[front cover]
[State Street Research logo]
STATE STREET RESEARCH CAPITAL FUND
SEMIANNUAL REPORT
March 31, 1996
[graphic of man climbing blocks]
WHAT'S INSIDE
Investment Update:
About the Fund,
economy and markets
Fund Information
Facts and Figures
Plus, Complete Portfolio Holdings
and Financial Statements
[Dalbar logo]
For Excellence
in
Shareholder Service
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
INVESTMENT UPDATE
INVESTMENT ENVIRONMENT
The Economy
(bullet) After slowing in late 1995, economic growth picked up speed in the
early months of 1996. Inflation has remained low, however.
(bullet) Consumer confidence and spending inched upward, despite higher debt
levels.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996. Because of the stronger
economy, the Fed left rates untouched at its March meeting.
The Markets
(bullet) Stocks performed well, with gains concentrated in the largest
stocks. The Dow Jones Industrial Average, which represents 30
stocks, notched a gain of +18.04% for the six months ended March 31,
1996. The much broader Standard & Poor's 500 Index provided a total
return of +11.70% over the same time period.(1)
(bullet) Bond performance was mixed. The Lehman Brothers Government/Corporate
Bond Index provided a total return of +2.21% for the six months
ended March 31, 1996.(1) Yields on 30-year U.S. Treasury bonds
climbed to 6.67% by the end of March.
The Fund
Over the past six months
(bullet) For the six months ended March 31, 1996, Capital Fund's Class A
shares provided a total return of +1.15% (does not reflect sales
charge).(2) The average total return for 183 funds in Lipper
Analytical Services' Capital Appreciation Funds category was +8.26%
(does not reflect sales charge).
(bullet) The Fund's short-term underperformance was largely the result of the
fourth quarter of 1995, when technology stocks experienced a steep
decline. Performance recovered in the first three months of 1996.
Longer-term performance remains strong, as you can see in the table
below.
(bullet) In the fourth quarter, we sold most of our technology position and
all of our semiconductor holdings. We increased our holdings in
retail and textile/apparel stocks, as well as in hotel and
restaurant stocks.
Current strategy
(bullet) In the retail and textile/apparel area, which together represent
more than 22% of fund assets, we are focusing on companies that
design, manufacture and market their own clothing.
(bullet) With our computer software holdings, we are emphasizing companies
developing products to increase productivity.
(bullet) We continue to select stocks with a bottom-up approach--company by
company--based on earnings growth and other fundamental
characteristics.
(1)The Standard & Poor's Composite Index (S&P 500) includes 500 widely traded
common stocks and is a commonly used measure of U.S. stock performance. The
Lehman Brothers Government/Corporate Bond Index is a commonly used measure of
bond market performance. The indices are unmanaged and do not take sales
charges into account. Direct investment in the indices is not possible;
results are for illustrative purposes only.
(2)+0.76% for Class B shares; +1.22% for Class C shares; +0.69% for Class D
shares.
(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. During the periods prior to 1993 that
shares were not offered to the general public, the Fund was not subject to
the cash inflows and higher level of redemptions and expenses that have
occurred during the Fund's current, continuous public offering. Performance
for a class includes periods prior to the adoption of class designations.
Performance prior to 1993 class designations does not reflect annual 12b-1
fees of .25% for "A" shares and 1% for "B" shares, which will reduce
subsequent performance.
(4)Performance reflects maximum "A" share front-end, or 5% "B" share or 1% "D"
share contingent deferred, sales charges. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and institutions.
(5)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Please note that the discussion throughout this shareholder report is dated
as indicated and because of possible changes in viewpoint, data, and
transactions, should not be relied upon as being current thereafter.
FUND INFORMATION (all data are for periods ended March 31, 1996)
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3,4)
10 years 5 years 1 year
- -------- ---------- ---------- ------------
Class A +15.38% +19.76% +25.31%
- -------- -------- -------- ----------
Class B +15.68% +20.19% +25.14%
- -------- -------- -------- ----------
Class C +16.03% +21.11% +31.43%
- -------- -------- -------- ----------
Class D +15.70% +20.41% +29.08%
Cumulative Total Returns
(do not reflect sales charge)(3,5)
10 years 5 years 1 year
- -------- ---------- ---------- ------------
Class A +337.99% +157.95% +31.22%
- -------- -------- -------- ----------
Class B +329.17% +152.76% +30.14%
- -------- -------- -------- ----------
Class C +342.37% +160.53% +31.43%
