As filed with the Securities and Exchange Commission on August 25, 1995
1933 Act Registration No. 33-74628
1940 Act File No. 811-8322
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
--------------------
STATE STREET RESEARCH SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617) 357-1200
Francis J. McNamara, III
Senior Vice President, Secretary & General Counsel
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Copies of Communications to:
Donald J. Evans, P.C.
Edward T. O'Dell, P.C.
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On September 1, 1995 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _____________ pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On __________ pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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The Registrant hereby declares that, pursuant to Rule 24f-2(a)(1) under the
Investment Company Act of 1940, as amended, it has registered an indefinite
number of shares of beneficial interest, par value $.001 per share, in the State
Street Research Intermediate Bond Fund series of the Registrant, which shares
are designated as Class A shares, Class B shares, Class C shares and Class D
shares of such series.
A Rule 24f-2 Notice for the fiscal period ended April 30, 1995 was filed
by the Registrant on or about June 30, 1995 with respect to such shares.
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<PAGE>
STATE STREET RESEARCH SECURITIES TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Caption or Location in Prospectus
for State Street Research
Form N-1A Item No. Intermediate Bond Fund
PART A
1. Cover Page...................... Same
2. Synopsis........................ Table of Expenses
3. Condensed Financial
Information .................... Financial Highlights; Calculation of
Performance Data
4. General Description
of Registrant .................. The Fund's Investments; Investment
Practices; The Fund and its Shares;
Appendix
5. Management of the Fund.......... Management of the Fund; Purchase of
Shares; Shareholder Services
5A. Management's Discussion of
Fund Performance ............... [To be included in Annual Report to
Shareholders]
6. Capital Stock and
Other Securities ............... Shareholder Services; The Fund and
its Shares; Management of the Fund;
Dividends and Distributions; Taxes
7. Purchase of Securities
Being Offered ................. Purchase of Shares; Shareholder
Services; Management of the Fund
8. Redemption or Repurchase ....... Redemption of Shares; Shareholder
Services
9. Legal Proceedings............... Not Applicable
i
<PAGE>
Caption or Location in Statement
of Additional Information for
State Street Research
Form N-1A Item No. Intermediate Bond Fund
PART B
10. Cover Page...................... Same
11. Table of Contents............... Same
12. General Information and
History ........................ Not Applicable
13. Investment Objectives
and Policies ................... Additional Investment Policies and
Restrictions; Additional Information
Concerning Certain Investment
Techniques; Debt Instruments and
Permitted Cash Investments;
Portfolio Transactions
14. Management of the Registrant ... Trustees and Officers
15. Control Persons and Principal
Holders of Securities .......... Trustees and Officers
16. Investment Advisory and Other
Services ....................... Investment Advisory Services;
Custodian; Independent Accountants;
Distribution of Shares of the Fund
17. Brokerage Allocation............ Portfolio Transactions
18. Capital Stock and
Other Securities ............... Not Applicable (Description in
Prospectus)
19. Purchase, Redemption and Pricing
of Securities Being Offered .... Purchase of Shares; Net Asset Value
20. Tax Status ..................... Certain Tax Matters
21. Underwriters ................... Distribution of Shares of the Fund
22. Calculation of Performance
Data ........................... Calculation of Performance Data
23. Financial Statements ........... Financial Statements
ii
<PAGE>
Supplement No. 1 dated
September 1, 1995
to
Prospectus dated September 1, 1995
for
STATE STREET RESEARCH
INTERMEDIATE BOND FUND
a series of State Street Research Securities Trust
Shares Available
Shares of the Fund are available as set forth below:
Class A: Prior approval must be obtained from the Distributor before
Class A shares are offered to anyone. Subject to such advance approval,
Class A shares are only currently available in certain designated states
for investments of $1,000,000 or more. Contact the Distributor for details.
Class A shares are not currently available for acquisition
through exchanges from another fund.
Class B: Class B shares are not currently offered.
Class C: Class C shares are currently offered and available for investment
by certain employee benefit plans and large institutions.
Class D: Class D shares are not currently offered.
CONTROL NUMBER:2542-950828(0996)SSR-LD: IB-314E-995IBS
<PAGE>
State Street Research
Intermediate Bond Fund
Prospectus
September 1, 1995
The investment objective of State Street Research Intermediate Bond Fund (the
"Fund") is to provide total return, consisting primarily of current income
and secondarily of capital appreciation, commensurate with reasonable
investment risk. In seeking to achieve this investment objective, the Fund
invests primarily in a diversified portfolio of debt securities considered
investment grade by one or more nationally recognized rating agencies or of
comparable quality by the Fund's investment manager.
State Street Research & Management Company serves as investment adviser for
the Fund (the "Investment Manager"). As of June 30, 1995, the Investment
Manager had approximately $26.2 billion of assets under management. State
Street Research Investment Services, Inc. serves as distributor (the
"Distributor") for the Fund.
Shareholders may have their shares redeemed directly by the Fund at net asset
value plus the applicable contingent deferred sales charge, if any;
redemptions processed through securities dealers may be subject to processing
charges.
There are risks in any investment program, including the risk of changing
economic and market conditions, and there is no assurance that the Fund will
achieve its investment objective. The net asset value of a share of the Fund
will fluctuate as market conditions change.
This Prospectus sets forth concisely the information a prospective investor
ought to know about the Fund before investing. It should be retained for
future reference. A Statement of Additional Information about the Fund dated
September 1, 1995 has been filed with the Securities and Exchange Commission
and is incorporated by reference in this Prospectus. It is available, at no
charge, upon request to the Fund at the address indicated on the back cover
or by calling 1-800-562-0032.
The Fund is a diversified series of State Street Research Securities Trust
(the "Trust"), an open-end management investment company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Page
Table of Expenses 2
Financial Highlights 4
The Fund's Investments 5
Risk Factors and Investment Practices 6
Limiting Investment Risk 8
Purchase of Shares 9
Redemption of Shares 17
Shareholder Services 19
The Fund and its Shares 22
Management of the Fund 23
Dividends and Distributions; Taxes 24
Calculation of Performance Data 25
Appendix--Description of Debt/Bond Ratings 27
</TABLE>
1
<PAGE>
The Fund offers four classes of shares which may be purchased at the next
determined net asset value per share plus, in the case of all classes except
Class C shares, a sales charge which, at the election of the investor, may be
imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares).
Class A shares are subject to (i) an initial sales charge of up to 4.5% and
(ii) an annual service fee of 0.25% of the average daily net asset value of
the Class A shares.
Class B shares are subject to (1) a contingent deferred sales charge
(declining from 5% to 2%), which will be imposed on most redemptions made
within five years of purchase and (ii) annual distribution and service fees
of 1% of the average daily net asset value of such shares. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after purchase. No contingent deferred sales charge
applies after the fifth year following the purchase of Class B shares.
Class C shares are offered only to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees.
Class D shares are subject to (i) a contingent deferred sales charge of 1% if
redeemed within one year following purchase and (ii) annual distribution and
service fees of 1% of the average daily net asset value of such shares.
Table of Expenses
<TABLE>
<CAPTION>
Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses (1)
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering
price) 4.5% None None None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a percentage of
offering price) None None None None
Maximum Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) None (2) 5% None 1%
Redemption Fees (as a percentage of
amount redeemed, if applicable) None None None None
Exchange Fees None None None None
</TABLE>
(1) Reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge declines
thereafter and no contingent deferred sales charge is imposed after the fifth
year. Class D shares are subject to a 1% contingent deferred sales charge on
any portion of the purchase redeemed within one year of the sale. Long-term
investors in a class of shares with a distribution fee may, over a period of
years, pay more than the economic equivalent of the maximum sales charge
permissible under applicable rules. See "Purchase of Shares."
(2) Purchases of Class A shares of $1 million or more are not subject to a
sales charge. If such shares are redeemed within 12 months of purchase, a
contingent deferred sales charge of 1% will be applied to the redemption. See
"Purchase of Shares."
2
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees 0.55% 0.55% 0.55% 0.55%
12b-1 Fees 0.25% 1.00% None 1.00%
Other Expenses 1.39% 1.39% 1.39% 1.39%
Less Voluntary Reduction (1.19%) (1.19%) (1.19%) (1.19%)
------ ------ ------ ------
Total Fund Operating Expenses
(after voluntary reduction) 1.00% 1.75% 0.75% 1.75%
====== ====== ====== ======
</TABLE>
Example:
You would pay the following expenses on a $1,000 investment including, for
Class A shares, the maximum applicable initial sales charge, and assuming
(1) 5% annual return and (2) redemption of the entire investment at the end
of each time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
Class A shares $55 $75 $ 98 $162
Class B shares $68 $85 $115 $186
Class C shares $ 8 $24 $ 42 $ 93
Class D shares $28 $55 $ 95 $206
</TABLE>
You would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
Class B shares $18 $55 $95 $186
Class D shares $18 $55 $95 $206
</TABLE>
The example should not be considered as a representation of past or future
return or expenses. Actual return or expenses may be greater or less than
shown.
The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor will bear directly or indirectly.
The percentage expense levels shown in the table above are based on
experience with expenses during the fiscal period ended April 30, 1995.
Actual expense levels for the current fiscal year and future years may vary
from the amounts shown. The table does not reflect charges for optional
services elected by certain shareholders, such as the $7.50 fee for
remittance of redemption proceeds by wire. For further information on sales
charges, see "Purchase of Shares--Alternative Purchase Program"; for further
information on management fees, see "Management of the Fund"; and for further
information on 12b-1 fees, see "Purchase of Shares--Distribution Plan."
The Fund has been advised that 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. The Fund presently expects such assistance
to be provided for the next 12 months or until the Fund's net assets reach
$100 million, whichever first occurs. However, the Fund has not received any
firm commitment that such assistance will in fact be provided.
For the fiscal period ended April 30, 1995, Total Fund Operating Expenses as
a percentage of average net assets of Class A and Class C shares, would have
been 2.19% and 1.83%, respectively, in the absence of the voluntary
assumption of expenses by the Distributor and its affiliates. Such assumption
of fees or expenses, as a percentage of average net assets amounted to 1.19%
and 1.08% of the Class A and Class C shares of the Fund, respectively. The
amount of fees or expenses assumed during the fiscal period ended April 30,
1995 differed among classes because of fluctuations during the year in
relative levels of assets in each class and in expenses before reimbursement.
3
<PAGE>
Financial Highlights
The data set forth below has been audited by Coopers & Lybrand L.L.P.,
independent accountants, and their report thereon is included in the
Statement of Additional Information. For further information about the
performance of the Fund, see "Financial Statements" in the Statement of
Additional Information. Financial information is not presented for Class B
and Class D shares of the Fund because no shares of those classes were
outstanding during the period presented.
<TABLE>
<CAPTION>
Class A Class C
May 16, 1994 May 16, 1994
(Commencement of (Commencement of
Operations) to Operations) to
April 30, 1995 April 30, 1995
<S> <C> <C>
Net asset value, beginning of period $ 9.55 $ 9.55
Net investment income* .54 .56
Net realized and unrealized gain on investments,
foreign currency and forward contracts .01 .02
Dividends from net investment income (.44) (.46)
------- -------
Net asset value, end of period $ 9.66 $ 9.67
======= =======
Total return+++ 5.96% 6.30%
Net assets at end of period (000s) $10,222 $ 3,738
Ratio of operating expenses to average net assets* 1.00%++ 0.75%++
Ratio of net investment income to average net assets* 5.92%++ 6.17%++
Portfolio turnover rate 157.75% 157.75%
*Reflects voluntary assumption of fees or expenses
per share $ 0.11 $ 0.10
</TABLE>
++Annualized.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
4
<PAGE>
The Fund's Investments
The Fund's investment objective is to provide total return, consisting
primarily of current income and secondarily of capital appreciation,
commensurate with reasonable investment risk. The investment objective may
not be changed without shareholder approval.
In seeking to achieve this investment objective, the Fund follows certain
investment policies, as described below, which may be changed without
shareholder approval.
Under normal conditions, at least 65% of the Fund's total assets will consist
of a broad range of U.S. Government securities, corporate bonds and notes,
mortgage-related securities, asset-backed securities, zero coupon securities,
stripped securities, pay in kind ("PIK") securities, indexed securities,
commercial paper, and foreign government securities which are considered
investment grade by one or more nationally recognized rating agencies such as
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), i.e. rated BBB or higher by S&P or Baa or higher by Moody's, or
considered by the Investment Manager to be equivalent to investment grade.
The Fund may invest in debt instruments which are split rated; that is, rated
investment grade by one rating agency, but lower than investment grade by the
other. A maximum of 25% of the Fund's total assets may be invested in
securities which are rated BBB by S&P or Baa by Moody's, or considered by the
Investment Manager to be equivalent. For information concerning the ratings
of debt securities, see "Appendix--Description of Debt/Bond Ratings" herein.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in bonds, i.e., debt securities with an original stated maturity of
one year or more. Overall, the Fund is expected to have a dollar weighted
effective maturity of three to ten years. The securities can have stated or
remaining maturities at the time of purchase which vary widely, from a few
months to thirty years. In the case of mortgage-related securities, the
remaining maturity is based on the long-term prepayment outlook for the
securities as determined by independent, widely accepted bond market sources.
For example, mortgage loans in a pool could have stated maturities of up to
30 years, yet the actual average life or effective maturity of the interest
in the pool can be substantially less because the underlying mortgages will
be subject to normal principal amortization and may be prepaid prior to
maturity.
U.S. Government securities are securities which are issued or guaranteed as
to principal or interest by the U.S. Government, a U.S. Government agency or
instrumentality, or certain mixed-ownership Government corporations. The U.S.
Government securities in which the Fund invests include, among others, direct
obligations of the U.S. Treasury, i.e., U.S. Treasury bills, notes,
certificates and bonds; obligations of U.S. Government agencies or
instrumentalities such as the Federal National Mortgage Association, the
Government National Mortgage Association and the Federal Home Loan Mortgage
Corporation; obligations of mixed-ownership Government corporations such as
Resolution Funding Corporation and separate principal and interest components
issued by the U.S. Treasury for selected securities. See the Statement of
Additional Information.
Corporate bonds and notes are debt securities issued by domestic and foreign
issuers and include long- and short-term fixed income securities, notes,
debentures, convertible debt and similar instruments. The issuers can range
across the full spectrum of industries and can vary in size and be in
different stages of development.
Mortgage-related securities represent interests in pools of mortgage loans
and provide the Fund with a flow-through of interest and principal payments
as such payments are received with respect to the mortgages in the pool.
Mortgage-related securities may be issued by U.S. Government agencies,
instrumentalities or mixed-ownership corporations, and the securities may or
may not be supported by the credit of such entities. Mortgage-related
securities may also be issued by private entities such as investment banking
firms, insurance companies, mortgage bankers and home builders. An issuer may
offer senior or subordinated securities backed by the same pool of mortgages.
The senior securities have priority to the interest and/or principal payments
on the mortgages in the
5
<PAGE>
pool; the subordinate securities have a lower priority with respect to such
payments on the mortgages in the pool. The Fund does not presently expect to
invest in mortgage pool residuals. The possibility of prepayment of the
underlying mortgages which might be motivated, for instance, by declining
interest rates could lessen the potential for total return in mortgage-backed
securities. When prepayments of mortgages occur during periods of declining
interest rates, the Fund will have to reinvest the proceeds in instruments
with lower effective interest rates.
Stripped securities are issued by governmental or private issuers. Stripped
securities include mortgage- related securities which have been divided into
separate interest and principal components. Holders of the interest
components will receive payments of the interest on the mortgages, and
holders of the principal components will receive payments of the principal on
the mortgages. Issuers may issue combinations of interest components and
principal components. "Interest only" securities are known as IOs; "principal
only" securities are known as POs. The risks inherent in IOs and POs, or
variations thereof, stem from the effects of declining interest rates and the
resultant prepayments of the mortgages. For example, if the underlying
mortgage securities experience greater than anticipated prepayments of
principal, the Fund will fail to fully recoup its initial investment in an
IO, even though the IO is rated in the highest rating category by a
nationally recognized statistical rating organization. In the case of a PO,
the Fund may have difficulty reinvesting receipts of prepayments of principal
for an attractive return. The market for IOs and POs is new and there is no
assurance it will operate efficiently or provide liquidity in the future.
Stripped securities are extremely volatile and only government-issued IOs and
POs may be deemed to be liquid.
Asset-backed (other than mortgage-related) securities represent interests in
pools of consumer loans such as credit card receivables, automobile loans and
leases, leases on equipment such as computers and other financial
instruments. These securities provide a flow-through of interest and
principal payments as payments are received on the loans or leases and may be
supported by letters of credit or similar guarantees of payment by a
financial institution. These securities are subject to the risks of
nonpayment of the underlying loans as well as the risks of prepayment.
Zero coupon securities pay no interest for all or a portion of their life but
are purchased at a discount to face value at maturity. Their return consists
of the amortization of the discount between their purchase price and their
maturity value, plus any fixed rate interest income. Zero coupon securities
pay no interest to holders prior to maturity even though interest on these
securities is reported as income to the Fund. The reporting of interest for
PIK securities is similar to the reporting of interest for zero coupon
securities. The Fund will be required to distribute all or substantially all
of such amounts annually to its shareholders. These distributions may cause
the Fund to liquidate portfolio assets in order to make such distributions at
a time when the Fund may have otherwise chosen not to sell such securities.
Liquidating portfolio assets to make distributions is likely to reduce the
Fund's assets and may thereby increase its expense ratio, may decrease its
rate of return, and may result in additional taxes for the shareholder. The
amount of the discount fluctuates with such securities market value which may
be more volatile than that of securities which pay interest at regular
intervals. PIK debt securities permit the issuer to pay the interest thereon
either in cash or as additional debt obligations and generally provide a
higher rate of overall return than obligations which pay interest on a
regular basis, although they may experience greater market volatility than
the latter.
Risk Factors and Investment Practices
Foreign Investments
The Fund reserves the right to invest without limitation in debt securities
of non-U.S. governmental and corporate issuers. Under current policy,
however, the Fund limits such investments to 25% or less of its total assets.
It is anticipated that most of the foreign investments of the Fund will
consist of securities of issuers in countries with developed economies.
However, the Fund may also invest in the securities of issuers in
6
<PAGE>
countries with new or developing capital markets as deemed appropriate by the
Investment Manager, although the Fund does not presently expect to invest
more than 5% of its total assets in issuers in such less developed countries.
Such countries include countries that have an emerging stock market that
trades a small number of securities; countries with low- to middle-income
economies; and/or countries with economies that are based on only a few
industries. Eastern European countries are considered to have less developed
capital markets.
The risks associated with investments in foreign securities include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future political and economic developments including the risks of
nationalization or expropriation, the possible imposition of currency
exchange blockages, higher operating expenses for the Fund, foreign
withholding and other taxes which may reduce investment return, reduced
availability of public information concerning issuers and the fact that
foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic issuers. Moreover,
securities of many foreign issuers may be less liquid and their prices more
volatile than those of securities of comparable domestic issuers. See the
Statement of Additional Information.
Currency Transactions
In order to protect against the effect of uncertain future exchange rates on
securities denominated in foreign currencies, the Fund may engage in currency
exchange transactions either on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market or by entering into forward
contracts to purchase or sell currencies. Although such contracts tend to
minimize the risk of loss resulting from a correctly predicted decline in
value of hedged currency, they tend to limit any potential gain that might
result should the value of such currency increase. In entering a forward
currency transaction, the Fund is dependent upon the creditworthiness and
good faith of the counterparty. The Fund attempts to reduce the risks of
nonperformance by the counterparty by dealing only with established, large
institutions with which the Investment Manager has done substantial business
in the past. See the Statement of Additional Information.
Other Investment Policies
The Fund may invest in restricted securities in accordance with Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities"), which allows for
the resale of such securities among certain qualified institutional buyers.
Rule 144A Securities may be determined to be liquid by or in accordance with
guidelines established by the Board of Trustees for purposes of complying
with the Fund's investment restrictions applicable to investments in illiquid
securities. The Fund may invest up to 15% of its net assets in Rule 144A
Securities determined to be liquid. Because the market for such securities is
still developing, such securities could possibly become illiquid in
particular circumstances. See the Statement of Additional Information.
The Fund may invest in certain derivative securities. To aid in achieving its
investment objective, the Fund may, subject to certain limitations, buy and
sell options, futures contracts and options on futures contracts on
securities and securities indices. The Fund may not establish a position in a
commodity futures contract or purchase or sell a commodity option contract
for other than bona fide hedging purposes if immediately thereafter the sum
of the amount of initial margin deposits and premiums required to establish
such positions for such nonhedging purposes would exceed 5% of the market
value of the Fund's net assets. Similar policies apply to options which are
not commodities. The Fund may also enter various forms of swap arrangements
with respect to interest rates, currency rates and indices, although the Fund
does not presently expect to invest more than 5% of its total assets in such
items. See the Statement of Additional Information.
The Fund may lend portfolio securities with a value of up to 33-1/3% of its
total assets. The Fund will receive cash or cash equivalents (e.g., U.S.
Government obligations) as collateral in an amount equal to at least 100% of
the current market value of the loaned securities plus accrued interest.
Collateral
7
<PAGE>
received by the Fund will generally be held in the form tendered, although
cash may be invested in securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, irrevocable stand-by letters
of credit issued by a bank, or any combination thereof. The investing of cash
collateral received from loaning portfolio securities involves leverage which
magnifies the potential for gain or loss on monies invested and, therefore,
results in an increase in the volatility of the Fund's outstanding
securities. Such loans may be terminated at any time.
The Fund will retain most rights of ownership including rights to dividends,
interest or other distributions on the loaned securities. Voting rights pass
with the lending, although the Fund may call loans to vote proxies if
desired. Should the borrower of the securities fail financially, there is a
risk of delay in recovery of the securities or loss of rights in the
collateral. Loans are made only to borrowers which are deemed by the
Investment Manager to be of good financial standing.
For debt rated BBB by S&P, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal. Bonds rated Baa by Moody's lack outstanding investment
characteristics and in fact have speculative characteristics as well. Lower
rated debt securities (i.e., bonds rated BB or lower by S&P or Ba or lower by
Moody's or equivalent as determined by the Investment Manager) generally
involve more credit risk than higher rated securities and are considered by
S&P and Moody's to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity of the issuers of lower rated securities to make principal and
interest payments than in the case of higher grade bonds. Lower rated
securities may also be subject to greater market price fluctuations than
lower yielding, higher rated debt securities; credit ratings do not reflect
this market risk. When interest rates increase, the value of debt securities
and shares of the Fund can be expected to decline.
The Fund may also enter into repurchase agreements and purchase securities on
a "when-issued" basis.
The Fund anticipates that its portfolio turnover rate will generally not
exceed 125% under normal conditions. The Fund does, however, reserve full
freedom with respect to portfolio turnover. In periods when there are rapid
changes in economic conditions or security price levels or when investment
strategy changes significantly, portfolio turnover may be higher than during
times of economic and market price stability or when investment strategy
remains relatively constant. A higher portfolio turnover rate may result in
greater transaction costs relative to other funds and may have tax and other
consequences as well. See the Statement of Additional Information.
Limiting Investment Risk
In seeking to lessen investment risk, the Fund operates under certain
investment restrictions which may not be changed with respect to the Fund
except by a vote of the shareholders of the Fund. Under these restrictions
the Fund may not invest in a security if the transaction would result in: (a)
with respect to 75% of its total assets, more than 5% of the Fund's total
assets being invested in any one issuer or the Fund's owning more than 10% of
the outstanding voting securities of an issuer; or (b) more than 25% of the
Fund's total assets being invested in any one industry. These restrictions do
not apply to investments in U.S. Government securities.
The Fund operates under other investment restrictions which may be changed
without shareholder approval. Under these restrictions the Fund may not
invest more than 15% of its net assets in illiquid securities including
repurchase agreements extending for more than seven days. An illiquid
portfolio may affect the ability of the Fund to sell securities either to
meet redemption requests or in response to changes in the economy or the
financial markets.
For further information on the above and other investment restrictions,
including additional investment restrictions which may be changed without a
shareholder vote, see the Statement of Additional Information.
The Fund may hold up to 100% of its assets in cash or short-term debt
securities for temporary
8
<PAGE>
defensive purposes. The Fund will adopt a temporary defensive position when,
in the opinion of the Investment Manager, such a position is more likely to
provide protection against unfavorable market conditions than adherence to
the Fund's other investment policies. The types of short-term instruments in
which the Fund may invest for such purposes include short- term money market
securities such as repurchase agreements, U.S. Government securities,
certificates of deposit, time deposits and bankers' acceptances of certain
qualified financial institutions and corporate commercial paper rated at the
time of purchase at least "A" by S&P or "Prime" by Moody's (or, if not rated,
issued by companies having an outstanding long-term unsecured debt issue
rated at least "A" by S&P or Moody's). See the Statement of Additional
Information.
Information on the Purchase of Shares, Redemption of Shares and Shareholder
Services is set forth on pages 9 to 22 below.
The Fund is available for investment by many kinds of investors including
participants investing through 401(k) or other retirement plan sponsors,
employees investing through savings plans sponsored by employers, Individual
Retirement Accounts ("IRAs"), trusts, corporations, individuals, etc. The
applicability of the general information and administrative procedures set
forth below under Purchase of Shares, Redemption of Shares and Shareholder
Services accordingly will vary depending on the investor and the
recordkeeping system established for a shareholder's investment in the Fund.
Participants in 401(k) and other plans should first consult with the
appropriate person at their employer or refer to the plan materials before
following any of the procedures below. For more information or assistance,
anyone may call 1-800-562-0032.
Purchase of Shares
Methods of Purchase
Through Dealers
Shares of the Fund are continuously offered through securities dealers who
have entered into sales agreements with the Distributor. Purchases through
dealers are confirmed at the offering price, which is the net asset value
plus the applicable sales charge, next determined after the order is duly
received by State Street Research Shareholder Services ("Shareholder
Services"), a division of State Street Research Investment Services, Inc.,
from the dealer. ("Duly received" for purposes herein means in accordance
with the conditions of the applicable method of purchase as described below.)
The dealer is responsible for transmitting the order promptly to Shareholder
Services in order to permit the investor to obtain the current price. See
"Purchase of Shares--Net Asset Value" herein.
By Mail
Initial investments in the Fund may be made by mailing or delivering to the
investor's securities dealer a completed Application (accompanying this
Prospectus), together with a check for the total purchase price payable to
the Fund. The dealer must forward the Application and check in accordance
with the instructions on the Application.
Additional shares may be purchased by mailing to Shareholder Services a check
payable to the Fund in the amount of the total purchase price together with
any one of the following: (i) an Application; (ii) the stub from a
shareholder's account statement; or (iii) a letter setting forth the name of
the Fund, the class of shares and the shareholder's account name and number.
Shareholder Services will deliver the purchase order to the transfer agent
and dividend paying agent, State Street Bank and Trust Company (the "Transfer
Agent").
If a check is not honored for its full amount, the purchaser could be subject
to additional charges to cover collection costs and any investment loss, and
the purchase may be cancelled.
By Wire
An investor may purchase shares by wiring Federal Funds of not less than
$5,000 to State Street Bank and Trust Company, which also serves as the
Trust's custodian (the "Custodian"), as set forth below. Prior to making an
investment by wire, an investor must notify Shareholder Services at
1-800-521-6548 and obtain a control number and instructions. Following
9
<PAGE>
such notification, Federal Funds should be wired through the Federal Reserve
System to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA
BNF =State Street Research Intermediate Bond
Fund and class of shares
(A, B, C or D)
AC =99029761
OBI =Shareholder Name
Shareholder Account Number
Control #K (assigned by State Street
Research Shareholder Services)
In order for a wire investment to be processed on the same day (i) the
investor must notify Shareholder Services of his or her intention to make
such investment by 12 noon Boston time on the day of his or her investment;
and (ii) the wire must be received by 4 P.M. Boston time that same day.
An investor making an initial investment by wire must promptly complete the
Application accompanying this Prospectus and deliver it to his or her
securities dealer, who should forward it as required. No redemptions will be
effected until the Application has been duly processed.
The Fund may in its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. Orders for the
purchase of shares are subject to acceptance by the Fund. The Fund reserves
the right to reject any purchase order, including orders in connection with
exchanges, for any reason which the Fund in its sole discretion deems
appropriate. The Fund reserves the right to suspend the sale of shares.
Minimum Investment
<TABLE>
<CAPTION>
Class of Shares
A B C D
<S> <C> <C> <C> <C>
Minimum Initial Investment
By Wire $5,000 $5,000 (a) $5,000
IRAs $2,000 $2,000 (a) $2,000
By Investamatic $1,000 $1,000 (a) $1,000
All other $2,500 $2,500 (a) $2,500
Minimum Subsequent Investment
By Wire $5,000 $5,000 (a) $5,000
IRAs $ 50 $ 50 (a) $ 50
By Investamatic $ 50 $ 50 (a) $ 50
All other $ 50 $ 50 (a) $ 50
</TABLE>
(a) Special conditions apply; contact the Distributor.
The Fund reserves the right to vary the minimums for initial or subsequent
investments from time to time as in the case of, for example, exchanges and
investments under various retirement and employee benefit plans, sponsored
arrangements involving group solicitations of the members of an organization,
or other investment plans such as for reinvestment of dividends and
distributions or for periodic investments (e.g., Investamatic Check Program).
Alternative Purchase Program
General
Alternative classes of shares permit investors to select a purchase program
which they believe will be the most advantageous for them, given the amount
of their purchase, the length of time they anticipate holding Fund shares or
the flexibility they desire in this regard, and other relevant circumstances.
Investors will be able to determine whether in their particular circumstances
it is more advantageous to incur an initial sales charge and not be subject
to certain ongoing charges or to have their entire initial purchase price
invested in the Fund with the investment being subject thereafter to ongoing
service fees and distribution fees.
As described in greater detail below, securities dealers are paid differing
amounts of commission and other compensation depending on which class of
shares they sell.
10
<PAGE>
The major differences among the various classes of shares are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
Sales Initial sales charge at Contingent deferred sales None Contingent deferred sales
Charges time of investment of up charge of 5% to 2% charge of 1% applies to any
to 4.5% applies to any shares shares redeemed within one
depending on amount of redeemed within first year following their
investment five years following purchase
their purchase; no
contingent deferred sales
charge after five years
On investments of $1
million or more, no
initial sales charge; but
contingent deferred sales
charge of 1% applies to
any shares redeemed
within one year following
their purchase
Distribution None 0.75% for first eight None 0.75% each year
Fee years; Class B shares
convert automatically to
Class A shares after
eight years
Service Fee 0.25% each year 0.25% each year None 0.25% each year
Initial Above described 4% None 1%
Commission initial sales charge
Received by less 0.25% to 0.50%
Selling retained by
Securities Distributor
Dealer
On investments of $1
million or more, 0.25% to
0.70% paid to dealer by
Distributor
</TABLE>
11
<PAGE>
In deciding which class of shares to purchase, the investor should consider
the amount of the investment, the length of time the investment is expected
to be held, and the ongoing service fee and distribution fee, among other
factors.
Class A shares are sold at net asset value plus an initial sales charge of up
to 4.5% of the public offering price. Because of the sales charge, not all of
an investor's purchase amount is invested unless the purchase equals
$1,000,000 or more. Class B shareholders pay no initial sales charge, but a
contingent deferred sales charge of up to 5% generally applies to shares
redeemed within five years of purchase. Class D shareholders also pay no
initial sales charge, but a contingent deferred sales charge of 1% generally
applies to redemptions made within one year of purchase. For Class B and
Class D shareholders, therefore, the entire purchase amount is immediately
invested in the Fund.
An investor who qualifies for a significantly reduced initial sales charge,
or a complete waiver of the sales charge on investments of $1,000,000 or
more, on the purchase of Class A shares might elect that option to take
advantage of the lower ongoing service and distribution fees that
characterize Class A shares compared with Class B or Class D shares.
Class A, Class B and Class D shares are assessed an annual service fee of
0.25% of average daily net assets. Class B shares are assessed an annual
distribution fee of 0.75% of daily net assets for an eight-year period
following the date of purchase and are then automatically converted to Class
A shares. Class D shares are assessed an annual distribution fee of 0.75% of
daily net assets for as long as the shares are held. The prospective investor
should consider these fees plus the initial or contingent deferred sales
charges in estimating the costs of investing in the various classes of the
Fund's shares.
Only certain employee benefit plans and large institutions may make
investments in Class C shares.
Some of the service and distribution fees are allocated to dealers (see
"Distribution Plan" below). In addition, the Distributor will, at its
expense, provide additional cash and noncash incentives to securities dealers
that sell shares. Such incentives may be extended only to those dealers that
have sold or may sell significant amounts of shares and/or meet other
conditions established by the Distributor; for example, the Distributor may
sponsor special promotions to develop particular distribution channels or to
reach certain investor groups. The incentives may include merchandise and
trips to and attendance at sales seminars at resorts.
Class A Shares--Initial Sales Charges
Sales Charges
The purchase price of a Class A share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein, plus a sales charge which varies depending on the dollar
amount of the shares purchased as set forth in the table below. A major
portion of this sales charge is reallowed by the Distributor to the
securities dealer responsible for the sale.
<TABLE>
<CAPTION>
Sales
Sales Charge
Charge Paid
Paid By By Dealer
Dollar Investor Investor Concession
Amount of As % of As % of As % of
Purchase Purchase Net Asset Purchase
Transaction Price Value Price
<S> <C> <C> <C>
Less than
$100,000 4.50% 4.71% 4.00%
$100,000 or
above but less
than $250,000 3.50% 3.63% 3.00%
$250,000 or
above but less
than $500,000 2.50% 2.56% 2.00%
$500,000 or
above but less
than $1 million 2.00% 2.04% 1.75%
$1 million and See
above following
0% 0% discussion
</TABLE>
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
a commission as follows:
12
<PAGE>
<TABLE>
<CAPTION>
Amount of Sale Commission
<S> <C>
(a) $1 million to $3 million 0.70%
(b) Next $2 million 0.50%
(c) Amount over $5 million 0.25%
</TABLE>
On such sales of $1,000,000 or more, the investor is subject to a 1%
contingent deferred sales charge on any portion of the purchase redeemed
within one year of the sale. However, such redeemed shares will not be
subject to the contingent deferred sales charge to the extent that their
value represents (1) capital appreciation or (2) reinvestment of dividends or
capital gains distributions. In addition, the contingent deferred sales
charge will be waived for certain other redemptions as described under
"Contingent Deferred Sales Charge Waivers" below (as otherwise applicable to
Class B shares).
Class A shares of the Fund that are purchased without a sales charge may be
exchanged for Class A shares of certain other Eligible Funds, as described
below, without the imposition of a contingent deferred sales charge, although
contingent deferred sales charges may apply upon a subsequent redemption
within one year of the Class A shares which are acquired through such
exchange. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case
may be, on the amount realized on redemption. The amount of any contingent
deferred sales charge will be paid to the Distributor.
Reduced Sales Charges
The reduced sales charges set forth in the table above are applicable to
purchases made at any one time by any "person," as defined in the Statement
of Additional Information, of $100,000 or more of Class A shares of the Fund
or a combination of "Eligible Funds." "Eligible Funds" include the Fund and
other funds so designated by the Distributor from time to time. Class B,
Class C and Class D shares may also be included in the combination under
certain circumstances. Securities dealers should call Shareholder Services
for details concerning the other Eligible Funds and any persons who may
qualify for reduced sales charges and related information. See the Statement
of Additional Information.
Letter of Intent
Any investor who provides a Letter of Intent may qualify for a reduced sales
charge on purchases of no less than an aggregate of $100,000 of Class A
shares of the Fund and any other Eligible Funds within a 13-month period.
Class B, Class C and Class D shares may also be included in the combination
under certain circumstances. Additional information on a Letter of Intent is
available from dealers, or from the Distributor, and also appears in the
Statement of Additional Information.
Right of Accumulation
Investors may purchase Class A shares of the Fund or a combination of shares
of the Fund and other Eligible Funds at reduced sales charges pursuant to a
Right of Accumulation. Under the Right of Accumulation, the sales charge is
determined by combining the current purchase with the value of the Class A
shares of other Eligible Funds held at the time of purchase. Class B, Class C
and Class D shares may also be included in the combination under certain
circumstances. See the Statement of Additional Information and call
Shareholder Services for details concerning the Right of Accumulation.
Other Programs
Class A shares of the Fund may be sold or issued in an exchange at a reduced
sales charge or without a sales charge pursuant to certain sponsored
arrangements, which include programs under which a company, employee benefit
plan or other organization makes recommendations to, or permits group
solicitation of, its employees, members or participants, except any
organization created primarily for the purpose of obtaining shares of the
Fund at a reduced sales charge or without a sales charge. Sales without a
sales charge, or with a reduced sales charge, may also be made through
brokers, financial planners, institutions, and others, under managed
fee-based programs (e.g., "wrap fee" or similar programs) which meet certain
requirements established from time to time by the Distributor, in the event
the Distributor determines to implement such arrangements. Information on
such arrangements and further conditions and limitations is available from
the Distributor.
13
<PAGE>
In addition, no sales charge is imposed in connection with the sale of Class
A shares of the Fund to the following entities and persons: (A) the
Investment Manager, the Distributor, or any affiliated entities, including
any direct or indirect parent companies and other subsidiaries of such
parents (collectively "Affiliated Companies"); (B) employees, officers, sales
representatives or current or retired directors or trustees of the Affiliated
Companies or any investment company managed by any of the Affiliated
Companies, any relatives of any such individuals whose relationship is
directly verified by such individuals to the Distributor, or any beneficial
account for such relatives or individuals; and (C) employees, officers, sales
representatives or directors of dealers and other entities with a selling
agreement with the Distributor to sell shares of any aforementioned
investment company, any spouse or child of such person, or any beneficial
account for any of them. The purchase must be made for investment and the
shares purchased may not be resold except through redemption. This purchase
program is subject to such administrative policies, regarding the
qualification of purchasers and any other matters, as may be adopted by the
Distributor from time to time.
Class B Shares--Contingent Deferred Sales Charges
Contingent Deferred Sales Charges
The public offering price of Class B shares is the net asset value per share
next determined after the purchase order is duly received, as defined herein.
No sales charge is imposed at the time of purchase; thus the full amount of
the investor's purchase payment will be invested in the Fund. However, a
contingent deferred sales charge may be imposed upon redemptions of Class B
shares as described below.
The Distributor will pay securities dealers at the time of sale a 4%
commission for selling Class B shares. The proceeds of the contingent
deferred sales charge and the distribution fee are used to offset
distribution expenses and thereby permit the sale of Class B shares without
an initial sales charge.
Class B shares that are redeemed within a five-year period after their
purchase will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents (1) capital appreciation of
Fund assets or (2) reinvestment of dividends or capital gains distributions.
The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the net asset value of such shares at the time of
redemption or at the time of purchase, whichever is lower, by the applicable
percentage shown in the table below:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge As A
Redemption During Percentage Of Net Asset Value At Redemption
<S> <C>
1st Year Since Purchase 5%
2nd Year Since Purchase 4
3rd Year Since Purchase 3
4th Year Since Purchase 3
5th Year Since Purchase 2
6th Year Since Purchase and Thereafter None
</TABLE>
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption of Class B shares is made first
of those shares having the greatest capital appreciation, next of shares
representing reinvestment of dividends and capital gains distributions and
finally of remaining shares held by the shareholder for the longest period of
time. The holding period for purposes of applying a contingent deferred sales
charge on Class B shares of a Fund acquired through an exchange from another
Eligible Fund will be measured from the date that such shares were initially
acquired in the other Eligible Fund, and Class B shares being redeemed will
be considered to represent, as applicable, capital appreciation or dividend
and capital gains distribution reinvestments in such other Eligible Fund.
These determinations will result in any contingent deferred sales charge
being imposed at the lowest possible rate. For federal income tax purposes,
the amount of the contingent deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any contingent deferred sales charge will be paid to the
Distributor.
Contingent Deferred Sales Charge Waivers
The contingent deferred sales charge does not apply to exchanges, or to
redemptions under a systematic withdrawal plan which meets certain
conditions. In
14
<PAGE>
addition, the contingent deferred sales charge will be waived for: (i)
redemptions made within one year of the death or total disability, as defined
by the Social Security Administration, of all shareholders of an account;
(ii) redemptions made after attainment of a specific age in an amount which
represents the minimum distribution required at such age under Section
401(a)(9) of the Internal Revenue Code for retirement accounts or plans
(e.g., age 70-1/2 for IRAs and Section 403(b) plans), calculated solely on
the basis of assets invested in the Fund or other Eligible Funds; and (iii) a
redemption resulting from a tax-free return of an excess contribution to an
IRA. (The foregoing waivers do not apply to a tax-free rollover or transfer
of assets out of the Fund.) The Fund may modify or terminate the waivers
described above at any time; for example, the Fund may limit the application
of multiple waivers.
Conversion of Class B Shares to Class A Shares
A shareholder's Class B shares, including all shares received as dividends or
distributions with respect to such shares, will automatically convert to
Class A shares of the Fund at the end of eight years following the issuance
of the Class B shares; consequently, they will no longer be subject to the
higher expenses borne by Class B shares. The conversion rate will be
determined on the basis of the relative per share net asset values of the two
classes and may result in a shareholder receiving either a greater or fewer
number of Class A shares than the Class B shares so converted. As noted
above, holding periods for Class B shares received in exchange for Class B
shares of other Eligible Funds will be counted toward the eight-year period.
Class C Shares--Institutional; No Sales Charge
The purchase price of a Class C share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase or
redemption. The Fund will receive the full amount of the investor's purchase
payment.
Class C shares are only available for new investments by certain employee
benefit plans and large institutions. See the Statement of Additional
Information. Information on the availability of Class C shares and further
conditions and limitations with respect thereto is available from the
Distributor.
Class C shares may be also issued in connection with mergers and acquisitions
involving the Fund, and under certain other circumstances as described in
this Prospectus (e.g., see "Shareholder Services-- Exchange Privilege").
Class D Shares--Spread Sales Charges
The purchase price of a Class D share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase; thus the
full amount of the investor's purchase payment will be invested in the Fund.
Class D shares are subject to a 1% contingent deferred sales charge on any
portion of the purchase redeemed within one year of the sale. The contingent
deferred sales charge will be 1% of the lesser of the net asset value of the
shares at the time of purchase or at the time of redemption. The Distributor
pays securities dealers a 1% commission for selling Class D shares at the
time of purchase. The proceeds of the contingent deferred sales charge and
the distribution fee are used to offset distribution expenses and thereby
permit the sale of Class D shares without an initial sales charge.
