<PAGE>
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STATE STREET RESEARCH
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ARGO FUND
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SEMIANNUAL REPORT
December 31, 1999
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WHAT'S INSIDE
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INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
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[DALBAR LOGO]
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For Excellence
[logo] STATE STREET RESEARCH in
Service
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STATE STREET RESEARCH ARGO FUND
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INVESTMENT UPDATE
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INVESTMENT ENVIRONMENT
THE ECONOMY
o The U.S. economy grew at a robust pace in the second half of the year.
Personal income and consumer spending rose, while unemployment edged down to
4.1%.
o Energy prices boosted inflation from 1.6% to 2.6% in 1999. With energy out of
the mix, inflation showed a more moderate increase to 2.2%.
o The Federal Reserve Board raised short-term interest rates by 3/4% in three
1/4% steps in the second half of the year, raising the fed funds rate -- the
target rate at which commercial banks lend to each other overnight -- to 5.5%.
THE MARKETS
o The S&P 500(1), a broad measure of common stock performance, rose 7.70% for
the six- month period ending December 31, 1999. Technology stocks outpaced
other sectors.
o Large-cap stocks have performed well in recent years; however, the market
started to show signs of broadening in the fourth quarter of 1999, a favorable
indicator for mid-cap value stocks.
o The bond market was hurt by growing concerns about inflation, which translated
into higher interest rates and lower bond prices. Municipal bonds lost ground
while most other sectors eked out gains of 1% or less.
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1999, Class A shares of Argo Fund
returned -12.56% (does not reflect sales charge).(2) The Fund underperformed
the Russell 1000 Value Index, which returned -4.89% for the period,(1) and
lagged the Lipper Large-Cap Value Funds Average, which returned -0.26%.
o The Fund was hurt by its emphasis on stocks with relatively low price/earnings
ratios. However, performance was helped somewhat by investments in
telecommunications companies.
o Investments in Cendant and Columbia/HCA moved up strongly. Both stocks had
declined as a result of special circumstances. However, as business prospects
stabilized for Cendant and regulatory difficulties for Columbia/HCA
diminished, the stocks rebounded.
CURRENT STRATEGY
o The manager remains committed to the Fund's value-oriented investment style
and will continue to seek opportunities in attractively priced stocks with
winning long-term prospects.
December 31, 1999
(1) The S&P 500 (officially the "Standard and Poor's 500 Stock Price Index") is
an unmanaged index of 500 U.S. stocks. The Russell 1000 Value Index contains
only those stocks within the complete Russell 1000 Index (a large company
index) that show less than average growth. The indices do not take
transaction charges into consideration. It is not possible to invest
directly in the indices.
(2) -12.88% for Class B(1) shares; -12.88% for Class B shares; -12.89% for Class
C shares; -12.47% for Class S shares.
(3) Keep in mind that past performance is no guarantee of future results. The
Fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
Performance reflects a maximum 5.75% Class A share front-end sales charge,
or 5% Class B(1) or Class B share or 1% Class C share contingent deferred
sales charge, where applicable.
(4) Class S shares, offered without a sales charge, are available through
certain employee benefit plans and special programs.
PLEASE NOTE THAT THE DISCUSSION THROUGHOUT THIS SHAREHOLDER REPORT IS DATED AS
INDICATED, AND, BECAUSE OF POSSIBLE CHANGES IN VIEWPOINT, DATA AND TRANSACTIONS,
SHOULD NOT BE RELIED UPON AS BEING CURRENT THEREAFTER.
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FUND INFORMATION (all data are for periods ended December 31, 1999)
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AVERAGE ANNUAL TOTAL RETURN
(at maximum applicable sales charge)(3)(4)
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10 YEARS 5 YEARS 1 YEAR
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Class A 12.33% 17.39% -7.93%
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Class B(1) 12.49% 17.71% -6.89%
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Class B 12.49% 17.71% -6.89%
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Class C 12.49% 17.95% -3.82%
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Class S 13.21% 19.07% -2.12%
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Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses. Without subsidization, performance would have been
lower.
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 EXXON MOBIL Oil 3.5%
2 AT&T Telecommunications 3.2%
3 BELL ATLANTIC Telecommunications 2.9%
4 SBC COMMUNICATIONS Telecommunications 2.6%
5 WALT DISNEY Entertainment 2.5%
6 INTERNATIONAL PAPER Paper & forest products 2.5%
7 US WEST Telecommunications 2.5%
8 FNMA Financial Services 2.5%
9 CHUBB Insurance 2.4%
10 FEDERATED DEPARTMENT STORES Retail 2.4%
These securities represent an aggregate of 27.0% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
TOP 5 INDUSTRIES
(by percentage of net assets)
TELECOMMUNICATIONS 12.7%
CHEMICALS 8.6%
BANK & SAVINGS & LOAN 7.8%
MISCELLANEOUS FINANCIAL 7.8%
INTERNATIONAL OIL 7.8%
Total: 44.7%
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<TABLE>
STATE STREET RESEARCH ARGO FUND
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INVESTMENT PORTFOLIO
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December 31, 1999 (Unaudited)
<CAPTION>
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VALUE
SHARES (NOTE 1)
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<S> <C> <C>
COMMON STOCKS 97.4%
AUTOMOBILES & TRANSPORTATION 4.3%
AUTOMOTIVE PARTS 1.7%
Delphi Automotive Systems Corp. .................................. 160,539 $ 2,528,489
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AUTOMOBILES 1.6%
General Motors Corp. ............................................. 33,100 2,405,956
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RAILROADS 1.0%
Burlington Northern Santa Fe Corp. ............................... 59,400 1,440,450
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Total Automobiles & Transportation ............................... 6,374,895
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CONSUMER DISCRETIONARY 9.5%
COMMERCIAL SERVICES 2.4%
Cendant Corp.* ................................................... 30,200 802,188
Waste Management Inc.* ........................................... 162,600 2,794,687
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3,596,875
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COMMUNICATIONS, MEDIA & ENTERTAINMENT 2.5%
Walt Disney Co. .................................................. 129,900 3,799,575
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RETAIL 4.1%
Federated Department Stores Inc.* ................................ 72,100 3,645,556
May Department Stores Co. ........................................ 74,750 2,410,688
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6,056,244
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TOYS 0.5%
Mattel Inc. ...................................................... 52,000 682,500
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Total Consumer Discretionary ..................................... 14,135,194
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CONSUMER STAPLES 1.9%
FOODS 1.9%
Nabisco Group Holdings Corp. ..................................... 260,500 2,767,813
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Total Consumer Staples ........................................... 2,767,813
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FINANCIAL SERVICES 22.1%
BANKS & SAVINGS & LOAN 7.8%
Bank of America Corp. ............................................ 63,603 3,192,075
Bank One Corp. ................................................... 91,100 2,920,894
First Union Corp. ................................................ 65,900 2,162,344
FleetBoston Financial Corp.* ..................................... 97,800 3,404,662
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11,679,975
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INSURANCE 6.5%
Chubb Corp. ...................................................... 64,800 3,649,050
Hartford Financial Services Group, Inc. .......................... 60,700 2,875,663
Saint Paul Companies, Inc. ....................................... 57,100 1,923,556
XL Capital Ltd. Cl. A ............................................ 23,800 1,234,625
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9,682,894
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MISCELLANEOUS FINANCIAL 7.8%
Citigroup, Inc. .................................................. 40,175 2,232,223
Federal National Mortgage Association ............................ 59,600 3,721,275
Marsh & McLennan Companies, Inc. ................................. 24,500 2,344,344
Mellon Financial Corp. ........................................... 99,000 3,372,188
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11,670,030
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Total Financial Services ......................................... 33,032,899
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HEALTH CARE 5.4%
DRUGS & BIOTECHNOLOGY 1.5%
American Home Products Corp. ..................................... 27,300 1,076,644
Baxter International Inc. ........................................ 18,500 1,162,031
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2,238,675
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HEALTH CARE FACILITIES 2.1%
Columbia/HCA Healthcare Corp. .................................... 108,900 3,192,131
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HEALTH CARE SERVICES 1.8%
Aetna Inc. ....................................................... 48,500 2,706,906
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Total Health Care ................................................ 8,137,712
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INTEGRATED OILS 11.7%
INTEGRATED DOMESTIC 3.9%
Conoco Inc. Cl. B ................................................ 119,700 2,977,538
Unocal Corp. ..................................................... 86,100 2,889,731
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5,867,269
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INTEGRATED INTERNATIONAL 7.8%
Exxon Mobil Corp. ................................................ 64,100 5,164,056
Texaco Inc. ...................................................... 60,000 3,258,750
Total Fina SA ADR* ............................................... 46,700 3,233,975
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11,656,781
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Total Integrated Oils ............................................ 17,524,050
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MATERIALS & PROCESSING 15.2%
CHEMICALS 8.6%
Air Products & Chemicals, Inc. ................................... 95,500 3,205,219
Dow Chemical Co. ................................................. 27,200 3,634,600
PPG Industries Inc. .............................................. 46,300 2,896,644
Rohm & Haas Co. .................................................. 77,500 3,153,281
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12,889,744
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NON-FERROUS METALS 2.1%
Alcoa Inc. ....................................................... 37,000 3,071,000
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PAPER & FOREST PRODUCTS 4.5%
Fort James Corp. ................................................. 107,500 2,942,812
International Paper Co. .......................................... 67,200 3,792,600
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6,735,412
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Total Materials & Processing ..................................... 22,696,156
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OTHER 2.2%
MULTI-SECTOR 2.2%
Monsanto Co. ..................................................... 30,400 1,083,000
Raytheon Co. Cl. B ............................................... 25,000 664,063
Tyco International Ltd. .......................................... 38,900 1,512,237
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Total Other ...................................................... 3,259,300
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OTHER ENERGY 3.6%
OIL & GAS PRODUCERS 2.0%
Burlington Resources Inc. ........................................ 92,400 3,054,975
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OIL WELL EQUIPMENT & SERVICES 1.6%
Halliburton Co. .................................................. 58,600 2,358,650
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Total Other Energy ............................................... 5,413,625
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PRODUCER DURABLES 2.4%
AEROSPACE 1.1%
Lockheed Martin Corp. ............................................ 77,100 1,686,563
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ELECTRICAL EQUIPMENT & COMPONENTS 1.3%
Emerson Electric Co. ............................................. 32,400 1,858,950
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Total Producer Durables .......................................... 3,545,513
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UTILITIES 19.1%
ELECTRICAL 6.4%
Duke Energy Co. .................................................. 68,100 3,413,512
Texas Utilities Co. .............................................. 96,300 3,424,669
Unicom Corp. ..................................................... 80,600 2,700,100
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9,538,281
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TELECOMMUNICATIONS 12.7%
AT&T Corp. ....................................................... 93,050 4,722,287
Bell Atlantic Corp. .............................................. 69,800 4,297,063
Bellsouth Corp. .................................................. 47,600 2,228,275
SBC Communications Inc. .......................................... 80,900 3,943,875
U.S. West Inc.* .................................................. 52,400 3,772,800
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18,964,300
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Total Utilities .................................................. 28,502,581
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Total Common Stocks (Cost $135,100,993) .......................... 145,389,738
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SHORT-TERM INVESTMENTS 0.3%
State Street Navigator Securities Lending
Prime Portfolio ................................................ 523,600 523,600
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Total Short-Term Investments (Cost $523,600) ...................................... 523,600
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PRINCIPAL MATURITY
AMOUNT DATE
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COMMERCIAL PAPER 2.7%
AIG Funding Inc., 4.95% ...................... $3,000,000 1/04/2000 2,998,763
American Express Credit Corp., 5.80% ......... 473,000 1/04/2000 473,000
CIT Group Holdings Inc., 4.50% ............... 603,000 1/03/2000 603,000
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Total Commercial Paper (Cost $4,074,763) ..................................... 4,074,763
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Total Investments (Cost $139,699,356) - 100.4% ............................... 149,988,101
Cash and Other Assets, Less Liabilities - (0.4%).............................. (648,784)
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Net Assets - 100.0% .......................................................... $149,339,317
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Federal Income Tax Information:
At December 31, 1999, the net unrealized appreciation of investments based on cost
for Federal income tax purposes of $139,965,311 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an
excess of value over tax cost ................................................... $ 20,591,345
Aggregate gross unrealized depreciation for all investments in which there is an
excess of tax cost over value ................................................... (10,568,555)
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$ 10,022,790
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* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
The accompanying notes are an integral part of the financial statements.
</TABLE>
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STATE STREET RESEARCH ARGO FUND
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STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1999 (Unaudited)
ASSETS
Investments, at value (Cost $139,699,356) (Note 1) .......... $ 149,988,101
Cash ........................................................ 903
Dividends and interest receivable ........................... 350,734
Receivable for fund shares sold ............................. 77,167
Receivable from Distributor (Note 3) ........................ 41,904
Other assets ................................................ 29,831
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150,488,640
LIABILITIES
Payable for collateral received on securities loaned ........ 523,600
Accrued transfer agent and shareholder services (Note 2) .... 171,204
Payable for fund shares redeemed ............................ 167,495
Accrued management fee (Note 2) ............................. 152,043
Accrued trustees' fees (Note 2) ............................. 18,560
Other accrued expenses ...................................... 116,421
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1,149,323
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NET ASSETS .................................................. $ 149,339,317
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Net Assets consist of:
Undistributed net investment income ....................... $ 294,975
Unrealized appreciation of investments .................... 10,288,745
Accumulated net realized loss ............................. (4,836,254)
Paid-in capital ........................................... 143,591,851
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$ 149,339,317
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Net Asset Value and redemption price per share of Class
A shares ($62,661,411 / 4,216,887 shares) ................ $14.86
======
Maximum Offering Price per share of Class A shares
($14.86 / .9425) ......................................... $15.77
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Net Asset Value and offering price per share of
Class B(1) shares ($6,736,705 / 468,403 shares)* ......... $14.38
======
Net Asset Value and offering price per share of
Class B shares ($45,548,276/ 3,163,324 shares)* .......... $14.40
======
Net Asset Value and offering price per share of
Class C shares ($1,014,027 / 70,354 shares)* ............. $14.41
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($33,378,898 / 2,251,681 shares) ......................... $14.82
======
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* Redemption price per share for Class B(1), 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>
STATE STREET RESEARCH ARGO FUND
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STATEMENT OF OPERATIONS
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For the six months ended December 31, 1999 (Unaudited)
INVESTMENT INCOME
Dividends, net of foreign taxes of $18,967 .................. $ 2,075,030
Interest (Note 1) ........................................... 121,039
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2,196,069
EXPENSES
Management fee (Note 2) ..................................... 590,597
Transfer agent and shareholder services (Note 2) ............ 246,469
Custodian fee ............................................... 70,400
Registration fees ........................................... 38,016
Trustees' fees (Note 2) ..................................... 18,560
Reports to shareholders ..................................... 13,568
Audit fee ................................................... 12,672
Service fee - Class A (Note 5) .............................. 87,154
Distribution and service fees - Class B(1) (Note 5) ......... 28,436
Distribution and service fees - Class B (Note 5) ............ 264,131
Distribution and service fees - Class C (Note 5) ............ 6,736
Legal fees .................................................. 6,144
Miscellaneous ............................................... 2,816
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1,385,699
Expenses borne by the Distributor (Note 3) .................. (82,371)
Fees paid indirectly (Note 2) ............................... (8,261)
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1,295,067
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Net investment income ....................................... 901,002
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REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments (Notes 1 and 4) ............ (650,256)
Net unrealized depreciation of investments .................. (26,537,269)
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Net loss on investments ..................................... (27,187,525)
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Net decrease in net assets resulting from operations ........ $ (26,286,523)
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The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH ARGO FUND
<TABLE>
<CAPTION>
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STATEMENT OF CHANGES IN NET ASSETS
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SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ....................................... $ 1,149,577 $ 901,002
Net realized gain (loss) on
investments ............................................... 38,935,822 (650,256)
Net unrealized depreciation of investments .................. (23,505,974) (26,537,269)
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Net increase (decrease) resulting from
operations ................................................ 16,579,425 (26,286,523)
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Dividends from net investment income:
Class A ................................................... (331,356) (427,224)
Class B(1) ................................................ (1,635) (21,382)
Class B ................................................... -- (129,945)
Class C ................................................... -- (3,106)
Class S ................................................... (499,905) (360,792)
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(832,896) (942,449)
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Distributions from net realized gains:
Class A ................................................... (7,384,171) (14,532,860)
Class B(1) ................................................ -- (1,104,625)
Class B ................................................... (5,516,923) (11,333,494)
Class C ................................................... (158,506) (293,206)
Class S ................................................... (9,054,570) (11,556,945)
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(22,114,170) (38,821,130)
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Net increase (decrease) from fund share transactions (Note 6) (21,144,328) 9,775,409
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Total decrease in net assets ................................ (27,511,969) (56,274,693)
NET ASSETS
Beginning of period ......................................... 233,125,979 205,614,010
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End of period (including undistributed net investment income
of $336,422 and $294,975, respectively) ................... $ 205,614,010 $ 149,339,317
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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STATE STREET RESEARCH ARGO FUND
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NOTES TO UNAUDITED FINANCIAL STATEMENTS
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December 31, 1999
NOTE 1
State Street Research Argo 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 consists presently of four separate funds: State Street Research Argo
Fund, State Street Research Alpha Fund, State Street Research Global Resources
Fund and State Street Research Athletes Fund.
The investment objective of the Fund is to provide long-term growth of capital
and, secondarily, income. In seeking to achieve its investment objective, the
Fund invests at least 65% of total assets in large-cap value stocks, which may
include common and preferred stocks, convertible securities and warrants.
The Fund offers five classes of shares. Until December 31, 1998, Class A
shares were subject to an initial sales charge of up to 4.50% and effective
January 1, 1999 became subject to an initial sales charge of up to 5.75%.
