-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WfUPnSq/03szoEkkd14tyUtGuxyqqnNOBD0oRmsQzBdrIc+PumLPCPRt4KzoaWQK TwMZwfDe1EYHDFy3G21p5w== 0000950146-97-001381.txt : 19970912 0000950146-97-001381.hdr.sgml : 19970911 ACCESSION NUMBER: 0000950146-97-001381 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970828 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STATE STREET RESEARCH GROWTH TRUST CENTRAL INDEX KEY: 0000034918 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046013177 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-00985 FILM NUMBER: 97671927 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6173571340 MAIL ADDRESS: STREET 1: STATE STREET RESEARCH GROWTH TRUST STREET 2: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: STATE STREET GROWTH TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STATE STREET GROWTH FUND INC DATE OF NAME CHANGE: 19890827 FORMER COMPANY: FORMER CONFORMED NAME: FEDERAL STREET FUND INC DATE OF NAME CHANGE: 19830503 N-30D 1 SEMIANNUAL REPORT [FRONT COVER] STATE STREET RESEARCH GROWTH FUND SEMIANNUAL REPORT June 30, 1997 WHAT'S INSIDE Investment Update About the Fund, economy and markets Fund Information Facts and figures Plus, Complete Portfolio Holdings and Financial Statements [DALBAR Key Honors Logo] DALBAR KEY HONORS COMMITMENT TO: INVESTORS 1996 For Excellence in Shareholder Service STATE STREET RESEARCH FUNDS STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENT UPDATE - -------------------------------------------------------------------------------- INVESTMENT ENVIRONMENT The Economy [bullet] The U.S. economy was driven by strong growth with low inflation over the six months ended June 30, 1997. Consumer spending and confidence were on the rise, and wages began to accelerate slightly over the period. [bullet] A strong dollar helped restrain inflation. The Federal Reserve Board found no need to raise short-term rates during the second quarter, thus stimulating the bond market. The Federal Reserve continues to focus on the strength in consumer demand and wage pressures in the labor market. [bullet] Capital spending, particularly for computers and related equipment, continues steadily and producers' durable equipment remains strong. Production is expected to jump in the auto sector, where inventories have been lean. The Markets [bullet] The first six months of 1997 offered positive overall performance for both stocks and bonds. Without inflation pressure bond prices appreciated. The resulting rally drove down the yield of the benchmark 30-year Treasury bond below 7%. [bullet] A short-term correction took a substantial bite out of the Dow Jones Industrial Average, which had topped 7000 in February and continued to slip until mid-March. By June 30, 1997, the Index had closed at 7672.79, representing a +38.54% gain over the previous 12 months.(1) [bullet] The quarter ended June 30, 1997 was one of the best in history. For the second time in nearly 50 years, the S&P 500(1) had doubled in less than three years. THE FUND A Mid-Year Retrospective [bullet] Against this historic backdrop, the Fund's Class A shares posted a +10.04% (does not reflect sales charge)(2) total return during the past three months. This stronger quarter followed a period of weakness and enabled the Fund to advance +5.59% by mid-year, not including sales charges.(3) The Fund narrowly outperformed the Russell 2000 Growth Index(1). [bullet] The smaller capitalization stocks that helped the portfolio during the previous year have impaired it somewhat during the first six months of 1997, since the market's rise was dominated by large capitalization stocks. Over 35% of the stocks on the New York Stock Exchange and 52% of those on NASDAQ declined during the first quarter, but began to turn around by the end of the second quarter. [bullet] An overweighting in technology stocks, especially semiconductors and large capitalization software companies, helped the Fund's performance. The weighting was reduced to 27% by June 30 and some of the assets were redirected to the financial services sector. We continued to decrease our exposure to energy stocks. [bullet] Pharmaceuticals and drug companies became expensive relative to the market as a whole, but this sector interests us on a company-by-company basis. Current strategy [bullet] Our ongoing research continues to identify companies when the valuations, fundamentals, and management teams converge at the same time--regardless of market conditions. [bullet] The Fund's management is adding market capitalization to the portfolio. [bullet] Some catch-up is needed in the aggressive growth sector relative to the large-cap sector. The economic environment remains constructive and benign, in terms of its impact on the stock market, and therefore we expect opportunity in the months ahead. June 30, 1997 (1)The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely traded common stocks and is a commonly used measure of U.S. stock market performance. The Dow Jones Industrial Average includes 30 widely traded common stocks and is a commonly used measure of stock performance. The Russell 2000 Growth Index includes 2,000 small-company stocks and is a commonly used measure of small-stock performance. The indices are unmanaged and do not take transaction charges into consideration. Direct investment in the indices is not possible; results are for illustrative purposes only. (2)+9.76% for Class B shares; +10.16% for Class C shares; +9.76% for Class D shares. (3)+5.18% for Class B shares; +5.86% for Class C shares; +5.18% for Class D shares. (4)All returns represent past performance, which is no guarantee of future results. The investment return and principal value of an investment made in the Fund will fluctuate and shares, when redeemed, may be worth more or less than their original cost. All returns assume reinvestment of capital gain distributions