As filed with the Securities and Exchange Commission on October 11, 1995
1933 Act Registration No. 2-86271
1940 Act File No. 811-3838
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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. 11 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 17 |X|
--------------------
STATE STREET RESEARCH CAPITAL 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
Thomas J. Kelly, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
It is proposed that this filing will become effective under Rule 485:
|_| Immediately upon filing pursuant to paragraph (b),
|X| On October 23, 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.
-------------------------------------
The Registrant hereby declares that, pursuant to Rule 24f-2 promulgated under
the Investment Company Act of 1940, as amended (the "1940 Act"), it has
registered an indefinite number of shares of beneficial interest, par value
$.001 per share, in each of the State Street Research Capital Fund series, the
State Street Research Small Capitalization Growth Fund series and the State
Street Research Small Capitalization Value Fund series of the Registrant, which
shares are designated as Class A shares, Class B shares, Class C shares and
Class D shares. A Rule 24f-2 Notice for the fiscal year ended September 30, 1995
will be filed on or about November 30, 1995.
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<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
-----------------------
Part A
------
CAPTION OR LOCATION CAPTION OR LOCATION
CAPTION OR LOCATION IN PROSPECTUS FOR IN PROSPECTUS FOR
IN PROSPECTUS FOR STATE STREET RESEARCH STATE STREET
STATE STREET SMALL CAPITALIZATION RESEARCH SMALL
FORM N-1A ITEM NO. RESEARCH CAPITAL FUND GROWTH FUND CAPITALIZATION VALUE FUND
- ------------------ ---------------------- ------------------------- -------------------------
<S> <C> <C> <C>
1. Cover Page Same Same Same
2. Synopsis Table of Expenses Table of Expenses Table of Expenses
3. Condensed Financial Financial Highlights; Financial Highlights; Financial Highlights;
Information Calculation of Performance Data Calculation of Performance Data Calculation of Performance Data
4. General Description The Funds' Investments; Limiting The Fund's Investments; The Fund's Investments;
of Registrant Investment Risk; The Fund Limiting Investment Risk; Limiting Investment Risk;
and its Shares The Fund and its Shares The Fund and its Shares
5. Management of the Management of the Fund; Management of the Fund; Management of the Fund;
Fund Purchase of Shares; Purchase of Shares; Purchase of Shares;
Shareholder Services Shareholder Services Shareholder Services
5A. Management's [To be included in Annual [To be included in Annual [To be included in Annual
Discussion of Fund Reports to Shareholders] Reports to Shareholders] Reports to Shareholders]
Performance
6. Capital Stock and The Fund and its Shares; The Fund and its Shares; The Fund and its Shares;
Other Securities Management of the Fund; Management of the Fund; Management of the Fund;
Dividends and Distributions; Dividends and Distributions; Dividends and Distributions;
Taxes; Shareholder Services Taxes; Shareholder Services Taxes; Shareholder Services
7. Purchase of Purchase of Shares; Purchase of Shares; Purchase of Shares;
Securities Being Shareholder Services Shareholder Services Shareholder Services
Offered
8. Redemption or Redemption of Shares; Redemption of Shares; Redemption of Shares;
Repurchase Shareholder Services Shareholder Services Shareholder Services
9. Legal Proceedings Not Applicable Not Applicable Not Applicable
10. Cover Page Same Same Same
11. Table of Contents Same Same Same
12. General Information Not Applicable Not Applicable Not Applicable
and History
13. Investment Additional Investment Additional Investment Investment Policies and
Objectives Policies and Restrictions; Policies and Restrictions; Restrictions; Additional
and Policies Additional Information Additional Information Information Concerning
Concerning Certain Concerning Certain Certain Investment
Investment Techniques; Investment Techniques; Techniques; Debt
Money Market Instrument and Debt Instruments and Instruments and Permitted
Permitted Cash Investments; Permitted Cash Investments; Cash Investments;
Rating Categories of Debt Rating Categories of Debt Portfolio Transactions
Securities; Portfolio Transactions Securities; Portfolio Transactions
2
<PAGE>
<CAPTION>
Part B
------
CAPTION OR LOCATION CAPTION OR LOCATION
IN STATEMENT OF IN STATEMENT OF
CAPTION OR LOCATION ADDITIONAL INFORMATION ADDITIONAL INFORMATION
IN STATEMENT OF FOR STATE STREET FOR STATE STREET
ADDITIONAL INFORMATION RESEARCH RESEARCH SMALL
FOR STATE STREET SMALL CAPITALIZATION CAPITALIZATION
FORM N-1A ITEM NO. RESEARCH CAPITAL FUND GROWTH FUND VALUE FUND
- ------------------ ---------------------- ------------------------- -----------------------
<S> <C> <C> <C>
14. Management of the Trustees and Officers Trustees and Officers Trustees and Officers
Registrant
15. Control Persons and Trustees and Officers Trustees and Officers Trustees and Officers
Principal Holders of
Securities
16. Investment Investment Advisory Services; Investment Advisory Services; Investment Advisory Services;
Advisory and Custodian; Independent Custodian; Independent Custodian; Independent
Other Services Accountants; Distribution of Accountants; Distribution of Accountants; Distribution of
Shares of the Fund Shares of the Fund Shares of the Fund
17. Brokerage Allocation Portfolio Transactions Portfolio Transactions Portfolio Transactions
18. Capital Stock and Not Applicable (Description in Not Applicable (Description Not Applicable (Description
Other Securities Prospectus) in Prospectus) in Prospectus)
19. Purchase, Redemption Purchase and Shares; Redemption Purchase of Shares; Redemption Purchase of Shares; Redemption
and Pricing of of Shares; Net Asset Value of Shares; Net Asset Value of Shares; Net Asset Value
Securities Being
Offered
20. Tax Status Certain Tax Matters Certain Tax Matters Certain Tax Matters
21. Underwriters Distribution of Shares of the Distribution of Shares of the Distribution of Shares of the
Fund Fund Fund
22. Calculation of Calculation of Performance Calculation of Performance Calculation of Performance
Performance Data Data Data Data
23. Financial Statements Financial Statements Financial Statements Financial Statements
</TABLE>
3
<PAGE>
Supplement No. 3 dated October 23, 1995
(Supplanting Supplement No. 2 dated July 17, 1995)
to
Prospectus dated February 1, 1995
for
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
a series of State Street Research Capital Trust
Share Classes Available
At the present time, only Class A shares are generally available for
purchase.
For information on the availability of other classes of shares, contact the
Distributor.
Financial Highlights (Unaudited)
This information should be read in conjunction with the unaudited
financial statements and notes thereto included in the Statement of Additional
Information.
For a share outstanding from February 13, 1995 (commencement of
operations) to September 30, 1995:
Class A Class B Class C Class D
------- ------- ------- -------
Net asset value,
beginning of period $ 9.55 $ 9.55 $ 9.55 $ 9.55
Net investment income* .07 .02 .09 .02
Net unrealized gain
on investments 1.51 1.51 1.51 1.51
------ ------ ------ ------
Net asset value,
end of period $11.13 $11.08 $11.15 $11.08
====== ====== ====== ======
Total return+ 16.54% 16.02% 16.75% 16.02%
Net assets at end
of period (000s) $5,782 $116 $117 $116
Ratio of operating
expenses to average
net assets* 1.45%++ 2.20%++ 1.20%++ 2.20%++
Ratio of net investment
income to average
net assets* 1.05%++ 0.32%++ 1.32%++ 0.32%++
Portfolio turnover rate 47.34% 47.34% 47.34% 47.34%
__________________
* Reflects voluntary
assumption of fees
or expenses per
share in each period $0.15 $0.15 $0.15 $0.15
+ 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.
++Annualized.
Table of Expenses
The last sentence of the second paragraph under the caption "Table of Expenses"
at page 5 of the Prospectus is hereby revised as follows:
"For the period February 13, 1995 (commencement of operations) through September
30, 1995, Total Fund Operating expenses as a percentage of average net assets of
Class A, Class B, Class C and Class D shares of the Fund would have been 3.69%,
4.44%, 3.44% and 4.44%, respectively, in the absence of the voluntary assumption
of fees or expenses by the Distributor and its affiliates, which amounted to
2.24%, 2.24%, 2.24% and 2.24%, respectively."
Minimum Investment
The section under the caption "Purchase of Shares -- Minimum Investment"
is revised in its entirety as follows:
"Class of Shares
----------------
A B C D
--------------------------------------------
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
(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)."
Other Programs
Immediately after the first sentence of the first paragraph under the
caption "Purchase of Shares -- Class A Shares -- Initial Sales Charges -- Other
Programs," the following is added:
"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."
Additional Information
Under the caption "Redemption of Shares -- Additional Information," the
first paragraph is revised in its entirety as follows:
"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."
Investment Plans
The first paragraph under the caption "Shareholder Services -- Investment
Plans" is revised in its entirety to read as follows:
"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."
<PAGE>
State Street Research
Small Capitalization Value Fund
Prospectus
February 1, 1995
The investment objective of State Street Research Small Capitalization
Value Fund (the "Fund") is to provide high total return consisting principally
of capital appreciation. In seeking to achieve its investment objective, the
Fund invests primarily in the equity securities of small capitalization
companies which are trading at prices believed to be below the true values of
such securities. For further information, see "The Fund's Investments."
State Street Research & Management Company (the "Investment Manager")
serves as investment adviser to the Fund. As of December 31, 1994, the
Investment Manager had assets of approximately $23.2 billion under management.
State Street Research Investment Services, Inc. serves as distributor (the
"Distributor") for the Fund.
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 the Fund's shares
fluctuates as market conditions change.
Because of the Fund's investment policies, the Fund is subject to
above-average risks; it may invest substantial amounts in foreign securities and
special situation companies and have a high portfolio turnover rate. The Fund
generally is designed for investors who want an aggressive investment and can
tolerate volatility and possible losses. An investment in the Fund should be
part of a balanced investment program which includes more conservative
investments. For further information, see "The Fund's Investments -- Other
Investments and Risk Considerations." In addition, the Fund may suspend the
offering of its shares at any time because of the limited availability of
investments which meet the Fund's investment parameters.
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
February 1, 1995 has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus. It is available at no charge
upon request to the Fund at the address indicated on the cover or by calling
1-800-562-0032.
The Fund is a diversified series of State Street Research Capital 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.
CONTROL NUMBER: 2146-950220(0396)SSR-LD SCV-175E-295IBS
<PAGE>
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.
Table of Contents Page
Table of Expenses ...................................................... 3
The Fund's Investments ................................................. 5
Limiting Investment Risk ............................................... 10
Purchase of Shares ..................................................... 11
Redemption of Shares ................................................... 24
Shareholder Services ................................................... 27
The Fund and its Shares ................................................ 33
Management of the Fund ................................................. 35
Dividends and Distributions; Taxes ..................................... 36
Calculation of Performance Data ........................................ 38
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 (i) to 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.
2
<PAGE>
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
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
annually through the fifth year, 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."
3
<PAGE>
Class A Class B Class C Class D
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees ............... 0.85% 0.85% 0.85% 0.85%
12b-1 Fees .................... 0.25% 1.00% None 1.00%
Other Expenses ................ 1.05% 1.05% 1.05% 1.05%
Less Voluntary Reduction ..... (0.70%) (0.70%) (0.70%) (0.70%)
------- ------- ------- -------
Total Fund Operating Expenses
(after voluntary reduction) 1.45% 2.20% 1.20% 2.20%
======= ======= ======= =======
Example: 1 Year 3 Years
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:
Class A shares .................................. $59 $89
Class B shares .................................. $72 $99
Class C shares .................................. $12 $38
Class D shares .................................. $32 $69
You would pay the following expenses on the same investment, assuming no
redemption:
Class B shares .................................. $22 $69
Class D shares .................................. $22 $69
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. Because the Fund is newly organized, the percentage expense levels
shown in the table as "Other Expenses" are based on estimated amounts for the
current year. 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."
4
<PAGE>
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 current fiscal
year, Total Fund Operating Expenses for the Fund are estimated to be 2.15%,
2.90%, 1.90% and 2.90% for Class A, Class B, Class C and Class D shares,
respectively, in the absence of the voluntary assumption of expenses by the
Distributor and its affiliates.
The Fund's Investments
The Fund's investment objective is to provide high total return consisting
principally of capital appreciation. The investment objective is a fundamental
policy that may not be changed without approval of the Fund's shareholders.
In seeking to achieve its investment objective, the Fund invests at least
65% of its total assets under normal circumstances in the equity securities of
small capitalization companies which are trading at prices believed by the
Investment Manager to be below the true values of such securities. A company's
market capitalization is the total market value of its publicly traded equity
securities. The Fund currently invests in companies with market capitalizations
of up to $1 billion, although this figure may fluctuate over time because of
market conditions, inflation, etc. While a company's market capitalization may
be small at the time the Fund first invests in the company, the Fund may
continue to hold and acquire shares of a company after its market capitalization
increases. The definition of a "small capitalization company" may be revised by
the Investment Manager from time to time.
In selecting investments, the Investment Manager considers a variety of
factors, any one or more of which may be determinative. These include a
company's expected growth in earnings, relative financial condition and cash
flow, competitive position, management and business strategy, overall potential
as an enterprise, entrepreneurial character, and new or innovative products,
services or processes. In assessing a security's value in comparison to its
current price the Investment Manager analyzes such measurements as price to
earnings ratio, price to cash flow ratio, price to book value ratio, price to
replacement cost ratio and price to private market value ratio.
The equity securities in which the Fund will invest consist of common and
preferred stocks, convertible securities (e.g., preferred stock, bonds and
debentures) and warrants. Preferred stocks are stocks which have preferences,
such as payment of dividends, over common stocks; debentures are debt securities
5
<PAGE>
subject to protective covenants such as the maintenance of minimum financial
conditions; convertible securities are securities which may be converted into
different securities, such as a preferred stock being converted into a common
stock; and warrants are rights to acquire other securities. The Fund anticipates
that more than half of the total value, at the time of investment, of the equity
securities held by the Fund will be included on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") system or listed on a major
securities exchange.
Under normal circumstances, the Fund expects to be fully invested in
equity securities as described above. However, the Fund may, consistent with its
investment objective, also invest at any time up to 35% of its total assets in
other equity and debt securities, such as those issued by larger capitalization,
more mature, or special situation companies, and U.S. Government securities. A
special situation company is one which, because of unique circumstances such as,
for example, a particular business niche it fills, is an attractive investment
even though it is not a small capitalization issuer. The Fund will generally
purchase investment grade debt securities (i.e., rated at the time of purchase
AAA, AA, A or BBB by Standard & Poor's Corporation ("S&P") or Aaa, Aa, A or Baa
by Moody's Investors Service, Inc. ("Moody's")), or securities that are not
rated but considered by the Investment Manager to be of equivalent investment
quality; bonds rated Baa by Moody's, or equivalent, may have speculative
characteristics. The Fund may, however, invest up to 5% of its total assets in
debt securities rated as low as C by S&P and Moody's. The debt securities, which
may have differing maturities and fixed or floating interest rates, generally
will be U.S. Government securities or issued by larger capitalization issuers.
For more information on debt ratings and the risks of lower rated debt
securities, see the Statement of Additional Information.
Because the Fund invests primarily in small capitalization companies, an
investment in the Fund involves greater than average risks and the value of the
Fund's shares may fluctuate more widely than the value of shares of a fund that
invests in larger, more established companies. Securities held by the Fund,
particularly those traded over-the-counter, may have limited marketability and
may be subject to more abrupt or erratic market movements over time than
securities of larger, more seasoned companies or the market as a whole. The
issuers of over-the-counter securities may have limited product lines, markets
and financial resources, may be dependent on entrepreneurial management,
typically reinvest most of their net income in the enterprise and typically do
not pay dividends.
6
<PAGE>
Other Investments and Risk Considerations
Foreign Investments
The Fund reserves the right to invest without limitation in securities of
non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). Under current
policy, however, the Fund limits such investments, including ADRs and EDRs, to a
maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company, which
evidence ownership of underlying securities issued by a foreign corporation or
other entity. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs in registered form are designed for use
in U.S. securities markets and EDRs are designed for use in European securities
markets. The underlying securities are not always denominated in the same
currency as the ADRs or EDRs. Although investment in the form of ADRs or EDRs
facilitates trading in foreign securities, it does not mitigate all the risks
associated with investing in foreign securities.
ADRs are available through facilities which may be either "sponsored" or
"unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the foreign
issuer is not involved, and the ADR holders pay the fees of the depository.
Sponsored ADRs are generally more advantageous to the ADR holders and the issuer
than are unsponsored ADRs. More and higher fees are generally charged in an
unsponsored program compared to a sponsored facility. Only sponsored ADRs may be
listed on the New York or American Stock Exchanges. Unsponsored ADRs may prove
to be more risky due to (a) the additional costs involved to the Fund; (b) the
relative illiquidity of the issue in U.S. markets; and (c) the possibility of
higher trading costs in the over-the-counter market as opposed to exchange-based
trading. The Fund will take these and other risk considerations into account
before making an investment in an unsponsored ADR.