Class A shares pay a service fee equal to 0.25% of average daily net assets.
On January 1, 1999, the Fund began offering Class B(1) shares and continued
offering Class B shares but only to current shareholders through reinvestment
of dividends and distributions or through exchanges from existing Class B
accounts of State Street Research funds. Class B(1) and Class B pay annual
distribution and service fees of 1.00% and both classes automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years. Class B(1) shares are subject to a contingent deferred sales charge on
certain redemptions made within six years of purchase. Class B shares are
subject to a contingent deferred sales charge on certain redemptions made
within five years of purchase. Class C shares are subject to a contingent
deferred sales charge of 1.00% on any shares redeemed within one year of their
purchase. Class C shares also pay annual distribution and service fees of
1.00%. Class S shares are only offered through certain retirement accounts,
advisory accounts of State Street Research & Management Company (the
"Adviser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance
Company ("Metropolitan"), and special programs. No sales charge is imposed at
the time of purchase or redemption of Class S shares. Class S shares do not
pay any distribution or service fees. The Fund's expenses are borne pro-rata
by each class, except that each class bears expenses, and has exclusive voting
rights with respect to provisions of the plans of distribution, related
specifically to that class. The Trustees declare separate dividends on each
class of shares.
The following significant policies are consistently followed by the Fund in
preparing its financial statements, and such policies are in conformity with
generally accepted accounting principles for investment companies.
A. INVESTMENT VALUATION
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange. Over-the-
counter securities quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at closing prices supplied
through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are at
the mean of the closing bid and asked quotations. Short-term securities maturing
within sixty days are valued at amortized cost. Other securities, if any, are
valued at their fair value as determined in accordance with established methods
consistently applied.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Trust.
D. DIVIDENDS
Dividends from net investment income, if any, are declared and paid or
reinvested quarterly. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
F. ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
G. SECURITIES LENDING
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. 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, 1999, the value of the securities loaned and the value
of collateral were $533,225 and $523,600, respectively. During the six months
ended December 31, 1999, income from securities lending amounted to $13,162
and is included in interest income.
NOTE 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.65% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the six months ended December 31, 1999, the
fees pursuant to such agreement amounted to $590,597.
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, 1999, the amount of such shareholder servicing and account
maintenance expenses was $116,083.
The Fund has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Fund's expense. During the six months ended December 31, 1999
the Fund's transfer agent fees were reduced by $8,261 under this agreement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$18,560 during the six months ended December 31, 1999.
NOTE 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1999, the amount of such
expenses assumed by the Distributor and its affiliates was $82,371.
NOTE 4
For the six months ended December 31, 1999, purchases and sales of securities,
exclusive of short-term obligations, aggregated $69,589,627 and $100,632,208,
respectively.
NOTE 5
The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the plans, 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(1), 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(1), 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, 1999,
fees pursuant to such plans amounted to $87,154, $28,436, $264,131, and $6,736
for Class A, Class B(1), 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 $14,748 and $44,164, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1999, and that MetLife
Securities, Inc. earned commissions aggregating $69,929 and $1,002 on sales of
Class B(1) and Class B shares, and that the Distributor collected contingent
deferred sales charges aggregating $7,001, $55,161 and $374 on redemptions of
Class B(1), Class B and Class C shares, respectively, during the same period.
<PAGE>
NOTE 6
<TABLE>
The Trustees have the authority to issue an unlimited number of shares of beneficial interest, $.001 par value per
share.
Share transactions were as follows:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 952,096 $ 18,460,508 276,172 $ 4,707,976
Issued upon reinvestment of:
Dividends from net investment income ...... 15,825 317,273 32,355 427,224
Distributions from net realized gains ..... 377,796 7,137,865 847,618 14,028,642
Shares redeemed ............................. (1,245,552) (23,863,674) (552,119) (8,752,732)
---------- ------------ ---------- ------------
Net increase ................................ 100,165 $ 2,051,972 604,026 $ 10,411,110
========== ============ ========== ============
<CAPTION>
CLASS B(1) SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 237,803 $ 4,568,242 230,727 $ 3,759,348
Issued upon reinvestment of:
Dividends from net investment income ...... 150 1,635 1,337 18,920
Distribution from net realized gains ...... -- -- 68,632 1,088,713
Shares redeemed ............................. (33,497) (677,927) (36,749) (553,869)
---------- ------------ ---------- ------------
Net increase ................................ 204,456 $ 3,891,950 263,947 $ 4,313,112
========== ============ ========== ============
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 798,834 $ 15,458,889 100,574 $ 1,681,786
Issued upon reinvestment of:
Dividend from net investment income ....... -- -- 8,821 125,855
Distributions from net realized gains ..... 293,842 5,422,431 690,945 11,040,896
Shares redeemed ............................. (683,683) (12,921,381) (503,000) (7,689,827)
---------- ------------ ---------- ------------
Net increase ................................ 408,993 $ 7,959,939 297,340 $ 5,158,710
========== ============ ========== ============
<CAPTION>
CLASS C SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 657,186 $ 12,433,576 7,649 $ 158,520
Issued upon reinvestment of:
Dividend from net investment income ....... -- -- 158 2,253
Distributions from net realized gains ..... 7,870 145,219 17,341 238,157
Shares redeemed ............................. (671,001) (12,786,000) (29,629) (443,956)
---------- ------------ ---------- ------------
Net decrease ................................ (5,945) $ (207,205) (4,481) $ (45,026)
========== ============ ========== ============
<CAPTION>
CLASS S SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 2,203,797 $ 41,755,985 505,254 $ 7,891,464
Issued upon reinvestment of:
Dividends from net investment income ...... 25,046 492,632 24,455 360,714
Distributions from net realized gains ..... 479,326 9,052,915 699,045 11,555,776
Shares redeemed ............................. (4,486,925) (86,142,516) (1,957,047) (29,870,451)
---------- ------------ ---------- ------------
Net decrease ................................ (1,778,756) $(34,840,984) (728,293) $(10,062,497)
========== ============ ========== ============
- ------------------------------------------------------------------------------------------------------------------------
* January 1, 1999 (commencement of share class) to June 30, 1999.
</TABLE>
<PAGE>
STATE STREET RESEARCH ARGO FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
CLASS A
-------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------------------- DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.44 14.28 17.04 19.68 21.68 21.30
----- ----- ----- ----- ----- -----
Net investment income* ($) 0.08 0.12 0.09 0.06 0.13 0.10
Net realized and
unrealized gain
(loss) on investments ($) 2.14 3.38 4.63 4.74 1.64 (2.48)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 2.22 3.50 4.72 4.80 1.77 (2.38)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.05) (0.11) (0.09) (0.06) (0.09) (0.10)
Distributions from net
realized gains ($) (0.33) (0.63) (1.99) (2.74) (2.06) (3.96)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.38) (0.74) (2.08) (2.80) (2.15) (4.06)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.28 17.04 19.68 21.68 21.30 14.86
===== ===== ===== ===== ===== =====
Total return(b) (%) 18.34 25.33 30.91 27.62 9.61 (12.56) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 31,174 39,300 55,239 76,151 76,943 62,661
Ratio of operating
expenses to average net
assets (%)* 1.42 1.25 1.25 1.25 1.26 1.26 (e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 1.42 1.25 1.25 1.25 1.25 1.25 (e)
Ratio of net investment
income to average net
assets (%)* 0.64 0.79 0.54 0.29 0.68 1.18 (e)
Portfolio turnover rate (%) 47.93 44.44 88.07 81.53 118.91 40.03
*Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.06 0.03 0.03 0.01 0.01 0.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B(1)
--------------------------------
PERIOD ENDED SIX MONTHS ENDED
JUNE 30, DECEMBER 31, 1999
1999(a)(c) (UNAUDITED)(a)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 18.66 20.76
----- -----
Net investment income ($)* 0.02 0.04
Net realized and unrealized gain (loss) on investments ($) 2.09 (2.41)
----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 2.11 (2.37)
----- -----
Dividends from net investment income ($) (0.01) (0.05)
Distributions from net realized gains ($) -- (3.96)
----- -----
TOTAL DISTRIBUTIONS ($) (0.01) (4.01)
----- -----
NET ASSET VALUE, END OF PERIOD ($) 20.76 14.38
===== =====
Total return(b) (%) 11.30 (d) (12.88) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ($ thousands) 4,244 6,737
Ratio of operating expenses to average net assets (%)* 2.01 (e) 2.01 (e)
Ratio of operating expenses to average net assets after expense reductions (%)* 2.00 (e) 2.00 (e)
Ratio of net investment income to average net assets (%)* 0.24 (e) 0.49 (e)
Portfolio turnover rate (%) 118.91 40.03
*Reflects voluntary reduction of expenses per share of these amounts (Note 3) ($) 0.00 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge. Total return would be lower if the Distributor and its
affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ARGO FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- ------------------------------------------------------------------------------------------------------------------------
CLASS B
---------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
--------------------------------------------------------------------------- DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.36 14.16 16.88 19.42 21.25 20.77
----- ----- ----- ----- ----- -----
Net investment income
(loss) ($)* 0.01 0.01 (0.03) (0.09) (0.01) 0.03
Net realized and
unrealized gain
(loss) on investments ($) 2.12 3.34 4.56 4.66 1.59 (2.40)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 2.13 3.35 4.53 4.57 1.58 (2.37)
----- ----- ----- ----- ----- -----
Dividend from net
investment income ($) -- -- -- -- -- (0.04)
Distributions from net
realized gains ($) (0.33) (0.63) (1.99) (2.74) (2.06) (3.96)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.33) (0.63) (1.99) (2.74) (2.06) (4.00)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.16 16.88 19.42 21.25 20.77 14.40
===== ===== ===== ===== ===== =====
Total return(b) (%) 17.70 24.39 29.91 26.67 8.82 (12.88) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 5,933 13,129 25,478 52,211 59,527 45,548
Ratio of operating
expenses to average net
assets (%)* 2.00 2.00 2.00 2.00 2.01 2.01 (e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 2.00 2.00 2.00 2.00 2.00 2.00 (e)
Ratio of net investment
income (loss) to
average net assets (%)* 0.08 0.05 (0.20) (0.46) (0.06) 0.42 (e)
Portfolio turnover rate (%) 47.93 44.44 88.07 81.53 118.91 40.03
*Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.06 0.03 0.03 0.01 0.01 0.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
---------------------------------------------------------------------------- DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.36 14.15 16.87 19.41 21.26 20.78
----- ----- ----- ----- ----- -----
Net investment income
(loss) ($)* 0.01 0.01 (0.03) (0.09) (0.01) 0.03
Net realized and
unrealized gain
(loss) on investments ($) 2.11 3.34 4.56 4.68 1.59 (2.40)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 2.12 3.35 4.53 4.59 1.58 (2.37)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) -- -- -- -- -- (0.04)
Distributions from net
realized gains ($) (0.33) (0.63) (1.99) (2.74) (2.06) (3.96)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.33) (0.63) (1.99) (2.74) (2.06) (4.00)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 14.15 16.87 19.41 21.26 20.78 14.41
===== ===== ===== ===== ===== =====
Total return(b) ($) 17.53 24.40 29.93 26.80 8.81 (12.89)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 699 931 1,642 1,718 1,555 1,014
Ratio of operating
expenses to average net
assets (%)* 2.00 2.00 2.00 2.00 2.01 2.01 (e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 2.00 2.00 2.00 2.00 2.00 2.00 (e)
Ratio of net investment
income (loss) to
average net assets (%)* 0.08 0.04 (0.19) (0.43) (0.07) 0.41 (e)
Portfolio turnover rate (%) 47.93 44.44 88.07 81.53 118.91 40.03
* Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.06 0.03 0.03 0.01 0.01 0.01
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge. Total return would be lower if the Distributor and its
affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ARGO FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- ------------------------------------------------------------------------------------------------------------------------
CLASS S
----------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
---------------------------------------------------------------------------- DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 12.48 14.27 17.03 19.66 21.65 21.26
----- ----- ----- ----- ----- -----
Net investment income ($)* 0.14 0.17 0.13 0.11 0.17 0.12
Net realized and
unrealized gain
(loss) on investments ($) 2.15 3.37 4.62 4.73 1.64 (2.48)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 2.29 3.54 4.75 4.84 1.81 (2.36)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.17) (0.15) (0.13) (0.11) (0.14) (0.12)
Distributions from net
realized gains ($) (0.33) (0.63) (1.99) (2.74) (2.06) (3.96)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.50) (0.78) (2.12) (2.85) (2.20) (4.08)
---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF
PERIOD ($) 14.27 17.03 19.66 21.65 21.26 14.82
===== ===== ===== ===== ===== =====
Total return(b) (%) 18.83 25.66 31.19 27.90 9.84 (12.47)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 50,503 70,177 83,999 103,046 63,346 33,379
Ratio of operating
expenses to average net
assets (%)* 1.00 1.00 1.00 1.00 1.01 1.01 (e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 1.00 1.00 1.00 1.00 1.00 1.00 (e)
Ratio of net investment
income to average net
assets (%)* 1.09 1.06 0.77 0.55 0.89 1.39 (e)
Portfolio turnover rate (%) 47.93 44.44 88.07 81.53 118.91 40.03
* Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.06 0.03 0.03 0.01 0.01 0.01
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge. Total return would be lower if the Distributor and its
affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ARGO FUND
- --------------------------------------------------------------------------------
REPORT ON SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the State Street Research Argo Fund, a
series of State Street Research Equity Trust ("Trust"), was convened on
September 14, 1999 ("Meeting"), and continued thereafter. The results of the
Meeting are set forth below.
VOTES (MILLIONS OF SHARES)
(COMBINED FOR ALL SERIES
OF THE TRUST)
------------------------
ACTION ON PROPOSAL FOR WITHHELD
- --------------------------------------------------------------------------------
1. The following persons were elected as Trustees:
Bruce R. Bond ...................................... 31.9 0.8
Steve A. Garban .................................... 31.9 0.8
Malcolm T. Hopkins ................................. 31.9 0.8
Susan M. Phillips .................................. 31.9 0.8
VOTES (MILLIONS OF SHARES)
--------------------------------
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
2. The fundamental policy on diversification
of investments was amended ................. 4.7 0.2 0.4
3. The fundamental policy on industry
concentration was amended .................. 4.7 0.2 0.4
4. The Fund's investment objective was revised
to provide for long-term growth of capital
and, secondarily, growth of income ......... 4.7 0.2 0.4
5. The fundamental policy regarding
participation in underwritings was amended . 4.6 0.2 0.4
<PAGE>
STATE STREET RESEARCH ARGO FUND
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FUND INFORMATION OFFICERS TRUSTEES
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
ARGO FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company BRUCE R. BOND
One Financial Center BARTLETT R. GEER Former Chairman of the Board,
Boston, MA 02111 Vice President Chief Executive Officer and
President, PicturTel Corporation
DISTRIBUTOR F. GARDNER JACKSON, JR.
State Street Research Vice President STEVE A. GARBAN
Investment Services, Inc. Former Senior Vice President
One Financial Center THOMAS P. MOORE, JR. for Finance and Operations and
Boston, MA 02111 Vice President Treasurer, The Pennsylvania
State University
SHAREHOLDER SERVICES BRIAN P. O'DELL
State Street Research Vice President MALCOLM T. HOPKINS
Service Center Former Vice Chairman of the
P.O. Box 8408 DANIEL J. RICE III Board and Chief Financial
Boston, MA 02266-8408 Vice President Officer, St. Regis Corp.
1-800-562-0032
JAMES M. WEISS DEAN O. MORTON
CUSTODIAN Vice President Former Executive Vice
State Street Bank and President, Chief Operating
Trust Company PETER A. ZUGER Officer and Director,
225 Franklin Street Vice President Hewlett-Packard Company
Boston, MA 02110
GERARD P. MAUS SUSAN M. PHILLIPS
LEGAL COUNSEL Treasurer Dean, School of Business
Goodwin, Procter & Hoar LLP and Public Management,
Exchange Place JOSEPH W. CANAVAN George Washington University;
Boston, MA 02109 Assistant Treasurer former Member of the Board
of Governors of the Federal
DOUGLAS A. ROMICH Reserve System and Chairman
Assistant Treasurer and Commissioner of the
Commodity Futures Trading
FRANCIS J. MCNAMARA, III Commission
Secretary and General Counsel
TOBY ROSENBLATT
DARMAN A. WING President,
Assistant Secretary and Founders Investments Ltd.
Assistant General Counsel President,
The Glen Ellen Company
AMY L. SIMMONS
Assistant Secretary MICHAEL S. SCOTT MORTON
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
</TABLE>
<PAGE>
[back cover]
STATE STREET RESEARCH ARGO FUND ------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Canton, MA
Permit #313
------------
[Graphic Omitted]
QUESTIONS? COMMENTS?
CALL us at 1-800-562-0032, or
[hearing-impaired 1-800-676-7876]
[Chinese and Spanish-speaking 1-888-638-3193]
E-MAIL us at:
[email protected]
INTERNET SITE:
www.ssrfunds.com
WRITE us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders.
This publication must be preceded or accompanied by a current State Street
Research Argo Fund prospectus.
When used after March 31, 2000, this report must be accompanied by a current
Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: (exp0201)SSR-LD AG-1227-0200
<PAGE>
--------------------------------
STATE STREET RESEARCH
--------------------------------
ALPHA FUND
--------------------------------
SEMIANNUAL REPORT
December 31, 1999
---------------------
WHAT'S INSIDE
---------------------
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
-------------------
[DALBAR LOGO]
-------------------
For Excellence
[logo] STATE STREET RESEARCH in
Service
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
THE ECONOMY
o The U.S. economy grew at a robust pace in the second half of the year.