- -------- -------- -------- ----------
Class D +329.84% +153.15% +30.08%
Top 10 Common Stock Holdings
(by percentage of net assets)
1 Gucci Group Apparel designer/manufacturer 4.1%
2 HFS Hotel reservation service 4.0%
3 Sunglass Hut Specialty retailer 3.6%
4 Halliburton Oil service leader 2.3%
5 Trans World Airlines Airline 2.2%
6 Newbridge Networks Telecommunications firm 2.1%
7 AMR Parent of American Airlines 1.9%
8 HBO Semiconductor maker 1.9%
9 FILA Holdings Apparel designer/manufacturer 1.8%
10 Continental Airlines Airline 1.8%
These securities represent an aggregate of 25.7% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Top 5 Industries
(by percentage of net assets)
[typeset representation of bar chart]
Retail 16.8%
Hotel and restaurant 10.6%
Airline 8.7%
Computer software 8.5%
Insurance 5.8%
Total: 50.4%
[end bar chart]
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
INVESTMENT PORTFOLIO
March 31, 1996 (Unaudited)
---------------------------------------------- ------ -------------
Value
Shares (Note 1)
- ---------------------------------------------- ------ -------------
COMMON STOCKS 95.7%
Basic Industries 4.7%
Chemical 2.7%
Ciba-Geigy AG ADR 70,600 $ 4,413,206
Praxair, Inc. 61,700 2,460,288
Union Carbide Corp. 152,100 7,547,962
-----------
14,421,456
-----------
Machine 2.0%
Case Corp. 94,300 4,797,513
UCAR International, Inc.* 162,300 6,309,412
-----------
11,106,925
-----------
Total Basic Industries 25,528,381
-----------
Consumer Cyclical 46.7%
Airline 8.7%
AMR Corp.* 117,100 10,480,450
Continental Airlines, Inc. Cl. B* 167,700 9,454,088
Continental Airlines Financing Trust Pfd.*+ 56,100 3,702,600
Northwest Airlines Corp. Cl. A* 65,300 3,346,625
Southwest Airlines Co. 152,700 4,523,737
Trans World Airlines, Inc. Cv. Pfd.*+ 58,600 3,347,525
Trans World Airlines, Inc.* 587,600 11,752,000
-----------
46,607,025
-----------
Automotive 2.5%
AutoZone, Inc.* 233,300 7,903,038
Danaher Corp. 24,800 917,600
Ford Motor Co. 120,700 4,149,062
Penske Motor Sports Inc.* 12,500 465,625
-----------
13,435,325
-----------
Building 0.1%
Stimsonite Corp.* 80,300 742,775
-----------
Hotel & Restaurant 10.6%
Apple South, Inc. 311,600 7,634,200
Extended Stay America, Inc.* 9,300 206,925
HFS, Inc.* 448,900 21,827,763
Host Marriott Corp. 278,800 3,763,800
Lone Star Steakhouse & Saloon, Inc.* 176,400 6,747,300
Mirage Resorts, Inc.* 109,600 4,808,700
Rainforest Cafe, Inc.* 41,300 1,300,950
Red Roof Inns, Inc.* 64,500 959,437
Trump Hotels & Casino Resorts, Inc.* 205,200 6,002,100
Renaissance Hotel Group NV* 42,600 915,900
Sun International Hotels Ltd.* 87,800 3,160,800
-----------
57,327,875
-----------
Recreation 2.4%
American Radio Systems Corp.* 131,200 $ 4,428,000
Ascent Entertainment Group, Inc.* 76,500 1,147,500
Evergreen Media Corp. Cl. A. 68,900 2,480,400
Oakley, Inc.* 112,800 4,258,200
Silver King Communications, Inc.* 17,000 527,000
-----------
12,841,100
-----------
Retail Trade 16.8%
Ann Taylor Stores Corp.* 266,800 4,802,400
BT Office Products International, Inc.* 250,900 4,233,938
Borders Group, Inc.* 115,300 3,286,050
Corporate Express, Inc.* 255,000 8,415,000
General Nutrition Centers, Inc.* 103,300 2,582,500
Gucci Group NV* 463,800 22,262,400
Industrie Natuzzi SPA ADR 37,200 2,022,750
Just For Feet Inc.* 177,550 7,390,519
Melville Corp. 152,400 5,467,350
Micro Warehouse, Inc.* 59,600 2,473,400
Office Depot, Inc.* 240,200 4,713,925
Spiegel, Inc. Cl. A NV 59,800 612,950
Staples, Inc.* 134,250 2,735,344
Sunglass Hut International, Inc.* 591,700 19,600,062
-----------
90,598,588
-----------
Textile & Apparel 5.6%
Adidas ADR*+ 20,100 731,640
Authentic Fitness Corp. 30,500 789,188
Fila Holdings SPA ADR* 150,700 9,625,962
Men's Wearhouse, Inc.* 264,025 8,316,788
Nautica Enterprises, Inc.* 85,800 4,096,950
Tommy Hilfiger Corp.* 144,300 6,619,762
-----------
30,180,290
-----------
Total Consumer Cyclical 251,732,978
-----------
Consumer Staple 16.2%
Business Service 5.5%
HBO & Co. 110,300 10,395,775
Medaphis Corp.* 189,300 9,181,050
Republic Industries, Inc.* 282,000 8,847,750
U.S. Office Products Co.* 35,000 1,085,000
Xeikon NV ADR* 17,500 339,063
-----------
29,848,638
-----------
Drug 4.5%
Biochem Pharma, Inc.* 209,500 8,589,500
Biogen, Inc.* 67,100 3,992,450
Centocor Corp.* 96,500 3,486,063
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
INVESTMENT PORTFOLIO (cont'd)
- ---------------------------------------------- ------ -------------
Value
Shares (Note 1)
- ---------------------------------------------- ------ -------------
Drug (cont'd)
Cephalon, Inc.* 197,000 $ 5,097,375
Magainin Pharmaceuticals, Inc.* 67,200 705,600
Matrix Pharmaceuticals, Inc.* 37,300 862,562
Myriad Genetics, Inc.* 13,100 350,425
Physio-Control International Corp.* 53,100 1,062,000
-----------
24,145,975
-----------
Food & Beverage 1.2%
Boston Beer Company, Inc. Cl. A* 4,100 82,513
Boston Chicken, Inc.* 67,800 2,309,437
Pete's Brewing Co.* 8,300 155,625
Starbucks Corp.* 167,800 3,911,837
-----------