The risks associated with investments in foreign securities include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future political and economic developments, including the risks of
nationalization or expropriation, the possible imposition of currency exchange
blockages, higher operating expenses, foreign withholding and other taxes which
may reduce investment return, reduced availability of public information
concerning issuers 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
7
<PAGE>
foreign issuers may be less liquid and their prices more volatile than those of
securities of comparable domestic issuers.
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 countries with less
developed economies 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.
For further information regarding foreign investments, 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. For further information, see
the Statement of Additional Information.
Other Investment Policies
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
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
8
<PAGE>
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.
The Fund may, subject to certain percentage limitations below, buy and
sell options, futures contracts and options on futures contracts on securities,
securities indices and currencies; such instruments are commonly known as
derivatives because they derive their value from underlying assets, such as the
securities on which they are based. 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
derivative positions for 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 invest in derivatives through various forms of
swap arrangements with respect to interest rates, currency rates and indices;
the Fund does not expect to invest more than 5% of its total assets in such
derivatives. For a more detailed discussion of derivatives, see the Statement of
Additional Information. The Fund may also enter into repurchase agreements,
reverse repurchase agreements and purchase securities on a "when-issued" basis.
See the Statement of Additional Information.
The Fund may invest in restricted securities in accordance with Rule 144A
under the Securities Act of 1933, which allows for the resale of such securities
among certain qualified institutional buyers. 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 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. An actual portfolio turnover rate of 100% or more may
result in greater transaction costs, relative to other funds in general, and may
have tax and
9
<PAGE>
other consequences as well. See the Statement of Additional Information.
Limiting Investment Risk
In seeking to lessen investment risk, the Fund operates under certain
fundamental and nonfundamental investment restrictions. Under the fundamental
investment restrictions, the Fund may not (a) 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; (b) purchase for its portfolio a
security of any one issuer if such purchase would cause more than 10% of the
voting securities of such issuer to be held by the Fund; or (c) invest more than
25% of the Fund's total assets in securities of issuers principally engaged in
any one industry as set forth in the Statement of Additional Information. Under
the nonfundamental investment restrictions, the Fund may not invest more than
15% of the Fund's total assets in illiquid securities including repurchase
agreements extending for more than seven days and may not invest more than 5% of
the Fund's total assets in restricted securities excluding securities eligible
for resale under Rule 144A under the Securities Act of 1933. Although many
illiquid securities may also be restricted, and vice versa, compliance with each
of these policies will be determined independently.
The foregoing fundamental investment restrictions may not be changed
except by vote of the holders of a majority of the outstanding voting securities
of the Fund. The vote of a majority of the outstanding voting securities of the
Fund means the vote (A) of 67 per centum or more of the voting securities
present at a meeting, if the holders of more than 50 per centum of the
outstanding voting securities of the Fund are present or represented by proxy;
or (B) of more than 50 per centum of the outstanding voting securities of the
Fund, whichever is less. The foregoing nonfundamental investment restriction may
be changed without a shareholder vote. For further information on the above and
other fundamental and nonfundamental investment restrictions, see the Statement
of Additional Information.
The Fund may hold up to 100% of its assets in cash or certain short-term
securities for temporary defensive purposes. The Fund will adopt a temporary
defensive position when, in the opinion of the Investment Manager, such a
position is more likely to provide protection against adverse market conditions.
To the extent that the Fund's assets are held in a temporary defensive position,
the Fund will not be achieving its investment objective. The types of short-term
instruments in which the Fund may invest for such purposes are, as more fully
described in the Statement of Additional Information: U.S. Government securities
(including STRIPS, as defined below), custodial receipts, cer-
10
<PAGE>
tificates of deposit, time deposits and bankers' acceptances of certain
qualified financial institutions and corporate commercial paper rated at least
"A" by S&P or "Prime" by Moody's (or, if not rated, issued by companies having
an outstanding unsecured debt issue rated at least "A" by S&P or Moody's). Under
the Separate Trading of Registered Interest and Principal of Securities
("STRIPS") program, the principal and interest components of selected U.S.
Government securities are traded independently. Custodial receipts are
instruments that evidence ownership of future interest payments, principal
payments or both on certain U.S. Treasury notes or bonds and are known by
various names, including "Treasury Investment Growth Receipts" ("TIGRs") and
"Certificates of Accrual on Treasury Securities" ("CATS"). See the Statement of
Additional Information.
Information on the Purchase of Shares, Redemption of Shares and Shareholder
Services is set forth on pages 11 to 33 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 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.
11
<PAGE>
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 the shareholder's account statement; or (iii) a letter setting
forth the name of the Fund, the class of shares and the 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 the 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 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
Small Capitalization Value 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.
12
<PAGE>
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.
13
<PAGE>
Minimum Investment
Class of Shares
A B C D
Minimum Initial
Investment
By Wire $5,000 $5,000 (a) $5,000
IRAs $2,000 $2,000 (a) $2,000
All other $2,500 $2,500 (a) $2,500
Minimum Subsequent
Investment $5,000 $5,000 $5,000 $5,000
By Wire $50 $50 $50 $50
All other
(a) Special conditions apply; contact 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 pursuant to various retirement, dividend and other investment plans,
or sponsored arrangements involving group solicitations of the members of an
organization. The Fund also reserves the right at any time to suspend the
offering of shares or to reject any specific purchase order for shares.
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 commissions and other
compensation depending on which class of shares they sell.
14
<PAGE>
The major differences among the various classes of shares are as follows:
Class A Class B Class C Class D
Sales Initial sales Contingent None Contingent
Charges charge at time deferred sales deferred sales
of investment charge of 5% charge of 1%
of up to 4.5% to 2% applies applies to any
depending on to any shares shares
amount of redeemed redeemed
investment within first within one
five years year following
following their 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 None 0.75% each year
Fee first eight
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 4% None 1%
Commission described
Received by initial sales
Selling charge less
Securities 0.25% to 0.50%
Dealers retained by
Distributor
On investments
of $1 million
or more, 0.25%
to 1% paid to
dealer by
Distributor
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.
15
<PAGE>
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 Fund 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 who 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.
16
<PAGE>
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.
Dollar Sales Sales Dealer
Amount of Charge Charge Concession
Purchase Paid by Paid by As % of
Transaction Investor Investor Purchase
As % of As % of Price
Purchase Net Asset
Price Value
Less than 4.50% 4.71% 4.00%
$100,000
$100,000 or 3.50% 3.63% 3.00%
above but less
than $250,000
$250,000 or 2.50% 2.56% 2.00%
above but less
than $500,000
$500,000 or 2.00% 2.04% 1.75%
above but less
than
$1 million
$1 million and 0% 0% See following discussion
above
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 at the time of sale as follows:
Amount of Sale Commission
(a) $1 million to $3 million 1.00%
(b) Next $2 million 0.50%
(c) Amount over $5 million 0.25%
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
17
<PAGE>
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
18
<PAGE>
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 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. Information on such arrangements and further conditions and
limitations is available from the Distributor.
In addition, no sales charge is imposed in connection with the sale of
Class A shares of the Fund to the following entities and persons: (A) the
Investment Manager, Distributor, or any affiliated entities, including any
direct or indirect parent companies and other subsidiaries of such parents
(collectively "Affiliated Companies"); (B) employees, officers, sales
representatives or current or retired directors or trustees of the Affiliated
Companies or any investment company managed by any of the Affiliated Companies,
any relatives of any such individuals whose relationship is directly verified by
such individuals to the Distributor, or any beneficial account for such
relatives or individuals; and (C) employees, officers, sales representatives or
directors of dealers and other entities with a selling agreement with the
Distributor to sell shares of any aforementioned investment company, any spouse
or child of such person, or any beneficial account for any of them. The purchase
must be made for investment and the shares purchased may not be resold except
through redemption. This purchase program is subject to such administrative
policies, regarding the qualification of purchasers and any other matters, as
may be adopted by the Distributor from time to time.
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
19
<PAGE>
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:
Contingent
Deferred
Sales Charge
As A Percentage Of
Net Asset Value
Redemption During At Redemption
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
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 the Fund acquired through an exchange from another
Eligible Fund will be measured from the date that such shares were initially
acquired in the other Eligible Funds, 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
20
<PAGE>
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 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 has reserved the right to change, modify or terminate the
waivers described above at any time.
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
such Class B shares; consequently, they will no longer be subject to the higher
expenses borne by Class B shares. The conversion rate will be determined on the
basis of the relative per share net asset values of the two classes and may
result in a shareholder receiving either a greater or fewer number of Class A
shares than the Class B shares so converted. As noted above, holding periods for
Class B shares received in exchange for Class B shares of other Eligible Funds
will be counted toward the eight-year period.
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
21
<PAGE>
availability of Class C shares and further conditions and limitations 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 C shares may be issued directly or through exchanges to those
shareholders of the Fund or other Eligible Funds who previously held shares not
subject to any future sales charge or service fees or distribution fees.
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 days on
which the NYSE is closed. The NYSE ordinarily closes at 4 P.M. New York City
time. Assets held by the Fund are valued at the last reported sale price as of
the
22
<PAGE>
close of business on the valuation date, except that securities and assets for
which market quotations are not readily available are valued as determined in
good faith by or under the authority of the Trustees of the Trust. In
determining the value of certain assets for which market quotations are not
readily available, the Fund may use one or more pricing services. 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. 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 that have
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:
Class Service Fee Distribution Fee
A 0.25% None
B 0.25% 0.75%
C None None
D 0.25% 0.75%
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 the 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
23
<PAGE>
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 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 applicable
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.
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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
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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 authorization at any time. The repurchase price is the net asset
value for the applicable shares next determined following the time at which the
shares are offered for repurchase by the dealer to the Distributor. The dealer
is responsible for promptly transmitting a shareholder's order to the
Distributor. 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. 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 promptly to the affected shareholder at the address of
record. To cover the cost of additional compliance administration, a $20 fee
will be charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Fund may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for more than seven days, except that (a) it may
elect to suspend the redemption of shares or postpone the date of payment of
redemption proceeds: (1) during any period that the NYSE is closed (other than
customary weekend and holiday closings) or trading on the NYSE is restricted;
(2) during any period in which an emergency exists as a result of which disposal
of portfolio securities is not reasonably practicable or it is not reasonably
practicable for
26
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the Fund fairly to determine the value of its net assets; 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 provided under "Redemption of Shares."
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 enable the Transfer
Agent to be certain that the person who has authorized a redemption from the
account is, in fact, the shareholder. Signature guarantees are required for: (1)
all redemptions requested by mail; and (2) 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 by the Fund in certain instances.
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.
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(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, the 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 MetLife
State Street Research Money Market Fund issues Class E shares which are sold
without any sales charge. Exchanges of MetLife - 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.
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<PAGE>
For the convenience of its 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.
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. In order to limit exchange
activity where the Fund believes doing so would be in the best interests of the
Fund, it reserves the right to revise or terminate the exchange privilege, limit
the amount or number of exchanges or reject any exchange for any person. These
measures may be imposed at any time. 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. Consult Shareholder
Services before requesting an exchange or for further information.
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
29
<PAGE>
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 30
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 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.
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
Investamatic application form available from Shareholder Services. The
Investamatic Check Program is subject to the same minimum initial investment and
subsequent investment requirements for accounts as applicable otherwise. 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
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<PAGE>
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 of
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 amount. 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.
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<PAGE>
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;
(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
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<PAGE>
assume the risk to the full extent of their accounts that telephone requests may
be unauthorized. Reasonable procedures must be followed to confirm that
instructions communicated by telephone are genuine. The shareholder will not be
liable for any losses due to 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. For more information
and/or requisite authorization forms for telephone redemption and exchange
privileges call 1-800-562-0032. 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 commenced operations in February 1995 as an additional series of
State Street Research Capital Trust, a Massachusetts business trust, formed in
1988. The Trust is registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. The fiscal year end of the Fund is September 30.
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The Fund has received an order from the Securities and Exchange Commission
(the "Commission") permitting the issuance and sale of multiple classes of
shares representing interests in the existing portfolio of any series of the
Trust. Except for those differences between the classes of shares described
below and elsewhere in the Prospectus, each share of the Fund has equal
dividend, redemption and liquidation rights with other shares of the Fund and
when issued is fully paid and nonassessable. The Trustees have authorized the
Fund to offer four classes of shares as described above. 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
redesignation 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 each 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 Master Trust Agreement of the Trust, 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 Trust shares can require
that the Trustees call a meeting of
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<PAGE>
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 the approximate time of this Prospectus, the Investment Manager, the
Distributor and/or Metropolitan Life Insurance Company ("Metropolitan"), their
indirect parent, were the beneficial owners of all or a substantial amount of
the outstanding shares of the Fund, and may be deemed to be in control of the
Fund as "control" is defined in the 1940 Act. Such owners may acquire additional
shares of the Fund. Although sales of the Fund's shares to other investors will
reduce their percentage ownership, so long as 25% of the Fund's shares are so
owned, such owners will be presumed to be in control of the Fund for purposes of
voting on certain matters submitted to a vote of shareholders, such as any
Distribution Plan for a given class.
Management of the Fund
Under the provisions of the 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 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 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. The Investment Manager is an indirect wholly-owned
subsidiary of Metropolitan, and the Distributor is a wholly-owned subsidiary of
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the Investment Manager, and both are located at One Financial Center, Boston,
Massachusetts 02111-2690.
Under its Advisory Agreement with the Trust, the Investment Manager
receives a monthly investment advisory fee equal to 0.85% (on an annual basis)
of the average daily value of the net assets of the Fund. Such fee is higher
than that charged by most mutual funds, but is believed by the Trustees to be
justified given the considerable analysis and research necessary to manage the
Fund in light of its investment objective and policies. 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 Fund also incurs expenses payable to various states in
connection with the offer and sale of the Fund's shares, and expenses for legal,
custodian and transfer agent services, among other costs. 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. Under the Advisory Agreement, the
Investment Manager provides the Fund with office space, facilities and
personnel. 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 Rudolph K. Kluiber. Mr. Kluiber has managed the
Fund since its inception. Mr. Kluiber's principal occupation currently is
Vice President of State Street Research & Management Company. During the past
five years he has also served as an analyst 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.
Dividends and Distributions; Taxes
The Fund intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code, 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 taxes on its 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
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<PAGE>
(capital gains net of capital losses). The Fund declares dividends from net
investment income and distributions of net capital gains annually and pays such
dividends and distributions, if any, after year end 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 additional shares of the Fund at net asset value on the record
date of that dividend or distribution, except in the case of shareholders who
elect a different available distribution method.
The Fund will provide its shareholders of record 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, and a portion may be eligible for the 70%
dividends-received deduction for corporations. The percentage of the Fund's
dividends eligible for such tax treatment may be less than 100% to the extent
that less than 100% of the Fund's gross income consists of qualifying dividends
of domestic corporations. 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, and are not eligible for the dividends-received deduction. 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 redemptions of Fund
shares paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if State Street Bank and Trust Company, the
Fund's transfer agent, is not provided with the shareholder's correct taxpayer
identification number and 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.
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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 and 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 NASDAQ Composite Average, Small Stock Index, Russell 2000 Value
Index, Standard & Poor's 500 Stock Index (the "S&P 500"), Consumer Price Index
and Dow Jones Industrial Average and/or to appropriate rankings and averages,
such as the Lipper Small Company Growth Funds average, 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 will be calculated for the periods
specified in applicable regulations and may be accompanied by nonstandard total
return information for differing periods computed in the same manner with or
without annualizing the total return or taking sales charges into account.
During the first year of operations, the Fund may also advertise its aggregate
total return without annualization.
The standard total return 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, the results will be
increased. Any voluntary waiver of management fees or assumption of expenses by
the Fund's affiliates will also increase performance results.
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
38
<PAGE>
Fund nor the Fund's 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.
Performance data or rankings for a given class of shares should be interpreted
carefully by investors who hold or may invest in a different class of shares.
39
<PAGE>
State Street Research
Small Capitalization
Value Fund
February 1, 1995
P R O S P E C T U S
STATE STREET RESEARCH
SMALL CAPITALIZATION
VALUE 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
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
CT\value
40
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
a series of
STATE STREET RESEARCH CAPITAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1995
As Supplemented October 23, 1995
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS 2
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES 5
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS 12
TRUSTEES AND OFFICERS 19
INVESTMENT ADVISORY SERVICES 22
PURCHASE AND REDEMPTION OF SHARES 23
NET ASSET VALUE 25
PORTFOLIO TRANSACTIONS 26
CERTAIN TAX MATTERS 27
DISTRIBUTION OF SHARES OF THE FUND 29
CALCULATION OF PERFORMANCE DATA 32
CUSTODIAN 33
INDEPENDENT ACCOUNTANTS 33
FINANCIAL STATEMENTS 33
The following Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus of State Street Research Small
Capitalization Value Fund, dated February 1, 1995, as supplemented October 23,
1995, which may be obtained without charge from the offices of State Street
Research Capital Trust (the "Trust") or State Street Research Investment
Services, Inc. (the "Distributor"), One Financial Center, Boston, Massachusetts
02111-2690.