Personal income and consumer spending rose, while unemployment edged down to
4.1%.
o Energy prices boosted inflation from 1.6% to 2.6% in 1999. With energy out of
the mix, inflation showed a more moderate increase to 2.2%.
o The Federal Reserve Board raised short-term interest rates by 3/4% in three
1/4% steps in the second half of the year, raising the fed funds rate -- the
target rate at which commercial banks lend to each other overnight -- to
5.5%.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, rose 7.70% for the
six-month period ending December 31, 1999(1). Technology stocks outpaced
other sectors.
o Large-cap stocks have performed well in recent years; however, the market
started to show signs of broadening in the fourth quarter of 1999, a
favorable indicator for mid-cap value stocks.
o The bond market was hurt by growing concerns about inflation, which
translated into higher interest rates and lower bond prices. Municipal bonds
lost ground while most other sectors eked out gains of 1% or less.
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1999, Class A shares of Alpha Fund
returned -8.84% (does not reflect sales charge).(2) The Fund underperformed
the Russell Mid-Cap Value Index(1), which returned -7.27% for the period, and
the Lipper Mid-Cap Value Funds Average, which returned 0.24%.
o The Fund was hurt by its emphasis on smaller company value stocks, which lost
significant ground during the period as investors favored rapidly growing
technology stocks.
o Unexpected upper-management changes resulted in deep declines for several of
the portfolio's key investments.
CURRENT STRATEGY
o The manager continues to emphasize mid-cap value stocks in the portfolio.
With a decelerating economy in the U.S. and acceleration in the economies
abroad, the manager believes there is an opportunity for a value comeback in
the year ahead.
December 31, 1999
(1) The S&P 500 (officially the "Standard and Poor's 500 Stock Price Index") is
an unmanaged index of 500 U.S. stocks. The Russell Mid-Cap Value Index
contains only those stocks from the Russell Mid-Cap Index with a less-than-
average growth orientation. The indices do not take transaction charges into
consideration. It is not possible to invest directly in the indices.
(2) -9.16% for Class B(1) shares; -9.20% for Class B shares; -9.15% for Class C
shares; -8.66% for Class S shares.
(3) Keep in mind that past performance is no guarantee of future results. The
Fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
Performance reflects a maximum 5.75% Class A share front-end sales charge,
or 5% Class B(1) or Class B share or 1% Class C share contingent deferred
sales charge, where applicable. The Fund's returns include performance
before the creation of share classes. If this performance reflected the
share classes' current 12b-1 fees, the Fund's returns may have been lower.
(4) Class S shares offered without a sales charge, are available through certain
employee benefit plans and special programs.
PLEASE NOTE THAT THE DISCUSSION THROUGHOUT THIS SHAREHOLDER REPORT IS DATED AS
INDICATED AND, BECAUSE OF POSSIBLE CHANGES IN VIEWPOINT, DATA AND TRANSACTIONS,
SHOULD NOT BE RELIED UPON AS BEING CURRENT THEREAFTER.
- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1999)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(at maximum applicable sales charge)(3)(4)
- -------------------------------------------------------------------------------
LIFE OF FUND
(since 8/25/86) 10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------------------
Class A 10.78% 10.63% 14.64% -8.65%
- -------------------------------------------------------------------------------
Class B(1) 10.88% 10.77% 14.89% -8.53%
- -------------------------------------------------------------------------------
Class B 10.89% 10.78% 14.91% -8.47%
- -------------------------------------------------------------------------------
Class C 10.91% 10.78% 15.16% -4.68%
- -------------------------------------------------------------------------------
Class S 11.46% 11.52% 16.31% -2.77%
- -------------------------------------------------------------------------------
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 HOLLINGER INTERNATIONAL Newspaper publishing 4.7%
2 BALL Containers 4.5%
3 HARRAH'S ENTERTAINMENT Hotel and restaurant 4.4%
4 MARK IV INDUSTRIES Power transfer equipment 4.2%
5 A.C. NIELSEN Marketing, information analysis 4.0%
6 VALASSIS COMMUNICATIONS Newspaper promotions 3.9%
7 HOWMET Machinery 3.9%
8 FEDERATED DEPARTMENT STORES Retail 3.0%
9 WILLIAMS COMPANIES Gas, petroleum, telecommunications 2.7%
10 AMERICAN NATIONAL CAN GROUP Containers 2.5%
These securities represent an aggregate of 37.8% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
ASSET ALLOCATION
(by percentage of net assets)
[GRAPHIC
OMITTED]
Common and Preferred Stocks 90%
High-Yield Bonds 9%
Cash/Other 1%
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS 86.5%
AUTOMOBILES & TRANSPORTATION 0.3%
TRUCKERS 0.3%
CNF Transportation Inc. .................... 22,800 $ 786,600
------------
Total Automobiles & Transportation ......... 786,600
------------
CONSUMER DISCRETIONARY 24.5%
ADVERTISING AGENCIES 3.9%
Valassis Communications Inc.* .............. 235,000 9,928,750
------------
CASINOS/GAMBLING, HOTEL/MOTEL 6.4%
GTech Holdings Corp.* ...................... 115,000 2,530,000
Harrah's Entertainment Inc.* ............... 420,000 11,103,750
International Game Technology Inc.* ........ 115,000 2,335,938
Motels of America Inc.*+ ................... 500 125
------------
15,969,813
------------
COMMERCIAL SERVICES 6.3%
A.C. Nielsen Corp.* ........................ 405,000 9,973,125
Safety Kleen Corp.* ........................ 530,000 5,995,625
------------
15,968,750
------------
COMMUNICATIONS, MEDIA & ENTERTAINMENT 0.2%
Granite Broadcasting Co.* .................. 50,000 506,250
------------
PRINTING & PUBLISHING 4.7%
Hollinger International, Inc. Cl. A ........ 905,292 11,712,215
------------
RESTAURANTS 0.0%
AmeriKing, Inc.* ........................... 1,000 10,000
------------
RETAIL 3.0%
Federated Department Stores Inc.* .......... 150,000 7,584,375
------------
Total Consumer Discretionary ............... 61,680,153
------------
CONSUMER STAPLES 1.9%
FOODS 0.4%
Aurora Foods Inc.* ......................... 65,000 605,313
Nabisco Group Holdings Corp. ............... 40,000 425,000
------------
1,030,313
------------
TOBACCO 1.5%
R.J. Reynolds Tobacco Holdings Inc.* ....... 13,333 234,994
UST Inc. ................................... 140,000 3,526,250
------------
3,761,244
------------
Total Consumer Staples ..................... 4,791,557
------------
FINANCIAL SERVICES 11.9%
BANKS & SAVINGS & LOAN 2.9%
Mercantile Bankshares Corp. ................ 55,000 1,756,562
Peoples Heritage Financial Group* .......... 280,000 4,217,500
SouthTrust Corp. ........................... 35,000 1,323,438
------------
7,297,500
------------
INSURANCE 6.4%
Ace Ltd. ................................... 350,000 5,840,625
Saint Paul Companies, Inc. ................. 115,000 3,874,063
XL Capital Ltd. Cl. A* ..................... 121,935 6,325,378
------------
16,040,066
------------
MISCELLANEOUS FINANCIAL 2.6%
Ambac Financial Group, Inc. ................ 88,300 4,608,156
Financial Security Assurance Co.* .......... 40,000 2,085,000
------------
6,693,156
------------
Total Financial Services ................... 30,030,722
------------
HEALTH CARE 3.0%
HEALTH CARE FACILITIES 0.8%
Quest Diagnostics, Inc.* ................... 55,000 1,680,937
Tenet Healthcare Corp. ..................... 10,000 235,000
------------
1,915,937
------------
HEALTH CARE SERVICES 2.0%
Quorum Health Group Inc.* .................. 550,000 5,121,875
------------
HOSPITAL SUPPLY 0.2%
Beckman Coulter Inc. ....................... 11,500 585,063
------------
Total Health Care .......................... 7,622,875
------------
INTEGRATED OILS 1.7%
INTEGRATED DOMESTIC 1.7%
Lyondell Petrochemical Co. ................. 74,300 947,325
Unocal Corp. ............................... 100,000 3,356,250
------------
4,303,575
------------
Total Integrated Oils ...................... 4,303,575
------------
MATERIALS & PROCESSING 11.7%
CHEMICALS 2.1%
Omnova Solutions Inc. ...................... 355,000 2,751,250
Solutia Inc. ............................... 160,000 2,470,000
------------
5,221,250
------------
CONTAINERS & PACKAGING 2.5%
American National Can Group Inc. ........... 490,000 6,370,000
------------
DIVERSIFIED MANUFACTURING 4.5%
Ball Corp. ................................. 285,000 11,221,875
------------
FERTILIZERS 0.3%
Mississippi Chemical Corp. ................. 110,000 680,625
------------
FOREST PRODUCTS 0.3%
Westvaco Corp. ............................. 25,700 838,463
------------
STEEL 2.0%
Alaska Steel Holding Corp. ................. 115,000 2,170,625
Harsco Corp.* .............................. 90,000 2,857,500
------------
5,028,125
------------
Total Materials & Processing ............... 29,360,338
------------
OTHER 3.7%
MULTI-SECTOR 3.7%
Gencorp Inc.* .............................. 330,000 3,258,750
Ogden Corp. ................................ 500,000 5,968,750
------------
Total Other ................................ 9,227,500
------------
OTHER ENERGY 5.6%
GAS PIPELINES 2.7%
Williams Companies Inc. .................... 220,000 6,723,750
------------
OIL & GAS PRODUCERS 1.3%
Ocean Energy Inc.* ......................... 150,000 $ 1,162,500
Union Pacific Resources Group Inc. ......... 160,000 2,040,000
------------
3,202,500
------------
OIL WELL EQUIPMENT & SERVICES 1.6%
Baker Hughes Inc. .......................... 70,000 1,474,375
Valero Energy Corp. ........................ 130,000 2,583,750
------------
4,058,125
------------
Total Other Energy ......................... 13,984,375
------------
PRODUCER DURABLES 10.9%
AEROSPACE 1.5%
B. F. Goodrich Co. ......................... 50,000 1,375,000
Cordant Technologies Inc. .................. 75,000 2,475,000
------------
3,850,000
------------
ELECTRICAL EQUIPMENT & COMPONENTS 4.3%
Mark IV Industries Inc. .................... 602,800 10,662,025
------------
MACHINERY 3.9
Howmet International Inc.* ................. 540,000 9,753,750
------------
MISCELLANEOUS EQUIPMENT 1.2%
Thomas & Betts Corp. ....................... 94,800 3,021,750
------------
Total Producer Durables .................... 27,287,525
------------
TECHNOLOGY 4.9%
COMMUNICATIONS TECHNOLOGY 0.2%
Concentric Network Corp. ................... 19,022 586,115
------------
COMPUTER TECHNOLOGY 2.9%
Silicon Graphics Inc.* ..................... 550,000 5,396,875
Unisys Corp. ............................... 60,000 1,916,250
------------
7,313,125
------------
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS 1.8%
Cypress Semiconductor Corp.* ............... 135,000 4,370,625
------------
Total Technology ........................... 12,269,865
------------
UTILITIES 6.4%
ELECTRICAL 1.9%
Energy East Corp. .......................... 20,000 416,250
OGE Energy Corp. ........................... 70,000 1,330,000
Pinnacle West Capital Corp. ................ 60,000 1,833,750
Scana Corp. ................................ 45,000 1,209,375
------------
4,789,375
------------
GAS DISTRIBUTION 1.1%
Questar Corp. .............................. 120,000 1,800,000
UGI Corp. .................................. 50,000 1,021,875
------------
2,821,875
------------
TELECOMMUNICATIONS 3.4%
Celcaribe SA*+ ............................. 69,918 139,836
Pagemart Nationwide Inc.*+ ................. 1,750 27,125
RSL Communications Ltd. Cl. A* ............. 340,000 5,822,500
Viatel Inc.* ............................... 47,231 2,532,762
------------
8,522,223
------------
Total Utilities ............................ 16,133,473
------------
Total Common Stocks (Cost $201,847,899) .... 217,478,558
------------
CONVERTIBLE PREFERRED STOCKS & OTHER 3.3%
Advanced Radio Telecom Corp. Wts.* ......... 3,750 107,640
Clark U.S.A. Inc. Sr. Exch. Pfd.>........... 623 93,450
Clearnet Communications Inc. Wts.* ......... 3,300 24,750
Cluett American Corp. Sr. Exch. Pfd.> ...... 20,300 954,100
Loral Orion Network Systems Inc. Wts.* ..... 1,250 11,250
Nextel Communications Inc.
Series D Exch. Pfd.> ...................... 81 87,480
North Atlantic Trading Inc. Sr. Pfd.> ...... 66,475 1,113,456
NS Group Inc. Wts.* ........................ 250 25,000
Nucentrix Broadband Networks, Inc. Wts.* ... 1,500 15
Pagemart Inc. Wts.*+ ....................... 3,450 12,076
Primus Telecommunications Group Wts.* ...... 500 25,125
Real Time Data Inc. Series B Pfd. *@(+) .... 4,356 1,081,333
Real Time Data Inc. Series C Pfd. *@(+) .... 6,269 1,251,606
RSL Communications Ltd. Wts.*+ ............. 500 39,000
Startec Global Communications Wts.*+ ....... 1,150 1,725
Winstar Communications Cv. Pfd.* ........... 45,057 3,469,389
Wireless One Inc. Wts.* .................... 1,500 15
------------
Total Convertible Preferred Stocks
& Other (Cost $8,956,044) ............................ 8,297,410
------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL MATURITY VALUE
AMOUNT DATE (NOTE 1)
- --------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE BONDS 7.5%
<S> <C> <C> <C>
Advanced Radio Telecom Corp. Sr. Note, 14.00% ....... $ 680,000 2/15/2007 618,800
Ametek Inc. Sr. Note, 7.20% ......................... 500,000 7/15/2008 445,325
Archibald Candy Corp. Sr. Sec. Note, 10.25% ......... 250,000 7/01/2004 244,375
Celcaribe SA Sr. Sec. Note, 13.50% .................. 430,000 3/15/2004 335,400
Cellnet Data Systems Inc. Sr. Note
Series B, 0.00% to 9/30/2002,
14.00% from 10/1/2002 to maturity ................. 2,000,000 10/01/2007 245,000
Drypers Corp. Sr. Note Series B, 10.25% ............. 1,200,000 6/15/2007 936,000
Econophone Inc. Sr. Note, 13.50% .................... 1,750,000 7/15/2007 1,859,375
Empire Gas Corp. Sr. Sec. Note, 12.875% 1,500,000 7/15/2004 900,000
Envirosource Inc. Note, 9.75% ....................... 1,250,000 6/15/2003 725,000
GNI Group Inc. Sr. Note, 10.875% .................... 500,000 7/15/2005 215,000
Golden Ocean Group Ltd. Sr. Note,
10.00%[ ] ............. 4,000,000 8/31/2001 240,000
J. Crew Group Inc. Sr. Deb., 0.00% to
10/14/2002, 13.125% from 10/15/2002
to maturity ....................................... 250,000 10/15/2008 126,250
J. Crew Operating Corp. Sr. Sub. Note, 10.38% ....... 1,000,000 10/15/2007 850,000
J.B. Poindexter Inc. Sr. Note, 12.50% ............... 1,500,000 5/15/2004 1,440,000
NE Restaurant Inc. Sr. Note, 10.75% ................. 1,000,000 7/15/2008 892,500
North Atlantic Trading Inc. Sr. Note, 11.00% ........ 650,000 6/15/2004 594,750
Pagemart Nationwide Inc. Sr. Note, 0.00% to 1/31/
2000, 15.00% from 2/1/2000 to maturity ............ 825,000 2/01/2005 723,937
Pagemart Wireless Inc. Sr. Sub. Note, 0.00% to 1/31/
2003, 11.25% from
2/1/2003 to maturity .............................. 2,250,000 2/01/2008 810,000
Phase Metrics Inc. Sr. Note, 10.75% ................. 1,500,000 2/01/2005 210,000
Rose Hills Co. Sr. Sub. Note, 9.50% ................. 1,500,000 11/15/2004 1,200,000
RSL Communications Ltd. Sr. Note, 12.25% 750,000 11/15/2006 761,250
Silgan Holdings Inc. Sub. Deb., 13.25% .............. 279,000 7/15/2006 308,993
Startec Global Communications Sr. Note, 12.00% ...... 1,150,000 5/15/2008 943,000
Viatel Inc. Sr. Note, 0.00% to 4/14/2003, 12.50% from
4/15/2003 to maturity ............................. 750,000 4/15/2008 468,750
Viatel Inc. Sr. Note, 11.25% ........................ 1,000,000 4/15/2008 995,000
Winstar Communications Inc. Sr. Exch. Note, 14.50% .. 1,250,000 10/15/2005 1,850,000
-----------
Total Non-Convertible Bonds (Cost $25,480,541) ...................................... $18,938,705
-----------
CONVERTIBLE BONDS 1.6%
Crown Resources Corp. Cv. Sub. Deb., 5.75% .......... 2,000,000 8/27/2001 1,380,000
Networks Associates Inc. Cv. Sub. Deb., 0.00% ....... 6,800,000 2/13/2018 2,632,688
-----------
Total Convertible Bonds (Cost $3,760,312) ........................................... 4,012,688
-----------
- -------------------------------------------------------------------------------------------------------
SHARES
- -------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 8.4%
State Street Navigator Securities Lending
Prime Portfolio ................................................... 21,246,573 21,246,573
------------
Total Short-Term Investments (Cost $21,246,573) ..................................... 21,246,573
------------
Total Investments (Cost $261,291,369) - 107.3% ...................................... 269,973,934
Cash and Other Assets, Less Liabilities - (7.3%) .................................... (18,443,393)
------------
Net Assets - 100.0% ................................................................. $251,530,541
============
- -------------------------------------------------------------------------------------------------------
Federal Income Tax Information:
At December 31, 1999, the net unrealized appreciation of investments based on cost for
Federal income tax purposes of $261,706,421 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess
of value over tax cost ................................................................ $ 40,378,725
Aggregate gross unrealized depreciation for all investments in which there is an excess
of tax cost over value ................................................................ (32,111,212)
------------
$ 8,267,513
============
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Nonincome-producing securities.
