability of Federal Funds..............................................9
2.6 Collection of Income......................................................................9
2.7 Payment of Fund Moneys...................................................................10
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased..........................................................12
2.9 Appointment of Agents....................................................................13
2.10 Deposit of Securities in Securities System...............................................13
2.11 Segregated Account.......................................................................16
2.12 Ownership Certificates for Tax Purposes..................................................18
2.13 Proxies..................................................................................18
2.14 Communications Relating to Fund
Portfolio Securities.....................................................................18
2.15 Reports to Fund by Independent Public
Accountants..............................................................................l9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.....................................................20
3.1 Appointment of Foreign Sub-Custodians....................................................20
3.2 Assets to be Held........................................................................20
3.3 Foreign Securities Depositories..........................................................21
3.4 Segregation of Securities................................................................21
3.5 Agreements with Foreign Banking Institutions.............................................21
3.6 Access of Independent Accountants of the Fund............................................22
3.7 Reports by Custodian.....................................................................22
3.8 Transactions in Foreign Custody Account..................................................23
3.9 Liability of Foreign Sub-Custodians......................................................24
3.10 Liability of Custodian...................................................................25
3.11 Monitoring Responsibilities..............................................................25
3.12 Branches of U.S. Banks...................................................................26
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund...........................................................................26
5. Proper Instructions.............................................................................27
6. Actions Permitted Without Express Authority.....................................................28
7. Evidence of Authority...........................................................................28
<PAGE>
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income.....................................................................................29
9. Records........................................................................................29
10. Opinion of Fund's Independent Accountant.......................................................30
11. Compensation of Custodian......................................................................30
12. Responsibility of Custodian....................................................................31
13. Effective Period, Termination and Amendment....................................................32
14. Successor Custodian............................................................................33
15. Interpretive and Additional Provisions.........................................................35
16. Additional Funds...............................................................................35
17. Massachusetts Law to Apply.....................................................................35
18. Prior Contracts................................................................................36
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
This Contract between MetLife - State Street Equity Trust, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at One Financial Center, Boston, Massachusetts, 02111,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts corporation, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in three series, the
MetLife - State Street Capital Appreciation Fund, MetLife - State Street Equity
Investment Fund, and the MetLife - State Street Equity Income Fund (such series
together with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 12);
NOW, THEREFORE, That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
<PAGE>
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust. The Fund agrees to deliver to the Custodian all securities and cash owned
by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of its beneficial interest, ("Shares") of the Fund as may be
issued or sold from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Trustees of the Fund, and provided that the Custodian shall have no more or
less responsibility or liability to the Fund on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but only in accordance
with the provisions of Article 3.
-2-
<PAGE>
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, to be held by it in
the United States, including all domestic securities owned by the
Fund, other than securities which are maintained pursuant to Section
2.10 in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by the Fund held by the Custodian or in a
Securities System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into
by the Fund;
3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
-3-
<PAGE>
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.9 or into the name or
nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
7) To the broker selling the same for examination in accordance
with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions
-4-
<PAGE>
for conversion contained in such securities, or pursuant to
any deposit agreement; provided that, in any such case, the
new securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts
or temporary securities for definitive securities;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral;
-5-
<PAGE>
11) For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, but
only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
-6-
<PAGE>
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distribution in kind, as may be described from time to
time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Trustees or of the Executive
Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes
to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of
the Custodian
-7-
<PAGE>
which nominee shall be assigned exclusively to the Fund, unless the
Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name
of any sub-custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund under the terms of
this Contract shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian for
the Fund may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
-8-
<PAGE>
deposited with each such bank or trust company shall be approved by
vote of a majority of the Trustees of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions, make federal funds available to the
Fund as of specified times agreed upon from time to time by the Fund
and the Custodian in the amount of checks received in payment for
Shares of the Fund which are deposited into the Fund's account.
2.6 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to United States registered
securities held hereunder to which the Fund shall be entitled either
by law or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with respect
to United States bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or agent thereof and
shall credit such income, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring
-9-
<PAGE>
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Fund on United
States securities loaned pursuant to the provisions of Section 2.2
(10) shall be the responsibility of the Fund. The Custodian will have
no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian
of the income to which the Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases
only:
1) Upon the purchase of domestic securities, futures contracts
or options on futures contracts for the account of the Fund
but only (a) against the delivery of such securities, or
evidence of title to futures contracts or options on futures
contracts, to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940,
as amended, to act as a custodian and has been designated by
the Custodian as its agent for this purpose) registered in
the name of the Fund
-10-
<PAGE>
or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities System,
in accordance with the conditions set forth in Section 2.10
hereof or (c) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, or
a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Fund of
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase
such securities from the Fund;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Fund as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not
-11-
<PAGE>
limited to the following payments for the account of the
Fund: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect
of securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by
its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom
such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of domestic
securities for the account of the
-12-
<PAGE>
Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the
Fund to so pay in advance, he Custodian shall be absolutely liable
to the Fund for such securities to the same extent as if the
securities had been received by the Custodian, except that in the case
of repurchase agreements entered into by the Fund with a bank which is
a member of the Federal Reserve System, the Custodian may transfer
funds to the account of such bank prior to the receipt of written
evidence that the securities subject to such repurchase agreement have
been transferred by book-entry into a segregated non-proprietary
account of the Custodian maintained with the Federal Reserve Bank of
Boston or of the safe-keeping receipt, provided that such securities
have in fact been so transferred by book-entry.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The Custodian may deposit
and/or maintain domestic securities
-13-
<PAGE>
owned by the Fund in a clearing agency registered with the Securities
and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if
any, and subject to the following provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased
for the account of the Fund upon (i) receipt of advice from
the Securities System that such securities have
-14-
<PAGE>
been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The
Custodian shall transfer domestic securities sold for the
account of the Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of domestic
securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system,
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<PAGE>
internal accounting control and procedures for safeguarding
domestic securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13
hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into
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<PAGE>
which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by
the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Trustees or of the Executive Committee signed by an officer of the
Fund and
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<PAGE>
certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Fund held by it
and in connection with transfers of such securities.