CONTROL NUMBER: 1285R-950220(0396)SSR-LD SCV-879D-295
<PAGE>
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 or use 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
the Securities and Exchange Commission (the creation of general
liens or security interests under normal brokerage arrangements for
transactions in portfolio assets are not deemed to involve the
issuance of senior securities);
(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 a selling shareholder in an offering or 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 make real estate loans or own, or
invest or deal in, real estate;
2
<PAGE>
(5) not to invest in physical commodities or physical commodity
contracts in excess of 10% of the Fund's total assets, except
that investments in essentially financial items such as, but not
limited to, swap arrangements, hybrids, currencies, currency and
other forward contracts, futures contracts and options on futures
contracts on securities, securities indices and currencies shall
not be deemed investments in commodities or commodities
contracts;*
(6) not to lend money; however, 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 or
mixed-ownership Government corporations (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
3
<PAGE>
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 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 so long as such investments
plus investments in restricted securities (other than those which
are eligible for resale under Rule 144A, Regulation S or other
exemptive provisions as noted above) 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 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
4
<PAGE>
(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 currencies, and
may enter into closing transactions with respect to each of the foregoing, and
invest in other derivatives, 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.
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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
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.
7
<PAGE>
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
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
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
8
<PAGE>
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's dealings in forward currency exchange contracts will be limited
to hedging involving either specific transactions or aggregate portfolio
positions. A forward currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are not commodities and are entered into
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. 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.
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<PAGE>
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 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, such 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, marketmaking 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.
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<PAGE>
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 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 CFTC for entities which are not commodity pool
operators, such as the Fund. In entering a swap arrangement, the Fund is
dependent upon the creditworthiness and good faith of the counterparty. The 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.
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<PAGE>
Securities Lending
The Fund may lend portfolio securities with a value of up to 33 1/3% of its
total assets, although the Fund has no present intention of lending portfolio
securities with a value in excess of 5% 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 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 of the loaned securities 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.
Industry Classifications
In determining how much of the Fund's 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
Utility Energy Consumer Cyclical
- ------- ------ -----------------
Electric Oil Airline
Natural Gas Oil Service Automotive
Telephone Building
Hotel & Restaurant
Miscellaneous Finance Photography
- ------------- ------- Recreation
Bank Retail Trade
Financial Service Textile & Apparel
Insurance
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:
(bullet) direct obligations of the U.S. Treasury, i.e., U.S. Treasury
bills, notes, certificates and bonds;
(bullet) obligations of U.S. Government agencies or instrumentalities such
as the Federal Home Loan Banks, the Federal Farm Credit Banks,
the Federal National Mortgage Association, the Government National
Mortgage Association and the Federal Home Loan Mortgage
Corporation; and
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<PAGE>
(bullet) 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.
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.
13
<PAGE>
Rating Categories of Debt Securities
Set forth below is a description of corporate bond and debenture ratings
of Standard & Poor's Corporation ("S&P"):
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.
Debt rated BB, B, CCC, CC and C is regarded as having speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
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<PAGE>
CI: The rating CI is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
S&P may attach the "r" symbol to 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.
Set forth below is a description of corporate bond and debenture
ratings of Moody's Investors Service, Inc. ("Moody's"):
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.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
15
<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
1, 2 or 3: The ratings from Aa through B may be modified by the addition
of a numeral indicating a bond's rank within its rating category.
Risk Factors of Lower Quality Debt Securities
Lower quality debt securities generally involve more credit risk than
higher rated securities and are considered by S&P and Moody's to be speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. Further, such securities may be subject to greater
market fluctuations and risk of loss of income and principal than lower
yielding, higher rated debt securities. Risks of lower quality debt securities,
commonly known as "junk bonds," include (i) limited liquidity and secondary
market support; (ii) substantial market price volatility resulting from changes
in prevailing interest rates and/or investor perceptions; (iii) subordination to
the prior claims of banks and other senior lenders; (iv) the operation of
mandatory sinking fund or call/redemption provisions during periods of declining
interest rates when the Fund may be required to reinvest premature redemption
proceeds in lower yielding portfolio securities; (v) the possibility that
earnings of the issuer may be insufficient to meet its debt service; and (vi)
the issuer's low creditworthiness and potential for insolvency during periods of
rising interest rates and economic downturn.
16
<PAGE>
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.
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.
17
<PAGE>
Commercial Paper Ratings
Commercial paper investments at the time of purchase will be rated 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 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.
In the event the lowering of ratings of debt instruments held by the Fund
by applicable rating agencies results in a material decline in the overall
quality of the Fund's portfolio, the Trustees of the Trust will review the
situation and take such action as they deem in the best interests of the Fund's
shareholders, including, if necessary, changing the composition of the
portfolio.
18
<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.
*+Peter C. Bennett, One Financial Center, Boston, MA 02111, serves as Vice
President of the Trust. He is 57. His principal occupation is Executive Vice
President and Director of State Street Research & Management Company. During the
past five years he has also served as Senior Vice President and as Vice
President of State Street Research & Management Company. Mr. Bennett's other
principal business affiliation is Director, State Street Research Investment
Services, Inc.
*Charles S. Glovsky, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 43. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of State Street Research & Management
Company.
*Rudolph K. Kluiber, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 36. His principal occupation currently is
Vice President of State Street Research & Management Company. During the past
five years he has also served as an analyst for State Street Research &
Management Company.
*+Frederick R. Kobrick, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 52. His principal occupation during the past
five years has been Senior Vice President of State Street Research & Management
Company.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791, serves
as Trustee of the Trust. He is 68. He is engaged principally in private
investments and civic affairs, and is an author of business history. 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.
*+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.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. He is 44. His principal occupation is Executive Vice
President, Treasurer and Director of State Street Research & Management Company.
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.
- -----------------------------
* or + See footnotes on page 21.
19
<PAGE>
*+Thomas P. Moore, Jr., One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 56. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of State Street Research & Management
Company.
+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.
+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.
+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.
*+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.
- -----------------------------
* or + See footnotes on page 21.
20
<PAGE>
+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 September 30, 1995, the Investment Manager, the Distributor and/or
Metropolitan Life Insurance Company ("Metropolitan"), their indirect parent,
were the beneficial owners of all or a substantial amount of the outstanding
Class A, Class B, Class C and Class D shares of the Fund, and may be deemed to
be in control of the Fund as control is defined in the 1940 Act. Such owners may
acquire additional shares of the Fund. Although sales of the Fund's shares to
other investors will reduce their percentage ownership, so long as 25% of a
class of shares is 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 or distribution 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.
21
<PAGE>
During the fiscal year ended September 30, 1995, the Trustees were
compensated as follows:
Total Compensation
Aggregate From Trust and
Compensation Complex Paid
Name of Trustee From Trust(a) to Trustees(b)
Edward M. Lamont $ 0 $61,271
Robert A. Lawrence $8,300 $88,935
Dean O. Morton $9,100 $97,395
Thomas L. Phillips $8,100 $67,185
Toby Rosenblatt $ 0 $61,271
Michael S. Scott Morton $9,700 $98,835
Ralph F. Verni $ 0 $ 0
Jeptha H. Wade $8,600 $69,585
(a) Includes compensation from multiple Series of the Trust. See "Distribution
of Shares" for a listing of series.
(b) 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.
(c) This information is provided for the Trust's fiscal year ended September
30, 1995, and includes estimates of compensation from the Fund for a full
year. The Fund commenced operations on February 13, 1995, and has not yet
completed a full fiscal year.
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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 alnd 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 0.85% 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 February 13,
1995 (commencement of operations) through September 30, 1995, the Fund's
investment advisory fee prior to the assumption of fees or expenses was $30,298.
For the same period, the voluntary reduction of fees or assumption of expenses
amounted to $80,022.
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 administration services for the Trust, such as
assistance in determining the daily net asset value of shares of series of the
Trust 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
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maintenance of certain share ownership records for participants in sponsored
arrangements, such as employee benefit plans, through or under which the Fund's
shares may be purchased.
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 transactions, 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
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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.
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 purchasing for their own accounts; endowment funds of
nonprofit organizations with substantial minimum assets; and 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.
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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 are 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.
The net asset value per share of the Fund is computed by dividing the sum of
the value of the securities held by the Fund plus any cash or other assets minus
all liabilities by the total number of outstanding shares of the Fund at such
time. Any expenses, except for extraordinary or nonrecurring expenses, borne by
the Fund, including the investment management fee payable to the Investment
Manager, are accrued daily.
In determining the values of portfolio assets as provided below, the Trustees
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.
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
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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. The portfolio turnover rate for the
period February 13, 1995 (commencement of operations) through September 30, 1995
was 47.34%.
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
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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. Brokerage commissions paid by the Fund during the period
February 13, 1995 (commencement of operations) through September 30, 1995
amounted to approximately $15,354.
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 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
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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 to the extent thereof. Any distribution in excess of a shareholder's basis
in the shareholder's shares would be taxable as gain realized from the sale of
such shares.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Fund must
distribute an amount equal to at least 98% of the sum of its ordinary income
(not taking into account any capital gains or losses) for the calendar year, and
its capital gain net income for the 12-month period ending on October 31, in
addition to any undistributed portion of the respective balances from the prior
year. The Fund intends to make sufficient distributions to avoid this 4% excise
tax.
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
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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 Shareholders
Dividends paid by the Fund may be eligible for the 70% dividends-received
deduction for corporations. The percentage of the Fund's dividends eligible for
such tax treatment may be less than 100% to the extent that less than 100% of
the Fund's gross income may be from qualifying dividends of domestic
corporations. 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.
DISTRIBUTION OF SHARES OF THE FUND
State Street Research Capital Trust is currently comprised of the following
series: State Street Research Capital Fund, State Street Research Small
Capitalization Growth Fund and State Street Research Small Capitalization Value
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
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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 February 13, 1995 (commencement of operations) through
September 30, 1995, the Fund paid the Distributor no sales charges on Class A
shares.
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. For the period February 13, 1995
(commencement of operations) through September 30, 1995, the Fund paid the
Distributor no contingent deferred sales charges upon redemption of Class A,
Class B or Class D shares.
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
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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.
For the period February 13, 1995 (commencement of operations) through
September 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 Class B Class D
------- ------- -------
Advertising $ $ $
Printing and mailing of
prospectuses to other
than current shareholders
Compensation to dealers
Compensation to sales
personnel
Interest
Carrying or other
financial charges
Other expenses:
marketing; general
------ ------ ------
$8,392 $692 $692
====== ====== ======
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.
31
<PAGE>
CALCULATION OF PERFORMANCE DATA
The average annual total return ("standard total return") of the Class A,
Class B, Class C and Class D shares of the Fund will be calculated as set forth
below. Total return is computed separately for each class of shares of the Fund.
The Fund's performance is shown below, and where noted, reflects the
voluntary measures, if any, by the Fund's affiliates to reduce fees or expenses
relating to the Fund; see "Accrued Expenses" later in this section.
Total Return
The total returns ("standard total return") of each class of the Fund's
shares were as follows:
February 13, 1995
(Commencement of Operations) to
September 30, 1995
SEC Total Return Aggregate Total Return
(Annualized) (Not Annualized)
------------------------------ ------------------------------
With Subsidy Without Subsidy With Subsidy Without Subsidy
------------ --------------- ------------ ---------------
Class A 18.52% 15.81% 11.30% 9.69%
Class B 18.05% 15.22% 11.02% 9.34%
Class C 27.87% 24.95% 16.75% 15.07%
Class D 24.87% 21.98% 15.02% 13.34%
The figures shown above as "SEC Total Return" result from the "annualization"
of actual returns for the approximately 230-day period involved; annualization
presumes that the performance for the 230 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.
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 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 will be lower.