> Payments of income may be made in cash or in the form of additional
securities.
[ ] Security is in default.
@ Security valued under consistently applied procedures established by the
Trustees.
+ 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, 1999 was $206,909 and $219,887 (0.09% of
net assets), respectively.
(+) Security restricted as to public resale. At December 31, 1999, there were no
outstanding unrestricted securities of the same class as those held. The
total cost and market value of restricted securities owned at December 31,
1999 were $2,652,341 and $2,332,939 (0.93% of net assets), respectively.
Forward currency exchange contracts outstanding at December 31, 1999, are as
follows:
UNREALIZED
CONTRACT APPRECIATION DELIVERY
TOTAL VALUE PRICE (DEPRECIATION) DATE
- --------------------------------------------------------------------------------
Buy Euro, Sell U.S.
dollars 498,236 EUR 1.07720 EUR $33,732 1/28/00
Sell Euro, Buy U.S.
dollars 498,236 EUR 1.01950 EUR (4,984) 1/28/00
-------
$28,748
=======
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
ASSETS
Investments, at value (Cost $261,291,369) (Note 1) .......... $ 269,973,934
Cash ........................................................ 2,622,572
Dividends and interest receivable ........................... 990,458
Receivable for securities sold .............................. 311,510
Receivable for fund shares sold ............................. 90,388
Receivable from Distributor (Note 3) ........................ 52,790
Receivable for open forward contracts ....................... 33,732
Other assets ................................................ 60,287
-------------
274,135,671
LIABILITIES
Payable for collateral received on securities loaned ........ 21,246,573
Payable for fund shares redeemed ............................ 707,111
Accrued transfer agent and shareholder services
(Note 2) .................................................. 233,007
Accrued management fee (Note 2) ............................. 143,808
Accrued distribution and service fees (Note 5) .............. 135,973
Accrued trustees' fees (Note 2) ............................. 12,996
Payable for open forward contracts .......................... 4,984
Other accrued expenses ...................................... 120,678
-------------
22,605,130
-------------
NET ASSETS .................................................. $ 251,530,541
=============
Net Assets consist of:
Undistributed net investment income ....................... $ 1,381,431
Unrealized appreciation of investments .................... 8,682,565
Unrealized appreciation of foreign currency and
forward contracts ....................................... 27,550
Accumulated net realized gain ............................. 4,517,245
Paid-in capital ........................................... 236,921,750
-------------
$ 251,530,541
=============
Net Asset Value and redemption price per share of
Class A shares ($88,490,173 / 6,327,751 shares) ........... $13.98
======
Maximum Offering Price per share of Class A shares
($13.98 / .9425) .......................................... $14.83
======
Net Asset Value and offering price per share of
Class B(1) shares ($9,751,098 / 701,944 shares)* .......... $13.89
======
Net Asset Value and offering price per share of
Class B shares $105,468,242 / 7,569,137 shares)* .......... $13.93
======
Net Asset Value and offering price per share of
Class C shares ($17,332,294 / 1,246,099 shares)* .......... $13.91
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($30,488,734 / 2,180,867 shares) .......................... $13.98
======
- -------------------------------------------------------------------------------
*Redemption price per share for Class B(1), 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>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended December 31, 1999 (Unaudited)
INVESTMENT INCOME
Dividends ................................................... $ 1,921,713
Interest (Note 1) ........................................... 2,157,995
------------
4,079,708
EXPENSES
Management fee (Note 2) ..................................... 958,253
Transfer agent and shareholder services (Note 2) ............ 445,962
Service fee - Class A (Note 5) .............................. 128,425
Distribution and service fees - Class B(1) (Note 5) ......... 45,900
Distribution and service fees - Class B (Note 5) ............ 624,689
Distribution and service fees - Class C (Note 5) ............ 104,725
Custodian fee ............................................... 96,112
Reports to shareholders ..................................... 27,160
Registration fees ........................................... 21,804
Audit fee ................................................... 15,604
Trustees' fees (Note 2) ..................................... 12,996
Legal fees .................................................. 7,324
Miscellaneous ............................................... 6,042
------------
2,494,996
Fees paid indirectly (Note 2) ............................... (14,566)
Expenses borne by the Distributor (Note 3) .................. (102,454)
------------
2,377,976
------------
Net investment income ....................................... 1,701,732
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY AND FORWARD CONTRACTS
Net realized gain on investments (Notes 1 and 4) ............ 19,953,908
Net realized gain on foreign currency and forward
contracts (Note 1) ........................................ 84,756
------------
Total net realized gain ................................. 20,038,664
------------
Net unrealized depreciation of investments .................. (51,206,946)
Net unrealized depreciation of foreign currency
and forward contracts ..................................... (156,354)
------------
Total net unrealized depreciation ....................... (51,363,300)
------------
Net loss on investments, foreign currency and
forward contracts ......................................... (31,324,636)
------------
Net decrease in net assets resulting from operations ........ $(29,622,904)
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income ..................................... $ 7,028,669 $ 1,701,732
Net realized gain (loss) on investments,
foreign currency and forward
contracts ............................................... (10,791,405) 20,038,664
Net unrealized depreciation of investments, foreign
currency and forward contracts .......................... (5,842,718) (51,363,300)
------------
Net decrease resulting from operations (9,605,454) (29,622,904)
------------ ------------
Dividends from net investment income:
Class A ................................................. (2,160,169) (1,243,550)
Class B(1) .............................................. (38,185) (92,394)
Class B ................................................. (1,709,386) (1,020,743)
Class C ................................................. (300,621) (170,394)
Class S ................................................. (1,319,451) (495,319)
------------ ------------
(5,527,812) (3,022,400)
------------ ------------
Distributions from net realized gains:
Class A ................................................. (4,849,837) (1,380,863)
Class B(1) .............................................. -- (154,082)
Class B ................................................. (6,856,725) (1,670,793)
Class C ................................................. (1,115,493) (278,556)
Class S ................................................. (3,216,541) (496,967)
------------ ------------
(16,038,596) (3,981,261)
------------ ------------
Net decrease from fund share
transactions (Note 6) ................................... (57,163,257) (39,867,293)
------------ ------------
Total decrease in net assets .............................. (88,335,119) (76,493,858)
NET ASSETS
Beginning of period ....................................... 416,359,518 328,024,399
------------ ------------
End of period (including undistributed
net investment income of $2,702,099 and $1,381,431,
respectively) ........................................... $328,024,399 $251,530,541
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1999
NOTE 1
State Street Research Alpha 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
consists presently of four separate funds: State Street Research Alpha Fund,
State Street Research Argo Fund, State Street Research Global Resources Fund and
State Street Research Athletes Fund.
The Fund seeks to provide long-term growth of capital. Under normal market
conditions, the Fund invests at least 65% of total assets in mid-cap value
stocks, which may include common and preferred stocks, convertible securities
and warrants.
The Fund offers five classes of shares. Until December 31, 1998, Class A
shares were subject to an initial sales charge of up to 4.50% and effective
January 1, 1999 became subject to an initial sales charge of up to 5.75%.
Class A shares pay a service fee equal to 0.25% of average daily net assets.
On January 1, 1999, the Fund began offering Class B(1) shares and continued
offering Class B shares but only to current shareholders through reinvestment
of dividends and distributions or through exchanges from existing Class B
accounts of State Street Research funds. Class B(1) and Class B pay annual
distribution and service fees of 1.00% and both classes automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years. Class B(1) shares are subject to a contingent deferred sales charge on
certain redemptions made within six years of purchase. Class B shares are
subject to a contingent deferred sales charge on certain redemptions made
within five years of purchase. Class C shares are subject to a contingent
deferred sales charge of 1.00% on any shares redeemed within one year of their
purchase. Class C shares also pay annual distribution and service fees of
1.00%. Class S shares are only offered through certain retirement accounts,
advisory accounts of State Street Research & Management Company (the
"Adviser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance
Company ("Metropolitan"), and special programs. No sales charge is imposed at
the time of purchase or redemption of Class S shares. Class S shares do not
pay any distribution or service fees. The Fund's expenses are borne pro-rata
by each class, except that each class bears expenses, and has exclusive voting
rights with respect to provisions of the plans of distribution, related
specifically to that class. The Trustees declare spearate dividends on each
class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. INVESTMENT VALUATION
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange. Over-the-
counter securities quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at closing prices supplied
through such system. In the absence of recorded sales and for those over-the-
counter securities not quoted on the NASDAQ system, valuations are at the mean
of the closing bid and asked quotations. Fixed income securities are valued by
a pricing service, approved by the Trustees, which utilizes market
transactions, quotations from dealers, and various relationships among
securities in determining value. Short-term securities maturing within sixty
days are valued at amortized cost. Other securities, if any, are valued at
their fair value as determined in accordance with established methods
consistently applied.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. Discount on debt obligations is amortized under the
effective yield method. Certain preferred securities held by the Fund pay
dividends in the form of additional securities (payment-in-kind securities).
Dividend income on payment-in-kind preferred securities is recorded at the
market value of securities received. Differences between the market value of
securities received and the corresponding amounts of income accrued are
recorded as adjustments to income. The Fund is charged for expenses directly
attributable to it, while indirect expenses are allocated among all funds in
the Trust.
D. DIVIDENDS
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually,
unless additional distributions are required for compliance with applicable
tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods. At June 30, 1999, the Fund
had a capital loss carryforward of $10,786,497 available, to the extent
provided in regulations, to offset future capital gains, if any, which expires
on June 30, 2007.
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 as
collateral in an amount equal to at least 100% of the current market value of
any loaned securities plus accrued interest. By reinvesting any cash
collateral it receives in these transactions, the Fund could realize
additional gains and losses. 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, 1999, the value of the securities
loaned and the value of collateral were $20,625,082 and $21,246,573,
respectively. During the six months ended December 31, 1999, income from
securities lending amounted to $26,347 and is included in interest income.
NOTE 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.65% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the six months ended December 31, 1999, the
fees pursuant to such agreement amounted to $958,253.
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, 1999, the amount of such shareholder servicing and account
maintenance expenses was $239,226.
The Fund has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Fund's expense. During the six months ended December 31, 1999,
the Fund's transfer agent fees were reduced by $14,566 under this arrangement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$12,996 during the six months ended December 31, 1999.
NOTE 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1999, the amount of such
expenses assumed by the Distributor and its affiliates was $102,454.
NOTE 4
For the six months ended December 31, 1999, purchases and sales of securities,
exclusive of short-term obligations, aggregated $51,081,651 and $91,505,902,
respectively.
NOTE 5
The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the plans, 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(1), 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(1), 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,
1999, fees pursuant to such plans amounted to $128,425, $45,900, $624,689 and
$104,725 for Class A, Class B(1), Class B and Class C shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropoitan, earned initial sales charges
aggregating $16,045 and $41,893, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1999, and that MetLife
Securities, Inc. earned commissions aggregating $82,906 and $5,905 on sales of
Class B(1) and Class B shares, and that the Distributor collected contingent
deferred sales charges of $17,146, $204,942 and $2,877 on redemptions of Class
B(1), Class B and Class C shares, respectively, during the same period.
NOTE 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
---------------------------------- ---------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 1,872,980 $ 27,773,497 562,985 $ 8,289,621
Issued upon reinvestment of:
Dividends from net investment
income ..................... 312,465 4,596,362 49,440 667,105
Distributions from net
realized gains ............. 138,693 2,006,101 93,582 1,262,421
Shares redeemed ............... (2,556,541) (37,261,318) (1,608,936) (23,187,721)
---------- ------------- ---------- --------------
Net decrease .................. (232,403) $ (2,885,358) (902,929) $ (12,968,574)
========== ============= ========== ==============
CLASS B(1) SHARES* AMOUNT* SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 561,224 $ 8,434,485 293,116 $ 4,319,496
Issued upon reinvestment of:
Dividends from net investment
income ..................... 2,256 34,508 4,121 55,219
Distribution from net
realized gains ............. -- -- 10,225 137,015
Shares redeemed ............... (88,763) (1,366,884) (80,235) (1,136,498)
---------- ------------- ---------- --------------
Net increase .................. 474,717 $ 7,102,109 227,227 $ 3,375,232
========== ============= ========== ==============
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 2,188,749 $ 32,437,372 141,914 $ 2,027,651
Issued upon reinvestment of:
Dividends from net investment
income ..................... 438,063 6,408,860 39,921 536,736
Distributions from net
realized gains ............. 116,587 1,643,800 99,368 1,335,506
Shares redeemed ............... (4,192,753) (60,996,254) (1,708,186) (24,533,420)
---------- ------------- ---------- --------------
Net decrease .................. (1,449,354) $ (20,506,222) (1,426,983) $ (20,633,527)
========== ============= ========== ==============
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 832,769 $ 12,348,336 158,704 $ 2,288,130
Issued upon reinvestment of:
Dividends from net investment
income ..................... 70,468 1,028,840 4,455 59,778
Distributions from net
realized gains ............. 19,057 273,103 11,168 149,875
Shares redeemed ............... (995,360) (14,475,298) (457,874) (6,608,010)
---------- ------------- ---------- --------------
Net decrease .................. (73,066) $ (825,019) (283,547) $ (4,110,227)
========== ============= ======== ==============
CLASS S SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Shares sold ................... 1,755,098 $ 25,878,565 471,913 $ 6,808,423
Issued upon reinvestment of:
Dividends from net investment
income ..................... 218,567 3,215,116 21,406 288,552
Distributions from net
realized gains ............... 92,102 1,318,800 36,831 496,482
Shares redeemed ............... (4,804,307) (70,461,248) (930,272) (13,123,654)
---------- ------------- ---------- --------------
Net decrease .................. (2,738,540) $ (40,048,767) (400,122) $ (5,530,197)
========== ============= ======== ==============
- ------------------------------------------------------------------------------------------------------
*January 1, 1999 (commencement of share class) to June 30, 1999.