Class D shares that are redeemed within one year after purchase will not be
subject to the contingent deferred sales charge to the extent that the value
of such shares represents (1) capital appreciation of Fund assets or (2)
reinvestment of dividends or capital gains distributions. In addition, the
contingent deferred sales charge will be waived for certain other redemptions
as described under "Contingent Deferred Sales Charge Waivers" above (as
otherwise applicable to Class B shares). For federal income tax purposes, the
amount of the contingent deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any contingent deferred sales charge will be paid to the
Distributor.
Net Asset Value
The Fund's per share net asset values are determined Monday through Friday as
of the close of the New York Stock Exchange (the "NYSE") exclusive of
15
<PAGE>
days on which the NYSE is closed. The NYSE ordinarily closes at 4 P.M. New
York City time. The Fund uses one or more pricing services to value its
portfolio securities. The pricing services utilize information with respect
to market transactions, quotations from dealers and various relationships
among securities in determining value and may provide prices determined as of
times prior to the close of the NYSE. Assets for which quotations are readily
available are valued as of the close of business on the valuation date.
Securities for which there is no pricing service valuation or last reported
sale price are valued as determined in good faith by or under the authority
of the Trustees of the Trust. The Trustees have authorized the use of the
amortized cost method to value short-term debt instruments issued with a
maturity of one year or less and having a remaining maturity of 60 days or
less when the value obtained is fair value. Further information with respect
to the valuation of the Fund's assets is included in the Statement of
Additional Information.
Distribution Plan
The Fund has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Distribution Plan") in accordance with the regulations under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under the provisions of the
Distribution Plan, the Fund makes payments to the Distributor based on an
annual percentage of the average daily value of the net assets of each class
of shares as follows:
<TABLE>
<CAPTION>
Class Service Fee Distribution Fee
<S> <C> <C>
A 0.25% None
B 0.25% 0.75%
C None None
D 0.25% 0.75%
</TABLE>
Some or all of the service fees are used to reimburse securities dealers
(including securities dealers that are affiliates of the Distributor) for
personal services and/or the maintenance of shareholder accounts. A portion
of any initial commission paid to dealers for the sale of shares of a Fund
represents payment for personal services and/or the maintenance of
shareholder accounts by such dealers. Dealers who have sold Class A shares
are eligible for further reimbursement commencing as of the time of such
sale. Dealers who have sold Class B and Class D shares are eligible for
further reimbursement after the first year during which such shares have been
held of record by such dealer as nominee for its clients (or by such clients
directly). Any service fees received by the Distributor and not allocated to
dealers may be applied by the Distributor in reduction of expenses incurred
by it directly for personal services and the maintenance of shareholder
accounts.
The distribution fees are used primarily to offset initial and ongoing
commissions paid to securities dealers for selling such shares. Any
distribution fees received by the Distributor and not allocated to dealers
may be applied by the Distributor in connection with sales or marketing
efforts, including special promotional fees and cash and noncash incentives
based upon sales by securities dealers.
The Distributor provides distribution services on behalf of other funds
having distribution plans and receives similar payments from, and incurs
similar expenses on behalf of, such other funds. When expenses of the
Distributor cannot be identified as relating to a specific fund, the
Distributor allocates expenses among the funds in a manner deemed fair and
equitable to each fund.
Commissions and other cash and noncash incentives and payments to dealers, to
the extent payable out of the general profits, revenues or other sources of
the Distributor (including the advisory fees paid by the Fund), have also
been authorized pursuant to the Distribution Plan.
A rule of the National Association of Securities Dealers, Inc. ("NASD")
limits the annual expenditures which the Fund may incur under the
Distribution Plan to 1%, of which 0.75% may be used to pay distribution
expenses and 0.25% may be used to pay shareholder service fees. The NASD rule
also limits the aggregate amount which the Fund may pay for such distribution
costs to 6.25% of gross share sales of a class since the inception of any
asset-based sales charge plus interest at the prime rate plus 1% on unpaid
amounts thereof (less any contingent deferred sales charges). Such limitation
16
<PAGE>
does not apply to shareholder service fees. Payments to the Distributor or to
dealers funded under the Distribution Plan may be discontinued at any time by
the Trustees of the Trust.
Redemption of Shares
Shareholders may redeem all or any portion of their accounts on any day the
NYSE is open for business. Redemptions will be effective at the net asset
value per share next determined (see "Purchase of Shares-- Net Asset Value"
herein) after receipt of the redemption request, in accordance with the
requirements described below, by Shareholder Services and delivery of the
request by Shareholder Services to the Transfer Agent. To allow time for the
clearance of checks used for the purchase of any shares which are tendered
for redemption shortly after purchase, the remittance of the redemption
proceeds for such shares could be delayed for 15 days or more after the
purchase. Shareholders who anticipate a potential need for immediate access
to their investments should, therefore, purchase shares by wire. Except as
noted, redemption proceeds are normally remitted within seven days after
receipt of the redemption request and any necessary documents in good order.
Methods of Redemption
Request By Mail
A shareholder may request redemption of shares, with proceeds to be mailed to
the shareholder or wired to a predesignated bank account (see "Proceeds By
Wire" below), by sending to State Street Research Shareholder Services, P.O.
Box 8408, Boston, Massachusetts 02266-8408: (1) a written request for
redemption signed by the registered owner(s) of the shares, exactly as the
account is registered; (2) an endorsed stock power in good order with respect
to the shares or, if issued, the share certificates for the shares endorsed
for transfer or accompanied by an endorsed stock power; (3) any required
signature guarantees (see "Redemption of Shares--Signature Guarantees"
below); and (4) any additional documents which may be required for redemption
in the case of corporations, trustees, etc., such as certified copies of
corporate resolutions, governing instruments, powers of attorney, and the
like. The Transfer Agent will not process requests for redemption until it
has received all necessary documents in good order. A shareholder will be
notified promptly if a redemption request cannot be accepted. Shareholders
having any questions about the requirements for redemption should call
Shareholder Services toll-free at 1-800-562-0032.
Request By Telephone
Shareholders may request redemption by telephone with proceeds to be
transmitted by check or by wire (see "Proceeds By Wire" below). A shareholder
can request a redemption for $50,000 or less to be transmitted by check. Such
check for the proceeds will be made payable to the shareholder of record and
will be mailed to the address of record. There is no fee for this service. It
is not available for shares held in certificate form or if the address of
record has been changed within 30 days of the redemption request. The Fund
may revoke or suspend the telephone redemption privilege at any time and
without notice. See "Shareholder Services--Telephone Services" for a
discussion of the conditions and risks associated with Telephone Privileges.
Proceeds By Wire
Upon a shareholder's written request or by telephone if the shareholder has
Telephone Privileges (see "Shareholder Services--Telephone Services" herein),
the Trust's custodian will wire redemption proceeds to the shareholder's
predesignated bank account. To make the request, the shareholder should call
1-800- 521-6548 prior to 4 P.M. Boston time. A $7.50 charge against the
shareholder's account will be imposed for each wire redemption. This charge
is subject to change without notice. The shareholder's bank may also impose a
charge for receiving wires of redemption proceeds. The minimum redemption by
wire is $5,000.
Request to Dealer to Repurchase
For the convenience of shareholders, the Fund has authorized the Distributor
as its agent to accept orders from dealers by wire or telephone for the
repurchase of shares by the Distributor from the dealer. The Fund may revoke
or suspend this authori
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zation at any time. The repurchase price is the net asset value for the
applicable shares next determined following the time at which the shares are
offered by the dealer for repurchase by the Distributor. The dealer is
responsible for promptly transmitting a shareholder's order to the
Distributor. Payment of the repurchase proceeds is made to the dealer who
placed the order promptly upon delivery of certificates for shares in proper
form for transfer or, for Open Accounts, upon the receipt of a stock power
with signatures guaranteed as described below, and, if required, any
supporting documents. Neither the Fund nor the Distributor imposes any charge
upon such a repurchase. However, a dealer may impose a charge as agent for a
shareholder in the repurchase of his or her shares.
The Fund has reserved the right to change, modify or terminate the services
described above at any time.
Additional Information
Because of the relatively high cost of maintaining small shareholder
accounts, the Fund reserves the right to involuntarily redeem at its option
any shareholder account which remains below $1,500 for a period of 60 days
after notice is mailed to the applicable shareholder, or to impose a
maintenance fee on such account after 60 days' notice. Such involuntary
redemptions will be subject to applicable sales charges, if any. The Fund may
increase such minimum account value above such amount in the future after
notice to affected shareholders. Involuntarily redeemed shares will be priced
at the net asset value on the date fixed for redemption by the Fund, and the
proceeds of the redemption will be mailed to the affected shareholder at the
address of record. Currently, the maintenance fee is $18 annually, which is
paid to the Transfer Agent. The fee does not apply to certain retirement
accounts or if the shareholder has more than an aggregate $50,000 invested in
the Fund and other Eligible Funds combined. Imposition of a maintenance fee
on a small account could, over time, exhaust the assets of such account.
To cover the cost of additional compliance administration, a $20 fee will be
charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Fund may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for more than seven days, except that (a) it
may elect to suspend the redemption of shares or postpone the date of payment
of redemption proceeds: (1) during any period that the NYSE is closed (other
than customary weekend and holiday closing) or trading on the NYSE is
restricted; (2) during any period in which an emergency exists as a result of
which disposal of portfolio securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the Fund's net asset values;
or (3) during such other periods as the Securities and Exchange Commission
may by order permit for the protection of investors; and (b) the payment of
redemption proceeds may be postponed as otherwise provided under "Redemption
of Shares" herein.
Signature Guarantees
To protect shareholder accounts, the Transfer Agent, the Fund, the Investment
Manager and the Distributor from possible fraud, signature guarantees are
required for certain redemptions. Signature guarantees help the Transfer
Agent to determine that the person who has authorized a redemption from the
account is, in fact, the shareholder. Signature guarantees are required for:
(1) written requests for redemptions for more than $50,000, (2) written
requests for redemptions for any amount if the proceeds are transmitted to
other than the current address of record (unchanged in the past 30 days), (3)
written requests for redemptions for any amount submitted by corporations and
certain fiduciaries and other intermediaries, and (4) requests to transfer
the registration of shares to another owner. Signatures must be guaranteed by
a bank, a member firm of a national stock exchange, or other eligible
guarantor institution. The Transfer Agent will not accept guarantees (or
notarizations) from notaries public. The above requirements may be waived in
certain instances. Please contact Shareholder Services at 1-800-562-0032 for
specific requirements relating to your account.
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Shareholder Services
The Open Account System
Under the Open Account System full and fractional shares of the Fund owned by
shareholders are credited to their accounts by the Transfer Agent, State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110. Certificates representing shares will not be issued. Shareholders will
receive periodic statements of transactions in their accounts.
The Fund's Open Account System provides the following options:
1. Additional purchases of shares of the Fund may be made through dealers, by
wire or by mailing a check, payable to the Fund, to Shareholder Services
under the terms set forth above under "Purchase of Shares."
2. The following methods of receiving dividends from investment income and
distributions from capital gains are available:
(a) All income dividends and capital gains distributions reinvested in
additional shares of the Fund.
(b) All income dividends in cash; all capital gains distributions
reinvested in additional shares of the Fund.
(c) All income dividends and capital gains distributions in cash.
(d) All income dividends and capital gains distributions invested in any
one available Eligible Fund designated by the shareholder as described below.
See "Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, that account will automatically be coded for reinvestment of all
dividends and distributions in additional shares of the same class of the
Fund. Selections may be changed at any time by telephone or written notice to
Shareholder Services. Dividends and distributions are reinvested at net asset
value without a sales charge.
Exchange Privilege
Shareholders of the Fund may exchange their shares for available shares with
corresponding characteristics of any of the other Eligible Funds at any time
on the basis of the relative net asset values of the respective shares to be
exchanged, subject to compliance with applicable securities laws.
Shareholders of any other Eligible Fund may similarly exchange their shares
for Fund shares with corresponding characteristics. Prior to making an
exchange, shareholders should obtain the Prospectus of the Eligible Fund into
which they are exchanging. Under the Direct Program, subject to certain
conditions, shareholders may make arrangements for regular exchanges from the
Fund into other Eligible Funds. To effect an exchange, Class A, Class B and
Class D shares may be redeemed without the payment of any contingent deferred
sales charge that might otherwise be due upon an ordinary redemption of such
shares. The State Street Research Money Market Fund issues Class E shares
which are sold without any sales charge. Exchanges of State Street Research
Money Market Fund Class E shares into Class A shares of the Fund or any other
Eligible Fund are subject to the initial sales charge or contingent deferred
sales charge applicable to an initial investment in such Class A shares,
unless a prior Class A sales charge has been paid directly or indirectly with
respect to the shares redeemed. For purposes of computing the contingent
deferred sales charge that may be payable upon disposition of the acquired
Class A, Class B and Class D shares, the holding period of the redeemed
shares is "tacked" to the holding period of the acquired shares. The period
any Class E shares are held is not tacked to the holding period of any
acquired shares. No exchange transaction fee is currently imposed on any
exchange.
For the convenience of the shareholders who have Telephone Privileges, the
Fund permits exchanges by telephone request from either the shareholder or
his or her dealer. Shares may be exchanged by telephone provided that the
registration of the two accounts is the same. The toll-free number for
exchanges is 1-800-521-6548. See "Telephone Services" herein for a discussion
of conditions and risks associated with Telephone Privileges.
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The exchange privilege may be exercised only in those states where shares of
the relevant other Eligible Fund may legally be sold. For tax purposes, each
exchange actually represents the sale of shares of one fund and the purchase
of shares of another. Accordingly, exchanges may produce a capital gain or
loss for tax purposes. The exchange privilege may be terminated or suspended
or its terms changed at any time, subject, if required under applicable
regulations, to 60 days' prior notice. New accounts established for
investments upon exchange from an existing account in another fund will have
the same Telephone Privileges as the existing account, unless Shareholder
Services is instructed otherwise. Related administrative policies and
procedures may also be adopted with regard to a series of exchanges, street
name accounts, sponsored arrangements and other matters.
The exchange privilege is not designed for use in connection with short-term
trading or market timing strategies. To protect the interests of
shareholders, the Fund reserves the right to temporarily or permanently
terminate the exchange privilege for any person who makes more than six
exchanges out of or into the Fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, may be aggregated for purposes of the six exchange
limit. Notwithstanding the six exchange limit, the Fund reserves the right to
refuse exchange redemptions or purchases by any person or group if, in the
Investment Manager's judgment, the Fund would be unable to invest effectively
in accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. Exchanges may be restricted or refused if
the Fund receives or anticipates simultaneous orders affecting significant
portions of the Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund. The
Fund may impose these restrictions at any time. The exchange limit may be
modified for accounts in certain institutional retirement plans because of
plan exchange limits, Department of Labor regulations or administrative and
other considerations. Subject to the foregoing, if an exchange request in
good order is received by Shareholder Services and delivered by Shareholder
Services to the Transfer Agent by 12 noon Boston time on any business day,
the exchange usually will occur that day. For further information regarding
the exchange privilege, shareholders should contact Shareholder Services.
Reinvestment Privilege
A shareholder of the Fund who has redeemed shares or had shares repurchased
at his or her request may reinvest all or any portion of the proceeds (plus
that amount necessary to acquire a fractional share to round off his or her
reinvestment to full shares) in shares, of the same class as the shares
redeemed, of the Fund or any other Eligible Fund at net asset value and
without subjecting the reinvestment to an initial sales charge, provided such
reinvestment is made within 120 calendar days after a redemption or
repurchase. Upon such reinvestment, the shareholder will be credited with any
contingent deferred sales charge previously charged with respect to the
amount reinvested. The redemption of shares is, for federal income tax
purposes, a sale on which the shareholder may realize a gain or loss. If a
redemption at a loss is followed by a reinvestment within 30 days, the
transaction may be a "wash sale" resulting in a denial of the loss for
federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject to
any applicable minimum account standards imposed by the fund into which the
reinvestment is made. Shares are sold to a reinvesting shareholder at the net
asset value thereof next determined following timely receipt by Shareholder
Services of such shareholder's written purchase request and delivery of the
request by Shareholder Services to the Transfer Agent. A shareholder may
exercise this reinvestment privilege only once per twelve month period with
respect to his or her shares of the Fund. No charge is imposed by the Fund
for such reinvestments; however, dealers may charge fees in connection with
the reinvestment privilege. The reinvestment privilege may be exercised with
respect to an Eligible Fund only in those states where shares of the relevant
other Eligible Fund may legally be sold.
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Investment Plans
The Fund offers Class A, Class B and Class D shareholders the Investamatic
Check Program. Under this Program, shareholders may make regular investments
by authorizing withdrawals from their bank accounts each month or quarter on
the Application available from Shareholder Services.
The Fund also offers tax-sheltered retirement plans, including prototype and
other employee benefit plans for employees, sole proprietors, partnerships
and corporations and IRAs. Details of these investment plans and their
availability may be obtained from securities dealers or from Shareholder
Services.
Systematic Withdrawal Plan
A shareholder who owns noncertificated Class A or Class C shares with a value
of $5,000 or more, or Class B or Class D shares with a value of $10,000 or
more, may elect, by participating in the Fund's Systematic Withdrawal Plan,
to have periodic checks issued for specified amounts. These amounts may not
be less than certain minimums, depending on the class of shares held. The
Plan provides that all income dividends and capital gains distributions of
the Fund shall be credited to participating shareholders in additional shares
of the Fund. Thus, the withdrawal amounts paid can only be realized by
redeeming shares of the Fund under the Plan. To the extent such amounts paid
exceed dividends and distributions from the Fund, a shareholder's investment
will decrease and may eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales charges,
no such charges will be imposed on withdrawals of up to 8% annually of either
(a) the value, at the time the Plan is initiated, of the shares then in the
account, or (b) the value, at the time of a withdrawal, of the same number of
shares as in the account when the plan was initiated, whichever is higher.
Expenses of the Plan are borne by the Fund. A participating shareholder may
withdraw from the Plan, and the Fund may terminate the Plan at any time on
written notice. Purchase of additional shares while a shareholder is
receiving payments under a Plan is ordinarily disadvantageous because of
duplicative sales charges. For this reason, a shareholder may not participate
in the Investamatic Check Program and the Systematic Withdrawal Plan at the
same time.
Dividend Allocation Plan
The Dividend Allocation Plan allows shareholders to elect to have all their
dividends and any other distributions from the Fund or any Eligible Fund
automatically invested at net asset value in one other such Eligible Fund
designated by the shareholder, provided the account into which the investment
is made is initially funded with the requisite minimum account. The number of
shares purchased will be determined as of the dividend payment date. The
Dividend Allocation Plan is subject to state securities law requirements, to
suspension at any time, and to such policies, limitations and restrictions,
as, for instance, may be applicable to street name or master accounts, that
may be adopted from time to time.
Automatic Bank Connection
A shareholder may elect, by participating in the Fund's Automatic Bank
Connection ("ABC"), to have dividends and other distributions, including
Systematic Withdrawal Plan payments, automatically deposited in the
shareholder's bank account by electronic funds transfer. Some contingent
deferred sales charges may apply. See "Systematic Withdrawal Plan" herein.
Reports
Reports for the Fund will be sent to shareholders of record at least
semiannually. These reports will include a list of the securities owned by
the Fund as well as the Fund's financial statements.
Telephone Services
The following telephone privileges ("Telephone Privileges") can be used:
(1) the privilege allowing the shareholder to make telephone redemptions for
amounts up to $50,000 to be mailed to the shareholder's address of record is
available automatically;
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(2) the privilege allowing the shareholder or his or her dealer to make
telephone exchanges is available automatically; and
(3) the privilege allowing the shareholder to make telephone redemptions for
amounts over $5,000, to be remitted by wire to the shareholder's
predesignated bank account, is available by election on the Application
accompanying this Prospectus. A current shareholder who did not previously
request such telephone wire privilege on his or her original Application may
request the privilege by completing a Telephone Redemption-by-Wire Form which
may be obtained by calling 1-800-521-6548. The Telephone Redemption-by-Wire
Form requires a signature guarantee.
A shareholder may decline the automatic Telephone Privileges set forth in (1)
and (2) above by so indicating on the Application accompanying this
Prospectus.
A shareholder may discontinue any Telephone Privilege at any time by advising
Shareholder Services that the shareholder wishes to discontinue the use of
such privileges in the future.
Unless such Telephone Privileges are declined, a shareholder is deemed to
authorize Shareholder Services and the Transfer Agent to: (1) act upon the
telephone instructions of any person purporting to be the shareholder to
redeem, or purporting to be the shareholder or the shareholder's dealer to
exchange, shares from any account; and (2) honor any written instructions for
a change of address regardless of whether such request is accompanied by a
signature guarantee. All telephone calls will be recorded. None of the Fund,
the other Eligible Funds, the Transfer Agent, the Investment Manager or the
Distributor will be liable for any loss, expense or cost arising out of any
request, including any fraudulent or unauthorized requests. Shareholders
assume the risk to the full extent of their accounts that telephone requests
may be unauthorized. Reasonable procedures will be followed to confirm that
instructions communicated by telephone are genuine. The shareholder will not
be liable for any losses arising from unauthorized or fraudulent instructions
if such procedures are not followed.
Shareholders may redeem or exchange shares by calling toll-free
1-800-521-6548. Although it is unlikely, during periods of extraordinary
market conditions, a shareholder may have difficulty in reaching Shareholder
Services at such telephone number. In that event, the shareholder should
contact Shareholder Services at 1-800-562-0032, 1-617-357-7805 or otherwise
at its main office at One Financial Center, Boston, Massachusetts 02111-2690.
Shareholder Account Inquiries:
Please call 1-800-562-0032
Call this number for assistance in answering general questions on your
account, including account balance, available shareholder services, statement
information and performance of the Fund. Account inquiries may also be made
in writing to State Street Research Shareholder Services, P.O. Box 8408,
Boston, Massachusetts 02266-8408. A fee of up to $10 will be charged against
an account for providing additional account transcripts or photocopies of
paid redemption checks or for researching records in response to special
requests.
Shareholder Telephone Transactions:
Please call 1-800-521-6548
Call this number for assistance in purchasing shares by wire and for
telephone redemptions or telephone exchange transactions. Shareholder
Services will require some form of personal identification prior to acting
upon instructions received by telephone. Written confirmation of each
transaction will be provided.
The Fund and its Shares
The Fund was organized in 1994 as a series of State Street Research
Securities Trust, a Massachusetts business trust. The Trustees have
authorized shares of the Fund to be issued in four classes: Class A, Class B,
Class C and Class D shares. The Trust is registered with the Securities and
Exchange Commission as an open-end management investment company. The fiscal
year end of the Fund is April 30.
Except for those differences between the classes of shares described below
and elsewhere in the Prospectus, each share of the Fund has equal dividend,
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redemption and liquidation rights with other shares of the Fund and when
issued is fully paid and nonassessable. In the future, certain classes may be
redesignated, for administrative purposes only, to conform to standard class
designations and common usage of terms which may develop in the mutual fund
industry. For example, Class C shares may be redesignated as Class Y shares
and Class D shares may be redesignated as Class C shares. Any redesignations
would not affect any substantive rights respecting the shares.
Each share of each class of shares represents an identical legal interest in
the same portfolio of investments of the Fund, has the same rights and is
identical in all respects, except that Class A, Class B and Class D shares
bear the expenses of the deferred sales arrangement and any expenses
(including the higher service and distribution fees) resulting from such
sales arrangement, and certain other incremental expenses related to a class.
Each class will have exclusive voting rights with respect to provisions of
the Rule 12b-1 distribution plan pursuant to which the service and
distribution fees, if any, are paid. Although the legal rights of holders of
each class of shares are identical, it is likely that the different expenses
borne by each class will result in different net asset values and dividends.
The different classes of shares of the Fund also have different exchange
privileges.
The rights of holders of shares may be modified by the Trustees at any time,
so long as such modifications do not have a material, adverse effect on the
rights of any shareholder. On any matter submitted to the shareholders, the
holder of a Fund share is entitled to one vote per share (with proportionate
voting for fractional shares) regardless of the relative net asset value
thereof.
Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there will ordinarily be no shareholder
meetings unless required by the 1940 Act. Except as otherwise provided under
said Act, the Board of Trustees will be a self-perpetuating body until fewer
than two thirds of the Trustees serving as such are Trustees who were elected
by shareholders of the Trust. In the event less than a majority of the
Trustees serving as such were elected by shareholders of the Trust, a meeting
of shareholders will be called to elect Trustees. Under the Master Trust
Agreement, any Trustee may be removed by vote of two thirds of the
outstanding Trust shares; holders of 10% or more of the outstanding shares of
the Trust can require that the Trustees call a meeting of shareholders for
purposes of voting on the removal of one or more Trustees. In connection with
such meetings called by shareholders, shareholders will be assisted in
shareholder communications to the extent required by applicable law.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and provides for
indemnification for all losses and expenses of any shareholder of the Fund
held personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to meet its
obligations. The Investment Manager believes that, in view of the above, the
risk of personal liability to shareholders is remote.
As of July 31, 1995 Metropolitan Life Insurance Company ("Metropolitan") was
the record and/or beneficial owner of approximately 100% and 70% of Class A
and Class C, respectively, and may be deemed to be in control of such classes
of shares of the Fund. Ownership of 25% or more of a voting security is
deemed "control" as defined in the 1940 Act. So long as 25% of a class of
shares are so owned, such owners will be presumed to be in control of such
class of shares for purposes of voting on certain matters, such as any
Distribution Plan for a given class.
Management of the Fund
Under the provisions of the Trust's Master Trust Agreement and the laws of
Massachusetts, responsibility for the management and supervision of the Fund
rests with the Trustees.
The Fund's investment manager is State Street Research & Management Company.
The Investment Manager is charged with the overall responsibility for
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managing the investments and business affairs of the Fund, subject to the
authority of the Board of Trustees.
The Investment Manager was founded by Paul Cabot, Richard Saltonstall and
Richard Paine to serve as investment adviser to one of the nation's first
mutual funds, presently known as State Street Research Investment Trust,
which they had formed in 1924. Their investment management philosophy, which
continues to this day, emphasized comprehensive fundamental research and
analysis, including meetings with the management of companies under
consideration for investment. The Investment Manager's portfolio management
group has extensive investment industry experience. In managing debt
securities for a portfolio, the Investment Manager may consider yield curve
positioning, sector rotation and duration, among other factors.
The Investment Manager and the Distributor are indirect wholly-owned
subsidiaries of Metropolitan and are located at One Financial Center, Boston,
Massachusetts 02111-2690.
The Investment Manager has entered into an Advisory Agreement with the Trust
pursuant to which investment research and management, administrative
services, office facilities and personnel are provided for the Fund in
consideration of a fee from the Fund.
Under its Advisory Agreement with the Trust, the Investment Manager receives
a monthly investment advisory fee equal to 0.55% (on an annual basis) of the
average daily value of the net assets of the Fund. The Fund bears all costs
of its operation other than those incurred by the Investment Manager under
the Advisory Agreement. In particular, the Fund pays, among other expenses,
investment advisory fees, certain distribution expenses under the Fund's
Distribution Plan and the compensation and expenses of the Trustees who are
not otherwise currently affiliated with the Investment Manager or any of its
affiliates. The Investment Manager will reduce its management fee payable by
the Fund up to the amount of any expenses (excluding permissible items, such
as brokerage commissions, Rule 12b-1 payments, interest, taxes and litigation
expenses) paid or incurred in any year in excess of the most restrictive
expense limitation imposed by any state in which the Fund sells shares, if
any. The Investment Manager compensates Trustees of the Trust if such persons
are employees or affiliates of the Investment Manager or its affiliates.
The Fund is managed by John H. Kallis. Mr. Kallis has managed the Fund since
its inception in May 1994. Mr. Kallis's principal occupation currently is
Senior Vice President of State Street Research & Management Company. During
the past five years he has also served as a portfolio manager for State
Street Research & Management Company.
Subject to the policy of seeking best overall price and execution, sales of
shares of the Fund may be considered by the Investment Manager in the
selection of broker or dealer firms for the Fund's portfolio transactions.
The Investment Manager has a Code of Ethics governing personal securities
transactions of certain of its employees; see the Statement of Additional
Information.
Dividends and Distributions; Taxes
The Fund qualified and elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code for its most recent
fiscal year end and it intends to qualify as such in future fiscal years
although it cannot give complete assurance that it will do so. As long as it
so qualifies and satisfies certain distribution requirements, it will not be
subject to federal income tax on its taxable income (including capital gains,
if any) distributed to its shareholders. Consequently, the Fund intends to
distribute annually to its shareholders substantially all of its net
investment income and any capital gain net income (capital gains net of
capital losses).
Dividends from net investment income of the Fund normally will be paid four
times each year. Distributions of capital gain net income, if any, will
generally be made after the end of the fiscal year or as otherwise required
for compliance with applicable tax regulations. Both dividends from net
investment income and distributions of capital gain net income will be
declared and paid to shareholders in addi
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<PAGE>
tional shares of the Fund at net asset value (except in the case of
shareholders who elect a different available distribution method).
The Fund will provide its shareholders with annual information on a timely
basis concerning the federal tax status of dividends and distributions during
the preceding calendar year.
Dividends paid by the Fund from taxable net investment income and
distributions of net short-term capital gains, whether paid in cash or
reinvested in additional shares, will be taxable for federal income tax
purposes to shareholders as ordinary income. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses) which are designated as capital gains distributions, whether paid in
cash or reinvested in additional shares, will be taxable for federal income
tax purposes to shareholders as long-term capital gains, regardless of how
long shareholders have held their shares. If shares of the Fund which are
sold at a loss have been held six months or less, the loss will be considered
as a long-term capital loss to the extent of any capital gains distributions
received.
Dividends and other distributions and proceeds of redemption of Fund shares
paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if the Transfer Agent is not provided with the
shareholder's correct taxpayer identification number or certification that
the shareholder is not subject to such backup withholding.
The foregoing discussion relates only to generally applicable federal income
tax provisions in effect as of the date of this Prospectus. Therefore,
prospective shareholders are urged to consult their own tax advisers
regarding tax matters, including state and local tax consequences.
Calculation of Performance Data
From time to time, in advertisements or in communications to shareholders or
prospective investors, the Fund may compare the performance of its Class A,
Class B, Class C or Class D shares to that of other mutual funds with similar
investment objectives, to certificates of deposit and/or to other financial
alternatives. The Fund may also compare its performance to appropriate
indices such as the Lehman Intermediate Government/Corporate Bond Index
and/or to appropriate rankings or averages such as the Intermediate
Investment Grade Debt Funds category compiled by Lipper Analytical Services,
Inc. or to those compiled by Morningstar, Inc., Money Magazine, Business
Week, Forbes Magazine, The Wall Street Journal and Investor's Daily.
Total return is computed separately for each class of shares of the Fund. The
average annual total return ("standard total return") for shares of the Fund
is computed by determining the average annual compounded rate of return for a
designated period that, if applied to a hypothetical $1,000 initial
investment (less the maximum initial or contingent deferred sales charge, if
applicable), would produce the redeemable value of that investment at the end
of the period, assuming reinvestment of all dividends and distributions and
with recognition of all recurring charges. Standard total return may be
accompanied with nonstandard total return information computed in the same
manner, but for differing periods and with or without annualizing the total
return or taking sales charges into account.
The Fund's yield is computed separately for each class of shares by dividing
the net investment income, after recognition of all recurring charges, per
share earned during the most recent month or other specified thirty-day
period by the applicable maximum offering price per share on the last day of
such period and annualizing the result.
The standard total return and yield results take sales charges into account,
if applicable, but do not take into account recurring and nonrecurring
charges for optional services which only certain shareholders elect and which
involve nominal fees, such as the $7.50 fee for remittance of redemption
proceeds by wire. Where sales charges are not applicable and therefore not
taken into account in the calculation of standard total return and yield, the
results will be increased. Any voluntary waiver of fees or assumption of
expenses by the Fund's affiliates will also increase performance results.
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The Fund's distribution rate is calculated separately for each class of
shares by annualizing the latest distribution and dividing the result by the
maximum offering price per share as of the end of the period to which the
distribution relates. The distribution rate is not computed in the same
manner as the above described yield, and, therefore, can be significantly
different from it. In its supplemental sales literature, the Fund may quote
its distribution rate together with the above described standard total return
and yield information. The use of such distribution rates would be subject to
an appropriate explanation of how the components of the distribution rate
differ from the above described yield.
Performance information may be useful in evaluating the Fund and for
providing a basis for comparison with other financial alternatives. Since the
performance of the Fund varies in response to fluctuations in economic and
market conditions, interest rates and Fund expenses, among other things, no
performance quotation should be considered a representation as to the Fund's
performance for any future period. In addition, the net asset value of shares
of the Fund will fluctuate, with the result that shares of the Fund, when
redeemed, may be worth more or less than their original cost. Neither an
investment in the Fund nor its performance is insured or guaranteed; such
lack of insurance or guarantees should accordingly be given appropriate
consideration when comparing the Fund to financial alternatives which have
such features.
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APPENDIX
Description of Debt/Bond Ratings
Standard & Poor's Corporation
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): The ratings may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
S&P may attach the "r" symbol to derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high
variability in expected returns due to noncredit risks created by the terms
of the obligation, such as securities whose principal or interest return is
indexed to equities, commodities, or currencies; certain swaps and options;
and interest only (IO) and principal only (PO) mortgage securities.
Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
1, 2 or 3: The ratings may be modified by the addition of a numeral
indicating a bond's rank within its rating category.
27
<PAGE>
[back cover}
STATE STREET RESEARCH
INTERMEDIATE BOND FUND
One Financial Center
Boston, MA 02111
INVESTMENT ADVISER
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
DISTRIBUTOR
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
SHAREHOLDER SERVICES
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
800-562-0032
CUSTODIAN
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02110
IB-008E-995IBS CONTROL NUMBER 2545-950828(0996)SSR-LD
[state street logo] State Street Research
State Street Research
Intermediate Bond Fund
September 1, 1995
P R O S P E C T U S
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
a series of
STATE STREET RESEARCH SECURITIES TRUST
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1995
TABLE OF CONTENTS
Page
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS ............................ 2
ADDITIONAL INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES ............ 5
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS ............................ 12
TRUSTEES AND OFFICERS ...................................................... 15
INVESTMENT ADVISORY SERVICES ............................................... 18
PURCHASE AND REDEMPTION OF SHARES .......................................... 19
NET ASSET VALUE ............................................................ 20
PORTFOLIO TRANSACTIONS ..................................................... 21
CERTAIN TAX MATTERS ........................................................ 23
DISTRIBUTION OF SHARES OF THE FUND ......................................... 25
CALCULATION OF PERFORMANCE DATA ............................................ 27
CUSTODIAN .................................................................. 31
INDEPENDENT ACCOUNTANTS .................................................... 31
FINANCIAL STATEMENTS ....................................................... 31
The following Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus of State Street Research
Intermediate Bond Fund dated September 1, 1995, which may be obtained without
charge from the offices of State Street Research Securities Trust (the "Trust")
or State Street Research Investment Services, Inc. (the "Distributor"), One
Financial Center, Boston, Massachusetts 02111-2690.
<PAGE>
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS
As set forth in part under "The Fund's Investments" and "Limiting
Investment Risk" in the Fund's Prospectus, the Fund has adopted certain
investment restrictions.
The fundamental and nonfundamental policies of the Fund do not apply to
any matters involving the issuance of multiple classes of shares of the Fund or
the creation of a structure allowing the Fund to invest substantially all its
assets in a related collective investment vehicle for similar funds or allowing
the Fund to serve as such a collective investment vehicle for other similar
funds, to the extent permitted by law and regulatory authorities.
All of the Fund's fundamental investment restrictions are set forth below.
These fundamental investment restrictions may not be changed except by the
affirmative vote of a majority of the Fund's outstanding voting securities as
defined in the Investment Company Act of 1940, as amended (the "1940 Act").
(Under the 1940 Act, a "vote of the majority of the outstanding voting
securities" means the vote, at a meeting of security holders duly called, (i) of
67% or more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy or (ii) of more than 50% of the outstanding voting securities, whichever
is less.) Under these restrictions, it is the Fund's policy:
(1) not to purchase a security of any one issuer (other than
securities issued or guaranteed as to principal or interest by the
U.S. Government or its agencies or instrumentalities or
mixed-ownership Government corporations) if such purchase would,
with respect to 75% of the Fund's total assets, cause more than 5%
of the Fund's total assets to be invested in the securities of such
issuer or cause more than 10% of the voting securities of such
issuer to be held by the Fund;
(2) not to issue senior securities as defined in the 1940 Act,
except as permitted by that Act and the rules thereunder or as
permitted by an order of the Securities and Exchange Commission;
(3) not to underwrite or participate in the marketing of securities
of other issuers, except (a) the Fund may, acting alone or in
syndicates or groups, purchase or otherwise acquire securities of
other issuers for investment, either from the issuers or from
persons in a control relationship with the issuers or from
underwriters of such securities; and (b) to the extent that, in
connection with the disposition of the Fund's securities, the Fund
may be deemed to be an underwriter under certain federal securities
laws;
(4) not to purchase fee simple interests in real estate unless
acquired as a result of ownership of securities or other
instruments, although the Fund may purchase and sell other interests
in real estate including securities which are secured by real
estate, or securities of companies which own or invest or deal in
real estate;
(5) not to invest in commodities or commodity contracts in excess of
10% of the Fund's total assets, except that investments in
essentially financial items such as swap arrangements, hybrids,
currencies, futures contracts and options on futures contracts on
securities, securities indices and currencies shall not be deemed
investments in commodities or commodities contracts;*
2
<PAGE>
(6) not to make loans, except that the Fund may lend portfolio
securities and purchase bonds, debentures, notes and similar
obligations (and enter into repurchase agreements with respect
thereto);
(7) not to make any investment which would cause more than 25% of
the value of the Fund's total assets to be invested in securities of
issuers principally engaged in any one industry [for purposes of
this restriction, (a) utilities may be divided according to their
services so that, for example, gas, gas transmission, electric and
telephone companies may each be deemed in a separate industry, (b)
oil and oil related companies may be divided by type so that, for
example, oil production companies, oil service companies and
refining and marketing companies may each be deemed in a separate
industry, (c) finance companies may be classified according to the
industries of their parent companies, and (d) securities issued or
guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities (including repurchase agreements
involving such U.S. Government securities to the extent excludable
under relevant regulatory interpretations) may be excluded]; and
(8) not to borrow money, including reverse repurchase agreements in
so far as such agreements may be regarded as borrowings, except for
borrowings not in an amount in excess of 33 1/3% of the value of its
total assets.
* In connection with clause (5), the Fund has undertaken with a
state securities authority that, for so long as the Fund's shares
are required to be registered for sale in that state, the Fund will
restrict its investment in those commodities which are subject to
the 10% limit of the Fund's total assets, to precious metals.
The following nonfundamental investment restrictions may be changed
without shareholder approval. Under these restrictions, it is the Fund's
policy:
(1) not to purchase any security or enter into a repurchase agreement if
as a result more than 15% of its net assets would be invested in
securities that are illiquid (including repurchase agreements not
entitling the holder to payment of principal and interest within
seven days);
(2) not to invest more than 15% of its net assets in restricted
securities of all types (including not more than 5% of its net
assets in restricted securities which are not eligible for resale
pursuant to Rule 144A, Regulation S or other exemptive provisions
under the Securities Act of 1933);
(3) not to invest more than 5% of its total assets in securities of
private issuers including predecessors with less than three years'
continuous operations (except (a) securities guaranteed or backed by
an affiliate of the issuer with three years of continuous
operations, (b) securities issued or guaranteed as to principal or
interest by the U.S. Government, or its agencies or
instrumentalities, or a mixed-ownership Government corporation, (c)
securities of issuers with debt securities rated at least "BBB" by
Standard & Poor's Corporation or "Baa" by Moody's Investor's
Service, Inc., or their equivalent by any other nationally
recognized statistical rating organization, or securities of issuers
considered by the Investment Manager to be equivalent, (d)
securities issued by a holding company with at least 50% of its
assets invested in companies with three years of continuous
operations including predecessors, and (e) securities which generate
income which is exempt from local, state or federal taxes); provided
that the Fund may invest up to 15% in such issuers
3
<PAGE>
so long as such investments plus investments in restricted
securities (other than those which are eligible for resale under
Rule 144A, Regulations S or other exemptive provisions) do not
exceed 15% of the Fund's total assets;
(4) not to engage in transactions in options except in connection with
options on securities, securities indices and currencies, and
options on futures on securities, securities indices and currencies;
(5) not to purchase securities on margin or make short sales of
securities or maintain a short position except for short sales
"against the box" (as a matter of current operating policy, the Fund
will not make short sales or maintain a short position unless not
more than 5% of the Fund's net assets (taken at current value) are
held as collateral for such sales at any time; and for the purpose
of this restriction, escrow or custodian receipts or letters, margin
or safekeeping accounts, or similar arrangements used in the
industry in connection with the trading of futures, options and
forward commitments are not deemed to involve the use of margin);
(6) not to purchase a security issued by another investment company,
except to the extent permitted under the 1940 Act or except by
purchases in the open market involving only customary brokers'
commissions, or securities acquired as dividends or distributions or
in connection with a merger, consolidation or similar transaction or
other exchange;
(7) not to purchase or retain any security of an issuer if, to the
knowledge of the Fund, those of its officers and Trustees and
officers and directors of its investment adviser who individually
own more than 1/2 of 1% of the securities of such issuer, when
combined, own more than 5% of the securities of such issuer taken at
market;
(8) not to invest directly as a joint venturer or general partner in
oil, gas or other mineral exploration or development joint ventures
or general partnerships (provided that the Fund may invest in
securities issued by companies which invest in or sponsor such
programs and in securities indexed to the price of oil, gas or other
minerals);
(9) not to invest in warrants in excess of 5% of the value, at the lower
of cost or market, of its net assets, provided that warrants not
listed on the New York or American Stock Exchange shall be further
limited to 2% of the Fund's net assets (warrants initially attached
to securities and acquired by the Fund upon original issuance
thereof shall be deemed to be without value); and
(10) not to purchase any security while borrowings, including reverse
repurchase agreements, representing more than 5% of the Fund's total
assets are outstanding.
Compliance with the above nonfundamental investment restrictions (1) and
(2) will be determined independently.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES
Among other investments described below, the Fund may buy and sell
domestic and foreign options, futures contracts, and options on futures
contracts, with respect to securities, securities indices, and
4
<PAGE>
currencies, and may enter into closing transactions with respect to each of the
foregoing under circumstances in which the use of such techniques is expected
by State Street Research & Management Company (the "Investment Manager") to aid
in achieving the investment objective of the Fund. In most cases, only futures
and options listed and traded on national securities exchanges or registered
commodities exchanges or which are readily marketable will be used. The Fund on
occasion may also purchase instruments with characteristics of both futures and
securities (e.g., debt instruments with interest and principal payments
determined by reference to the value of a commodity or a currency at a future
time) and which, therefore, possess the risks of both futures and securities
investments.