and income dividends. During the periods prior to 1993 that shares of the Fund were not offered to the general public, the Fund was not subject to the cash inflows and higher redemptions and expenses that have occurred during the Fund's current, continuous public offering. Performance for a class includes periods prior to the adoption of class designations in 1993, which resulted in new or increased 12b-1 fees of up to 1% per class thereafter and which will reduce subsequent performance. "C" shares, offered without a sales charge, are available only to certain employee benefit plans and large institutions. (5)Performance reflects up to maximum 4.5% "A" share front-end sales charge, or 5% "B" share or 1% "D" share contingent deferred, sales charges, where applicable. (6)Cumulative total returns are not annualized, nor do they reflect sales charges, which, if reflected, would reduce performance. Please note that the discussion throughout this shareholder report is dated as indicated and, because of possible changes in viewpoint, data and transactions, should not be relied upon as being current thereafter. - -------------------------------------------------------------------------------- FUND INFORMATION (all data are for periods ended June 30, 1997) - -------------------------------------------------------------------------------- SEC Average Annual Compound Rates of Return (at maximum applicable sales charge)(4),(5) 10 Years 5 Years 1 Year ---------- --------- ------- Class A +9.78% +11.74% -3.23% - -------- ------- ------- ------- Class B +9.91% +11.78% -3.96% - -------- ------- ------- ------- Class C +10.39% +12.98% +1.60% - -------- ------- ------- ------- Class D +9.92% +12.02% -0.33% Cumulative Total Returns (do not reflect sales charge)(4),(6) 10 Years 5 Years 1 Year ---------- --------- ------- Class A +166.27% +82.44% +1.33% - -------- -------- ------- ------ Class B +157.15% +76.20% +0.58% - -------- -------- ------- ------ Class C +168.71% +84.12% +1.60% - -------- -------- ------- ------ Class D +157.43% +76.39% +0.58% Top 10 Stock Positions (by percentage of net assets) [bulleted 1] Telefonos De Venezuela Communications company 4.1% [bulleted 2] HFS Hotel reservation service 4.0% [bulleted 3] U.S. Office Products Business service company 2.8% [bulleted 4] Warner-Lambert Pharmaceutical company 2.6% [bulleted 5] Eli Lilly Pharmaceutical manufacturer 2.5% [bulleted 6] Gillette Personal care company 2.5% [bulleted 7] Pfizer Pharmaceutical company 2.5% [bulleted 8] Republic Industries Waste management company 2.3% [bulleted 9] Thermo Electron Electronic equipment 2.3% [bulleted 10] Citicorp Nation's largest bank 2.1% These securities represent an aggregate of 27.7% of the portfolio. Because of active management, there is no guarantee that the Fund currently invests, or will continue to invest, in the securities listed in this table or in the text above. Top 5 Industries (by percentage of net assets) Electronic Equipment 9.5% Business Service 9.2% Computer Software & Service 8.8% Drug 8.5% Bank 7.2% Total: 43.2% STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENT PORTFOLIO - -------------------------------------------------------------------------------- June 30, 1997 (Unaudited) Value Shares (Note 1) --------- ------------- COMMON STOCKS 101.0% Basic Industries 0.4% Metal & Mining 0.4% Chicago Bridge & Iron Co.* ............ 46,300 $ 1,024,388 ------------- Total Basic Industries ........................ 1,024,388 ------------- Consumer Cyclical 21.4% Airline 3.0% Ryanair Holdings PLC ADR* ............ 5,400 146,475 Trans World Airlines Inc.* ............ 318,800 2,689,875 US Airways Group Inc. .................. 120,200 4,207,000 ------------- 7,043,350 ------------- Automotive 1.1% Budget Group Inc. Cl. A* ............... 73,700 2,542,650 ------------- Hotel & Restaurant 5.4% Apple South Inc. ..................... 59,700 910,425 Extended Stay America Inc.* ............ 155,700 2,452,275 HFS Inc.* .............................. 161,600 9,372,800 ------------- 12,735,500 ------------- Recreation 4.2% Clear Channel Communications Inc.* ... 29,400 1,808,100 Evergreen Media Corp. Cl A ............ 31,600 1,410,150 Florida Panthers Holdings Inc. Cl. A* 10,800 261,900 Oakley Inc.* ........................... 180,700 2,541,094 Walt Disney Co. ........................ 16,400 1,316,100 Westinghouse Electric Corp. ............ 114,000 2,636,250 ------------- 9,973,594 ------------- Retail Trade 6.1% Borders Group Inc.* .................. 134,800 3,252,050 Converse Inc.* ........................ 183,900 4,068,787 Gucci Group NV* ........................ 10,300 663,063 Jones Apparel Group Inc.* ............ 79,600 3,800,900 Linens 'n Things Inc.* ............... 54,700 1,620,487 Proffitts Inc.* ........................ 26,600 1,167,075 ------------- 14,572,362 ------------- Textile & Apparel 1.6% Men's Wearhouse, Inc.* ............... 117,700 3,707,550 ------------- Total Consumer Cyclical ........................ 50,575,006 ------------- Consumer Staple 31.6% Business Service 9.2% Aspect Telecommunications Corp.* ...... 17,800 396,050 Caribiner International Inc.* ......... 125,000 4,078,125 Creative Technology Ltd.* ............ 160,900 2,735,300 HBO & Co. .............................. 32,900 2,265,987 Value Shares (Note 1) --------- ------------- Business Service (cont'd) Maximus Inc.* ........................ 4,700 $ 84,013 Republic Industries Inc.* ............ 222,900 5,544,637 U.S. Office Products Co.* ............ 216,300 6,610,669 ------------- 21,714,781 ------------- Drug 8.5% Eli Lilly & Co. ........................ 54,400 5,946,600 Pfizer Inc. ........................... 49,300 5,891,350 Vertex Pharmaceuticals Inc.* ......... 53,500 2,046,375 Warner-Lambert Co. ..................... 49,400 6,137,950 ------------- 20,022,275 ------------- Food & Beverage 0.5% Starbucks Corp.* ..................... 