</TABLE>
<PAGE>
STATE STREET RESEARCH ALPHA FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
CLASS A
---------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD ($) 10.87 11.70 13.85 14.86 16.80 15.80
----- ----- ----- ----- ----- -----
Net investment income($)* 0.28 0.23 0.33 0.33 0.34 0.11
Net realized and
unrealized gain
(loss) on
investments, foreign
currency and forward
contracts ($) 1.37 2.36 2.90 3.56 (0.43) (1.52)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 1.65 2.59 3.23 3.89 (0.09) (1.41)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.28) (0.28) (0.28) (0.28) (0.28) (0.19)
Distributions from net
realized gains ($) (0.54) (0.16) (1.94) (1.67) (0.63) (0.22)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.82) (0.44) (2.22) (1.95) (0.91) (0.41)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 11.70 13.85 14.86 16.80 15.80 13.98
===== ===== ===== ===== ===== =====
Total return(b) (%) 16.12 22.41 27.45 28.15 (0.04) (8.84)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 37,327 44,464 71,087 125,402 114,235 88,490
Ratio of operating
expenses to average net
assets (%)* 1.42 1.25 1.25 1.24 1.22 1.26(e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 1.42 1.25 1.25 1.24 1.21 1.25(e)
Ratio of net investment
income to average net
assets (%)* 2.55 1.78 2.43 2.06 2.29 1.52(e)
Portfolio turnover rate(%) 67.50 111.13 63.33 52.99 56.04 18.30
*Reflects voluntary reduction
of expenses per share of these
amounts (Note 3) ($) 0.05 0.03 0.02 0.00 0.01 0.01
</TABLE>
<TABLE>
<CAPTION>
CLASS B(1)
----------------------------------------------------------
SIX MONTHS ENDED
PERIOD ENDED DECEMBER 31, 1999
JUNE 30, 1999(a)(c) (UNAUDITED)(a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 14.94 15.70
---- ----
Net investment income ($)* 0.11 0.06
Net realized and unrealized gain (loss) on investments,
foreign currency and forward contracts ($) 0.75 (1.51)
---- ----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.86 (1.45)
---- ----
Dividends from net investment income ($) (0.10) (0.14)
Distribution from net realized gains ($) -- (0.22)
---- ----
TOTAL DISTRIBUTIONS ($) (0.10) (0.36)
---- ----
NET ASSET VALUE, END OF PERIOD ($) 15.70 13.89
===== =====
Total return(b) (%) 5.81(d) (9.16)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ($ thousands) 7,454 9,751
Ratio of operating expenses to average net assets (%)* 1.86(e) 2.01(e)
Ratio of operating expenses to average net assets after expense
reductions (%)* 1.85(e) 2.00(e)
Ratio of net investment income to average net assets (%)* 1.46(e) 0.82(e)
Portfolio turnover rate (%) 56.04 18.30
*Reflects voluntary reduction of expenses per share of these
amounts (Note 3) ($) 0.00 0.01
- ------------------------------------------------------------------------------------------------------------------
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE STREET RESEARCH ALPHA FUND
CLASS B
---------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD ($) 10.86 11.68 13.82 14.81 16.74 15.74
----- ----- ----- ----- ----- -----
Net investment income($)* 0.21 0.13 0.22 0.21 0.23 0.06
Net realized and unrealized
gain (loss) on investments,
foreign currency and
forward contracts ($) 1.38 2.36 2.89 3.55 (0.43) (1.52)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 1.59 2.49 3.11 3.76 (0.20) (1.46)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.23) (0.19) (0.18) (0.16) (0.17) (0.13)
Distributions from net
realized gains ($) (0.54) (0.16) (1.94) (1.67) (0.63) (0.22)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.77) (0.35) (2.12) (1.83) (0.80) (0.35)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 11.68 13.82 14.81 16.74 15.74 13.93
===== ===== ===== ===== ===== =====
Total return(b) (%) 15.43 21.60 26.45 27.23 (0.80) (9.20)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 16,130 25,543 71,986 174,835 141,559 105,468
Ratio of operating
expenses to average net
assets (%)* 2.00 2.00 2.00 1.99 1.97 2.01(e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 2.00 2.00 2.00 1.99 1.96 2.00(e)
Ratio of net investment
income to average net
assets (%)* 1.95 1.05 1.65 1.32 1.54 0.76(e)
Portfolio turnover rate(%) 67.50 111.13 63.33 52.99 56.04 18.30
*Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.05 0.03 0.02 0.00 0.01 0.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD ($) 10.86 11.67 13.82 14.79 16.71 15.71
----- ----- ----- ----- ----- -----
Net investment income($)* 0.22 0.13 0.21 0.21 0.23 0.06
Net realized and
unrealized gain
(loss) on
investments, foreign
currency and forward
contracts ($) 1.36 2.37 2.90 3.54 (0.43) (1.51)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 1.58 2.50 3.11 3.75 (0.20) (1.45)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.23) (0.19) (0.20) (0.16) (0.17) (0.13)
Distributions from net
realized gains ($) (0.54) (0.16) (1.94) (1.67) (0.63) (0.22)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.77) (0.35) (2.14) (1.83) (0.80) (0.35)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 11.67 13.82 14.79 16.71 15.71 13.91
===== ===== ===== ===== ===== =====
Total return(b) (%) 15.33 21.68 26.42 27.23 (0.78) (9.15)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 1,366 1,386 9,592 26,777 24,027 17,332
Ratio of operating
expenses to average net
assets (%)* 2.00 2.00 2.00 1.99 1.97 2.01(e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 2.00 2.00 2.00 1.99 1.96 2.00(e)
Ratio of net investment
income to average net
assets (%)* 1.96 1.03 1.59 1.32 1.54 0.76(e)
Portfolio turnover rate(%) 67.50 111.13 63.33 52.99 56.04 18.30
*Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.05 0.03 0.01 0.00 0.01 0.01
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE STREET RESEARCH ALPHA FUND
FINANCIAL HIGHLIGHTS (CONT'D)
CLASS S
---------------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD ($) 10.86 11.70 13.85 14.86 16.80 15.79
----- ----- ----- ----- ----- -----
Net investment income($)* 0.32 0.26 0.36 0.37 0.38 0.13
Net realized and
unrealized gain
(loss) on
investments, foreign
currency and forward
contracts ($) 1.39 2.36 2.90 3.56 (0.44) (1.51)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 1.71 2.62 3.26 3.93 (0.06) (1.38)
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.33) (0.31) (0.31) (0.32) (0.32) (0.21)
Distributions from net
realized gains ($) (0.54) (0.16) (1.94) (1.67) (0.63) (0.22)
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.87) (0.47) (2.25) (1.99) (0.95) (0.43)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 11.70 13.85 14.86 16.80 15.79 13.98
===== ===== ===== ===== ===== =====
Total return(b) (%) 16.64 22.82 27.75 28.45 0.15 (8.66)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 34,827 39,298 59,453 89,345 40,750 30,489
Ratio of operating
expenses to average net
assets (%)* 1.00 1.00 1.00 0.99 0.97 1.01(e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 1.00 1.00 1.00 0.99 0.96 1.00(e)
Ratio of net investment
income to average net
assets (%)* 2.93 2.03 2.68 2.30 2.56 1.77(e)
Portfolio turnover rate
(%) 67.50 111.13 63.33 52.99 56.04 18.30
*Reflects voluntary
reduction of expenses
per share of these
amounts (Note 3) ($) 0.05 0.03 0.02 0.00 0.01 0.01
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
REPORT ON SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
Special Meeting of Shareholders of State Street Research Alpha Fund, a series of
State Street Research Equity Trust ("Trust"), was convened on September 14, 1999
("Meeting"), and continued thereafter. The results of the Meeting are set forth
below.
VOTES (MILLIONS OF SHARES)
(COMBINED FOR ALL SERIES OF THE
TRUST)
---------------------
ACTION ON PROPOSAL FOR WITHHELD
- -------------------------------------------------------------------------------
1. The following persons were elected as Trustees:
Bruce R. Bond .................................. 31.9 0.8
Steve A. Garban ................................ 31.9 0.8
Malcolm T. Hopkins ............................. 31.9 0.8
Susan M. Phillips .............................. 31.9 0.8
VOTES (MILLIONS OF SHARES)
--------------------------------
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
2. The fundamental policy on diversification
of investments was amended .................. 9.8 0.2 0.6
3. The fundamental policy on industry
concentration was amended ................... 9.7 0.3 0.6
4. The Fund's investment objective was revised
to provide for long-term growth of capital .. 9.8 0.2 0.6
5. The fundamental policy regarding participation
in underwritings was amended ................. 9.7 0.2 0.6
<PAGE>
STATE STREET RESEARCH ALPHA FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION OFFICERS TRUSTEES
<S> <C> <C>
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
ALPHA FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company BRUCE R. BOND
One Financial Center BARTLETT R. GEER Former Chairman of the Board,
Boston, MA 02111 Vice President Chief Executive Officer and
President, PicturTel Corporation
DISTRIBUTOR F. GARDNER JACKSON, JR.
State Street Research Vice President STEVE A. GARBAN
Investment Services, Inc. Former Senior Vice President
One Financial Center THOMAS P. MOORE, JR. for Finance and Operations and
Boston, MA 02111 Vice President Treasurer, The Pennsylvania
State University
SHAREHOLDER SERVICES BRIAN P. O'DELL
State Street Research Vice President MALCOLM T. HOPKINS
Service Center Former Vice Chairman of the
P.O. Box 8408 DANIEL J. RICE III Board and Chief Financial
Boston, MA 02266-8408 Vice President Officer, St. Regis Corp.
1-800-562-0032
JAMES M. WEISS DEAN O. MORTON
CUSTODIAN Vice President Former Executive Vice
State Street Bank and President, Chief Operating
Trust Company PETER A. ZUGER Officer and Director,
225 Franklin Street Vice President Hewlett-Packard Company
Boston, MA 02110
GERARD P. MAUS SUSAN M. PHILLIPS
LEGAL COUNSEL Treasurer Dean, School of Business
Goodwin, Procter & Hoar LLP and Public Management,
Exchange Place JOSEPH W. CANAVAN George Washington University;
Boston, MA 02109 Assistant Treasurer former Member of the Board
of Governors of the Federal
DOUGLAS A. ROMICH Reserve System and Chairman and
Assistant Treasurer Commissioner of the Commodity
Futures Trading Commission
FRANCIS J. MCNAMARA, III
Secretary and General Counsel TOBY ROSENBLATT
President,
DARMAN A. WING Founders Investments Ltd.
Assistant Secretary and President,
Assistant General Counsel The Glen Ellen Company
AMY L. SIMMONS MICHAEL S. SCOTT MORTON
Assistant Secretary Jay W. Forrester Professor of
Management, Massachusetts
Institute of Technology
</TABLE>
<PAGE>
STATE STREET RESEARCH ALPHA FUND ------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Canton, MA
Permit #313
------------
[Graphic Omitted]
QUESTIONS? COMMENTS?
CALL us at 1-800-562-0032, or
[hearing-impaired 1-800-676-7876]
[Chinese and Spanish-speaking 1-888-638-3193]
E-mail us at:
[email protected]
INTERNET site:
www.ssrfunds.com
WRITE us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders.
This publication must be preceded or accompanied by a current State Street
Research Alpha Fund prospectus.
When used after March 31, 2000, this report must be accompanied by a current
Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: (exp0201)SSR-LD AL-1226-0200
<PAGE>
--------------------------------
STATE STREET RESEARCH
--------------------------------
GLOBAL RESOURCES FUND
--------------------------------
SEMIANNUAL REPORT
December 31, 1999
---------------------
WHAT'S INSIDE
---------------------
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
-------------------
[DALBAR LOGO]
-------------------
For Excellence
[logo] STATE STREET RESEARCH in
Service
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
INVESTMENT UPDATE
- -------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
THE ECONOMY
o The U.S. economy grew at a robust pace in the second half of the year.
Personal income and consumer spending rose, while unemployment edged down to
4.1%.
o Energy prices boosted inflation from 1.6% to 2.6% in 1999. With energy out of
the mix, inflation showed a more moderate increase to 2.2%.
o The Federal Reserve Board raised short-term interest rates by 3/4% in three
1/4% steps in the second half of the year, raising the fed funds rate -- the
target rate at which commercial banks lend to each other overnight -- to 5.5%.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, rose 7.70% for the
six- month period ending December 31, 1999.(1) Technology stocks outpaced
other sectors.
o Large-cap stocks have performed well in recent years; however, the market
started to show signs of broadening in the fourth quarter of 1999 -- a
favorable indicator for mid-cap value stocks.
o The bond market was hurt by growing concerns about inflation, which translated
into higher interest rates and lower bond prices. Municipal bonds lost ground
while most other sectors eked out gains of 1% or less.
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1999, Class A shares of Global Resources
Fund returned -6.09% (does not reflect sales charge).(2) The Fund fell below
the Lipper Natural Resources Funds Average which returned 2.69%.
o After a strong showing in the first half of the year, energy stocks lost
ground in the second half as investors began to question the sustainability of
current price levels for oil and gas.
o The disparity between the high price of crude oil and natural gas and sagging
prices of related energy stocks widened significantly in the fourth quarter.
CURRENT STRATEGY
o The manager believes that the global economic recovery may help sustain the
current high price levels of both oil and gas.
o The portfolio continues to emphasize exploration and production companies and
remains underweighted in oil service companies.
December 31, 1999
(1) The S&P 500 (officially the "Standard and Poor's 500 Stock Price Index") is
an unmanaged index of 500 U.S. stocks. The index does not take transaction
charges into consideration. It is not possible to invest directly in the
index.
(2) -6.49% for Class B(1) shares, -6.56% for Class B shares; -6.41% for Class C
shares; -6.03% for Class S shares.
(3) Keep in mind that past performance is no guarantee of future results. The
Fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
Performance reflects a maximum 5.75% Class A share front-end sales charge,
or 5% Class B(1) or Class B share or 1% Class C share contingent deferred
sales charge, where applicable.
(4) Class S shares offered without a sales charge, are available through certain
employee benefit plans and special programs.
PLEASE NOTE THAT THE DISCUSSION THROUGHOUT THIS SHAREHOLDER REPORT IS DATED AS
INDICATED AND, BECAUSE OF POSSIBLE CHANGES IN VIEWPOINT, DATA AND
TRANSACTIONS, SHOULD NOT BE RELIED UPON AS BEING CURRENT THEREAFTER.
- -------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1999)
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(at maximum applicable sales charge)(3)(4)
- ---------------------------------------------------------------------
LIFE OF FUND
(since 3/2/90) 5 YEARS 1 YEAR
- ---------------------------------------------------------------------
Class A 1.14% 4.32% 8.85%
- ---------------------------------------------------------------------
Class B(1) 1.27% 4.41% 9.51%
- ---------------------------------------------------------------------
Class B 1.28% 4.43% 9.62%
- ---------------------------------------------------------------------
Class C 1.27% 4.75% 13.65%
- ---------------------------------------------------------------------
Class S 1.96% 5.83% 15.76%
- ---------------------------------------------------------------------
Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses. Without subsidization, performance would have been
lower.
- --------------------------------------------------------------------------------
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 WESTERN GAS RESOURCES Natural gas processing 9.4%
2 OCEAN ENERGY Oil service 5.6%
3 BASIN EXPLORATION Oil and gas exploration 4.5%
4 CALLON PETROLEUM Oil and gas exploration 4.4%
5 PLAINS RESOURCES Oil and gas exploration 4.2%
6 RANGER OIL International oil exploration 4.1%
7 NUEVO ENERGY Oil and gas exploration 4.1%
8 BAYTEX ENERGY Oil and gas exploration 4.0%
9 CLAYTON WILLIAMS ENERGY Oil and gas exploration 4.0%
10 TITAN EXPLORATION Oil and gas exploration 3.9%
These securities represent an aggregate of 48.2% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table.
ASSET ALLOCATION
(by percentage of net assets)
Exploration & Production 74%
Utility 10%
Mining 8%
Oil Service 6%
Other 2%
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
VALUE
SHARES (NOTE 1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES 102.2%
CONTRACT DRILLING 3.5%
Plains Energy Services Ltd.* ..................................... 38,600 $ 207,239
Precision Drilling Corp.* ........................................ 100,000 2,568,750
R & B Falcon Corp.* .............................................. 50,000 662,500
TMBR/Sharp Drilling Inc.* ........................................ 136,800 756,675
------------
4,195,164
------------
EXPLORATION & PRODUCTION 73.8%
2M Energy Corp.* ................................................. 240,000 178,732
Berkley Petroleum Corp.* ......................................... 171,500 1,502,927
Keywest Energy Corp.* ............................................ 740,900 579,991
Magin Energy Inc.* ............................................... 344,300 572,442
Prize Energy Inc.* ............................................... 162,769 33,828
Triumph Energy Corp.* ............................................ 1,085,500 1,203,187
Abacan Resource Corp.* ........................................... 1,861,200 176,814
Basin Exploration Inc.* .......................................... 300,000 5,287,500
Baytex Energy Ltd. Cl. A* ........................................ 782,300 4,769,131
Bellator Exploration Inc.* ....................................... 2,790,600 3,383,131
Brigham Exploration Co.* ......................................... 34,400 52,675
Cabot Oil & Gas Corp. Cl. A* ..................................... 196,500 3,156,281
Callon Petroleum Co.* ............................................ 350,500 5,191,781
Canadian 88 Energy Corp.* ........................................ 846,400 1,110,900
Clayton Williams Energy Inc.* .................................... 399,930 4,724,173
Contour Energy Co.* .............................................. 40,000 20,800
Edge Energy Inc.* ................................................ 90,800 176,127
Elk Point Resources Inc. Cl. A* .................................. 490,500 1,325,216
Esenjay Exploration Inc.* ........................................ 117,069 219,505
Exco Resources Inc.* ............................................. 150,000 1,087,500
Gulfstream Resources Ltd. ........................................ 347,000 625,009
Interaction Resources Ltd.* ...................................... 300,000 112,227
KCS Energy Inc.* ................................................. 540,000 438,750
Mallon Resources Corp.* .......................................... 210,100 1,247,469
Maxx Petroleum Ltd.* ............................................. 300,975 827,681
Miller Exploration Co.* .......................................... 322,800 353,063
Niko Resources Ltd.* ............................................. 150,000 675,442
Nuevo Energy Co.* ................................................ 256,800 4,815,000
Ocean Energy Inc.* ............................................... 850,000 6,587,500
Patina Oil & Gas Corp. ........................................... 94,700 816,788
Pease Oil & Gas Co.* ............................................. 20,000 5,625
Pease Oil & Gas Co.*(+)@ ......................................... 8,750 1,938
Pendaries Petroleum Ltd.*+ ....................................... 167,000 563,625
Pennaco Energy Inc.* ............................................. 63,000 504,000
Petsec Energy Ltd. ADR* .......................................... 46,000 23,000
Plains Resources Inc.* ........................................... 400,000 5,000,000
Post Energy Corp.* ............................................... 400,000 1,385,521
Probe Exploration Inc.*+ ......................................... 1,500,000 218,220
Purcell Energy Ltd.* ............................................. 129,000 294,908
PYR Energy Corp.* ................................................ 150,000 675,000
Ranger Oil Ltd.* ................................................. 1,553,000 4,853,125
Remington Oil & Gas Corp.* ....................................... 150,000 581,250
Richland Petroleum Corp.* ........................................ 332,900 830,232
Seven Seas Petroleum Inc.* ....................................... 657,600 1,150,800
Southwestern Energy Co. .......................................... 359,300 2,357,906
St. Mary Land & Exploration Co. .................................. 58,400 1,445,400
Thunder Energy Inc.* ............................................. 300,000 415,656
Titan Exploration Inc.* .......................................... 836,523 4,548,594
Tom Brown, Inc. .................................................. 205,900 2,753,913
Tri-Link Resources Ltd. Cl. A* ................................... 175,100 891,573
Triton Energy Ltd. Cl. A* ........................................ 145,300 2,996,812
Ulster Petroleum Ltd.* ........................................... 373,500 3,324,887
Ultra Petroleum Corp.* ........................................... 586,100 397,906
Vermilion Resources Ltd.* ........................................ 200,000 616,557
Wolverine Energy Corp.* .......................................... 165,000 13,717
------------
87,101,735
------------
MINING 7.8%
Falconbridge Ltd.* ............................................... 100,000 1,787,323
Ashanti Goldfields Co. Ltd. GDR .................................. 324,600 852,075
Denison Mines Ltd.* .............................................. 1,500,000 119,501
Glamis Gold Ltd.* ................................................ 250,000 453,125
Inco Ltd.* ....................................................... 75,000 1,762,500
Nevsun Resources Ltd.* ........................................... 400,000 110,842
Newcrest Mining Ltd.* ............................................ 300,000 1,024,140
Normandy Mining Ltd. ............................................. 372,841 264,352
Pangea Goldfields Inc.* .......................................... 100,000 263,249
Randgold Resources Inc. GDR*+ .................................... 93,500 374,000
Romarco Minerals Inc.* ........................................... 223,000 151,396
Romarco Minerals Inc. Wts.* ...................................... 77,000 32,006
Southernera Resources Ltd.* ...................................... 302,400 450,405
Southwestern Gold Corp.* ......................................... 243,300 825,888
Tombstone Exploration Co. Ltd.* .................................. 200,000 9,006
Viceroy Resource Corp.* .......................................... 183,000 106,491
Virginia Gold Mines Inc.* ........................................ 500,000 294,423
X-Cal Resources Ltd.* ............................................ 2,000,000 221,683
Zimbabwe Platinum Mines Ltd.* .................................... 150,000 68,933
------------
9,171,338
------------
MISCELLANEOUS 1.6%
Mosvold Shipping Ltd.*+ .......................................... 2,200,000 783,016
OMI Corp.* ....................................................... 559,500 1,153,969
------------
1,936,985
------------
OIL SERVICE 5.7%
Badger Daylighting Inc.* ......................................... 375,000 1,026,152
Global Industries Inc.* .......................................... 85,000 733,125
NewPark Resources Inc.* .......................................... 443,800 2,718,275
Pason Systems Inc.* .............................................. 400,000 1,731,901
Stellarton Energy Corp. Cl. A*+ .................................. 150,000 358,504
Willbros Group Inc.* ............................................. 29,100 134,587
------------
6,702,544
------------
REFINING 0.2%
Interoil Corp.* .................................................. 156,500 262,138
------------
UTILITY 9.6%
Markwest Hydrocarbon Inc.* ....................................... 37,500 243,750
Western Gas Resources Inc. ....................................... 839,300 11,068,269
------------
11,312,019
------------
Total Equity Securities (Cost $182,071,387) ...................... 120,681,923
------------
SHORT-TERM INVESTMENTS 1.2%
AIM Liquid Assets Portfolio ...................................... 1,458,168 1,458,168
------------
Total Short-Term Investments (Cost $1,458,168) ................... 1,458,168
------------
Total Investments (Cost $183,529,555) - 103.4% ................... 122,140,091
Other Assets, Less Liabilities - (3.4)% .......................... (4,058,083)
------------
Net Assets - 100% ................................................ $118,082,008
============
- ------------------------------------------------------------------------------------------------------
Federal Income Tax Information:
At December 31, 1999, the net unrealized depreciation of
investments based on cost for Federal income tax purposes of
$184,456,515 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost ................. $ 17,230,676
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value ................. (79,547,100)
------------
$(62,316,424)
============
- -------------------------------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global Depositary Receipt, respectively,
representing ownership of foreign securities.