Futures Contracts
Futures contracts are publicly traded contracts to buy or sell underlying
assets, such as certain securities, currencies, or an index of securities, at a
future time at a specified price. A contract to buy establishes a "long"
position while a contract to sell establishes a "short" position.
The purchase of a futures contract on securities or an index of securities
normally enables a buyer to participate in the market movement of the underlying
asset or index after paying a transaction charge and posting margin in an amount
equal to a small percentage of the value of the underlying asset or index. The
Fund will initially be required to deposit with the Trust's custodian or the
broker effecting the futures transaction an amount of "initial margin" in cash
or U.S. Treasury obligations.
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin is
like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on a
daily basis as the price of the underlying asset fluctuates. This process is
known as "marking to market." For example, when the Fund has taken a long
position in a futures contract and the value of the underlying asset has risen,
that position will have increased in value and the Fund will receive from the
broker a maintenance margin payment equal to the increase in value of the
underlying asset. Conversely, when the Fund has taken a long position in a
futures contract and the value of the underlying instrument has declined, the
position would be less valuable, and the Fund would be required to make a
maintenance margin payment to the broker.
At any time prior to expiration of the futures contract, the Fund may
elect to close the position by taking an opposite position which will terminate
the Fund's position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain. While futures
contracts with respect to securities do provide for the delivery and acceptance
of such securities, such delivery and acceptance are seldom made.
Futures contracts will be executed primarily (a) to establish a short
position, and thus protect the Fund from experiencing the full impact of an
expected decline in market value of portfolio holdings without requiring the
sale of holdings, or (b) to establish a long position, and thus to participate
in an expected rise in market value of securities or currencies which the Fund
intends to purchase. Subject to the limitations described below, the Fund may
also enter into futures contracts for purposes of enhancing return. In
transactions establishing a long position in a futures contract, money market
instruments equal to the face value of the futures contract will be identified
by the Fund to the Trust's custodian for maintenance in a separate account to
insure that the use of such futures contracts is unleveraged. Similarly, a
representative portfolio of securities having a value equal to the aggregate
face value of the futures contract will be identified with respect to each short
position. The Fund will employ any other appropriate method of cover which is
consistent with applicable regulatory and exchange requirements.
5
<PAGE>
Options on Securities
The Fund may use options on securities to implement its investment
strategy. A call option on a security, for example, gives the purchaser of the
option the right to buy, and the writer the obligation to sell, the underlying
asset at the exercise price during the option period. Conversely, a put option
on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period.
Purchased options have defined risk, i.e., the premium paid for the
option, no matter how adversely the price of the underlying asset moves, while
affording an opportunity for gain corresponding to the increase or decrease in
the value of the optioned asset.
Written options have varying degrees of risk. An uncovered written call
option theoretically carries unlimited risk, as the market price of the
underlying asset could rise far above the exercise price before its expiration.
This risk is tempered when the call option is covered, i.e., when the option
writer owns the underlying asset. In this case, the writer runs the risk of the
lost opportunity to participate in the appreciation in value of the asset rather
than the risk of an out-of-pocket loss. A written put option has defined risk,
i.e., the difference between the agreed-upon price that the Fund must pay to the
buyer upon exercise of the put and the value, which could be zero, of the asset
at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
his obligation to deliver the underlying asset in the case of a call option, or
to pay for the underlying asset in the case of a put option, a covered writer is
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the applicable clearing corporation and exchanges.
Options on Securities Indices
The Fund may engage in transactions in call and put options on securities
indices. For example, the Fund may purchase put options on indices of securities
in anticipation of or during a market decline to attempt to offset the decrease
in market value of its securities that might otherwise result.
Put options on indices of securities are similar to put options on the
securities themselves except that the delivery requirements are different.
Instead of giving the right to make delivery of a security at a specified price,
a put option on an index of securities gives the holder the right to receive an
amount of cash upon exercise of the option if the value of the underlying index
has fallen below the exercise price. The amount of cash received will be equal
to the difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. As with options
on securities or futures contracts, the Fund may offset its position in index
options prior to expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.
A securities index assigns relative values to the securities included in
the index and the index options are based on a broad market index. Although
there are at present few available options on indices of fixed income
securities, other than tax-exempt securities, or futures and related options
based on such indices, such instruments may become available in the future. In
connection with the use of such options, the Fund may cover its position by
identifying a representative portfolio of securities having a value equal to the
aggregate face value of the option position taken. However, the Fund may employ
any appropriate method to cover its positions that is consistent with applicable
regulatory and exchange requirements.
6
<PAGE>
Options on Futures Contracts
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option.
Options Strategy
A basic option strategy for protecting the Fund against a decline in
securities prices could involve (a) the purchase of a put -- thus "locking in"
the selling price of the underlying securities or securities indices -- or (b)
the writing of a call on securities or securities indices held by the Fund --
thereby generating income (the premium paid by the buyer) by giving the holder
of such call the option to buy the underlying asset at a fixed price. The
premium will offset, in whole or in part, a decline in portfolio value; however,
if prices of the relevant securities or securities indices rose instead of
falling, the call might be exercised, thereby resulting in a potential loss of
appreciation in the underlying securities or securities indices.
A basic option strategy when a rise in securities prices is anticipated is
the purchase of a call -- thus "locking in" the purchase price of the underlying
security or other asset. In transactions involving the purchase of call options
by the Fund, money market instruments equal to the aggregate exercise price of
the options will be identified by the Fund to the Trust's custodian to insure
that the use of such investments is unleveraged.
The Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and concurrently write a call option
against that security. If the call option is exercised in such a transaction,
the Fund's maximum gain will be the premium received by it for writing the
option, adjusted upward or downward by the difference between the Fund's
purchase price of the security and the exercise price of the option. If the
option is not exercised and the price of the underlying security declines, the
amount of such decline will be offset in part, or entirely, by the premium
received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund's return will be the premium received from
writing the put option minus the amount by which the market price of the
security is below the exercise price.
Limitations and Risks of Options and Futures Activity
The Fund will engage in transactions in futures contracts or options as a
hedge against changes resulting from market conditions which produce changes in
the values of their securities or the securities which it intends to purchase
(e.g., to replace portfolio securities which will mature in the near future)
and, subject to the limitations described below, to enhance return. The Fund
will not purchase any futures contract or purchase any call option if,
immediately thereafter, more than one third of the Fund's net assets would be
represented by long futures contracts or call options. The Fund will not write a
covered call or put option if, immediately thereafter, the aggregate value of
the assets (securities in the case of written calls and cash or cash equivalents
in the case of written puts) underlying all such options, determined as of the
dates such options were written, would exceed 25% of that Fund's net assets. The
Fund may not establish a position in a commodity futures contract or purchase or
sell a commodity option contract for other than bona fide hedging purposes if
immediately thereafter the sum of the amount of initial margin deposits and
7
<PAGE>
premiums required to establish such positions for such nonhedging purposes would
exceed 5% of the market value of the Fund's net assets.
Although effective hedging can generally capture the bulk of a desired
risk adjustment, no hedge is completely effective. The Fund's ability to hedge
effectively through transactions in futures and options depends on the degree to
which price movements in its holdings correlate with price movements of the
futures and options.
Some positions in futures and options may be closed out only on an
exchange which provides a secondary market therefor. There can be no assurance
that a liquid secondary market will exist for any particular futures contract or
option at any specific time. Thus, it may not be possible to close such an
option or futures position prior to maturity. The inability to close options and
futures positions also could have an adverse impact on the Fund's ability to
effectively hedge its securities and might in some cases require the Fund to
deposit cash to meet applicable margin requirements. The Fund will enter into an
option or futures position only if it appears to be a liquid investment.
Foreign Investments
The Fund reserves the right to invest without limitation in debt
securities of non-U.S. issuers. The risks associated with investments in foreign
securities include those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future political and economic developments, the
possible imposition of currency exchange blockages, higher operating expenses,
expropriation of the Fund's assets by a foreign government, foreign withholding
and other taxes which may reduce investment return, reduced availability of
public information concerning issuers and the fact that foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to those
applicable to domestic issuers. Moreover, securities of many foreign issuers may
be less liquid and their prices more volatile than those of securities of
comparable domestic issuers. Finally, to the extent the Fund invests in
securities of issuers in less developed countries or emerging foreign markets,
it will be subject to a variety of additional risks, including risks associated
with political instability, economies based on relatively few industries, lesser
market liquidity, high rates of inflation, significant price volatility of
portfolio holdings and high levels of external debt in the relevant country.
Although the Fund may invest in securities denominated in foreign
currencies, the Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of the Fund's shares may fluctuate with U.S.
dollar exchange rates as well as with price changes of the Fund's securities in
the various local markets and currencies. Thus, an increase in the value of the
U.S. dollar compared to the currencies in which the Fund makes its investments
could reduce the effect of increases and magnify the effect of decreases in the
prices of the Fund's securities in their local markets. Conversely, a decrease
in the value of the U.S. dollar will have the opposite effect of magnifying the
effect of increases and reducing the effect of decreases in the prices of the
Fund's securities in the local markets.
Currency Transactions
The Fund may engage in currency exchange transactions. The Fund will
conduct its currency exchange transactions either on a spot (i.e., cash) basis
at the rate prevailing in the currency exchange market, or by entering into
forward contracts to purchase or sell currencies. The Fund's dealings in forward
currency exchange contracts will be limited to hedging involving either specific
transactions or aggregate portfolio positions. A forward currency contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract
8
<PAGE>
agreed upon by the parties, at a price set at the time of the contract. These
contracts are not commodities and are entered into in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. In transactions involving forward currency exchange
contracts, cash or marketable securities equal to the price of the contract
will be identified for segregation by the Fund to the Trust's custodian to
ensure that the use of such instruments is unleveraged. Although spot and
forward contracts will be used primarily to protect the Fund from adverse
currency movements, they also involve the risk that anticipated currency
movements will not be accurately predicted, which may result in losses to the
Fund. This method of protecting the value of the Fund's portfolio securities
against a decline in the value of a currency does not eliminate fluctuations
in the underlying prices of the securities. It simply establishes a rate of
exchange that can be achieved at some future point in time. Although such
contracts tend to minimize the risk of loss due to a decline in the value of
hedged currency, they tend to limit any potential gain that might result should
the value of such currency increase.
Repurchase Agreements
The Fund may enter into repurchase agreements. Repurchase agreements occur
when the Fund acquires a security and the seller, which may be either (i) a
primary dealer in U.S. Government securities or (ii) an FDIC-insured bank having
gross assets in excess of $500 million, simultaneously commits to repurchase it
at an agreed-upon price on an agreed-upon date within a specified number of days
(usually not more than seven) from the date of purchase. The repurchase price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the acquired security. The Fund will
only enter into repurchase agreements involving U.S. Government securities.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities. Repurchase
agreements will be limited to 30% of the Fund's total assets, except that
repurchase agreements extending for more than seven days when combined with
other illiquid securities will be limited to 15% of the Fund's net assets.
Currently, the Fund does not expect to invest more than 5% of its net assets in
repurchase agreements.
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements. However, the Fund
has no present intention of engaging in reverse repurchase agreements in excess
of 5% of the Fund's total assets. In a reverse repurchase agreement the Fund
transfers a portfolio instrument to another person, such as a financial
institution, broker or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed-upon rate. The ability to use reverse
repurchase agreements may enable, but does not ensure the ability of, the Fund
to avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous.
When effecting reverse repurchase agreements, assets of the Fund in a
dollar amount sufficient to make payment of the obligations to be purchased are
segregated on the Fund's records at the trade date and maintained until the
transaction is settled.
When-Issued Securities
The Fund may purchase "when-issued" equity securities, which are traded on
a price basis prior to actual issuance. Currently, the Fund does not expect to
invest more than 5% of its net assets in when-issued securities. Such purchases
will be made only to achieve the Fund's investment objective and not for
leverage. The when-issued trading period generally lasts from a few days to up
to a month or more; during
9
<PAGE>
this period dividends on equity securities are not payable. No income accrues
to the Fund prior to the time it takes delivery. A frequent form of when-issued
trading occurs when corporate securities to be created by a merger of companies
are traded prior to the actual consummation of the merger. Such transactions
may involve a risk of loss if the value of the securities fall below the price
committed to prior to the actual issuance. The Trust's custodian will establish
a segregated account for the Fund when it purchases securities on a when-issued
basis consisting of cash or liquid securities equal to the amount of the
when-issued commitments.
Rule 144A Securities
The Fund may buy or sell restricted securities in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities"). Securities may
be resold pursuant to Rule 144A under certain circumstances only to qualified
institutional buyers as defined in the rule, and the markets and trading
practices for such securities are relatively new and still developing; depending
on the development of such markets, Rule 144A Securities may be deemed to be
liquid as determined by or in accordance with methods adopted by the Trustees.
Under such methods the following factors are considered, among others: the
frequency of trades and quotes for the security, the number of dealers and
potential purchasers in the market, market making activity, and the nature of
the security and marketplace trades. Investments in Rule 144A Securities could
have the effect of increasing the level of the Fund's illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing such securities. Also, the Fund may be adversely impacted by the
possible illiquidity and subjective valuation of such securities in the absence
of a market for them.
Indexed Securities
The Fund may purchase securities the value of which is indexed to interest
rates, foreign currencies and various indices and financial indicators. These
securities are generally short- to intermediate-term debt securities. The
interest rates or values at maturity fluctuate with the index to which they are
connected and may be more volatile than such index.
Swap Arrangements
The Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates or indices,
including purchase of caps, floors and collars as described below. In an
interest rate swap the Fund could agree for a specified period to pay a bank or
investment banker the floating rate of interest on a so-called notional
principal amount (i.e., an assumed figure selected by the parties for this
purpose) in exchange for agreement by the bank or investment banker to pay the
Fund a fixed rate of interest on the notional principal amount. In a currency
swap, the Fund would agree with the other party to exchange cash flows based on
the relative differences in values of a notional amount of two (or more)
currencies; in an index swap, the Fund would agree to exchange cash flows on a
notional amount based on changes in the values of the selected indices. Purchase
of a cap entitles the purchaser to receive payments from the seller on a
notional amount to the extent that the selected index exceeds an agreed upon
interest rate or amount whereas purchase of a floor entitles the purchaser to
receive such payments to the extent the selected index falls below an
agreed-upon interest rate or amount. A collar combines a cap and a floor.
Most swaps entered into by the Fund will be on a net basis; for example,
in an interest rate swap, amounts generated by application of the fixed rate and
the floating rate to the notional principal amount would first offset one
another, with the Fund either receiving or paying the difference between such
amounts. In order to be in a position to meet any obligations resulting from
swaps, the Fund will set up a
10
<PAGE>
segregated custodial account to hold appropriate liquid assets, including cash;
for swaps entered into on a net basis, assets will be segregated having a daily
net asset value equal to any excess of the Fund's accrued obligations over the
accrued obligations of the other party, while for swaps on other than a net
basis assets will be segregated having a value equal to the total amount of
the Fund's obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a part of the Fund's portfolio.
However, the Fund may enter into such arrangements for income purposes to the
extent permitted by the Commodities Futures Trading Commission for entities
which are not commodity pool operators, such as the Fund. In entering a swap
arrangement, the Fund is dependent upon the creditworthiness and good faith of
the counterparty. The Fund attempts to reduce the risks of nonperformance by the
counterparty by dealing only with established, reputable institutions. The swap
market is still relatively new and emerging; positions in swap arrangements may
become illiquid to the extent that nonstandard arrangements with one
counterparty are not readily transferable to another counterparty or if a market
for the transfer of swap positions does not develop. The use of interest rate
swaps is a highly specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio securities
transactions. If the Investment Manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the Fund would diminish compared with what it would have been if these
investment techniques were not used. Moreover, even if the Investment Manager is
correct in its forecasts, there is a risk that the swap position may correlate
imperfectly with the price of the asset or liability being hedged.
Industry Classifications
In determining how much of the portfolio is invested in a given industry,
the following industry classifications, grouped by sectors, are currently used:
BASIC INDUSTRIES CONSUMER STAPLE SCIENCE & TECHNOLOGY
---------------- --------------- --------------------
Chemical Business Service Aerospace
Diversified Container Computer Software & Service
Electrical Equipment Drug Electronic Components
Forest Products Food & Beverage Electronic Equipment
Machinery Hospital Supply Office Equipment
Metal & Mining Personal Care
Railroad Printing & Publishing
Truckers Tobacco
CONSUMER CYCLICAL ENERGY UTILITY
----------------- ------ -------
Airline Oil Electric
Automotive Oil Service Natural Gas
Building Telephone
Hotel & Restaurant FINANCE Miscellaneous
Photography -------
Recreation Bank
Retail Trade Financial Service
Textile & Apparel Insurance
11
<PAGE>
Other Investment Limitations
Pursuant to the policies of certain state securities authorities, the Fund
will not invest in real estate limited partnerships, oil, gas or mineral
development limited partnerships, or in oil, gas or mineral leases for so long
as Fund shares are required to be registered for sale in the relevant state.
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS
As indicated in the Fund's Prospectus, the Fund may invest in long-term
and short-term debt securities. The Fund may invest in cash and short-term
securities for temporary defensive purposes when, in the opinion of the
Investment Manager, such a position is more likely to provide protection against
unfavorable market conditions than adherence to other investment policies.
Certain debt securities and money market instruments in which the Fund may
invest are described below.
U.S. Government and Related Securities
U.S. Government securities are securities which are issued or guaranteed
as to principal or interest by the U.S. Government, a U.S. Government agency or
instrumentality, or certain mixed-ownership Government corporations as described
herein. The U.S. Government securities in which the Fund invests include, among
others:
direct obligations of the U.S. Treasury, i.e., U.S. Treasury
bills, notes, certificates and bonds;
obligations of U.S. Government agencies or instrumentalities
such as the Federal Home Loan Banks, the Farmers Home
Administration, the Federal Farm Credit Banks, the Federal National
Mortgage Association, the Government National Mortgage Association
and the Federal Home Loan Mortgage Corporation; and
obligations of mixed-ownership Government corporations such
as Resolution Funding Corporation.
U.S. Government securities which the Fund may buy are backed in a variety
of ways by the U.S. Government, its agencies or instrumentalities. Some of these
obligations, such as Government National Mortgage Association mortgage-backed
securities, are backed by the full faith and credit of the U.S. Treasury. Other
obligations, such as those of the Federal National Mortgage Association, are
backed by the discretionary authority of the U.S. Government to purchase certain
obligations of agencies or instrumentalities, although the U.S. Government has
no legal obligation to do so. Obligations such as those of the Federal Home Loan
Banks, the Federal Farm Credit Banks, the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation are backed by the credit of the
agency or instrumentality issuing the obligations. Certain obligations of
Resolution Funding Corporation, a mixed-ownership Government corporation, are
backed with respect to interest payments by the U.S. Treasury, and with respect
to principal payments by U.S. Treasury obligations held in a segregated account
with a Federal Reserve Bank. Except for certain mortgage-related securities, the
Fund will only invest in obligations issued by mixed-ownership Government
corporations where such securities are guaranteed as to payment of principal or
interest by the U.S. Government or a U.S. Government agency or instrumentality,
and any unguaranteed principal or interest is otherwise supported by U.S.
Government obligations held in a segregated account.
12
<PAGE>
U.S. Government securities may be acquired by the Fund in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book entry
records of the Federal Reserve Banks.
In addition, the Fund may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury Securities" ("CATS"), and may
not be deemed U.S. Government securities.
The Fund may also invest from time to time in collective investment
vehicles, the assets of which consist principally of U.S. Government securities
or other assets substantially collateralized or supported by such securities,
such as Government trust certificates.
Bank Money Investments
Bank money investments include but are not limited to certificates of
deposit, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term (i.e., less than one year), interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (to finance the import, export, transfer or
storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank, including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nonnegotiable deposits for a fixed period of time at
a stated interest rate. The Fund will not invest in any such bank money
investment unless the investment is issued by a U.S. bank that is a member of
the Federal Deposit Insurance Corporation ("FDIC"), including any foreign branch
thereof, a U.S. branch or agency of a foreign bank, a foreign branch of a
foreign bank, or a savings bank or savings and loan association that is a member
of the FDIC and which at the date of investment has capital, surplus and
undivided profits (as of the date of its most recently published financial
statements) in excess of $50 million. The Fund will not invest in time deposits
maturing in more than seven days and will not invest more than 10% of its total
assets in time deposits maturing in two to seven days.
U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and regulated
either federally or under state law. U.S. federal branches or agencies of
foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however,
not all such branches elect FDIC insurance. Unlike U.S. branches of foreign
banks, U.S. agencies of foreign banks may not accept deposits and thus are not
eligible for FDIC insurance. Both branches and agencies can maintain credit
balances, which are funds received by the office incidental to or arising out
of the exercise of their banking powers and can exercise other commercial
functions, such as lending activities.
13
<PAGE>
Short-Term Corporate Debt Instruments
Short-term corporate debt instruments include commercial paper to finance
short-term credit needs (i.e., short-term, unsecured promissory notes) issued by
corporations including but not limited to (a) domestic or foreign bank holding
companies or (b) their subsidiaries or affiliates where the debt instrument is
guaranteed by the bank holding company or an affiliated bank or where the bank
holding company or the affiliated bank is unconditionally liable for the debt
instrument. Commercial paper is usually sold on a discounted basis and has a
maturity at the time of issuance not exceeding nine months.
Commercial Paper Ratings
Commercial paper investments at the time of purchase will be rated A by
Standard & Poor's Corporation ("S&P") or Prime by Moody's Investor's Service,
Inc. ("Moody's"), or, if not rated, issued by companies having an outstanding
long-term unsecured debt issue rated at least A by S&P or by Moody's. The money
market investments in corporate bonds and debentures (which must have maturities
at the date of settlement of one year or less) must be rated at the time of
purchase at least A by S&P or by Moody's.
Commercial paper rated A (highest quality) by S&P is issued by entities
which have liquidity ratios which are adequate to meet cash requirements.
Long-term senior debt is rated A or better, although in some cases BBB credits
may be allowed. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. The relative strength or weakness of the
above factors determines whether the issuer's commercial paper is rated A-1, A-2
or A-3. (Those A-1 issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign: A-1+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
Prime-1, Prime-2 or Prime-3.
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<PAGE>
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, their addresses, and their
principal occupations and positions with certain affiliates of the Investment
Manager are set forth below.
*+John H. Kallis, One Financial Center, Boston, MA 02111, serves as Vice
President of the Trust. His principal occupation is Senior Vice President of
State Street Research & Management Company. He is 54. During the past five years
he has also served as portfolio manager for State Street Research & Management
Company.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791, serves
as Trustee of the Trust. He is engaged principally in private investments and
civic affairs, and is an author of business history. He is 68. Previously, he
was with Morgan Guaranty Trust Company of New York.
+Robert A. Lawrence, Saltonstall & Co., 50 Congress Street, Boston, MA
02109, serves as Trustee of the Trust. He is 69. His principal occupation during
the past five years has been Partner, Saltonstall & Co., a private investment
firm.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. His principal occupation is Executive Vice President,
Treasurer and Director of State Street Research & Management Company. He is 44.
During the past five years he has also served as Executive Vice President and
Chief Financial Officer of New England Investment Companies and as Senior Vice
President and Vice President of New England Mutual Life Insurance Company. Mr.
Maus's other principal business affiliations include Executive Vice President,
Treasurer, Chief Financial Officer and Director of State Street Research
Investment Services, Inc.
*+Francis J. McNamara, III, has served as Secretary and General Counsel of
the Trust since May 1995. He is 40. His principal occupation is Senior Vice
President, Secretary and General Counsel of the Investment Manager. During the
past five years he has also served as Senior Vice President, General Counsel and
Assistant Secretary of The Boston Company, Inc., Boston Safe Deposit and Trust
Company and The Boston Company Advisors, Inc. Mr. McNamara's other principal
business affiliations include Senior Vice President, Clerk and General Counsel
of State Street Research Investment Services, Inc.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Trust. He is 63. He is retired, having served during the past
five years, until October 1992, as Executive Vice President, Chief Operating
Officer and Director of Hewlett-Packard Company.
*Kim M. Peters, One Financial Center, Boston, MA 02111, serves as Vice
President of the Trust. His principal occupation is Vice President of State
Street Research & Management Company. He is 42. During the past five years he
has also served as Vice President of State Street Research Investment Services,
Inc.
+Thomas L. Phillips, 141 Spring Street, Lexington, MA 02173, serves as
Trustee of the Trust. He is 71. He is retired and was formerly Chairman of the
Board and Chief Executive Officer of Raytheon Company, of which he remains a
Director.
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118, serves as
Trustee of the Trust. He is 57. His principal occupations during the past five
years have been President of The Glen Ellen Company, a private investment
company, and Vice President of Founders Investments Ltd.
-------------------
* or + See footnotes on page 16.
15
<PAGE>
+Michael S. Scott Morton, Massachusetts Institute of Technology, 77
Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of the Trust.
He is 58. His principal occupation during the past five years has been Jay W.
Forrester Professor of Management at Sloan School of Management, Massachusetts
Institute of Technology.
*+Thomas A. Shively, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. His principal occupation is Executive Vice
President and Director of State Street Research & Management Company. He is 41.
During the past five years he has also served as Senior Vice President of State
Street Research & Management Company. Mr. Shively's other business affiliations
include Director of State Street Research Investment Services, Inc.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Trust. He is 52. His principal occupation is Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research & Management
Company. During the past five years he has also served as President and Chief
Executive Officer of New England Investment Companies and as Chief Investment
Officer and Director of New England Mutual Life Insurance Company. Mr. Verni's
other principal business affiliations include Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research Investment
Services, Inc.
+Jeptha H. Wade, 251 Old Billerica Road, Bedford, MA 01730, serves as
Trustee of the Trust. He is 70. He is retired and was formerly Of Counsel for
the law firm Choate, Hall & Stewart. He was a partner of that firm from 1960
to 1987.
As of July 31, 1995, the Trustees and officers of the Trust as a group
owned none of the Fund's outstanding shares.
As of July 31, 1995, Metropolitan Life Insurance Company ("Metropolitan"),
a New York corporation having its principal offices at One Madison Avenue, New
York, NY 10010, was the record and/or beneficial owner, directly or indirectly
through its subsidiaries or affiliates, of approximately 99.0% and 70.1% of the
outstanding Class A and Class C shares of the Fund, respectively. As of the same
date, United States Trust Company, 770 Broadway, New York, NY 10003, was the
record owner of approximately 29.9% of the Fund's outstanding Class C shares.
United States Trust Company holds such shares as a trustee under certain
employee benefit plans serviced by Metropolitan.
Ownership of 25% or more of a voting security is deemed "control" as
defined in the 1940 Act. So long as 25% of a class of shares are so owned, such
owner will be presumed to be in control of such class of shares for purposes of
voting on certain matters, such as any Distribution Plan for a given class.
--------------------
* These Trustees and/or officers are or may be deemed to be "interested
persons" of the Trust under the 1940 Act because of their affiliations with
the Fund's investment adviser.
+ Serves as a Trustee and/or officer of one or more of the following investment
companies, each of which has an advisory relationship with the Investment
Manager or its affiliates: MetLife - State Street Equity Trust, MetLife -
State Street Financial Trust, State Street Research Income Trust, State
Street Research Money Market Trust, State Street Research Tax-Exempt Trust,
State Street Research Capital Trust, State Street Research Exchange Trust,
State Street Research Growth Trust, State Street Research Master Investment
Trust, State Street Research Securities Trust, State Street Research
Portfolios, Inc. and Metropolitan Series Fund, Inc.
16
<PAGE>
During the last fiscal year of the Fund, the Trustees were compensated as
follows:
-------------------------------------------------------------------------------
Aggregate Total Compensation
Name of Compensation From Trust and Complex
Trustee From Trust Paid to Trustees (a)
-------------------------------------------------------------------------------
Edward M. Lamont $ 1,900 $ 58,011
Robert A. Lawrence $ 1,900 $ 82,525
Dean. O. Morton $ 2,200 $ 93,275
Thomas L. Phillips $ 2,100 $ 65,425
Toby Rosenblatt $ 1,900 $ 58,011
Michael S. Scott Morton $ 2,400 $ 90,025
Ralph F. Verni $ 0 $ 0
Jeptha H. Wade $ 1,800 $ 67,025
---------------------
(a) Includes compensation from Metropolitan Series Fund, Inc., for which the
Investment Manager serves as sub-investment adviser, State Street Research
Portfolios, Inc., for which State Street Research Investment Services,
Inc. serves as distributor, and all investment companies for which the
Investment Manager serves as primary investment adviser, comprising a
total of 30 series. The Trust does not provide any pension or retirement
benefits for the Trustees.
17
<PAGE>
INVESTMENT ADVISORY SERVICES
State Street Research & Management Company, the Investment Manager, a
Delaware corporation, with offices at One Financial Center, Boston,
Massachusetts 02111-2690, acts as investment adviser to the Fund. The Advisory
Agreement provides that the Investment Manager shall furnish the Fund with an
investment program, suitable office space and facilities and such investment
advisory, research and administrative services as may be required from time to
time. The Investment Manager compensates all executive and clerical personnel
and Trustees of the Trust if such persons are employees of the Investment
Manager or its affiliates. The Investment Manager is an indirect wholly-owned
subsidiary of Metropolitan.
The advisory fee payable monthly by the Fund to the Investment Manager is
computed as a percentage of the average of the value of the net assets of the
Fund, as determined at the close of the New York Stock Exchange (the "NYSE") on
each day the NYSE is open for trading, at the annual rate of 0.55% of the net
assets of the Fund. The Fund has been advised that 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. For the period May 16, 1994
(commencement of operations) through April 30, 1995 the Fund's investment
advisory fee prior to the assumption of fees or expenses was $72,084. For the
same period, the voluntary reduction of fees or assumption of expenses amounted
to $151,957.
Further, to the extent required under applicable state regulatory
requirements, the Investment Manager will reduce its management fee up to the
amount of any expenses (excluding permissible items, such as brokerage
commissions, Rule 12b-1 payments, interest, taxes and litigation expenses) paid
or incurred by the Fund in any fiscal year which exceed specified percentages
of the average daily net assets of the Fund for such fiscal year. The most
restrictive of such percentage limitations is currently 2.5% of the first $30
million of average net assets, 2.0% of the next $70 million of average net
assets and 1.5% of the remaining average net assets. These commitments may be
amended or rescinded in response to changes in the requirements of the various
states by the Trustees without shareholder approval.
The Advisory Agreement provides that it shall continue in effect with
respect to the Fund for a period of two years after its initial effectiveness
and will continue from year to year thereafter as long as it is approved at
least annually both (i) by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) or by the Trustees of the
Trust, and (ii) in either event by a vote of a majority of the Trustees who are
not parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated on 60 days written notice by
either party and will terminate automatically in the event of its assignment, as
defined under the 1940 Act and regulations thereunder. Such regulations provide
that a transaction which does not result in a change of actual control or
management of an adviser is not deemed an assignment.
Under a Funds Administration Agreement between the Investment Manager and
the Distributor, the Distributor provides assistance to the Investment Manager
in performing certain fund administrative services for the Trust, such as
assistance in determining the daily net asset value of shares of the Fund and in
preparing various reports required by regulations.
Under a Shareholders' Administrative Services Agreement between the Trust
and the Distributor, the Distributor provides shareholders' administrative
services, such as responding to inquiries and instructions from investors
respecting the purchase and redemption of shares of the Fund, and is entitled to
reimbursements of its costs for providing such services. Under certain
arrangements for Metropolitan to provide subadministration services,
Metropolitan may receive a fee for the maintenance of certain share ownership
records for participants in sponsored arrangements, employee benefit plans, and
similar programs or plans, through or under which the Fund's shares may be
purchased.
18
<PAGE>
Under the Code of Ethics of the Investment Manager, its employees in Boston
where investment management operations are conducted, are only permitted to
engage in personal securities transactions in accordance with certain conditions
relating to an employee's position, the identity of the security, the timing of
the transaction, and similar factors. Such employees must report their personal
securities transactions quarterly and supply broker confirmations to the
Investment Manager.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are distributed by the Distributor. The Fund offers
four classes of shares which may be purchased at the next determined net asset
value per share plus, in the case of all classes except Class C shares, a sales
charge which, at the election of the investor, may be imposed (i) at the time of
purchase (the Class A shares) or (ii) on a deferred basis (the Class B and Class
D shares). General information on how to buy shares of the Fund, as well as
sales charges involved, are set forth under "Purchase of Shares" in the
Prospectus. The following supplements that information.
Public Offering Price
The public offering price for each class of shares of the Fund is based on
their net asset value determined as of the close of the NYSE on the day the
purchase order is received by State Street Research Shareholder Services
provided that the order is received prior to the close of the NYSE on that day;
otherwise the net asset value used is that determined as of the close of the
NYSE on the next day it is open for unrestricted trading. When a purchase order
is placed through a dealer, that dealer is responsible for transmitting the
order promptly to State Street Research Shareholder Services in order to permit
the investor to obtain the current price. Any loss suffered by an investor which
results from a dealer's failure to transmit an order promptly is a matter for
settlement between the investor and the dealer.
Reduced Sales Charges
For purposes of determining whether a purchase of Class A shares qualifies
for reduced sales charges, the term "person" includes: (i) an individual, or an
individual combining with his or her spouse and their children and purchasing
for his, her or their own account; (ii) a "company" as defined in Section
2(a)(8) of the 1940 Act; (iii) a trustee or other fiduciary purchasing for a
single trust estate or single fiduciary account (including a pension, profit
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code); (iv) a tax-exempt organization
under Section 501(c)(3) or (13) of the Internal Revenue Code; and (v) an
employee benefit plan of a single employer or of affiliated employers.
Investors may purchase Class A shares of the Fund at reduced sales charges
by executing a Letter of Intent to purchase no less than an aggregate of
$100,000 of the Fund or any combination of Class A shares of "Eligible Funds" as
designated by the Distributor within a 13-month period. The sales charge
applicable to each purchase made pursuant to a Letter of Intent will be that
which would apply if the total dollar amount set forth in the Letter of Intent
were being bought in a single transaction. Purchases made within a 90-day period
prior to the execution of a Letter of Intent may be included therein; in such
case the date of the earliest of such purchases marks the commencement of the
13-month period.
An investor may include toward completion of a Letter of Intent the value
(at the current public offering price) of all of his or her Class A shares of
the Funds and of any of the other Class A shares of Eligible Funds held of
record as of the date of his or her Letter of Intent, plus the value (at the
current offering price) as of such date of all of such shares held by any
"person" described herein as eligible to join
19
<PAGE>
with the investor in a single purchase. Class B, Class C and Class D shares
may also be included in the combination under certain circumstances.
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 5% of the specified amount will, however, be taken
from the initial purchase (or, if necessary, subsequent purchases) and held in
escrow in the investor's account as collateral against the higher sales charge
which would apply if the total purchase is not completed within the allotted
time. The escrowed shares will be released when the Letter of Intent is
completed or, if it is not completed, when the balance of the higher sales
charge is, upon notice, remitted by the investor. All dividends and capital
gains distributions with respect to the escrowed shares will be credited to the
investor's account.
Investors may purchase Class A shares of the Fund or a combination of
Eligible Funds at reduced sales charges pursuant to a Right of Accumulation. The
applicable sales charge under the right is determined on the amount arrived at
by combining the dollar amount of the purchase with the value (at the current
public offering price) of all Class A shares of the other Eligible Funds owned
as of the purchase date by the investor plus the value (at the current public
offering price) of all such shares owned as of such date by any "person"
described herein as eligible to join with the investor in a single purchase.
Class B, Class C and Class D shares may also be included in the combination
under certain circumstances. Investors must submit to the Distributor sufficient
information to show that they qualify for this Right of Accumulation.
Class C Shares - Class C shares are currently available to certain benefit
plans such as qualified retirement plans, other than individual retirement
accounts and self-employed retirement plans, which meet criteria relating to
level of assets, number of participants, service agreements, or similar factors;
banks and insurance companies; endowment funds of nonprofit organizations with
substantial minimum assets; and other similar institutional investors.
Reorganizations
In the event of mergers or reorganizations with other public or private
collective investment entities, including investment companies as defined in the
1940 Act, as amended, the Fund may issue its shares at net asset value (or more)
to such entities or to their security holders.
Redemptions
The Fund reserves the right to pay redemptions in kind with portfolio
securities in lieu of cash. In accordance with its election pursuant to Rule
18f-1 under the 1940 Act, the Fund may limit the amount of redemption proceeds
paid in cash. Although it has no present intention to do so, the Fund may, under
unusual circumstances, limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000 or (ii)
1% of the net asset value of the Fund at the beginning of such period. In
connection with any redemptions paid in kind with portfolio securities,
brokerage and other costs may be incurred by the redeeming shareholder in the
sale of the securities received.
NET ASSET VALUE
The net asset values of the shares of the Fund is determined once daily as
of the close of the NYSE, ordinarily 4 P.M. New York City time, Monday through
Friday, on each day during which the NYSE is open for unrestricted trading. The
NYSE is currently closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
20
<PAGE>
The net asset value per share of the Fund is computed by dividing the sum
of the value of the securities held by the Fund plus any cash or other assets
minus all liabilities by the total number of outstanding shares of the Fund at
such time. Any expenses, except for extraordinary or nonrecurring expenses,
borne by the Fund, including the investment management fee payable to the
Investment Manager, are accrued daily.
In determining the values of portfolio assets, the Trustees utilize one or
more pricing services to value certain securities for which market quotations
are not readily available on a daily basis. Most debt securities are valued on
the basis of data provided by such pricing services. Since the Fund is comprised
substantially of debt securities under normal circumstances, most of the Fund's
assets are therefore valued on the basis of such data from the pricing services.
The pricing services may provide prices determined as of times prior to the
close of the NYSE.
In general, securities are valued as follows. Securities which are listed
or traded on the New York or American Stock Exchange are valued at the price of
the last quoted sale on the respective exchange for that day. Securities which
are listed or traded on a national securities exchange or exchanges, but not on
the New York or American Stock Exchange, are valued at the price of the last
quoted sale on the exchange for that day prior to the close of the NYSE.
Securities not listed on any national securities exchange which are traded "over
the counter" and for which quotations are available on the National Association
of Securities Dealers' NASDAQ System, or other system, are valued at the closing
price supplied through such system for that day at the close of the NYSE. Other
securities are, in general, valued at the mean of the bid and asked quotations
last quoted prior to the close of the NYSE if there are market quotations
readily available, or in the absence of such market quotations, then at the fair
value thereof as determined by or under authority of the Trustees of the Trust
utilizing such pricing services as may be deemed appropriate as described above.
Securities deemed restricted as to resale are valued at the fair value thereof
as determined by or in accordance with methods adopted by the Trustees of the
Trust.
Short-term debt instruments issued with a maturity of one year or less
which have a remaining maturity of 60 days or less are valued using the
amortized cost method, provided that during any period in which more than 25% of
the Fund's total assets is invested in short-term debt securities the current
market value of such securities will be used in calculating net asset value per
share in lieu of the amortized cost method. The amortized cost method is used
when the value obtained is fair value. Under the amortized cost method of
valuation, the security is initially valued at cost on the date of purchase (or
in the case of short-term debt instruments purchased with more than 60 days
remaining to maturity, the market value on the 61st day prior to maturity), and
thereafter a constant amortization to maturity of any discount or premium is
assumed regardless of the impact of fluctuating interest rates on the market
value of the security.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Fund's portfolio turnover rate is determined by dividing the lesser of
securities purchases or sales for a year by the monthly average value of
securities held by the Fund (excluding, for purposes of this determination,
securities the maturities of which as of the time of their acquisition were one
year or less). The Fund reserves full freedom with respect to portfolio
turnover, as described in the Prospectus. For the period May 16, 1994
(commencement of operations) through April 30, 1995 the portfolio turnover rate
was 157.75%. The turnover rate was higher than expected because of unusual
changes in interest rates during the period.
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<PAGE>
Brokerage Allocation
The Fund and the Investment Manager seek the best overall execution of
purchase or sale orders and the most favorable net price in securities
transactions consistent with their judgment as to the business qualifications of
the various broker or dealer firms with which the Fund may do business.
Decisions with respect to the market where the transaction is to be completed,
and to the allocation of orders among brokers or dealers, are made in accordance
with this policy. In selecting brokers or dealers to effect portfolio
transactions, consideration is given to the performance, integrity and financial
responsibility of the various firms as well as to their demonstrated execution
experience and capability generally and in regard to particular markets or
securities and, in agency transactions, to the competitiveness of the commission
rates (or in principal transactions of the net prices) they charge. The
Investment Manager keeps current as to the range of rates or prices charged by
various firms and against this background evaluates the reasonableness of a
commission or price charged with respect to a particular transaction by
considering such factors as difficulty of execution or security positioning by
the executing firm.
When it appears that a number of firms can satisfy the required standards
in respect of a particular transaction, consideration may also be given to
services other than execution services which such firms have provided in the
past or may provide in the future. Among such other services are the supplying
of supplemental investment research, general economic and political information,
analytical and statistical data, relevant market information and daily market
quotations for computation of net asset value. In this connection it should be
noted that a substantial portion of brokerage commissions paid, or principal
transactions entered, by the Fund may be with brokers and investment banking
firms which, in the normal course of business, publish statistical, research and
other material which is received by the Investment Manager and which may or may
not prove useful to the Investment Manager, the Fund or other clients of the
Investment Manager.
Neither the Fund nor the Investment Manager has any definite agreements
with any firm as to the amount of business which that firm may expect to receive
for services supplied or otherwise. There may be, however, understandings with
certain firms that in order for such firms to be able to continuously supply
certain services, they need to receive allocation of a specified amount of
business. These understandings are honored to the extent possible in accordance
with the policy set forth above. Neither the Fund nor the Investment Manager
intends to pay a firm in excess of that which another would charge for handling
the same transaction in recognition of services (other than execution services)
provided. However, the Fund and the Investment Manager are aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, rely on the provisions of Section 28(e) of the
Securities Exchange Act of 1934, to the extent applicable. For the period May
16, 1994 (commencement of operations) through April 30, 1995 the Fund did not
pay brokerage commissions.
Occasions may arise when the Investment Manager determines that an
investment in a particular security, or the disposition of a particular
security, is simultaneously a proper investment decision for the Fund as well as
for the portfolio of one or more of its other clients. In this event, a purchase
or sale, as the case may be, of any such security on any given day will be
normally averaged as to price and allocated as to amount among the several
clients in a manner deemed equitable to each client.