32
<PAGE>
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 returns for the six months ended
September 30, 1995 without taking sales charges into account, were as follows:
With Subsidy Without Subsidy
------------ ---------------
Class A 13.80% 12.52%
Class B 13.41% 12.13%
Class C 14.01% 12.73%
Class D 13.41% 12.13%
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 unaudited financial statements are for the period February 13,
1995 (commencement of operations) through September 30, 1995:
33
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
INVESTMENT PORTFOLIO
September 30, 1995 (Unaudited)
Value
Shares (Note 1)
- ----------------------------------------------- ------------ --------------
COMMON STOCKS 99.6%
Basic Industries 37.6%
Chemical 5.1%
Applied Extrusion Technologies, Inc.* 3,000 $ 55,125
Carlisle Plastics, Inc. Cl. A* 10,000 50,000
McWhorter Technologies, Inc.* 7,000 107,625
Rexene Corp.* 2,500 29,375
Uniroyal Chemical Corp.* 7,500 67,500
--------------
309,625
--------------
Diversified 5.9%
Alltrista Corp.* 2,000 38,000
Commercial Intertech Corp. 1,500 28,688
Noel Group, Inc.* 22,000 137,500
Triton Group Ltd.* 33,300 104,062
Zero Corp.* 3,300 53,625
--------------
361,875
--------------
Forest Product 2.5%
Gaylord Container Corp. Wts.* 18,199 154,694
--------------
Machinery 3.6%
Arden Industrial Products, Inc.* 8,000 64,000
Hardinge, Inc.* 3,500 91,875
Specialty Equipment Companies, Inc.* 5,000 61,250
--------------
217,125
--------------
Metal & Mining 19.6%
Algoma Steel, Inc.* 11,000 51,150
Bayou Steel Corp. Cl. A* 3,000 14,813
Carbide/Graphite Group, Inc. 12,000 169,500
Castech Aluminum Group, Inc.* 7,000 112,875
Chase Brass Industries, Inc. 8,000 102,000
Commonwealth Aluminum Corp.* 1,000 17,500
Easco, Inc.* 11,000 82,500
Encore Wire Corp.* 2,000 24,125
Interlake, Inc.* 53,900 128,013
Maxxam, Inc.* 1,000 49,125
Shaw Group, Inc.* 6,000 54,750
Sinter Metals, Inc. Cl. A* 3,000 33,000
Sunshine Mining & Refining Co. Pfd.* 18,000 148,500
Webco Industries, Inc.* 21,000 145,687
Wyman Gordon Co.* 5,000 69,062
--------------
1,202,600
--------------
Railroad 0.9%
Westinghouse Air Brake Co. 4,000 57,500
--------------
Total Basic Industries 2,303,419
--------------
Consumer Cyclical 34.0%
Airline 3.0%
America West Airline, Inc.* 9,000 $ 139,500
Midwest Express Holdings, Inc.* 2,000 45,000
--------------
184,500
--------------
Automotive 7.9%
Borg Warner Automotive, Inc. 1,000 32,000
Federal-Mogul Corp. 5,000 95,625
Harvard Industries, Inc. Cl. B* 1,000 26,750
Lear Seating Corp.* 3,000 88,125
Littelfuse, Inc.* 1,000 32,500
Masland Corp.* 7,000 104,125
Tower Automotive, Inc.* 3,000 41,250
Wescast Industries, Inc. Cl. A* 6,000 66,000
--------------
486,375
--------------
Building 8.5%
American Building Co.* 2,500 59,062
Cameron Ashley, Inc.* 6,000 57,000
Centex Construction Products, Inc. 6,500 85,313
Falcon Building Products, Inc.* 5,000 43,750
Miles Homes, Inc.* 20,000 27,500
Nortek, Inc.* 16,000 140,000
Simpson Manufacturing, Inc.* 4,000 48,500
Stimsonite Corp.* 5,000 60,000
--------------
521,125
--------------
Hotel & Restaurant 2.3%
Hollywood Casino Cl. A* 10,000 70,000
Primadonna Resorts, Inc.* 4,500 68,625
--------------
138,625
--------------
Recreation 3.8%
Lewis Galoob Toys, Inc. Cv. Pfd.* 5,000 91,875
Granite Broadcasting Co. 7,000 76,125
HMG Worldwide Corp.* 27,000 64,125
--------------
232,125
--------------
Retail Trade 8.5%
Bombay Company, Inc.* 5,000 40,625
Cole National Corp.* 5,000 60,625
Eastbay, Inc.* 4,500 88,875
Finlay Enterprises, Inc.* 3,000 51,750
Home Shopping Network, Inc.* 3,000 27,750
Rhodes, Inc.* 10,000 115,000
TBC Corp.* 8,000 77,000
Valuevision International, Inc.* 10,000 58,750
--------------
520,375
--------------
Total Consumer Cyclical 2,083,125
--------------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
INVESTMENT PORTFOLIO (cont'd)
Value
Shares (Note 1)
- ----------------------------------------------- ------------ --------------
Consumer Staple 11.7%
Business Service 5.3%
Computer Learning Centers, Inc.* 4,000 $ 44,000
Ideon Group, Inc. 5,000 51,250
Protection One, Inc.* 16,000 146,000
Staffing Resources, Inc.* 6,500 81,250
--------------
322,500
--------------
Container 3.8%
Continental Can Company, Inc.* 4,000 78,500
Lufkin Industries, Inc. 3,000 70,500
U.S. Can Corp.* 6,500 86,937
--------------
235,937
--------------
Drug 0.8%
Martek Biosciences Corp.* 3,000 48,750
--------------
Printing & Publishing 1.8%
Katz Media Group, Inc.* 5,500 112,063
--------------
Total Consumer Staple 719,250
--------------
Energy 5.2%
Oil 4.3%
Crystal Oil Corp.* 3,700 110,075
Gerrity Oil & Gas Corp. Cv. Pfd. 10,000 106,250
Optima Petroleum Corp.* 17,100 49,162
--------------
265,487
--------------
Oil Service 0.9%
Global Marine, Inc.* 8,000 57,000
--------------
Total Energy 322,487
--------------
Finance 2.7%
Bank 0.8%
Springfield Institution For Savings Bank* 3,000 46,125
--------------
Financial Service 1.9%
Hawthorne Financial Corp.* 20,000 73,750
Midland Financial Group, Inc.* 4,000 44,000
--------------
117,750
--------------
Total Finance 163,875
--------------
Science & Technology 7.2%
Aerospace 1.1%
BE Aerospace, Inc.* 8,000 67,000
--------------
Computer Software & Service 3.0%
Computational Systems, Inc.* 3,900 63,375
Computervision Corp.* 10,000 121,250
--------------
184,625
--------------
Electronic Components 3.1%
MEMC Electronic Materials, Inc.* 4,500 $ 122,062
Thermospectra Corp.* 4,000 67,000
--------------
189,062
--------------
Total Science & Technology 440,687
--------------
Utility 1.2%
Natural Gas 1.2%
TransTexas Gas Corp.* 4,000 72,500
--------------
Total Utility 72,500
--------------
Total Common Stocks (Cost $5,568,938) 6,105,343
--------------
Principal Maturity
Amount Date
- ------------------------------ ------------ ------------ --------------
SHORT-TERM OBLIGATIONS 1.7%
Household Finance Corp., 5.65% $104,000 10/2/1995 104,000
--------------
Total Short-Term Obligations (Cost $104,000) 104,000
--------------
Total Investments (Cost $5,672,938)--101.3% 6,209,343
Cash and Other Assets, Less Liabilities--(1.3)% (78,070)
--------------
Net Assets--100.0% $6,131,273
==============
Federal Income Tax Information:
At September 30, 1995, the net unrealized appreciation of
investments based on cost for Federal income tax purposes of
$5,672,938 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 777,614
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (241,209)
-------------
$ 536,405
=============
* Nonincome-producing securities
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995 (Unaudited)
Assets
Investments, at value (Cost $5,672,938) (Note 1) $6,209,343
Receivable for securities sold 29,479
Cash 19,606
Receivable from Distributor (Note 3) 2,177
Dividends and interest receivable 531
Deferred organization costs and other assets (Note 1) 69,733
-----------
6,330,869
Liabilities
Payable for securities purchased 136,125
Accrued trustees' fees (Note 2) 9,128
Accrued management fee (Note 2) 4,269
Accrued distribution fee (Note 5) 1,375
Accrued transfer agent and shareholder services (Note 2) 730
Other accrued expenses 47,969
-----------
199,596
-----------
Net Assets $6,131,273
===========
Net Assets consist of:
Undistributed net investment income $ 36,497
Unrealized appreciation of investments 536,405
Accumulated net realized gain 275,486
Shares of beneficial interest (Note 6) 5,282,885
-----------
$6,131,273
===========
Net Asset Value and redemption price per share of Class A
shares ($5,781,809 / 519,451 shares of beneficial interest) $11.13
===========
Maximum Offering Price per share of Class A shares ($11.13 /
.955) $11.65
===========
Net Asset Value and offering price per share of
Class B shares ($116,240 / 10,493 shares of beneficial
interest)* $11.08
===========
Net Asset Value, offering price and redemption price per share
of Class C shares ($116,984 / 10,493 shares of beneficial
interest) $11.15
===========
Net Asset Value and offering price per share of
Class D shares ($116,240 / 10,493 shares of beneficial
interest)* $11.08
===========
*Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
STATEMENT OF OPERATIONS
For the period February 13, 1995 (commencement of operations) to September
30, 1995 (Unaudited)
Investment Income
Interest $ 78,168
Dividends, net of foreign taxes of $36 10,878
-----------
89,046
Expenses
Custodian fee 44,957
Management fee (Note 2) 30,298
Amortization of organization costs (Note 1) 9,230
Trustees' fees (Note 2) 9,128
Reports to shareholders 8,800
Audit fee 8,139
Legal fees 5,584
Registration fees 4,649
Transfer agent and shareholder services (Note 2) 730
Distribution fee--Class A (Note 5) 8,392
Distribution fee--Class B (Note 5) 692
Distribution fee--Class D (Note 5) 692
Miscellaneous 1,280
-----------
132,571
Expenses borne by the Distributor (Note 3) (80,022)
-----------
52,549
-----------
Net investment income 36,497
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 275,486
Net unrealized appreciation of investments 536,405
-----------
Net gain on investments 811,891
-----------
Net increase in net assets resulting from operations $848,388
===========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period February 13, 1995 (commencement of operations) to September
30, 1995 (Unaudited)
- -----------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 36,497
Net realized gain on investments* 275,486
Net unrealized appreciation of investments 536,405
-----------
Net increase resulting from operations 848,388
-----------
Net increase from fund share transactions
(Note 6) 5,282,885
-----------
Total increase in net assets 6,131,273
Net Assets
Beginning of period --
-----------
End of period (including undistributed net investment
income of $36,497) $6,131,273
===========
*Net realized gain for Federal income tax purposes (Note 1) $ 275,486
===========
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 1995
Note 1
State Street Research Small Capitalization Value Fund (the "Fund"), is a
series of State Street Research Capital Trust (the "Trust"), formerly State
Street Capital Trust, which is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The Trust was organized in November,
1988 as a successor to State Street Capital Fund, Inc., a Massachusetts
corporation. The Trust consists presently of three separate funds: State
Street Research Small Capitalization Value Fund, State Street Research Small
Capitalization Growth Fund and State Street Research Capital Fund.
The Fund is authorized to issue four classes of shares. At the present time,
only Class A shares are generally available for purchase. Class B, Class C
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 pay an annual 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. 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. Investment 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 certain
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 identified cost of
securities delivered for both financial reporting and Federal income tax
purposes.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
NOTES (cont'd)
B. Federal Income Taxes
No provision for Federal income taxes is necessary since 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,
if any, within the prescribed time periods.
C. Dividends
Dividends from net investment income, if any, are declared and paid or
reinvested annually. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
D. 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.
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 0.85% 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. The fees of the Trustees not currently affiliated with the
Adviser amounted to $9,128 during the period February 13, 1995 (commencement
of operations) to September 30, 1995.
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 February 13, 1995 (commencement of
operations) to September 30, 1995, the amount of such expenses was $118.
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 February 13, 1995 (commencement of operations) to
September 30, 1995, the amount of such expenses assumed by the Distributor
and its affiliates was $80,022.
Note 4
For the period February 13, 1995 (commencement of operations) to September
30, 1995, exclusive of short-term investments and U.S. Government
obligations, purchases and sales of securities aggregated $6,865,944 and
$1,572,492, 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
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 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 February 13, 1995 (commencement of
operations) to September 30, 1995, fees pursuant to such plan amounted to
$8,392, $692 and $692 for Class A, Class B and Class D, respectively.
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At September 30, 1995,
Metropolitan owned one share of each of Class A, Class B, Class C and Class D
shares and the Adviser owed 492,146 Class A shares and 10,471 of each of
Class B, Class C and Class D shares of the Fund.
Share transactions were as follows:
February 13, 1995
(Commencement of Operations)
to September 30, 1995
(Unaudited)
-----------------------------
Class A Shares Amount
-----------------------------------------------------------------
Shares sold 519,451 $4,982,255
------------ --------------
Net increase 519,451 $4,982,255
============ ==============
Class B Shares Amount
-----------------------------------------------------------------
Shares sold 10,493 $ 100,210
------------ --------------
Net increase 10,493 $ 100,210
============ ==============
Class C Shares Amount
-----------------------------------------------------------------
Shares sold 10,493 $ 100,210
------------ --------------
Net increase 10,493 $ 100,210
============ ==============
Class D Shares Amount
-----------------------------------------------------------------
Shares sold 10,493 $ 100,210
------------ --------------
Net increase 10,493 $ 100,210
============ ==============
7
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
FINANCIAL HIGHLIGHTS
For a share outstanding from February 13, 1995 (commencement of operations)
to September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Class A Class B Class C Class D
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.55 $ 9.55 $ 9.55 $ 9.55
Net investment income* .07 .02 .09 .02
Net unrealized gain on investments 1.51 1.51 1.51 1.51
---------- ---------- ---------- -----------
Net asset value, end of period $11.13 $11.08 $11.15 $11.08
========== ========== ========== ===========
Total return+ 16.54% 16.02% 16.75% 16.02%
Net assets at end of period (000s) $5,782 $116 $117 $116
Ratio of operating expenses to average net assets* 1.45%++ 2.20%++ 1.20%++ 2.20%++
Ratio of net investment income to average net assets* 1.05%++ 0.32%++ 1.32%++ 0.32%++
Portfolio turnover rate 47.34% 47.34% 47.34% 47.34%
*Reflects voluntary assumption of fees or expenses
per share in each period. (Note 3) $.15 $.15 $.15 $.15
</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>
STATE STREET RESEARCH CAPITAL 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 State Street Research Capital Fund
for the fiscal years ended September 30, 1985 through
September 30, 1994 and Financial Highlights for State Street
Research Small Capitalization Growth Fund for the period
October 4, 1993 (commencement of operations) through
September 30, 1994 incorporated by reference from
Post-Effective Amendment No. 10.
Unaudited Financial Highlights for State Street Research Small
Capitalization Value Fund for the period February 13, 1995
(commencement of operations) through September 30, 1995.
(2) Financial Statements included in PART B (Statement of
Additional Information) of this Registration Statement:
For State Street Research Capital Fund for the fiscal
year ended September 30, 1994 (except as provided below)
incorporated by reference from Post-Effective Amendment
No. 10:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(fiscal years ended September 30, 1994 and
September 30, 1993)
Notes to Financial Statements
(including financial highlights)
Report of Independent Accountants
Management's Discussion of Fund Performance
For State Street Research Small Capitalization Growth
Fund for the period October 4, 1993 (commencement of
operations) through September 30, 1994 incorporated by
reference from Post-Effective Amendment No. 10:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
C-1
<PAGE>
Statement of Changes in Net Assets (for the period
October 4, 1993 (commencement of operations)
to September 30, 1994)
Notes to Financial Statements
(including financial highlights)
Report of Independent Accountants
Management's Discussion of Fund Performance
Unaudited Financial Statements for State Street
Research Small Capitalization Value Fund for the
period February 13, 1995 (commencement of operations)
through September 30, 1995:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(for the period February 13, 1995 (commencement
of operations) to September 30, 1995)
Notes to Unaudited Financial Statements
(including financial highlights)
(b) Exhibits
(1) First Amended and Restated Master Trust Agreement, Amendment
No. 1 and Amendment No. 2
(2)(a) By-Laws of the Registrant (iii)
(2)(b) Amendment No. 1 to By-Laws, effective September 30, 1992
(vii)
(3) Not Applicable
(4)(a) Specimen Share Certificate -- State Street Capital Fund (iv)
(4)(b) Specimen Share Certificate -- State Street Small Capitalization
Growth Fund (vi)
(5)(a) Investment Advisory Contract with respect to State Street
Capital Fund (iii)
(5)(b) Restated Advisory Agreement with respect to State Street
Research Small Capitalization Growth Fund and Letter Agreement
relating to State Street Research Small Capitalization Value
Fund
(6)(a) Distribution Agreement with State Street Research Investment
Services, Inc. (viii)
(6)(b) Form of Selected Dealer Agreement
(6)(c) Form of Bank and Bank-Affiliated Broker-Dealer Agreement (x)
C-2
<PAGE>
(6)(d) Letter Agreement with respect to the Distribution
Agreement relating to State Street Research Small
Capitalization Value Fund
(7) Not Applicable
(8)(a) Custodian Contract (iii)
(8)(c) Letter Agreement with respect to the Custodian Contract
relating to State Street Small Capitalization Growth Fund (vii)
(8)(d) Letter Agreement with respect to the Custodian
Contract relating to State Street Research Small
Capitalization Value Fund
(9) Agreement and Plan of Reorganization and Liquidation (iii)
(10)(a) Consent and Opinion of counsel on legality of shares being
issued with respect to State Street Capital Fund (vii)
(10)(b) Consent and Opinion of counsel on legality of shares
being issued with respect to State Street Small
Capitalization Growth Fund (vi)
(10)(c) Consent and Opinion of counsel on legality of shares
being issued with respect to MetLife - State Street
Research Small Capitalization Value Fund (x)
(11) Consent of Coopers & Lybrand L.L.P.
(12) Not Applicable
(13)(a) Subscription and Investment Letters -- State Street Small
Capitalization Growth Fund (vii)
(13)(b) Subscription and Investment Letters -- State
Street Research Small Capitalization Value Fund
(14)(a) State Street Research IRA: Disclosure Statement, Forms Booklet
and Transfer of Assets/Direct Rollover Form
C-3
<PAGE>
(14)(b) State Street Research 403(b): Brochure, Account Agreement,
Maximum Salary Reduction Worksheet, Account Application,
Salary Reduction Agreement and Direct Rollover of Assets
Form (x)
(15)(a) Plan of Distribution Pursuant to Rule 12b-1 with respect to
State Street Research Capital Fund (x)
(15)(b) Letter Agreement with respect to Plan of Distribution Pursuant
to Rule 12b-1 relating to State Street Research Small
Capitalization Growth Fund (viii)
(15)(c) Letter Agreement with respect to Plan of Distribution
Pursuant to Rule 12b-1 relating to State Street
Research Small Capitalization Value Fund
(16)(a) Calculation of Performance Data with respect to State Street
Research Capital Fund (ii)
(16)(b) Calculation of Performance Data with respect to State Street
Research Small Capitalization Growth Fund (ix)
(17) Multiple Class Expense Allocation Plan Adopted Pursuant to
Rule 18f-3
(18)(a) Powers of Attorney
(18)(b) Certificate of Board Resolution Respecting Powers of Attorney
(19) Application Forms (x)
(27) Financial Data Schedules
- ----------------
The Series of the Registrant have changed their names at various times.
Documents in this listing of Financial Statements and Exhibits which were
effective prior to the most recent name change accordingly refer to a former
name of such Series.
C-4
<PAGE>
- -------------
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
Footnote Securities Act of 1933
Reference Registration/Amendment Date Filed
i Initial Registration August 22, 1983
ii Post-Effective Amendment No. 1 July 15, 1988
iii Post-Effective Amendment No. 2 December 2, 1988
iv Post-Effective Amendment No. 3 January 26, 1990
v Post-Effective Amendment No. 4 January 31, 1991
vi Post-Effective Amendment No. 6 May 26, 1992
vii Post-Effective Amendment No. 7 November 25, 1992
viii Post-Effective Amendment No. 8 November 26, 1993
ix Post-Effective Amendment No. 9 January 21, 1994
x Post-Effective Amendment No. 10 November 18, 1994
C-5
<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-6
<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-7
<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%
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<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-9
<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-10
<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-11
<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-12
<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.
C-13
<PAGE>
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.
C-14
<PAGE>
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-15
<PAGE>
Item 26. Number of Holders of Securities
(1) (2)
Number of
As of Title of Class Record Holders
Shares of Beneficial Interest
8/31/95 State Street Research Capital Fund
Class A 2,340
Class B 5,353
Class C 66
Class D 2,419
8/31/95 State Street Research Small
Capitalization Growth Fund
Class A 2,950
Class B 2,285
Class C 149
Class D 392
8/31/95 State Street Research Small
Capitalization Value Fund
Class A 20
Class B 7
Class C 6
Class D 6
Item 27. Indemnification
Article VI of Registrant's Master Trust Agreement provides: The Trust
shall indemnify (from the assets of the Sub-Trust or Sub-Trusts in question)
each of its Trustees
C-16
<PAGE>
and officers (including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person")) against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct 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 whom 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 Trust as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion.
Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's distributor, the Registrant
has agreed to indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may hereafter be an officer,
director, employee or agent of State Street Research Investment Services, Inc.
against any loss, damage or expense reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon a violation of any of its covenants herein contained or
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements made
not misleading, in a Registration Statement or Prospectus of the Registrant, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written information furnished by State Street Research
Investment Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to trustees, officers, underwriters
and controlling persons of the Registrant, pursuant to Article VI of the
Registrant's Master Trust Agreement, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or
C-17
<PAGE>
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-18
<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 Investment Adviser Various investment Boston, MA
Research & advisory clients
Management
Company
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
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<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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)
Dillman, Thomas J Director of Research Bank of New York New York, NY
Senior Vice President (until 6/95)
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 (until 8/94)
President
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-20
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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-21
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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 Assistant Secretary
(until 5/95)
Senior Vice President, General The Boston Company Advisors, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
C-22
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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-23
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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 Vice President Wellington Management Company Boston, MA
Vice President (until 1/94)
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-24
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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 Director Alex Brown Capital, Ltd. Hamilton, Bermuda
President
(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)
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 U.S. Portfolio Consultant Teton Partners Boston, MA
Senior Vice President (until 4/95)
C-25
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
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.
Chairman of the Board and 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-26
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
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-27
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
(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-28
<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 Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
Ralph F. Verni Chairman of the Chairman of
One Financial Center Board, President, the Board,
Boston, MA 02111 Chief Executive Officer President,
and Director Chief Executive
Officer and
Trustee
Peter C. Bennett Director Vice President
One Financial Center
Boston, MA 02111
Gerard P. Maus Executive Vice Treasurer
One Financial Center President, Treasurer,
Boston, MA 02111 Chief Financial
Officer and Director
Thomas A. Shively Director None
One Financial Center
Boston, MA 02111
Dennis C. Barghann Senior Vice President None
One Financial Center
Boston, MA 02111
Peter Borghi Senior Vice President None
One Financial Center
Boston, MA 02111
C-29
<PAGE>
Paul V. Daly Senior Vice President None
One Financial Center
Boston, MA 02111
Susan M.W. DiFazio Senior Vice President None
One Financial Center
Boston, MA 02111
Robert Haeusler Senior Vice President None
One Financial Center
Boston, MA 02111
Gregory R. McMahan Senior Vice President None
One Financial Center
Boston, MA 02111
Francis J. McNamara, III Senior Vice Secretary
One Financial Center President and
Boston, MA 02111 Clerk
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 Assistant
One Financial Center President and Secretary
Boston, MA 02111 Assistant Clerk
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 and None
One Financial Center Assistant Treasurer
Boston, MA 02111
C-30
<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) Deleted.
(d) Deleted.
(e) 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.
(f) 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.
(g) Deleted.
C-31
<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 Registration Statement and Amendment, 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 series of the Registrant, as provided in the Master Trust
Agreement. Each series of the Registrant shall be solely and exclusively
responsible for all of its direct or indirect debts, liabilities, and
obligations, and no other series shall be responsible for the same.
C-32
<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. 11 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 11th day of October, 1995.
STATE STREET RESEARCH CAPITAL TRUST
By: ____________________________*________________
Ralph F. Verni
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed on the
above date by the following persons in the capacities indicated:
* 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
- ---------------------------------- Trustee
Toby Rosenblatt
* Trustee
- ----------------------------------
Michael S. Scott Morton
<PAGE>
* Trustee
- ----------------------------------
Jeptha H. Wade
*By: /s/ Francis J. McNamara, III
Francis J. McNamara, III,
Attorney-in-Fact under Powers of
Attorney dated October 11, 1995,
filed herein.
<PAGE>
1933 Act Registration No. 2-86271
1940 Act File No. 811-3838
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
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. 11 |X|
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 17 |X|
--------------------
STATE STREET RESEARCH CAPITAL TRUST
(Exact Name of Registrant as Specified in Articles of Organization)
--------------------
EXHIBITS
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
(1) First Amended and Restated Master Trust Agreement, Amendment
No. 1 and Amendment No. 2
(5)(b) Restated Advisory Agreement with respect to State Street Research
Small Capitalization Growth Fund and Letter Agreement relating to
State Street Research Small Capitalization Value Fund
(6)(b) Form of Selected Dealer Agreement
(6)(d) Letter Agreement with respect to the Distribution Agreement
relating to State Street Research Small Capitalization Value Fund
(8)(d) Letter Agreement with respect to the Custodian Contract relating
to State Street Research Small Capitalization Value Fund
(11) Consent of Coopers & Lybrand L.L.P.
(13)(b) Subscription and Investment Letters -- State Street Research
Small Capitalization Value Fund
(14)(a) State Street Research IRA: Disclosure Statement, Forms Booklet
and Transfer of Assets/Direct Rollover Form
(15)(c) Letter Agreement with respect to Plan of Distribution Pursuant
to Rule 12b-1 relating to State Street Research Small
Capitalization Value Fund
(17) Multiple Class Expense Allocation Plan Adopted Pursuant to
Rule 18f-3
(18)(a) Powers of Attorney
(18)(b) Certificate of Board Resolution Respecting Powers of Attorney
(27) Financial Data Schedules
EXHIBIT (1)
STATE STREET CAPITAL TRUST
FIRST AMENDED AND RESTATED
MASTER TRUST AGREEMENT
The AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts on
the 8th day of November, 1988, by the Trustees thereunder, and by the
holders of shares of beneficial interest to be issued thereunder as therein
provided, is hereby amended and restated in its entirety this 5th day of
February, 1993.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust
hereunder, and to issue classes of Shares of any Sub-Trust or divide Shares
of any Sub-Trust into two or more classes, all in accordance with the
provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance
with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire
in any manner as Trustees hereunder IN TRUST to manage and dispose of the
same upon the following terms and conditions for the benefit of the holders
from time to time of shares of beneficial interest in this Trust or
Sub-Trusts (as hereinafter defined) created hereunder as hereinafter set
forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as State Street Capital
Trust and the Trustees shall conduct the business of the Trust under that
name or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time;
<PAGE>
(b) "Class" refers to any class of Shares or any Series or
Sub-Trust established and designated under or in accordance with the
provisions of Article IV;
(c) "Commission" shall have the meaning given it in the 1940
Act;
(d) "Declaration of Trust" shall mean this First Amended and
Restated Agreement and Declaration of Trust as amended or restated from
time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust and each Sub-Trust of the Trust
and/or any class of any Sub-Trust (as the context may require) shall be
divided from time to time;
(h) "Sub-Trust" or "Series" refers to a series of Shares
established and designated under or in accordance with the provisions of
Article IV;
(i) "Trust" refers to the Massachusetts business trust
established by this Declaration of Trust, as amended from time to time,
inclusive of each and every Sub-Trust established hereunder; and
(j) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
2
<PAGE>
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The Trustees hereof are Dean O. Morton,
Thomas L. Phillips, William P. Rich, Michael S. Scott Morton, Ralph F. Verni
and Jeptha H. Wade.
(b) Number. The Trustees serving as such, whether named above
or hereafter becoming Trustees, may increase or decrease (to not less than
two at any time after the effective date of the Trust's Registration
Statement on Form N-1A with the Commission) the number of Trustees to a
number other than the number theretofore determined. No decrease in the
number of Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 3.1.
(c) Election and Term. The Shareholders shall elect a Board of
Trustees at the first meeting of Shareholders following the initial public
offering of Shares. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee of the Trust and of each
Sub-Trust hereunder during the lifetime of this Trust and until its
termination as hereinafter provided except as such Trustee sooner dies,
resigns or is removed. The Trustees may elect their own successors, and
may, pursuant to Section 3.1(f) hereof, appoint Trustees to fill vacancies;
provided, however, that the Shareholders shall have the right to elect
Trustees subsequent to the initial election contemplated by this Section
3.1(c) in the event there shall at any time be no Trustees in office or
when and to the extent otherwise required by Section 16(a) of the 1940 Act.
(d) Resignation and Retirement. Any Trustee may resign his
trust or retire as a Trustee, by written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or upon such
later date as is specified in such instrument and shall be effective as to
the Trust and each Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause
at any time: (i) by written instrument, signed by at least two-thirds of
the number of Trustees in office
3
<PAGE>
immediately prior to such removal, specifying the date upon which such
removal will become effective; or (ii) by vote of Shareholders holding not
less than two-thirds of the shares then outstanding, cast in person or by
proxy at any meeting called for the purpose. Any such removal shall be
effective as to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation the death, resignation,
retirement, removal or incapacity of any of the Trustees, or resulting from
an increase in the number of Trustees by the other Trustees may (but so
long as there are at least two remaining Trustees, need not unless required
by the 1940 Act) be filled by a majority of the remaining Trustees, subject
to the provisions of Section 16(a) of the 1940 Act, through the appointment
in writing of such other person as such remaining Trustees in their
discretion shall determine and such appointment shall be effective upon the
written acceptance of the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of this Declaration
of Trust, except that any such appointment in anticipation of a vacancy to
occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or
after the effective date of said retirement, resignation or increase in
number of Trustees. As soon as any Trustee so appointed shall have
accepted such appointment and shall have agreed in writing to be bound by
this Declaration of Trust and the appointment is effective, the Trust
estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them,
shall not operate to annul or terminate the Trust or any Sub-Trust
hereunder, or to revoke or terminate any existing agency or contract
created or entered into pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940
Act or under circumstances which would justify his removal for cause, no
person ceasing to be a Trustee as a result of his death, resignation,
retirement, removal or incapacity (nor the estate of such person) shall be
required to make an accounting to the Shareholders or remaining Trustees
upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and
4
<PAGE>
the purpose of the Trust. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust. The Trustees
shall not be bound or limited by present or future laws or customs with regard
to investment by trustees or fiduciaries, but shall have full authority and
absolute power and control over the assets of the Trust and the business of the
Trust to the same extent as if the Trustees were sole owners of the assets of
the Trust and the business in their own right, including such authority, power
and control to do all acts and things as they, in their uncontrolled discretion,
shall deem proper to accomplish the purposes of this Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may sue or be sued in the name of the Trust;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish Sub-Trusts, each such Sub-Trust to operate as a separate and
distinct investment medium and with separately defined investment objectives and
policies and distinct investment purposes; from time to time in accordance with
the provisions of Section-4.1 hereof establish classes of Shares of any Series
or Sub-Trust or divide the Shares of any Series or Sub-Trust into classes; they
may as they consider appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository or
custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or Shareholder servicing
agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or otherwise, and
set record dates or times for the determination of Shareholders or various of
them with respect to various matters; they may compensate or provide for the
compensation of the Trustees, officers, advisers, administrators, custodians,
5
<PAGE>
other agents, consultants and employees of the Trust or the Trustees on such
terms as they deem appropriate; and in general they may delegate to any officer
of the Trust, to any committee of the Trustees and to any employee, adviser,
administrator, distributor, depository, custodian, transfer and dividend
disbursing agent, or any other agent or consultant of the Trust such authority,
powers, functions and duties as they consider desirable or appropriate for the
conduct of the business and affairs of the Trust, including without implied
limitation the power and authority to act in the name of the Trust and any
Sub-Trust and of the Trustees, to sign documents and to act as attorney-in-fact
for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust
established hereunder:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation
to securities, debt instruments or property as the Trustees shall deem
proper;
(d) Subscription. To exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the Trustees or of
the Trust of any Sub-Trust or in the name of a custodian, subcustodian or
other depository or a nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
plan for the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held in the
Trust; to consent to
6
<PAGE>
any contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to
any security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee, depository,
voting trustee or otherwise, and in that connection to deposit any security
or debt instrument with, or transfer any security or debt instrument to,
any such committee, depository or trustee, and to delegate to them such
power and authority with relation to any security or debt instrument
(whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or trustee as the Trustees shall
deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any Sub-Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general
or limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of
any notes or other obligations of any person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust property or any part thereof to secure any of
or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and principal
on its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, consultants,
investment advisers, managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof (or any person
connected therewith), of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having
held any such office or position, or by reason of any action alleged to
have been taken
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or omitted by any such person in any such capacity, including any action
taken or omitted that may be determined to constitute negligence, whether
or not the Trust would have the power to indemnify such person against such
liability;
(m) Pensions, etc. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and
other retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a means
of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust; and
(n) Distribution Plans. To adopt on behalf of the Trust or any
Sub-Trust a plan of distribution and related agreements thereto pursuant to
the terms of Rule 12b-1 of the 1940 Act and to make payments from the
assets of the Trust or the relevant Sub-Trust or Sub-Trusts pursuant to
said Rule 12b-1 plan.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees on behalf of the Trust or any Sub-Trust may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum, consisting of
at least one-half of the Trustees then in the office, being present),
within or without Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time, and participation by such means shall constitute presence in person
at a meeting, or by written consents of a majority of the Trustees then in
office (or such larger or different number as may be required by the 1940
Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present
and future law or custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to time and without
limiting the generality of their powers and authority otherwise set forth
herein, enter into one or more contracts with any one or more corporations,
trusts, associations, partnerships, limited partnerships, other types of
organizations, or individuals (a "Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust and/or any
Sub-Trust, and/or the Trustees, and to provide for the performance and
assumption of such other services, duties and
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responsibilities in addition to those set forth below as the Trustees may
determine appropriate:
(a) Advisory. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the Trustees with
respect to the investments of the Trust or of the assets belonging to any
Sub-Trust of the Trust (as that phrase is defined in subsection (a) of
Section 4.2), to manage such investments and assets, make investment
decisions with respect thereto, and to place purchase and sale orders for
portfolio transactions relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect
to the operations of the Trust and each Sub-Trust (including each class
thereof), to supervise all or any part of the operations of the Trust and
each Sub-Trust, and to provide all or any part of the administrative and
clerical personnel, office space and office equipment and services
appropriate for the efficient administration and operations of the Trust
and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and
each Sub-Trust (including any classes thereof), to be principal underwriter
of such Shares, and/or to act as agent of the Trust and each Sub-Trust in
the sale of Shares and the acceptance or rejection of orders for the
purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and each Sub-Trust and
accounting records in connection therewith;
(e) Transfer and Dividend Disbursing Agent. To maintain
records of the ownership of outstanding Shares, the issuance and redemption
and the transfer thereof; and to disburse any dividends declared by the
Trustees and in accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to
the relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the
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Trust and/or the Trustees, and the contracts with respect thereto may
contain such terms interpretive of or in addition to the delineation of the
services, duties and responsibilities provided for, including provisions
that are not inconsistent with the 1940 Act relating to the standard of
duty of and the rights to indemnification of the Contracting Party and
others, as the Trustees may determine. Nothing herein shall preclude,
prevent or limit the Trust or a Contracting Party from entering into
sub-contractual arrangements relating to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or
affiliate of any Contracting Party, or that the
Contracting Party or any parent or affiliate thereof
is a Shareholder or has an interest in the Trust or
any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing
for the rendering of any similar services to one or
more other corporations, trusts, associations,
partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
or any Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee
or officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust, any Sub-Trust or its
Shareholders, provided that in the case of any relationship or interest
referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (x) the material facts as to such relationship
or interest have been disclosed to or are known by the Trustees not having
any such relationship or interest and the contract involved is approved in
good faith by a majority of such Trustees not having any such relationship
or interest (even though such unrelated or disinterested Trustees are less
than a quorum of all of the Trustees), (y) the material facts as to such
relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract
involved is specifically approved in
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good faith by vote of the Shareholders, or (z) the specific contract
involved is fair to the Trust as of the time it is authorized, approved or
ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust or any Sub-Trust, or partly out of
principal and partly out of income, and to charge or allocate the same to,
between or among such one or more of the Sub-Trusts and/or one or more
classes of Shares thereof that may be established and designated pursuant
to Article IV, as the Trustees deem fair, all expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the Trust or
any Sub-Trust and/or one or more classes of Shares thereof, or in
connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository,
custodian, transfer agent, dividend disbursing agent, accounting agent,
Shareholder servicing agent, and such other agents, consultants and
independent contractors and such other expenses and charges as the Trustees
may deem necessary or proper to incur. Without limiting the generality of
any other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may fix the
amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the
Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all with par value $.001 per Share, but
the Trustees shall have the authority from time to time to issue Shares in
one or more Series (each of which Series of Shares shall be a separate and
distinct Sub-Trust of the Trust, including without limitation those
Sub-Trusts specifically established and designated in Section 4.2), as they
deem necessary or desirable. For all purposes under this Declaration of
Trust or otherwise, including, without implied limitation: (i) with
respect to the rights of creditors and (ii) for purposes of interpreting
the relative rights of each Sub-Trust and the Shareholders of each
Sub-Trust, each Sub-Trust established hereunder shall be deemed
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to be a separate trust. The Trustees shall have exclusive power without
the requirement of Shareholder approval to establish and designate such
separate and distinct Sub-Trusts, and to fix and determine the relative
rights and preferences as between the shares of the separate Sub-Trusts as
to right of redemption and the price, terms and manner of redemption,
special and relative rights as to dividends and other distributions and on
liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the several Sub-Trusts shall have separate voting
rights or no voting rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any
Sub-Trust or divide the Shares of any Sub-Trust into classes, each class
having such different dividend, liquidation, voting and other rights as the
Trustees may determine, and may establish and designate the specific
classes of Shares of each Sub-Trust. The fact that a Sub-Trust shall have
initially been established and designated without any specific
establishment or designation of classes (i.e., that all Shares of such
Sub-Trust are initially of a single class), or that a Sub-Trust shall have
more than one established and designated class, shall not limit the
authority of the Trustees to establish and designate separate classes, or
one or more further classes, of said Sub-Trust without approval of the
holders of the initial class thereof, or previously established and
designated class or classes thereof, provided that the establishment and
designation of such further separate classes would not adversely affect the
rights of the holders of the initial or previously established and
designated class or classes.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the
Trustees may issue Shares of any Sub-Trust or class thereof for such
consideration and on such terms as they may determine (or for no
consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the
terms determined by the Trustees shall be fully paid and non-assessable
(but may be subject to mandatory contribution back to the Trust as provided
in subsection (h) of Section 4.2). The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any
Sub-Trust or class thereof into one or more Sub-Trusts or classes thereof
that may be established and designated from time to time. The Trustees may
hold as treasury Shares, reissue for such consideration and on such terms
as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
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The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the
holders of Shares entitled to be treated as such, to the extent provided or
referred to in Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Shares of such
Sub-Trust or class, (ii) upon the execution of an instrument in writing by
an officer of the Trust pursuant to the vote of a majority of the Trustees,
or (iii) as otherwise provided in either such instrument. At any time that
there are no Shares outstanding of any particular Sub-Trust or class
previously established and designated the Trustees may by an instrument
executed by a majority of their number (or by an instrument executed by an
officer of the Trust pursuant to a vote of a majority of the Trustees)
abolish that Sub-Trust or class and the establishment and designation
thereof. Each instrument establishing and designating any Sub-Trust shall
have the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose
of Shares of any Sub-Trust (including any classes thereof) of the Trust to
the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued
and sold and may purchase Shares of any Sub-Trust (including any classes
thereof) from any such person or any such organization subject only to the
general limitations, restrictions or other provisions applicable to the
sale or purchase of Shares of such Sub-Trust (including any classes
thereof) generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate further Sub-Trusts and classes, the Trustees hereby
establish and designate two Sub-Trusts: the "State Street Research Capital
Fund" and the "State Street Research Small Capitalization Growth Fund."