(+) Security restricted as to public resale. The total cost and market value of restricted securities
owned at December 31, 1999 were $218,770 and $1,938 (0.00% of net assets), respectively.
+ Security restricted in accordance with Rule 144A under the Securities Act of 1933, which allows for
the resale of such securities among certain qualified institutional buyers. The total cost and market
value of Rule 144A securities owned at December 31, 1999 were $8,131,168 and $2,297,365 (1.95% of net
assets), respectively.
Diversification of Equity Securities at December 31, 1999 (as a percentage of net assets) was United
States 56.5%, Canada 40.6%, Australia 1.2%, Ghana 0.7%, Norway 0.7%, Great Britain 0.3%.
@ Security valued under consistently applied procedures established by the Trustees.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
STATEMEMT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
ASSETS
Investments, at value (Cost $183,529,555) (Note 1) .......... $ 122,140,091
Receivable for securities sold .............................. 1,096,664
Receivable for fund shares sold ............................. 543,138
Dividends and interest receivable ........................... 41,965
-------------
123,821,858
LIABILITIES
Payable for fund shares redeemed ............................ 2,477,764
Payable for collateral received on securities loaned ........ 1,458,168
Payable to custodian ........................................ 1,355,854
Accrued transfer agent and shareholder services
(Note 2) .................................................. 181,170
Accrued management fee (Note 2) ............................. 75,729
Accrued distribution and service fees (Note 4) .............. 67,573
Accrued trustees' fees (Note 2) ............................. 6,784
Other accrued expenses ...................................... 116,808
-------------
5,739,850
-------------
NET ASSETS .................................................. $ 118,082,008
=============
Net Assets consist of:
Unrealized depreciation of investments .................... $ (61,389,464)
Accumulated net realized loss ............................. (45,397,631)
Paid-in capital ........................................... 224,869,103
-------------
$ 118,082,008
=============
Net Asset Value and redemption price per share of
Class A shares ($45,820,791 / 4,016,032 shares) ........... $11.41
======
Maximum Offering Price per share of Class A shares
($11.41 / .9425) .... ..................................... $12.11
======
Net Asset Value and offering price per share of
Class B(1) shares ($5,691,289 / 526,703 shares)* .......... $10.81
======
Net Asset Value and offering price per share of
Class B shares ($42,546,182 / 3,930,565 shares)* .......... $10.82
======
Net Asset Value and offering price per share of
Class C shares ($18,848,334 / 1,745,482 shares)* .......... $10.80
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($5,175,412 / 443,105 shares) ............................. $11.68
======
- -------------------------------------------------------------------------------
* Redemption price per share for Class B(1), 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>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the six months ended December 31, 1999 (Unaudited)
INVESTMENT INCOME
Dividends, net of foreign taxes of $964 ..................... $ 260,224
Interest (Note 1) ........................................... 34,548
-------------
294,772
EXPENSES
Management fee (Note 2) ..................................... 581,887
Transfer agent and shareholder services (Note 2) ............ 261,485
Service fee - Class A (Note 4) .............................. 79,073
Distribution and service fees - Class B(1) (Note 4) ......... 29,472
Distribution and service fees - Class B (Note 4) ............ 276,189
Distribution and service fees - Class C (Note 4) ............ 124,906
Custodian fee ............................................... 71,040
Registration fees ........................................... 55,296
Reports to shareholders ..................................... 27,264
Audit fee ................................................... 14,208
Legal fees .................................................. 12,416
Trustees' fees (Note 2) ..................................... 6,784
Miscellaneous ............................................... 3,456
-------------
1,543,476
Fees paid indirectly (Note 2) ............................... (12,781)
-------------
1,530,695
-------------
Net investment loss ......................................... (1,235,923)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments (Notes 1 and 3) ............ 636,293
Net unrealized depreciation of investments .................. (9,078,432)
-------------
Net loss on investments ..................................... (8,442,139)
-------------
Net decrease in net assets resulting from operations ........ $ (9,678,062)
=============
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss ......................................... $ (2,078,315) $ (1,235,923)
Net realized gain (loss) on investments, foreign currency
and forward contracts ..................................... (46,014,337) 636,293
Net unrealized depreciation of investments .................. (6,567,556) (9,078,432)
------------- -------------
Net decrease resulting from operations ...................... (54,660,208) (9,678,062)
------------- -------------
Distribution from net realized gains:
Class A ................................................... (3,619,542) --
Class B ................................................... (3,887,699) --
Class C ................................................... (1,503,483) --
Class S ................................................... (209,120) --
------------- -------------
(9,219,844) --
------------- -------------
Net increase (decrease) from fund share
transactions (Note 6) ..................................... 8,549,006 (32,284,298)
------------- -------------
Total decrease in net assets ................................ (55,331,046) (41,962,360)
NET ASSETS
Beginning of period ......................................... 215,375,414 160,044,368
------------- -------------
End of period ............................................... $ 160,044,368 $ 118,082,008
============= =============
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1999
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 presently consists of four separate funds: State
Street Research Global Resources Fund, State Street Research Alpha Fund, State
Street Research Argo Fund and State Street Research Athletes 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 five classes of shares. Until December 31, 1998, Class A
shares were subject to an initial sales charge of up to 4.50% and effective
January 1, 1999 became subject to an initial sales charge of up to 5.75%.
Class A shares pay a service fee equal to 0.25% of average daily net assets.
On January 1, 1999, the Fund began offering Class B(1) shares and continued
offering Class B shares but only to current shareholders through reinvestment
of dividends and distributions or through exchanges from existing Class B
accounts of State Street Research funds. Class B(1) and Class B pay annual
distribution and service fees of 1.00% and both classes automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years. Class B(1) shares are subject to a contingent deferred sales charge on
certain redemptions made within six years of purchase. Class B shares are
subject to a contingent deferred sales charge on certain redemptions made with
five years of purchase. 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 plans 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
Investment income is accrued daily as earned. Dividend income is accrued on
the ex-dividend date. The Fund is charged for expenses directly attributable
to it, while indirect expenses are allocated among all funds in the Trust.
D. DIVIDENDS
Dividends from net investment income, if any, are declared and paid or
reinvested semiannually. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gains distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods. At June 30, 1999, the Fund
had a capital loss carryforward of $6,860,770 available, to the extent
provided in regulations, to offset future capital gains, if any, which expires
on June 30, 2007.
In order to meet certain excise tax distribution requirements under Section
4982 of the Internal Revenue Code, the Fund is required to measure and
distribute annually, if necessary, net capital gains realized during a twelve-
month period ending October 31. In this connection, the Fund is permitted to
defer into its next fiscal year any net capital losses incurred between each
November 1 and the end of its fiscal year. From November 1, 1998 through June
30, 1999, the Fund incurred net capital losses of approximately $37,553,000
and it intends to defer and treat such losses as arising in the fiscal year
ended June 30, 2000.
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. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. 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, 1999, the value of the securities loaned and the value
of collateral were $1,440,550 and $1,458,168, respectively. During the six
months ended December 31, 1999, income from securities lending amounted to
$34,548 and is included in interest income.
NOTE 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.75% 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, 1999, the
fees pursuant to such agreement amounted to $581,887.
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, 1999, the amount of such shareholder servicing and account
maintenance expenses was $125,497.
The Fund has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Fund's expense. During the six months ended December 31, 1999,
the Fund's transfer agent fees were reduced by $12,781 under this arrangement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$6,784 during the six months ended December 31, 1999.
NOTE 3
For the six months ended December 31, 1999, purchases and sales of securities,
exclusive of short-term obligations, aggregated $35,389,199 and $63,513,751,
respectively.
NOTE 4
The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the plans, 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(1), 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(1), 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,
1999, fees pursuant to such plans amounted to $79,073, $29,472 and $276,189
and $124,906 for Class A, Class B(1), 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 $13,352 and $10,160, respectively, on sales of Class A shares of
the Fund during the six months ended December 31, 1999, and that MetLife
Securities, Inc. earned commissions aggregating $23,127 and $987 on sales of
Class B(1) and Class B shares, and that the Distributor collected contingent
deferred sales charges of $27,387, $138,665 and $5,060 on redemptions of Class
B(1), 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
<TABLE>
The Trustees have the authority to issue an unlimited number of shares of beneficial interest, $.001 par value per
share.
Share transactions were as follows:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
------------------------------- ---------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 9,547,596 $106,672,440 3,646,281 $ 47,543,479
Issued upon reinvestment of distribution from
net realized gains ........................ 347,217 3,362,264 -- --
Shares repurchased .......................... (9,116,127) (101,535,221) (5,155,851) (65,060,700)
---------- ------------ ---------- ------------
Net increase (decrease) ..................... 778,686 $ 8,499,483 (1,509,570) $(17,517,221)
========== ============ ========== ============
<CAPTION>
CLASS B(1) SHARES* AMOUNT* SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 552,033 $ 5,148,104 184,322 $ 2,169,316
Shares repurchased .......................... (114,865) (1,235,708) (94,787) (1,076,363)
---------- ------------ ---------- ------------
Net increase ................................ 437,168 $ 3,912,396 89,535 $ 1,092,953
========== ============ ========== ============
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 1,834,773 $ 20,961,694 221,281 $ 2,670,289
Issued upon reinvestment of distribution from
net realized gains ........................ 392,245 3,628,438 -- --
Shares repurchased .......................... (2,697,037) (28,620,805) (1,189,604) (13,465,727)
---------- ------------ ---------- ------------
Net decrease ................................ (470,019) $ (4,030,673) (968,323) $(10,795,438)
========== ============ ========== ============
<CAPTION>
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 1,115,539 $ 11,753,691 152,313 $ 1,777,296
Issued upon reinvestment of distribution from
net realized gains ........................ 148,917 1,374,717 -- --
Shares repurchased .......................... (1,305,845) (13,956,016) (619,039) (6,848,089)
---------- ------------ ---------- ------------
Net decrease ................................ (41,389) $ (827,608) (466,726) $ (5,070,793)
========== ============ ========== ============
<CAPTION>
CLASS S SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 510,007 $ 5,687,504 283,375 $ 3,526,020
Issued upon reinvestment of distribution from
net realized gains ........................ 21,123 208,699 -- --
Shares repurchased .......................... (406,508) (4,900,795) (289,920) (3,519,819)
---------- ------------ ---------- ------------
Net increase (decrease) ..................... 124,622 $ 995,408 (6,545) $ 6,201
========== ============ ========== ============
- ------------------------------------------------------------------------------------------------------------------------
* January 1, 1999 (commencement of share class) to June 30, 1999
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period:
CLASS A
--------------------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
--------------------------------------------------------------------------- DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 11.84 12.16 17.44 22.39 17.35 12.15
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.16) (0.20) (0.15) (0.18) (0.11) (0.08)
Net realized and
unrealized gain (loss)
on investments, foreign
currency and forward
contracts ($) 0.48 5.48 5.86 (2.52) (4.34) (0.66)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.32 5.28 5.71 (2.70) (4.45) (0.74)
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 12.16 17.44 22.39 17.35 12.15 11.41
===== ===== ===== ===== ===== =====
Total return(b) (%) 2.70 43.42 32.96 (14.28) (24.56) (6.09)(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 25,692 30,943 80,029 82,376 67,155 45,821
Ratio of operating
expenses to average net
assets (%)* 1.75 1.75 1.42 1.46 1.59 1.59(e)
Ratio of operating
expenses to average net
assets after expense
reductions (%)* 1.75 1.75 1.42 1.46 1.57 1.58(e)
Ratio of net investment
loss to average net
assets (%)* (1.41) (1.47) (0.73) (0.82) (0.97) (1.17)(e)
Portfolio turnover rate (%) 62.94 92.33 51.67 68.69 55.89 23.63
* Reflects voluntary
reduction of expenses
per share of these
amounts ($) 0.09 0.05 0.00 -- -- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B(1)
-------------------------------
PERIOD ENDED SIX MONTHS ENDED
JUNE 30, DECEMBER 31, 1999
1999(a)(c) (UNAUDITED)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 9.44 11.56
----- -----
Net investment loss ($) (0.08) (0.12)
Net realized and unrealized gain (loss) on investments, foreign currency
and forward contracts ($) 2.20 (0.63)
----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 2.12 (0.75)
----- -----
NET ASSET VALUE, END OF PERIOD ($) 11.56 10.81
===== =====
Total return(b) (%) 22.46 (d) (6.49) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ($ thousands) 5,053 5,691
Ratio of operating expenses to average net assets (%) 2.19 (e) 2.34 (e)
Ratio of operating expenses to average net assets after expense reductions (%) 2.17 (e) 2.33 (e)
Ratio of net investment loss to average net assets (%) (1.64)(e) (1.96)(e)
Portfolio turnover rate (%) 58.89 23.63
- -------------------------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charge. Total return would be lower if the Distributor and its
affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B
-----------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 11.78 12.03 17.12 21.80 16.71 11.58
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.23) (0.30) (0.30) (0.33) (0.19) (0.12)
Net realized and
unrealized gain (loss) on
investments, foreign
currency and forward
contracts ($) 0.48 5.39 5.74 (2.42) (4.19) (0.64)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.25 5.09 5.44 (2.75) (4.38) (0.76)
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 12.03 17.12 21.80 16.71 11.58 10.82
===== ===== ===== ===== ===== =====
Total return(b) (%) 2.12 42.31 31.98 (14.94) (25.10) (6.56) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 7,030 12,828 78,701 89,689 56,708 42,546
Ratio of operating
expenses to average
net assets (%)* 2.33 2.50 2.17 2.21 2.34 2.34 (e)
Ratio of operating
expenses to average
net assets after
expense reductions (%)* 2.33 2.50 2.17 2.21 2.32 2.33 (e)
Ratio of net investment
loss to average net
assets (%)* (1.98) (2.20) (1.47) (1.57) (1.73) (1.95) (e)
Portfolio turnover rate (%) 62.94 92.33 51.67 68.69 55.89 23.63
* Reflects voluntary
reduction of expenses
per share of these
amounts ($) 0.09 0.04 0.00 -- -- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 11.77 12.02 17.10 21.76 16.67 11.54
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.23) (0.30) (0.30) (0.33) (0.19) (0.12)
Net realized and
unrealized gain (loss) on
investments, foreign
currency and forward
contracts ($) 0.48 5.38 5.72 (2.42) (4.19) (0.62)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.25 5.08 5.42 (2.75) (4.38) (0.74)
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- (0.76) (2.34) (0.75) --
---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF
PERIOD ($) 12.02 17.10 21.76 16.67 11.54 10.80
===== ===== ===== ===== ===== =====
Total return(b) (%) 2.12 42.26 31.90 (14.97) (25.17) (6.41) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 2,350 5,154 27,528 37,566 25,538 18,848
Ratio of operating
expenses to average
net assets (%)* 2.33 2.50 2.17 2.21 2.34 2.34 (e)
Ratio of operating
expenses to average
net assets after
expense reductions (%)* 2.33 2.50 2.17 2.21 2.32 2.33 (e)
Ratio of net investment
loss to average net
assets (%)* (1.99) (2.20) (1.45) (1.57) (1.72) (1.94) (e)
Portfolio turnover rate (%) 62.94 92.33 51.67 68.69 55.89 23.63
* Reflects voluntary
reduction of expenses
per share of these
amounts ($) 0.09 0.05 0.00 -- -- --
- --------------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charges. Total return would be lower if the Distributor and
its affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized
(e) Annualized
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS S
-----------------------------------------------------------------------------------------
YEARS ENDED JUNE 30 SIX MONTHS ENDED
------------------------------------------------------------------ DECEMBER 31, 1999
1995(a) 1996(a) 1997(a) 1998(a) 1999(a) (UNAUDITED)(a)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ($) 11.90 12.27 17.64 22.72 17.67 12.43
----- ----- ----- ----- ----- -----
Net investment loss ($)* (0.11) (0.17) (0.10) (0.13) (0.08) (0.06)
Net realized and
unrealized gain (loss) on
investments, foreign
currency and forward
contracts ($) 0.48 5.54 5.94 (2.58) (4.41) (0.69)
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS ($) 0.37 5.37 5.84 (2.71) (4.49) (0.75)
----- ----- ----- ----- ----- -----
Distributions from net
realized gains ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) -- -- (0.76) (2.34) (0.75) --
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD ($) 12.27 17.64 22.72 17.67 12.43 11.68
===== ===== ===== ===== ===== =====
Total return(b) (%) 3.11 43.77 33.33 (14.11) (24.33) (6.03) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period ($ thousands) 3,288 5,632 10,747 5,745 5,590 5,175
Ratio of operating
expenses to average
net assets (%)* 1.33 1.50 1.17 1.21 1.34 1.34 (e)
Ratio of operating
expenses to average
net assets after
expense reductions (%)* 1.33 1.50 1.17 1.21 1.32 1.33 (e)
Ratio of net investment
loss to average net
assets (%)* (1.01) (1.20) (0.48) (0.55) (0.70) (0.94) (e)
Portfolio turnover rate (%) 62.94 92.33 51.67 68.69 55.89 23.63
* Reflects voluntary
reduction of expenses
per share of these
amounts ($) 0.08 0.05 0.00 -- -- --
- -----------------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) 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 reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized
(e) Annualized
</TABLE>
<PAGE>
STATE STREET RESEARCH GLOBAL RESOURCES FUND
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FUND INFORMATION OFFICERS TRUSTEES
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
GLOBAL RESOURCES FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company BRUCE R. BOND
One Financial Center BARTLETT R. GEER Former Chairman of the Board,
Boston, MA 02111 Vice President Chief Executive Officer and
President, PicturTel Corporation
DISTRIBUTOR F. GARDNER JACKSON, JR.