On occasions when the Investment Manager deems the purchase or sale of a
security to be in the best interests of the Fund, as well as other clients of
the Investment Manager, the Investment Manager, to the extent permitted by
applicable laws and regulations, may aggregate such securities to be sold or
purchased for the Fund with those to be sold or purchased for other customers in
order to obtain best execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Investment Manager in
the
22
<PAGE>
manner it considers to be most equitable and consistent with its fiduciary
obligations to all such customers, including the Fund. In some instances, this
procedure may affect the price and size of the positions obtainable for the
Fund.
CERTAIN TAX MATTERS
Federal Income Taxation of the Fund -- In General
The Fund intends to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), although it cannot give complete assurance
that it will do so. Accordingly, the Fund must, among other things, (a) derive
at least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive less than 30% of its gross
income in each taxable year from the sale or other disposition of any of the
following held for less than three months (the "30% test"): (i) stock or
securities, (ii) options, futures, or forward contracts (other than options,
futures or forward contracts on foreign currencies), or (iii) foreign currencies
(or options, futures, or forward contracts on foreign currencies) but only if
such currencies (or options, futures, or forward contracts) are not directly
related to the Fund's principal business of investing in stocks or securities
(or options and futures with respect to stocks or securities); (c) satisfy
certain diversification requirements; and (d) in order to be entitled to utilize
the dividends paid deduction, distribute annually at least 90% of its investment
company taxable income (determined without regard to the deduction for dividends
paid).
The 30% test will limit the extent to which the Fund may sell securities
held for less than three months, write options which expire in less than three
months, and effect closing transactions with respect to call or put options that
have been written or purchased within the preceding three months. (If the Fund
purchases a put option for the purpose of hedging an underlying portfolio
security, the acquisition of the option is treated as a short sale of the
underlying security unless, for purposes only of the 30% test, the option and
the security are acquired on the same date.) Finally, as discussed below, this
requirement may also limit investments by the Fund in options on stock indices,
listed options on nonconvertible debt securities, futures contracts, options on
interest rate futures contracts and certain foreign currency contracts.
If the Fund should fail to qualify as a regulated investment company in
any year, it would lose the beneficial tax treatment accorded regulated
investment companies under Subchapter M of the Code and all of its taxable
income would be subject to tax at regular corporate rates without any deduction
for distributions to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of such Fund's current or
accumulated earnings and profits. Also, the shareholders, if they received a
distribution in excess of current or accumulated earnings and profits, would
receive a return of capital that would reduce the basis of their shares of the
Fund.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Fund must
distribute an amount equal to at least 98% of the sum of its ordinary income
(not taking into account any capital gains or losses) for the calendar year, and
its capital gain net income for the 12-month period ending on October 31, in
addition to any undistributed portion of the respective balances from the prior
year. The Fund intends to make sufficient distributions to avoid this 4% excise
tax.
23
<PAGE>
Federal Income Taxation of the Fund's Investments
Original Issue Discount. For federal income tax purposes, debt securities
purchased by the Fund may be treated as having original issue discount. Original
issue discount represents interest for federal income tax purposes and can
generally be defined as the excess of the stated redemption price at maturity of
a debt obligation over the issue price. Original issue discount is treated for
federal income tax purposes as income earned by the Fund, whether or not any
income is actually received, and therefore is subject to the distribution
requirements of the Code. Generally, the amount of original issue discount is
determined on the basis of a constant yield to maturity which takes into account
the compounding of accrued interest. Under section 1286 of the Code, an
investment in a stripped bond or stripped coupon may result in original issue
discount.
Debt securities may be purchased by the Fund at a discount that exceeds
the original issue discount plus previously accrued original issue discount
remaining on the securities, if any, at the time the Fund purchases the
securities. This additional discount represents market discount for income tax
purposes. In the case of any debt security issued after July 18, 1984, having a
fixed maturity date of more than one year from the date of issue and having
market discount, the gain realized on disposition will be treated as interest to
the extent it does not exceed the accrued market discount on the security
(unless the Fund elects to include such accrued market discount in income in the
tax year to which it is attributable). Generally, market discount is accrued on
a daily basis. The Fund may be required to capitalize, rather than deduct
currently, part or all of any direct interest expense incurred to purchase or
carry any debt security having market discount, unless the Fund makes the
election to include market discount currently. Because the Fund must include
original issue discount in income, it will be more difficult for the Fund to
make the distributions required for the Fund to maintain its status as a
regulated investment company under Subchapter M of the Code or to avoid the 4%
excise tax described above.
Options and Futures Transactions. Certain of the Fund's investments may be
subject to provisions of the Code that (i) require inclusion of unrealized gains
or losses in the Fund's income for purposes of the 90% test, the 30% test, the
excise tax and the distribution requirements applicable to regulated investment
companies; (ii) defer recognition of realized losses; and (iii) characterize
both realized and unrealized gain or loss as short-term or long-term gain or
loss. Such provisions generally apply to, among other investments, options on
debt securities, indices on securities and futures contracts.
Federal Income Taxation of the Shareholders
Any dividend declared in October, November or December and made payable to
shareholders of record in any such month is treated as received by such
shareholder on December 31, provided that the Fund pays the dividend during
January of the following calendar year.
Distributions by the Fund can result in a reduction in the fair market
value of such Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless may be taxable
to the shareholder as ordinary income or long-term capital gain, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a taxable distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a taxable distribution will then
receive a return of investment upon distribution which will nevertheless be
taxable to them.
24
<PAGE>
DISTRIBUTION OF SHARES OF THE FUND
State Street Research Securities Trust is currently comprised of one
series, State Street Research Intermediate Bond Fund. The Trustees have
authorized shares of the Fund to be issued in four classes: Class A, Class B,
Class C and Class D shares. The Trustees of the Trust have authority to issue an
unlimited number of shares of beneficial interest of separate series, $.001 par
value per share. A "series" is a separate pool of assets of the Trust which is
separately managed and has a different investment objective and different
investment policies from those of another series. The Trustees have authority,
without the necessity of a shareholder vote, to create any number of new series
or classes or to commence the public offering of shares of any previously
established series or class.
The Trust has entered into a Distribution Agreement with State Street
Research Investment Services, Inc., as Distributor, whereby the Distributor acts
as agent to sell and distribute shares of the Fund. Shares of the Fund are sold
through dealers who have entered into sales agreements with the Distributor. The
Distributor distributes shares of the Fund on a continuous basis at an offering
price which is based on the net asset value per share of the Fund plus (subject
to certain exceptions) a sales charge which, at the election of the investor,
may be imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares). The Distributor may reallow all
or portions of such sales charges as concessions to dealers. For the period May
16, 1994 (commencement of operations) through April 30, 1995 total sales charges
on Class A shares paid to the Distributor amounted to $ 0. For the same period,
the Distributor retained $ 0 after reallowance of concessions to dealers.
The differences in the price at which the Fund's Class A shares are
offered due to scheduled variations in sales charges, as described in the Fund's
Prospectus, result from cost savings inherent in economies of scale. Management
believes that the cost of sales efforts of the Distributor and broker-dealers
tends to decrease as the size of purchases increases, or does not involve any
incremental sales expenses as in the case of, for example, exchanges,
reinvestments or dividend investments at net asset value. Similarly, no
significant sales effort is necessary for sales of shares at net asset value to
certain Directors, Trustees, officers, employees, their relatives and other
persons directly or indirectly related to the Fund or associated entities. Where
shares of the Fund are offered at a reduced sales charge or without a sales
charge pursuant to sponsored arrangements, the amount of the sales charge
reduction will similarly reflect the anticipated reduction in sales expenses
associated with such sponsored arrangements. The reductions in sales expenses,
and therefore the reduction in sales charge, will vary depending on factors such
as the size and stability of the organization, the term of the organization's
existence and certain characteristics of its members. The Fund reserves the
right to make variations in, or eliminate, sales charges at any time or to
revise the terms of or to suspend or discontinue sales pursuant to sponsored
arrangements at any time.
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
making such sale a commission on the shares sold. Such commission also is
payable to authorized securities dealers upon sales of Class A shares made
pursuant to a Letter of Intent to purchase shares having a net asset value of
$1,000,000 or more. Shares sold with such commissions payable are subject to a
one-year contingent deferred sales charge of 1.00% on any portion of such shares
redeemed within one year following their sale. After a particular purchase of
Class A shares is made under the Letter of Intent, the commission will be paid
only in respect of that particular purchase of shares. If the Letter of Intent
is not completed, the commission paid will be deducted from any discounts or
commissions otherwise payable to such dealer in respect of shares actually sold.
If an investor is eligible to purchase shares at net asset value on account of
the Right of Accumulation, the commission will be paid only in respect of the
incremental purchase at net asset value.
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<PAGE>
For the period May 16, 1994 (commencement of operations) through April 30,
1995, the Distributor received no contingent deferred sales charges upon
redemption of Class A, Class B and Class D shares of the Fund.
The Fund has adopted a "Plan of Distribution Pursuant to Rule 12b-1" (the
"Distribution Plan") under which the Fund may engage, directly or indirectly, in
financing any activities primarily intended to result in the sale of Class A,
Class B and Class D shares, including, but not limited to, (1) the payment of
commissions and/or reimbursement to underwriters, securities dealers and others
engaged in the sale of shares, including payments to the Distributor to be used
to pay commissions and/or reimbursement to securities dealers (which securities
dealers may be affiliates of the Distributor) engaged in the distribution and
marketing of shares and furnishing ongoing assistance to investors, (2)
reimbursement of direct out-of-pocket expenditures incurred by the Distributor
in connection with the distribution and marketing of shares and the servicing of
investor accounts including expenses relating to the formulation and
implementation of marketing strategies and promotional activities such as direct
mail promotions and television, radio, newspaper, magazine and other mass media
advertising, the preparation, printing and distribution of Prospectuses of the
Fund and reports for recipients other than existing shareholders of the Fund,
and obtaining such information, analyses and reports with respect to marketing
and promotional activities and investor accounts as the Fund may, from time to
time, deem advisable, and (3) reimbursement of expenses incurred by the
Distributor in connection with the servicing of shareholder accounts including
payments to securities dealers and others in consideration of the provision of
personal services to investors and/or the maintenance of shareholder accounts
and expenses associated with the provision of personal services by the
Distributor directly to investors. In addition, the Distribution Plan is deemed
to authorize the Distributor to make payments out of general profits, revenues
or other sources to underwriters, securities dealers and others in connection
with sales of shares, to the extent, if any, that such payments may be deemed to
be within the scope of Rule 12b-1 under the 1940 Act.
The expenditures to be made pursuant to the Distribution Plan may not
exceed (i) with respect to Class A shares, an annual rate of 0.25% of the
average daily value of net assets represented by such Class A shares, and (ii)
with respect to Class B and Class D shares, an annual rate of 0.75% of the
average daily value of the net assets represented by such Class B or Class D
shares (as the case may be) to finance sales or promotion expenses and an annual
rate of 0.25% of the average daily value of the net assets represented by such
Class B or Class D shares (as the case may be) to make payments for personal
services and/or the maintenance of shareholder accounts. Proceeds from the
service fee will be used by the Distributor to compensate securities dealers and
others selling shares of the Fund for rendering service to shareholders on an
ongoing basis. Such amounts are based on the net asset value of shares of the
Fund held by such dealers as nominee for their customers or which are owned
directly by such customers for so long as such shares are outstanding and the
Distribution Plan remains in effect with respect to the Fund. Any amounts
received by the Distributor and not so allocated may be applied by the
Distributor as reimbursement for expenses incurred in connection with the
servicing of investor accounts. The distribution and servicing expenses of a
particular class will be borne solely by that class.
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<PAGE>
For the period May 16, 1994 (commencement of operations) through April 30,
1995 the Fund paid the Distributor fees under the Distribution Plan and the
Distributor used all of such payments for expenses incurred on behalf of the
Fund as follows:
Class A
Advertising $ 4,164
Printing and mailing of
prospectuses to other
than current shareholders $ 1,198
Compensation to dealers 0
Compensation to sales personnel $ 10,328
Interest 0
Carrying or other
financial charges 0
Other Expenses:
Marketing $ 8,418
-------
$24,108
The Distributor may also use additional resources of its own for further
expenses on behalf of the Fund.
No interested Trustee of the Trust has any direct or indirect financial
interest in the operation of the Distribution Plan or any related agreements
thereunder. The Distributor's interest in the Distribution Plan is described
above.
To the extent that the Glass-Steagall Act may be interpreted as
prohibiting banks and other depository institutions from being paid for
performing services under the Distribution Plan, the Fund will make alternative
arrangements for such services for shareholders who acquired shares through such
institutions.
CALCULATION OF PERFORMANCE DATA
The average annual total return ("standard total return") and yield of the
Class A and Class C shares of the Fund will be calculated as set forth below.
Total return and yield are computed separately for each class of shares of the
Fund.
The Fund's performance is shown below, and where noted, reflects the
voluntary measures by the Fund's affiliates to reduce fees or expenses relating
to the Fund; see "Accrued Expenses" later in this section.
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<PAGE>
Total Return
May 16, 1994
(commencement of operations)
to April 30, 1995
----------------------------
SEC Aggregate
Total Return Total Return
(Annualized)* (Not Annualized)*
------------- -----------------
With Subsidy Without Subsidy With Subsidy Without Subsidy
------------ --------------- ------------ ---------------
Class A 1.25% 0.51% 1.19% 0.49%
Class C 6.58% 5.81% 6.30% 5.56%
* Reflects maximum sales charges, if any.
The numbers shown above in the column entitled "SEC Total Return
(Annualized)" result from the "annualization" of actual return for the
approximately 350-day period involved and should be interpreted carefully since
annualization in this instance presumes that the performance for the 350-days
continues for a full year.
Standard total return is computed separately for each class of shares by
determining the average annual compounded rates of return over the designated
periods that, if applied to the initial amount invested, would produce the
ending redeemable value in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the
end of the designated period assuming a
hypothetical $1,000 payment made at the beginning
of the designated period
The calculation is based on the further assumptions that the maximum
initial or contingent deferred sales charge applicable to the investment is
deducted, and that all dividends and distributions by the Fund are reinvested at
net asset value on the reinvestment dates during the periods. All accrued
expenses are also taken into account as described later herein.
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<PAGE>
Yield
The annualized yield of the Class A shares and Class C shares of the Fund,
based on the month of April, 1995, was as follows:
With Subsidy Without Subsidy
------------ ---------------
Class A 6.17% 5.12%
Class C 6.72% 5.60%
Yield is computed separately for each class of shares by dividing the net
investment income per share earned during a recent month or other specified
30-day period by the maximum offering price per share on the last day of the
period and annualizing the result in accordance with the following formula:
YIELD = 2[(a - b + 1)6 -1]
-----
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of voluntary
expense reductions by the Investment Manager)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period
To calculate interest earned (for the purpose of "a" above) on debt
obligations, the Fund computes the yield to maturity of each obligation held by
the Fund based on the market value of the obligation (including actual accrued
interest) at the close of the last business day of the preceding period, or,
with respect to obligations purchased during the period, the purchase price
(plus actual accrued interest). The yield to maturity is then divided by 360 and
the quotient is multiplied by the market value of the obligation (including
actual accrued interest) to determine the interest income on the obligation for
each day of the period that the obligation is in the portfolio. Dividend income
is recognized daily based on published rates.
With respect to the treatment of discount and premium on mortgage or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("paydowns"), the Fund accounts for gain or
loss attributable to actual monthly paydowns as realized capital gain or loss
during the period. The Fund has elected not to amortize discount or premium on
such securities.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price.
Undeclared earned income is the net investment income which, at the end of the
base period, has not been declared as a dividend, but is reasonably expected to
be declared as a dividend shortly thereafter. The maximum offering price
includes, as applicable, a maximum sales charge of 4.5% .
All accrued expenses are taken into account as described later herein.
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<PAGE>
Yield information is useful in reviewing the Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in the Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often are insured and/or provide an agreed
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that yield is a function of the kind and quality of the instruments in
the Fund's portfolio, portfolio maturity and operating expenses and market
conditions.
Accrued Expenses
Accrued expenses include all recurring expenses that are charged to all
shareholder accounts in proportion to the length of the base period. The
standard total return and yield results take sales charges, if applicable, into
account, although the results do not take into account recurring and
nonrecurring charges for optional services which only certain shareholders elect
and which involve nominal fees, such as the $7.50 fee for wire orders.
Accrued expenses do not include the subsidization, if any, by affiliates
of fees or expenses relating to the Fund, during the subject period. In the
absence of such subsidization, the performance of the Fund may be lower.
Nonstandardized Total Return
A Fund may provide the above described standard total return results for
Class A, Class B, Class C and Class D shares for periods which end no earlier
than the most recent calendar quarter end and which begin twelve months before
and at the time of commencement of such Fund's operations. In addition, the Fund
may provide nonstandardized total return results for differing periods, such as
for the most recent six months, and/or without taking sales charges into
account. Such nonstandardized total return is computed as otherwise described
under "Total Return" except the result may or may not be annualized, and as
noted any applicable sales charge may not be taken into account and therefore
not deducted from the hypothetical initial payment of $1,000 or ending value.
For example, the nonstandardized total return for the six months ended April 30,
1995, without taking sales charges into account, were as follows:
With Subsidy Without Subsidy
------------ ---------------
Class A 5.52% 4.89%
Class C 5.76% 5.09%
Distribution Rates
The Fund may also quote its distribution rate for each class of shares.
The distribution rate is calculated by annualizing the latest per-share
distribution from ordinary income and dividing the result by the maximum
offering price per share as of the end of the period to which the distribution
relates. A distribution can include gross investment income from debt
obligations purchased at a premium and in effect include a portion of the
premium paid. A distribution can also include nonrecurring, gross short-term
capital gains without recognition of any unrealized capital losses. Further, a
distribution can include income from the sale of options by the Fund even though
such option income is not considered investment income under generally accepted
accounting principles.
Because a distribution can include such premiums, capital gains and option
income, the amount of the distribution may be susceptible to control by the
Investment Manager through transactions designed to
30
<PAGE>
increase the amount of such items. Also, because the distribution rate is
calculated in part by dividing the latest distribution by the offering price,
which is based on net asset value plus any applicable sales charge, the
distribution rate will increase as the net asset value declines. A distribution
rate can be greater than the yield rate calculated as described above.
The distribution rate of the Class A shares and Class C shares of the
Fund, based on the month of April, 1995, were as follows:
Class A 3.95%
Class C 4.38%
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trust's custodian. As custodian, State Street Bank
and Trust Company is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities and collecting interest and dividends on the Fund's investments.
State Street Bank and Trust Company is not an affiliate of the Investment
Manager or its affiliates.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as the Trust's independent accountants, providing professional
services including (1) audits of the Fund's annual financial statements, (2)
assistance and consultation in connection with Securities and Exchange
Commission filings and (3) review of the annual income tax returns filed on
behalf of the Fund.
FINANCIAL STATEMENTS
In addition to the reports provided to holders of record on a semiannual
basis, other supplementary financial reports may be made available from time to
time and holders of record may request a copy of a current supplementary report,
if any, by calling State Street Research Shareholder Services.
The following financial statements are for the period May 16, 1994
(commencement of operations) through April 30, 1995:
31
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
INVESTMENT PORTFOLIO
April 30, 1995
Principal Maturity Value
Amount Date (Note 1)
FIXED INCOME SECURITIES 95.6%
U.S. Treasury 49.7%
U.S. Treasury Bond, 8.125% $ 375,000 8/15/2021 $ 402,717
U.S. Treasury Note, 5.875% 1,925,000 5/31/1996 1,914,470
U.S. Treasury Note, 8.50% 1,525,000 5/15/1997 1,579,809
U.S. Treasury Note, 5.125% 150,000 6/30/1998 143,016
U.S. Treasury Note, 5.875% 225,000 3/31/1999 217,757
U.S. Treasury Note, 7.125% 1,125,000 9/30/1999 1,135,721
U.S. Treasury Note, 5.75% 1,675,000 8/15/2003 1,538,906
6,932,396
U.S. Agency Mortgage 16.2%
Federal Home Loan Mortgage Corp.
Gold, 6.50% 320,962 7/01/2008 307,620
Federal Home Loan Mortgage Corp.
Gold, 7.00% 248,751 8/01/2024 236,778
Federal Home Loan Mortgage Corp.
Gold, 8.00%+ 450,000 6/13/2025 448,031
Federal National Mortgage
Association REMIC Series
93-52-C PAC, 5.00% 175,000 2/25/2001 169,913
Federal National Mortgage
Association, 7.00% 285,235 2/01/2024 271,239
Federal National Mortgage
Association, 7.00% 175,986 11/01/2024 167,350
Government National Mortgage
Association, 6.50% 335,130 4/15/2009 320,780
Government National Mortgage
Association, 7.00% 365,231 1/15/2025 345,713
2,267,424
U.S. Agency 1.4%
Federal National Mortgage
Association, 5.41% 200,000 6/25/1998 191,792
Bank 5.2%
Advanta Credit Card Master Trust
Series 1994-B, 6.405% 150,000 10/15/2001 149,906
Capital One Bank Sr. Note, 8.125% 200,000 3/01/2000 202,528
First Chicago Credit Master Trust
Series 1991-D, 8.40% 225,000 6/15/1998 228,375
Standard Credit Card Master Trust
Series 1994-3A, 6.80% 150,000 4/07/2001 147,655
728,464
Canadian--Yankee 7.4%
Bell Telephone Co. Canada Deb.
Series DJ, 13.375% 125,000 10/15/2010 135,035
British Columbia Hydroelectric
Authority Deb. Series FH,
15.50% 125,000 7/15/2011 144,439
Hydro-Quebec Deb. Series FL,
13.25% 250,000 12/15/2013 304,045
Laidlaw Inc. Deb., 8.75% 75,000 4/15/2025 74,690
Province of Manitoba Global Note,
6.75% 75,000 3/01/2003 71,656
Province of Ontario Deb., 11.50% 175,000 3/10/2013 198,485
Province of Quebec, 8.80% 100,000 4/15/2003 104,959
1,033,309
Finance 11.0%
American General Finance Corp.
Note, 8.00% 100,000 2/15/2000 102,139
Beneficial Corp. Master Trust
Note, 8.17% 200,000 11/09/1999 205,364
Community Program Loan Trust
Series 1987 A-3, 4.50% 160,781 4/01/2002 156,912
Discover Credit Card Trust Series
1993-A, 6.25% 150,000 8/16/2000 146,672
Ford Motor Credit Co. Note, 8.00% 125,000 12/01/1997 127,446
General Electric Capital Corp.
Master Trust Note, 7.625% 175,000 7/24/1996 176,669
General Motors Acceptance Corp.
Master Trust Note, 7.85% 275,000 11/17/1997 278,630
Household Affinity Credit Card
Master Trust Series 1994- 1A,
6.275% 150,000 5/15/2001 149,156
Sears Credit Account Master Trust
Series 1995-2, 8.10% 125,000 6/15/2004 129,258
Tandy Master Trust Certificates
Series 1991-A, 8.25% 57,488 4/15/1999 57,829
1,530,075
Foreign Government 1.0%
Federal Republic of Germany, Deutsche Mark
6.625% 200,000 7/09/2003 140,878
Industrial 2.0%
American Home Products Corp.
Note, 7.70% $ 150,000 2/15/2000 152,469
Chevron Corp. Profit Sharing
Amortized Note, 8.11% 125,000 12/01/2004 129,099
281,568
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
Mortgage 0.7%
American Southwest Financial
Services Corp. Series 94-C2,
8.00% $ 98,184 8/25/2010 $ 98,829
Trust Certificates 1.0%
Rural Electric Cooperative
Grantor Trust Certificates,
10.11% 125,000 12/15/2017 137,816
Total Fixed Income Securities (Cost $13,196,564) 13,342,551
SHORT-TERM OBLIGATIONS 5.7%
American Express Credit Corp.,
5.80% 526,000 5/02/1995 526,000
Chevron Oil Finance Co., 5.92% 278,000 5/04/1995 278,000
Total Short-Term Obligations (Cost $804,000) 804,000
Total Investments (Cost $14,000,564)--101.3% 14,146,551
Cash and Other Assets, Less Liabilities--(1.3)% (186,869)
Net Assets--100.0% $13,959,682
Federal Income Tax Information:
At April 30, 1995, the net unrealized
appreciation of investments based on cost for
Federal income tax purposes of $14,022,104 was
as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of
value over tax cost $198,543
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over value (74,096)
$124,447
+Represents "TBA" (to be announced) purchase commitment to purchase securities
for a fixed unit price at a future date beyond customary settlement time.
Although the unit price has been established, the principal value has not been
finalized.
Forward currency exchange contract outstanding at April 30, 1995 is as follows:
Contract Unrealized Delivery
Total Value Price Depreciation Date
Sell Deutsche mark
Buy U.S. dollars 192,200 DEM .71721 DEM $(965) 5/24/95
Statement of Assets and Liabilities
April 30, 1995
Assets
Investments, at value (Cost $14,000,564) (Note 1) $14,146,551
Cash 906
Interest receivable 227,363
Receivable from Distributor (Note 3) 21,895
Deferred organization costs and other assets (Note 1) 73,480
14,470,195
Liabilities
Payable for securities purchased 449,091
Accrued management fee (Note 2) 6,288
Accrued trustees' fees (Note 2) 3,872
Accrued distribution fee (Note 5) 2,094
Payable for open forward contract 965
Accrued transfer agent and shareholder services (Note 2) 168
Other accrued expenses 48,035
510,513
Net Assets $13,959,682
Net Assets consist of:
Undistributed net investment income $ 151,627
Unrealized appreciation of investments 145,987
Unrealized depreciation of forward contracts and
foreign currency (923)
Accumulated net realized loss (152,902)
Shares of beneficial interest 13,815,893
$13,959,682
Net Asset Value and redemption price per share of Class
A shares ($10,221,776 [division sign] 1,057,613 shares of
beneficial interest) $ 9.66
Maximum Offering Price per share of Class A shares
($9.66 [division sign] .955) $10.12
Net Asset Value, offering price and redemption price
per share of Class C shares ($3,737,906 [division sign]
386,712 shares of beneficial interest) $ 9.67
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
STATEMENT OF OPERATIONS
For the period May 16, 1994
(commencement of operations) to April 30, 1995
Investment Income
Interest, net of foreign taxes of $5,845 $ 909,169
Expenses
Management fee (Note 2) 72,084
Custodian fee 64,685
Reports to shareholders 29,651
Distribution fee--Class A (Note 5) 24,108
Registration fees 21,900
Amortization of organization costs (Note 1) 16,853
Trustees' fees (Note 2) 14,947
Audit fee 12,174
Legal fees 9,988
Transfer agent and shareholder services (Note 2) 473
Miscellaneous 7,498
274,361
Expenses borne by the Distributor (Note 3) (151,957)
122,404
Net investment income 786,765
Realized and Unrealized Gain (Loss)
on Investments, Forward Contracts
and Foreign Currency
Net realized loss on investments (Notes 1 and 4) (143,780)
Net realized loss on forward contracts and foreign
currency (Note 1) (907)
Total net realized loss (144,687)
Net unrealized appreciation of investments 145,987
Net unrealized depreciation of forward contracts and
foreign currency (923)
Total net unrealized appreciation 145,064
Net gain on investments, foreign currency and forward
contracts 377
Net increase in net assets resulting from operations $ 787,142
STATEMENT OF CHANGES IN NET ASSETS
For the period May 16, 1994
(commencement of operations) to April 30, 1995
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 786,765
Net realized loss on investments, forward contracts
and foreign currency* (144,687)
Net unrealized appreciation of investments, forward
contracts and foreign currency 145,064
Net increase resulting from operations 787,142
Dividends from net investment income:
Class A (465,343)
Class C (178,010)
(643,353)
Net increase from fund share transactions (Note 6) 13,815,893
Total increase in net assets 13,959,682
Net Assets
Beginning of period --
End of period (including undistributed net investment
income of $151,627) $13,959,682
* Net realized loss for Federal income tax purposes
(Note 1) $ (37,239)
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1995
Note 1
State Street Research Intermediate Bond Fund (the "Fund") is a series of State
Street Research Securities Trust (the "Trust"), which was organized as a
Massachusetts business trust in January, 1994 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund commenced operations in May, 1994. The Fund is
presently the only active series of the Trust, although the Trustees have the
authority to create an unlimited number of series.
The Fund is authorized to issue four classes of shares. Only Class A and Class C
shares are presently available for purchase. Class B and Class D shares are not
being offered at this time. Class A shares are subject to an initial sales
charge of up to 4.50% and an annual service fee of 0.25% of average daily net
assets. Class B shares will be subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight years
after the issuance of the Class B shares. Class C shares are only offered to
certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class C shares. Class C shares
do not pay any distribution or service fees. Class D shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one year
of their purchase. Class D shares also pay annual distribution and service fees
of 1.00%. The Fund's expenses are borne pro-rata by each class, except that each
class bears expenses, and has exclusive voting rights with respect to provisions
of the Plan of Distribution, related specifically to that class. The Trustees
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. Investment Valuation
Securities are valued by a pricing service, 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.
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
Net investment income is determined daily and consists of interest accrued and
discount earned, less the estimated daily expenses of the Fund. Interest income
is accrued daily as earned. Discount on debt obligations is amortized under the
effective yield method.
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. The difference is primarily due to differing treatments
for foreign currency transactions and paydown gains and losses.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund intends 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 April 30, 1995, the Fund had a capital
loss carryforward of $37,239 available, to the extent provided in regulations,
to offset future capital gains, if any, which expires on April 30, 2003.
In order to meet certain excise tax distribution requirements under Section
4982 of the Internal Revenue Code, the Fund is required to measure and
distribute annually, if necessary, net capital gains realized during a
twelve-month period ending October 31. In this connection, the Fund is
permitted to defer into its next fiscal year any net capital losses incurred
between each November 1 and the end of its fiscal year. From November 1, 1994
through April 30, 1995, the Fund incurred net capital losses of approximately
$94,000 and intends to defer and treat such losses as arising in the fiscal
year ending April 30, 1996.
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. 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
6
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
NOTES (cont'd)
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.
Securities quoted in foreign currencies are translated into U.S. dollars at the
current exchange rate. Gains and losses that arise from changes in exchange
rates are not segregated from gains and losses that arise from changes in
market prices of investments.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly-owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser earns
monthly fees at an annual rate of 0.55% 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 period ended May 16, 1994 (commencement of operations) to April 30,
1995, the fees pursuant to such agreement amounted to $72,084.
State Street Research Shareholder Services, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly-owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the period May 16, 1994 (commencement of operations)
to April 30, 1995, the amount of such expenses was $89.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$14,947 during the period May 16, 1994 (commencement of operations) to April
30, 1995.
Note 3
The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the period May 16, 1994 (commencement of operations) to April 30, 1995,
the amount of such expenses assumed by the Distributor and its affiliates was
$151,957.
Note 4
For the period May 16, 1994 (commencement of operations) to April 30, 1995,
purchases and sales of securities, exclusive of short-term obligations,
aggregated $32,912,371 and $19,376,604 (including $24,420,098 and $17,723,077
of U.S. Government securities), respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. Under the Plan, the Fund will
pay annual service fees to the Distributor at a rate of 0.25% of average daily
net assets for Class A, Class B and Class D shares. In addition, the Fund will
pay annual distribution fees of 0.75% of average daily net assets for Class B
and Class D shares. The Distributor uses such payments for personal service
and/or the maintenance of shareholder accounts, to reimburse securities dealers
for distribution and marketing services, to furnish ongoing assistance to
investors and to defray a portion of its distribution and marketing expenses.
For the period May 16, 1994 (commencement of operations) to April 30, 1995,
fees pursuant to such plan amounted to $24,108 for Class A.
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At April 30, 1995, Metropolitan
owned 1,047,121 Class A shares and 386,133 Class C shares of the Fund and the
Adviser owned 10,471 Class A shares of the Fund. Share transactions were as
follows:
May 16, 1994
(Commencement of
Operations) to
April 30, 1995
Class A Shares Amount
Shares sold 1,057,613 $10,100,193
Net increase 1,057,613 $10,100,193
Class C Shares Amount
Shares sold 654,776 $ 6,291,798
Shares repurchased (268,064) (2,576,098)
Net increase 386,712 $ 3,715,700
7
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
For a share outstanding from May 16, 1994
(commencement of operations) to April 30, 1995.
<TABLE>
<CAPTION>
Class A Class C
<S> <C> <C>
Net asset value, beginning of period $9.55 $9.55
Net investment income* .54 .56
Net realized and unrealized gain on investments, foreign currency and forward contracts .01 .02
Dividends from net investment income (.44) (.46)
Net asset value, end of period $9.66 $9.67
Total return+++ 5.96% 6.30%
Net assets at end of period (000s) $10,222 $3,738
Ratio of operating expenses to average net assets* 1.00%++ 0.75%++
Ratio of net investment income to average net assets* 5.92%++ 6.17%++
Portfolio turnover rate 157.75% 157.75%
*Reflects voluntary assumption of fees or expenses per share. (Note 3) $.11 $.10
</TABLE>
++Annualized
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of State Street Research
Securities Trust and Shareholders of
State Street Research Intermediate Bond Fund:
We have audited the accompanying statement of assets and liabilities of State
Street Research Intermediate Bond Fund, including the schedule of portfolio
investments, as of April 30, 1995, and the related statements of operations and
changes in net assets and the financial highlights for the period May 16, 1994
(commencement of operations) to April 30, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
April 30, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Intermediate Bond Fund as of April 30, 1995, the results of its
operations and changes in its net assets and the financial highlights for the
period May 16, 1994 (commencement of operations) to April 30, 1995, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 2, 1995
9
<PAGE>
STATE STREET RESEARCH INTERMEDIATE BOND FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
State Street Research Intermediate Bond Fund performed in line with similar
funds over the past year, as measured by the average total return for Lipper
Analytical Services' intermediate investment grade funds category.
On April 30, 1995, the Fund's assets were allocated as follows: 50% to U.S.
Treasury securities, 29% to corporate bonds, 16% to mortgage securities, 1% in
foreign government bonds, and 4% to cash. The bonds in the portfolio also had a
high average quality of AAA-, as rated by Standard & Poor's or equivalent. On
April 30, 1995, the Fund's portfolio had a duration of 3.5 years, approximately
10% longer than the market average.
U.S. Treasury Securities
The Fund's holdings in U.S. Treasury securities offer the highest possible
credit quality. U.S. Treasury securities respond quickly to interest rate
changes, which benefited the portfolio as bond yields declined over the past
several months.
Mortgage Securities
The portfolio holds high-quality mortgage securities issued by U.S. Government
agencies. Over the past six months, as bond yields declined, we reduced our
holdings in mortgage securities.
Corporate Securities
7% of the portfolio is invested in "Yankee" bonds issued by Canadian provinces
or corporations, but denominated in U.S. dollars. Most of the remainder is
invested in instruments backed by specific assets, such as credit card
receivables.
Comparison of Change In Value Of A $10,000
Investment in Intermediate Bond Fund and The Lehman
Brothers Government/Corporate Intermediate Bond Index
[line graph]
Class A Shares
Aggregate Total Return
Life of Fund
+1.19%/+0.49%
[Intermediate Bond Fund data]
start-5/94-$9,550
end-4/95-$10,119
[LB Gov't/Corporate Intermediate Bond Index data]
start-5/94-$10,000
end-4/95-$10,648
[line chart]
Class C Shares
Aggregate Total Return
Life of Fund
+6.30%/+5.56%
[Intermediate Bond Fund data]
start-5/94-$10,000
end-4/95-$10,630
[LB Gov't/Corporate Intermediate Bond Index data]
start-5/94-$10,000
end-4/95-$10,648
All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. "A" share returns reflect the maximum 4.5%
sales charge. "C" shares, offered without a sales charge, are available only to
certain employee benefit plans and large institutions. Performance results for
the Fund are increased by the Distributor's voluntary reduction of fees and
expenses related to the Fund. The first figure reflects expense reduction; the
second shows what results would have been without subsidization. The Lehman
Brothers Government/Corporate Intermediate Bond Index is a commonly-used
measure of intermediate bond performance. The index is unmanaged and does not
take sales charges into consideration. Direct investment in the index is not
possible; results are for illustrative purposes only.
10
<PAGE>
STATE STREET RESEARCH SECURITIES TRUST
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements included in PART A (Prospectus) of this
Registration Statement:
Financial Highlights for the State Street Research
Intermediate Bond Fund for the period May 16, 1994
(commencement of operations) through April 30, 1995
(2) Financial Statements included in PART B (Statement of
Additional Information) of this Registration Statement:
Financial Statements for the State Street Research
Intermediate Bond Fund for the period May 16, 1994
(commencement of operations) through April 30, 1995
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(for the period May 16, 1994 (commencement of
operations) through April 30, 1995)
Notes to Financial Statements
(including financial highlights)
Report of Independent Accountants
Management's Discussion of Fund Performance
(b) Exhibits
(1) Master Trust Agreement (1)
(2) By-Laws of the Registrant (1)
(3) Not applicable
(4) Not applicable
(5) Advisory Agreement with State Street Research & Management
Company (3)
C-1
<PAGE>
(6)(a) Distribution Agreement with State Street Research Investment
Services, Inc.
(6)(b) Form of Selected Dealer Agreement and Supplement No. 1 to
Selected Dealer Agreement
(6)(c) Form of Bank and Bank-Affiliated Broker-Dealer Agreement (3)
(7) Not applicable
(8) Custodian Contract with State Street Bank and Trust
Company (3)
(9) Not applicable
(10) Opinion and Consent of Goodwin, Procter & Hoar with respect to
MetLife - State Street Research Intermediate Bond Fund (2)
(11) Consent of Independent Accountants
(12) Not applicable
(13) Form of Purchase Agreement and Investment Letter (1)
(14)(a) State Street Research IRA: Disclosure Statement; Forms
Booklet; Transfer of Assets/Direct Rollover Form
(14)(b) MetLife - State Street 403(b): Brochure, Account Agreement,
Maximum Salary Reduction Worksheet, Account Application,
Salary Reduction Worksheet and Transfer of 403(b) Assets
Form (1)
(15) Plan of Distribution Pursuant to Rule 12b-1
(16) Calculation of Performance Data
(17)(a) Powers of Attorney
(18) Certificate of Board Resolution Respecting Powers of Attorney
(19) Application Forms (3)
(20) Multiple Class Expense Allocation Plan Adopted Pursuant to
Rule 18f-3
(27) Financial Data Schedules
-------------------------------
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
Footnote Securities Act of 1933
Reference Registration/Amendment Dated Filed
--------- ---------------------- -----------
1 Initial Registration January 31, 1994
2 Pre-Effective Amendment No. 1 March 14, 1994
3 Post-Effective Amendment No. 1 November 19, 1994
C-2
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF DECEMBER 31, 1994
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan") as of December 31, 1994. Those entities which are listed at the
left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. The voting securities (excluding directors'
qualifying shares, if any) of the subsidiaries listed are 100% owned by their
respective parent corporations, unless otherwise indicated. The jurisdiction of
domicile of each subsidiary listed is set forth in the parenthetical following
such subsidiary.
A. Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Delaware)
a. Metropolitan Group Property and Casualty Insurance Company
(Delaware)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great
Britain)
b. Metropolitan Casualty Insurance Company (Delaware)
c. Metropolitan General Insurance Company (Delaware)
d. First General Insurance Company (Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
C-3
<PAGE>
4. MetLife HealthCare Management Corporation (Delaware)
a. MetLife HealthCare Network of Kansas City, Inc. (Missouri)
b. MetLife HealthCare Network of Northern New Jersey, Inc. (New
Jersey)
c. MetLife HealthCare Network of New York, Inc. (New York)
d. MetLife HealthCare Network of Ohio, Inc. (Ohio)
e. MetLife HealthCare Network of Wisconsin, Inc. (Wisconsin)
f. MetLife HealthCare Network, Inc. (Delaware)
g. MetLife HealthCare Network of Georgia, Inc. (Georgia)
h. MetLife HealthCare Network of Illinois, Inc. (Delaware)
i. MetLife HealthCare Network of Arizona, Inc. (Arizona)
j. MetLife HealthCare Network of Kentucky, Inc. (Kentucky)
k. MetLife HealthCare Network of Massachusetts, Inc. (Massachusetts)
l. MetLife HealthCare Network of Texas, Inc. (Texas)
m. MetLife HealthCare Network of Florida, Inc. (Florida)
n. MetLife HealthCare Network of Colorado, Inc. (Colorado)
o. MetLife HealthCare Network of California, Inc. (California)
5. Corporate Health Strategies, Inc. (Delaware)
6. Metropolitan Asset Management Corporation (Delaware)
a. MetLife Capital Holdings, Inc. (Delaware)
i. MetLife Capital Corporation (Delaware)
(1) Searles Cogeneration, Inc. (Delaware)
(2) MLYC Cogen, Inc. (Delaware)
(3) MCC Yerkes Inc. (Washington)
(4) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and MetLife
Capital Corporation (10%).
(5) MCC Investment Corporation (Delaware)
(a) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and MCC
Investment Corporation (10%).
(6) MetLife Capital Portfolio Investments, Inc. (Nevada)
(a) MetLife Capital Funding Corp. (Delaware)
ii. MetLife Capital Financial Corporation (Delaware)
C-4
<PAGE>
iii. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting
preferred stock of MetLife Financial Acceptance Corporation.
Metropolitan Property and Casualty Insurance Company holds
100% of the common stock of MetLife Financial Acceptance
Corporation.
b. MetLife Investment Management Corporation (Delaware)
i. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments
Limited.
c. MetLife Realty Group, Inc. (Delaware)
d. GFM International Investors Limited (United Kingdom). The common
stock of GFM International Investors Limited ("GFM") is held by
Metropolitan (99.5%) and by an employee of GFM (.5%). GFM is a
sub-investment manager for the International Stock Portfolio of
Metropolitan Series Fund, Inc.
i. GFM Investments Limited (United Kingdom)
7. SSRM Holdings, Inc. (Delaware)
a. State Street Research & Management Company (Delaware). Is a sub-
investment manager for the Growth, Income, Diversified and
Aggressive Growth Portfolios of Metropolitan Series Fund, Inc.
i. State Street Research Energy, Inc. (Massachusetts)
ii. State Street Research Investment Services, Inc.
(Massachusetts)
b. Metric Holdings, Inc. (Delaware)
i. Metric Management Inc. (Delaware)
ii. Metric Realty Corp. (Delaware)
iii. Metric Realty (Illinois). Metric Realty Corp. and Metric
Holdings, Inc. each holds 50% of the common stock of Metric
Realty.