6,459,412
-----------
Hospital Supply 4.5%
Caremark International, Inc. 72,300 1,816,538
EquiMed, Inc.* 18,500 242,812
Guidant Corp. 9,000 485,307
Healthsouth Corp.* 221,900 7,544,600
HealthCare Compare Corp.* 50,900 2,564,088
MedPartners/Mullikin, Inc.* 216,500 6,170,250
Medtronic, Inc. 37,700 2,247,862
National Surgery Centers, Inc.* 4,500 145,125
Neopath, Inc.* 133,400 3,101,550
-----------
24,318,132
-----------
Printing & Publishing 0.5%
CKS Group, Inc.* 4,100 104,550
Hollinger International Inc.* 130,800 1,569,600
World Color Press, Inc.* 46,400 881,600
-----------
2,555,750
-----------
Total Consumer Staple 87,327,907
-----------
Energy 4.0%
Oil Service 4.0%
Halliburton Co. 221,700 12,609,188
Tidewater, Inc. 243,300 9,245,400
-----------
21,854,588
-----------
Total Energy 21,854,588
-----------
Finance 6.8%
Bank 1.0%
NationsBank Corp. 63,700 5,103,962
-----------
Financial Service 0.0%
First USA Paymentech, Inc.* 6,900 243,225
-----------
Insurance 5.8%
Aetna Life & Casualty Insurance Co. 69,200 $ 5,224,600
Amerin Corp.* 9,300 253,425
W.R. Berkley Corp. 21,900 1,012,875
Cigna Corp. 73,600 8,408,800
Equitable Companies, Inc. 65,600 1,590,800
Highlands Insurance Group, Inc.* 17,680 349,180
IPC Holdings Ltd.* 94,600 1,974,775
Prudential Reinsurance Holdings, Inc. 220,400 5,206,950
Travelers, Inc. 108,800 7,180,800
-----------
31,202,205
-----------
Total Finance 36,549,392
-----------
Science & Technology 14.1%
Aerospace 1.7%
Boeing Co. 108,700 9,416,137
-----------
Computer Software & Service 8.5%
Ascend Communications, Inc.* 158,100 8,517,638
Cascade Communications Corp.* 79,500 7,135,125
CheckFree Corp.* 13,300 232,750
Computer Associates International, Inc. 101,200 7,248,450
Digital Generation Systems, Inc.* 29,800 249,575
Documentum, Inc.* 17,500 616,875
Engineering Animation, Inc.* 2,600 54,275
Geoworks* 150,000 4,500,000
Logic Works, Inc.* 11,600 188,500
Madge Networks NV* 16,000 642,000
Microsoft Corp.* 78,300 8,074,687
Open Text Corp.* 135,300 1,911,113
Parametric Technology Corp.* 69,400 2,715,275
Prism Solutions, Inc.* 5,700 151,050
Raptor Systems, Inc.* 4,000 119,500
Secure Computing Corp.* 3,600 78,300
7th Level, Inc.* 88,700 898,087
Sync Research, Inc.* 18,600 292,950
Triple P NV* 105,800 1,190,250
Westell Technologies, Inc. Cl. A* 22,700 839,900
Workgroup Technology Corp.* 10,800 233,550
-----------
45,889,850
-----------
Electronic Components 3.5%
Altera Corp.* 111,400 6,224,475
Analog Devices, Inc.* 273,100 7,646,800
Sanmina Holdings, Inc.* 158,600 4,718,350
-----------
18,589,625
-----------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- ---------------------------------------------- ------ -------------
Value
Shares (Note 1)
- ---------------------------------------------- ------ -------------
Office Equipment 0.4%
Telxon Corp. 110,600 $ 2,350,250
-----------
Total Science & Technology 76,245,862
-----------
Utility 3.2%
Telephone 3.2%
ADC Telecommunications, Inc.* 55,400 1,911,300
Newbridge Networks Corp.* 197,200 11,092,500
Omnipoint Corp.* 67,900 1,731,450
Total Access Communications Public Co. Ltd.* 270,600 2,381,280
Wireless One, Inc.* 13,200 212,850
-----------
17,329,380
-----------
Total Utility 17,329,380
-----------
Total Common Stocks (Cost $432,134,288) 516,568,488
-----------
------------------------------ ---------- ------- -------------
Principal Maturity
Amount Date
- ------------------------------ ---------- ------- -------------
Commercial Paper 12.3%
American Express Credit Corp.,
5.50% $10,000,000 4/1/1996 10,000,000
American Express Credit Corp.,
5.38% 4,047,000 4/3/1996 4,047,000
Commercial Credit Co., 5.41% 3,471,000 4/9/1996 3,471,000
Deere & Co., 5.35% 7,567,000 4/9/1996 7,567,000
Ford Motor Credit Co., 5.37% 13,814,000 4/2/1996 13,814,000
Ford Motor Credit Co., 5.35% 2,437,000 4/3/1996 2,437,000
General Electric Capital
Corp., 5.39% 10,837,000 4/9/1996 10,837,000
Household Finance Corp., 5.32% 5,190,000 4/3/1996 5,190,000
Norwest Financial Inc., 5.40% 8,800,000 4/3/1996 8,800,000
-----------
Total Commercial Paper (Cost $66,163,000) 66,163,000
-----------
Total Investments (Cost $498,297,288)--108.0% 582,731,488
Cash and Other Assets, Less Liabilities--(8.0)% (43,209,115)
-----------
Net Assets--100.0% $539,522,373
===========
Federal Income Tax Information:
At March 31, 1996, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $498,297,288 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost $92,038,118
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (7,603,918)
-----------
$84,434,200
===========
* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
+ Security restricted in accordance with Rule 144A under the Securities Act
of 1933, which allows for the resale of such securities among certain
qualified institutional buyers. The total cost and market value of Rule
144A securities owned at March 31, 1996 were $6,219,551 and $7,781,765
(1.44% of net assets), respectively.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $498,297,288) (Note 1) $582,731,488