32,100 1,249,894 ------------- Hospital Supply 5.1% Aetna Inc. ........................... 20,100 2,057,737 Boston Scientific Corp.* ............... 41,000 2,518,937 Guidant Corp. ........................ 56,800 4,828,000 Trigon Healthcare Inc.* ............... 78,100 1,893,925 Wellpoint Health Networks Inc. Cl. A* 16,300 747,763 ------------- 12,046,362 ------------- Personal Care 6.4% Avon Products Inc. ..................... 65,100 4,593,619 Colgate-Palmolive Co. .................. 73,000 4,763,250 Gillette Co. ........................... 62,400 5,912,400 ------------- 15,269,269 ------------- Printing & Publishing 0.9% Big Flower Press Holdings Inc.* ...... 55,700 1,155,775 Journal Register Co.* .................. 49,400 981,825 ------------- 2,137,600 ------------- Tobacco 1.0% Philip Morris Companies, Inc. ......... 53,500 2,374,063 ------------- Total Consumer Staple .................. 74,814,244 ------------- Energy 2.9% Oil 0.6% Chesapeake Energy Corp.* ............... 17,800 174,663 ENI SPA ADR ........................... 23,800 1,344,700 ------------- 1,519,363 ------------- Oil Service 2.3% Diamond Offshore Drilling Inc.* ...... 15,400 1,203,125 Ensco International Inc.* ............ 21,600 1,139,400 Schlumberger Ltd. ..................... 18,900 2,362,500 Weatherford Enterra Inc.* ............ 18,800 723,800 ------------- 5,428,825 ------------- Total Energy ........................... 6,948,188 ------------- The accompanying notes are an integral part of the financial statements. 2 STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENT PORTFOLIO (cont'd) - -------------------------------------------------------------------------------- Value Shares (Note 1) --------- ------------ Finance 13.7% Bank 7.2% BankAmerica Corp. ........................ 56,800 $ 3,667,150 Chase Manhattan Corp. ..................... 48,000 4,659,000 Citicorp ................................. 40,300 4,858,669 H.F. Ahmanson & Co. ..................... 29,100 1,251,300 NationsBank Corp. ........................ 25,900 1,670,550 Unibanco Holdings SA GDR* ............... 24,600 913,275 ------------- 17,019,944 ------------- Financial Service 1.1% Merrill Lynch & Company Inc. ............ 43,400 2,587,725 ------------- Insurance 5.4% Ace Ltd. ................................. 22,600 1,669,575 Allstate Corp. ........................... 11,800 861,400 AMBAC Inc. .............................. 47,900 3,658,362 Hartford Financial Services Group, Inc.* 23,400 1,936,350 Provident Companies, Inc. ............... 27,500 1,471,250 Travelers Group Inc. ..................... 51,100 3,222,494 ------------- 12,819,431 ------------- Total Finance .................................... 32,427,100 ------------- Science & Technology 26.5% Aerospace 1.4% Boeing Co. .............................. 61,700 3,273,956 ------------- Computer Software & Service 8.8% America Online Inc.* ..................... 55,000 3,059,375 Computer Associates International Inc. ... 27,500 1,531,406 EMC Corp.* .............................. 31,400 1,224,600 Informix Corp.* ........................... 51,500 463,500 McAfee Associates Inc.* .................. 48,500 3,061,563 Microsoft Corp.* ........................ 27,800 3,513,225 Oracle Systems Corp.* ..................... 62,400 3,143,400 Westell Technologies, Inc. Cl. A* ......... 94,000 2,350,000 Xilinx Inc.* .............................. 51,200 2,512,000 ------------- 20,859,069 ------------- Electronic Components 5.0% Altera Corp.* ........................... 73,200 3,696,600 Intel Corp.* .............................. 7,800 1,106,138 Lattice Semiconductor Corp.* ............... 20,700 1,169,550 LSI Logic Corp.* ........................... 33,500 1,072,000 RF Micro Devices Inc.* ..................... 4,200 80,325 Sanmina Corp.* ........................... 56,400 3,581,400 Texas Instruments Inc. .................. 13,800 1,160,062 ------------- 11,866,075 ------------- Value Shares (Note 1) --------- ------------ Electronic Equipment 9.5% Advanced Fibre Communications, Inc.* ...... 59,900 $ 3,616,462 Applied Materials Inc.* .................. 35,200 2,492,600 ASM Lithography Holdings NV* ............... 24,400 1,427,400 KLA-Tencor Corp.* ........................ 22,900 1,116,375 Motorola Inc. ........................... 46,000 3,496,000 Qwest Communications International Inc.* .................................... 15,600 425,100 Tellabs Inc.* .............................. 41,100 2,296,463 Teradyne Inc.* ........................... 54,700 2,146,975 Thermo Electron Corp.* ..................... 159,100 5,409,400 ------------- 22,426,775 ------------- Office Equipment 1.8% Dell Computer Corp.* ..................... 12,400 1,456,225 Sun Microsystems Inc.* ..................... 77,400 2,880,731 ------------- 4,336,956 ------------- Total Science & Technology ............... 62,762,831 ------------- Utility 4.5% Natural Gas 0.4% Calpine Corp.* ........................... 48,400 919,600 ------------- Telephone 4.1% Compania Anonima Nacional Telefonos de Venezuela ADR* ........................... 226,500 9,767,812 ------------- Total Utility ........................... 10,687,412 ------------- Total Common Stocks (Cost $202,900,879) ... 239,239,169 ------------- Principal Maturity Amount Date ------------ ----------- SHORT-TERM OBLIGATIONS 2.8% Ford Motor Credit Co., 5.49% . $2,717,000 7/01/1997 2,717,000 Ford Motor Credit Co., 5.50% . 1,493,000 7/01/1997 1,493,000 Ford Motor Credit Co., 5.56% . 2,480,000 7/01/1997 2,480,000 ----------- Total Short-Term Obligations (Cost $6,690,000) ....... 6,690,000 ------------ Total Investments (Cost $209,590,879)--103.8% .......... 245,929,169 Cash and Other Assets, Less Liabilities--(3.8%) ....... (9,059,228) ------------ Net Assets--100.0% .................................. $236,869,941 ============ The accompanying notes are an integral part of the financial statements. 