2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of
domestic securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the Fund
and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from
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<PAGE>
issuers of the domestic securities being held for the Fund. With
respect to tender or exchange offers, the Custodian shall transmit
promptly to the Fund all written information received by the Custodian
from issuers of the domestic securities whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three business days prior to
the date on which the Custodian is to take such action.
2.15. Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including domestic securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian
under this Contract; such reports, which shall be of sufficient scope
and in sufficient detail, as may reasonably be required by the Fund,
to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such
inadequacies, shall so state.
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<PAGE>
3. Duties of the Custodian with Respect to Property of the Fund Held Outside of
the United States
3.1 Appointment of Foreign Sub-Custodians.
The Custodian is authorized and instructed to employ as sub-custodians
for the Fund's securities and other assets maintained outside of the
United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", together with
a certified resolution of the Fund's Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to
designated additional foreign banking institutions and foreign
securities depositories to act as sub-custodians. Upon receipt of
Proper Instructions from the Fund the Custodian shall cease the
employment of any one or more of such sub-custodians for maintaining
custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(l) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to reasonably necessary to effect the Fund's foreign securities
transactions.
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<PAGE>
3.3 Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the Fund
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof.
3.4 Segregation of Securities. The Custodian shall identify on its books
as belonging to the Fund, the foreign securities of the Fund held by
each foreign sub-custodian. Each agreement pursuant to which the
Custodian employs a foreign banking institution shall require that
such institution establish a custody account for the Custodian on
behalf of the Fund and physically segregate in that account,
securities and other assets of the Fund, and, in the event that such
institutions deposits the Fund's securities in a foreign securities
depository, that it shall identify on its books as belonging to the
Custodian, as agent for the Fund, the securities so deposited (all
collectively referred to as the "Account").
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the Fund's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institutions
or its creditors, except a claim of payment
-21-
<PAGE>
for their safe custody or administration; (b) beneficial ownership for
the Fund's assets will be freely transferable without the payment of
money or value other than for custody or administration; (c) adequate
records will be maintained identifying the assets as belonging to the
Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accounts for the Fund,
will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the
Custodian; and (e) assets of the Fund held by the foreign
sub-custodian will be subject only to the instructions of the
Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institutions under its agreement
with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by foreign
sub-custodians, including but not limited to an identification of
entities having
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<PAGE>
possession of the Fund's securities and other assets and advices or
notifications of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the Custodian
on behalf of the Fund indicating, as to securities acquired for the
Fund, the identity of the entity having physical possession of such
securities.
3.8 Transactions in Foreign Custody Account. (a) Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall make or cause its
foreign sub-custodian to transfer, exchange or deliver foreign
securities owned by the Fund, but except to the extent explicitly
provided herein only in one of the circumstances specified in Section
2.2
(b) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties the Custodian
shall pay out or cause its foreign sub-custodians to pay out monies of
the Fund, but except to the extent explicitly provided herein only in
one of the circumstances specified in Section 2.8.
(c) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures
-23-
<PAGE>
in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer. (d)
Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and each Account from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund has
not been made whole for any such loss, damage, cost, expense,
liability or claim.
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<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in Section 1 of the
Custodian Contract and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank as contemplated by paragraph
3.12 hereof, the Custodian shall not be liable for any loss, damage,
cost, expense, liability or claim resulting from, or caused by, the
direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns
of a material adverse change in the financial condition of a foreign
sub-custodian or is notified by a foreign banking institution employed
as a foreign sub-custodian that there appears to be a substantial
likelihood that its
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<PAGE>
shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that is shareholders' equity has declined
below $200 million (in each case computed in accordance with generally
accepted U.S. accounting principles).
3.12 Branches of U.S. Banks. Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Fund assets maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a) (5) of the
Investment Company Act of 1940 which meets the qualification set forth
in Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by Article 1 of this Contract.
4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or
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<PAGE>
repurchase of Shares of the Fund, the Custodian shall honor checks drawn on the
Custodian by a holder of Shares, which checks have been furnished by the Fund to
the holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time between
the Fund and the Custodian.
The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or initialled by
one or more person or persons as the Trustees shall have from time to time
authorized. Each such writing shall set forth the specific transaction or type
of transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Trustees of the Fund accompanied by a detailed
description of procedures approved by the Trustees,
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<PAGE>
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trustees and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Fund's assets.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Trustees
of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Trustees of
the Fund as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any
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<PAGE>
determination or of any action by the Trustees pursuant to the Declaration of
Trust as described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Trustees of the Fund to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to
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<PAGE>
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and
state tax laws and any other law or administrative rules or procedures which may
be applicable to the Fund. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when requested
to do so by the Fund and for such compensation as shall be agreed upon between
the Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
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<PAGE>
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties. Except as otherwise
provided herein, the Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Contract, but shall be kept indemnified
by and shall be without liability to the Fund for any action taken or omitted by
it in good faith without negligence. It shall be entitled to rely on and may
act upon advice of reputable legal counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into between the
Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
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<PAGE>
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.10 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the
Trustees of the Fund have approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Trustees have reviewed the use by the Fund of such Securities
System, as required in each case by Rule 17f-4 under the
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<PAGE>
Investment Company Act of 1940, as amended; provided further however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulation or any provision of the Declaration of
Trust, and further provided, that the Fund may at any time by action of its
Trustees (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian shall be appointed by the Trustees of the Fund,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Trustees of the
Fund, deliver at the office of
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<PAGE>
the Custodian and transfer such securities, funds and other properties in
accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Custodian on or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Trustees to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
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<PAGE>
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
16. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the MetLife - State Street Capital Appreciation Fund, MetLife -
State Street Equity Investment Fund, and the MetLife - State Street Equity
Income Fund with respect to which it desires to have the Custodian render
services as custodian under the terms hereof, it shall so notify the Custodian
in writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Fund hereunder.
17. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
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18. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 30th day of June, 1986.
ATTEST METLIFE - STATE STREET EQUITY TRUST
/s/ Constantine Hutchins, Jr. By /s/ Charles A. Austin III
- -------------------------------- -----------------------------------
Constantine Hutchins, Jr. Charles A. Austin III
Secretary Treasurer
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ K.M. Kubit By /s/ E.D. Hawkes Jr.
- --------------------------------- -----------------------------------
K.M. Kubit E.D. Hawkes, Jr.
Assistant Secretary Vice President
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Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Trustees of MetLife - State Street Equity
Trust for use as sub-custodians for the Fund's securities and other assets:
Girozentrale Der Sparbanken (Austria)
ANZ Banking Group Ltd. (Australia)
Banque Bruxelles Lambert (Belgium)
Canada Permanent Trust Company (Canada)
Den Danske Bank (Denmark)
Kansallis-Osake-Pankki (Finland)
Credit Commercial De France (France)
BHF Bank (Germany)
Standard Chartered Bank (Hong Kong)
Credito Italiano (Italy)
Sumitomo Trust and Banking Co. Ltd. (Japan)
Citibank, N.A. (Mexico)
Bank Mees & Hope N.W. (Netherlands)
Christiania Bank og Kreditkasse (Norway)
DBS Bank (Singapore)
Barclays National Bank Ltd. (Barclays Trustees)
(South Africa)
Banco Hispano Americano (Spain)
Skandinaviska Enskilda Banken (Sweden)
Union Bank of Switzerland (Switzerland)
State Street London Limited (United Kingdom)
State Street Bank and Trust Company
(United States)
Exhibit (8)(b)
Amendment
To
Custodian Contract
AGREEMENT made this 12th day of January, 1989 by and between STATE STREET BANK
AND TRUST COMPANY ("Custodian") and METLIFE - STATE STREET EQUITY TRUST (the
"FUND").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a Custodian Contract
dated June 30, 1986 (as amended to date, the "Contract") which governs the terms
and conditions under which the Custodian maintains custody of the securities and
other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Contract and mutually agree to the following:
I. Section 2.1 is hereby amended to read in its entirety as follows:
"Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States, including all domestic securities owned by the Fund, other
<PAGE>
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System" and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian pursuant to Section 2.10.A."
II. Section 2.2 is hereby amended to read in its entirety as follows:
"Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper
book-entry system account ("Direct Paper System Account") only upon receipt
of Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such
-2-
<PAGE>
securities entered into by the Fund;
3) In the case of a sale effected through a Securities System,
including in the Direct Paper System Account, in accordance with
the provisions of Section 2.10 or 2.10.A hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) To the broker selling the same for examination
-3-
<PAGE>
in accordance with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral
-4-
<PAGE>
is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with the transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
-5-
<PAGE>
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the person or persons to whom delivery of such
-6-
<PAGE>
securities shall be made."
III. Section 2.7 (1) is amended to read in its entirety as follows:
"Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of domestic securities, futures contracts or
options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities, or evidence of title
to futures contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under
the Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System,
-7-
<PAGE>
in accordance with the conditions set forth in Section 2.10
hereof or (c) in the case of a purchase involving the
Direct Paper System, in accordance with the conditions set forth
in Section 2.10.A or (d) in the case of repurchase agreements
entered into between the Fund and the Custodian, or another bank,
or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or through
an entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the receipt
evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;"
IV. Following Section 2.10 there is inserted a new Section 2.10.A to read as
follows:
"Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:
-8-
<PAGE>
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which
shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Fund;
-9-
<PAGE>
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's transaction in
the Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may reasonably
request from time to time."
V. Section 13 is hereby amended in its entirety to read as follows:
"Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under
-10-
<PAGE>
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Trustees of the Fund have approved
the initial use of a particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Trustees have
reviewed the use by the Fund of such Securities System, as required in each case
by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section 2.10.A hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the
Trustees of the Fund have approved the initial use of the Direct Paper System
and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Trustees have reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Master Trust Agreement, and further
provided, that the Fund may at any time by action of its Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
-11-
<PAGE>
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements."
VI. Following Section 18, there is inserted a new Section 19 to read as
follows:
"Disclaimer
It is expressly agreed that the obligations of the Fund hereunder, and the
authorization, execution and delivery of this document, shall not be binding
upon any of the Trustees, shareholders, nominees, officers, agents or employees
of the Fund as individuals or personally, but shall bind only the property of
the Portfolios of the Fund, as provided in the Master Trust Agreement of the
Fund. The Master Trust Agreement of the Fund provides, and it is expressly
agreed, that the Portfolios of the Fund shall be solely and exclusively
responsible for the payment of any direct or indirect debts, liabilities and
obligations relating to the Portfolios, and that no other portfolios shall be
responsible for the same."
Except as otherwise expressly amended and modified herein, the provisions
of the Custodian Contract shall remain in full force and effect.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the 12th day of January, 1989.
Attest MetLife - State Street
Equity Trust
/s/ Darman A. Wing By /s/ Constantine Hutchins, Jr.
- ----------------------------- -----------------------------------
Darman A. Wing Constantine Hutchins, Jr.