Cash 266
Receivable for fund shares sold 4,944,918
Receivable for securities sold 1,634,493
Dividends and interest receivable 303,460
Other assets 82,420
-----------
589,697,045
Liabilities
Payable for securities purchased 48,951,463
Payable for fund shares redeemed 484,803
Accrued distribution and service fees (Note 4) 350,498
Accrued management fee (Note 2) 319,369
Accrued transfer agent and shareholder services
(Note 2) 14,331
Accrued trustees' fees (Note 2) 8,828
Other accrued expenses 45,380
-----------
50,174,672
-----------
Net Assets $539,522,373
===========
Net Assets consist of:
Unrealized appreciation of investments $ 84,434,200
Accumulated net realized loss (8,937,847)
Shares of beneficial interest (Note 5) 464,026,020
-----------
$539,522,373
===========
Net Asset Value and redemption price per share of
Class A shares ($80,183,815 / 6,341,146 shares
of beneficial interest) $12.65
===========
Maximum Offering Price per share of Class A shares
($12.65 / .955) $13.25
===========
Net Asset Value and offering price per share of
Class B shares ($283,875,092 / 22,972,801 shares
of beneficial interest)* $12.36
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($34,588,779 /
2,704,781 shares of beneficial interest) $12.79
===========
Net Asset Value and offering price per share of
Class D shares ($140,874,687 / 11,381,254 shares
of beneficial interest)* $12.38
===========
* 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 six months ended March 31, 1996 (Unaudited)
Investment Income
Dividends, net of foreign taxes of $3,817 $ 1,173,075
Interest 1,259,600
----------
2,432,675
Expenses
Management fee (Note 2) 1,662,614
Transfer agent and shareholder services (Note 2) 201,248
Custodian fee 83,618
Service fee--Class A (Note 4) 80,104
Distribution and service fees--Class B (Note 4) 1,159,623
Distribution and service fees--Class D (Note 4) 563,017
Reports to shareholders 51,242
Registration fees 36,832
Trustees' fees (Note 2) 15,120
Audit fee 14,152
Legal fees 7,470
Miscellaneous 13,315
----------
3,888,355
----------
Net investment loss (1,455,680)
----------
Realized and Unrealized Gain (Loss) on Investments
Net realized loss on investments (Notes 1 and 3) (8,925,456)
Net unrealized appreciation of investments 21,358,056
----------
Net gain on investments 12,432,600
----------
Net increase in net assets resulting from operations $10,976,920
==========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
STATEMENT OF CHANGES IN NET ASSETS
Six months ended
March 31, 1996 Year ended
(Unaudited) September 30, 1995
- ----------------------------- ------------------ --------------------
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (1,455,680) $ (2,022,509)
Net realized gain (loss) on
investments* (8,925,456) 32,914,544
Net unrealized appreciation
of investments 21,358,056 52,115,081
----------------- ------------------
Net increase resulting from
operations 10,976,920 83,007,116
----------------- ------------------
Distributions from net realized
gains:
Class A (4,170,936) (92,618)
Class B (15,632,188) (320,406)
Class C (3,556,781) (93,107)
Class D (7,349,181) (164,154)
----------------- ------------------
(30,709,086) (670,285)
----------------- ------------------
Net increase from fund share
transactions (Note 5) 157,208,451 164,713,294
----------------- ------------------
Total increase in net assets 137,476,285 247,050,125
Net Assets
Beginning of period 402,046,088 154,995,963
----------------- ------------------
End of period $539,522,373 $402,046,088
================= ==================
* Net realized gain (loss)
for Federal income tax
purposes
(Note 1) $ (8,931,450) $ 32,687,493
================= ==================
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1996
Note 1
State Street Research Capital Fund (the "Fund"), is a series of State Street
Research Capital Trust (the "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 Capital Fund, State Street Research Small
Capitalization Growth Fund and State Street Research Small Capitalization
Value Fund.
The investment objective of the Fund is to seek maximum capital appreciation
by investing primarily in common stocks of emerging growth companies and of
companies considered to be undervalued special situations, as determined by
the Fund's investment manager.
The Fund offers four classes of shares. 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. Investments in Securities
Values for listed securities represent the last sale on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are
at the mean of the closing bid and asked quotations, except for 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 CAPITAL FUND
Notes (cont'd)
B. Federal Income Taxes
No provision for Federal income taxes is necessary since the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is
to distribute all of its taxable income, including net realized capital
gains, within the prescribed time periods.