The Shares of such Sub-Trust and any Shares of any further Sub-Trusts that
may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Sub-Trust at the time of establishing and designating the same) have the
following relative rights and preferences:
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(a) Assets Belonging to Sub-Trusts. All consideration received
by the Trust for the issue or sale of Shares of a particular Sub-Trust or
any classes thereof, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
held by the Trustees in trust for the benefit of the holders of Shares of
that Sub-Trust or class thereof and shall irrevocably belong to that
Sub-Trust (and be allocable to any classes thereof) for all purposes, and
shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any General
Items (as hereinafter defined) allocated to that Sub-Trust as provided in
the following sentence, are herein referred to as "assets belonging to"
that Sub-Trust. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Sub-Trust (collectively
"General Items"), the Trustees shall allocate such General Items to and
among any one or more of the Sub-Trusts established and designated from
time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable; and any General Items so allocated to
a particular Sub-Trust shall belong to that Sub-Trust (and be allocable to
any classes thereof). Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Sub-Trusts (including
any classes thereof) for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging
to each particular Sub-Trust shall be charged with the liabilities in
respect of that Sub-Trust and all expenses, costs, charges and reserves
belonging to that Sub-Trust, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Sub-Trust shall be allocated and charged by the
Trustees to and among any one or more of the Sub-Trusts established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. In addition,
the liabilities in respect of a particular class of Shares of a particular
Sub-Trust and all expenses, costs, charges and reserves belonging to that
class of Shares, and any general liabilities, expenses, costs, charges or
reserves of that particular Sub-Trust which are not readily identifiable as
belonging to any particular class of
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Shares of that Sub-Trust shall be allocated and charged by the Trustees to
and among any one or more of the classes of Shares of that Sub-Trust
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges and reserves allocated and so
charged to a Sub-Trust or class thereof are herein referred to as
"liabilities belonging to" that Sub-Trust or class thereof. Each
allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the Shareholders, creditors
and any other persons dealing with the Trust or any Sub-Trust (including
any classes thereof) for all purposes. Any creditor of any Sub-Trust may
look only to the assets of that Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and
which items as capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a
particular Sub-Trust or any class thereof may be paid with such frequency
as the Trustees may determine, which may be daily or otherwise pursuant to
a standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of Shares of that
Sub-Trust or class, from such of the income and capital gains, accrued or
realized, from the assets belonging to that Sub-Trust or in the case of a
class, belonging to that Sub-Trust and allocable to that class, as the
Trustees may determine, after providing for actual and accrued liabilities
belonging to that Sub-Trust or class. All dividends and distributions on
Shares of a particular Sub-Trust or class thereof shall be distributed pro
rata to the holders of Shares of that Sub-Trust or class in proportion to
the number of Shares of that Sub-Trust or class held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Trustees under such program or procedure. Such
dividends and distributions may be made in cash or Shares of that Sub-Trust
or class or a combination thereof as determined by the Trustees or pursuant
to any program that the Trustees may have in effect at the time for the
election by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution paid
in Shares will be paid at the net asset value thereof as determined in
accordance with subsection (h) of Section 4.2.
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(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Sub-Trust and each class
thereof that has been established and designated shall be entitled to
receive, when and as declared by the Trustees, the excess of the assets
belonging to that Sub-Trust, or in the case of a class, belonging to that
Sub-Trust and allocable to that class, over the liabilities belonging to
that Sub-Trust or class. The assets so distributable to the Shareholders
of any particular Sub-Trust or class thereof shall be distributed among
such Shareholders in proportion to the number of Shares of that Sub-Trust
or class thereof held by them and recorded on the books of the Trust. The
liquidation of any particular Sub-Trust or class thereof may be authorized
at any time by vote of a majority of the Trustees then in office.
(e) Voting. On each matter submitted to a vote of the
Shareholders, each holder of a Share of each Sub-Trust or class thereof
shall be entitled to one vote for each whole Share standing in his name on
the books of the Trust, irrespective of the series thereof, and all Shares
of all series shall vote as a single class ("Single Class Voting");
provided, however, that (a) as to any other matter with respect to which a
separate vote of one or more series or class is required by the 1940 Act,
such requirements as to a separate vote by such series or class shall apply
in lieu of Single Class Voting as described above; and (b) as to any matter
which affects the interests of one or more particular series, only the
holders of Shares of the one or more affected series or class shall be
entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Sub-Trust or any class thereof shall have the right at such
times as may be permitted by the Trust, but no less frequently than once
each week, to require the Trust to redeem all or any part of his Shares of
that Sub-Trust or class thereof at a redemption price equal to the net
asset value per Share of that Sub-Trust or class thereof next determined in
accordance with subsection (h) of this Section 4.2 after the Shares are
properly tendered for redemption, subject to any contingent deferred sales
charge in effect at the time of redemption. Payment of the redemption
price shall be in cash; provided, however, that if the Trustees determine,
which determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Trust may, subject to the
requirements of the 1940 Act, make payment wholly or partly in securities
or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of
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the holders of Shares of any Sub-Trust or class thereof to require the
Trust to redeem Shares of that Sub-Trust during any period or at any time
when and to the extent permissible under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption
by the Trust at the redemption price which would be applicable if such
Share was then being redeemed by the Shareholder pursuant to subsection (f)
of this Section 4.2: (a) at any time, if the Trustees determine in their
sole discretion and by majority vote that failure to so redeem may have
materially adverse consequences to the Trust or any Sub-Trust or to the
holders of the Shares of the Trust or any Sub-Trust thereof or class
thereof, or (b) upon such other conditions as may from time to time be
determined by the Trustees and set forth in the then current Prospectus of
the Trust with respect to maintenance of Shareholder accounts of a minimum
amount. Upon such redemption the holders of the Shares so redeemed shall
have no further right with respect thereto other than to receive payment of
such redemption price.
(h) Net Asset Value. The net asset value per Share of any
Sub-Trust shall be (i) in the case of a Sub-Trust whose Shares are not
divided into classes, the quotient obtained by dividing the value of the
net assets of that Sub-Trust (being the value of the assets belonging to
that Sub-Trust less the liabilities belonging to that Sub-Trust) by the
total number of Shares of that Sub-Trust outstanding, and (ii) in the case
of a class of Shares of a Sub-Trust whose Shares are divided into classes,
the quotient obtained by dividing the value of the net assets of that
Sub-Trust allocable to such class (being the value of the assets belonging
to that Sub-Trust allocable to such class less the liabilities belonging to
such class) by the total number of Shares of such class outstanding; all
determined in accordance with the methods and procedures, including without
limitation those with respect to rounding, established by the Trustees from
time to time.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as
dividends payable in additional Shares of that Sub-Trust at the designated
constant dollar amount and for the handling of any losses attributable to
that Sub-Trust. Such procedures may provide that in the event of any loss
each Shareholder shall be deemed to have contributed to the capital of the
Trust attributable to that Sub-Trust his pro rata portion of the total
number of
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Shares required to be cancelled in order to permit the net asset value per
Share of that Sub-Trust to be maintained, after reflecting such loss, at
the designated constant dollar amount. Each Shareholder of the Trust shall
be deemed to have agreed, by his investment in any Sub-Trust with respect
to which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
(i) Transfer. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular
Sub-Trust or class thereof will be recorded on the Share transfer records
of the Trust applicable to that Sub-Trust or class only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Sub-Trust or class and at such other times as may be permitted by the
Trustees.
(j) Equality. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all
Shares of each particular Sub-Trust or class thereof shall represent an
equal proportionate interest in the assets belonging to that Sub-Trust, or
in the case of a class, belonging to that Sub-Trust and allocable to that
class (subject to the liabilities belonging to that Sub-Trust or class),
and each Share of any particular Sub-Trust or class shall be equal to each
other Share of that Sub-Trust or class; but the provisions of this sentence
shall not restrict any distinctions permissible under subsection (c) of
this Section 4.2 that may exist with respect to dividends and distributions
on Shares of the same Sub-Trust or class. The Trustees may from time to
time divide or combine the Shares of any particular Sub-Trust or class into
a greater or lesser number of Shares of that Sub-Trust or class without
thereby changing the proportionate beneficial interest in the assets
belonging to that Sub-Trust or class or in any way affecting the rights of
Shares of any other Sub-Trust or class.
(k) Fractions. Any fractional Share of any Sub-Trust or class,
if any such fractional Share is outstanding, shall carry proportionately
all the rights and obligations of a whole Share of that Sub-Trust or class,
including rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Sub-Trust or class thereof shall have
the right to convert said Shares into Shares of one or more other Sub-Trust
or class thereof in
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accordance with such requirements and procedures as may be established by
the Trustees.
(m) Class Differences. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the Trustees
may determine to be appropriate in their sole discretion, provided that
such differences are set forth in the instrument establishing and
designating such classes and executed by a majority of the Trustees (or by
an instrument executed by an officer of the Trust pursuant to a vote of a
majority of the Trustees).
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Sub-Trust and each class thereof that has been established and
designated. No certificates certifying the ownership of Shares need be
issued except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for the
issuance of Share certificates, the use of facsimile signatures, the
transfer of Shares and similar matters. The record books of the Trust as
kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Sub-Trust and class thereof held from time to time by each
such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and
on such terms and for such consideration, not inconsistent with the
provisions of the 1940 Act, as they from time to time authorize. The
Trustees may authorize any distributor, principal underwriter, custodian,
transfer agent or other person to accept orders for the purchase of Shares
that conform to such authorized terms and to reject any purchase orders for
Shares whether or not conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the
Trust or any Sub-Trust thereof nor entitle the
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representative of any deceased Shareholder to an accounting or take any
action in court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein to
call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally
agree to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
Shareholders in the event the Trust participates in any transaction which
would give rise to appraisal or dissenters' rights by a Shareholder of a
corporation organized under Chapter 156B of the General Laws of the
Commonwealth of Massachusetts, or otherwise.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section
3.1, (ii) with respect to any contract with a Contracting Party as provided
in Section 3.3 as to which Shareholder approval is as required by the 1940
Act, (iii) with respect to any termination or reorganization of the Trust
or any Sub-Trust to the extent and as provided in Sections 7.1 and 7.2,
(iv) with respect to any amendment of this Declaration of Trust to the
extent and as provided in Section 7.3, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Sub-Trust thereof or the Shareholders (provided, however, that a
Shareholder of a particular Sub-Trust shall not be entitled to a derivative
or class action on behalf of any other Sub-Trust (or Shareholder of any
other Sub-Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in
the election of Trustees. Shares may
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be voted in person or by proxy. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to
be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by
law, this Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees
from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or
upon any other matter deemed by the Trustees to be necessary or desirable.
Written notice of any meeting of Shareholders shall be given or caused to
be given by the Trustees by mailing such notice at least seven days before
such meeting, postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder at the Shareholder's address as it appears on
the records of the Trust. The Trustees shall promptly call and give notice
of a meeting of Shareholders for the purpose of voting upon removal of any
Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at
least 10% of the Shares then outstanding requesting a meeting be called for
any other purpose requiring action by the Shareholders as provided herein
or in the By-Laws, then Shareholders holding at least 10% of the Shares
then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any dividend or
distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30
days (except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees
may fix a reasonable date and time prior to the date of any meeting of
Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes
of such
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other action, and any Shareholder who was a Shareholder at the date and
time so fixed shall be entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for purposes of such
other action, even though he has since that date and time disposed of his
Shares, and no Shareholder becoming such after that date and time shall be
so entitled to vote at such meeting or any adjournment thereof or to be
treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by
the 1940 Act or other applicable law, 30% of the Shares entitled to vote
shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting without the necessity of further
notice. A majority of the Shares voted, at a meeting of which a quorum is
present shall decide any questions and a plurality shall elect a Trustee,
except when a different vote is required or permitted by any provision of
the 1940 Act or other applicable law or by this Declaration of Trust or the
By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may
be taken without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger proportion thereof as shall be required by
the 1940 Act or by any express provision of this Declaration of Trust or
the By-Laws) consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such consent shall
be treated for all purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the
Massachusetts Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more
shareholders of record who have been such for at least six months preceding
the date of application, and who hold in the aggregate either Shares having
a net asset value of at least $25,000 or at least 1% of the outstanding
shares, whichever is less, shall apply to the Trustees in writing, stating
that they wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a Shareholder meeting and
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accompanied by a form of communication and request which they wish to
transmit, the Trustees shall within five business days after receipt of
such application either (1) afford to such applicants access to a list of
the names and addresses of all Shareholders as recorded upon the books of
the Trust or Sub-Trust, as applicable; or (2) inform such applicants as to
the approximate number of Shareholders of record, and the approximate cost
of mailing to them the proposed communication and form of request.
If the Trustees elect to follow the course specified in clause (2)
above, the Trustees, upon the written request of such applicants,
accompanied by a tender of the material to be mailed and of the reasonable
expenses of mailing, shall, with reasonable promptness, mail such material
to all Shareholders of record at their addresses as recorded on the books,
unless within five business days after such tender the Trustees shall mail
to such applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would
be in violation of applicable law, and specifying the basis of such
opinion. The Trustees shall thereafter comply with any order entered by
the Commission and the requirements of the 1940 Act and the Securities
Exchange Act of 1934.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad
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faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be
liable for his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (a) the
Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser,
administrator, distributor or principal underwriter, custodian or transfer,
dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any
other Trustee; (b) the Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of Trust and
their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such
advice; and (c) in discharging their duties, the Trustees shall be entitled
to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent
public accountant, and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as
such shall not be required to give any bond or surety or any other security
for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or
held to be personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, said
Sub-Trust (upon proper and timely request by the Shareholder) shall assume
the defense against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his heirs, executors, administrators
or other legal representatives or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled out of
the assets of said Sub-Trust estate to be held harmless from and
indemnified against all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust
shall indemnify (from the assets of the Sub-Trust or
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Sub-Trusts in question) each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees
of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person")) against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties,
and expenses, including reasonable accountants' and counsel fees, incurred
by any Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which such
person may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or officer, director or
trustee, except with respect to any matter as to which it has been
determined that such Covered Person had acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (such conduct 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 whom 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 Trust 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.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken to repay the amounts so paid to the Sub-Trust in question if it
is ultimately determined that indemnification of such expenses is not
authorized under this Article VI and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested Trustees who are not a party to
the proceeding, or an independent legal counsel in a written opinion, shall
have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
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Covered Person ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either
for said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent
legal counsel in a written opinion. Approval by the Trustees pursuant to
clause (a) or by independent legal counsel pursuant to clause (b) shall not
prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with any of such clauses as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction to have been liable to the Trust or its Shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled.