3 STATE STREET RESEARCH GROWTH FUND Federal Income Tax Information: At June 30, 1997, the net unrealized appreciation of investments based on cost for Federal income tax purposes of $209,069,322 was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ....................................... $ 40,106,005 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ....................................... (3,246,158) ------------- $ 36,859,847 ============= - ------------------------------------- * Nonincome-producing securities ADR and GDR stand for American Depositary Receipt and Global Depositary Receipt, respectively, representing ownership of foreign securities. - --------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES - --------------------------------------------------------------------------- June 30, 1997 (Unaudited) Assets Investments, at value (Cost $209,590,879) (Note 1) ... $245,929,169 Cash ................................................ 16,300 Receivable for securities sold ..................... 10,378,579 Receivable for fund shares sold ..................... 30,690 Dividends and interest receivable .................. 21,671 Other assets ....................................... 5,056 ------------- 256,381,465 Liabilities Payable for securities purchased ..................... 19,171,998 Payable for fund shares redeemed ..................... 121,528 Accrued management fee (Note 2) ..................... 92,218 Accrued distribution and service fees (Note 4) ...... 38,242 Accrued transfer agent and shareholder services (Note 2) .......................................... 30,016 Accrued trustees' fees (Note 2) ..................... 13,853 Other accrued expenses .............................. 43,669 ------------- 19,511,524 ------------- Net Assets $236,869,941 ============= Net Assets consist of: Undistributed net investment income ............... $ 314,449 Unrealized appreciation of investments ............ 36,338,290 Accumulated net realized gain ..................... 8,465,942 Shares of beneficial interest ..................... 191,751,260 ------------- $236,869,941 ============= Net Asset Value and redemption price per share of Class A shares ($18,387,636 [divided by] 2,432,390 shares of beneficial interest) ................... $7.56 ============= Maximum Offering Price per share of Class A shares ($7.56 [divided by] .955) ........................... $7.92 ============= Net Asset Value and offering price per share of Class B shares ($36,586,418 [divided by] 5,001,574 shares of beneficial interest)* .................... $7.31 ============= Net Asset Value, offering price and redemption price per share of Class C shares ($176,357,343 [divided by] 23,234,260 shares of beneficial interest) ..... $7.59 ============= Net Asset Value and offering price per share of Class D shares ($5,538,544 [divided by] 757,366 shares of beneficial interest)* .................... $7.31 ============= - ------------------------------------- * Redemption price per share for Class B and Class D is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of the financial statements. 4 STATE STREET RESEARCH GROWTH FUND - ----------------------- STATEMENT OF OPERATIONS - ----------------------- For the six months ended June 30, 1997 (Unaudited) Investment Income Dividends ............................................. $ 615,941 Interest ................................................ 671,123 ------------ 1,287,064 Expenses Management fee (Note 2) ................................. 540,320 Custodian fee .......................................... 71,144 Transfer agent and shareholder services (Note 2) ...... 69,225 Service fee--Class A (Note 4) ........................... 21,554 Distribution and service fees--Class B (Note 4) ......... 167,813 Distribution and service fees--Class D (Note 4) ......... 27,501 Registration fees ....................................... 16,503 Reports to shareholders ................................. 15,672 Audit fee ............................................. 15,051 Trustees' fees (Note 2) ................................. 14,939 Legal fee ............................................. 3,605 Miscellaneous .......................................... 9,288 ------------ 972,615 ------------ Net investment income ................................. 314,449 ------------ Realized and Unrealized Gain on Investments Net realized gain on investments (Notes 1 and 3) ...... 8,388,542 Net unrealized appreciation of investments ............ 3,980,474 ------------ Net gain on investments ................................. 12,369,016 ------------ Net increase in net assets resulting from operations . $12,683,465 ============ - ---------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - ---------------------------------------------------- Six months ended June 30, 1997 Year ended (Unaudited) December 31, 1996 ------------------ ------------------ Increase (Decrease) in Net Assets Operations: Net investment income (loss) ......... $ 314,449 $ (421,667) Net realized gain on investments ...... 8,388,542 25,313,329 Net unrealized appreciation of investments ........................ 3,980,474 1,008,895 ------------ ------------- Net increase resulting from operations ........................ 12,683,465 25,900,557 ------------ ------------- Dividend from net investment income: Class A .............................. -- -- Class C .............................. -- (212,810) ------------ ------------- -- (212,810) ------------ ------------- Distribution from net realized gains: Class A .............................. -- (1,432,492) Class B .............................. -- (3,063,722) Class C .............................. -- (17,829,679) Class D .............................. -- (542,316) ------------ ------------- -- (22,868,209) ------------ ------------- Net increase (decrease) from fund share transactions (Note 5) ......... (4,844,965) 24,343,911 ------------ ------------- Total increase in net assets ......... 