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. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser
earns monthly fees equal to 1/16 of 1% (3/4 of 1% on an annual basis) of
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 $15,120 during the six
months ended March 31, 1996.
State Street Research Shareholder Services, a division of State Street
Research Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the six months ended March 31, 1996, the amount of
such expenses was $182,139.
Note 3
For the six months ended March 31, 1996, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$740,665,468 and $601,282,968, respectively.
Note 4
The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. 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 six months ended March 31, 1996, fees
pursuant to such plan amounted to $80,104, $1,159,623 and $563,017 for Class
A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $91,889 and $59,062, respectively, on sales of Class A shares of
the Fund during the six months ended March 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $95,436 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $148,785 and $21,867 on redemptions of Class B and Class D shares,
respectively, during the same period.
7
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
March 31, 1996 Year ended
(Unaudited) September 30, 1995
------------------------- ---------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,478,454 $29,625,688 2,826,294 $ 32,048,209
Issued upon reinvestment of distributions from
net realized gains 302,993 3,738,939 8,771 82,615
Shares repurchased (523,849) (6,224,170) (756,484) (8,537,685)
-------- --------- -------- -----------
Net increase 2,257,598 $27,140,457 2,078,581 $ 23,593,139
======== ========= ======== ===========
Class B Shares Amount Shares Amount
- ------------------------------------------------- -------- --------- -------- -----------
Shares sold 7,577,148 $89,072,555 9,420,000 $106,150,791
Issued upon reinvestment of distributions from
net realized gains 1,171,523 14,187,153 31,685 294,989
Shares repurchased (1,080,538) (12,673,301) (1,616,639) (17,716,667)
-------- --------- -------- -----------
Net increase 7,668,133 $90,586,407 7,835,046 $ 88,729,113
======== ========= ======== ===========
Class C Shares Amount Shares Amount
- ------------------------------------------------- -------- --------- -------- -----------
Shares sold 228,292 $ 2,787,278 1,284,385 $ 16,174,374
Issued upon reinvestment of distributions from
net realized gains 267,147 3,331,325 8,899 84,452
Shares repurchased (1,272,918) (15,975,969) (211,276) (2,192,278)
-------- --------- -------- -----------
Net increase (decrease) (777,479) $(9,857,366) 1,082,008 $ 14,066,548
======== ========= ======== ===========
Class D Shares Amount Shares Amount
- ------------------------------------------------- -------- --------- -------- -----------
Shares sold 4,229,423 $49,642,398 4,045,991 $ 46,180,380
Issued upon reinvestment of distributions from
net realized gains 561,501 6,811,002 16,713 155,761
Shares repurchased (604,874) (7,114,447) (710,067) (8,011,647)
-------- --------- -------- -----------
Net increase 4,186,050 $49,338,953 3,352,637 $ 38,324,494
======== ========= ======== ===========
</TABLE>
8
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
February 17, 1993
Year ended (Commencement
Six months ended September 30 of Share Class
March 31, 1996 ----------------- Designations) to
(Unaudited)** 1995** 1994 September 30, 1993
- ------------------------------------ ------------------ ------ ------ --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $13.53 $ 9.92 $10.43 $ 8.03
Net investment loss (.01) (.04) (.04) (.03)
Net realized and unrealized gain on
investments .15 3.69 .28 2.43
Distributions from net realized
gains (1.02) (.04) (.75) --
----------------- ----- ----- ------------------
Net asset value, end of period $12.65 $13.53 $ 9.92 $10.43
================= ===== ===== ==================
Total return 1.15%+++ 36.95%+ 2.51%+ 24.61%+++
Net assets at end of period (000s) $80,184 $55,250 $19,891 $7,251
Ratio of expenses to average
net assets 1.19%++ 1.33% 1.41% 2.43%++
Ratio of net investment loss to
average net assets (0.09)%++ (0.34)% (0.55)% (1.43)%++
Portfolio turnover rate 145.76% 214.59% 167.08% 129.57%
Average commission rate $.0020 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------
March 15, 1993
Year ended (Commencement
Six months ended September 30 of Share Class
March 31, 1996 ----------------- Designations) to
(Unaudited)** 1995** 1994 September 30, 1993
- ------------------------------------ ------------------ ------ ------ --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $13.29 $ 9.82 $10.40 $ 8.68
Net investment loss (.05) (.12) (.08) (.04)
Net realized and unrealized gain on
investments .14 3.63 .25 1.76
Distributions from net realized
gains (1.02) (.04) (.75) --
----------------- ----- ----- ------------------
Net asset value, end of period $12.36 $13.29 $ 9.82 $10.40
================= ===== ===== ==================
Total return 0.76%+++ 35.90%+ 1.79%+ 19.82%+++
Net assets at end of period (000s) $283,875 $203,446 $73,354 $16,044
Ratio of expenses to average
net assets 1.94%++ 2.08% 2.16% 3.16%++
Ratio of net investment loss to
average net assets (0.84)%++ (1.10)% (1.28)% (2.15)%++
Portfolio turnover rate 145.76% 214.59% 167.08% 129.57%
Average commission rate $.0020 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------------
Six months ended Year ended September 30
March 31, 1996 -------------------------------------------------
(Unaudited)** 1995** 1994 1993 1992 1991