As used in this Article VI, "Covered Person" shall include such person's
heirs, executors and administrators, an "interested Covered Person" is one
against whom the action, suit or other proceeding in question or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened, and a "disinterested" person is a person
against whom none of such actions, suits or other proceedings or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate
to terminate the Trust. The Trust may be terminated at any time by a
majority of the Trustees then in office subject to a favorable vote of a
majority of the outstanding voting securities, as defined in the 1940 Act
[Shares of each Sub-Trust voting separately by Sub-Trust]. Any Sub-Trust
or class liquidated pursuant to Section 4.2(d) or whose shares have been
redeemed pursuant to Section 4.2(g), may be terminated at any time by a
majority of the Trustees then in office, except that any such Sub-Trust or
class which is the last remaining Sub-Trust or class may only be so
terminated by the Trustees with the favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act, of such
Sub-Trust or class.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as
may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets
to distributable form in cash, securities or other property, or any
combination thereof, and distribute the proceeds to the Shareholders.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or
more Sub-Trusts, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust
to be held as assets belonging to another Sub-Trust of the Trust, in
exchange for cash, shares or other securities (including, in the case of a
transfer to another Sub-Trust of the Trust, Shares of such other Sub-Trust
or class thereof) with such transfer either (1) being made subject to, or
with the assumption by the transferee of, the liabilities belonging to each
Sub-Trust the assets of which are so transferred, or (2) not being made
subject to, or not with the assumption of, such liabilities; provided,
however, that no assets belonging to any particular Sub-Trust shall be so
transferred unless the terms of such transfer shall have first been
approved at a meeting called for the purpose by the affirmative vote of the
holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Sub-Trust. Following such
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transfer, the Trustees shall distribute such cash, shares or other
securities (taking into account the differences among the classes of Shares
of the Sub-Trust, if any, and giving due effect to the assets and
liabilities belonging to and any other differences among the various
Sub-Trusts the assets belonging to which have so been transferred) among
the Shareholders of the Sub-Trust the assets belonging to which have been
so transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to
form a new consolidated trust, partnership, association or corporation
under the laws of which any one of the constituent entities is organized,
or (2) merge into one or more other trusts, partnerships, associations or
corporations organized under the laws of the Commonwealth of Massachusetts
or any other state of the United States, or have one or more such trusts,
partnerships, associations or corporations merged into it, any such
consolidation or merger to be upon such terms and conditions as are
specified in an agreement and plan of reorganization entered into by the
Trust, or one or more Sub-Trusts as the case may be, in connection
therewith. The terms "merge" or "merger" as used herein shall also include
the purchase or acquisition of any assets of any other trust, partnership,
association or corporation which is an investment company organized under
the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger, other than the purchase
or acquisition of assets of an investment company or other collective
investment entity which is not registered under the 1940 Act, shall require
the affirmative vote of the holders of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or Trustee or repeal the prohibition of assessment upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Shareholders) may be amended
at any time, so long as such amendment does not have a material adverse
effect on the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so
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long as such amendment is not in contravention of applicable law, including
the 1940 Act, by an instrument in writing signed by a majority of the then
Trustees (or by an officer of the Trust pursuant to the vote of a majority
of such Trustees). Any amendment to this Declaration of Trust that does
have a material adverse effect on the rights of Shareholders may be adopted
at any time by an instrument in writing signed by a majority of the then
Trustees (or by an officer of the Trust pursuant to a vote of a majority of
such Trustees) when authorized to do so by the vote in accordance with
subsection (e) of Section 4.2 of Shareholders holding a majority of the
Shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of
such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate
(which may be a part of such instrument) executed by a Trustee or officer
of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of the instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy
of this instrument and of each amendment hereto shall be filed by the Trust
with the Secretary of the Commonwealth of Massachusetts as well as any
other governmental office where such filing may from time to time be
required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such amendment. Anyone dealing
with the Trust may rely on a certificate by an officer of the Trust as to
whether or not any such amendments have been made, as to the identities of
the Trustees and officers, and as to any matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like
"herein", "hereof" and "hereunder" shall be deemed to refer to this
instrument as a whole as the same may be amended or affected by any such
amendments. The masculine gender shall include the feminine and neuter
genders. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed
in any number of counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. Reference herein to Massachusetts Business Corporation Law
is not intended to
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give the Trust, the Trustees, the Shareholders or any other person any
right, power, authority or responsibility applicable only to or in
connection with an entity organized in corporate form. The Trust shall be
of the type referred to in Section 1 of Chapter 182 of the Massachusetts
General Laws and of the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts
the foregoing on behalf of the Trust pursuant to authorization by the
Trustees of the Trust.
/s/ Constantine Hutchins, Jr.
-----------------------------
Constantine Hutchins, Jr.
Secretary
Principal office of the Trust: One Financial Center
Boston, MA 02111
214768.c1
<PAGE>
STATE STREET CAPITAL TRUST
Amendment No. 1 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article IV, Sections 4.1 and 4.2 and Article VII, Section 7.3
of the First Amended and Restated Master Trust Agreement of the State Street
Capital Trust (the "Trust") dated February 5, 1993, ("Master Trust Agreement")
the Master Trust Agreement is hereby amended to establish and designate an
additional series of shares to be known as MetLife - State Street Research Small
Capitalization Value Fund, such new series to have the relative rights and
preferences set forth in Article IV, Section 4.2, subsections (a) through (l) of
the Master Trust Agreement.
Pursuant to Article VII, Section 7.3 of the Master Trust Agreement, the
third sentence of the third paragraph of Article IV, Section 4.1 of the Master
Trust Agreement is hereby amended to read as follows:
"The Trustees may classify or reclassify any Shares of any Sub-Trust
or class into one or more Sub-Trusts or classes that may be
established and designated from time to time provided, however, that
no such classification or reclassification shall adversely affect
the rights of any Shareholder."
This Amendment shall be effective as of February 1, 1995.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts the
foregoing on behalf of the Trust pursuant to authorization by the Trustees of
the Trust.
/s/ Constantine Hutchins, Jr.
-----------------------------
Constantine Hutchins, Jr.
Secretary
<PAGE>
STATE STREET CAPITAL TRUST
Amendment No. 2 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article I, Section 1.1, Article IV, Sections 4.1 and 4.2 and
Article VII, Section 7.3 of the First Amended and Restated Master Trust
Agreement of the State Street Capital Trust (the "Trust") dated February 5, 1993
("Master Trust Agreement"), as heretofore amended, the Master Trust Agreement is
hereby amended to change the name of the Trust to State Street Research Capital
Trust and to change the name of one of the series of shares under such Trust,
currently a Sub-Trust designated as MetLife - State Street Research Small
Capitalization Value Fund, to State Street Research Small Capitalization Value
Fund.
This Amendment shall be effective as of February 1, 1995.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts the
foregoing on behalf of the Trust pursuant to authorization by the Trustees of
the Trust.
/s/ Constantine Hutchins, Jr.
-----------------------------
Constantine Hutchins, Jr.
Secretary
Exhibit (5)(b)
RESTATED ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this 10th day of August, 1992, by and
between STATE STREET RESEARCH & MANAGEMENT COMPANY, a corporation organized
under the laws of Delaware having its principal place of business in Boston,
Massachusetts (the "Manager"), and STATE STREET CAPITAL TRUST, a Massachusetts
business trust having its principal place of business in Boston, Massachusetts
(the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, on or about November 8, 1988, the Trust established an original
series known as State Street Capital Fund to which this Agreement does not
apply; and
WHEREAS, the Trust subsequently established a second series known as State
Street Research Small Capitalization Growth Fund (formerly State Street Small
Capitalization Growth Fund) ("Second Fund"), together with all other series
established by the Trust after the date of this Agreement with respect to which
the Manager renders management and investment advisory services pursuant to the
terms of this Agreement, being herein collectively referred to as the "Funds"
and individually as a "Fund."
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF MANAGER.
(a) Second Fund. The Trust hereby appoints the Manager to act as
manager and investment adviser to the Second Fund for the period and on
the terms herein set forth. The Manager accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
(b) Additional Funds. In the event that the Trust establishes
one or more series of shares other than the
<PAGE>
Second Fund with respect to which it desires to retain the Manager to
render management and investment advisory services hereunder, it shall so
notify the Manager in writing, indicating the advisory fee to be payable
with respect to the additional series of shares. If the Manager is willing
to render such services, it shall so notify the Trust in writing,
whereupon such series of shares shall become a Fund hereunder. In such
event a writing signed by both the Trust and the Manager shall be annexed
hereto as a part hereof indicating that such additional series of shares
has become a Fund hereunder and reflecting the agreed-upon fee schedule
for such Fund to the extent the provisions of Section 4 shall not apply
with respect thereto.
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following
services and facilities to the Trust:
(a) Investment Program. The Manager shall (i) furnish continuously
an investment program for each Fund, (ii) determine (subject to the
overall supervision and review of the Board of Trustees of the Trust) what
investments shall be purchased, held, sold or exchanged by each Fund and
what portion, if any, of the assets of each Fund shall be held uninvested,
and (iii) make changes on behalf of the Trust in the investments of each
Fund. The Manager shall also manage, supervise and conduct the other
affairs and business of the Trust and each Fund thereof and matters
incidental thereto, subject always to the control of the Board of Trustees
of the Trust and to the provisions of the Master Trust Agreement and
By-Laws of the Trust, as amended, and the Prospectuses of the Trust as
from time to time amended and in effect and the 1940 Act. Subject to the
foregoing, the Manager shall have the authority to engage one or more
sub-advisers in connection with the management of the Funds, which
sub-advisers may be affiliates of the Manager.
(b) Regulatory Reports. The Manager shall furnish to the Trust
necessary assistance in:
(i) the preparation of all reports now or hereafter
required by federal or other laws; and
(ii) the preparation of prospectuses, registration statements
and amendments thereto that may be required by federal or other laws
or by the rules or regulations of any duly authorized commission or
administrative body.
(c) Office Space and Facilities. The Manager shall furnish the Trust
office space in the offices of the Manager, or in such other place or
places as may be agreed upon from time to time, and all necessary office
facilities,
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business equipment, supplies, utilities, and telephone service for
managing the affairs and investments of the Trust.
(d) Services of Personnel. The Manager shall provide all necessary
executive and administrative personnel for managing the affairs of the
Trust, including personnel to perform clerical, bookkeeping, accounting
and other office functions. These services are exclusive of the
bookkeeping and accounting services of any dividend disbursing agent,
transfer agent, registrar or custodian. The Manager shall compensate all
personnel, officers and Trustees of the Trust if such persons are also
employees of the Manager or its affiliates.
(e) Fidelity Bond. The Manager shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to
do business in the place where the bond is issued against larceny and
embezzlement covering each officer and employee of the Trust and/or the
Manager who may singly or jointly with others have access to funds or
securities of the Trust, with direct or indirect authority to draw upon
such funds or to direct generally the disposition of such funds. The bond
shall be in such reasonable amount as a majority of the Trustees who are
not "interested persons" of the Trust, as defined in the 1940 Act, shall
determine, with due consideration given to the aggregate assets of the
Trust to which any such officer or employee may have access. The premium
for the bond shall be payable by the Trust in accordance with paragraph
3(o).
(f) Portfolio Transactions. The Manager shall place all orders for
the purchase and sale of portfolio securities for the account of each Fund
with brokers or dealers selected by the Manager, although the Trust will
pay the actual brokerage commissions on portfolio transactions in
accordance with paragraph 3(d).
3. ALLOCATION OF EXPENSE.
Except for the services and facilities to be provided by the Manager
as set forth in paragraph 2 above, the Trust assumes and shall pay all
expenses for all other Trust operations and activities and shall reimburse
the Manager for any such expenses incurred by the Manager (it being
understood that the Trust shall allocate such expenses between or among
its Funds to the extent contemplated by its Master Trust Agreement). The
expenses to be borne by the Trust shall include, without limitation:
(a) all expenses of organizing the Trust or forming any Fund
thereof;
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<PAGE>
(b) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, shareholder servicing agent, custodian, or
depository appointed by the Trust for the safekeeping of its cash,
portfolio securities and other property, including the costs of servicing
shareholder investment accounts and bookkeeping, accounting and pricing
services;
(c) the charges and expenses of auditors;
(d) brokerage commissions and other costs incurred in connection
with transactions in the portfolio securities of the Trust, including any
portion of such commissions attributable to brokerage and research
services as defined in Section 28(e) of the Exchange Act;
(e) taxes, including issuance and transfer taxes and registration,
filing or other fees payable by the Trust to federal, state or other
governmental agencies;
(f) expenses, including the cost of printing certificates,
relating to the issuance of shares of the Trust;
(g) expenses involved in registering and maintaining registrations
of the Trust and of its shares with the Securities and Exchange Commission
and various states and other jurisdictions, including reimbursement of
actual expenses incurred by the Manager in performing such functions for
the Trust, which may include compensation of persons who are employees of
the Manager, in proportion to the relative time spent on such matters;
(h) expenses related to the redemption of shares of the Trust,
including expenses attributable to any program of periodic redemption;
(i) expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing proxy
statements, quarterly reports, semiannual reports, annual reports and
other communications to existing shareholders;
(j) expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to existing shareholders (but
not expenses of printing and mailing of prospectuses and literature used
for promotional purposes);
(k) compensation and expenses of Trustees who are not
"interested persons" within the meaning of the 1940 Act;
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<PAGE>
(l) expense of maintaining shareholder accounts and furnishing, or
causing to be furnished, to each shareholder a statement of his account,
including the expense of mailing;
(m) charges and expenses of legal counsel in connection with matters
relating to the Trust, including, without limitation, legal services
rendered in connection with the Trust's legal and financial structure and
relations with its shareholders, issuance of shares of the Trust, and
registration and qualification of securities under federal, state and
other laws;
(n) the cost and expense of maintaining the books and records
of the Trust, including general ledger accounting;
(o) insurance premiums on fidelity, errors and omissions and other
coverages including the expense of obtaining and maintaining a fidelity
bond as required by Section 17(g) of the 1940 Act;
(p) interest payable on Trust borrowings; and
(q) such other nonrecurring expenses of the Trust as may arise,
including expenses of actions, suits, or proceedings to which the Trust is
a party and expenses resulting from the legal obligation which the Trust
may have to provide indemnity with respect thereto.
4. ADVISORY FEE.
For the services and facilities to be provided by the Manager as set
forth in paragraph 2 hereof, the Trust agrees that each Fund shall pay to
the Manager a monthly fee as soon as practical after the last day of each
calendar month, which fee shall be paid at a rate equal to seventy-five
one hundredths of one percent (0.75%) on an annual basis of the average
daily net asset value of such Fund for such calendar month, commencing as
of the date on which this Agreement becomes effective with respect to such
Fund.
In the case of commencement or termination of this Agreement with
respect to any Fund during any calendar month, the fee with respect to
such Fund for that month shall be reduced proportionately based upon the
number of calendar days during which this Agreement is in effect with
respect to such Fund, and the fee shall be computed based upon the average
daily net asset value of such Fund during such period.
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<PAGE>
5. EXPENSE LIMITATION.
The Manager agrees that if the total expenses of any Fund (exclusive
of interest, taxes, payments to fund certain distribution expenses
pursuant to the Trust's Plan of Distribution Pursuant to Rule 12b-1
applicable to the Fund, if any, brokerage expenses and extraordinary items
such as litigation expenses) for any fiscal year of the Trust exceed the
lowest expense limitation imposed in any jurisdiction in which that Fund
is then making sales of its shares or in which its shares are then
qualified for sale, if any, the Manager will pay or reimburse such Fund
for that excess up to the amount of its advisory fees payable with respect
to that Fund during that fiscal year. The amount of the monthly advisory
fee under paragraph 4 hereof shall be reduced to the extent that the
monthly expenses of that Fund, on an annualized basis, would exceed the
foregoing limitation. At the end of each fiscal year of the Trust, if the
aggregate annual expenses chargeable to any Fund for that year exceed the
foregoing limitation based upon the average of the monthly average net
asset value of that Fund for the year, the Manager will promptly reimburse
that Fund for the amount of such excess to the extent not already
reimbursed by reduction of the monthly advisory fee, but if such expenses
are within the foregoing limitation, any excess amount previously withheld
from the monthly advisory fee during that fiscal year will be promptly
paid over to the Manager.