(1) Metric Capital Corporation (California)
(2) Metric Assignor, Inc. (California)
(3) Metric Institutional Realty Advisors, Inc. (California)
(4) Metric Institutional Realty Advisors, L.P.
(California).
Metric Realty holds a 99% limited partnership interest
and Metric Institutional Realty Advisors, Inc. holds a
1%
C-5
<PAGE>
interest as general partner in Metric Institutional
Realty Advisors, L.P.
(5) Metric Realty Services, Inc. (Delaware)
(6) Metric Institutional Apartment Fund II, L.P.
(California). Metric Realty holds a 1% interest as
general partner and Metropolitan holds an approximately
14.6% limited partnership interest in Metric
Institutional Apartment Fund II, L.P.
8. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
9. Metropolitan Tower Realty Company, Inc. (Delaware)
10. MetLife Real Estate Advisors, Inc. (California)
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Metropolitan Life Holdings Limited (Ontario, Canada)
1. Metropolitan Life Financial Services Limited (Ontario, Canada)
a. 810597 Ontario, Inc. (Ontario, Canada)
b. 810660 Ontario Inc. (Canada)
c. 478077 Alberta Ltd. (Alberta, Canada)
2. Metropolitan Life Financial Management Limited (Ontario, Canada)
a. Metropolitan Life Insurance Company of Canada (Canada)
b. Metropolitan Life Operations Limited (Canada)
i. Metropolitan Trust Company of Canada (Canada)
C-6
<PAGE>
3. Morguard Investments Limited (Ontario, Canada)
Shares of Morguard Investments Limited ("Morguard") are held by
Metropolitan Life Holdings Limited (82%) and by employees of Morguard
(18%).
4. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
5. 167080 Canada, Inc. (Canada)
a. 446068 B.C. Ltd. (British Columbia, Canada)
H. MetLife (UK) Limited (Great Britain)
1. Albany Life Assurance Company Limited (Great Britain)
a. Albany Pension Managers and Trustees Limited (Great Britain)
2. Albany Home Loans Limited (Great Britain)
3. ACFC Corporate Finance Limited (Great Britain)
4. Metropolitan Unit Trust Managers Limited (Great Britain)
5. Albany International Assurance Limited (Isle of Man)
6. MetLife Group Services Limited (Great Britain)
I. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
J. Kolon-Met Life Insurance Company (Korea). Shares of Kolon-MetLife Insurance
Company are held by Metropolitan (51%) and by an entity (49%) unaffiliated
with Metropolitan.
C-7
<PAGE>
K. Genesis Seguros de Vida S.A. (Argentina)
L. Genesis Seguros de Retiro S.A. (Argentina). Shares of Genesis Seguros de
Retiro S.A. are held by Metropolitan (10%) and by an entity (90%)
unaffiliated with Metropolitan.
M. 161397 Canada Inc. (Canada)
N. 2945835 Canada Inc. (Canada)
O. Metropolitan Marine Way Investments Limited (British Columbia, Canada)
P. Met Life Holdings Luxembourg (Luxembourg)
Q. Metropolitan Life Holdings, Netherlands BV (Netherlands)
R. MetLife International Holdings, Inc. (Delaware)
S. Century 21 Real Estate Corporation (Delaware)
1. Century 21 of the Pacific, Inc. (California)
2. Century 21 of the West, Inc. (California)
3. Century 21 Great Lakes, Inc. (Michigan)
4. Century 21 of the Southeast, Inc. (Florida)
5. Century 21 Australasia Pty. Ltd. (Australia)
6. Century 21 North Central, Inc. (Illinois)
7. Century 21 South Central States, Inc. (Texas)
8. Western Relocation Management, Inc. (California)
9. Century 21 United Kingdom Limited (United Kingdom)
10. Century 21 of the Northeast, Inc. (New Jersey)
C-8
<PAGE>
T. Metmor Financial, Inc. (California)
1. MetFirst Insurance Agency, Inc. (Delaware)
U. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. Cross & Brown Residentials, Inc. (New York)
b. Cross & Brown Company of Florida, Inc. (Florida)
c. Cross & Brown Associates of New York, Inc. (New York)
d. Cross & Brown Associates of New Jersey, Inc. (New Jersey)
e. Subrown Corp. (New York)
f. Cross & Brown Construction Corp. (New York)
g. CBNJ, Inc. (New Jersey)
h. Cross & Brown of Connecticut, Inc. (Connecticut)
V. MetPark Funding, Inc. (Delaware)
W. 2154 Trading Corporation (New York)
X. Transmountain Land & Livestock Company (Montana)
Y. Met West Agribusiness, Inc. (Delaware)
Z. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
C-9
<PAGE>
AA. Nebraska Farms, Inc. (Nebraska)
AB. MetFarm and Ranch Properties, Inc. (Delaware)
AC. MetLife Group Administrator, Inc.
AD. The MetraHealth Companies, Inc. (Delaware). Shares of The Metra Health
Companies, Inc. are held by Metropolitan (50%) and by an entity (50%)
unaffiliated with Metropolitan.
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of real
property subject to a 999 year prepaid lease. It is wholly-owned by
Metropolitan, having been acquired by a wholly-owned subsidiary of Metropolitan
in 1973 for $10 in connection with a real estate investment and transferred to
Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest. Metropolitan Structures owns 100% of the common stock of
Cicero/Cermak Corporation, an Illinois corporation, which owns and manages a
shopping center in Illinois. Metropolitan Structures, Inc., an Illinois
corporation, is a property manager. Metropolitan Structures, Inc. is wholly
owned by Metropolitan Structures. Metropolitan Structures, Inc. is the sole
general partner of MS Management Services, L.P., an Illinois limited partnership
in which Metropolitan has a 49.5% interest as a limited partner.
5) Metropolitan Structures West, Inc. (doing business as MS Management
Services), a California corporation, is a property manager in California.
Metropolitan owns 50% of the capital stock of Metropolitan Structures West, Inc.
6) Seguros Genesis, S.A. (Mexico), is a Mexican insurer in which Metropolitan
and two of its subsidiaries collectively own a 24.5% interest and have the right
to designate 2 of the 9 members of the Board of Directors.
7) Interbroker, Correduria de Reaseguros, S.A., is a Spanish insurance brokerage
company in which Santander Met, S.A., a subsidiary of Metropolitan in which
Metropolitan owns a 50% interest, owns a 50% interest and has the right to
designate 2 of the 4 members of the Board of Directors.
8) Met Life Agricultural Limited Partnership, is an Illinois limited
partnership of which Met Farm and Ranch Properties, Inc. has a 1% interest as
general partner and a 57.28% interest as limited partner.
9) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.
10) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides homeowner and related insurance for the Texas market. It is an
association of individuals designated as underwriters. Metropolitan Lloyds,
Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company,
serves as the attorney-in-fact and manages the association.
11) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly-owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest therein. The MILPs have various ownership interests
in certain companies. The various MILPs own, directly or indirectly, more than
50% of the common stock of the following companies: Braelan Corp., and its
subsidiary, Dan River, Inc.; Lincoln Group Holding Corp.; Igloo Holdings, Inc.
and its subsidiary, Igloo Products Corporation; Blodgett Holdings, Inc., and its
subsidiaries, GS Blodgett Corporation, GS Blodgett International Ltd., GS
Blodgett Inc., Pitco Frialator, Inc., Magikitch'n, Inc., and Cloverleaf
Properties, Inc.; and Briggs Holdings, Inc., and its subsidiary, Briggs Plumbing
Products, Inc.
C-10
<PAGE>
Item 26: Number of Holders of Securities
-----------------------------------------
As of July 31, 1995, the number of record holders of the Registrant's
Fund were as follows:
(1) (2)
Number of
Title of Class Record Holders
Shares of Beneficial Interest
State Street Research Intermediate Bond Fund
Class A 6
Class B None
Class C 6
Class D None
C-11
<PAGE>
Item 27: Indemnification
Under Article VI of the Registrant's Master Trust Agreement each of its
Trustees and officers or persons serving in such capacity with another entity at
the request of the Registrant ("Covered Person") shall be indemnified against
all liabilities, including, but not limited to, amounts paid in satisfaction of
judgments, in compromises or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person, except with respect to any matter as to which it has
been determined that such Covered Person had acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (such conduct being referred to
hereafter as "Disabling Conduct"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before which the proceeding was brought that the person to
be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of
a court action or an administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Registrant as defined in
section 2(a)(19) of the 1940 Act nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion.
Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's distributor, the Registrant
has agreed to indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may hereafter be an officer,
director, employee or agent of State Street Research Investment Services, Inc.
against any loss, damage or expense reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon a violation of any of its covenants herein contained or
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements made
not misleading, in a Registration Statement or Prospectus of the Registrant, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written
C-12
<PAGE>
information furnished by State Street Research Investment Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to trustees, officers, underwriters
and controlling persons of the Registrant, pursuant to Article VI of the
Registrant's Master Trust Agreement, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
C-13
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Research & Investment Adviser Various investment advisory Boston, MA
Management Company clients
Bangs, Linda L. None
Vice President
Barton, Michael E. None
Vice President
Bennett, Peter C. Vice President State Street Research Capital Trust Boston, MA
Director and Vice President State Street Research Exchange Trust Boston, MA
Executive Vice Vice President State Street Research Growth Trust Boston, MA
President Vice President State Street Research Master Investment Trust Boston, MA
Vice President MetLife - State Street Equity Trust
Director State Street Research Investment Services, Inc Boston, MA
Director Boston Private Bank & Trust Co. Boston, MA
President and Director Christian Camps & Conferences, Inc. Boston, MA
Director (until 12/93) Gefinor Securities S.A. Geneva,
Switzerland
Chairman and Trustee Gordon College Wenham, MA
Brown, Susan H. None
Vice President
Burbank, John F. None
Vice President
Canavan, Joseph W. Assistant Treasurer MetLife - State Street Equity Trust Boston, MA
Vice President Assistant Treasurer MetLife - State Street Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
C-14
<PAGE>
Carmen, Michael T. None
Vice President
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President Director Avalon, Inc. Boston, MA
DiFazio, Susan M.W. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President (Vice President until
8/93)
Drake, Susan W. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President
Duggan, Peter J. Vice President New England Mutual Life Insurance Company Boston, MA
Senior Vice President (until 8/94)
Evans, Gordon Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Federoff, Alex G. None
Vice President
Finch, Edward R. None
Senior Vice President
(Vice President until 10/93)
Gardner, Michael D. Vice President The Prudential Insurance Company of America Shorthills, NJ
Senior Vice President (until 9/93)
(Vice President until Partner Prism Group Seattle, WA
6/95)
Geer, Bartlett R. Vice President MetLife - State Street Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
(Vice President Vice President State Street Research Investment Services, Inc. Boston, MA
until 8/93)
C-15
<PAGE>
Glovsky, Charles S. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
(Vice President until 8/93)
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
(Vice President Treasurer and Director North Conway Institute Boston, MA
until 8/93)
Haverty, Jr., Lawrence J. None
Senior Vice President
(Vice President
until 8/93)
Heineke, George R. None
Vice President
Jackson, Jr., Trustee Certain trusts of related and
F. Gardner non-related individuals
Senior Vice President Trustee Vincent Memorial Hospital Boston, MA
(Vice President
until 8/93)
Jamieson, Frederick H. Vice President and Asst. Treasurer State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Vice President and Asst. Treasurer SSRM Holdings, Inc. Boston, MA
(Vice President Vice President and Controller MetLife Securities, Inc. New York, NY
until 6/95)
Kallis, John H. Vice President State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Vice President MetLife - State Street Financial Trust Boston, MA
Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Director and President K&G Enterprises Washington, D.C.
Kasper, M. Katherine None
Vice President
C-16
<PAGE>
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Vice President
Kobrick, Frederick R. Vice President State Street Research Investment Services, Inc. Boston, MA
Senior Vice Vice President MetLife - State Street Equity Trust Boston, MA
President Vice President State Street Research Capital Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Member Harvard Business School Association Cambridge, MA
Member National Alumni Council, Boston University Boston, MA
Leary, Eileen M. None
Vice President
Lintz, Carol None
Vice President
McNamara, III, Francis J. Senior Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Senior Vice President, and General Counsel
Secretary and Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Capital Trust Boston, MA
Secretary and General Counsel State Street Research Exchange Trust Boston, MA
Secretary and General Counsel State Street Research Growth Trust Boston, MA
Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel MetLife - State Street Equity Trust Boston, MA
Secretary and General Counsel MetLife - State Street Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money Market Trust Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Senior Vice President, General The Boston Company, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General Boston Safe Deposit and Trust Company Boston, MA
Counsel and Asistant Secretary
(until 5/95)
Senior Vice President, General The Boston Company Advisors, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
C-17
<PAGE>
Maus, Gerard P. Treasurer MetLife - State Street Equity Trust Boston, MA
Director, Executive Treasurer MetLife - State Street Financial Trust Boston, MA
Vice President Treasurer State Street Research Income Trust Boston, MA
and Treasurer Treasurer State Street Research Money Market Trust Boston, MA
Treasurer State Street Research Tax-Exempt Trust Boston, MA
Treasurer State Street Research Capital Trust Boston, MA
Treasurer State Street Research Exchange Trust Boston, MA
Treasurer State Street Research Growth Trust Boston, MA
Treasurer State Street Research Master Investment Trust Boston, MA
Treasurer State Street Research Securities Trust Boston, MA
Director, Executive Vice President, State Street Research Investment Services, Inc. Boston, MA
Treasurer and Chief Financial Officer
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Director GFM International Investors, Ltd. London, England
Treasurer and Chief Financial SSRM Holdings, Inc. Boston, MA
Officer
Treasurer MetLife Securities, Inc. New York, NY
Milder, Judith J. None
Senior Vice President
(Vice President until 6/95)
Miller, Joan D. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Moore, Jr., Thomas P. Director Hibernia Savings Bank Quincy, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Exchange Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President MetLife - State Street Equity Trust Boston, MA
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Vice President
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
C-18
<PAGE>
Pannell, James C. None
Vice President
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
(Vice President
until 7/94)
Pluckhahn, Charles W. None
Vice President
Ragsdale, Easton Senior Vice President Kidder, Peabody, & Co. Incorporated New York, NY
Vice President (until 12/94)
Rawlins, Jeffrey A. None
Vice President
Rice III, Daniel Joseph Vice President MetLife - State Street Equity Trust Boston, MA
Senior Vice President
(Vice President
until 8/93)
Richards, Scott None
Vice President
Romich, Douglas A. Assistant Treasurer MetLife - State Street Equity Trust Boston, MA
Vice President Assistant Treasurer MetLife - State Street Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
Row, III, Walter A. None
Vice President
C-19
<PAGE>
Schrage, Michael Senior Vice President Putnam Management Boston, MA
Vice President (until 12/93)
Schultz, David C. Director (non-voting) Capital Trust, S.A. Luxembourg
Executive Vice President Director Alex Brown Capital, Ltd. Hamilton, Bermuda
(Senior Vice President Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
until 12/94, Vice Member Association of Investment
President until Management Sales Executives Atlanta, GA
4/94) Member, Investment Committee Lexington Christian Academy Lexington, MA
Shean, William G. None
Vice President
Shively, Thomas A. Vice President MetLife - State Street Financial Trust Boston, MA
Director and Vice President State Street Research Money Market Trust Boston, MA
Executive Vice Vice President State Street Research Tax-Exempt Trust
President (Senior Director State Street Research Investment Services, Inc Boston, MA
Vice President Vice President State Street Research Securities Trust Boston, MA
until 6/93)
Shoemaker, Richard D. None
Senior Vice President
(Vice President
until 8/93)
Smith, Margaret D. Corporation Member New England Deaconess Boston, MA
Vice President Hospital Corporation
Somes, Steven P. Vice President MetLife - State Street Financial Trust Boston, MA
Vice President Vice President MetLife - State Street Equity Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Strelow, Dan R. None
Senior Vice President
(Vice President
until 8/93)
Stuka, Paul None
Senior Vice President
C-20
<PAGE>
Swanson, Amy McDermott None
Senior Vice President
(Vice President
until 8/93)
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
(Vice President until 6/95)
Verni, Ralph F. Chairman, President, Chief State Street Research Capital Trust Boston, MA
Chairman, President, Executive Officer and Trustee
Chief Executive Chairman, President, Chief State Street Research Exchange Trust Boston, MA
Officer and Executive Officer and Trustee
Director Chairman, President, Chief State Street Research Growth Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Master Investment Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Securities Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief MetLife - State Street Equity Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief MetLife - State Street Financial Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Income Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Money Market Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Tax-Exempt Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Investment Services, Inc. Boston, MA
Executive Officer and Director
Chairman and Director Metric Holdings, Inc. San Francisco, CA
Director and Officer Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Director MetLife Securities, Inc. New York, NY
Chairman and Director (until 11/94) GFM International Investors, Ltd. London, England
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
C-21
<PAGE>
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
Ward, Geoffrey None
Senior Vice President
(Vice President
until 8/93)
Westvold, President and Director Bondurant, Inc. Medfield, MA
Elizabeth McCombs (until 2/94)
Vice President
Wing, Darman A. Senior Vice President and State Street Research Investment Services, Inc. Boston, MA
Vice President, Asst. Clerk (Vice President
Assistant Secretary until 6/95)
and Assistant Assistant Secretary State Street Research Capital Trust Boston, MA
General Counsel Assistant Secretary State Street Research Exchange Trust Boston, MA
Assistant Secretary State Street Research Growth Trust Boston, MA
Assistant Secretary State Street Research Master Investment Trust Boston, MA
Assistant Secretary State Street Research Securities Trust Boston, MA
Assistant Secretary MetLife - State Street Equity Trust Boston, MA
Assistant Secretary MetLife - State Street Financial Trust Boston, MA
Assistant Secretary State Street Research Income Trust Boston, MA
Assistant Secretary State Street Research Money Market Trust Boston, MA
Assistant Secretary State Street Research Tax-Exempt Trust Boston, MA
Assistant Secretary SSRM Holdings, Inc. Boston, MA
Woodbury, Robert S. Employee Metropolitan Life Insurance Company New York, NY
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Growth Trust Boston, MA
President
C-22
<PAGE>
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
(Vice President
until 8/93)
Yogg, Michael Richard Vice President MetLife - State Street Financial Trust Boston, MA
Senior Vice Vice President State Street Research Income Trust Boston, MA
President
</TABLE>
C-23
<PAGE>
Item 29: Principal Underwriters
(a) State Street Research Investment Services, Inc., serves as principal
underwriter for MetLife - State Street Equity Trust, MetLife - State Street
Financial Trust, State Street Research Income Trust, State Street Research
Money Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Growth Trust, State Street
Research Master Investment Trust, State Street Research Securities Trust, and
State Street Research Portfolios, Inc.
(b) Directors and Officers of State Street Research Investment Services,
Inc. are as follows:
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Registrant
Ralph F. Verni Chairman of Chairman of the
One Financial Center the Board, President, Board, President,
Boston, MA 02111 Chief Executive Officer Chief Executive Officer
and Director and Trustee
Peter C. Bennett Director None
One Financial Center
Boston, MA 02111
Gerard P. Maus Executive Vice President Treasurer
One Financial Center Treasurer, Chief
Boston, MA 02111 Financial Officer and
Director
Thomas A. Shively Director Vice President
One Financial Center
Boston, MA 02111
George B. Trotta Executive Vice President None
One Madison Avenue
New York, NY 10010
Dennis C. Barghaan Senior Vice President None
One Madison Avenue
New York, NY 10010
Peter Borghi Senior Vice President None
One Financial Center
Boston, MA 02111
Paul V. Daly Senior Vice President None
One Financial Center
Boston, MA 02111
C-24
<PAGE>
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Registrant
Susan M.W. DiFazio Senior Vice President None
One Financial Center
Boston, MA 02111
Robert Haeusler Senior Vice President None
One Madison Avenue
New York, NY 10010
Gregory R. McMahan Senior Vice President None
One Financial Center
Boston, MA 02111
Francis J. McNamara, III Senior Vice President Secretary
One Financial Center and Clerk
Boston, MA 02111
Joan D. Miller Senior Vice President None
One Financial Center
Boston, MA 02111
Richard P. Samartin Senior Vice President None
One Financial Center
Boston, MA 02111
Darman A. Wing Senior Vice President Assistant Secretary
One Financial Center and Assistant Clerk
Boston, MA 02111
Gordon Evans Vice President None
One Financial Center
Boston, MA 02111
Linda Grasso Vice President None
One Financial Center
Boston, MA 02111
Frederick H. Jamieson Vice President None
One Financial Center and Assistant
Boston, MA 02111 Treasurer
C-25
<PAGE>
Item 30: Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 31: Management Services
Inapplicable.
Item 32: Undertakings
(a) Inapplicable.
(b) Deleted
(c) The Registrant has elected to include the information required
by Item 5A of Form N-1A in its annual report to shareholders. The
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the applicable fund's latest annual report to
shareholders, upon request and without charge.
(d) The Registrant undertakes to hold a special meeting of
shareholders of the Trust for the purpose of voting upon the question of
removal of any trustee or trustees when requested in writing to do so by
the record holders of not less than 10 per centum of the outstanding
shares of the Trust and, in connection with such meeting, to comply with
the provisions of Section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
C-26
<PAGE>
Notice
A copy of the Master Trust Agreement of the Registrant is on file with the
Secretary of State of the Commonwealth of Massachusetts and notice is hereby
given that the obligations of the Registrant hereunder, and the authorization,
execution and delivery of this amendment to the Registrant's Registration
Statement, shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Registrant as individuals or
personally, but shall bind only the property of the Funds of the Registrant, as
provided in the Master Trust Agreement. Each Fund of the Registrant shall be
solely and exclusively responsible for all of its direct or indirect debts,
liabilities and obligations, and no other Fund shall be responsible for the
same.
C-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 1 to its Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Boston and the Commonwealth of Massachusetts, on the 24th day of August, 1995.
STATE STREET RESEARCH SECURITIES TRUST
By: *
------------------------
Ralph F. Verni
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed on the
above date by the following persons in the capacities indicated.
Signature Title
--------- -----
* Trustee, Chairman of the Board and
--------------------- Chief Executive Officer
Ralph F. Verni (Principal Executive Officer)
* Treasurer (Principal Financial and
--------------------- Accounting Officer)
Gerard P. Maus
* Trustee
---------------------
Edward M. Lamont
* Trustee
---------------------
Robert A. Lawrence
* Trustee
---------------------
Dean O. Morton
* Trustee
---------------------
Thomas L. Phillips
<PAGE>
* Trustee
---------------------
Toby Rosenblatt
* Trustee
---------------------
Michael S. Scott Morton
* Trustee
---------------------
Jeptha H. Wade
*By: /s/ Francis J. McNamara, III
-------------------------------
Francis J. McNamara, III
Attorney-in-Fact
under Powers of Attorney
dated August 24, 1995
filed herein.
C-28
<PAGE>
1933 Act Registration No. 33-74628
1940 Act File No. 811-8322
---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
--------------------
STATE STREET RESEARCH SECURITIES TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
--------------------
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(6)(a) Distribution Agreement
with State Street Research
Investment Services, Inc.
(6)(b) Form of Selected Dealer
Agreement and Supplement
No. 1 to Selected Dealer
Agreement
(11) Consent of Independent Accountants
(14)(a) State Street Research
IRA: Disclosure Statement;
Forms Booklet; Transfer
of Assets/Direct Rollover Form
(15) Plan of Distribution
Pursuant to Rule 12b-1
(16) Calculation of
Performance Data
(17) Powers of Attorney
(18) Certificate of Board
Resolution Respecting
Powers of Attorney
(20) Multiple Class Expense
Allocation Plan Adopted
Pursuant to Rule 18f-3.
(27) Financial Data Schedules
2
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT effective as of May 16, 1994, by and between State
Street Research Investment Services, Inc., a corporation organized under the
laws of the Commonwealth of Massachusetts having its place of business in
Boston, Massachusetts (the "Distributor"), and State Street Research Securities
Trust, a Massachusetts business trust having its principal place of business in
Boston, Massachusetts (the "Trust"), which Trust proposes to offer shares of
beneficial interest in different series representing interests in separate
portfolios of assets (each series being referred to herein as a "Fund" and such
series being referred to herein collectively as the "Funds").
WITNESSETH:
In consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, it is agreed:
1. Appointment of Distributor.
(a) Appointment. The Trust hereby appoints the Distributor as its
agent to sell and distribute shares of the MetLife - State Street Research
Intermediate Bond Fund (the "Initial Fund") and the Distributor hereby accepts
such appointment and agrees during the term of this Agreement to provide the
services and to assume the obligations herein set forth. In the event that the
Trust establishes one or more series of shares other than the Initial Fund with
respect to which it desires to retain the Distributor to serve as distributor
and principal underwriter hereunder, it shall so notify the Distributor in
writing. If the Distributor is willing to render such services, it shall so
notify the Trust in writing, whereupon such series of shares shall become a Fund
hereunder. In such event a writing signed by both the Trust and the Distributor
shall be annexed hereto as a part hereof indicating that such additional series
of shares has become a Fund hereunder.
(b) Sales of Shares. Shares of each Fund shall be sold at the
offering price thereof as from time to time determined in the manner herein
provided. The Trust agrees that it will not, without the Distributor's consent,
sell or agree to sell any shares of a Fund otherwise than through the
Distributor, except that the Trust may (a) sell shares for not less than the net
asset value thereof as an investment to such persons or classes of persons as
may be indicated in the Prospectus of the Trust as amended and in effect from
time to time; (b) issue or sell shares for not less than the net asset value
thereof directly to holders of shares of any Fund upon such terms and for
<PAGE>
such consideration, if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or reinvestment of
distributions or dividends, the exercise of any applicable reinvestment
privilege, or otherwise; (c) issue or sell shares for not less than the net
asset value thereof of any Fund to the shareholders of any other Fund or
investment company in connection with the exercise of exchange privileges
offered by the Trust; and (d) issue shares for not less than the net asset value
thereof in connection with a merger, consolidation or acquisition of assets on
such basis as may be authorized or permitted under the Investment Company Act of
1940, as amended (the "1940 Act").
2. Basis of Sale of Shares; Selected Dealers. The Distributor does not
agree to sell any specific number of shares. Shares will be sold by the
Distributor as agent for the Funds and the Trust only against orders therefor.
The Distributor will not purchase shares except as agent for the Trust.
Notwithstanding anything herein to the contrary, the Trust may terminate,
suspend or withdraw the offering of shares whenever, in its sole discretion, it
deems such action desirable. In connection with its performance of services
hereunder, the Distributor may engage other persons to act as selected dealers.
3. Compensation.
(a) Offering Price/Sales Charge. The offering price for shares of
any Fund of the Trust shall be the "net asset value per share" for that Fund
determined in accordance with the Master Trust Agreement of the Trust, as
amended (the "Master Trust Agreement"), plus a sales charge, if any, payable to
the Distributor as set forth in the Trust's Prospectus as from time to time
amended and in effect. The Distributor may reallow such portions of such sales
charges as dealer concessions to dealers through whom sales are made as the
Distributor may determine consistent with the terms of the Trust's Prospectus as
from time to time amended and in effect; provided, however, that the sales
charge to each purchaser of shares shall not exceed that set forth for such
category of purchaser in the Trust's Prospectus as from time to time amended and
in effect. The Distributor may also pay from its own funds a commission, if any,
with respect to sales to the extent consistent with and as contemplated by the
Trust's Prospectus as from time to time amended and in effect. The net asset
value per share for each Fund shall be determined at such time and on such days
as are established by the Board of Trustees of the Trust from time to time.
<PAGE>
(b) 12b-1 Expenses. In the event that the Trust adopts a
distribution plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plan"),
the Distributor agrees to fulfill any obligations it may have under the 12b-1
Plan.
4. Manner of Offering. The Distributor will comply with the securities
laws of any jurisdiction in which it sells, directly or indirectly, any shares
of the Trust. The Distributor also agrees to furnish to the Trust sufficient
copies of any sales literature it intends to use in connection with any sales of
shares in adequate time for the Trust to review such sales literature. The
Distributor agrees that it will be responsible for filing and clearing all such
sales literature with the proper authorities before the same is put in use to
the extent required by applicable law, and not to use the same until so filed
and cleared.
The Distributor and the Trust each shall have the right to accept or
reject orders for the purchase of shares of the Trust. Any consideration which
the Distributor may receive in connection with a rejected purchase order will be
returned promptly to the prospective purchaser. The Distributor agrees promptly
to issue confirmations of all accepted purchase orders and to transmit a copy of
such confirmations to the Trust, or, if so directed, to any duly appointed
transfer or shareholder servicing agent of the Trust. If the originating dealer,
if any, shall fail to make timely settlement of its purchase order in accordance
with the rules of the National Association of Securities Dealers, Inc. or other
applicable requirements, the Distributor shall have the right to cancel such
purchase order and to hold the originating dealer responsible. The Distributor
agrees promptly to reimburse the Trust for any amount by which the Trust's
losses attributable to any such cancellations or to accepted purchase orders
exceed gains realized by the Trust for either of such reasons in respect of
other purchase orders. The Trust shall register or cause to be registered all
shares sold by the Distributor pursuant to the provisions hereof in such name or
names and amounts as the Distributor may request from time to time.
The Distributor agrees that if any person tenders to the Trust for
redemption of any shares purchased from the Trust within seven days of the
redemption request, the Distributor will promptly pay to the Trust the full
sales commission paid, if any, with respect to the shares so tendered for
redemption (in the case of sales by selected dealers, if any, such payment shall
be made promptly after the Distributor's receipt of the same from the selected
dealer responsible for the sale).
The Distributor hereby agrees to act as agent for the Trust in connection
with any share repurchase arrangements from time to time offered by the Trust in
accordance with the terms of the Trust's Prospectus as from time to time
amended.
<PAGE>
5. Securities Law. The Trust has delivered to the Distributor a copy of
its current Prospectus. The Trust agrees that it will use its best efforts to
continue the effectiveness of its Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act"), and the 1940 Act. The Trust
further agrees to prepare and file any amendments to such Registration Statement
and any supplemental data as may be necessary in order to comply with the
Securities Act and the 1940 Act. The Trust is presently registered under the
1940 Act as an investment company, and it will use its best efforts to maintain
such registration and to comply with the requirements of said Act.
At the Distributor's request, the Trust will take such steps as may be
necessary and feasible to qualify shares of the Funds for sale in states,
territories or dependencies of the United States of America, in the District of
Columbia and in foreign countries, in accordance with the laws thereof, and to
renew and extend any such qualification; provided, however, that the Trust shall
not be required to qualify shares or to maintain the qualification of shares in
any state, territory, dependency, district or country where it shall deem such
qualification disadvantageous to the Trust.
The Distributor agrees that it will (i) not use, distribute or disseminate
or authorize the use, distribution or dissemination by others in connection with
the sale of shares of the Funds, any statement, other than those contained in
the Trust's current Prospectus, except such supplemental literature or
advertising as shall be approved by the Trust, (ii) conform to the requirements
of all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. relating to the sale of shares of the
Trust (including, without limitation, the maintenance of effective broker-dealer
registrations as required), and (iii) observe and be bound by all the provisions
of the Master Trust Agreement (and of any fundamental policies adopted by the
Trust pursuant to the 1940 Act, notice of which shall have been given to the
Distributor) which at the time in any way require, limit, restrict or prohibit
or otherwise regulate any action on the part of the Distributor.
The Distributor further agrees that:
(a) the Distributor shall furnish to the Trust any information with
respect to the Distributor within the purview of any reports or registrations
required to be filed with any governmental authority; and
(b) the Distributor will not make any representations inconsistent
with the Registration Statement of the Trust filed under the Securities Act, as
from time to time amended and in effect.
<PAGE>
6. Allocation of Expenses.
(a) The Funds, either directly or through their investment adviser
or investment advisers, will be responsible for, and shall pay their allocable
portions of the expenses of:
(i) providing all necessary services, including fees and
disbursements of counsel, related to the preparation, setting in type, printing
and filing of any registration statement and/or prospectus required under the
Securities Act or the 1940 Act or under state securities laws covering their
shares, and all amendments and supplements thereto, the mailing of any such
prospectus to existing shareholders, and preparing, setting in type, printing
and mailing of periodic reports to existing shareholders;
(ii) the cost of all registration or qualification fees
relating to the Funds' shares, including the fees or expenses of qualifying the
Trust as a broker or dealer under laws of any state, if any;
(iii) the cost of preparing temporary and permanent share
certificates for shares, if any; and
(iv) any and all federal and state issue and/or transfer taxes
payable upon the issue by or (in the case of treasury shares) transfer from a
Fund of the shares distributed hereunder.
(b) The Distributor agrees that, after the Trust's Prospectus and
periodic reports have been set in type, it will bear the expense of printing and
distributing any copies thereof which are to be used in connection with the
offering of shares to prospective investors. The Distributor further agrees that
it will bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use in connection with
the offering of the shares for sale to the public, and any expenses of
advertising in connection with such offering. The Distributor will also pay fees
and expenses related to its registrations as a broker dealer and fees for
services rendered by the Trust's transfer agent on behalf of the Distributor.
(c) The Funds will be responsible for, and shall pay the expenses
of, maintaining shareholder accounts and furnishing or causing to be furnished
to each shareholder a statement of his account.
7. Distributor Is Independent Contractor. The Distributor shall be an
independent contractor. The Distributor is responsible for its own conduct, for
the employment, control and conduct of its agents and employees and for injury
to such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and
<PAGE>
employees under applicable laws and agrees to pay all employer taxes
relating thereto.
8. Term and Termination; Amendment.
(a) Term and Termination. This Agreement shall become effective as
of the effective date noted above with respect to each Initial Fund; and, with
respect to any additional Fund, (i) on the date of receipt by the Trust of
notice from the Distributor in accordance with Section 1(a) hereof that the
Distributor is willing to serve as Distributor with respect to such Fund, or
(ii) such other date with respect to an additional Fund as the Trust and the
Distributor mutually agree. Unless terminated as herein provided, this Agreement
shall remain in full force and effect with respect to each Initial Fund until
the date which is two years after the effective date of this Agreement with
respect to such Initial Fund, and, with respect to each additional Fund, for two
years from the date on which such Fund becomes a Fund hereunder. Subsequent to
such initial periods of effectiveness this Agreement shall continue in full
force and effect, subject to the last sentence of this Section 8(a), for
successive one-year periods with respect to each Fund so long as such
continuance with respect to such Fund is approved at least annually (a) by
either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of such Fund, and (b) in either
event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party of the Trust and who have no direct or indirect interest in
the operation of any 12b-1 Plan or this Agreement, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may be
terminated with respect to the Trust or any Fund at any time, without payment of
any penalty, by a vote of (a) a majority of the Trustees who are not "interested
persons" of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of any 12b-1 Plan or this Agreement
or (b) a majority of the outstanding voting securities of the Trust or that
Fund, or by the Distributor, as the case may be, in each case on sixty (60)
days' prior written notice of the other party.
(b) Amendment. Any amendment to this Agreement shall become
effective with respect to a Fund upon approval in writing of the Distributor and
the Trust (subject in the latter case to approval by a majority of the Trustees
and a majority of the Trustees who are not "interested persons" of the Trust (as
defined in the 1940 Act) and who have no direct or indirect financial interest
in the operation of any 12b-1 Plan; provided, however, that amendments relating
to any 12b-1 Plan shall not require the consent of the Distributor.
<PAGE>
(c) Approval, Amendment or Termination by Individual Fund. Any
approval, amendment or termination of this Agreement with respect to any Fund
shall be effective to continue, amend or terminate this Agreement with respect
to such Fund notwithstanding (i) that such action has not been approved with
respect to any other Fund affected thereby, and (ii) that such action has not
been approved by the shareholders of such Fund, unless such action shall be
required by any applicable law or otherwise.
9. Assignment. The Distributor may not make any assignment, as defined
under the 1940 Act, of this Agreement and this Agreement shall automatically
terminate in the event of an attempted assignment by the Distributor; provided,
however, that the Distributor may employ or enter into agreements with such
other person, persons, corporation or corporations, as it shall determine in
order to assist it in carrying out this Agreement, including, without
limitation, selected dealers as contemplated by Section 2.
10. Indemnification by Distributor. The Distributor agrees to indemnify
and hold harmless the Trust or any other person who has been, is, or may
hereafter be an officer, Trustee, employee or agent of the Trust against any
loss, damage or expense reasonably incurred by any of them in connection with
any claim or in connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise out of or is
based upon any violation of any of its representations or covenants herein
contained or any untrue statement or alleged untrue statement of a material
fact, or the omission or alleged omission to state a material fact necessary to
make the statements made not misleading, on the part of the Distributor or any
agent or employee of the Distributor or any other person for whose acts the
Distributor is responsible or is alleged to be responsible (such as any selected
dealer or person through whom sales are made pursuant to an agreement with the
Distributor), whether made orally or in writing, unless such statement or
omission was made in or in reliance upon written information furnished by the
Trust. The term "expenses" for purposes of this and the next paragraph includes
reasonable attorneys' fees and amounts paid in satisfaction of judgments or in
settlements which are made with the Distributor's consent. The foregoing rights
of indemnification shall be in addition to any other rights to which any of the
foregoing indemnified parties may be entitled as a matter of law.
11. Indemnification by Trust. The Trust agrees to indemnify and hold
harmless the Distributor and each person who has been, is, or may hereafter be
an officer, director, employee or agent of the Distributor against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit or proceeding to which any of them
may be party, which arises out of or is alleged to arise out of or is based upon
a violation of any of its covenants
<PAGE>
herein contained or any untrue or alleged untrue statement of material fact, or
the omission or alleged omission to state a material fact necessary to make the
statements made not misleading, in a Registration Statement or Prospectus of
the Trust, or any amendment or supplement thereto, unless such statement or
omission was made in reliance upon written information furnished by the
Distributor. The foregoing rights of indemnification shall be in addition to
any other rights to which any of the foregoing indemnified parties may be
entitled as a matter of law. Nothing contained herein shall relieve the
Distributor of any liability to the Trust or its shareholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or reckless
disregard of its obligations and duties hereunder.
12. Non-Exclusive Agreement. The services of the Distributor to the Trust
hereunder shall not be deemed to be exclusive, and the Distributor shall be free
to (a) render similar services to, and act as underwriter or distributor in
connection with the distribution of shares of, other investment companies, and
(b) engage in any other businesses and activities from time to time.
13. Governing Law; Counterparts. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together, constitute only one
instrument.
14. Prior Agreements Superseded; Construction. This Agreement supersedes
any prior agreement relating to the subject matter hereof between the parties
hereto. Where the context of this Agreement so permits, each of the masculine,
feminine and neuter genders shall be deemed to denote the other two genders, the
singular to denote the plural and the plural to denote the singular. Without
limiting the generality of the foregoing, all references to the Trust's
Prospectus shall include all Prospectuses thereunder.
15. Notices. Notices under this Agreement shall be in writing and shall be
addressed, and delivered or mailed postage prepaid, to the other party at such
address as such other party may designate from time to time for the receipt of
such notices. Until further notice to the other party, the address of each party
to this Agreement for this purpose shall be One Financial Center, Boston,
Massachusetts 02111.
<PAGE>
16. Limitation of Liability. The term "State Street Research Securities
Trust" means and refers to the Trustees from time to time serving under the
Master Trust Agreement of the Trust dated January 25, 1994 as the same may
subsequently have been, or subsequently may be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust as
individuals or personally, but shall bind only the trust property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization nor such execution and delivery shall be deemed to have been made
individually or to impose any personal liability, but shall bind only the trust
property of the Trust as provided in its Master Trust Agreement. The Master
Trust Agreement of the Trust further provides, and it is expressly agreed, that
each Fund of the Trust shall be solely and exclusively responsible for the
payment of its debts, liabilities and obligations and that no other Fund shall
be responsible or liable for the same.
IN WITNESS WHEREOF, this Agreement has been executed for the Distributor
and the Trust by their duly authorized officers, as of the date first set forth
above.
State Street Research Investment
Services, Inc.
By: /s/ Gerard P. Maus
-------------------------
Gerard P. Maus
State Street Research
Securities Trust
By: /s/ Ralph F. Verni
-------------------------
Ralph F. Verni
Exhibit (6)(b)
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: __________
Dealer Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Attn:
---------------------------------------
Ladies and Gentlemen:
We have been appointed to serve as an agent and principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife - State Street trusts, the State
Street trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio
series shall be denoted individually as a "Fund" and collectively as the
"Funds", and the investment companies shall be denoted individually as an
"Investment Company" and collectively as the "Investment Companies" for purposes
of this Agreement.
We are hereby inviting you, as a selected dealer and subject to the terms
and conditions set forth below, to make available to your customers Shares of
the Funds. By your acceptance hereof, you agree that you shall exercise your
best efforts to find purchasers for the Shares, shall purchase Shares only from
us or from your customers, and shall act only as agent for your customers or
dealer for your own account, with no authority to act as agent for the Funds,
for us or for any other dealer in any respect.
1. Acceptance of Orders. Orders received from you will be accepted only at
the public offering price (as defined below in Section 2) applicable to each
order. You agree to place orders for Shares immediately upon the receipt of, and
in the same amount as, orders from your customers. We will not accept a
conditional order from you on any basis. All orders are subject to our receipt
of Shares from the Investment Company and to acceptance and confirmation of such
<PAGE>
orders by us and by the Investment Company. The procedures relating to the
handling of orders shall be subject to instructions which we shall provide from
time to time to you. We and the Investment Companies reserve the right in our
sole discretion to reject any order.
2. Public Offering Price and Sales Charge. The public offering price shall
be the net asset value per Share plus any sales charge payable upon the purchase
of Shares of such Fund or class thereof as described in the then current
prospectus applicable to such Shares, as amended and in effect from time to time
(the "Prospectus"). The public offering price may reflect scheduled variations
in, or the elimination of, the sales charge on sales of the Shares either
generally to the public or in connection with special purchase plans, as
described in the Prospectus and related Statement of Additional Information. You
agree that you will apply any scheduled variation in, or elimination of, the
sales charge uniformly to all offerees in the class specified in the Prospectus.
The sales charge applicable to any sale of Shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Shares accepted by us shall be as set forth in the applicable Prospectus and
related Statement of Additional Information. You agree that you will not combine
customer orders to reach breakpoints in commissions for any purpose unless
authorized by the Prospectus or by us in writing. All commissions and
concessions are subject to change without notice by us.
3. 12b-1 Plans.