- -------------------------- ------------------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.66 $ 9.99 $10.46 $ 7.96 $7.74 $5.03
Net investment income
(loss) .01 (.01) (.03) (.06) (.06) (.08)
Net realized and
unrealized gain on
investments .14 3.72 .31 3.90 .63 2.79
Distributions from net
realized gains (1.02) (.04) (.75) (1.34) (.35) --
----------------- ----- ----- ----- ----- ------
Net asset value, end of
period $12.79 $13.66 $ 9.99 $10.46 $7.96 $7.74
================= ===== ===== ===== ===== ======
Total return 1.22%+++ 37.30%+ 2.91%+ 55.46%+ 7.34%+ 53.88%+
Net assets at end of
period (000s) $34,589 $47,553 $23,967 $18,342 $11,654 $10,939
Ratio of expenses to
average net assets 0.94%++ 1.08% 1.16% 2.11% 1.54% 1.88%
Ratio of net investment
income (loss) to
average net assets 0.15%++ (0.07)% (0.32)% (1.30)% (0.86)% (1.14)%
Portfolio turnover rate 145.76% 214.59% 167.08% 129.57% 124.94% 219.62%
Average commission rate $.0020 -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class D
---------------------------------------------------------------
March 15, 1993
Year ended (Commencement
Six months ended September 30 of Share Class
March 31, 1996 ----------------- Designations) to
(Unaudited)** 1995** 1994 September 30, 1993
- -------------------------- ------------------ ------ ------ --------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $13.31 $ 9.83 $10.39 $ 8.68
Net investment income
(loss) (.05) (.12) (.09) (.04)
Net realized and
unrealized gain on
investments .14 3.64 .28 1.75
Distributions from net
realized gains (1.02) (.04) (.75) --
----------------- ----- ----- ------------------
Net asset value, end of
period $12.38 $13.31 $ 9.83 $10.39
================= ===== ===== ==================
Total return 0.69%+++ 36.07%+ 2.00%+ 19.70%+++
Net assets at end of
period (000s) $140,875 $95,797 $37,783 $5,011
Ratio of expenses to
average net assets 1.94%++ 2.08% 2.16% 3.16%++
Ratio of net investment
income (loss) to
average net assets (0.84)%++ (1.09)% (1.28)% (2.16)%++
Portfolio turnover rate 145.76% 214.59% 167.08% 129.57%
Average commission rate $ .0020 -- -- --
</TABLE>
++ Annualized
** Per-share figures have been calculated using the average shares method.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
+++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
9
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH CAPITAL
TRUST
Fund Information
State Street Research
Capital Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Charles S. Glovsky
Vice President
Rudolph K. Kluiber
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
10
<PAGE>
[back cover]
State Street Research Capital Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was
not industry-wide.
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
CONTROL NUMBER: 3154-960524(0697)SSR-LD Cover Illustration by Dorothy
Cullinan CF-593D-596
<PAGE>
[front cover]
[State Street Research logo]
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
SEMIANNUAL REPORT
March 31, 1996
[graphic of man climbing blocks]
WHAT'S INSIDE
Investment Update:
About the Fund,
economy and markets
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
[Dalbar logo]
For Excellence
in
Shareholder Service
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
INVESTMENT UPDATE
INVESTMENT ENVIRONMENT
The Economy
(bullet) After slowing in late 1995, the economy picked up speed in the early
months of 1996. Inflation has remained low, however.
(bullet) Consumer confidence and spending inched upward, despite higher debt
levels.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996. Because of the stronger
economy, the Fed left rates untouched at its March meeting.
The Markets
(bullet) Stocks performed well, with gains concentrated in the largest
stocks. The Dow Jones Industrial Average, which represents 30
stocks, notched a gain of +18.04% for the six months ended March 31,
1996. The much broader Standard & Poor's 500 Index provided a total
return of +11.70% over the same time period.(1)
(bullet) Bond performance was mixed. The Lehman Brothers Government/
Corporate Bond Index provided a total return of +2.21% for the six
months ended March 31, 1996.(1) Yields on 30-year U.S. Treasury bonds
climbed to 6.67% by the end of March.
The Fund
Over the past six months
(bullet) For the six months ended March 31, 1996, Small Capitalization Growth
Fund's Class A shares provided a total return of +1.44% (does not
reflect sales charge.)(2) The average total return for 355 funds in
Lipper Analytical Services' Small Company Growth Funds category was
+7.93% (does not reflect sales charge).
(bullet) As a group, small-capitalization stocks did not perform as well as
larger stocks. Small Capitalization Growth Fund's performance was
hurt by a sharp sell-off in technology stocks, especially in
semiconductor and computer software, in the fourth quarter of 1995.
Performance recovered in the first three months of 1996.
Current strategy
(bullet) We recently added to energy and technology stocks.
(bullet) We reduced our position in health-care and selected consumer stocks.
(bullet) The current outlook for moderate economic growth and low inflation
should be favorable for small-capitalization stocks.
(1)The Standard & Poor's Composite Index (S&P 500) includes 500 widely traded
common stocks and is a commonly used measure of U.S. stock performance. The
Lehman Brothers Government/ Corporate Bond Index is a commonly used measure
of bond market performance. The indices are unmanaged and do not take sales
charges into account. Direct investment in the indices is not possible;
results are for illustrative purposes only.
(2)+0.94% for Class B shares; +1.43% for Class C shares; +0.94% for Class D
shares.