7,838,500 27,163,449 Net Assets Beginning of period .................. 229,031,441 201,867,992 ------------ ------------- End of period (including undistributed net investment income of $314,449 and $0, respectively) ............... $236,869,941 $ 229,031,441 ============ ============= The accompanying notes are an integral part of the financial statements. 5 STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- NOTES TO UNAUDITED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- June 30, 1997 Note 1 State Street Research Growth Fund (the "Fund"), is a series of State Street Research Growth Trust (the "Trust"), which is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized in February, 1989 as a successor to State Street Growth Fund, Inc., a Massachusetts corporation. The Fund is presently the only series of the Trust. The investment objective of the Fund is to provide long-term growth of capital. In seeking to achieve its investment objective, the Fund invests primarily in equity securities believed by the Investment Adviser to have better than average growth potential over the years. The Fund offers four classes of shares. Class A shares are subject to an initial sales charge of up to 4.50% and pay a service fee equal to 0.25% of average daily net assets. Class B shares are subject to a contingent deferred sales charge on certain redemptions made within five years of purchase and pay annual distribution and service fees of 1.00%. Class B shares automatically convert into Class A shares (which pay lower ongoing expenses) at the end of eight years after the issuance of the Class B shares. Class C shares are only offered to certain employee benefit plans and large institutions. No sales charge is imposed at the time of purchase or redemption of Class C shares. Class C shares do not pay any distribution or service fees. Class D shares are subject to a contingent deferred sales charge of 1.00% on any shares redeemed within one year of their purchase. Class D shares also pay annual distribution and service fees of 1.00%. The Fund's expenses are borne pro-rata by each class, except that each class bears expenses, and has exclusive voting rights with respect to provisions of the Plan of Distribution, related specifically to that class. The Trustees declare separate dividends on each class of shares. The following significant policies are consistently followed by the Fund in preparing its financial statements, and such policies are in conformity with generally accepted accounting principles for investment companies. A. Investments in Securities Values for listed securities represent the last sale on national securities exchanges quoted prior to the close of the New York Stock Exchange. Over-the-counter securities quoted on the National Association of Securities Dealers Automated Quotation ("NASDAQ") system are valued at the closing price supplied through such system. In the absence of recorded sales and for those over-the-counter securities not quoted on the NASDAQ system, valuations are at the mean of the closing bid and asked quotations, except for securities that may be restricted as to public resale, which are valued in accordance with methods adopted by the Trustees. Security transactions are accounted for on the trade date (date the order to buy or sell is executed), and dividends declared but not received are accrued on the ex-dividend date. Interest income is determined on the accrual basis. Realized gains and losses from security transactions are reported on the basis of average cost of securities delivered. B. Federal Income Taxes No provision for Federal income taxes is necessary since the Fund has elected to qualify under Subchapter M of the Internal Revenue Code and its policy is to distribute all of its taxable income, including net realized capital gains, within the prescribed time periods. It is also the intention of the Fund to distribute an amount sufficient to avoid imposition of any Federal Excise Tax under Section 4982 of the Internal Revenue Code. C. Dividends Dividends from net investment income, if any, are declared and paid or reinvested semiannually. Net realized capital gains are distributed annually. 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 the disposition of securities that have different bases for financial reporting and tax purposes. D. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Note 2 The Trust and State Street Research & Management Company (the "Adviser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance Company ("Metropolitan"), have entered into a contract that provides for an annual fee equal to 0.475% of the Fund's average daily net assets. In consideration of these fees, the Adviser furnishes the Fund with management, investment advisory, statistical and research facilities and services. The Adviser also pays all salaries, rent and certain other expenses of management. During the six months ended June 30, 1997, the fees pursuant to such agreement amounted to $540,320. 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 six months ended June 30, 1997, the amount of such expenses was $20,845. The fees of the Trustees not currently affiliated with the Adviser amounted to $14,939 during the six months ended June 30, 1997. Note 3 For the six months ended June 30, 1997, exclusive of short-term investments and U.S. Government obligations, purchases and sales of securities aggregated $444,880,141 and $442,291,298, respectively. 