State Street Research Vice President STEVE A. GARBAN
Investment Services, Inc. Former Senior Vice President
One Financial Center THOMAS P. MOORE, JR. for Finance and Operations and
Boston, MA 02111 Vice President Treasurer, The Pennsylvania
State University
SHAREHOLDER SERVICES BRIAN P. O'DELL
State Street Research Vice President MALCOLM T. HOPKINS
Service Center Former Vice Chairman of the
P.O. Box 8408 DANIEL J. RICE III Board and Chief Financial
Boston, MA 02266-8408 Vice President Officer, St. Regis Corp.
1-800-562-0032
JAMES M. WEISS DEAN O. MORTON
CUSTODIAN Vice President Former Executive Vice
State Street Bank and President, Chief Operating
Trust Company PETER A. ZUGER Officer and Director,
225 Franklin Street Vice President Hewlett-Packard Company
Boston, MA 02110
GERARD P. MAUS SUSAN M. PHILLIPS
LEGAL COUNSEL Treasurer Dean, School of Business
Goodwin, Procter & Hoar LLP and Public Management,
Exchange Place JOSEPH W. CANAVAN George Washington University;
Boston, MA 02109 Assistant Treasurer former Member of the Board
of Governors of the Federal
DOUGLAS A. ROMICH Reserve System and Chairman
Assistant Treasurer and Commissioner of the Commodity
Futures Trading Commission
FRANCIS J. MCNAMARA, III
Secretary and General Counsel TOBY ROSENBLATT
President,
DARMAN A. WING Founders Investments Ltd.
Assistant Secretary and President,
Assistant General Counsel The Glen Ellen Company
AMY L. SIMMONS MICHAEL S. SCOTT MORTON
Assistant Secretary Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
</TABLE>
<PAGE>
[back cover]
STATE STREET GLOBAL RESOURCES FUND ------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Canton, MA
Permit #313
------------
[Graphic Omitted]
QUESTIONS? COMMENTS?
CALL us at 1-800-562-0032, or
[hearing-impaired 1-800-676-7876]
[Chinese and Spanish-speaking 1-888-638-3193]
E-MAIL us at:
[email protected]
INTERNET site:
www.ssrfunds.com
WRITE us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders.
This publication must be preceded or accompanied by a current State Street
Research Global Resources Fund prospectus.
When used after March 31, 2000, this report must be accompanied by a current
Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: (exp0201)SSR-LD GR-1237-0200
<PAGE>
--------------------------------
STATE STREET RESEARCH
--------------------------------
ATHLETES FUND
--------------------------------
SEMIANNUAL REPORT
December 31, 1999
---------------------
WHAT'S INSIDE
---------------------
INVESTMENT UPDATE
About the Fund,
economy and markets
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
-------------------
[DALBAR LOGO]
-------------------
For Excellence
[logo] STATE STREET RESEARCH in
Service
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
THE ECONOMY
o The U.S. economy grew at a robust pace in the second half of the year.
Personal income and consumer spending rose, while unemployment edged down to
4.1%.
o Energy prices boosted inflation from 1.6% to 2.6% in 1999. With energy out of
the mix, inflation showed a more moderate increase to 2.2%.
o The Federal Reserve Board raised short-term interest rates by 3/4% in three
1/4% steps in the second half of the year, raising the fed funds rate -- the
target rate at which commercial banks lend to each other overnight -- to 5.5%.
THE MARKETS
o The S&P 500, a broad measure of common stock performance, rose 7.70% for the
six- month period ending December 31, 1999.(1) Technology stocks outpaced
other sectors.
o Large-cap stocks have performed well in recent years; however, the market
started to show signs of broadening in the fourth quarter of 1999 -- a
favorable indicator for mid-cap value stocks.
o The bond market was hurt by growing concerns about inflation, which translated
into higher interest rates and lower bond prices. Municipal bonds lost ground
while most other sectors eked out gains of 1% or less.
THE FUND
OVER THE PAST SIX MONTHS
o For the six months ended December 31, 1999, Class A shares of Athletes Fund
returned 20.78% (does not reflect sales charge)(2). The fund significantly
outperformed the S&P 500, which returned 7.70% for the period, and also beat
the Lipper Large-Cap Growth Funds Average, which returned 22.18%.
o The Fund's heavy exposure to technology stocks such as Cisco Systems, Sun
Microsystems, EMC and Nokia helped the Fund generate a strong performance.
These companies continued to beat the market's expectations for growth.
o The Fund underweighted its exposure to financial services and health care
stocks where earnings growth was not strong enough to offset the negative
impact of rising interest rates.
CURRENT STRATEGY
o If the Federal Reserve Board continues to raise interest rates to control
inflation, it could dampen investor optimism in the short term.
o The Fund is positioned to benefit from continued growth in technology and an
industrial recovery in foreign markets.
December 31, 1999
(1) The S&P 500 (officially the "Standard and Poor's 500 Stock Price Index") is
an unmanaged index of 500 U.S. stocks. The index does not take transaction
charges into consideration. It is not possible to invest directly in the
index.
(2) 20.33% for Class B(1) shares; 20.43% for Class B shares; 20.30% for Class C
shares; 20.95% for Class S shares.
(3) Keep in mind that past performance is no guarantee of future results. The
Fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
Performance reflects a maximum 5.75% Class A share front-end sales charge,
or 5% Class B(1) or Class B share or 1% Class C share contingent deferred
sales charge, where applicable.
(4) Class S shares, offered without a sales charge, are available through
certain employee benefit plans and special programs.
PLEASE NOTE THAT THE DISCUSSION THROUGHOUT THIS SHAREHOLDER REPORT IS DATED AS
INDICATED AND, BECAUSE OF POSSIBLE CHANGES IN VIEWPOINT, DATA AND TRANSACTIONS
SHOULD NOT BE RELIED UPON AS BEING CURRENT THEREAFTER.
- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1999)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(at maximum applicable sales charge)(3)(4)
- --------------------------------------------------------------------
LIFE OF FUND
(since 3/27/98) 1 YEAR
- --------------------------------------------------------------------
Class A 26.35% 26.19%
- --------------------------------------------------------------------
Class B(1) 27.75% 27.73%
- --------------------------------------------------------------------
Class B 27.81% 27.85%
- --------------------------------------------------------------------
Class C 29.68% 31.85%
- --------------------------------------------------------------------
Class S 30.94% 34.05%
- --------------------------------------------------------------------
Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses; without subsidization, performance would have been
lower.
TOP 10 STOCK POSITIONS
(by percentage of net assets)
1 CISCO SYSTEMS Computer network products 4.7%
2 SUN MICROSYSTEMS Microsystems 4.4%
3 MICROSOFT Software 3.5%
4 EMC Computer software and service 3.3%
5 TERADYNE Electronic measurement instruments 3.3%
6 CBS Entertainment 3.2%
7 NOKIA Telecommunications 3.0%
8 GENERAL ELECTRIC Consumer/industrial products 2.6%
9 SPDR TRUST Multi-sector 2.6%
10 TEXAS INSTRUMENTS Electronic components 2.6%
These securities represent an aggregate of 33.2% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
TOP 5 INDUSTRIES
(by percentage of net assets)
COMPUTER TECHNOLOGY 11.8%
MULTI-SECTOR 9.3%
COMMUNICATIONS TECHNOLOGY 8.6%
TELECOMMUNICATIONS 6.5%
COMPUTER SOFTWARE 5.7%
Total:p 41.9%
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- ------------------------------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 96.0%
CONSUMER DISCRETIONARY 13.7%
ADVERTISING AGENCIES 1.9%
Omnicom Group Inc. ............................................... 4,900 $ 490,000
------------
COMMERCIAL SERVICES 2.2%
America Online Inc.* ............................................. 7,200 543,150
------------
COMMUNICATIONS, MEDIA &
ENTERTAINMENT 3.2%
CBS Corp.* ....................................................... 12,500 799,219
------------
RESTAURANTS 1.1%
McDonald's Corp. ................................................. 6,900 278,156
------------
RETAIL 5.3%
Circuit City Stores Inc. ......................................... 8,800 396,550
Home Depot Inc. .................................................. 5,850 401,091
Wal-Mart Stores, Inc. ............................................ 7,600 525,350
------------
1,322,991
------------
Total Consumer Discretionary ..................................... 3,433,516
------------
CONSUMER STAPLES 4.6%
BEVERAGES 2.3%
Anheuser-Busch Companies, Inc. ................................... 8,200 581,175
------------
HOUSEHOLD PRODUCTS 2.3%
Colgate-Palmolive Co. ............................................ 8,700 565,500
------------
Total Consumer Staples ........................................... 1,146,675
------------
FINANCIAL SERVICES 8.7%
BANKS & SAVINGS & LOAN 1.0%
Chase Manhattan Corp. ............................................ 3,200 248,600
------------
FINANCIAL DATA PROCESSING SERVICES &
SYSTEMS 1.6%
First Data Corp. ................................................. 8,000 394,500
------------
INSURANCE 1.7%
American International Group Inc. ................................ 3,962 428,391
------------
MISCELLANEOUS FINANCIAL 4.4%
Citigroup, Inc. .................................................. 11,650 647,303
Morgan Stanley Dean Witter & Co. ................................. 3,200 456,800
------------
1,104,103
------------
Total Financial Services ......................................... 2,175,594
------------
HEALTH CARE 5.3%
DRUGS & BIOTECHNOLOGY 5.3%
Amgen Inc.* ...................................................... 8,000 480,500
Bristol-Myers Squibb Co. ......................................... 4,000 256,750
Genentech Inc.* .................................................. 600 80,700
Johnson & Johnson ................................................ 5,500 512,187
------------
Total Health Care ................................................ 1,330,137
------------
INTEGRATED OILS 2.7%
INTEGRATED INTERNATIONAL 2.7%
BP Amoco PLC ADR ................................................. 6,000 355,875
Total Fina SA ADR* ............................................... 4,800 332,400
------------
688,275
------------
Total Integrated Oils ............................................ 688,275
------------
MATERIALS & PROCESSING 2.1%
CHEMICALS 2.1%
Dow Chemical Co. ................................................. 3,900 521,138
------------
Total Materials & Processing ..................................... 521,138
------------
OTHER 9.3%
MULTI-SECTOR 9.3%
General Electric Co. ............................................. 4,300 665,425
Honeywell International Inc.* .................................... 8,300 478,806
Standard & Poor's Depositary Receipt Trust ....................... 4,500 660,938
Tyco International Ltd. .......................................... 13,800 536,475
------------
Total Other ...................................................... 2,341,644
------------
OTHER ENERGY 1.1%
OIL WELL EQUIPMENT & SERVICES 1.1%
Halliburton Co. .................................................. 6,900 277,725
------------
Total Other Energy ............................................... 277,725
------------
PRODUCER DURABLES 7.4%
ELECTRICAL EQUIPMENT & COMPONENTS 2.6%
Nortel Networks Corp. ............................................ 6,400 646,400
------------
MISCELLANEOUS EQUIPMENT 1.3%
Danaher Corp. .................................................... 7,000 337,750
------------
PRODUCTION TECHNOLOGY EQUIPMENT 3.5%
Agilent Technologies Inc.* ....................................... 700 54,119
Teradyne Inc.* ................................................... 12,400 818,400
------------
872,519
------------
Total Producer Durables .......................................... 1,856,669
------------
TECHNOLOGY 33.8%
COMMUNICATIONS TECHNOLOGY 8.6%
Cisco Systems Inc.* .............................................. 11,100 1,189,087
Inktomi Corp.* ................................................... 4,000 355,000
Lucent Technologies Inc. ......................................... 4,300 321,694
Motorola Inc. .................................................... 2,000 294,500
------------
2,160,281
------------
COMPUTER SOFTWARE 5.7%
Citrix Systems Inc.* ............................................. 4,500 553,500
Microsoft Corp.* ................................................. 7,500 875,625
------------
1,429,125
------------
COMPUTER TECHNOLOGY 11.8%
Electronic Data Systems Corp. .................................... 8,200 548,887
EMC Corp.* ....................................................... 7,600 830,300
International Business Machines Corp. ............................ 4,400 475,200
Sun Microsystems Inc.* ........................................... 14,400 1,115,100
------------
2,969,487
------------
ELECTRONICS 5.1%
Nokia Corp. ADR .................................................. 4,000 760,000
Solectron Corp.* ................................................. 5,500 523,188
------------
1,283,188
------------
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS 2.6%
Texas Instruments Inc. ........................................... 6,800 658,750
------------
Total Technology ................................................. 8,500,831
------------
UTILITIES 7.3%
CABLE TELEVISION & RADIO 0.8%
MediaOne Group Inc.* ............................................. 2,700 207,394
------------
TELECOMMUNICATIONS 6.5%
Alltel Corp. ..................................................... 5,000 413,437
MCI WorldCom Inc.* ............................................... 12,300 652,669
Qwest Communications International Inc.* ......................... 13,200 567,600
------------
1,633,706
------------
Total Utilities .................................................. 1,841,100
------------
Total Common Stocks (Cost $15,840,479) ........................... 24,113,304
------------
- ------------------------------------------------------------------------------------------------------
PRINCIPAL MATURITY
AMOUNT DATE
- ------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS 2.6%
AIG Funding Inc., 4.95% ...................... $666,000 1/04/2000 665,725
------------
Total Short-Term Obligations (Cost $665,725) ....................................... 665,725
------------
Total Investments (Cost $16,506,204) - 98.6% ....................................... 24,779,029
Cash and Other Assets, Less Liabilities - 1.4% ..................................... 350,811
------------
Net Assets - 100.0% ................................................................ $ 25,129,840
============
Federal Income Tax Information:
At December 31, 1999, the net unrealized appreciation of investments based on cost
for Federal income tax purposes of $16,519,708 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an
excess of value over tax cost ...................................................... $ 8,298,205
Aggregate gross unrealized depreciation for all investments in which there is an
excess of tax cost over value ...................................................... (38,884)
------------
$ 8,259,321
============
- ------------------------------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of foreign securities.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
ASSETS
Investments, at value (Cost $16,506,204) (Note 1) ........... $ 24,779,029
Cash ........................................................ 14,287
Receivable for fund shares sold ............................. 364,216
Receivable from Distributor (Note 3) ........................ 34,799
Dividends and interest receivable ........................... 8,825
Deferred organization costs and other assets (Note 1) ....... 104,789
-------------
25,305,945
LIABILITIES
Accrued management fee (Note 2) ............................. 13,106
Accrued trustees' fees (Note 2) ............................. 7,443
Accrued distribution and service fees (Note 5) .............. 2,876
Other accrued expenses ...................................... 152,680
-------------
176,105
-------------
NET ASSETS .................................................. $ 25,129,840
=============
Net Assets consist of:
Unrealized appreciation of investments .................... $ 8,272,825
Accumulated net realized loss ............................. (145,066)
Paid-in capital ........................................... 17,002,081
-------------
$ 25,129,840
=============
Net Asset Value and redemption price per share of
Class A shares ($2,920,430 / 260,366 shares) $11.22
======
Maximum Offering Price per share of Class A shares
($11.22 / .9425) .......................................... $11.90
======
Net Asset Value and offering price per share of
Class B(1) shares ($928,806 / 83,884 shares)* $11.07
======
Net Asset Value and offering price per share of
Class B shares ($991,728 / 89,539 shares)* $11.08
======
Net Asset Value and offering price per share of
Class C shares ($809,496 / 73,058 shares)* $11.08
======
Net Asset Value, offering price and redemption price per
share of Class S shares ($19,479,380 / 1,729,993 shares) .. $11.26
======
- --------------------------------------------------------------------------------
* Redemption price per share for Class B(1), 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>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended December 31, 1999 (Unaudited)
INVESTMENT INCOME
Dividends ................................................... $ 57,034
Interest .................................................... 16,383
-----------
73,417
EXPENSES
Management fee (Note 2) ..................................... 65,677
Custodian fee ............................................... 46,297
Registration fees ........................................... 40,784
Reports to shareholders ..................................... 14,224
Legal fees .................................................. 10,244
Amortization of organization costs (Note 1) ................. 9,143
Audit fee ................................................... 7,734
Trustees' fees (Note 2) ..................................... 7,443
Service fee - Class A (Note 5) .............................. 3,100
Distribution and service fees - Class B(1) (Note 5) ......... 3,631
Distribution and service fees - Class B (Note 5) ............ 4,233
Distribution and service fees - Class C (Note 5) ............ 3,503
Transfer agent and shareholder services (Note 2) ............ 425
Miscellaneous ............................................... 1,841
-----------
218,279
Fees paid indirectly (Note 2) ............................... (32)
Expenses borne by the Distributor (Note 3) .................. (102,736)
-----------
115,511
-----------
Net investment loss ......................................... (42,094)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (Notes 1 and 4) ............ (77,085)
Net unrealized appreciation of investments .................. 4,261,744
-----------
Net gain on investments ..................................... 4,184,659
-----------
Net increase in net assets resulting from operations ........ $ 4,142,565
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
<TABLE>
- -------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss ......................................... $ (38,026) $ (42,094)
Net realized gain (loss) on investments ..................... 32,951 (77,085)
Net unrealized appreciation of investments .................. 3,410,523 4,261,744
----------- -----------
Net increase resulting from operations ...................... 3,405,448 4,142,565
----------- -----------
Dividend from net investment income:
Class A ................................................... (1,375) --
Class S ................................................... (10,313) --
----------- -----------
(11,688) --
----------- -----------
Net increase from fund share transactions (Note 6) .......... 5,465,500 2,206,270
----------- -----------
Total increase in net assets ................................ 8,859,260 6,348,835
NET ASSETS
Beginning of period ......................................... 9,921,745 18,781,005
----------- -----------
End of period ............................................... $18,781,005 $25,129,840
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1999
NOTE 1
State Street Research Athletes 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 presently consists of four separate funds: State Street Research
Athletes Fund, State Street Research Alpha Fund, State Street Research Global
Resources Fund and State Street Research Argo 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 at
least 65% of total assets in stocks and convertible securities of large-size
companies. The Fund is intended primarily for professional athletes and
associated persons.