(a) As consideration for your providing distribution and marketing
services in the promotion of the sale of Shares of certain Funds or classes
thereof which have adopted Distribution Plans pursuant to Rule 12b-1 under the
1940 Act, and for providing personal services to and/or the maintenance of the
accounts of, your customers who invest in and own such Shares, we shall pay you
such fee, if any, as is described in the applicable Prospectus and otherwise
established by us from time to time on Shares which are owned of record by your
firm as nominee for your customers or which are owned by those customers of your
firm whose records, as maintained by such Fund or its agent, designate your firm
as the customer's dealer of record. Any fee payable hereunder shall be computed
and accrued daily and for each month shall be based on average daily net asset
value of the relevant Shares which remain outstanding during such month. No such
fee will be paid to you with respect to Shares redeemed or repurchased by such
Fund within seven business days after the date of our confirmation of such
purchase. No such fee will be paid to you with respect to any of your customers
2
<PAGE>
if the amount of such fee based upon the value of such customer's Shares will be
less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect to
any Fund or class thereof in accordance with the provisions of Rule 12b-1 under
the 1940 Act or the rules of the National Association of Securities Dealers,
Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time to
time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Payment for Shares. Payment for Shares sold through you shall be made on
or before the settlement date specified in the applicable confirmation, at the
office of our clearing agent, and by your check payable to the order of such
Fund or, if applicable, by Federal Funds wire for credit to such Fund, in any
case in accordance with the procedures and conditions described in the
applicable Prospectus. Each Fund reserves the right to delay issuance or
transfer of Shares until such check has cleared. If such payment is not received
by us, we reserve the right, without notice, forthwith to cancel the sale.
Unless other instructions are received by us on or before the settlement date,
orders accepted by us may be placed in an Open Account in your name. If such
payment or instruments are not timely received by us, we may hold you
responsible for any expense or loss, including loss of profit, suffered by us or
by such Fund resulting from your failure to make payment as aforesaid.
5. Redemption and Repurchase of Shares. If any of the Shares sold through
you hereunder are redeemed by such Fund or repurchased by us as agent for such
Fund within seven business days after confirmation of the original purchase, it
is agreed that you shall forfeit your right to the entire dealer concession and
related commission, if any, received by you on such Shares. We will notify you
of any such repurchase or redemption within ten business days from the date
thereof and you shall forthwith refund to us the entire concession and
commission, if any, received by you on such sale. We agree, in the event of any
such repurchase or redemption, to refund to such Fund our share of the sales
charge retained by us, if any, and upon receipt from you of the refund of the
concession allowed to you, to pay such refund forthwith to such Fund.
3
<PAGE>
If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to us or a Fund, you
agree not to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
6. Manner of Offering.
(a) No person is authorized to make any representations concerning
Shares except those contained in the applicable Prospectus, in the related
Statement of Additional Information and in any then current sales literature or
other material issued by us supplemental to such Prospectus, which sales
literature or other material is used in conformity with applicable rules or
conditions. All offerings of Shares by you shall be subject to the conditions
set forth in the applicable Prospectus (including the condition relating to
minimum purchases) and to the terms and conditions herein set forth. We will
furnish additional copies of the Prospectuses and such sales literature and
other material issued by us in reasonable quantities upon request. You will
provide all customers with the applicable Prospectus prior to or at the time
such customer purchases Shares and will forward promptly to us any customer
request for a copy of the applicable Statement of Additional Information. Sales
and exchanges of Shares may only be made in those states and jurisdictions where
the Shares are registered or qualified for sale to the public. We agree to
advise you currently of the identity of those states and jurisdictions in which
the Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that we
may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
4
<PAGE>
7. NASD Matters. This Agreement is conditioned upon your representation and
warranty that you are a member of the NASD or, in the alternative, that you are
a foreign dealer not eligible for membership in the NASD. You and we agree to
abide by the Rules and Regulations of the NASD, including Rule 26 of its Rules
of Fair Practice, and all applicable federal, state, and foreign laws, rules and
regulations.
8. Rejection of Orders. We shall have the right to accept or reject orders
for the purchase of Shares of any Fund. It is understood that for the purposes
hereof no Share shall be considered to have been sold by you and no compensation
will be payable to you with respect to any subscription for Shares which is
rejected by us or an Investment Company. Any consideration which you may receive
in connection with a rejected purchase order will be returned promptly.
Confirmations of all accepted purchase orders will be transmitted by the
Transfer Agent for the applicable Fund or class thereof to the investor or to
you, if authorized.
9. Status of Soliciting Dealer. Nothing herein shall make you a partner
with us or render our relationship an association. You are responsible for your
own conduct, for the employment, control and conduct of your employees and
agents and for injury to such employees or agents or to others through such
employees or agents. You assume full responsibility for your employees and
agents under applicable laws and agree to pay all employer taxes relating
thereto.
10. No Liability. As distributor of the Shares, we shall have full
authority to take such action as we may deem advisable in respect of all matters
pertaining to the distribution of such Shares. We shall not be under any
liability to you, except for lack of good faith and for obligations expressly
assumed by us in this Agreement; provided, however, that nothing in this
sentence shall be deemed to relieve any of us from any liability imposed by the
Securities Act of 1933, as amended.
11. Term of Contract; Amendment; Termination. This Agreement shall become
effective on the date hereof. We and each Fund reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time, to change any sales charges, commissions, concessions and other fees
described in the applicable Prospectus or to suspend sales or withdraw the
offering of Shares of any Fund or class of Shares thereof entirely. You agree
that any order to purchase Shares placed by you after notice of any amendment to
this Agreement has been sent to you shall constitute your agreement to such
amendment.
5
<PAGE>
12. Miscellaneous. This Agreement supersedes any and all prior agreements
between us. All communications to us should be sent to the above address. Any
notice to you shall be duly given if mailed or telefacsimiled to you at the
address specified by you above. This Agreement shall be effective when accepted
by you below and shall be construed under the laws of the Commonwealth of
Massachusetts.
The following provision, as marked, applies to this agreement.
|_| This document constitutes an amendment to and restatement of the Selected
Dealer Agreement currently in effect between you and us.
|_| Please confirm your agreement hereto by signing and returning the enclosed
counterpart of this Agreement at once to: State Street Research Investment
Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us as of the date
indicated.
State Street Research
Investment Services, Inc.
(Distributor)
By:
-----------------------
ACCEPTED:
[ ]
(Selected Dealer)
By:
----------------------------
6
<PAGE>
SUPPLEMENT NO. 1 TO
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: _________________
Dealer Name: _____________________________________
Address: _____________________________________
_____________________________________
Attn: _____________________________________
Ladies and Gentlemen:
This Agreement amends and supplements the Selected Dealer Agreement
between you and us, as in effect from time to time (the Selected Dealer
Agreement). All of the terms and provisions of the Selected Dealer Agreement
remain in full force and effect, and this Agreement and the Selected Dealer
Agreement shall be construed and interpreted as one Agreement, provided that in
the event of any inconsistency between this Agreement and the Selected Dealer
Agreement, the terms and provisions of this Agreement shall control. Capitalized
terms used in this Agreement and not defined herein are used as defined in the
Selected Dealer Agreement.
We understand that you wish to use Shares of the Funds in managed
fee-based programs in which you participate (the Fee-Based Program), and that
you wish to afford investors participating in such programs the opportunity to
qualify for the ability to purchase shares of the Funds at net asset value. We
are willing to allow you to purchase Shares of the Funds for sale to investors
participating in the Fee-Based Program on such basis, subject to the terms and
conditions of this Agreement and the Selected Dealer Agreement.
1. Sale of Shares through Fee-Based Program
You may, in connection with the Fee-Based Program, sell shares of any
Funds made available by us, from time to time, at net asset value to investors
participating in a bona fide Fee-Based Program. You will receive no discount,
commission or other concession with respect to any
<PAGE>
such sale, but will be entitled to receive any service fees otherwise payable
with respect thereto to the extent provided from time to time in the applicable
Funds Prospectuses and in the Dealer Agreement. We will, after consulting with
you, determine, from time to time, which Funds we will make available to you for
use in the Fee-Based Program. You agree that Shares will not be made available
through the Fee-Based Program for the sole purpose of enabling evasion of sales
charges.
2. Fees under Fee-Based Program
For any Fee-Based Program investor eligible to purchase Fund shares at
net asset value, the investor shall be subject to an annual fee of not more than
2.50% of such investors average net assets included in the Fee-Based Program,
nor less than 0.50% of such assets. You shall send to us upon request from time
to time the then-current standard fee schedule for the applicable Fee-Based
Program and a copy of the applicable Schedule H to the Form ADV containing the
required disclosures relating to the Fee-Based Program, or any successor
required disclosures. Any brochures, written materials or advertising relating
to the Fee-Based Program may refer to the Funds as available at net asset value
if the fees and expenses of the Fee-Based Program are given at least equal
prominence. In connection with explaining the fees and expenses of the Fee-Based
Program, your representatives may describe to customers the option of purchasing
Fund shares through such Program at net asset value.
3. Undertakings
You will (i) provide us with continuous reasonable access to your
offices, representatives and mutual fund and Fee-Based Program sales support
personnel and to meetings, including national and regional sales conferences and
training programs, of your representatives and sales personnel, (ii) include
descriptions of all Funds offered through the Fee-Based Program in internal
sales materials and electronic information displays used in conjunction with the
Fee-Based Program, (iii) include our representatives on your internal sales
lines and conference calls on a regular basis, (iv) use reasonable efforts to
motivate your representatives to recommend suitable Funds for clients of the
Fee-Based Program, (v) provide us with sales information in reasonable
Fund-by-Fund detail, including identification of offices and representatives
that account for the most significant sales of shares of the Funds through the
Fee-Based Program, and (vi) include the Funds on any approved, preferred or
other similar list of mutual fund products offered through the Fee-Based
Program.
4. Customer Accounts
You may maintain with the Funds shareholder servicing agent either (i)
one or more omnibus accounts solely for the participants in the applicable
Fee-Based Program or (ii) separate accounts for each participant in the
applicable Fee-Based Program. If one or more omnibus accounts are maintained,
you shall, among other things, be responsible for forwarding proxies, annual and
semi-annual reports and other materials to each beneficial owner in a timely
manner.
5. Applicable Law
This Agreement shall be governed by and construed and interpreted in
accordance with the internal laws of The Commonwealth of Massachusetts.
6. Disclaimer and Indemnity
We are not endorsing, recommending and are not otherwise involved in
providing any investment product of yours, including but not limited to any
Fee-Based Program. We are merely affording you the opportunity to use shares of
the Funds as an investment medium for the applicable Fee-Based Program. You
acknowledge and agree that you are solely responsible for any such Fee-Based
Program and you agree to indemnify, defend and hold harmless us, the Funds and
our and their affiliates, directors, trustees, offices, employees and agents
from and against any claims, losses, damages or costs (including attorneys fees)
arising from or related to such Fee-Based Program, including without limitation
any brochures, written materials or advertising in any form that refers to the
Funds or the Fee-Based Program.
7. Miscellaneous
This Agreement is not exclusive and shall terminate automatically upon
termination of the Selected Dealer Agreement. We reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has been sent to you shall constitute your
agreement to such amendment.
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: __________________________
Name:
Title:
Accepted:
__________________________________
Name of Dealer
By: __________________________________
Name:
Title:
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
State Street Research Securities Trust
We consent to the inclusion in Post-Effective Amendment No. 2 to the
Registration Statement of the State Street Research Securities Trust on Form
N-1A (Securities Act of 1933 File No. 33-74628) of our report dated June 2, 1995
on our audit of the financial statements and the financial highlights of State
Street Research Intermediate Bond Fund for the period ended April 30, 1995. We
also consent to the reference to our Firm under the captions "Financial
Highlights" and "Independent Accountants" in the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
--------------------------------
Coopers & Lybrand L.L.P.
Boston, Massachusetts
August 24, 1995
[LOGO] STATE STREET RESEARCH
[LOGO]
STATE STREET RESEARCH
IRA
Forms Booklet
o o o o o o o o o o o o o o o o o o o
This IRA Forms Booklet includes:
o Terms and Conditions
o Application
o Lump Sum Profile
o Distribution Form
o Pre-59 1/2 Distribution
Information Request Form
<PAGE>
Just about everything you will need to open an IRA at
State Street Research is included in this Forms Booklet.
--------------------------------------------------------------------------------
Terms and Conditions
--------------------------------------------------------------------------------
This legal document explains the provisions of your Individual Retirement
Account.
--------------------------------------------------------------------------------
IRA Application
--------------------------------------------------------------------------------
This application allows you or your investment representative to open all types
of IRAs, including:
o Regular/accumulation IRAs (you can make contributions to it each year).
o Rollover IRAs (you can move money from another qualified retirement
plan--such as a former employer's 401(k) plan--into an IRA at State Street
Research.) You will also need to complete the Transfer of Assets/Direct
Rollover Form.
o Transfer of assets IRAs (you can transfer money from an IRA somewhere else
to an IRA at State Street Research.) You will also need to complete the
Transfer of Assets/Direct Rollover Form.
--------------------------------------------------------------------------------
Lump Sum Profile
--------------------------------------------------------------------------------
You or your investment representative may fill out this form to request a
personalized, hypothetical illustration based on a lump-sum distribution from a
qualified retirement plan.
--------------------------------------------------------------------------------
Distribution Form
--------------------------------------------------------------------------------
When it's time to withdraw money from your IRA, this is the form to use. Among
other things, the form allows you to withdraw all of your money, set up a
Systematic Withdrawal Plan, or begin "required minimum distributions."
Before you begin withdrawals from your IRA, please consult your tax adviser
to determine whether any tax penalties apply to you. Also, don't forget that a
contingent deferred sales charge may apply to distributions. If you plan to
direct your distributions to an address besides your address of record--a bank
account or a State Street Research mutual fund, for instance--you will need a
signature guarantee.
--------------------------------------------------------------------------------
Pre-59 1/2 Distribution Information Request Form
--------------------------------------------------------------------------------
In certain cases, it may be possible to receive distributions from your IRA
before you reach age 59 1/2--without paying a tax penalty. This form lets you
request additional information. Before you begin withdrawals from your IRA,
please consult your tax adviser to determine whether any tax penalties apply to
you.
--------------------------------------------------------------------------------
Transfer of Assets/Direct Rollover Form
--------------------------------------------------------------------------------
(not included in the Forms Booklet)
Fill out this form to move money to State Street Research from an IRA at another
company (transfer of assets), or from your employee retirement plan (direct
rollover). Send us a completed Transfer of Assets/Direct Rollover Form and a
completed IRA Application, and we'll do the rest.
If you have any questions, please contact your investment representative,
or call us at 1-800-562-0032.
<PAGE>
--------------------------------------------------------------------------------
[LOGO] State Street Research IRA
Terms & Conditions
--------------------------------------------------------------------------------
These Terms and Conditions are in the form promulgated by the Internal Revenue
Service in Form 5305 for use in establishing an individual retirement trust
account.
ARTICLE I.
The Trustee may accept additional cash contributions on behalf of the Grantor
for a tax year of the Grantor. The total cash contributions are limited to
$2,000 for the tax year unless the contribution is a rollover contribution
described in section 402(c) (but only after December 31, 1992), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified employee
pension plan as described in section 408(k). Rollover contributions before
January 1, 1993, include rollovers described in section 402(a)(5), 402(a)(6),
402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a
simplified employee pension plan as described in section 408(k).
ARTICLE II.
The Grantor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV.
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Grantor's interest in the custodial account shall be made in
accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Grantor under paragraph 3, or to the surviving spouse under paragraph 4,
other than in the case of life annuity, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Grantor and the surviving
spouse and shall apply to all subsequent years. The life expectancy of a
nonspouse beneficiary may not be recalculated.
3. The Grantor's entire interest in the custodial account must be, or begin to
be, distributed by the Grantor's required beginning date (April 1 following the
calendar year end in which the Grantor reaches age 70 1/2). By that date, the
Grantor may elect, in a manner acceptable to the Trustee, to have the balance in
the custodial account distributed in:
(a) A single sum payment
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Grantor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Grantor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the Grantor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
Grantor and his or her designated beneficiary.
4. If the Grantor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:
(a) If the Grantor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Grantor dies before distribution of his or her interest has begun,
the entire remaining interest will, at the election of the Grantor or, if the
Grantor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Grantor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries starting
by December 31 of the year following the year of the Grantor's death. If,
however, the beneficiary is the Grantor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which the Grantor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Grantor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Grantor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may he accepted in the account.
5. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Grantor's entire interest in the custodial account as of the close of
business on December 31 of the preceding year by the life expectancy of the
Grantor (or the joint life and last survivor expectancy of the Grantor and the
Grantor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Grantor and designated beneficiary as
of their birthdays in the year the Grantor reaches age 70 1/2. In the case of a
distribution in accordance with paragraph 4(b)(ii), determine life expectancy
using the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C. B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V.
1. The Grantor agrees to provide the Trustee with information necessary for the
Trustee to prepare any reports required under section 408(i) and Regulations
sections 1.408-5 and 1.408-6.
2. The Trustee agrees to submit reports to the Internal Revenue Service and the
Grantor as prescribed by the Internal Revenue Service.
ARTICLE Vl.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
ARTICLE Vll.
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
<PAGE>
ARTICLE VIII.
1. The amount of each contribution credited to the Grantor's individual
retirement trust account shall (except to the extent applied to pay fees or
other charges under section 7 below) be applied to purchase full and fractional
shares of beneficial interest of one or more classes in one or more mutual funds
(hereinafter collectively the "Funds" or individually a "Fund"), as designated
from time to time by State Street Research Investment Services, Inc. ("SSRIS")
as available for investment under this agreement (provided always that such
shares may legally be offered for sale in the state of the Grantor's residence),
in accordance with instructions of the Grantor given under Section 3 below. The
Trustee (or any party appointed to act as agent for the Trustee under section 16
of this Article VlIl--the "Agent"; whenever an Agent is acting for the Trustee,
references to the Trustee will be deemed to include the Agent) may retain the
Grantor's initial deposit for a period of up to ten days after receipt thereof
without liability for any loss of interest, earnings or appreciation, and may
invest such initial deposit at the end of such period if the Grantor has not
revoked his account. The Grantor may revoke the account by written notice to the
Trustee or its Agent received by the Trustee or its Agent within seven calendar
days after the Grantor establishes the account. Upon revocation, the amount of
the Grantor's initial deposit will be returned to him, without interest.
2. All dividends and capital gain distributions received on the shares of a
particular class of any Fund held in the Grantor's account shall be retained in
the account and (unless received in additional shares of such class) shall be
reinvested in full and fractional shares of such class of such Fund.
3. For each contribution, the Grantor shall designate the portion that will be
invested in each Fund. A contribution may be invested entirely in one Fund, or
may be invested in two or more Funds. However, investment designations will be
subject to any minimum initial or additional investment rules applicable to a
Fund. In addition, the Grantor shall designate which class of shares of each
such Fund the Grantor's contribution shall be invested in.
The Grantor shall make such designation on the State Street Research
Individual Retirement Account Application or other written notice acceptable to
the Trustee.
4. Subject to the minimum initial or additional investment, minimum balance and
other exchange rules applicable to a Fund, the Grantor may at any time direct
the Trustee to exchange all or a specified portion of the shares of a Fund in
the Grantor's account for shares and fractional shares of one or more other
Funds.
The Grantor shall give such directions by written, telephonic or other
notice acceptable to the Trustee and the Trustee will process such directions as
soon as practicable after receipt thereof.
If any investment designation or direction relating to investments under
these Terms and Conditions is, in the opinion of the Trustee (or SSRIS or the
Agent), ambiguous or incomplete, the Trustee may refrain from carrying out such
designation or other investment direction until the designation or other
investment direction has been clarified or completed to the Trustee's
satisfaction, and neither the Trustee, SSRIS, the Agent nor any Fund (nor any of
their affiliates) will have any liability for loss of interest, earnings or
investment gains or appreciation during such period.
5. The Grantor, by written notice to the Trustee, may designate one or more
beneficiaries to receive the balance (if any) remaining in the Grantor's account
after his death and the time and manner of payment of such balance (subject to
the applicable requirements of the preceding Articles of these Terms and
Conditions). A designation may be on a form provided by the Trustee or on a
written instrument acceptable to the Trustee executed by the Grantor and filed
with the Trustee. The Grantor may revoke or change such designation in like
manner, at any time and from time to time. No designation will be effective
until received by the Trustee. Any designation filed with the Trustee (whether
or not such designation fully disposes of the Grantor's account) will revoke all
other designations previously filed with the Trustee. If no such designation is
in effect upon the Grantor's death, or if such a designation is in effect but
does not fully dispose of the Grantor's account, the balance in the account
shall be paid in a single sum, as soon as is practicable, to the Grantor's
estate.
Subject to the applicable requirements of the preceding Articles of these
Terms and Conditions, the Grantor may designate a form of payment to the
beneficiary by filing an instrument so specifying with the Trustee. In the
absence of such written instructions from the Grantor, the Trustee will pay the
beneficiary in such form as the beneficiary selects.
Except as provided in the first sentence of the preceding paragraph,
following the Grantor's death, each beneficiary (or the representative of the
Grantor's estate) will exercise the powers and responsibilities of the Grantor
hereunder with respect to the portion of the Grantor's account passing to such
beneficiary (or estate).
6. The Trustee shall forward to the Grantor any notices, prospectuses, reports
to shareholders, financial statements, proxies and proxy soliciting materials,
relating to the Fund shares in the Grantor's account. The Trustee shall vote any
such shares held in the account in accordance with the timely written
instructions of the Grantor if received. If no timely written instructions are
received from the Grantor, the Trustee may vote such shares in such manner as it
deems appropriate (including "present" or in accordance with the recommendations
of SSRIS).
7. The Trustee's fee for performing its duties hereunder shall be such
reasonable amounts as shall be agreed to from time to time by the Trustee and
SSRIS. Such fee, any taxes of any kind and any liabilities with respect to the
account, and any and all expenses reasonably incurred by the Trustee shall, if
not paid by the Grantor, be paid from the Grantor's account.
8. The Trustee shall make distributions from the account at such times and in
such manner as the Grantor directs in writing, subject (except where otherwise
specifically provided in this Article VIII) to the applicable requirements of
the preceding Articles of these Terms and Conditions.
The recalculation of life expectancy of the Grantor and/or the Grantor's
spouse in connection with distributions from the account before the Grantor's
death will be made only at the written election of the Grantor. The
recalculation of life expectancy of the surviving spouse in connection with
distributions from the account after the Grantor's death will be made only at
the written election of the surviving spouse. By establishing the account, the
Grantor (for himself and his surviving spouse, if any) determines not to
recalculate life expectancies unless the Grantor (or surviving spouse)
specifically elects the recalculation of life expectancies approach in
accordance with the following sentence. Any such election may be made in such
form as the Grantor (or the surviving spouse) provides for (including
instructions to such effect to the Trustee or the calculation of minimum
distribution amounts in accordance with a method that provides for recalculation
of life expectancy and instructions to the Trustee to make distributions in
accordance with such method).
9. It shall be the sole responsibility of the Grantor to determine the time and
amount of contributions to the account and the time, amount and manner of
payment of distributions from the account (and to instruct the Trustee or the
Agent accordingly), and the federal and state tax treatment of any contributions
to or distributions from the account. SSRIS, the Agent, the Trustee and the
Funds shall be fully protected in following the direction of the Grantor with
respect to the time, amount and manner of payment of such distributions, or in
not acting in the absence of such direction. If the Grantor (or beneficiary)
does not direct the Trustee to make distributions from the account by the time
that such distributions are required to commence in accordance with the
preceding Articles of these Terms and Conditions, the Trustee (and SSRIS and the
Agent) will assume that the Grantor (or beneficiary) is meeting the minimum
distribution requirements from another individual retirement arrangement
maintained by the Grantor (or beneficiary) and will be fully protected in so
doing. SSRIS, the Agent, the Trustee and the Funds shall not be liable for any
taxes, penalties, liabilities or other costs to the Grantor or any other person
resulting from contributions to or distributions from the
<PAGE>
Grantor's account.
10. SSRIS, the Agent, the Trustee and the Funds shall not be responsible for any
loss or diminution in the value of the Grantor's account arising out of the
Grantor's establishment of a State Street Research Individual Retirement Account
or arising out of any investment instructions of the Grantor, whether relating
to the portion of contributions invested in one or more of the Funds, the
selection of a particular class of shares of a particular Fund, or the exchange
of shares of one Fund for shares of one or more other Funds. SSRIS, the Agent,
the Trustee and the Funds shall not render any investment advice to the Grantor
(or beneficiary) and will have no duty of inquiry concerning the Grantor's (or
beneficiary's) investment directions (subject to the right of the Trustee, SSRIS
or the Agent to obtain clarification or completion of any investment directions
under section 4 above). The Grantor (or beneficiary) will have exclusive
investment control over the account.
11. Whenever the Grantor (or beneficiary) is responsible for any direction,
notice, representation or instruction under these Terms and Conditions, SSRIS,
the Agent, the Trustee and the Funds shall be entitled to assume the propriety
and truth of any statement made by the Grantor (or beneficiary), and shall be
under no duty of further inquiry with respect thereto, and shall have no
liability with respect to any action taken in reliance upon such statement.
However, the Trustee (or Agent or SSRIS) shall be entitled to receive such
information or documentation (including signature guarantees, waivers or
indemnifications) as it may reasonably request before carrying out any
direction, notice or instruction from the Grantor (or beneficiary).
Grantor agrees to provide information to the Trustee at such times as may be
necessary to enable the Trustee to administer the account hereunder.
Except to the extent provided by applicable law, the account will not be
subject to assignment, transfer, pledge or hypothecation, nor shall it be liable
for the debts of the Grantor (or beneficiary) or subject to seizure, attachment,
execution or other legal process. However, the Trustee (or Agent or SSRIS) may
carry out the requirements of any apparently valid order of a governmental
authority (including a court) relating to the Grantor's account and will have no
liability for so doing.
12. These Terms and Conditions shall terminate upon the complete distribution of
the account to the Grantor or his beneficiaries or to a successor individual
retirement account, annuity or bond, to a qualified plan, or to an annuity or
custodial account under Section 403(b) of the Internal Revenue Code. The Trustee
shall have the right to terminate this account upon 60 days notice to the
Grantor, or to his beneficiaries if he is then dead. In such event, upon
expiration of such 60 day period, the Trustee shall transfer the amount in the
account into such successor individual retirement accounts, annuities or bonds,
qualified plan, or annuity or custodial account as the Grantor (or his
beneficiaries) shall designate, or, in the absence of such designation, to the
Grantor, or if he is then dead, to the beneficiaries or the Grantor's estate as
their interests shall appear.
13. The Trustee may resign at any time upon 60 days notice in writing to SSRIS
and may be removed by SSRIS at any time upon 60 days notice in writing to the
Trustee. Upon such resignation or removal, SSRIS shall appoint a successor
trustee which satisfies the requirements of Section 408 of the Internal Revenue
Code.
14. Upon receipt by the Trustee of written notice of appointment of a successor
trustee or custodian and of written acceptance of such appointment by the
successor, the Trustee shall transfer to such successor the assets of the
account and copies of all records pertaining thereto. The Trustee may reserve
such sum of money as it deems advisable for payment of its fees, taxes, costs,
expenses or liabilities with respect to the account, with the balance (if any)
of such reserve remaining after the payment of such items to be paid over to the
successor. The successor shall hold the assets paid over to it under terms that
satisfy the requirements of Section 408 of the Internal Revenue Code.
15. If, within 60 days after the Trustee's resignation or removal, SSRIS has not
appointed a successor trustee which has accepted such appointment, the Trustee
shall appoint such a successor unless it elects to terminate the Agreement under
Section 12 of this Article VIII.
16. The Trustee may employ or designate one or more parties to serve as agents
or contractors to perform any or all of its duties hereunder.
17. Any notice sent to the Grantor or to his beneficiaries or estate, if he is
then dead, shall be effective if sent by first class mail to him or them at his
or their last addresses of record as provided to the Trustee.
18. Any distributions from the account may be mailed, first-class postage
prepaid to the last known address of the person who is to receive such
distribution, as shown on the Trustee's records, and such distribution shall to
the extent of the amount thereof completely discharge the Trustee's liability
for such payment.
19. Any purchase or redemption of shares of any class of a Fund for or from the
Grantor's account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Fund's transfer agent receives the contribution or
other directions.
Any purchase, exchange, transfer or redemption of shares of any class of a
Fund for or from the Grantor's account will be subject to any sales charge,
distribution fee or redemption charge, or other fee or charge applicable to
shares of such class, as described in the then effective prospectus for such
Fund. In addition, shares of any class of a Fund will be subject to any service
fee, charge or other annual maintenance or servicing fees or charges applicable
to shares of such class as described in the then effective prospectus for such
Fund.
20. SSRIS may amend these Terms and Conditions from time to time, and shall give
written notice of any material amendment to the Grantor within a reasonable time
after the amendment is adopted or becomes effective, whichever is later. The
Grantor hereby expressly delegates authority to SSRIS to amend these Terms and
Conditions and consents to any such amendments.
21. These Terms and Conditions shall be construed, administered and enforced
according to the laws of Massachusetts. The Grantor agrees that any legal
proceedings relating to the Grantor's account must be brought in a court
(including a federal district court) located in Massachusetts.
22. The term "Trustee" refers to the person serving as the Trustee of the
Individual Retirement Account established hereby, and the term "Grantor" refers
to the person for whose benefit such Account was established.
23. Articles I through VII of these Terms and Conditions are in the form
promulgated by the Internal Revenue Service. It is anticipated that if and when
the Internal Revenue Service promulgates changes to Form 5305, SSRIS will adopt
such changes as an amendment to these Terms and Conditions. Pending the adoption
of any amendment necessary or desirable to conform these Terms and Conditions to
the requirements of any amendment to the Internal Revenue Code or regulations or
rulings thereunder, the Trustee (and SSRIS and the Agent) may operate the
Grantor's account in accordance with such requirements to the extent deemed
necessary to preserve the tax benefits of the account.
24. The Grantor acknowledges that he or she has received and read the current
prospectus for each Fund in which his or her account is invested and the State
Street Research Individual Retirement Account Disclosure Statement.
(References are to the Internal Revenue Code.)
[LOGO] STATE STREET RESEARCH
<PAGE>
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[LOGO] State Street Research IRA
IRA Application
--------------------------------------------------------------------------------
Upon completion, send application and check (if you are making a
contribution at this time) made payable to "State Street Bank and Trust Company,
Trustee" to the address listed on the back.
1 What Type of IRA?
/ / Regular/Accumulation
(if you plan to make additional investments
into the account)
/ / Rollover IRA
/ / Direct rollover (sent trustee to trustee, from
a qualified retirement plan elsewhere to a
State Street Research IRA)
/ / Rollover (proceeds from my former qualified
retirement plan were paid to me, and my
check is enclosed) Please note: Rollover must be
transferred within 60 days of the date proceeds
were paid to you.
Do not rollover or transfer any amounts required
to be paid to you under the minimum distribution
rules that apply after you reach age 70 1/2, or any
other amounts which are not eligible rollover
distributions or would not be otherwise includable
in your gross income.
/ / Transfer of Assets
(from an IRA at another company to a State Street
Research IRA)
/ / SEP IRA / / SAR-SEP IRA
--------------------------------------------------------------------------------
Name of employer Employer telephone
--------------------------------------------------------------------------------
Address of employer
2 What is your name and address?
(Please print.)
--------------------------------------------------------------------------------
Your name
--------------------------------------------------------------------------------
Street address
--------------------------------------------------------------------------------
City State ZIP
--------------------------------------------------------------------------------
Daytime telephone number Evening telephone number
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
3 Which funds have you selected?
--------------------------------------------------------------------------------
Fund name
$ / / A / / B / / D*
--------------------------------------------------------------------------------
Amount ($2,000 minimum) Share class**
--------------------------------------------------------------------------------
Fund name
$ / / A / / B / / D*
--------------------------------------------------------------------------------
Amount ($2,000 minimum) Share class**
--------------------------------------------------------------------------------
Fund name
$ / / A / / B / / D*
--------------------------------------------------------------------------------
Amount ($2,000 minimum) Share class**
$
---------------------
Total amount invested
* "D" shares not available through MSI.
**Investments in Money Market Fund will purchase
class E shares.
If a check is enclosed, make it payable to "State Street Bank and Trust
Company, Trustee." Please add $10 for the first year's trustee fee;
otherwise, the fee will be deducted from your account at year end.
<PAGE>
4 Who is your beneficiary?
Primary beneficiary
(only one required per account. If you have more than
two, include them on a separate sheet. If two or more
are named, they will receive equal amounts unless you
specify otherwise; also if one of the named primary
beneficiaries predeceases you, that person's share will
be distributed pro-rata to the other primary beneficiaries
who survive you, unless you specify otherwise.)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City State ZIP
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City State ZIP
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
Secondary beneficiary
(if the person(s) named as primary beneficiary fails to
survive you.)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City State ZIP
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
5 We need your signature
I hereby establish a State Street Research IRA, appoint State Street Bank and
Trust Company as Trustee, direct that contributions to my IRA be invested as
specified by this application, and designate the individual(s) named above, or
in any signed attachment, as my beneficiary(ies). I have received a current
prospectus for the Fund(s) indicated above and the Terms and Conditions of the
State Street Research IRA (which are incorporated herein by reference) and have
read its Disclosure Statement.
Under penalties of perjury, I certify that: (1) the number shown on this form is
my correct taxpayer identification number (or I am waiting for a number to be
issued to me), and (2) I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified by the Internal
Revenue Service that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding. (You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
return.)
I confirm that all the information, instructions and agreements set forth hereon
shall apply to the account, and if applicable, shall also apply to any other
fund account with shares acquired upon exchange of share of the Fund.
--------------------------------------------------------------------------------
Signature Date
<PAGE>
6 Dealer information
(for Dealer use only)
--------------------------------------------------------------------------------
Dealer name
--------------------------------------------------------------------------------
Street address of home office
--------------------------------------------------------------------------------
City State ZIP
--------------------------------------------------------------------------------
Authorized signature of dealer
--------------------------------------------------------------------------------
Agency/branch office number
--------------------------------------------------------------------------------
Street address of agency/branch office servicing account
--------------------------------------------------------------------------------
City State ZIP
--------------------------------------------------------------------------------
Registered representative's name and number
If this application is for an account introduced through the above-named Dealer,
the Dealer further agrees to all applicable provisions in this application and
in the Prospectus. The Dealer warrants that this application is completed in
accordance with the shareholder's instructions and agrees to indemnify the
Transfer Agent, the Fund, any other eligible Funds, State Street Research
Shareholder Services, the Investment Manager or the Distributor for any loss or
liability from acting or relying upon such instructions and information. The
terms and conditions of the currently effective Selected Dealer Agreement or
sales agreement are included by reference in this section. The dealer represents
that it may lawfully sell shares of the designated Fund(s) in the state
designated as the Applicant's address of record, and that it has a currently
effective selected dealer agreement with a Distributor authorizing the Dealer to
sell shares of the Fund and the Eligible Funds.
--------------------------------------------------------------------------------
Optional Shareholder Services
--------------------------------------------------------------------------------
A Telephone Exchange Privilege
To exchange Fund shares over the telephone--available only for shares held on
deposit with Agent.
Telephone Exchange By Shareholder OR DEALER
State Street Research Shareholder Services may effect exchanges for my account
according to telephone instructions FROM ME OR MY DEALER as set forth in the
Prospectus, and may register the shares of the fund to be acquired exactly the
same as my existing account. Authorizing an exchange constitutes an
acknowledgment that I have received the current prospectus of the Fund to be
acquired.
I will not hold the Transfer Agent, the Fund, any other Eligible Funds, State
Street Research Shareholder Services, the Investment Manager or the Distributor
liable for any loss, injury, damage or expense as a result of acting upon any
telephone instructions or responsible for the authenticity of any telephone
instructions. I understand that all telephone calls are tape recorded. My
liability shall be subject to the use of reasonable procedures to confirm that
instructions communicated by telephone are genuine.
The account will automatically have this privilege unless you expressly decline
it by providing your initials below.
I do not want the Telephone Exchange Privilege.
(initial here.)
-----------------
B Do You Qualify For Reduced Sales Charges?
(Applies to Class A shares only)
/ / Right of Accumulation:
I apply for Right of Accumulation reduced sales charges for Class A share
purchases because the combined holdings for me and my family members in the
Eligible Funds (listed below) totals $100,000 or more. I understand the Transfer
Agent must confirm the holdings listed below.
Name on account Account number
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
/ / Letter of Intent:
I intend to invest / / $100,000, / / $250,000, / / $500,000, or
/ / $1,000,000 in any combination of the Eligible Funds
over a 13-month period beginning _________________ 19__
(purchase date not more than 90 days prior to this letter). If
the amount indicated is not invested within 13 months,
reduced sales charges do not apply.
<PAGE>
C Investamatic Check Program
To arrange automatic additional investments from a bank account into Fund
accounts. Accounts must first meet minimum initial investment requirements.
(Total annual contribution should not exceed $2,000 for an individual IRA.)
--------------------------------------------------------------------------------
Fund name Account number
$ / / A / / B / / D
--------------------------------------------------------------------------------
Amount (See prospectus for minimum) Share class*
--------------------------------------------------------------------------------
Fund name Account number
$ / / A / / B / / D
--------------------------------------------------------------------------------
Amount (See prospectus for minimum) Share class*
* Investments in Money Market Fund will purchase
Class E shares.
--------------------------------------------------------------------------------
Account registration (exactly as it appears on Fund records)
Frequency of investment
/ / Monthly / / Quarterly
Investment date (if you don't choose a date, the 5th will be
chosen automatically)
/ / 5th business day / / 20th business day
I hereby request and authorize the bank named in this section ("the Bank") to
pay and charge checks drawn on, or debits against, my account initiated by and
payable to the transfer agent designated by the Distributor. I agree that the
Bank's rights in respect to each such check or debit shall be the same as if it
were a check drawn on or debit against my account authorized personally by me.
This authority is to remain in effect until revoked by me, and until the Bank
actually receives such notice, I agree that the Bank shall be fully protected in
honoring any such check or debit authorization. I further agree that if any
check or debit authorization be dishonored, whether with or without cause and
whether intentionally or inadvertently, the Bank shall be under no liability
whatsoever, unless the nonpayment is because of insufficient funds. I understand
that this Program may be revoked by the Agent or the Distributor without prior
notice if any check is not paid upon presentation, and that this Program may be
discontinued by the Distributor, the Agent or me upon thirty (30) business days'
notice prior to the due date of any deposit.
State Street Bank and Trust Company, Trustee:
You are hereby authorized and appointed on behalf of the above-signed dealer
to execute the purchase transactions in accordance with the terms and
conditions of this Application, and to confirm each purchase.
Acceptance by the Trustee:
This plan shall be deemed to have been accepted by the Trustee, State Street
Bank and Trust Company, after all necessary forms, properly completed, are
received by State Street Research Shareholder Services, and delivered by
Shareholder Services to the agent for the Trustee.
Type of bank account:
/ / Checking / / NOW or Money Market / / Savings
--------------------------------------------------------------------------------
Account title (print exactly as it appears on bank records)
--------------------------------------------------------------------------------
Bank routing number Bank account number
--------------------------------------------------------------------------------
Bank name
--------------------------------------------------------------------------------
Bank street address
--------------------------------------------------------------------------------
City State ZIP
1944
4-122/100
________________ 19____
______________________________________________________________/ $
______________________________________________________________ DOLLARS
Staple a blank check marked "VOID" here
_________________________________________________________________________
1505
================================================================================
Once completed, send application and check (if you are making a contribution at
this time) made payable to "State Street Bank and Trust Company, Trustee" to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
================================================================================
[LOGO] STATE STREET RESEARCH
<PAGE>
--------------------------------------------------------------------------------
[LOGO] State Street Research IRA
Lump Sum Profile
--------------------------------------------------------------------------------
Registered Representative Information
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Firm name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City State ZIP
--------------------------------------------------------------------------------
Telephone Fax
================================================================================
Registered representative, return form to:
State Street Research Investment Services
Attn: Marketing Analysis Department
One Financial Center, 3rd Floor
Boston, MA 02111
Or fax to: 1-617-261-0288
================================================================================
Client Information
--------------------------------------------------------------------------------
Name
/ /
--------------------------------------------------------------------------------
Date of lump-sum distribution Age Date of birth
--------------------------------------------------------------------------------
Spouse's age Age to start income payments (maximum age 70 1/2)
Exempt from early distribution penalty? / / yes / / no
$
--------------------------------------------------------------------------------
Year you entered plan Total taxable distribution
$
--------------------------------------------------------------------------------
Number of exemptions Other taxable income in year of distribution
(income after deductions and exemptions)
$
--------------------------------------------------------------------------------
Other taxable income during payout period
(income after deductions and exemptions)
Tax filing status / / single / / joint / / head of household
%
--------------------------------------------------------------------------------
Inflation rate (for 15% penalty tax exclusion)
(3% assumed unless otherwise indicated)
%
--------------------------------------------------------------------------------
Federal income tax bracket (if none elected, 28% assumed)
%
--------------------------------------------------------------------------------
Your state income tax rate
--------------------------------------------------------------------------------
Rate of return to assume (5% unless otherwise indicated)
Investment Information
What is your investment objective? (check all that apply)
/ / Aggressive growth
/ / Growth
/ / Growth and income
/ / Current income
[LOGO] STATE STREET RESEARCH
<PAGE>
--------------------------------------------------------------------------------
[[LOGO] State Street Research IRA
IRA Distribution Form
--------------------------------------------------------------------------------
1 IRA owner information
(Please print or type.)
--------------------------------------------------------------------------------
Today's date
--------------------------------------------------------------------------------
IRA account number
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Daytime phone number
--------------------------------------------------------------------------------
Address (P.O. Boxes may not be used)
--------------------------------------------------------------------------------
City State ZIP
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
2 Oldest primary designated beneficiary
(If you wish to add beneficiaries, please attach a separate list.)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Relationship
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City State ZIP
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
3 Account balance on December 31:
If you transferred or rolled over your IRA from another
retirement plan this year, please provide its account
balance as of December 31 of the prior year.
$______________
4 Type of Distribution
(Choose one. For Class "B" or "D" shares, a contingent
deferred sales charge may apply.)
/ / A. Regular distribution
I am age 59 1/2 or older and wish to withdraw $_____________
(To establish a Systematic Withdrawal Plan, fill out
section 5.)
/ / B. Disability
I wish to withdraw $_____________
I have attached a copy of Schedule R from my tax return
or a confirmation letter from my physician.
(To establish a Systematic Withdrawal Plan, fill out section 5.)
/ / C. Death of IRA shareholder
Withdrawal amount: $______________
The beneficiary should complete this form and enclose a
certified copy of the shareholder's death certificate.
(To establish a Systematic Withdrawal Plan, fill out section 5.)
/ / D. Withdrawal of excess contribution
Year excess contribution was made: 19_____.
Withdrawal amount: $______________
/ / E. Pre-59 1/2 distribution
I wish to withdraw $
I understand that a 10% tax penalty may apply on the
amount of the withdrawal includable in income.