6 STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- NOTES (cont'd) - -------------------------------------------------------------------------------- Note 4 The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 (the "Plan") under the Investment Company Act of 1940, as amended. Under the Plan, the Fund pays annual service fees to the Distributor at a rate of 0.25% of average daily net assets for Class A, Class B and Class D shares. In addition, the Fund pays annual distribution fees of 0.75% of average daily net assets for Class B and Class D shares. The Distributor uses such payments for personal services and/or the maintenance or servicing of shareholder accounts, to reimburse securities dealers for distribution and marketing services, to furnish ongoing assistance to investors and to defray a portion of its distribution and marketing expenses. For the six months ended June 30, 1997, fees pursuant to such plan amounted to $21,554, $167,813 and $27,501 for Class A, Class B and Class D shares, respectively. The Fund has been informed that the Distributor and MetLife Securities, Inc., a wholly owned subsidiary of Metropolitan earned initial sales charges aggregating $11,756 and $75,677, respectively, on sales of Class A shares of the Fund during the six months ended June 30, 1997, and that MetLife Securities, Inc. earned commissions aggregating $190,394 on sales of Class B shares, and that the Distributor collected contingent deferred sales charges of $34,369 and $165 on redemptions of Class B and Class D shares, respectively, during the same period. Note 5 The Trustees have the authority to issue an unlimited number of shares of beneficial interest, $.001 par value per share. At June 30, 1997, the Adviser owned one share each of Class A, Class B and Class D of the Fund. Share transactions were as follows:
Six months ended June 30, 1997 (Unaudited) --------------------------------- Class A Shares Amount - ------------------------------------------------------------------ ---------------- ---------------- Shares sold ................................................... 1,508,895 $ 10,942,546 Issued upon reinvestment of distribution from net realized gains -- -- Shares redeemed ................................................ (1,195,247) (8,578,818) ------------ ------------- Net increase ................................................... 313,648 $ 2,363,728 ============ ============= Class B Shares Amount - ------------------------------------------------------------------ ------------ ------------- Shares sold ...................................................... 1,149,641 $ 8,114,739 Issued upon reinvestment of distribution from net realized gains -- -- Shares redeemed ................................................ (621,246) (4,377,609) ------------ ------------- Net increase ................................................... 528,395 $ 3,737,130 ============ ============= Class C Shares Amount - ------------------------------------------------------------------ ------------ ------------- Shares sold ...................................................... 56,272 $ 404,799 Issued upon reinvestment of: Distribution from net realized gains ........................... -- -- Dividend from net investment income ........................... -- -- Shares redeemed ................................................ (1,489,138) (11,025,361) ------------ ------------- Net decrease ................................................... (1,432,866) $ (10,620,562) ============ ============= Class D Shares Amount - ------------------------------------------------------------------ ------------ ------------- Shares sold ...................................................... 307,209 $ 2,247,695 Issued upon reinvestment of distribution from net realized gains -- -- Shares redeemed ................................................ (352,742) (2,572,956) ------------ ------------- Net increase (decrease) ....................................... (45,533) $ (325,261) ============ ============= Year ended December 31, 1996 ------------------------------- Class A Shares Amount - ------------------------------------------------------------------ -------------- ---------------- Shares sold ................................................... 1,847,928 $ 14,383,066 Issued upon reinvestment of distribution from net realized gains 195,417 1,399,231 Shares redeemed ................................................ (263,591) (2,062,377) ----------- ------------- Net increase ................................................... 1,779,754 $ 13,719,920 =========== ============= Class B Shares Amount - ------------------------------------------------------------------ ----------- ------------- Shares sold ...................................................... 2,947,485 $ 22,502,916 Issued upon reinvestment of distribution from net realized gains 369,233 2,566,243 Shares redeemed ................................................ (395,250) (2,996,738) ----------- ------------- Net increase ................................................... 2,921,468 $ 22,072,421 =========== ============= Class C Shares Amount - ------------------------------------------------------------------ ----------- ------------- Shares sold ...................................................... 114,007 $ 899,665 Issued upon reinvestment of: Distribution from net realized gains ........................... 807,652 5,802,306 Dividend from net investment income ........................... 4,457 36,774 Shares redeemed ................................................ (2,836,294) (21,897,052) ----------- ------------- Net decrease ................................................... (1,910,178) $ (15,158,307) =========== ============= Class D Shares Amount - ------------------------------------------------------------------ ----------- ------------- Shares sold ...................................................... 462,926 $ 3,510,341 Issued upon reinvestment of distribution from net realized gains 71,693 498,203 Shares redeemed ................................................ (39,411) (298,667) ----------- ------------- Net increase (decrease) ....................................... 495,208 $ 3,709,877 =========== =============