Assistant Secretary Secretary
Attest State Street Bank and Trust Company
/s/ Richard P. Vandale By /s/ W.J. Hayes
- ----------------------------- ------------------------------------
Richard P. Vandale W.J. Hayes
Assistant Secretary Vice President
AmdCAgET
-13-
Exhibit (8)(e)
METLIFE - STATE STREET EQUITY TRUST
One Financial Center
Boston, MA 02111
January 25, 1990
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Gentlemen:
This letter is to confirm to you that MetLife - State Street Equity Trust
(the "Trust") has created a new series of shares to be known as MetLife - State
Street Energy Fund (the "Fund"), and that pursuant to paragraph 16 of the
Custodian Contract dated as of June 30, 1986 between the Trust and you, as
amended (the "Agreement"), the Trust desires to retain you to act as Custodian
of the assets of the Fund as set forth in the Custodian Contract.
Please indicate your acceptance of the above in accordance with the terms
of the Agreement by signing this letter as indicated below.
The term "MetLife - State Street Equity Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Trust
dated March 18, 1986 as the same may subsequently thereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the obligations
of the Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by the President of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust provides, and it is expressly agreed, that each
Fund of the Trust shall be solely and exclusively responsible for the payment of
its debts,
<PAGE>
liabilities and obligations, and that no other fund shall be responsible for the
same.
METLIFE - STATE STREET
EQUITY TRUST
By: /s/ Constantine Hutchins, Jr.
---------------------------------------
Constantine Hutchins, Jr.
ACCEPTED AND AGREED TO:
STATE STREET BANK AND TRUST
COMPANY
By: /s/ T.E. Swedlund
----------------------------------
T.E. Swedlund
DP-7084/w
2
Exhibit (8)(g)
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and MetLife - State Street Equity Trust (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated June 30, 1986 as amended January 12, 1989 (the "Custodian Contract")
governing the terms and conditions under which the Custodian maintains custody
of the securities and other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 2nd day of November, 1995.
METLIFE - STATE STREET EQUITY TRUST
(Currently State Street Research Equity Trust)
By: /s/ Gerard P. Maus
---------------------------------
Gerard P. Maus
Title: Treasurer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Timothy Pandro
---------------------------------
Timothy Pandro
Title: Vice President
Exhibit (10)(a)
GOODWIN, PROCTER & HOAR
(A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS)
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
July 8, 1986 TELEX 94-0640
CABLE.GOODPROCT.BOSTON
MetLife - State Street Equity Trust
One Financial Center
Boston, Massachusetts 02111
Gentlemen:
As counsel to MetLife - State Street Equity Trust, a voluntary association
of the type commonly known as a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), we have been asked to render our
opinion in connection with the proposed issuance by the Trust of shares of
MetLife - State Street Capital Appreciation Fund, MetLife - State Street Equity
Investment Fund, and MetLife - State Street Equity Income Fund, the three series
of the Trust which have been established and designated in Section 4.2 of
Article IV of the Trust's Agreement and Declaration of Trust (also referred to
as the Master Trust Agreement) dated March 18, 1986 (the "Declaration"), ail as
more fully described in the Prospectus and Statement of Additional Information
contained in the Registration Statement on Form N-1A filed by the Trust, as
amended (the "Registration Statement").
We have examined the Declaration and By-Laws of the Trust, the records of
the meetings and written consents of the Board of Trustees and shareholders of
the Trust, the Prospectus and Statement of Additional Information contained in
the Registration Statement and such other documents records and certificates as
we deemed necessary for purpose of this opinion.
Based upon the foregoing, we are of the opinion that the Trust has been
duly organized and is validly existing pursuant to the laws of the Commonwealth
of Massachusetts, and that the shares of beneficial interest of the Trust which
are the subject of the foregoing Registration Statement will, when sold in
accordance with the terms of the Prospectus and Statement of Additional
Information in effect at the time of the sale, be legally issued, fully paid and
non-assessable by the Trust.
We consent to being named in the Prospectus and Statement of Additional
Information and to a copy of this opinion being filed as an exhibit to the
foregoing Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar
GOODWIN, PROCTER & HOAR
SVS-4486/S
Exhibit (10)(b)
GOODWIN, PROCTER & HOAR
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
COUNSELLORS AT LAW
January 25, 1990
MetLife - State Street Equity Trust
One Financial Center
Boston, MA 02111-2690
Gentlemen:
As counsel to MetLife - State Street Equity Trust, a voluntary association
of the type commonly known as a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), we have been asked to render our
opinion in connection with the proposed issuance by the Trust of shares of
beneficial interest of MetLife - State Street Energy Fund (the "Fund"), a
series of the trust which has been established and designated pursuant to
Section 4.2 of Article IV of the Trust's Master Trust Agreement dated March 18,
1986, as amended, all as more fully described in the Prospectus and Statement of
Additional Information contained in Post-Effective Amendment No. 7 under the
Securities Act of 1933 to the Registration Statement on Form N-1A (Securities
Act File No. 33-4696) filed by the Trust (as amended, the "Registration
Statement").
We have examined the Master Trust Agreement (including all amendments
thereto) and By-Laws of the Trust, the records of the proceedings of the Board
of Trustees of the Trust and the sole shareholder of the Fund, the Prospectus
and Statement of Additional Information contained in the Registration Statement
and such other documents, records and certificates as we deemed necessary for
purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Trust has been
duly organized and is validly existing pursuant to the laws of the Commonwealth
of Massachusetts, and that the shares of beneficial interest of the Fund which
are described in the foregoing Registration Statement will, when sold in
accordance with the terms of the Prospectus and Statement of Additional
Information in effect at the time of the sale, be legally issued, fully paid and
non-assessable by the Trust.