/ / F. Pre-59 1/2 distribution with substantially equal
periodic payments
(If you have any questions, contact your investment
representative or tax adviser, or call State Street Research
at 1-800-562-0032. State Street Research does not guarantee
or give any assurance that the pre-59 1/2 distribution with
"substanially equal periodic payments" will qualify for an
exception to the 10% penalty tax.)
/ / I have made the calculations to determine substantially
equal periodic payments from my IRA account. I understand
that if I modify the withdrawal plan before the end of
5 years, or before I reach age 59 1/2, whichever occurs later,
the IRS may impose a retroactive 10% penalty on
payments includable in income with interest.
Payment amount $__________________
Payment frequency:
/ / Monthly / / Quarterly / / Semiannually / / Annually
/ / Make the calculations for me based on:
/ / My individual life expectancy.
/ / Joint life expectancy with my designated beneficiary.
Payment frequency:
/ / Monthly / / Quarterly / / Semiannually / / Annually
/ / G. Post-70 1/2 - Required minimum distribution
(choose one.)
/ / I wish to receive my entire IRA account balance.
/ / I am already taking the required minimum distribution
from another IRA. Please take no action.
/ / I have calculated the amount of my required distribution.
Payment amount $__________________
Payment frequency:
/ / Monthly / / Quarterly / / Semiannually / / Annually
/ / Make the calculations for me based on:
/ / My individual life expectancy.
/ / Joint life expectancy with my designated beneficiary.
/ / A fixed number of years:_____________ years
Payment frequency:
/ / Monthly / / Quarterly / / Semiannually / / Annually
Payments to begin:____________________(month/year)
Note: to begin payments in the month indicated,
State Street Research must receive this form at least
three weeks prior to the first payment.
/ / H. Income distributions
Choose only one. (Not available if you are under age 59 1/2.
If you choose this option, you may not choose a Systematic
Withdrawal Plan. Please note: this may not be enough to satisfy
minimum distribution rules if you are over age 70 1/2.)
/ / Dividends in cash
/ / Dividends and capital gain distributions in cash
<PAGE>
5 Systematic Withdrawal Plan
Please base my systematic withdrawal payments on
the following (choose only one). For Class "B" or "D"
shares, a contingent deferred sales charge may apply.
/ / My individual life expectancy.
Do you wish us to recalculate this each year? / / Yes / / No
/ / Joint life expectancy with my designated beneficiary.
Do you wish us to recalculate this each year? / / Yes / / No
/ / A fixed number of years:_________________years
Do you wish us to recalculate this each year? / / Yes / / No
/ / A fixed dollar amount: $____________________
/ / A fixed number of shares:___________________
/ / A fixed percentage:_________________________%
Payment frequency:
/ / Monthly / / Quarterly / / Semiannually / / Annually
Payments to begin:___________________________(month/year)
Note: to begin payments in the month indicated, State Street
Research must receive this form at least three weeks prior to
the first payment.
6 Distribute To:
/ / Mail to IRA owner, at address of record
/ / Deposit to the following (non-retirement) State Street
Research mutual fund account
--------------------------------------------------------------------------------
Fund name:
--------------------------------------------------------------------------------
Account number:
/ / Open a new (non-retirement) account in the following
mutual fund from State Street Research:
--------------------------------------------------------------------------------
Fund
/ / A / / B / / D
--------------------------------------------------------------------------------
Share class*
/ / Other payee:
--------------------------------------------------------------------------------
Name of bank (Automatic Bank Connection) or payee
--------------------------------------------------------------------------------
Bank account number (if applicable)
--------------------------------------------------------------------------------
Street address
--------------------------------------------------------------------------------
City State ZIP
Attach a blank check marked "Void" if distribution
is to be made to your bank.
* Investments in Money Market Fund will purchase
Class E shares.
7 Substitute Form W-4P
Withholding Election:
(This section must be completed.)
Instructions: Check the first box if you do not want federal
tax withheld from each IRA distribution. If you elect no withholding,
your election will remain in effect until revoked; you
may change your election by writing to State Street Research
Shareholder Services. Check the second box to have withholding
apply. Even if you elect not to have federal tax withheld,
you are liable for payment of federal tax on the taxable portion
of your IRA distribution. You may also be subject to tax penalties
under the estimated tax payment rules if your payments
of estimated tax and withholding are not adequate. Some
states may also require us to withhold state income tax from
these withdrawals.
We encourage you to consult with your tax adviser regarding
your IRA distributions.
/ / I elect not to have tax withheld from each distribution.
/ / I elect to have 10% tax withheld from each distribution.
Also, please withhold an additional________________% or $____________
from each distribution.
--------------------------------------------------------------------------------
Signature of IRA owner Date
8 Authorizations and signatures:
I authorize the Transfer Agent to act upon my
instructions for both the options I have checked
on this form and the withholding elections I
have indicated:
--------------------------------------------------------------------------------
Signature of IRA owner
--------------------------------------------------------------------------------
Printed name of IRA owner
Signature Guarantee
--------------------------------------------------------------------------------
Name of bank or eligible guarantor
--------------------------------------------------------------------------------
Authorized signature of bank or eligible guarantor
--------------------------------------------------------------------------------
Title
A signature guarantee is required if you are directing a
distribution to an address other than your address of record or
to a payee other than yourself. Signatures may be guaranteed
by a bank, a member of a domestic stock exchange, or other
eligible guarantor. Notarizations are not acceptable.
================================================================================
Return this signed and dated form to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
================================================================================
[LOGO] STATE STREET RESEARCH
<PAGE>
--------------------------------------------------------------------------------
[LOGO] State Street Research IRA
Pre-59 1/2 Distribution Information Request Form
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Client's Name
/ / / /
--------------------------------------------------------------------------------
Date Date of Birth
$
--------------------------------------------------------------------------------
Current Account Balance(1)
Payout Mode (Circle) A S Q M
/ /
--------------------------------------------------------------------------------
Beneficiary's Date of Birth (Optional)(2)
================================================================================
Registered representative, return form to:
State Street Research Investment Services
Attn: Marketing Analysis Department
One Financial Center, 3rd Floor
Boston, MA 02111
Or fax to: 1-617-261-0288
================================================================================
--------------------------------------------------------------------------------
Representative's Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
( )
--------------------------------------------------------------------------------
Telephone Number
( )
--------------------------------------------------------------------------------
Fax Number
Unless otherwise indicated, response will be to the
fax number above.
Comments:
(1) Account balance at end of prior month or current balance
for this month. Factors are valid for current balances and
current month only. However, factors can be used for
planning purposes for withdrawals in the future. When actual
withdrawals are to commence, the client's age, account
balance and actual month will be used for factor calculations.
(2) While the age of the beneficiary can be used for factor
calculations, usually a single life quotation will maximize
the payouts.
[LOGO] STATE STREET RESEARCH P59TT (2/95)
<PAGE>
[LOGO] STATE STREET RESEARCH
(C)1995 State Street Research Investment Services, Inc. Boston, MA 02111
CONTROL NUMBER: 2251-950331(0496)SSR-LD IR-082E-395
<PAGE>
--------------------------------------------------------------------------------
[LOGO] State Street Research IRA
Transfer of Assets/Direct Rollover Form
--------------------------------------------------------------------------------
Once completed, send the top two copies of this form and a State Street Research
IRA Application to: State Street Research Shareholder Services, P.O. Box 8408,
Boston, MA 02266-8408. Do not rollover or transfer any amounts required to be
paid to you under the minimum distribution rules that apply after you reach age
70 1/2.
1 Your name and address
(Please print.)
--------------------------------------------------------------------------------
Your name
--------------------------------------------------------------------------------
Street address
--------------------------------------------------------------------------------
City State ZIP
--------------------------------------------------------------------------------
Home telephone number Business telephone number
/ /
--------------------------------------------------------------------------------
Social security number/taxpayer identification number Date of birth
2 Your fund selections at
State Street Research
Fund Name Account number Share class* Amount
(if applicable)
/ / A / / B / / D
--------------------------------------------------------------------------------
/ / A / / B / / D
--------------------------------------------------------------------------------
/ / A / / B / / D
--------------------------------------------------------------------------------
*Money Market Fund investments will purchase Class E shares.
3 Direct Rollover of Eligible Rollover
Distributions (complete if applicable)
(Sent trustee-to-trustee, from a retirement plan
elsewhere to an IRA at State Street Research)
Type of current plan:
/ / 403(b) / / 401(k) / / Pension plan / / Other
--------------------------------------------------------------------------------
Account number
--------------------------------------------------------------------------------
Name and address of current trustee/custodian
4 Transfer of Assets (complete if applicable)
(From an IRA at another company to an
IRA at State Street Research)
--------------------------------------------------------------------------------
Name and address of current trustee/custodian
--------------------------------------------------------------------------------
Fund name IRA account number
--------------------------------------------------------------------------------
Fund name IRA account number
5 Authorization
(To authorize your current Trustee/custodian to
transfer/rollover your qualified plan or IRA assets to
State Street Research)
Please redeem / / all or / / part ($__________ ) of my present
account and transfer the redemption proceeds to my State
Street Research IRA account / / immediately / / at maturity.
--------------------------------------------------------------------------------
Your signature Date
--------------------------------------------------------------------------------
Employer's signature (if required) Date
6 Signature guarantee
(Ask your current custodian/trustee if it requires
your signature to be guaranteed.)
Signature guaranteed by:
--------------------------------------------------------------------------------
Name of bank/eligible guarantor
--------------------------------------------------------------------------------
Authorized signature of bank or eligible guarantor
Please do not fill out the lower portion of this form.
--------------------------------------------------------------------------------
For current trustee/custodian use: Instructions for delivery to State Street
Research IRA.
--------------------------------------------------------------------------------
Please liquidate and transfer on a fiduciary-to-fiduciary basis all or part of
the designated account as instructed above and make check payable to: State
Street Bank and Trust Company, Trustee.
================================================================================
Please include account number and FBO on the check.
Mail to: State Street Research Shareholder Services, P.O. Box 8408, Boston,
MA 02266-8408
Please remember to include a copy of this form, along with a check, for
proper credit to the accounts. State Street Research Shareholder Services
will deliver the items to the agent for State Street Bank and Trust Company,
who serves as Trustee.
================================================================================
For successor trustee/custodian use: Successor Trustee's acceptance of
Individual Retirement Account assets.
State Street Bank and Trust Company will accept the transfer described above
once this form has been completed and signed by you.
--------------------------------------------------------------------------------
Authorized signature of acceptance by Agent for State Street Bank and Trust
Company, Trustee.
CONTROL NUMBER: 2237-950331(0496)SSR-LD IR 139E-395
[LOGO] STATE STREET RESEARCH
<PAGE>
[Logo] STATE STREET RESEARCH
[LOGO]
STATE STREET RESEARCH
IRA
YOUR GUIDE TO PLANNING FOR
A COMFORTABLE RETIREMENT
o o o o o o o o o o o o o o
o Regular/accumulation IRA
o Rollover IRA
o Transfer of assets IRA
o Lump-Sum distribution IRA
o IRA distributions and withdrawals
<PAGE>
GONE
FISHIN'
[Graphic -- Fish]
CONTENTS PAGE
Introduction.................................1
What is an IRA...............................3
IRA at a glance..............................4
Choosing your IRA
o regular/accumulation IRA ...............5
o rollover/transfer of assets...............7
o lump-sum distribution.....................9
State Street Research
IRA services
o Distributions/withdrawals ...........12-13
IRA basics
Answers to common
questions................................15
Why invest with
State Street Research.......................18
Your investment
options.............................Back Cover
A RELAXED
RETIREMENT
REQUIRES
CAREFUL
PLANNING
o o o o o o o o o o o o o o o o o o o o o
Many of us look forward to retirement as
a time when we can do the things we've
wanted to do for years. But in order for
your "golden years" to shine, you need
to start planning today.
The Financial Challenges
of Retirement
When planning for something as important
as your retirement, it's crucial that
you know the facts:
o Many people are retiring earlier and
living longer; retirement assets may
have to last 20, even 30, years. Yet
half of all retirees during the late
1980s entered their retirement years
with less than $10,000 in savings.(1)
Outliving retirement income is a
serious concern.
(1) Source: Rep. William J. Hughes,
statement before the Subcommittee on
Retirement Income and Security, House
Select Committee on Aging, U.S. House
of Representatives, July 10, 1991.
1
<PAGE>
How Long Will Your
Money Last...
$100,000 earning hypothetical rates of
return with monthly withdrawals of $800
(compounded monthly)
Years of withdrawals before principal is exhausted
[The table below was represented as a bar graph in the printed material.]
4% 13.5 yrs.
6% 16.2 yrs.
8% 22.1 yrs.
Rate of return before inflation
These figures are for illustration only
and are not a projection of investment
performance. There is no guarantee that
any available fund managed by State
Street Research or its affiliates will
achieve any particular rate of return.
Results do not take into account the
effect of taxes or inflation on income.
o Estimates indicate that most retirees
need 70% to 80% of their
pre-retirement income to maintain
their standard of living. In most
cases, Social Security and pension(s)
provide only a portion of the income
needed. A third or more may have to
come from personal savings and
investments.
o Retirees should not count on Social
Security as a sole means of
retirement income. Consider that the
average Social Security payment is
$7,836 per year (that's only $653 per
month),(2) fine as a supplement, but
not as a primary source of income.
(2) Source: Social Security
Administration
Where Will The Money
Come From
THE PERCEPTION
Where will many pre-retirees think
the money will come from
[The table below was represented as pie graph in the printed material.]
Savings* 18%
Pensions** 43%
Social Security 25%
Earnings 4%
Other/Unsure 10%
Source: Merrill Lynch
* Includes IRA, payroll reduction plan,
401(k), life insurance, annuities,
investments, other savings on hand
and savings to be added.
** Includes employer's pension plan,
profit sharing plan, government
pension, Keogh/SEP.
THE REALITY
Actual sources of
Retirement Income
[The table below was represented as a pie graph in the printed material.]
Pensions 20%
Earned Income 27%
Investment/Savings 33%
Social Security 18%
Other Benefits 2%
Source: Social Security Administration.
For retirees with at least $28,714 in
annual income in 1990.
o Most Americans change jobs numerous
times over their careers; frequent
job changes can mean reduced income
from company pension plans. Similar
to Social Security, pension plans
should be viewed as a supplementary
source of retirement income.
o Taxes and inflation. They don't go
away, even for retirees. In fact, the
portion of Social Security benefits
that may be subject to tax has
increased from 50% to 85%! And when
you consider that an annual inflation
rate of 4% cuts purchasing power in
half in just 15 years, the
combination of taxes and inflation
can make a serious dent in any
retirement nest egg.
Remember When...
A dollar was worth a dollar.
Thanks to inflation, your 1974 dollar is
worth only 29 cents in today's economy.
[The table below was represented as a line graph in the printed material.]
1974 $1.00
1994 $0.29
Source: Consumer Price Index
You Need A
Substantial Nest Egg
To comfortably meet retirement and
health care costs, you'll probably need
more income than Social Security and
your pension plan alone will provide.
Unfortunately, taxable savings plans may
not be adequate either. Both the money
you set aside and the interest it earns
are taxed at current rates, and that tax
bite can make a real difference over the
long term. Fortunately, there is an easy
way to help insure a more comfortable
retirement. It's called an IRA.
2
<PAGE>
[Graphic -- What is an IRA?]
An Individual Retirement Account,
commonly referred to as an "IRA," is a
savings or investment plan that lets you
set aside money specifically for your
retirement. An IRA offers three
important advantages:
o Tax-deferred earnings--you pay no
taxes on your investment earnings
until you begin taking distributions
from your account. Generally,
withdrawals begin after retirement,
when you may be in a lower tax
bracket--ultimately, your tax bill
might be smaller.
[BAR CHART]
Build For Tomorrow
Tax-deferred growth can help make a
comfortable retirement a reality.
Tax deferred $202,144
28% $140,539
31% $135,297
36% $127,048
39.6% $121,511
Tax-deferred annual investments of
$2,000 over 30 years, earning a 7%
hypothetical rate of return versus the
same investments taxed at the 28%, 31%,
36%, and 39.6 federal tax rates.
For illustration only. Not intended to
imply or guarantee a rate of return on
any investment.
o Power of tax-deferred
compounding--compounding is the money
you earn on your IRA contributions
(dividends, interest, appreciation
and capital gains). Because earnings
are tax-deferred, your retirement
nest egg has the potential to build
even more quickly than a taxable
investment earning the same rate of
return. This can make a significant
difference, particularly over the
long-term.
o Potential tax deduction--you may be
eligible to deduct some or all of
your IRA contributions on your
current federal income tax return.
But even if your contributions aren't
deductible, you still benefit from
tax-deferred growth--a key component
to a sound retirement plan.
In addition to these incentives, a State
Street Research IRA offers you other
advantages, including--a wide choice of
mutual funds and services, and all the
information you need in an easy-to-use,
easy-to-read format. With help from this
guide and the accompanying forms
booklet, you can choose any type of IRA
transaction you need. Open an IRA, take
distributions from your IRA, or just
call to find out more.
Mutual Funds Can Help
The American public has become more
focused than ever on the importance of
investing for retirement. And mutual
funds have taken center stage. Currently
33% (approximately $284 billion) of all
IRA assets are invested in mutual funds.
Why? Because mutual funds offer a
variety of features that appeal to
investors accumulating assets for the
future, including--
o professional management
o diversification
o flexibility
o convenience
o affordability
Source: Investment Company Institute,
1994 Mutual Fund Fact Book
CONSIDER
the potential benefits
if your earnings
could grow tax-deferred...
3
<PAGE>
Mutual Funds and
IRA Investing --
A Natural Fit
An increasing number of investors are
choosing mutual funds to help meet their
future retirement needs.
Number of Mutual Fund
IRA Accounts
1993
29,300,000
1981
500,000
Source: Investment Company Institute,
1994 Mutual Fund Fact Book
We want to
MAKE IT EASY
to plan for retirement...
All the forms you need
are in the forms booklet
that accompanies
this brochure.
And, remember
to consult your
investment representative
and tax adviser.
STATE STREET RESEARCH
IRA
AT A GLANCE
State Street Research offers an IRA to meet your needs.
Included in this brochure:
Regular/Accumulation IRA--see page 5
Open a State Street Research IRA and build your
retirement assets over time through periodic
contributions.
Rollover & Transfer of Assets IRA--see page 7
Rollovers and Transfers are great for
consolidating your finances. They potentially
reduce your IRA fees and simplify your
record-keeping, while continuing to let your
assets build for tomorrow.
Lump-Sum Distribution IRA--see page 9
Retiring or leaving your job? If so, you may be
expecting a lump-sum distribution. Let us show you
what your options are. Making the wrong decision
could cost you thousands. Help avoid tax penalties
with a State Street Research IRA.
Distributions and withdrawals--see page 12
If you're approaching 70 1/2, it's almost time to
begin taking mandatory IRA withdrawals. The IRS
has rules about how much you must withdraw based
on your age, life expectancy and account balance.
State Street Research can help with the
calculations for your review.
4
<PAGE>
YOUR IRA OPTIONS
REGULAR
IRA
IS THIS THE
IRA FOR YOU?
o o o o o o o o o o o o o o o o o o o o
Consider a Regular/Accumulation IRA if
you are:
o Interested in a tax-advantaged way to
save for retirement.
o Concerned about future retirement and
health care expenses and the real
danger of outliving your retirement
assets.
o Employed, but do not have the benefit
of an employer-sponsored retirement
plan.
o Employed and covered by a retirement
plan at work, but want additional
tax-deferred growth potential.
[Graphic]
CONTRIBUTIONS
TO AN IRA
With a regular IRA, you can contribute
up to $2,000 per year or 100% of earned
income, whichever is less.
THE BENEFITS
Without the added boost of personal
retirement savings, many retirees must
make marked cuts in their standard of
living. Establishing an IRA today is a
great way to help build for the future.
You'll benefit from:
o Tax deferral--
Pay no taxes on your investment
earnings until you begin taking
distributions from your account. Once
you reach retirement age, you may be
in a lower tax bracket--which may
mean you pay less in taxes!
o Tax-deferred compounding--
Compounding is the money you earn on
your IRA contributions plus
accumulated investment earnings
(interest, dividends and capital
gains). Because your earnings grow
tax-deferred, your assets have the
potential to accumulate even more
quickly.
o Current tax deduction--
You may be eligible to take a full or
partial tax deduction for
contributions to an IRA.*
* See your tax adviser for details.
[Graphic]
CAN'T DEDUCT
YOUR IRA
CONTRIBUTION?
Don't worry, over time, it's the tax
deferral, not the tax deduction, that
can make the real difference. And, it's
available to all IRA investors.
[PIE CHART]
Benefits of Tax Deduction
Contribute a total of $60,000
to an IRA...
...and your
tax deductions
total $21,600
$60,000
For illustration only. Assumes
individual in 36% federal tax bracket
contributes $2,000 annually over 30
years.
5
<PAGE>
THE FORMS
YOU NEED
1. IRA Terms & Conditions
2. IRA Application
3. Fund Prospectus(es)
Benefits of Tax Deferral
You gain a significant edge when
your investment is tax-deferred
[The table below was represented as a graphic in the printed material.]
$2,000/yr. tax-deferred $202,144
$2,000/yr. taxable 36% bracket $127,048
$75,096 tax advantage
For illustration only. Not intended to imply or guarantee a rate of return on
any investment. Assumes individual in 36% federal tax bracket; annual
contributions of $2,000 for 30 years; and a hypothetical 7% rate of return.
How To Open
Your IRA
o o o o o o o o o o o o o o o o o o o o
A o Sit down with your investment
representative to map out a solid
plan for preparing for retirement.
Choose the State Street Research
funds that best suit your goals and
risk tolerance.
o Read the prospectus for each fund
you're considering before you
invest.
B o Familiarize yourself with the IRA
Terms & Conditions.
o Complete the IRA Application--be
sure to specify which mutual funds
you would like to invest in (Section
3).
o Attach a check made payable to State
Street Bank & Trust Co.*
C o Keep a copy of your signed documents
for your files.
o Mail your completed application in
the envelope provided.
o You will receive written
confirmation that your account has
been established.
* Note: you may contribute up to
$2,000 annually to your IRA. Once
you invest the minimum initial
investment of $2,000 to open your
IRA, you may choose either a
lump-sum investment or periodic
contributions in following years. If
you'd like your IRA contributions
made automatically from your
checking account--each month or
every quarter--fill out the
Investamatic section of the IRA
Application. If you use
Investamatic, you may invest as
little as $50 once the $2,000
minimum investment requirement is
met.
That's all there is to it!
If you have any questions, call toll-free:
1-800-562-0032.
6
<PAGE>
YOUR IRA OPTIONS
ROLLOVER
IRA
IS THIS THE
IRA FOR YOU?
o o o o o o o o o o o o o o o o o o o o
Consider a rollover or a transfer of
assets if you:
o Have IRA(s) at other financial
institution(s) and want to transfer
your assets to consolidate your
accounts for easier record keeping
and potentially lower fees.
o Already have an IRA, but are
dissatisfied with your current level
of service or want a wider array of
investment options.
"TRANSFER"
"ROLLOVER"
What's The Difference?
While the terms are often used
interchangeably, there are important
differences between a "transfer" and a
"rollover:"
o Transfer--moves your IRA assets
directly from one custodian to
another. One of the key differences
between a transfer and a rollover is
with a transfer you never take
receipt of your assets. There is no
limit to the number of IRA transfers
you can make in a given year.
o Rollover--moves your retirement
assets from one place to another.
Unlike a transfer, which occurs
between two custodians, with no
direct involvement by you, choosing
a rollover means you receive an
actual distribution from the first
IRA and it is your responsibility to
reinvest it in another IRA within 60
days. Aside from certain exceptions,
if you are under age 59 1/2 and do
not complete the rollover within 60
days, you will pay ordinary income
tax on your withdrawal, plus a
possible 10% tax penalty. While you
can make an unlimited number of
transfers, you are entitled to only
one IRA rollover between IRAs in a
12-month period. For more
information on direct rollovers,
please see the Lump Sum Distribution
IRA on pages 9-11. Also, remember
that whether a transfer or rollover
of assets, sales charges may apply
to investments in a mutual fund.
THE BENEFITS
o Easier record keeping
o Help avoid tax penalties
o Continue to build for retirement
o Potentially lower fees
Sales charges may apply; please consult
the Fund prospectus(es) for more
details.
CASE STUDY
o o o o o o o o o o o o o o o o o o o o
Transferring
Assets For Easier
Record Keeping
Over the years, Fred Viola and his wife
Florence had established IRAs with a
number of financial institutions. It was
becoming a record-keeping nightmare,
particularly at tax time. The Violas,
long-time investors with State Street
Research, called their investment
representative to see whether their IRAs
could be consolidated into one IRA.
Their representative assured them that
this could be easily accomplished. The
transaction was simply called a
"transfer of assets." After the transfer
was complete, the Violas were pleased to
finally have their IRA assets "under one
roof" and found that State Street
Research's consolidated IRA statement
made tax time much easier.
Note: consolidation of rollover IRAs
(which contain assets from 403(b)
contracts or qualified plans other than
IRAs), with an existing IRA may have
adverse tax consequences such as
limiting future rollovers into qualified
plans other than IRAs.
7
<PAGE>
THE FORMS
YOU NEED
1. IRA Terms & Conditions
2. IRA Application
3. Transfer of Assets/
Direct Rollover Form
4. Fund Prospectus(es)
o o o o o o o o o o o o o o o o o o o o
STATE STREET RESEARCH IRA
How To
Rollover
Or Transfer
Assets To
An IRA
o o o o o o o o o o o o o o o o o o o o
A o Sit down with your investment
representative; he or she will help
you select the funds for your IRA
that are best suited to your
retirement goals.
o Read the prospectus for each fund
you're considering before you
invest.
B o Familiarize yourself with the IRA
Terms & Conditions.
o Complete the IRA Application--be
sure to specify which mutual funds
you would like to invest in (Section
3).
For Rollovers Only:
o Attach a check made payable to State
Street Bank & Trust Co., or, if the
check representing your assets was
made payable to you, please endorse
it to State Street Bank & Trust Co.
For Transfers of Assets &
Direct Rollovers Only:
C o Complete the Transfer of
Assets/Direct Rollover Form. This
will authorize your present IRA
trustee (or the plan administrator
of your employer's plan) to
transfer/rollover your assets
directly to State Street Research.
D o Keep a copy of your signed documents
for your files
o Mail your completed application and
the transfer of assets/direct
rollover form in the envelope
provided.
o You will receive written
confirmation that the transfer, or
rollover, has occurred and your IRA
has been established.
That's all there is to it!
If you have any questions, call toll-free:
1-800-562-0032.
8
<PAGE>
YOUR IRA OPTIONS
LUMP-SUM
IRA
IS THIS THE
IRA FOR YOU?
o o o o o o o o o o o o o o o o o o o o
Consider a Lump-Sum Distribution IRA if
you are leaving your job for any reason:
o You have reached retirement age, or
you've decided to retire early.
o You have accepted a new job with
another employer.
o Your industry is consolidating and
layoffs are inevitable.
o Your company has recently been
acquired or taken over.
o You're starting your own business.
Avoid the 20% withholding and keep your
retirement money working by rolling your
eligible rollover distribution directly
into an IRA from State Street Research.
What's A Lump-Sum
Distribution?
To qualify as a lump-sum, the
distribution from your company's
retirement plan must:
o Represent your entire vested account
balance
o Be paid as a result of separation
from service; attainment of
age 59 1/2; disability; or death
o Be paid in one or more payments
within one calendar year
Facing Major Decisions
If your employer has a retirement plan
that you've participated in, when you
leave your job, you may receive a
lump-sum distribution from that plan.
You need to decide--in advance--how to
deal with those assets or you may face
some serious tax consequences:
o how much will you owe in taxes?
o do you qualify for income averaging?
o is your best option a direct
rollover into an IRA?
o what are the tax consequences if you
keep the money?
YOUR OPTIONS
Take a cash distribution and pay
your tax bill now
If you don't roll your money into an
IRA (or other tax-qualified
retirement plan) within 60 days, or
don't qualify for income averaging,
you may face a hefty tax bill that
could include penalties if you are
under age 59 1/2.
Use income averaging to minimize the
taxes you pay now(4)
If you keep your distribution,
current taxes are due on your entire
distribution. It's possible to reduce
your taxes by using 5- or 10-year
income averaging, if you qualify:
5-year averaging--you must be at
least 59 1/2 when you receive your
lump-sum distribution and have been
an active participant in your former
employer's retirement plan for at
least five years.
10-year averaging--you can use this
method if you were 50 or older on
January 1, 1986 (this rule applies
to 5-year averaging as well).
(4) Income averaging can only be used
once.
Choose a direct rollover to defer
taxes
A direct rollover into an IRA or
your new employer's qualified
retirement plan will defer taxes on
all or part of your distribution. By
continuing to benefit from
tax-deferred growth, a direct
rollover IRA may provide the
opportunity to substantially
increase your retirement assets over
time.(5)
(5) If you receive a check and the
rollover is not done directly
(institution-to-institution), you
will be subject to 20% income tax
withholding (mandatory under IRA
rules). This applies even if you
comply with the 60-day rollover
deadline.
Another option is to begin periodic
withdrawals of substantially equal
amounts for at least 10 years. You
pay tax as you receive distributions
but avoid the 20% withholding tax
and the 10% penalty tax if rolled
over within 60 days.
9
<PAGE>
How To Choose
Your Best Distribution
Option
State Street Research offers a free
personalized program called Lump Sum to
help you get the most from your
retirement plan distributions. Lump Sum
will show you--in real dollar
terms--what each distribution option
means, given your age, tax bracket and
income needs.(6) In an
individually-prepared analysis, Lump Sum
shows:
1 How your distribution can grow in a
tax-deferred IRA.
2 How 5- or 10-year income averaging
can lower your tax bill (if you are
eligible).
3 Expected income and taxes for each
of your distribution options.
4 Hypothetical performance
illustration on selected mutual
funds that correspond with the
investment objective that you
indicate on the Lump Sum Profile
form.
(6) Lump Sum Illustrations are based on
past performance only and are not
meant to imply or guarantee future
performance of any funds managed by
State Street Research or its
affiliates.
o o o o o o o o o o o o o o o o o o o o
STATE STREET RESEARCH IRA
NEW TAX LAW
$
COULD COST YOU $$$
20% Withholding Law--
Effective January 1, 1993
The 20% withholding rule applies to all
eligible rollover distributions and not
just the taxable portion of a lump sum
distribution.
If you accept a check--made payable to
you--your employer must withhold 20% of
the total for taxes. This rule applies
even if you have every intention of
rolling the money over within 60 days.
Exempt From 20%
Withholding Rule
In general, eligible rollover
distributions are all distributions from
a qualified retirement plan except the
following:
o Distributions from IRAs
o Substantially equal periodic payments
(made not less frequently than
annually) with a term of 10 years or
more.
o Substantially equal payments (made not
less frequently than annually) made
for your lifetime or over a period not
exceeding your life expectancy; or for
the joint lives of you and your
beneficiary or over a period not
exceeding your joint life
expectancies.
o Minimum required distributions
o Distributions of previously taxed
amounts.
CASE STUDY
o o o o o o o o o o o o o o o o o o o o
20% Law In Action
George Mills, age 50, has accepted a new
job and is eligible for a $100,000
lump-sum distribution from his former
employer's retirement plan. Thinking he
has 60 days to decide to roll all, or a
portion, into an IRA, George accepts the
distribution check. Later, when George
looks at the check, he sees that it is
for $80,000 not $100,000. He immediately
calls the benefits department at his
former employer. They explain that the
lump-sum distribution was in IRS-terms
an "eligible rollover distribution,"
hence, it is subject to the new 20%
withholding. Now what?
o George decides to roll the $80,000
into an IRA.
o The $20,000 withheld is treated as a
premature distribution and will be
included in his annual income for tax
purposes.
o George is in the 36% tax
bracket--income tax due on the $20,000
is $7,200.
o The remainder of the $20,000 withheld
will be refunded after he files his
tax return.
o And it gets worse. George is under
59 1/2, so he has to pay an additional
penalty tax of 10%. Already his tax
bill is up to $9,200--and that doesn't
include state or local taxes!
If George wants to roll over the entire
$100,000, is it still possible? Yes. But
he must come up with the additional
$20,000 from his other assets. And, the
rollover must be completed within 60
days from the date he received the
$80,000. This will not get back the
$20,000 withheld for tax purposes (he'll
have to wait for his IRS refund), but it
will avoid a 10% premature withdrawal
penalty and the $7,200 income tax.
TURN PAGE FOR MORE INFO ON LUMP-SUM IRA
10
<PAGE>
THE FORMS
YOU NEED
1. IRA Terms & Conditions
2. IRA Application
3. Lump Sum Profile
4. Transfer of Assets/Direct
Rollover Form
5. Fund Prospectus(es)
How To Open An
IRA With Your
Lump-Sum
Distribution
o o o o o o o o o o o o o o o o o o o o
A o Complete the Lump Sum Profile form
and mail, or fax, it to State Street
Research.
o With your investment representative,
review the Lump Sum Illustration
provided by State Street Research
and select the distribution option
that best suits your needs.
B o If an investment is appropriate,
your representative will help you
select the funds for your IRA that
will best meet your retirement
goals.
o Read the prospectus for each fund
you're considering before you
invest.
C o Familiarize yourself with the IRA
Terms & Conditions.
o Complete the IRA Application--be
sure to specify which mutual funds
you would like to invest in (Section
3).
For an institution-to-institution
rollover:
D o Complete the Transfer of
Assets/Direct Rollover Form.
This will authorize your retirement
plan trustee to transfer/rollover
your assets directly to State Street
Research.
E o Keep a copy of your signed documents
for your files.
o Mail your completed application and
the transfer of assets/direct
rollover form in the envelope
provided.
o You will receive written
confirmation that the transfer, or
direct rollover has occurred and
your IRA has been established.
That's all there is to it!
If you have any questions, call toll-free:
1-800-562-0032.
11
<PAGE>
DISTRIBUTION SERVICES AVAILABLE TO IRA OWNERS
MINIMUM DISTRIBUTION
IRA
Investing for retirement is serious
business, and State Street Research
recognizes that it takes more than
attractive investments to power a
successful IRA. It takes dedicated
service, low cost, and features that
help make investing easier.
MINIMUM
DISTRIBUTION SERVICE
Consider a minimum distribution from
your IRA if you are:
o approaching age 70 1/2.
o Between age 59 1/2 and 70 1/2 and
ready to supplement your retirement
income with distributions from your
IRA.(7)
(7) Minimum withdrawals are not
mandatory until April 1 following
the year you reach age 70 1/2. Also
sales charges may apply to
withdrawals made prior to age
70 1/2. See Fund prospectus for
details.
Withdrawals Are
Mandatory At
Age 70 1/2
You may make withdrawals from an IRA
from age 59 1/2 on. However, if you are
approaching 70 1/2, the IRS requires
that you begin taking a minimum
distribution from your IRA each year. If
you don't make the required withdrawals,
you will be subject to a 50% penalty tax
on the amount that should have been
withdrawn. Therefore, once you reach
70 1/2, it is important that you begin
taking your minimum distributions by
April 1 of the following year.
DID YOU TURN
70 1/2 THIS YEAR?
If so, you MUST begin IRA withdrawals by
April 1 of next year
How Much Do You Need
To Withdraw?
When you're ready to take distributions,
you have two choices for determining the
amount to withdraw to meet the minimum
requirement (based on age, account
balance and life expectancy):
o We will do the calculations for your
State Street Research IRA--for your
review--based on information you
provide. Distributions will be paid
on a periodic basis, and your
minimum distribution amount will be
recalculated automatically each
year.
o You may make your own
calculations--take your IRA
withdrawal in an annual lump-sum or
choose periodic payments.(8)
(8) If you choose to make your own
calculations, you must take all your
IRAs into consideration (State
Street Research and others) in
computing the aggregate amount
required to satisfy the minimum
distribution requirements. However,
the IRS allows you to take the
amount from any one or more of your
IRAs, as you choose. As your account
size changes, the required minimum
distribution will vary each year;
therefore, it is your responsibility
to be sure that the withdrawal
amount you specify does not fall
below the minimum amount required.
If you change beneficiaries, see
your tax adviser. This may affect
your calculations.
o o o o o o o o o o o o o o o o o o o o
STATE STREET RESEARCH IRA
TURN PAGE FOR MORE INFO ON MINIMUM DISTRIBUTION
12
<PAGE>
Cash Or Reinvest--
It's Up To You
Take your IRA distribution(s) in cash or
choose automatic reinvestment:
o Cash--We'll send you one check,
representing your annual minimum
withdrawal amount, or a series of
smaller periodic payments. Or choose
the Automatic Bank Connection (ABC)
option, and your distributions will
automatically be deposited in your
bank checking or NOW account. ABC is
easy and gives you ready access to
your distributions.
o Automatic Reinvestment--Just tell us
which available funds managed by
State Street Research (or its
affiliates) you'd like to invest in,
and we'll automatically reinvest
your minimum distributions for you.9
While no longer tax-sheltered, your
money has the potential to continue
to grow to provide future income for
you or your heirs.
9 See Fund prospectus for minimum
required investments. Also, in
general, contributions--whether in
cash or reinvested--are taxable. If
you have made non-deductible
contributions to your IRA, a portion
of each distribution will not be
taxable.
A WORD ABOUT
PRE-59 1/2
DISTRIBUTIONS
There are several circumstances in which
you might choose to make withdrawals
from your IRA prior to reaching age
59 1/2. Call us if you'd like more
information. Make sure you consult with
your tax adviser first so that you fully
understand the potential tax
consequences. A 10% penalty may apply to
these withdrawals.
THE FORMS
YOU NEED
1. IRA
Distribution
Form
How To Choose
The Minimum Distribution Option
o o o o o o o o o o o o o o o o o o o o
A o Complete the IRA Distribution
Form--be sure to indicate which
distribution option you'd like
(Section 4).
B o Keep a copy of your signed documents
for your files.
o Mail the completed form in the
envelope provided.
That's all there is to it! Your
distributions will begin within one month.
If you have any questions, call toll-free:
1-800-562-0032.
13
<PAGE>
MORE FEATURES
IRA
ONE FEE
$10
ANNUALLY
Choose as many available mutual funds
for your IRA account as you want--you
pay only one fee (Does not include sales
charge).(10)
o Easy-To-Use Brochure/Forms--
We explain your IRA options and give
you step-by-step instructions on how
to open the IRA that's right for you.
Forms are easy to fill
out--everything you need is at your
fingertips.
o Consolidated Statement--
All your State Street Research IRA
information on one statement. You'll
see at a glance what portion of your
investments are tax-qualified and--if
you have non-IRA mutual fund
accounts--what are not. This can be a
big timesaver at tax time. For your
convenience, statements are generated
quarterly.
(10) Applies to annual trustee fee, does
not include applicable sales
charges. See Fund prospectus for
more information.
o Free Hypothetical Illustrations
(based on past performance)--
Tailored to your needs--this
powerful tool shows any number of
investment scenarios all in real
dollar terms. This service can be
invaluable for retirement planning.
See your investment representative
for details.(11)
o DIRECT--
An innovative risk reduction
strategy for lump-sum investments.
Commit a minimum of $10,000 to any
available State Street Research
mutual fund. Smaller sums(12) are then
systematically invested (monthly or
quarterly) into a maximum of four
other funds that you choose. It's a
great solution if you have a
substantial sum of money to invest
but are concerned about committing
it all at once.
o Automatic Reinvestment of Required
Distributions--
If it's time to take required
distributions from your State Street
Research IRA--but you don't
currently need the money--this
option will help your assets
continue to work for you. Although
no longer tax-advantaged, your IRA
distributions will automatically be
reinvested in the fund(s) you
choose. You will generally pay taxes
on the amounts reinvested, and the
earnings on the distributions will
no longer be tax-sheltered.
(11) Illustrations are based on past
performance only and are not
intended to imply or guarantee the
future performance of any available
fund managed by State Street
Research or its affiliates.
(12) See prospectus for minimum required
investments.
o Investamatic--
Invest in your State Street Research
IRA, on a monthly or quarterly
basis, through the Investamatic
check program. You can have as
little as $50 automatically
withdrawn from your checking account
and invested in your IRA. It's a
great way to build for your future
with no inconvenience.(12)
o Automatic Bank Connection (ABC)--
If you're taking distributions from
your IRA, choose this feature and
insure that all investment income is
deposited directly into your bank
checking account. No phone calls or
unnecessary paperwork, it all
happens automatically and gives you
immediate access to your money.
o Overview--
Receive a copy of our shareholder
newsletter four times a year. Each
issue is full of information about
the economy, tips to make investing
easier, what State Street Research
portfolio managers are saying about
the markets, and more!
14
<PAGE>
IRA BASICS
Q/A
ANSWERS TO
FREQUENTLY
ASKED
QUESTIONS
o o o o o o o o o o o o o o o o o o o o
CONTRIBUTIONS
TO YOUR IRA
Q. Who can open an IRA?
A. Anyone with earned income who is
under age 70 1/2.
Q. How much can I contribute to an IRA
each year?
A. Except for rollover contributions,
you can contribute a maximum of $2,000
or 100% of your earned income, whichever
is less.
Q. We're a dual-income household. Can we
each contribute $2,000?
A. Yes. If your spouse is a wage-earner,
he or she can open a separate IRA--the
maximum contribution rules apply
separately to each of you--$2,000 each
for a combined annual total of $4,000 or
100% of compensation, whichever is less.
Q. May I have more than one IRA?
A. Absolutely. Just be sure that total
annual contributions to your IRAs do not
exceed 100% of compensation, up to a
maximum of $2,000. Many investors have
found that by consolidating multiple
IRAs into one IRA, annual account
maintenance fees are reduced and record
keeping is made easier. One note
though--sales charges may apply. Please
consult a Fund prospectus for details.
Q. How do I determine whether my IRA
contribution is deductible on my federal
tax return?
A. Deductibility of IRA contributions
depends on your income and whether you
participate in an employer-sponsored
retirement plan. Generally, you can
fully deduct up to $2,000 if:
o you or your spouse is not covered by
an employer-sponsored retirement
plan;
o you or your spouse participate in an
employer-sponsored retirement plan,
but your adjusted gross income does
not exceed $40,000 ($25,000 if you
are single).
For married couples filing jointly with
earnings of $40,000 to $50,000 (and
single filers who earn $25,000 to
$35,000), contributions may be partially
deductible--the rules can be complex.
Please see your tax adviser for details.
Q. Why contribute to an IRA if I can't
deduct my contribution?