(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance for a class includes periods
prior to the adoption of class designations in 1994. Performance prior to
class designations in 1994 does not reflect annual 12b-1 fees of .25% for "A"
shares and 1% for "B" and "D" shares, which will reduce subsequent
performance. Performance results for the Fund are increased by the
Distributor's voluntary reduction of Fund fees and expenses. The first figure
reflects expense reduction; the second shows results without subsidization.
(4)Performance reflects maximum "A" share front-end, or 5% "B" share or 1%
"D" share contingent deferred, sales charges. "C" shares, offered without a
sales charge, are available only to certain employee benefit plans and
institutions.
(5)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Please note that the discussion throughout this shareholder report is dated
as indicated and because of possible changes in viewpoint, data, and
transactions, should not be relied upon as being current thereafter.
FUND INFORMATION (all data for periods ended March 31, 1996)
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3,4)
Life of Fund
(since 10/4/93) 1 Year
- -------- --------------- ----------------
Class A -0.69%/-1.24% +14.07%/+13.32%
- -------- ------------- ---------------
Class B -0.70%/-1.28% +13.50%/+12.72%
- -------- ------------- ---------------
Class C +1.50%/+0.90% +19.83%/+19.05%
- -------- ------------- ---------------
Class D +0.50%/-0.06% +17.50%/+16.72%
Cumulative Total Returns
(do not reflect sales charge)(3,5)
Life of Fund
(since 10/4/93) 1 Year
- -------- --------------- ----------------
Class A +2.93%/+1.50% +19.44%/+18.66%
- -------- ------------- ---------------
Class B +1.26%/-0.16% +18.50%/+17.72%
- -------- ------------- ---------------
Class C +3.77%/+2.26% +19.83%/+19.05%
- -------- ------------- ---------------
Class D +1.26%/-0.16% +18.50%/+17.72%
Top 10 Holdings
(by percentage of net assets)
1 Global DirectMail Business service company 4.2%
2 Hyperion Software Financial software company 2.3%
3 Lincare Holdings Hospital supply company 2.1%
4 NAC Re Reinsurance company 2.0%
5 Itron Electronic equipment maker 2.0%
6 Wonderware Computer software company 1.9%
7 Nuevo Energy Oil and gas exploration firm 1.7%
8 Teltrend Computer software company 1.6%
9 Intersolv Computer software company 1.6%
10 Ranger Oil Oil exploration firm 1.5%
These securities represent an aggregate of 20.9% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Top 5 Industries
(by percentage of net assets)
[typeset representation of bar chart]
Computer software 16.7%
Business service 15.5%
Hospital supply 10.1%
Oil 8.5%
Insurance 6.0%
Total: 56.8%
[end bar chart]
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
INVESTMENT PORTFOLIO
March 31, 1996 (Unaudited)
- ------------------------------------------ ------ ------------
Value
Shares (Note 1)
- ------------------------------------------ ------ ------------
COMMON STOCKS 94.6%
Basic Industries 5.2%
Chemical 1.0%
Cambrex Corp. 11,600 $ 535,050
----------
Electrical Equipment 1.9%
Baldor Electric Co. 28,000 563,500
Belden, Inc.* 17,600 519,200
----------
1,082,700
----------
Machinery 1.0%
United States Filter Corp.* 19,500 546,000
----------
Metal & Mining 1.3%
Century Aluminum Co.* 19,900 271,138
Wyman-Gordon Co.* 27,900 470,813
----------
741,951
----------
Total Basic Industries 2,905,701
----------
Consumer Cyclical 14.5%
Airline 1.4%
Atlas Air, Inc.* 20,700 776,250
----------
Automotive 2.1%
Lear Seating Corp.* 24,900 812,363
Masland Corp.* 20,300 355,250
----------
1,167,613
----------
Hotel & Restaurant 3.7%
Au Bon Pain Company, Inc.* 36,500 310,250
Main Street and Main, Inc.* 48,200 144,600
Outback Steakhouse, Inc.* 16,750 631,266
Primadonna Resorts, Inc.* 21,000 320,250
Station Casinos, Inc.* 53,200 618,450
----------
2,024,816
----------
Recreation 3.5%
American Radio Systems Corp.* 7,000 236,250
Argyle Television, Inc.* 20,300 441,525
Evergreen Media Corp. 8,400 302,400
Sierra On-Line, Inc.* 15,700 527,913
Silverking Communications, Inc.* 14,400 446,400
----------
1,954,488
----------
Retail Trade 2.6%
Corporate Express, Inc.* 7,200 237,600
Gymboree Corp.* 19,700 514,663
Viking Office Products, Inc.* 12,100 673,062
----------
1,425,325
----------
Textile & Apparel 1.2%
Authentic Fitness Corp. 26,600 $ 688,275
----------
Total Consumer Cyclical 8,036,767
----------
Consumer Staple 31.2%
Business Service 15.5%
Advo, Inc. 47,000 458,250
Career Horizons, Inc.* 13,600 404,600