We consent to being named in the Prospectus and Statement of Additional
Information and to a copy of this opinion being filed as an exhibit to the
foregoing Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar
GOODWIN, PROCTER & HOAR
EXCHANGE PLACE [bullet] BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000 [bullet] TELECOPIER (617) 523-1231
TELEX 94-0640 [bullet] CABLE.GOODPROCT.BOSTON
WP-7682M
EXHIBIT (11)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 22 to the registration
statement (No. 33-4296) on Form N-1A (the "Registration Statement") of our
report dated August 8, 1997 relating to the financial statements and financial
highlights of State Street Research Global Resources Fund (a series of State
Street Research Equity Trust), which appears in such Statement of Additional
Information and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Independent Accountants" in
such Statement of Additional Information and to the reference to us under the
heading "Financial Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
May 22, 1998
Exhibit (13)(a)
March 18, 1986
MetLife - State Street Equity Trust
One Financial Center
Boston, Massachusetts 02111
Gentlemen:
In connection with your sale to us today of three (3) shares of beneficial
interest in MetLife - State Street Equity Trust (the "Shares") (representing one
(1) share of the MetLife - State Street Capital Appreciation Fund series, one
(1) share of the MetLife - State Street Equity Investment Fund series and one
(1) share of the MetLife - State Street Equity Income Fund series), we
understand that: (i) the Shares have not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Shares to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Shares for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of any or all of the Shares or of any interest therein,
except that it is understood that we may transfer the Shares to MetLife - State
Street Management Company, Inc., our wholly-owned subsidiary, upon receipt of
investment representations identical in substance to the foregoing. We hereby
agree that we will not sell, assign or transfer the Shares or any interest
therein, except upon repurchase or redemption by MetLife - State Street Equity
Trust or as contemplated by the immediately preceding sentence, unless and until
the Shares have been registered under the 1933 Act or you have received an
opinion of your counsel indicating to your satisfaction that said sale,
assignment or transfer will not violate the provisions of the 1933 Act or any
rules or regulations promulgated thereunder.
This letter is intended to take effect as an instrument under seal, shall
be construed under the laws of the Commonwealth of Massachusetts, and is
delivered at Boston, Massachusetts, as of the date above written.
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Robert A. Lawrence
-------------------------------------
Robert A. Lawrence
SVS/3188S
<PAGE>
PURCHASE AGREEMENT
MetLife - State Street Equity Trust (the "Trust"), an unincorporated
association of the type commonly referred to as a business trust organized under
the laws of the Commonwealth of Massachusetts, and State Street Research &
Management Company, a Delaware corporation ("SSRM"), hereby agree with each
other as follows:
1. The Trust hereby offers SSRM and SSRM hereby purchases: one (1) share of
beneficial interest (par value $.001) in the Trust's Capital Appreciation Fund,
one (1) share of beneficial interest (par value $.001) in the Trust's Equity
Investment Fund, and one (1) share of beneficial interest (par value $.001) in
the Trust's Equity Income Fund (collectively, the "Shares"), in each case at a
price of $10.00 per Share. The Trust hereby acknowledges receipt from SSRM of
payment in full for the Shares.
2. SSRM represents and warrants to the Trust that the Shares are being
acquired for investment purposes and not with a view to the distribution
thereof, except that it is understood that SSRM may transfer the Shares to
MetLife - State Street Management Company, Inc., its wholly-owned subsidiary,
upon receipt of appropriate investment representations.
<PAGE>
3. The names "MetLife - State Street Equity Trust" and "Trustees of MetLife
- - State Street Equity Trust" refer, respectively, to the Trust and the Trustees
of the Trust, as trustees but not individually or personally, acting from time
to time under the Trust's Agreement and Declaration of Trust dated March ,
1986, which is hereby referred to and a copy of which is on file at the office
of the Secretary of the Commonwealth of Massachusetts and the principal office
of the Trust. The obligations of "MetLife - State Street Equity Trust" entered
into in the name or on behalf thereof by any of the Trustees, representatives or
agents of the Trust are made not individually, but in such capacities, and are
not binding upon any of the Trustees, holders of shares of beneficial interest
or representatives of the Trustees personally, but bind only the trust estate,
and all persons dealing with the Trust must look solely to the trust property
for the enforcement of any claims against the Trust. The Agreement and
Declaration of Trust of the Trust further provides, and it is expressly agreed,
that each Fund of the Trust shall be solely and exclusively responsible for the
payment of its debts, liabilities and obligations and that no other Fund shall
be responsible or liable for the same.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 18th day of March, 1986.
ATTEST: METLIFE - STATE STREET
EQUITY TRUST
/s/ Constantine Hutchins, Jr. By: /s/ Charles L. Smith, Jr.
- ----------------------------------------- -------------------------
Constantine Hutchins, Jr. Charles L. Smith, Jr.
ATTEST: STATE STREET RESEARCH &
MANAGEMENT COMPANY
/s/ Constantine Hutchins, Jr. By: /s/ Robert A. Lawrence
- ------------------------------------------ -------------------------
Constantine Hutchins, Jr. Robert A. Lawrence
SVS/3193/S
3
Exhibit (13)(b)
July 16, 1986
MetLife - State Street Equity Trust
One Financial Center
Boston, Massachusetts 02111
Gentlemen:
In connection with your sale to us today of 10,741.137 shares of beneficial
interest in MetLife - State Street Equity Trust (the "Shares") (representing
3,580.380 shares of the MetLife - State Street Capital Appreciation Fund series,
3,580.379 shares of the MetLife - State Street Equity Investment Fund series and
3,580.379 shares of the MetLife - State Street Equity Income Fund series), we
understand that: (i) the Shares have not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Shares to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Shares for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of any or all of the Shares or of any interest therein.
We hereby agree that we will not sell, assign or transfer the Shares or any
interest therein, except upon repurchase or redemption by MetLife - State Street
Equity Trust, unless and until the Shares have been registered under the 1933
Act or you have received an opinion of your counsel indicating to your
satisfaction that said sale, assignment or transfer will not violate the
provisions of the 1933 Act or any rules or regulations promulgated thereunder.
This letter is intended to take effect as an instrument under seal, shall
be construed under the laws of the Commonwealth of Massachusetts, and is
delivered at Boston, Massachusetts, as of the date above written.
METLIFE - STATE STREET INVESTMENT
SERVICES, INC.