A. You're helping prepare for a
comfortable retirement. And regardless
of whether you are able to deduct your
contribution, contributing to an IRA
gives you the benefit of tax deferral on
your earnings. Earnings are tax-free
until they are distributed to you. When
you're ready to retire, this
tax-deferred compounding may make a
sizable difference in your retirement
savings.
Q. Do I have to contribute to an IRA
every year?
A. You are not required to contribute to
your IRA each year, but it may be wise
to do so. IRA contributions--up to the
maximum annual limit--are completely at
your discretion. Contribute as much or
as little as you choose. However, you
may not make up "missed" contributions
in later years.
Q. Is there a cut-off date for my annual
IRA contribution?
A. You can contribute to your IRA
(deductible and non-deductible
contributions) up to the due date for
filing your federal tax return for the
prior year--generally April 15th.
Q. Do I have to stop contributing to my
IRA once I reach a certain age?
A. Yes. You can make IRA contributions
as long as you are a wage-earner up to,
but not including, the year you reach
age 70 1/2.
15
<PAGE>
DISTRIBUTIONS
FROM YOUR IRA
Q. When will I start to make
withdrawals?
A. You may elect to make withdrawals
from your IRA in the year in which you
reach age 59 1/2. Withdrawals before you
reach age 59 1/2 may be considered
premature and may be subject to a
penalty tax of 10%. However, you must
begin making withdrawals from your IRA
by April 1 of the year following the
year in which you reach 70 1/2.
Q. What if I decide to make withdrawals
before I turn 59 1/2?
A. If you decide to withdraw money from
your IRA before age 59 1/2, you may
incur a 10% tax penalty--on top of your
regular income tax. This penalty is
imposed to encourage people to invest in
an IRA as a future retirement account,
not a short-term savings vehicle.
However, exceptions exist, including
those based on hardships such as death
or disability. (Sales charges may apply
in some circumstances.)
Q. Will I have to pay tax on my IRA
withdrawals?
A. Unfortunately, the answer is yes. IRA
withdrawals are generally taxable as
ordinary income in the year you receive
them. But--and this is part of the
attraction of IRAs--when you reach
retirement, your income may be lower
than it is now, putting you in a lower
tax bracket. So by deferring your tax
bill until retirement, you may pay less
in taxes.
Q. What about tax on withdrawals of
non-deductible contributions?
A. Don't worry, you don't have to pay
taxes twice! If you've made
contributions that you did not deduct on
your tax return, they are returned to
you tax-free because you paid tax on
them in the year they were contributed.
However, for maximum flexibility under
the income tax rules, you may want to
consider keeping rollover IRAs separate
from others.
Q. I'd like to wait as long as possible
before I take withdrawals from my IRA.
What's the latest date I can start?
A. The law requires that you begin
withdrawals no later than April 1
following the year you reach age 70 1/2.
If you have reached this age and choose
to take your withdrawals in installments
(versus a lump-sum payment) you must
satisfy certain minimum distribution
requirements. These calculations are
based on your life expectancy (and those
of your beneficiaries, if any). As part
of our IRA service, we'll provide you
with your minimum distribution
calculation(s) on your State Street
Research IRA, for your review. If you
begin withdrawals after age 70 1/2 and
do not take your minimum required
distribution, you may be assessed a
penalty tax equal to 50% of the
difference between the amount you
received and the amount you should have
received. See your tax adviser for
details.
Q. Will IRA withdrawals affect my Social
Security benefits?
A. No. Your IRA withdrawals are in
addition to other retirement income such
as Social Security and any other
retirement or pension plan benefits you
may receive.
o o o o o o o o o o o o o o o o o o o o
STATE STREET RESEARCH IRA
TURN PAGE FOR MORE Qs & As
16
<PAGE>
Q. Will I have access to my IRA money if
I become disabled?
A. Absolutely. If you become
disabled--as defined in Section 72(m) of
the Internal Revenue Code--you may begin
to receive penalty-free distributions
from your IRA regardless of your age.
Q. What happens to my IRA if I die?
A. Your assets will be distributed to
your designated beneficiary(ies). If you
die after some of your IRA assets have
been distributed to you, your designated
beneficiary may continue to receive
payments under the method you elected
prior to your death. Distributions to
your beneficiary must be made at least
as rapidly as they were made to you.
However, if you die before any IRA
distributions have begun, the rules
change slightly:
o In general, your IRA assets must be
distributed to your estate or
beneficiary within five years after
your death.
o If you have designated a beneficiary
and he or she is someone other than
your spouse, your beneficiary may
begin distributions no later than
one year after the date of your
death, and such distributions must
be made over your beneficiary's life
or over a period not exceeding your
beneficiary's life expectancy.
o If your designated beneficiary is
your spouse, he or she may defer any
distributions until December 31st of
the year in which you would have
reached age 70 1/2. Distributions
must then be made over your spouse's
life or over a period not exceeding
his or her life expectancy. Or, your
spouse may roll your IRA assets over
into his or her own IRA; the assets
would then be subject to the same
distribution rules as any IRA.
INVESTING
YOUR IRA
Q. Are there any rules about how IRA
contributions can be invested?
A. You have a number of investment
options to choose from,
including--individual stocks and bonds,
mutual funds, certain types of
annuities, endowment policies and
savings accounts. These options vary in
risk and potential rate of return, so be
sure to consult your investment adviser.
He or she can help you select the asset
mix that's right for you. The law
prohibits IRAs from investing in life
insurance.
Q. I keep reading about IRAs and mutual
fund investing--what is a mutual fund?
A. A mutual fund is a company that pools
the money of many shareholders,
investing it in a variety of securities
chosen by a full-time, professional
money manager, for the purpose of
meeting a stated financial objective.
The flexibility and diversification of
mutual funds have wide appeal--currently
over $284 billion (approximately 33%) of
all IRA assets are invested in mutual
funds.
Source: Investment Company Institute,
1994 Mutual Fund Fact Book
Q. If I own mutual funds in my IRA, what
happens to any dividends and capital
gains?
A. Dividends and capital gain
distributions are automatically
reinvested in additional shares. These
additional shares do not affect the
amount you may contribute. It is
important to understand that the value
of a fund's portfolio will fluctuate
with changes in market conditions;
therefore, the amount available when you
are ready to take your distributions
cannot be projected or guaranteed.
Q. What about fees? Is it expensive to
open an IRA with State Street Research?
A. State Street Research offers some of
the most competitive pricing for IRAs
that you'll find anywhere. You'll pay a
$10 annual account administration
(trustee) fee. This $10 (per IRA) fee
allows you to choose any number of our
available mutual funds. You pay per IRA,
not per fund! Remember though, sales
charges may also apply to the mutual
funds that you invest in for your IRA.
JUST THE
ABCs
OF IRAs
These are the IRA basics. You may have
further questions which your investment
representative and/or tax adviser can
answer.
17
<PAGE>
WHY INVEST WITH
STATE STREET RESEARCH
PROVEN
MANAGEMENT
SINCE 1924
o o o o o o o o o o o o o o o o o o o o
State Street Research & Management
Company has a history that dates to
1924, when Paul Cabot and his
Boston-based colleagues opened America's
second mutual fund. Over the years,
State Street Research has built a
reputation for top-notch research and
prudent investment management. Today,
the Company is well-respected in many of
the nation's most powerful board rooms
and is best known as the institutional
asset manager for some of the most
successful and renowned companies in the
United States. The knowledge, resources
and experience of over seven decades are
available to individual investors
through the State Street Research IRA.
Investment
Flexibility
Choose the mutual fund, or combination
of funds, which best suits your
investment objectives. If your financial
goals change, you can easily exchange
shares of one available mutual fund
managed by State Street Research or its
affiliates for shares of another with no
fee. Exchanges may be subject to
applicable sales charges, and the
privilege may be changed or discontinued
at any time.
A Wealth of Experience
An investment as important as your
retirement plan--and that's what an IRA
is--shouldn't be entrusted to anyone but
experts. To manage its assets, State
Street Research employs some of the best
in the business. The Company currently
has 22 portfolio managers on staff--they
average 20 years of investment
experience--and 25 analysts--with an
average 15 years of experience.
o o o o o o o o o o o o o o o o o o o o
STATE STREET RESEARCH IRA
18
<PAGE>
[Graphic]
OPTIONS
YOUR
INVESTMENT
OPTIONS
o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o
Whichever IRA you choose, State Street
Research offers a family of mutual funds
from which to choose. Each fund is
managed to achieve a specific objective
such as growth, income, or growth and
income combined.
Consult your investment representative
for the fund(s) best suited to your
goals and risk tolerance.
--------------------------------------------------------------------------------
Please note that neither State Street Research, Metropolitan Life Insurance
Company nor any of their agents give legal or tax advice. The brief discussion
of taxes in this brochure is neither complete nor necessarily up-to-date--it is
intended strictly as a guide. The laws and regulations are complex and subject
to change.
For complete details, consult your attorney or tax adviser.
--------------------------------------------------------------------------------
[Logo] STATE STREET RESEARCH
A MetLife Company
When used as sales material, this brochure must be preceded or accompanied by a
current, relevant fund prospectus which provides more complete information
including investment policies, sales charges and expenses. Please read the
prospectus(es) carefully before you invest.
(C)1995 State Street Research Investment Services, Inc., Boston, MA 02111
CONTROL NUMBER: 2074-950302(0496)SSR-LD
IR-081E-395
STATE STREET RESEARCH SECURITIES TRUST
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1
WHEREAS, the State Street Research Securities Trust, an unincorporated
association of the type commonly known as a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), engages in business as
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust is authorized (i) to issue shares of beneficial
interest (the "Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets, and (ii) to divide the Shares within each such series into two or more
classes;
WHEREAS, the Trust has established one portfolio series, the MetLife -
State Street Research Intermediate Bond Fund referred to herein as the "Initial
Series" - such series, together with all other series subsequently established
by the Trust and made subject to this Plan, referred to herein individually as a
"Series" and collectively as the "Series");
WHEREAS, the Trust may be deemed a distributor of the Shares within the
meaning of Rule 12b-1 under the Act, and desires to adopt a Plan of Distribution
and has adopted a related Distribution Agreement with State Street Research
Investment Services, Inc., the Trust's principal underwriter (the "Distributor")
pursuant to such Rule (respectively, the "Plan" and the "Agreement"); and
WHEREAS, the Board of Trustees as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or the Agreement
and any agreements relating to it (the "Qualified Trustees"), having determined,
in the exercise of their reasonable business judgment and in light of their
fiduciary duties under state law and under Section 36(a) and (b) of the Act,
that there is a reasonable likelihood that this Plan and the Agreement will
benefit the Initial Series and its shareholders, have accordingly approved this
Plan and the Agreement by votes cast in person at a meeting called for the
purpose of voting on this Plan and the Agreement and any agreements related
thereto.
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule
12b-1 under the Act, on the following terms and conditions:
SECTION 1. DISTRIBUTION ACTIVITIES
-----------------------------------
Subject to the supervision of the Board of Trustees, the Trust may engage,
directly or indirectly, in financing any activities primarily intended to result
in the sale of Shares, including, but not limited to, the following: (1) payment
of commissions and/or
<PAGE>
reimbursement to underwriters, securities dealers and others engaged in the
sale of Shares, including payments to the Distributor to be used to pay
commissions and/or reimbursement to securities dealers and others (including
affiliates of the Distributor) engaged in the distribution and marketing of
Shares or furnishing assistance to investors on an ongoing basis, (2)
reimbursement of direct out-of-pocket expenditures incurred by the
Distributor in connection with the distribution and marketing of Shares,
including expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of sales literature, the preparation,
printing and distribution of Prospectuses of the Trust and reports for
recipients other than existing shareholders of the Trust, and obtaining such
information, analyses and reports with respect to marketing and promotional
activities and investor accounts as the Trust may, from time to time, deem
advisable, and (3) reimbursement of expenses incurred by the Distributor in
connection with the servicing of shareholder accounts, including payments to
securities dealers and others in consideration of the provision of personal
services to investors and/or the maintenance of shareholder accounts including
administrative and accounting services, and expenses associated with the
provision of the same by the Distributor directly to investors. In addition, the
Plan shall be deemed to authorize the Distributor and State Street Research &
Management Company (the "Adviser") to make payments out of general profits,
revenues and other sources to underwriters, securities dealers and others in
connection with sales as described in the Prospectus of the Trust as from time
to time amended and in effect (for purposes hereof, references to the Prospectus
of the Trust shall be deemed to include all Prospectuses of the Trust), to the
extent, if any, that such payments may be deemed to be within the scope of Rule
12b-1 under the Act.
The Trust and the Series are authorized to engage in the activities listed
above, and in other activities primarily intended to result in the sale of
Shares, either directly or through other persons with which the Trust has
entered into agreements pursuant to the Plan.
SECTION 2. MAXIMUM EXPENDITURES
--------------------------------
The expenditures to be made by the Initial Series pursuant to this Plan
and the basis upon which payment of such expenditures will be made shall be
determined by the Initial Series, but in no event may such expenditures exceed
the following: (i) with respect to Class A Shares of the Initial Series, an
annual rate of .25% of the average daily value of net assets represented by such
Class A shares, and (ii) with respect to Class B Shares and Class D Shares of
the Initial Series, an annual rate of .75% of the average daily value of the net
assets represented by such Class B or Class D shares (as the case may be) to
finance sales or promotion expenses and an annual rate of .25% of the average
daily value of the net assets represented by such Class B or Class D shares (as
the case may be) to make payments for personal services and/or the maintenance
of shareholder accounts; plus such amounts as the Distributor and Adviser may
expend from general revenues, profits and other sources from time to time in
accordance with the last sentence of Section 1 and the second paragraph of
Section 3. With respect to any Series subsequently established by the Trust and
made
2
<PAGE>
subject to this Agreement, the maximum expenditures shall be as set forth
herein, or if different as agreed upon and specified in an addendum hereto. The
expenditures to be made pursuant to this Plan shall commence with respect to
each class of Shares of a Series as of the date on which this Plan becomes
effective with respect to each such class.
SECTION 3. PAYMENTS
--------------------
Pursuant to this Plan, the Trust shall make periodic payments to the
Distributor at the annual rate provided for in Section 2 with respect to each
Series, or class of Shares thereof. The Distributor shall in turn remit to and
allocate among selected dealers (including those that are affiliates of the
Distributor) who have entered into selected dealer agreements or selling
agreements with the Distributor, in consideration of and as reimbursement for
expenses incurred in the provision of distribution and marketing services and
furnishing assistance to investors on an ongoing basis, such amounts as are
required pursuant to such selected dealer agreements or selling agreements and
as indicated in the Prospectus of the Trust. Any amounts received by the
Distributor and not so allocated may be applied by the Distributor as
reimbursement for expenses incurred in connection with the distribution and
marketing of Shares of each class and the servicing of investor accounts as
contemplated by Section 1(2) hereof. The distribution and servicing expenses of
a particular class will be borne solely by that class and no Series will use
fees charged to one class within a Series to support the marketing or servicing
relating to any other class of Shares within that Series or any other Series.
Any amounts received by the Distributor hereunder and not applied as provided
herein shall be returned to the applicable class or Series of the Trust.
The Distributor and the Adviser may also make payments to authorized
securities dealers from its general profits, revenues and other sources. Amounts
received by the Distributor from any Fund in respect of any class of Shares
shall not be used to pay any commission expenses related to the sale of any
other class of Shares of such Series.
Notwithstanding anything to the contrary herein, the aggregate of all
payments to the Distributor to finance sales or promotion expenses with respect
to the Class B or the Class D shares pursuant to this Section 3 together with
any contingent deferred sales charges received by the Distributor in connection
with the redemption of shares of the respective class shall not exceed the
amount expended by the Distributor to finance sales or promotion expenses of
such class.
SECTION 4. TERM AND TERMINATION
--------------------------------
(a) Initial Series. This Plan shall become effective with respect to
each class of the Initial Series as of the later of (i) the date on which a
Registration Statement with respect to such class of Shares becomes effective
under the Securities Act of 1933, as amended, or (ii) the date on which such
class of the Initial Series commences operations or offering its Shares to the
public and shall continue in effect with respect to the Initial Series
3
<PAGE>
(subject to Section 4(c) hereof) until one year from the date of such
effectiveness, unless the continuation of this Plan shall have been approved
with respect to the Initial Series in accordance with the provisions of
Section 4(c) hereof.
(b) Additional Series. This Plan shall become effective with respect
to each additional Series or class thereof other than the Initial Series
established by the Trust after the date hereof and made subject to this Plan
upon commencement of operations or the initial public offering thereof (provided
that the Plan has previously been approved for continuation by votes of a
majority of both (i) the Board of Trustees of the Trust and (ii) the Qualified
Trustees, cast in person at a meeting held before the initial public offering of
such additional Series or classes thereof and called for the purpose of voting
on such approval), and shall continue in effect with respect to each such
additional Series or Class (subject to Section 4(c) hereof) for one year
thereafter, unless the continuation of this Plan shall have been approved with
respect to such additional Series or Class in accordance with the provisions of
Section 4(c) hereof. The Distributor and the Trust on behalf of each such
additional Series or Class shall each sign an addendum hereto agreeing to be
bound hereby and setting forth such specific and different terms as the parties
may agree upon, including, without implied limitation, the amount and purpose of
payments to be made hereunder.
(c) Continuation. This Plan and the Agreement shall continue in
effect with respect to each Series or Class thereof subsequent to the initial
term specified in Section 4(a) and (b) for so long as such continuance is
specifically approved at least annually by votes of a majority of both (i) the
Board of Trustees of the Trust and (ii) the Qualified Trustees, cast in person
at a meeting called for the purpose of voting on this Plan, subject to any
shareholder approval requirements existing under applicable law.
(d) Termination. (i) This Plan may be terminated at any time with
respect to the Trust or any Series or Class thereof, as the case may be, by vote
of a majority of the Qualified Trustees, or by vote of a majority of the
outstanding voting securities of the Trust or that Series or Class, as the case
may be. The Plan may remain in effect with respect to a Series or Class thereof
even if it has been terminated in accordance with this Section 4(e) with respect
to such Series or one or more other Series of the Trust.
(ii) The Agreement may be terminated at any time, without penalty,
with respect to the Trust or any Series, as the case may be, by vote of a
majority of the Qualified Trustees or by vote of a majority of the outstanding
voting securities of the Trust or that Series, as the case may be, on sixty
days' written notice to the Distributor. In addition, the Agreement provides for
automatic termination in the event of its assignment.
SECTION 5. AMENDMENTS
----------------------
This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 2 hereof unless such amendment
is approved by a vote of a majority of the outstanding voting securities of each
Series or class thereof with respect
4
<PAGE>
to which a material increase in the amount of distribution expenditures is
proposed, and no material amendment to the Plan shall be made unless approved
in the manner provided for annual renewal in Section 4(c) hereof. Otherwise,
this Plan may be amended with respect to the Trust or a Series or class thereof
by vote of a majority of the Qualified Trustees or the outstanding voting
securities of the Trust or that Series, as the case may be.
SECTION 6. INDEPENDENT TRUSTEES
--------------------------------
While this Plan is in effect with respect to any Series, the selection and
nomination of Trustees who are not interested persons (as defined in the Act) of
the Trust shall be committed to the discretion of the Trustees who are not
interested persons.
SECTION 7. QUARTERLY REPORTS
-----------------------------
The Treasurer of the Trust and the Treasurer of the Distributor shall
provide to the Trustees of the Trust and the Trustees shall review, at least
quarterly, a written report of the amounts expended for distribution pursuant to
this Plan and the purposes for which such expenditures were made.
SECTION 8. RECORDKEEPING
-------------------------
The Trust shall preserve copies of this Plan, the Agreement and any
related agreements and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan and the Agreement,
the agreements or such reports, as the case may be, the first two years in an
easily accessible place.
SECTION 9. LIMITATION OF LIABILITY
-----------------------------------
The term "State Street Research Securities Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement dated
January 25, 1994 of the Trust as the same may subsequently thereto have been, or
subsequently hereto be, amended. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind only
the trust property of the Trust, as provided in the Master Trust Agreement of
the Trust. The execution and delivery of this Plan and the Plan have been
authorized by the Trustees and shareholder of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such authorization
by such Trustees and shareholder nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Master Trust Agreement. The Master Trust Agreement
of the Trust further provides, and it is expressly agreed, that each Series of
the
5
<PAGE>
Trust shall be solely and exclusively responsible for the payment of its debts,
liabilities and obligations and that no other Series shall be responsible or
liable for the same.
IN WITNESS WHEREOF, the Trust and the Distributor have executed this Plan
of Distribution as of the day and year set forth below in Boston, Massachusetts.
STATE STREET RESEARCH SECURITIES TRUST
By: /s/ Ralph F. Verni
-------------------------
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: /s/ Gerard P. Maus
-------------------------
Date: May 16, 1994
------
6
State Street Reseach Intermediate Bond Fund - Class A
Standard Total Return Computations--Since Inception
Original Amt. Invested $1,000.00
Commission at 4.50% $45.00
Net Amount to Fund $955.00
Purchase price $9.55
Shares acquired 100.000
<TABLE>
<CAPTION>
Beginning Dividend Monthly Reinvest Shares New Month-end Monthly Aggregate
Month Shares Rate Income Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/16/94 100.000 0.0000 0.00 $9.55 0.000 100.000 $9.55 $ 955.00 -4.50 -4.50
5/31/94 100.000 0.0000 0.00 $9.56 0.000 100.000 $9.56 $ 956.00 0.10 -4.40
6/30/94 100.000 0.0000 0.00 $9.55 0.000 100.000 $9.55 $ 955.00 -0.10 -4.50
7/31/94 100.000 0.0000 0.00 $9.68 0.000 100.000 $9.68 $ 968.00 1.36 -3.20
8/31/94 100.000 0.0000 0.00 $9.69 0.000 100.000 $9.69 $ 969.00 0.10 -3.10
9/30/94 100.000 0.1000 10.00 $9.49 1.054 101.054 $9.49 $ 959.00 -1.03 -4.10
10/31/94 101.054 0.0000 0.00 $9.49 0.000 101.054 $9.49 $ 959.00 0.00 -4.10
11/30/94 101.054 0.0000 0.00 $9.47 0.000 101.054 $9.47 $ 956.98 -0.21 -4.30
12/20/94 101.054 0.2400 24.25 $9.27 2.616 103.670 $9.27 $ 961.02 0.42 -3.90
12/31/94 103.670 0.0000 0.00 $9.27 0.000 103.670 $9.27 $ 961.02 0.00 -3.90
1/31/95 103.670 0.0000 0.00 $9.43 0.000 103.670 $9.43 $ 977.61 1.73 -2.24
2/28/95 103.670 0.0000 0.00 $9.60 0.000 103.670 $9.60 $ 995.23 1.80 -0.48
3/31/95 103.670 0.1000 10.37 $9.55 1.086 104.756 $9.55 $1,000.4 0.52 0.04
4/30/95 104.756 0.0000 0.00 $9.66 0.000 104.756 $9.66 $1,011.9 1.15 1.19
</TABLE>
(1) Calculate average annual return of the Fund for the period May 16,
1994 through April 30, 1995:
350/365
1,000 (1 + T) = 1011.94
T =1.25%
<PAGE>
State Street Research Intermediate Bond Fund - Class A
Nonstandardized Total Return Computation
Original Amt. Inv $1,000.00
Commission at 0.0 $0.00
Net Amount to Fun $1,000.00
Purchase price $9.49
Shares acquired 105.374
<TABLE>
<CAPTION>
Beginning Dividend Monthly Reinvest Shares New Month-end Monthly ITD
Month Shares Rate Income Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/94 105.374 0.0000 0.00 $9.47 0.000 105.374 $9.47 $ 997.89 -0.21 -0.21
12/20/94 105.374 0.2400 25.29 $9.27 2.728 108.102 $9.27 $1,002.1 0.42 0.21
12/31/94 108.102 0.0000 0.00 $9.27 0.000 108.102 $9.27 $1,002.1 0.00 0.21
1/31/95 108.102 0.0000 0.00 $9.43 0.000 108.102 $9.43 $1,019.4 1.73 1.94
2/28/95 108.102 0.0000 0.00 $9.60 0.000 108.102 $9.60 $1,037.7 1.80 3.78
3/31/95 108.102 0.1000 10.81 $9.55 1.132 109.234 $9.55 $1,043.1 0.52 4.32
4/30/95 109.234 0.0000 0.00 $9.66 0.000 109.234 $9.66 $1,055.2 1.15 5.52
</TABLE>
No annualization is made. Computation for the six months ended April 30, 1995.
<PAGE>
State Street Reseach Intermediate Bond Fund - Class C
Standard Total Return Computations- Since Inception
Original Amt. Invested $1,000.00
Commission at 0.0% $0.00
Net Amount to Fund $1,000.00
Purchase price $9.55
Shares acquired 104.712
<TABLE>
<CAPTION>
Beginning Dividend Monthly Reinvest Shares New Month-end Monthly Aggregate
Month Shares Rate Income Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/16/94 104.712 0.0000 0.00 $9.55 0.000 104.712 $9.55 $1,000.0 0.00 0.00
5/31/94 104.712 0.0000 0.00 $9.56 0.000 104.712 $9.56 $1,001.0 0.10 0.10
6/30/94 104.712 0.0000 0.00 $9.55 0.000 104.712 $9.55 $1,000.0 -0.10 0.00
7/31/94 104.712 0.0000 0.00 $9.68 0.000 104.712 $9.68 $1,013.6 1.36 1.36
8/31/94 104.712 0.0000 0.00 $9.70 0.000 104.712 $9.70 $1,015.7 0.21 1.57
9/30/94 104.712 0.1090 11.41 $9.49 1.203 105.915 $9.49 $1,005.1 -1.04 0.51
10/31/94 105.915 0.0000 0.00 $9.49 0.000 105.915 $9.49 $1,005.1 0.00 0.51
11/30/94 105.915 0.0000 0.00 $9.47 0.000 105.915 $9.47 $1,003.0 -0.21 0.30
12/20/94 105.915 0.2460 26.06 $9.27 2.811 108.725 $9.27 $1,007.8 0.49 0.79
12/31/94 108.725 0.0000 0.00 $9.27 0.000 108.725 $9.27 $1,007.8 0.00 0.79
1/31/95 108.725 0.0000 0.00 $9.43 0.000 108.725 $9.43 $1,025.2 1.73 2.53
2/28/95 108.725 0.0000 0.00 $9.61 0.000 108.725 $9.61 $1,044.8 1.91 4.49
3/31/95 108.725 0.1060 11.52 $9.55 1.207 109.932 $9.55 $1,049.8 0.48 4.99
4/30/95 109.932 0.0000 0.00 $9.67 0.000 109.932 $9.67 $1,063.0 1.26 6.30
</TABLE>
(1) Calculate average annual return of the Fund for the period May 16,
1994 through April 30, 1995:
350/365
1,000 (1 + T) = 1063.04
T = 6.58%
<PAGE>
State Street Research Intermediate Bond Fund - Class C
Nonstandardized Total Return Computation
Original Amt. Inv $1,000.00
Commission at 0.0 $0.00
Net Amount to Fun $1,000.00
Purchase price $9.49
Shares acquired 105.374
<TABLE>
<CAPTION>
Beginning Dividend Monthly Reinvest Shares New Month-end Monthly ITD
Month Shares Rate Income Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/94 105.374 0.0000 0.00 $9.47 0.000 105.374 $9.47 $ 997.89 -0.21 -0.21
12/20/94 105.374 0.2460 25.92 $9.27 2.796 108.170 $9.27 $1,002.7 0.49 0.27
12/31/94 108.170 0.0000 0.00 $9.27 0.000 108.170 $9.27 $1,002.7 0.00 0.27
1/31/95 108.170 0.0000 0.00 $9.43 0.000 108.170 $9.43 $1,020.0 1.73 2.00
2/28/95 108.170 0.000 0.00 $9.61 0.000 108.170 $9.61 $1,039.5 1.91 3.95
3/31/95 108.170 0.106 11.47 $9.55 1.201 109.371 $9.55 $1,044.4 0.48 4.45
4/30/95 109.371 0.000 0.00 $9.67 0.000 109.371 $9.67 $1,057.6 1.26 5.76
</TABLE>
No annualization is made. Computation for the six months ended April 30, 1995.
<PAGE>
Calculation of Distribution Rate
State Street Research Intermediate Bond Fund
The distribution rate for Class A shares is calculated by annualizing the
latest per-share distribution from ordinary income and dividing the result by
the maximum offering price per share as of the end of the period.
The computation as of April 30, 1995 is as follows:
.1000(a) x 4 = .4000/10.12(b) = 3.95%
(a) latest per-share distribution from ordinary income
(b) maximum offering price at April 30, 1995 ($10.12)
<PAGE>
Calculation of Distribution Rate
State Street Research Intermediate Bond Fund
The distribution rate for Class C shares is calculated by annualizing the
latest per-share distribution from ordinary income and dividing the result by
the maximum offering price per share as of the end of the period.
The computation as of April 30, 1995 is as follows:
.1060(a) x 4 = ..4240/9.67(b) = 4.38%
(a) latest per-share distribution from ordinary income
(b) maximum offering price at April 30, 1995 ($9.67)
<PAGE>
Calculation of Yield
State Street Research Intermediate Bond Fund
The annualized yield for Class A shares based on the month of April 1995
was calculated according to the following formula:
a-b
YIELD = 2[(----- +1) 6 -1]
cd
Where: a= dividends and interest earned during the period
b= expenses accrued for the period (net of voluntary expense
reductions by the Investment Manager)
c= the average daily number of shares outstanding during the
period that were entitled to receive dividends
d= the maximum offering price per share on the last day of
the month
Therefore:
62,745.56-8,380.43
YIELD = 2[(---------------------- +1) 6 -1]
1,057,612.405x10.12
= 6.17%
See "Calculation of Performance Data" in the Statement of Additional Information
for a description of how interest earned ("a" above) is calculated.
Expenses accrued ("b" above) do not include the Investment Manager's voluntary
reduction of management fees or assumption of any portion of expenses relating
to the Fund during the subject period.
<PAGE>
Average daily number of shares outstanding ("c" above) is calculated by summing
the shares entitled to receive dividends on each day of the month and dividing
the total by the number of days in the month.
<PAGE>
Calculation of Yield
State Street Research Intermediate Bond Fund
The annualized yield for Class C shares based on the month of April 1995
was calculated according to the following formula:
a-b
YIELD = 2[(----- +1) 6 -1]
cd
Where: a= dividends and interest earned during the period
b= expenses accrued for the period (net of voluntary expense
reductions by the Investment Manager)
c= the average daily number of shares outstanding during the
period that were entitled to receive dividends
d= the maximum offering price per share on the last day of
the month
Therefore:
22,922.79-2,296.25
YIELD = 2[(---------------------- +1) 6 -1]
386,388.312x9.67
= 6.72%
See "Calculation of Performance Data" in the Statement of Additional Information
for a description of how interest earned ("a" above) is calculated.
Expenses accrued ("b" above) do not include the Investment Manager's voluntary
reduction of management fees or assumption of any portion of expenses relating
to the Fund during the subject period.
<PAGE>
Average daily number of shares outstanding ("c" above) is calculated by summing
the shares entitled to receive dividends on each day of the month and dividing
the total by the number of days in the month.
POWER OF ATTORNEY
We, the undersigned State Street Research Securities Trust ("Trust"), a
Massachusetts business trust, its trustees, its principal executive officer and
its principal financial and accounting officer, hereby severally constitute and
appoint Francis J. McNamara, III, and Darman A. Wing, as our true and lawful
attorneys, with full power to each of them alone to sign for us, in our names
and in the capacities indicated below, any Registration Statements and any and
all amendments thereto of the Trust filed with the Securities and Exchange
Commission and generally to do all such things in our names and in the indicated
capacities as are required to enable the Trust to comply with provisions of the
Securities Act of 1933, as amended, and/or the Investment Company Act of 1940,
as amended, and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they have been and
may be signed by our said attorneys to said Registration Statements, and any and
all amendments thereto.
IN WITNESS WHEREOF, we have hereunto set our hands, on this 24th day of
August, 1995.
SIGNATURES
STATE STREET RESEARCH SECURITIES TRUST
By: /s/ Ralph F. Verni
--------------------------------
Ralph F. Verni, Chief Executive
Officer and President
/s/ Ralph F. Verni /s/ Thomas L. Phillips
----------------------------------- --------------------------------
Ralph F. Verni, Trustee and Thomas L. Phillips, Trustee
principal executive officer
/s/ Gerard P. Maus /s/ Michael S. Scott Morton
----------------------------------- --------------------------------
Gerard P. Maus, Principal financial Michael S. Scott Morton, Trustee
and accounting officer
/s/ Robert A. Lawrence /s/ Jeptha H. Wade
----------------------------------- --------------------------------
Robert A. Lawrence, Trustee Jeptha H. Wade, Trustee
/s/ Dean O. Morton
-----------------------------------
Dean O. Morton, Trustee
STATE STREET RESEARCH SECURITIES TRUST
Certificate of Resolution
I, the undersigned Darman A. Wing, hereby certify that I am Assistant
Secretary of State Street Research Securities Trust (the "Trust"), a
Massachusetts business truly duly authorized and validly existing under
Massachusetts law, and that the following is a true, correct and complete
statement of a vote duly adopted by the Trustees of said Trust on May 5, 1995:
"VOTED: That Francis J. McNamara, III and
Darman A. Wing be, and each hereby is,
authorized and empowered, for and on
behalf of the Trust, its principal
financial and accounting officer, and in
their name, to execute, and file a Power
of Attorney relating to, the Trust's
Registration Statement under the
Investment Company Act of 1940 and/or the
Securities Act of 1933, and amendments
thereto, the execution and delivery of
such Power of Attorney, Registration
Statement and amendments thereto, to
constitute conclusive proof of such
authorization."
I further certify that said vote has not been amended or revoked and that
the same is now in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of August,
1995.
/s/ Darman A. Wing
------------------
Darman A. Wing
Assistant Secretary
Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, State Street Research Securities Trust, an unincorporated
association of the type commonly known as a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), engages in business as
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust is authorized to (i) issue shares of beneficial
interest ("Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets, and (ii) divide the Shares within each such series into two or more
classes;
WHEREAS, the Trust has established one or more portfolio series as of the
date hereof (such portfolios being referred to collectively herein as the
"Initial Series", such series, together with all other series subsequently
established by the Trust and made subject to this Plan, being referred to herein
individually as a "Series" and collectively as the "Series"), and four classes
thereof, and of series of affiliated investment companies, have been designated
as "Class A," "Class B," "Class C," and "Class D" shares, except for the MetLife
- State Street Research Money Market Fund, which issues four classes thereof
designated as "Class B," "Class C," "Class D," and "Class E" shares);
WHEREAS, prior to the adoption of Rule 18f-3 by the Securities and
Exchange Commission the Trust received an Order from the Securities and Exchange
Commission under Section 6(c) of the Act for an exemption from Sections
2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c) and 22(d) of the Act and Rule
22c-1 thereunder to permit the Trust to issue multiple classes of shares
representing interests in the same portfolio of securities, assess a contingent
deferred sales charge ("CDSC") on certain redemptions of shares, and waive the
CDSC in certain cases; and
WHEREAS, the Trustees have determined to operate under Rule 18f-3 and
pursuant to such Rule the Board of Trustees as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the Act) (the "Qualified
Trustees"), having determined in the exercise of their reasonable business
judgment this Plan is in the best interest of each class of the Initial Series
individually and the Initial Series as a whole, have accordingly approved this
Plan.
NOW, THEREFORE, Trust hereby adopts this Plan in accordance with Rule
18f-3 under the Act, on the following terms and conditions:
<PAGE>
1. Class Differences. Each class of Shares of each Initial Series shall
represent interests in the same portfolio of investments of Initial Series and
shall be identical in all respects, and except as otherwise set forth in this
Plan, shall differ solely with respect to: (i) arrangements for shareholder
services or the distribution of Shares, or both, as provided for in Sections 2
and 3 of this Plan; (ii) the exclusive right of a Class to vote on certain
matters relating to the Plan of Distribution Pursuant to Rule 12b-1 adopted by
the Trust with respect to such Class; (iii) such differences relating to
purchase minimums, sales charges and eligible investors as may be set forth in
the Prospectuses and Statement of Additional Information of the Initial Series,
as the same may be amended or supplemented from time to time (the "Prospectuses"
and "SAI"); (iv) the different exchange privileges of the classes of Shares; (v)
the fact that only certain classes will have a conversion feature; and (iv) the
designation of each Class of shares.
2. Differences in Distribution and Shareholder Services. Each Class
of Shares of the Initial Series shall have a different arrangement for
shareholder services or the distribution of Shares, or both, as follows:
Class A Shares shall be sold subject to a front-end sales charge as
set forth in the Prospectuses and SAI with respect to the applicable Initial
Series. Class A, Class B and Class D Shares shall be sold subject to a
contingent deferred sales charge as set forth in the Prospectuses and SAI with
respect to the applicable Initial Series. Class A, B and D Shares shall be
subject to a service fee of up to 0.25% of the nets assets of the Initial Series
allocable to such Class of Shares. Class B and D Shares shall also be subject to
an annual distribution fee of up to 0.75% of the nets assets of the Initial
Series allocable to such Class of Shares. Such service and distribution fees may
be used to finance activities in accordance with Rule 12b-1 under the Act and
the Plan of Distribution pursuant to Rule 12b-1 adopted by the Trust.
3. Allocation of Expenses. Expenses of the Series shall be
allocated as follows:
(a) Class Expenses. Expenses relating to different arrangements for
shareholder services or the distribution of Shares, or both, shall be allocated
to and paid by that class. A class may pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of a Series' assets, if such expenses are actually incurred in a
different amount by that class, or if the class receives services of a different
kind or to a different degree than other classes.
(b) Other Allocations. All expenses of the Series not allocated to a
particular class pursuant to Sections 2 and 3(a) of this Plan shall be allocated
to each class on the basis of the
<PAGE>
net asset value of that class in relation to the net asset value of the Series.
Notwithstanding the foregoing, the underwriter, adviser, or other provider of
services to a Series may waive or reimburse the expenses of a specific class or
classes to the extent permitted under Rule 18f-3 under the Act; provided,
however, that the Board shall monitor the use of such waivers or reimbursements
intended to differ by class.
4. Term and Termination.
(a) Initial Series. This Plan shall become effective with respect to
the Initial Series as of the date hereof, and shall continue in effect with
respect to each Class of Shares of the Initial Series (subject to Section 4(c)
hereof) until terminated in accordance with the provisions of Section 4(c)
hereof.
(b) Additional Series or Classes. This Plan shall become effective
with respect to any class of the Initial Series other than Class A, Class B,
Class C, and Class D, and in the case of the MetLife - State Street Money Market
Fund, Class E, and with respect to each additional Series or class thereof
established by the Trust after the date hereof and made subject to this Plan,
upon commencement of operations thereof or as otherwise determined, and shall
continue in effect with respect to each such additional Series or class (subject
to Section 4(c) hereof) until terminated in accordance with the provisions of
Section 4(c) hereof. An addendum hereto setting forth such specific and
different terms of such additional series of classes shall be attached to this
Plan.
(c) Termination. This Plan may be terminated at any time with
respect to the Trust or any Series or class thereof, as the case may be, by vote
of a majority of both the Trustees of the Trust and the Qualified Trustees. The
Plan may remain in effect with respect to a Series or class thereof even if it
has been terminated in accordance with this Section 4(e) with respect to such
Series or class or one or more other Series of the Trust.
5. Amendments. Any material amendment to this Plan shall require
the affirmative vote of a majority of both the Trustees of the Trust and the
Qualified Trustees.
Dated: May 5, 1995
[ARTICLE] 6
[CIK] 0000918572
[NAME] STATE STREET RESEARCH SECURITIES TRUST
[SERIES]
[NUMBER] 011
[NAME] STATE STREET RESEARCH INTERMEDIATE BOND FUND CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] APR-30-1995
[PERIOD-END] APR-30-1995
[INVESTMENTS-AT-COST] 14,000,564
[INVESTMENTS-AT-VALUE] 14,146,551
[RECEIVABLES] 249,258
[ASSETS-OTHER] 74,386
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 14,470,195
[PAYABLE-FOR-SECURITIES] 449,091
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 61,422
[TOTAL-LIABILITIES] 510,513
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 13,815,893
[SHARES-COMMON-STOCK] 1,057,613
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 151,627
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (152,902)
[ACCUM-APPREC-OR-DEPREC] 145,064
[NET-ASSETS] 13,959,682
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 909,169
[OTHER-INCOME] 0
[EXPENSES-NET] 122,404
[NET-INVESTMENT-INCOME] 786,765
[REALIZED-GAINS-CURRENT] (144,687)
[APPREC-INCREASE-CURRENT] 145,064
[NET-CHANGE-FROM-OPS] 787,142
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (465,343)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,057,613
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 13,959,682
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 72,084
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 274,361
[AVERAGE-NET-ASSETS] 13,667,875
[PER-SHARE-NAV-BEGIN] 9.55
[PER-SHARE-NII] 0.54
[PER-SHARE-GAIN-APPREC] 0.01
[PER-SHARE-DIVIDEND] (0.44)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.66
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0000918572
[NAME] STATE STREET RESEARCH SECURITIES TRUST
[SERIES]
[NUMBER] 013
[NAME] STATE STREET RESEARCH INTERMEDIATE BOND FUND CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] APR-30-1995
[PERIOD-END] APR-30-1995
[INVESTMENTS-AT-COST] 14,000,564
[INVESTMENTS-AT-VALUE] 14,146,551
[RECEIVABLES] 249,258
[ASSETS-OTHER] 74,386
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 14,470,195
[PAYABLE-FOR-SECURITIES] 449,091
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 61,422
[TOTAL-LIABILITIES] 510,513
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 13,815,893
[SHARES-COMMON-STOCK] 386,712
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 151,627
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (152,902)
[ACCUM-APPREC-OR-DEPREC] 145,064
[NET-ASSETS] 13,959,682
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 909,169
[OTHER-INCOME] 0
[EXPENSES-NET] 122,404
[NET-INVESTMENT-INCOME] 786,765
[REALIZED-GAINS-CURRENT] (144,687)
[APPREC-INCREASE-CURRENT] 145,064
[NET-CHANGE-FROM-OPS] 787,142
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (178,010)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 654,776
[NUMBER-OF-SHARES-REDEEMED] (268,064)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 13,959,682
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 72,084
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 274,361
[AVERAGE-NET-ASSETS] 13,667,875
[PER-SHARE-NAV-BEGIN] 9.55
[PER-SHARE-NII] 0.56
[PER-SHARE-GAIN-APPREC] 0.02
[PER-SHARE-DIVIDEND] (0.46)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.67
[EXPENSE-RATIO] 0.75
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