In the event that this Agreement (i) is terminated with respect to
any one or more Funds as of a date other than the last day of the fiscal
year of the Trust or (ii) commences with respect to one or more Funds as
of a date other than the first day of the fiscal year of the Trust, then
the expenses of such Fund or Funds shall be annualized and the Manager
shall pay to, or receive from, the applicable Fund or Funds a pro rata
portion of the amount that the Manager would have been required to pay or
would have been entitled to receive, if any, had this Agreement been in
effect with respect to such Fund or Funds for the full fiscal year.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Master Trust Agreement and
By-laws of the Trust and the Certificate of Incorporation and By-laws of
the Manager, it is understood that Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Manager (or any
successor thereof) as directors, officers or otherwise, that directors,
officers, agents and shareholders of the Manager (or any successor
thereof) are or may be interested in the Trust as Trustees, officers,
agents, shareholders or otherwise, that the Manager (or any such successor
thereof) is or may be interested in the Trust as a shareholder or
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<PAGE>
otherwise and that the effect of any such adverse interests shall be
governed by said Master Trust Agreement, Certificate of Incorporation and
By-laws.
7. LIABILITY OF MANAGER.
The Manager shall not be liable to the Trust for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates; provided,
however, that no provision of this Agreement shall be deemed to protect
the Manager against any liability to the Trust or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance,
bad faith or gross negligence in the performance of its duties or the
reckless disregard of its obligations and duties under this Agreement, nor
shall any provision hereof be deemed to protect any Trustee or officer of
the Trust against any such liability to which he might otherwise be
subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of his duties or the reckless disregard of
his obligations and duties. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to
the Second Fund on the later of (i) the date on which a Registration
Statement with respect to its shares under the Securities Act of 1933, as
amended, is first declared effective by the Securities and Exchange
Commission or (ii) the date on which such Second Fund commences offering
its shares to the public, and, with respect to any additional Fund, on the
date of receipt by the Trust of notice from the Manager in accordance with
paragraph 1(b) hereof that the Manager is willing to serve as Manager with
respect to such Fund. Unless terminated as herein provided, this Agreement
shall remain in full force and effect with respect to the Second Fund
until the date which is two years after the effective date of this
Agreement, and with respect to each additional Fund, for two years from
the date on which such Fund becomes a Fund hereunder. Subsequent to such
initial periods of effectiveness this Agreement shall continue in full
force and effect, subject to Section 8(c), for successive one-year periods
with respect to each Fund so long as such continuance with respect to such
Fund is approved at least annually (a) by either the Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of such Fund, and (b) in either event, by the vote of a
majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any
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<PAGE>
such party, cast in person at a meeting called for the purpose of voting
on such approval.
(b) Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no amendments of this
Agreement shall be effective with respect to any Fund until approved by
vote of the holders of a majority of that Fund's outstanding voting
securities (as defined in the 1940 Act).
(c) Termination. This Agreement may be terminated with respect to
any Fund at any time, without payment of any penalty, by vote of the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of that Fund, or by the Manager, in each case on
sixty (60) days' prior written notice to the other party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the
1940 Act).
(e) Approval, Amendment or Termination by Individual Fund. Any
approval, amendment or termination of this Agreement shall be effective to
continue, amend or terminate this Agreement with respect to such Fund
notwithstanding (i) that such action has not been approved by the holders
of a majority of the outstanding voting securities of any other Fund
affected thereby, and (ii) that such action has not been approved by the
vote of a majority of the outstanding voting securities of the Trust,
unless such action shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Trust hereunder are not to be
deemed exclusive, and the Manager shall be free to render similar services
to others so long as its services hereunder are not impaired thereby.
10. NAME OF TRUST.
It is understood that the name "State Street" and any logos
associated with that name are the valuable property of State Street
Research & Management Company, the Manager, and that the Trust has the
right to include such name as a part of its name and the names of its
Funds only so long as this Agreement shall continue. Upon termination of
this Agreement the Trust shall forthwith cease to use the State Street
name and logos.
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<PAGE>
11. PRIOR AGREEMENTS SUPERSEDED.
This Agreement supersedes any prior agreement relating to the
subject matter hereof between the parties hereto.
12. NOTICES.
Notices under this Agreement shall be in writing and shall be
addressed, and delivered or mailed postage prepaid, to the other party at
such address as such other party may designate from time to time for the
receipt of such notices. Until further notice to the other party, the
address of each party to this Agreement for this purpose shall be One
Financial Center, Boston, Massachusetts 02111.
13. GOVERNING LAW; COUNTERPARTS.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one instrument.
14. LIMITATION OF LIABILITY.
The term "State Street Capital Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated
Master Trust Agreement ("Master Trust Agreement") of the Trust dated
February 5, 1993 as the same may subsequently hereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the
Trust as individuals or personally, but shall bind only the trust property
of the Trust, as provided in the Master Trust Agreement of the Trust. The
execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by a duly authorized 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 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 for the same.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
STATE STREET RESEARCH & STATE STREET CAPITAL TRUST
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni By: /s/ Constantine Hutchins, Jr.
------------------ -----------------------------
Ralph F. Verni Constantine Hutchins, Jr.
President Secretary
Restated as of: June 28, 1993
<PAGE>
STATE STREET RESEARCH CAPITAL TRUST
One Financial Center
Boston, Massachusetts 02111-2690
February 1, 1995
State Street Research &
Management Company
One Financial Center
Boston, Massachusetts 02111-2690
Gentlemen:
This letter is to confirm to you that State Street Research Capital Trust
(the "Trust") has created a new series of shares to be known as State Street
Research Small Capitalization Value Fund (the "Fund") and that pursuant to
Section 1(b) of the Advisory Agreement dated as of August 10, 1992 (the
"Agreement"), the Trust desires to retain you to render management and
investment advisory services under the Agreement to the Fund as a "Series"
thereunder for a fee equal to 0.85% on an annual basis of the average daily net
asset value of the Fund. Nothing in the Agreement shall be construed as
requiring that the initial public shareholders of the Fund approve of the
Agreement in respect of the Fund. Notwithstanding paragraph 8(b) of the
Agreement, no shareholder vote shall be required for any amendments to the
Agreement for which the Securities and Exchange Commission has indicated that no
shareholder vote is necessary, as for example, in the case of a decrease in the
advisory fee under the Agreement.
Please indicate your acceptance of this responsibility in accordance with
the terms of the Agreement by signing this letter as indicated below.
The term "State Street Research Capital Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated Master
Trust Agreement dated February 5, 1993 ("Master Trust Agreement"), as the same
may subsequently thereto have been, or subsequently hereto may be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust as individuals or personally, but shall bind only the
trust property of the Trust, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by a duly
<PAGE>
authorized 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 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 for the
same.
STATE STREET RESEARCH CAPITAL TRUST
By: /s/ Gerard P. Maus
ACCEPTED AND AGREED TO:
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
Exhibit (6)(b)
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: __________
Dealer Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Attn:
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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
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<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.
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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
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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 investor's 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, officers, 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:
Exhibit (6)(d)
STATE STREET RESEARCH CAPITAL TRUST
One Financial Center
Boston, Massachusetts 02111-2690
February 1, 1995
State Street Research
Investment Services, Inc.
One Financial Center
Boston, Massachusetts 02111-2690
Gentlemen:
This letter is to confirm to you that State Street Research Capital Trust
(the "Trust"), has created a new series of shares to be known as State Street
Research Small Capitalization Value Fund (the "Fund"), which is authorized to be
issued in four classes (Class A shares, Class B shares, Class C shares and Class
D shares), and that pursuant to the Distribution Agreement between the Trust and
you dated as of February 17, 1993 (the "Agreement"), you will serve as
distributor and principal underwriter of the Fund (which shall be deemed a
"Fund" under the Agreement) with respect to the sale of its shares and each
class thereof. Shares of each class of the Fund will be sold at the "net asset
value per share" of the Fund plus any applicable sales charge in accordance with
the then current prospectus and statement of additional information of the Fund,
as from time to time amended.
Please indicate your acceptance of the above in accordance with the terms
of the Agreement by signing this letter as indicated below.
The term "State Street Research Capital Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated Master
Trust Agreement dated February 5, 1993 ("Master Trust Agreement") as the same
may subsequently thereto have been, or subsequently hereto may be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust as individuals or personally, but shall bind only the
trust property of the Trust, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by a duly authorized 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,
<PAGE>
but shall bind only the trust property of the Trust as provided in its Master
Trust Agreement. The Master Trust Agreement of the Trust provides, and it is
expressly agreed, that each Fund of the Trust shall be solely and exclusively
responsible for the payment of its debts, liabilities and obligations, and that
no other fund shall be responsible for the same.
STATE STREET RESEARCH CAPITAL TRUST
By: /s/ Ralph F. Verni
ACCEPTED AND AGREED TO:
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: /s/ Gerard P. Maus
Exhibit (8)(d)
STATE STREET RESEARCH CAPITAL TRUST
One Financial Center
Boston, Massachusetts 02111-2690
February 1, 1995
State Street Bank and
Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Gentlemen:
This letter is to confirm to you that State Street Research Capital Trust
(the "Trust") has created a new series of shares to be known as State Street
Research Small Capitalization Value Fund (the "Fund"), and that pursuant to
paragraph 12 of the Custodian Contract dated as of January 27, 1989 between the
Trust and you (the "Agreement"), the Trust desires to retain you to act as
Custodian of the assets of the Fund as set forth in the Custodian Contract.
Please indicate your acceptance of the above in accordance with the terms
of the Agreement by signing this letter as indicated below.
The term "State Street Research Capital Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated Master
Trust Agreement dated February 5, 1993 ("Master Trust Agreement") as the same
may subsequently thereto have been, or subsequently hereto may be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust as individuals or personally, but shall bind only the
trust property of the Trust, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by a duly authorized 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 provides,
and it is expressly agreed, that each fund of the
<PAGE>
Trust shall be solely and exclusively responsible for the payment of its debts,
liabilities and obligations, and that no other fund shall be responsible for the
same.
STATE STREET RESEARCH CAPITAL TRUST
By: /s/ Gerard P. Maus
ACCEPTED AND AGREED TO:
STATE STREET BANK AND
TRUST COMPANY
By: /s/ Timothy Panaro
Exhibit (11)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
State Street Research Capital Trust
We consent to the reference to our firm under the caption "Independent
Accountants" in the Registration Statement of the State Street Research Capital
Trust on Form N-1A (Securities Act of 1933 File No. 2-86271).
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 10, 1995
Exhibit (13)(b)
SUBSCRIPTION
February 1, 1995
To: The Trustees of the
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
The undersigned hereby subscribes to one Class A share of beneficial
interest of State Street Research Small Capitalization Value Fund, having a par
value of $.001, at a price of $9.55 per share and agrees to pay therefor upon
demand in cash the amount of $9.55.
Very truly yours,
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
SUBSCRIPTION
February 1, 1995
To: The Trustees of the
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
The undersigned hereby subscribes to one Class B share of beneficial
interest of State Street Research Small Capitalization Value Fund, having a par
value of $.001, at a price of $9.55 per share and agrees to pay therefor upon
demand in cash the amount of $9.55.
Very truly yours,
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
SUBSCRIPTION
February 1, 1995
To: The Trustees of the
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
The undersigned hereby subscribes to one Class C share of beneficial
interest of State Street Research Small Capitalization Value Fund, having a par
value of $.001, at a price of $9.55 per share and agrees to pay therefor upon
demand in cash the amount of $9.55.
Very truly yours,
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
SUBSCRIPTION
February 1, 1995
To: The Trustees of the
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
The undersigned hereby subscribes to one Class D share of beneficial
interest of State Street Research Small Capitalization Value Fund, having a par
value of $.001, at a price of $9.55 per share and agrees to pay therefor upon
demand in cash the amount of $9.55.
Very truly yours,
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
February 1, 1995
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
In connection with your sale to us of one Class A share of beneficial
interest of State Street Research Small Capitalization Value Fund (the "Share"),
we understand that: (i) the Share has not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Share to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Share for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of the Share or of any interest therein. We hereby agree
that we will not sell, assign or transfer the Share or any interest therein,
except upon repurchase or redemption by the Fund, unless and until the Share has
been registered under the 1933 Act or you have received an opinion of your
counsel indicating to your satisfaction that said sale, assignment or transfer
will not violate the provisions of the 1933 Act or any rules or regulations
promulgated thereunder.
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
February 1, 1995
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
In connection with your sale to us of one Class B share of beneficial
interest of State Street Research Small Capitalization Value Fund (the "Share"),
we understand that: (i) the Share has not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Share to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Share for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of the Share or of any interest therein. We hereby agree
that we will not sell, assign or transfer the Share or any interest therein,
except upon repurchase or redemption by the Fund, unless and until the Share has
been registered under the 1933 Act or you have received an opinion of your
counsel indicating to your satisfaction that said sale, assignment or transfer
will not violate the provisions of the 1933 Act or any rules or regulations
promulgated thereunder.
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
February 1, 1995
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
In connection with your sale to us of one Class C share of beneficial
interest of State Street Research Small Capitalization Value Fund (the "Share"),
we understand that: (i) the Share has not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Share to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Share for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of the Share or of any interest therein. We hereby agree
that we will not sell, assign or transfer the Share or any interest therein,
except upon repurchase or redemption by the Fund, unless and until the Share has
been registered under the 1933 Act or you have received an opinion of your
counsel indicating to your satisfaction that said sale, assignment or transfer
will not violate the provisions of the 1933 Act or any rules or regulations
promulgated thereunder.
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
<PAGE>
February 1, 1995
State Street Research Capital Trust
One Financial Center
Boston, Massachusetts 02111-2690
In connection with your sale to us of one Class D share of beneficial
interest of State Street Research Small Capitalization Value Fund (the "Share"),
we understand that: (i) the Share has not been registered under the Securities
Act of 1933, as amended (the "1933 Act"); (ii) your sale of the Share to us is
made in reliance on such sale being exempt under Section 4(2) of the 1933 Act as
not involving any public offering; and (iii) in part, your reliance on such
exemption is predicated on our representation, which we hereby confirm, that we
are acquiring the Share for investment for our own account as the sole
beneficial owner thereof, and not with a view to or in connection with any
resale or distribution of the Share or of any interest therein. We hereby agree
that we will not sell, assign or transfer the Share or any interest therein,
except upon repurchase or redemption by the Fund, unless and until the Share has
been registered under the 1933 Act or you have received an opinion of your
counsel indicating to your satisfaction that said sale, assignment or transfer
will not violate the provisions of the 1933 Act or any rules or regulations
promulgated thereunder.
STATE STREET RESEARCH &
MANAGEMENT COMPANY
By: /s/ Ralph F. Verni
Exhibit (14)(a)
[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
Exhibit (15)(c)
STATE STREET RESEARCH CAPITAL TRUST
One Financial Center
Boston, MA 02111
February 1, 1995
State Street Research Investment
Services, Inc.
One Financial Center
Boston, Massachusetts 02111
Ladies and Gentlemen:
This letter is to confirm to you that the Plan of Distribution Pursuant
to Rule 12b-1 dated as of February 17, 1993 (the "Plan") adopted by State
Street Research Capital Trust (the "Trust") shall apply to State Street
Research Small Capitalization Value Fund (the "Fund") as a "Series"
thereunder and under the terms set forth in the then current prospectus and
statement of additional information of the Fund, as from time to time amended.
Please indicate your acceptance of the above in accordance with the
terms of the Plan by signing this letter as indicated below.
The term "State Street Research Capital Trust" means and refers to the
Trustees from time to time serving under the First Amended and Restated
Master Trust Agreement ("Master Trust Agreement") of the Trust dated February
5, 1993 as the same may subsequently thereto have been, or subsequently
hereto may be, amended. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust as individuals or
personally, but shall bind only the trust property of the Trust, as provided
in the Master Trust Agreement of the Trust. This Agreement has been
authorized by the Trustees of the Trust and signed by a duly authorized
officer of the Trust, acting as such, and neither such authorization nor such
execution shall be deemed to have been made individually or to impose any
personal liability, but shall bind only the trust property of the Trust as
provided in its Master Trust Agreement. The Master Trust Agreement of the
Trust provides, and it is expressly agreed, that each Fund of the Trust shall
be solely and
<PAGE>
exclusively responsible for the payment of its debts, liabilities and
obligations, and that no other fund shall be responsible for the same.
STATE STREET RESEARCH CAPITAL TRUST
By: /s/ Ralph F. Verni
ACCEPTED AND AGREED TO:
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: /s/ Gerard P. Maus
Exhibit (17)
Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, State Street Research Capital 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)
<PAGE>
of this Plan shall be allocated to each class on the basis of the 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
Exhibit (18)(a)
POWER OF ATTORNEY
We, the undersigned State Street Research Capital 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 11th day of October, 1995.
SIGNATURES
STATE STREET RESEARCH CAPITAL 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
Exhibit (18)(b)
STATE STREET RESEARCH CAPITAL TRUST
Certificate of Resolution
I, the undersigned Amy L. Simmons, hereby certify that I am Assistant
Secretary of State Street Research Capital Trust (the "Trust"), a
Massachusetts business trust 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 Statements 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 Statements 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 11th day of
October, 1995.
/s/ Amy L. Simmons
-------------------
Assistant Secretary
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