By: /s/ Herbert P. Hess
--------------------------------------
Herbert P. Hess
SVS-4463/S
7/7/86
<PAGE>
PURCHASE AGREEMENT
MetLife - State Street Equity Trust (the "Trust"), an unincorporated
association of the type commonly referred to as a business trust organized under
the laws of the Commonwealth of Massachusetts, and MetLife - State Street
Investment Services, Inc., a Massachusetts corporation ("MLSSIS"), hereby agree
with each other as follows:
1. The Trust hereby offers MLSSIS and MLSSIS hereby purchases: 3,580.380
shares of beneficial interest (par value $.001) in the Trust's Capital
Appreciation Fund, 3,580.379 shares of beneficial interest (par value $.001) in
the Trust's Equity Investment Fund, and 3,580.379 shares of beneficial interest
(par value $.001) in the Trust's Equity Income Fund (collectively, the
"Shares"), in each case at a price of $9.31 per Share. The Trust hereby
acknowledges receipt from MLSSIS of payment in full for the Shares.
2. MLSSIS represents and warrants to the Trust that the Shares are being
acquired for investment purposes and not with a view to the distribution
thereof.
3. The names "MetLife - State Street Equity Trust" and "Trustees of MetLife
- - State Street Equity Trust" refer, respectively, to the Trust and the Trustees
of the Trust, as
<PAGE>
trustees but not individually or personally, acting from time to time under the
Trust's Agreement and Declaration of Trust dated March 18, 1986, which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "MetLife - State Street Equity Trust" entered into in the name or
on behalf thereof by any of the Trustees, representatives or agents of the Trust
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, holders of shares of beneficial interest or representatives of
the Trustees personally, but bind only the trust estate, and all persons dealing
with the Trust must look solely to the trust property for the enforcement of any
claims against the Trust. The Agreement and Declaration of Trust of the Trust
further provides, and it is expressly agreed, that each Fund of the Trust shall
be solely and exclusively responsible for the payment of its debts, liabilities
and obligations and that no other Fund shall be responsible or liable for the
same.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 16th day of July, 1986.
METLIFE - STATE STREET
EQUITY TRUST
ATTEST:
/s/ Constantine Hutchins, Jr. By: /s/ Charles L. Smith, Jr.
- --------------------------------- ------------------------------------
Constantine Hutchins, Jr. Charles L. Smith, Jr.
Secretary President
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
ATTEST:
/s/ Constantine Hutchins, Jr. By: /s/ Herbert P. Hess
- ---------------------------------- ------------------------------------
Constantine Hutchins, Jr. Herbert P. Hess
Clerk Senior Vice President
SVS-4462/S
Exhibit (13)(c)
SUBSCRIPTION
January 25, 1990
To: The Trustees of the MetLife -
State Street Equity Trust
One Financial Center
Boston, Massachusetts 02111-2690
Dear Sirs:
The undersigned hereby subscribes to one share(s) of beneficial interest of
MetLife - State Street Energy Fund series, having a par value of $.001, at a
price of $11.94 per share and agrees to pay therefor upon demand in cash the
amount of $11.94 .
Very truly yours,
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By: /s/ David P. McLean
--------------------------------------------
David P. McLean
President
DP-7085/w
<PAGE>
January 25, 1990
MetLife - State Street Equity Trust
One Financial Center
Boston, Massachusetts 02110-2690
Gentlemen:
In connection with your sale to us today of one share(s) of beneficial
interest of MetLife - State Street Energy Fund (the "Shares"), we understand
that: (i) the Shares have not been registered under the Securities Act of 1933,
as amended (the "1933 Act"); (ii) your sale of the Shares to us is made in
reliance on such sale being exempt under Section 4(2) of the 1933 Act as not
involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Shares for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of the Shares or of any interest therein. We hereby agree
that we will not sell, assign or transfer the Shares or any interest therein,
except upon repurchase or redemption by MetLife - State Street Energy Fund,
unless and until the Shares have been registered under the 1933 Act or you have
received an opinion of your counsel indicating to your satisfaction that said
sale, assignment or transfer will not violate the provisions of the 1933 Act or
any rules or regulations promulgated thereunder.
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By: /s/ David P. McLean
-------------------------------------
David P. McLean
President
DP-7089/w
Exhibit (15)(a)
METLIFE - STATE STREET EQUITY TRUST
FIRST AMENDED AND RESTATED PLAN OF
DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, the MetLife - State Street Equity Trust, an unincorporated
association of the type commonly known as a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), engages in business as
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust is authorized (i) to issue shares of beneficial interest
(the "Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets, and (ii) to divide the Shares within each such series into two or more
classes;
WHEREAS, the Trust has established four portfolio series, including the
MetLife - State Street Capital Appreciation Fund, the MetLife - State Street
Equity Investment Fund, the MetLife - State Street Equity Income Fund and the
MetLife - State Street Global Energy Fund (the MetLife - State Street Capital
Appreciation Fund, the MetLife - State Street Equity Investment Fund, the
MetLife - State Street Equity Income Fund and the MetLife - State Street Global
Energy Fund being referred to herein as the "Initial Series" - such series,
together with any previously established series made subject to this Plan and
all other series subsequently established by the Trust and made subject to this
Plan, being referred to herein individually as a "Series" and collectively as
the "Series");
WHEREAS, the Trust may be deemed a distributor of the Shares within the
meaning of Rule 12b-1 under the Act, and desires to adopt a Plan of Distribution
and has adopted a related Distribution Agreement with State Street Research
Investment Services, Inc., the Trust's principal underwriter (the "Distributor")
pursuant to such Rule (respectively, the "Plan" and the "Agreement"); and
WHEREAS, the Board of Trustees as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or the Agreement
and any agreements relating to it (the "Qualified Trustees"), having determined,
in the exercise of their reasonable business judgment and in light of their
fiduciary duties under state law and under Section 36(a) and (b) of the Act,
that there is a reasonable likelihood that this Plan and the Agreement will
benefit the
<PAGE>
Initial Series and its shareholders, have accordingly approved this Plan and the
Agreement by votes cast in person at a meeting called for the purpose of voting
on this Plan and the Agreement and any agreements related thereto.