The Fund offers five classes of shares. Until December 31, 1998, Class A
shares were subject to an initial sales charge of up to 4.50% and effective
January 1, 1999 became subject to an initial sales charge of up to 5.75%.
Class A shares pay a service fee equal to 0.25% of average daily net assets.
On January 1, 1999, the Fund began offering Class B(1) shares and continued
offering Class B shares but only to current shareholders through reinvestment
of dividends and distributions or through exchanges from existing Class B
accounts of State Street Research funds. Class B(1) and Class B pay annual
distribution and service fees of 1.00% and both classes automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight
years. Class B(1) shares are subject to a contingent deferred sales charge on
certain redemptions made within six years of purchase. Class B shares are
subject to a contingent deferred sales charge on certain redemptions made
within five years of purchase. Class C shares are subject to a contingent
deferred sales charge of 1.00% on any shares redeemed within one year of their
purchase. Class C shares also pay annual distribution and service fees of
1.00%. Class S shares are only offered through certain retirement accounts,
advisory accounts of State Street Research & Management Company (the
"Adviser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance
Company ("Metropolitan"), and special programs. No sales charge is imposed at
the time of purchase or redemption of Class S shares. Class S shares do not
pay any distribution or service fees. The Fund's expenses are borne pro-rata
by each class, except that each class bears expenses, and has exclusive voting
rights with respect to provisions of the plans of distribution, related
specifically to that class. The Trustees declare separate dividends on each
class of shares.
The following significant policies are consistently followed by the Fund in
preparing its financial statements, and such policies are in conformity with
generally accepted accounting principles for investment companies.
A. INVESTMENT VALUATION
Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange. Over-the-
counter securities quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system are valued at the closing price supplied
through such system. In the absence of recorded sales and for those over-the-
counter securities not quoted on the NASDAQ system, valuations are at the mean
of the closing bid and asked quotations. Short-term securities maturing
within sixty days are valued at amortized cost. Other securities, if any, are
valued at their fair value as determined in accordance with established
methods consistently applied.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Trust.
D. DIVIDENDS
Dividends from net investment income, if any, are declared and paid or
reinvested annually. 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. At June 30, 1999, the Fund
had a capital loss carryforward of $42,797 available, to the extent provided
in regulations, to offset future capital gains, if any, which expires on June
30, 2007.
F. DEFERRED ORGANIZATION COSTS
Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.
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. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. 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. During the six months ended December 31, 1999, there were no loaned
securities.
NOTE 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.65% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the six months ended December 31, 1999, the
fees pursuant to such agreement amounted to $65,677.
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. During the six months ended December 31, 1999, the amount
of such expenses was $393.
The Fund has entered into an agreement with its transfer agent whereby credits
realized as a result of uninvested cash balances were used to reduce a portion
of the Fund's expense. During the six months ended December 31, 1999 the
Fund's transfer agent fees were reduced by $32 under this arrangement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$7,443 during the six months ended December 31, 1999.
NOTE 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended December 31, 1999, the amount of such
expenses assumed by the Distributor and its affiliates was $102,736.
NOTE 4
For the six months ended December 31, 1999, purchases and sales of securities,
exclusive of short-term obligations, aggregated $7,194,118 and $5,452,098,
respectively.
NOTE 5
The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the Plans, 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(1), 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(1), Class B and Class C shares. The Distributor uses such payments for
personal service and/or the maintenance or servicing of shareholder accounts,
to compensate or 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, 1999, fees pursuant to such plans amounted to $3,100, $3,631, $4,233 and
$3,503 for Class A, Class B(1), 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 $193 and $731, respectively, on sales of Class A shares of the
Fund during the six months ended December 31, 1999, and the Distributor
collected contingent deferred sales charges aggregating $525 on redemptions of
Class B shares during the same period.
<PAGE>
NOTE 6
<TABLE>
The Trustees have the authority to issue an unlimited number of shares of beneficial interest, $.001 par value per
share. At December 31, 1999, Metropolitan owned 71,429 shares of each of Class A, Class B and Class C, 59,952 Class B(1)
shares and 440,476 Class S shares of the Fund.
Share transactions were as follows:
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1999 (UNAUDITED)
--------------------------- ------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 144,360 $ 1,138,520 10,188 $ 94,195
Issued upon reinvestment of dividend ........ 106 842 -- --
Shares redeemed ............................. (1,259) (11,157) (1,400) (13,436)
---------- ------------ ---------- ------------
Net increase ................................ 143,207 $ 1,128,205 8,788 $ 80,759
========== ============ ========== ============
<CAPTION>
CLASS B(1) SHARES* AMOUNT* SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 68,939 $ 578,077 14,976 $ 145,859
Shares redeemed ............................. -- -- (31) (323)
---------- ------------ ---------- ------------
Net increase ................................ 68,939 $ 578,077 14,945 $ 145,536
========== ============ ========== ============
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 14,242 $ 112,402 5,514 $ 52,986
Shares redeemed ............................. (36) (305) (2,340) (24,058)
---------- ------------ ---------- ------------
Net increase ................................ 14,206 $ 112,097 3,174 $ 28,928
========== ============ ========== ============
<CAPTION>
CLASS C SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 1,617 $ 14,091 -- $ --
---------- ------------ ---------- ------------
Net increase ................................ 1,617 $ 14,091 -- $ --
========== ============ ========== ============
<CAPTION>
CLASS S SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................................. 673,473 $ 5,476,910 270,367 $ 2,680,815
Shares repurchased .......................... (229,336) (1,843,880) (80,385) (729,768)
---------- ------------ ---------- ------------
Net increase ................................ 444,137 $ 3,633,030 189,982 $ 1,951,047
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------------
* January 1, 1999 (commencement of share class) to June 30, 1999.
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<CAPTION>
CLASS A CLASS B(1)
-------------------------------------------------------------------- -----------------------------------------
MARCH 27, 1998
(COMMENCEMENT OF SIX MONTHS ENDED SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED DECEMBER 31, 1999 PERIOD ENDED DECEMBER 31, 1999
JUNE 30, 1998(a) JUNE 30, 1999(a) (UNAUDITED)(a) JUNE 30, 1999(a)(c) (UNAUDITED)(a)
- -------------------------------------------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD ($) 7.00 7.36 9.29 8.34 9.20
----- ----- ----- ------ -----
Net investment
income (loss) ($)* 0.00 (0.03) (0.03) (0.05) (0.06)
Net realized and
unrealized
gain on
investments ($) 0.36 1.97 1.96 0.91 1.93
----- ----- ----- ------ -----
TOTAL FROM
INVESTMENT
OPERATIONS ($) 0.36 1.94 1.93 0.86 1.87
----- ----- ----- ------ -----
Dividend from
net investment
income ($) -- (0.01) -- -- --
----- ----- ----- ------ -----
TOTAL
DISTRIBUTIONS ($) -- (0.01) -- -- --
----- ----- ----- ------ -----
NET ASSET VALUE,
END OF PERIOD ($) 7.36 9.29 11.22 9.20 11.07
===== ===== ===== ====== =====
Total return(b) (%) 5.14(d) 26.32 20.78(d) 10.31(d) 20.33(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at
end of period ($
thousands) 797 2,336 2,920 634 929
Ratio of operating
expenses to average
net assets (%)* 1.25(e) 1.25 1.25(e) 2.00(e) 2.00(e)
Ratio of
operating
expenses to
average net
assets after
expense
reductions (%)* 1.25(e) 1.25 1.25(e) 2.00(e) 2.00(e)
Ratio of net
investment
income (loss)
to average net
assets (%)* 0.25(e) (0.41) (0.53)(e) (1.27)(e) (1.29)(e)
Portfolio
turnover rate (%) 30.76 141.92 28.25 141.92 28.25
*Reflects
voluntary
reduction of
expenses per
share of these
amounts (Note 3) ($) 0.07 0.06 0.04 0.08 0.05
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------------------------------------------------------
MARCH 27, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1998(a) JUNE 30, 1999(a) (UNAUDITED)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD ($) 7.00 7.34 9.20
----- ----- -----
Net investment
loss ($)* (0.01) (0.09) (0.06)
Net realized
and
unrealized
gain on
investments ($) 0.35 1.95 1.94
----- ----- -----
TOTAL FROM
INVESTMENT
OPERATIONS ($) 0.34 1.86 1.88
----- ----- -----
NET ASSET VALUE,
END OF PERIOD ($) 7.34 9.20 11.08
===== ===== =====
Total return(b) (%) 4.86(d) 25.34 20.43(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at
end of period
($ thousands) 530 795 992
Ratio of
operating
expenses to
average
net assets(%)* 2.00(e) 2.00 2.00(e)
Ratio of
operating
expenses to
average
net assets
after expense
reductions (%)* 2.00(e) 2.00 2.00(e)
Ratio of net investment
loss to average net
assets (%)* (0.44)(e) (1.12) (1.28)(e)
Portfolio
turnover rate (%) 30.76 141.92 28.25
*Reflects voluntary
reduction of
expenses per share of
these amounts
(Note 3) ($) 0.07 0.15 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------
MARCH 27, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1998(a) JUNE 30, 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD ($) 7.00 7.34 9.21
----- ------ ------
Net investment loss ($)* (0.01) (0.09) (0.06)
Net realized and unrealized gain
on investments ($) 0.35 1.96 1.93
----- ------ ------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.34 1.87 1.87
----- ------ ------
NET ASSET VALUE, END OF PERIOD ($) 7.34 9.21 11.08
===== ====== ======
Total return(b) (%) 4.86(d) 25.48 20.30(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
($ thousands) 525 673 809
Ratio of operating expenses to
average net assets (%)* 2.00(e) 2.00 2.00(e)
Ratio of operating expenses to
average net assets after
expense reductions (%)* 2.00(e) 2.00 2.00(e)
Ratio of net investment loss to
average net assets (%)* (0.43)(e) (1.12) (1.28)(e)
Portfolio turnover rate (%) 30.76 141.92 28.25
*Reflects voluntary reduction of
expenses per share of these
amounts (Note 3) ($) 0.07 0.16 0.05
</TABLE>
<TABLE>
<CAPTION>
CLASS S
----------------------------------------------------------------------------
MARCH 27, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED DECEMBER 31, 1999
JUNE 30, 1998(a) JUNE 30, 1999(a) (UNAUDITED)(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD ($) 7.00 7.36 9.31
----- ------ ------
Net investment income (loss) ($)* 0.01 (0.01) (0.01)
Net realized and unrealized
gain on investments ($) 0.35 1.97 1.96
----- ------ ------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.36 1.96 1.95
----- ------ ------
Dividend from net investment
income ($) -- (0.01) --
----- ------ ------
TOTAL DISTRIBUTIONS ($) -- (0.01) --
----- ------ ------
NET ASSET VALUE, END
OF PERIOD ($) 7.36 9.31 11.26
===== ====== ======
Total return(b) (%) 5.14(d) 26.62 20.95(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
($ thousands) 8,070 14,343 19,479
Ratio of operating expenses to
average net assets (%)* 1.00(e) 1.00 1.00(e)
Ratio of operating expenses to
average net assets after
expense reductions (%)* 1.00(e) 1.00 1.00(e)
Ratio of net investment income (loss)
to average net assets (%)* 0.46(e) (0.14) (0.27)(e)
Portfolio turnover rate (%) 30.76 141.92 28.25
*Reflects voluntary reduction of
expenses per share of these
amounts (Note 3) ($) 0.06 0.13 0.05
- --------------------------------------------------------------------------------------------------------------
(a) Per share figures have been calculated using the average shares method.
(b) 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 reduced a portion of the Fund's expenses.
(c) January 1, 1999 (commencement of share class) to June 30, 1999.
(d) Not annualized.
(e) Annualized.
</TABLE>
<PAGE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------
REPORT ON SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the State Street Research Athletes Fund,
a series of State Street Research Equity Trust ("Trust"), was convened on
September 14, 1999 ("Meeting"), and continued thereafter. The results of the
Meeting are set forth below.
<TABLE>
<CAPTION>
VOTES (MILLIONS OF SHARES)
(COMBINED FOR ALL SERIES OF THE TRUST)
--------------------------------------
ACTION ON PROPOSAL FOR WITHHELD
- --------------------------------------------------------------------------------------------
<S> <C> <C>
1. The following persons were elected as Trustees:
Bruce R. Bond ...................................... 31.9 0.8
Steve A. Garban .................................... 31.9 0.8
Malcolm T. Hopkins ................................. 31.9 0.8
Susan M. Phillips .................................. 31.9 0.8
</TABLE>
<TABLE>
<CAPTION>
VOTES (MILLIONS OF SHARES)
---------------------------------------------------
FOR AGAINST ABSTAIN
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. The fundamental policy on diversification of investments was amended ........ 1.9 0.0 0.0
</TABLE>
<PAGE>
<TABLE>
STATE STREET RESEARCH ATHLETES FUND
- --------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH EQUITY TRUST
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FUND INFORMATION OFFICERS TRUSTEES
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
ATHLETES FUND Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company BRUCE R. BOND
One Financial Center BARTLETT R. GEER Former Chairman of the Board,
Boston, MA 02111 Vice President Chief Executive Officer and
President, PicturTel Corporation
DISTRIBUTOR F. GARDNER JACKSON, JR.
State Street Research Vice President STEVE A. GARBAN
Investment Services, Inc. Former Senior Vice President
One Financial Center THOMAS P. MOORE, JR. for Finance and Operations and
Boston, MA 02111 Vice President Treasurer, The Pennsylvania
State University
SHAREHOLDER SERVICES BRIAN P. O'DELL
State Street Research Vice President MALCOLM T. HOPKINS
Service Center Former Vice Chairman of the
P.O. Box 8408 DANIEL J. RICE III Board and Chief Financial
Boston, MA 02266-8408 Vice President Officer, St. Regis Corp.
1-800-562-0032
JAMES M. WEISS DEAN O. MORTON
CUSTODIAN Vice President Former Executive Vice
State Street Bank and President, Chief Operating
Trust Company PETER A. ZUGER Officer and Director,
225 Franklin Street Vice President Hewlett-Packard Company
Boston, MA 02110
GERARD P. MAUS SUSAN M. PHILLIPS
LEGAL COUNSEL Treasurer Dean, School of Business
Goodwin, Procter & Hoar LLP and Public Management,
Exchange Place JOSEPH W. CANAVAN George Washington University;
Boston, MA 02109 Assistant Treasurer former Member of the Board
of Governors of the Federal
DOUGLAS A. ROMICH Reserve System and Chairman
Assistant Treasurer and Commissioner of the
Commodity Futures Trading
FRANCIS J. MCNAMARA, III Commission
Secretary and General Counsel
TOBY ROSENBLATT
DARMAN A. WING President,
Assistant Secretary and Founders Investments Ltd.
Assistant General Counsel President,
The Glen Ellen Company
AMY L. SIMMONS
Assistant Secretary MICHAEL S. SCOTT MORTON
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
</TABLE>
<PAGE>
State Street Research Athletes Fund ------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Canton, MA
Permit #313
------------
[Graphic Omitted]
QUESTIONS? COMMENTS?
CALL us at 1-800-562-0032, or
[hearing-impaired 1-800-676-7876]
[Chinese and Spanish-speaking 1-888-638-3193]
E-MAIL us at:
[email protected]
INTERNET site:
www.ssrfunds.com
WRITE us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders.
This publication must be preceded or accompanied by a current State Street
Research Athletes Fund prospectus.
When used after March 31, 2000, this report must be accompanied by a current
Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: (exp0201)SSR-LD AT-1228-0200