7 STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- For a share outstanding throughout each period:
Class A --------------------------------------------------- Year ended December 31 Six months ended ------------------------- June 30, 1997 (Unaudited)*** 1996*** 1995*** ------------------------- ------------ ------------ Net asset value, beginning of period $ 7.17 $ 7.02 $ 7.09 ------- ------- ------- Net investment income (loss) 0.01 (0.03) 0.01 Net realized and unrealized gain (loss) on investments 0.38 0.93 2.30 ------- ------- ------- Total from investment operations 0.39 0.90 2.31 ------- ------- ------- Dividends from net investment income -- -- (0.02) Distributions from net realized gains -- (0.75) (2.36) ------- ------- ------- Total distributions -- (0.75) (2.38) ------- ------- ------- Net asset value, end of period $ 7.56 $ 7.17 $ 7.02 ======= ======= ======= Total return 5.59%++ 12.65%+ 32.57%+ Net assets at end of period (000s) $18,388 $15,181 $ 2,379 Ratio of operating expenses to average net assets 0.91%[dbldag] 0.90% 0.89% Ratio of net investment income (loss) to average net assets 0.23%[dbldag] (0.34)% 0.12% Portfolio turnover rate 203.11% 237.85% 234.43% Average commission rate@ $0.0380 $0.0331 -- Class B ----------------------------------------- Year ended Year ended December 31 December 31 ------------------------- Six months ended ------------ June 30, 1997 1994 1993* (Unaudited)*** 1996*** -------------- ------------------------- ---------------------------- ------------ Net asset value, beginning of period $ 8.50 $ 9.63 $ 6.96 $ 6.89 ------- ------ ------- ------- Net investment income (loss) 0.05 0.06 (0.02) (0.08) Net realized and unrealized gain (loss) on investments (0.38) 0.37 0.37 0.90 ------- ------ ------- ------- Total from investment operations (0.33) 0.43 0.35 0.82 ------- ------ ------- ------- Dividends from net investment income (0.05) (0.08) -- -- Distributions from net realized gains (1.03) (1.48) -- (0.75) ------- ------ ------- ------- Total distributions (1.08) (1.56) -- (0.75) ------- ------ ------- ------- Net asset value, end of period $ 7.09 $ 8.50 $ 7.31 $ 6.96 ======= ====== ======= ======= Total return (3.83)%+ 4.52%++ 5.18%++ 11.73%+ Net assets at end of period (000s) $ 719 $ 602 $36,586 $31,119 Ratio of operating expenses to average net assets 0.90% 0.96%[dbldag] 1.66%[dbldag] 1.65% Ratio of net investment income (loss) to average net assets 0.54% 0.48%[dbldag] (0.53)%[dbldag] (1.07)% Portfolio turnover rate 57.18% 68.36% 203.11% 237.85% Average commission rate@ -- -- $0.0380 $0.0331 Year ended December 31 ------------------------------------------------ 1995*** 1994 1993** ------------ -------------- -------------------- Net asset value, beginning of period $ 7.02 $ 8.46 $ 9.56 ------- ------ ------- Net investment income (loss) (0.06) (0.00) 0.03 Net realized and unrealized gain (loss) on investments 2.29 (0.41) 0.42 ------- ------ ------- Total from investment operations 2.23 (0.41) 0.45 ------- ------ ------- Dividends from net investment income -- -- (0.07) Distributions from net realized gains (2.36) (1.03) (1.48) ------- ------ ------- Total distributions (2.36) (1.03) (1.55) ------- ------ ------- Net asset value, end of period $ 6.89 $ 7.02 $ 8.46 ======= ======= ======= Total return 31.71%+ (4.80)%+ 4.64%++ Net assets at end of period (000s) $10,684 $ 1,544 $ 986 Ratio of operating expenses to average net assets 1.63% 1.63% 1.71%[dbldag] Ratio of net investment income (loss) to average net assets (0.69)% (0.20)% (0.36)%[dbldag] Portfolio turnover rate 234.43% 57.18% 68.36% Average commission rate@ -- -- --
Class C --------------------------------------------------- Year ended December 31 Six months ended ------------------------- June 30, 1997 (Unaudited)*** 1996*** 1995*** ------------------------- ------------ ------------ Net asset value, beginning of period $ 7.18 $ 7.02 $ 7.08 -------- --------- --------- Net investment income (loss) 0.02 (0.00) 0.04 Net realized and unrealized gain (loss) on investments 0.39 0.92 2.29 -------- --------- --------- Total from investment operations 0.41 0.92 2.33 -------- --------- --------- Dividends from net investment income -- (0.01) (0.03) Distributions from net realized gains -- (0.75) (2.36) -------- --------- --------- Total distributions -- (0.76) (2.39) -------- --------- --------- Net asset value, end of period $ 7.59 $ 7.18 $ 7.02 ======== ========= ========= Total return 5.86%++ 12.74%+ 33.02%+ Net assets at end of period (000s) $176,357 $ 177,147 $ 186,689 Ratio of operating expenses to average net assets 0.66%[dbldag] 0.65% 0.64% Ratio of net investment income (loss) to average net assets 0.47%[dbldag] (0.06)% 0.43% Portfolio turnover rate 203.11% 237.85% 234.43% Average commission rate@ $ 0.0380 $ 0.0331 -- [diamond]After provision for Federal tax on retained capital gains at end of period of -- -- -- Class D ----------------------------------------- Year ended Year ended December 31 December 31 ----------------------- Six months ended ------------ June 30, 1997 1994 1993 1992 (Unaudited)*** 1996*** -------------- ----------- ----------- ---------------------------- ------------ Net asset value, beginning of period $ 8.51 $ 9.26 $ 9.14 $ 6.95 $ 6.88 --------- -------- -------- ------- ------- Net investment income (loss) 0.07 0.09 0.14 (0.02) (0.08) Net realized and unrealized gain (loss) on investments (0.40) 0.74 0.15 0.38 0.90 --------- -------- -------- ------- ------- Total from investment operations (0.33) 0.83 0.29 0.36 0.82 --------- -------- -------- ------- ------- Dividends from net investment income (0.07) (0.10) (0.14) -- -- Distributions from net realized gains (1.03) (1.48) (0.03) -- (0.75) --------- -------- -------- ------- ------- Total distributions (1.10) (1.58) (0.17) -- (0.75) --------- -------- -------- ------- ------- Net asset value, end of period $ 7.08 $ 8.51 $ 9.26 $ 7.31 $ 6.95 ========= ======== ======== ======= ======= Total return (3.82)%+ 8.94%+ 5.71%+ 5.18%++ 11.89%+ Net assets at end of period (000s) $ 186,108 $ 250,786 $ 263,781 $ 5,539 $ 5,584 Ratio of operating expenses to average net assets 0.64% 0.66% 0.57% 1.66%[dbldag] 1.65% Ratio of net investment income (loss) to average net assets 0.78% 0.92% 1.56% (0.54)%[dbldag] (1.07)% Portfolio turnover rate 57.18% 68.36% 35.60% 203.11% 237.85% Average commission rate@ -- -- -- $0.0380 $0.0331 [diamond] After provision for Federal tax on retained capital gains at end of period of -- -- $ 0.22 -- -- Year ended December 31 ----------------------------------------------- 1995*** 1994 1993** ------------ -------------- ------------------- Net asset value, beginning of period $ 7.02 $ 8.45 $ 9.56 ------- ---------- ------- Net investment income (loss) (0.06) (0.00) 0.03 Net realized and unrealized gain (loss) on investments 2.28 (0.40) 0.41 ------- ---------- ------- Total from investment operations 2.22 (0.40) 0.44 ------- ---------- ------- Dividends from net investment income -- -- (0.07) Distributions from net realized gains (2.36) (1.03) (1.48) ------- ---------- ------- Total distributions (2.36) (1.03) (1.55) ------- ---------- ------- Net asset value, end of period $ 6.88 $ 7.02 $ 8.45 ======= ========== ======= Total return 31.57%+ (4.68)%+ 4.59%++ Net assets at end of period (000s) $ 2,117 $ 384 $ 242 Ratio of operating expenses to average net assets 1.63% 1.63% 1.71%[dbldag] Ratio of net investment income (loss) to average net assets (0.67)% (0.20)% (0.34)%[dbldag] Portfolio turnover rate 234.43% 57.18% 68.36% Average commission rate@ -- -- -- [diamond] After provision for Federal tax on retained capital gains at end of period of -- -- --
- -------------------------------------------------------------------------------- * March 16, 1993 (commencement of share class designations) to December 31, 1993. ** March 18, 1993 (commencement of share class designations) to December 31, 1993. *** Per-share figures have been calculated using the average shares method. [dbldag] Annualized + Total return figures do not reflect any front-end or contingent deferred sales charges. ++ Represents aggregate return for the period without annualization and does not reflect any front-end or contingent deferred sales charges. @ Average commission rate per share paid for security trades beginning with the fiscal year ended December 31, 1996. 8 STATE STREET RESEARCH GROWTH FUND - -------------------------------------------------------------------------------- FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH GROWTH TRUST - -------------------------------------------------------------------------------- Fund Information State Street Research Growth Fund One Financial Center Boston, MA 02111 Investment Adviser State Street Research & Management Company One Financial Center Boston, MA 02111 Distributor State Street Research Investment Services, Inc. One Financial Center Boston, MA 02111 Shareholder Services State Street Research Shareholder Services P.O. Box 8408 Boston, MA 02266-8408 1-800-562-0032 Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 Legal Counsel Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA 02111 Officers Ralph F. Verni Chairman of the Board, President and Chief Executive Officer Peter C. Bennett Vice President Frederick R. Kobrick Vice President Dudley F. Wade Vice President James M. Weiss Vice President Gerard P. Maus Treasurer Joseph W. Canavan Assistant Treasurer Douglas A. Romich Assistant Treasurer Francis J. McNamara, III Secretary and General Counsel Darman A. Wing Assistant Secretary and Assistant General Counsel Amy L. Simmons Assistant Secretary Trustees Ralph F. Verni Chairman of the Board, President, Chief Executive Officer and Director, State Street Research & Management Company Steve A. Garban Retired; formerly Senior Vice President for Finance and Operations and Treasurer, The Pennsylvania State University Malcolm T. Hopkins Former Vice Chairman of the Board and Chief Financial Officer, St. Regis Corp. Edward M. Lamont Formerly in banking (Morgan Guaranty Trust Company of New York); presently engaged in private investments and civic affairs Robert A. Lawrence Associate, Saltonstall & Co. Dean O. Morton Retired; formerly Executive Vice President, Chief Operating Officer and Director, Hewlett-Packard Company Thomas L. Phillips Retired; formerly Chairman of the Board and Chief Executive Officer, Raytheon Company Toby Rosenblatt President, The Glen Ellen Company Vice President, Founders Investments Ltd. Michael S. Scott Morton Jay W. Forrester Professor of Management, Sloan School of Management, Massachusetts Institute of Technology Jeptha H. Wade Retired; formerly Of Counsel, Choate, Hall & Stewart 9 [back cover] State Street Research Growth Fund One Financial Center Boston, MA 02111 Bulk Rate U.S. Postage PAID Randolph, MA Permit No. 600 Questions? Comments? Call us at 1-800-562-0032, or write us at: State Street Research Shareholder Services P.O. Box 8408 Boston, MA 02266-8408 [State Street Research Logo] This report is prepared for the general information of current shareholders. When used in the general solicitation of investors, this report must be accompanied or preceded by a current State Street Research Growth Fund prospectus. When used after September 30, 1997, this report must be accompanied by a current Quarterly Performance Update. Portfolio changes should not be considered recommendations for action by individual investors. The Dalbar awards recognize quality shareholder service and should not be considered a rating of fund performance. The survey included mutual fund complexes that volunteered or were otherwise selected to participate and was not industry-wide. CONTROL NUMBER: 4102-970820(0998)SSR-LD GF-750D-897IBS -----END PRIVACY-ENHANCED MESSAGE-----