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule
12b-1 under the Act, on the following terms and conditions:
SECTION 1. DISTRIBUTION ACTIVITIES
Subject to the supervision of the Board of Trustees, the Trust may engage,
directly or indirectly, in financing any activities primarily intended to result
in the sale of Shares, including, but not limited to, the following: (1) payment
of commissions and/or reimbursement to underwriters, securities dealers
and others engaged in the sale of Shares, including payments to the Distributor
to be used to pay commissions and/or reimbursement to securities dealers and
others (including affiliates of the Distributor) engaged in the distribution and
marketing of Shares or furnishing assistance to investors on an ongoing basis,
(2) reimbursement of direct out-of-pocket expenditures incurred by the
Distributor in connection with the distribution and marketing of Shares,
including expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of sales literature, the preparation,
printing and distribution of Prospectuses of the Trust and reports for
recipients other than existing shareholders of the Trust, and obtaining such
information, analyses and reports with respect to marketing and promotional
activities and investor accounts as the Trust may, from time to time, deem
advisable, and (3) reimbursement of expenses incurred by the Distributor in
connection with the servicing of shareholder accounts, including payments to
securities dealers and others in consideration of the provision of personal
service to investors and/or the maintenance of shareholder accounts and expenses
associated with the provision of personal service by the Distributor directly to
investors. In addition, the Plan shall be deemed to authorize the Distributor
and State Street Research & Management Company (the "Adviser") to make payments
out of general profits, revenues and other sources to underwriters, securities
dealers and others in connection with sales as described in the Prospectus of
the Trust as from time to time amended and in effect (for purposes hereof,
references to the Prospectus of the Trust shall be deemed to include all
2
<PAGE>
Prospectuses of the Trust), to the extent, if any, that such payments may be
deemed to be within the scope of Rule 12b-1 under the Act.
The Trust and the Series are authorized to engage in the activities listed
above, and in other activities primarily intended to result in the sale of
Shares, either directly or through other persons with which the Trust has
entered into agreements pursuant to the Plan.
SECTION 2. MAXIMUM EXPENDITURES
The expenditures to be made by the Initial Series pursuant to this Plan and
the basis upon which payment of such expenditures will be made shall be
determined by the Initial Series, but in no event may such expenditures exceed
the following: (i) with respect to Class A Shares of each Initial Series, an
annual rate of .50% of the average daily value of net assets represented by such
Class A shares, (ii) with respect to Class B Shares and Class D Shares of each
Initial Series, an annual rate of .75% of the average daily value of the net
assets represented by such Class B or Class D shares (as the case may be) to
finance sales or promotion expenses and an annual rate of .25% of the average
daily value of the net assets represented by such Class B or Class D shares (as
the case may be) to make payments for personal service and/or the maintenance of
shareholder accounts, and (iii) with respect to any Series subsequently
established by the Trust and made subject to this Agreement, the annual rate as
agreed upon and specified in an addendum hereto; plus such amounts as the
Distributor and Adviser may expend from general revenues, profits and other
sources from time to time in accordance with the last sentence of Section 1 and
the second paragraph of Section 3. The expenditures to be made pursuant to this
Plan shall commence with respect to each class of Shares of a Series as of the
date on which this Plan becomes effective with respect to each such class.
SECTION 3. PAYMENTS
Pursuant to this Plan, the Trust shall make periodic payments to the
Distributor at the annual rate provided for in Section 2 with respect to each
Series, or class of Shares thereof. The Distributor shall in turn remit to and
allocate among selected dealers (including those that are affiliates of the
Distributor) who have entered into selected dealer agreements with the
Distributor, in consideration of and as reimbursement for expenses incurred in
the provision of distribution and marketing services and furnishing assistance
3
<PAGE>
to investors on an ongoing basis, such amounts as are required pursuant to such
selected dealer agreements and as indicated in the Prospectus of the Trust. Any
amounts received by the Distributor and not so allocated may be applied by the
Distributor as reimbursement for expenses incurred in connection with the
distribution and marketing of Shares of each class and the servicing of investor
accounts as contemplated by Section 1(2) hereof. The distribution and servicing
expenses of a particular class will be borne solely by that class and no Series
will use fees charged to one class within a Series to support the marketing or
servicing relating to any other class of Shares within that Series or any other
Series. Any amounts received by the Distributor hereunder and not applied as
provided herein shall be returned to the applicable class or Series of the
Trust.
The Distributor and the Adviser may also make payments to authorized
securities dealers as specified in the Prospectus of the Trust as from time to
time amended and in effect, from its general profits, revenues and other
sources. Amounts received by the Distributor from any Fund in respect of any
class of Shares shall not be used to pay any commission expenses related to the
sale of any other class of Shares of such Series.
Notwithstanding anything to the contrary herein, the aggregate of all
payments to the Distributor to finance sales or promotion expenses with respect
to the Class B or the Class D shares pursuant to this Section 3 together with
any contingent deferred sales charges received by the Distributor in connection
with the redemption of shares of the respective class shall not exceed the
amount expended by the Distributor to finance sales or promotion expenses of
such class.
SECTION 4. TERM AND TERMINATION
(a) Initial Series. This Plan shall become effective with respect to
each class of the Initial Series as of the date on which such class of the
Initial Series commences offering its Shares to the public and shall continue in
effect with respect to each Initial Series (subject to Section 4(c) hereof)
until one year from the date of such effectiveness, unless the continuation of
this Plan shall have been approved with respect to the Initial Series in
accordance with the provisions of Section 4(c) hereof.
(b) Additional Series. This Plan shall become effective with respect
to each additional Series or class thereof other than the Initial Series
established by the Trust after the date hereof and made subject to this Plan
upon commencement of the initial public offering thereof (provided that the Plan
has previously been approved for continuation by
4
<PAGE>
votes of a majority of both (i) the Board of Trustees of the Trust and (ii) the
Qualified Trustees, cast in person at a meeting held before the initial public
offering of such additional Series or classes thereof and called for the purpose
of voting on such approval), and shall continue in effect with respect to each
such additional Series or Class (subject to Section 4(c) hereof) for one year
thereafter, unless the continuation of this Plan shall have been approved with
respect to such additional Series or Class in accordance with the provisions of
Section 4(c) hereof. The Distributor and the Trust on behalf of each such
additional Series or Class shall each sign an addendum hereto agreeing to be
bound hereby and setting forth such specific and different terms as the parties
may agree upon, including, without implied limitation, the amount and purpose of
payments to be made hereunder.
(c) Continuation. This Plan and the Agreement shall continue in effect
with respect to each Series or Class thereof subsequent to the initial term
specified in Section 4(a) and (b) for so long as such continuance is
specifically approved at least annually by votes of a majority of both (i) the
Board of Trustees of the Trust and (ii) the Qualified Trustees, cast in person
at a meeting called for the purpose of voting on this Plan, subject to any
shareholder approval requirements existing under applicable law.
(d) Termination. (i) This Plan may be terminated at any time with
respect to the Trust or any Series or Class thereof, as the case may be, by vote
of a majority of the Qualified Trustees, or by vote of a majority of the
outstanding voting securities of the Trust or that Series or Class, as the case
may be. The Plan may remain in effect with respect to a Series or Class thereof
even if it has been terminated in accordance with this Section 4(e) with
respect to such Series or one or more other Series of the Trust.
(ii) The Agreement may be terminated at any time, without
penalty, with respect to the Trust or any Series, as the
case may be, by vote of a majority of the Qualified
Trustees or by vote of a majority of the outstanding
voting securities of the Trust or that Series, as the
case may be, on sixty days' written notice to the
Distributor. In addition, the Agreement provides for
automatic termination in the event of its assignment.
SECTION 5. AMENDMENTS
This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 2 hereof unless such amendment
is approved by a vote of a majority of the outstanding voting securities of each
Series or
5
<PAGE>
class thereof with respect to which a material increase in the amount of
distribution expenditures is proposed, and no material amendment to the Plan
shall be made unless approved in the manner provided for annual renewal in
Section 4(c) hereof. Otherwise, this Plan may be amended with respect to the
Trust or a Series or class thereof by vote of a majority of the Qualified
Trustees or the outstanding voting securities of the Trust or that Series, as
the case may be.
SECTION 6. INDEPENDENT TRUSTEES
While this Plan is in effect with respect to any Series, the selection and
nomination of Trustees who are not interested persons (as defined in the Act) of
the Trust shall be committed to the discretion of the Trustees who are not
interested persons.
SECTION 7. QUARTERLY REPORTS
The Treasurer of the Trust and the Treasurer of the Distributor shall
provide to the Trustees of the Trust and the Trustees shall review, at least
quarterly, a written report of the amounts expended for distribution pursuant to
this Plan and the purposes for which such expenditures were made.
SECTION 8. RECORDKEEPING
The Trust shall preserve copies of this Plan, the Agreement and any related
agreements and all reports made pursuant to Section 7 hereof, for a period of
not less than six years from the date of this Plan and the Agreement, the
agreements or such reports, as the case may be, the first two years in an easily
accessible place.
SECTION 9. LIMITATION OF LIABILITY
The term "MetLife - State Street Equity Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated Master
Trust Agreement dated June 1, 1993 (the "Master Trust Agreement") as the same
may subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Plan and the Plan have been authorized by the Trustees and
shareholder of the Trust and
6
<PAGE>
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholder nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust further provides, and it is expressly agreed, that
each Series of the Trust shall be solely and exclusively responsible for the
payment of its debts, liabilities and obligations and that no other Series shall
be responsible or liable for the same.
IN WITNESS WHEREOF, the Trust and the Distributor have executed this First
Amended and Restated Plan of Distribution on the day and year set forth below in
Boston, Massachusetts.
ATTEST: METLIFE - STATE STREET
EQUITY TRUST
/s/ Darman A Wing By: /s/ Gerard P. Maus
- ------------------------------------- ------------------------
Darman A. Wing Gerard P. Maus
STATE STREET RESEARCH
ATTEST: INVESTMENT SERVICES, INC.
/s/ Constantine Hutchins, Jr. By: /s/ Donald E. Webber
- -------------------------------------- ------------------------
Constantine Hutchins, Jr. Donald E. Webber
Date: June 1, 1993
DP-3172/d
5/26/93
7
Exhibit (15)(b)
METLIFE - STATE STREET EQUITY TRUST
AMENDMENT NO. 1
TO
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
In accordance with Section 5 of the First Amended and Restated Plan of
Distribution Pursuant to Rule 12b-1 dated June 1, 1993 (the "Rule 12b-1 Plan")
by and between MetLife - State Street Equity Trust (the "Trust") and State
Street Research Investment Services, Inc. and pursuant to a vote by a majority
of the Qualified Trustees of said Trust taken at a meeting duly held on November
2, 1994, Section 2 Clause (i) of the Rule 12b-1 Plan is hereby amended to read
as follows:
"...with respect to Class A Shares of each Initial Series, an annual
rate of 0.25% of the average daily value of net assets represented by
such Class A shares..."
This amendment shall be deemed effective as of March 10, 1995.
AGREED:
MetLife - State Street Equity Trust
By: /s/ Darman A. Wing
---------------------------------
Darman A. Wing
State Street Research Investment
Services, Inc.
By: /s/ Gerard P. Maus
---------------------------------
Gerard P. Maus
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