Catalina Marketing Corp.* 7,600 593,750
Data Processing Resources Corp.* 2,300 63,250
Eagle River Interactive, Inc.* 10,500 136,500
Eltron International, Inc.* 18,500 610,500
Encad, Inc.* 11,900 282,625
Global DirectMail Corp.* 66,400 2,315,700
HA-LO Industries, Inc. 26,900 743,112
NRP, Inc.* 17,300 145,968
Personnel Group of America, Inc.* 41,700 761,025
Premenos Technologies, Corp.* 43,900 790,200
Profit Recovery Group International, Inc.* 8,400 130,200
Scientific Games Holdings Corp.* 11,900 333,200
Superior Services, Inc.* 5,900 78,175
Technology Solutions Co.* 16,700 452,987
VTEL Corp.* 25,300 265,650
----------
8,565,692
----------
Drug 3.4%
Arris Pharmaceutical Corp.* 62,100 787,894
CytoTherapeutics, Inc.* 37,000 536,500
Healthdyne Technologies, Inc.* 44,300 550,981
----------
1,875,375
----------
Hospital Supply 10.1%
American Medical Response, Inc.* 15,900 564,450
Circon Corp.* 20,200 295,425
Community Care of America, Inc. 39,400 403,850
Community Health Systems, Inc.* 13,300 545,300
Cytyc Corp.* 6,900 115,575
I Stat Corp.* 15,200 387,600
Integra Lifesciences Corp.* 15,600 183,300
Lincare Holdings, Inc.* 36,200 1,176,500
Orthologic Corp.* 14,400 365,400
Physician Support System, Inc.* 20,700 354,487
Respironics, Inc.* 14,500 304,500
Rotech Medical Corp.* 16,400 606,800
Ultra-Fem, Inc.* 23,700 308,100
----------
5,611,287
----------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
INVESTMENT PORTFOLIO (cont'd)
- ------------------------------------------ ------ ------------
Value
Shares (Note 1)
- ------------------------------------------ ------ ------------
Personal Care 0.9%
U.S.A. Detergents, Inc.* 15,300 $ 497,250
----------
Printing & Publishing 0.5%
Heritage Media Corp.* 8,000 287,000
----------
Tobacco 0.8%
Schweitzer Mauduit International, Inc.* 16,100 442,750
----------
Total Consumer Staple 17,279,354
----------
Energy 9.6%
Oil 8.5%
Abacan Resource Corp.* 166,000 705,500
Tom Brown, Inc.* 24,700 348,888
Global Natural Resources, Inc.* 31,000 410,750
Nuevo Energy Co.* 32,500 934,375
Phoenix Resource Cos., Inc. 18,800 448,850
Plains Resources, Inc.* 34,700 314,469
Ranger Oil Ltd. 119,100 833,700
Swift Energy Co.* 52,500 689,063
----------
4,685,595
----------
Oil Service 1.1%
Atwood Oceanics, Inc. 7,900 284,400
Landmark Graphics Corp.* 19,700 327,512
----------
611,912
----------
Total Energy 5,297,507
----------
Finance 8.4%
Financial Service 2.4%
Alex Brown, Inc. 11,200 581,000
First USA Paymentech, Inc.* 700 24,675
Piper Jaffray Cos., Inc. 19,300 265,375
RAC Financial Group, Inc.* 7,800 175,500
Raymond James Financial, Inc.* 11,800 265,500
----------
1,312,050
----------
Insurance 6.0%
American Travellers Corp.* 9,700 287,362
Delphi Financial Group, Inc.* 11,200 271,600
IPC Holdings Ltd.* 10,700 223,363
Mutual Risk Management Ltd. 15,000 620,625
NAC Re Corp. 34,400 1,122,300
National Re Corp. 20,700 698,625
Penn Treaty American Corp.* 7,100 134,900
----------
3,358,775
----------
Total Finance 4,670,825
----------
Science & Technology 22.0%
Computer Software & Service 16.7%
Boca Research, Inc.* 24,700 $ 450,775
Cerner Corp.* 32,300 750,975
Comshare, Inc.* 23,200 533,600
Datastream Systems, Inc.* 28,200 613,350
Desktop Data, Inc.* 16,700 613,725
Discreet Logic, Inc.* 18,300 251,625
Enterprise Systems, Inc.* 10,200 281,775
Hyperion Software Corp.* 58,000 1,261,500
Inso Corp.* 3,000 138,375
Intersolv, Inc.* 74,800 869,550
OnTechnologies Corp.* 49,900 548,900
Pixar* 4,300 95,675
Spyglass, Inc.* 6,400 138,400
Sync Research, Inc.* 8,000 126,000
Teltrend, Inc.* 19,200 873,600
Videoserver, Inc.* 26,700 674,175
Wonderware Corp.* 45,000 1,057,500
----------
9,279,500
----------
Electronic Components 1.1%
Mosaid Technologies, Inc.* 13,800 258,086
US Order, Inc.* 16,000 328,000
----------
586,086
----------
Electronic Equipment 2.3%
Berg Electronics Corp.* 7,600 178,600
Itron, Inc.* 24,900 1,114,275
----------
1,292,875
----------
Office Equipment 1.9%
FileNet Corp.* 14,000 808,500
HMT Technology Corp.* 22,200 231,712
----------
1,040,212
----------
Total Science & Technology 12,198,673
----------
Utility 3.7%
Telephone 3.7%
Allen Group, Inc. 27,600 534,750
Colonial Data Technologies, Inc.* 27,800 615,075
Geotek Communications, Inc.* 27,800 284,950
Rural Cellular Corp.* 8,800 101,200
Tel-Save Holdings, Inc.* 31,500 531,562
----------
2,067,537
----------
Total Utility 2,067,537
----------
Total Common Stocks (Cost $46,014,247) 52,456,364
----------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
Principal Maturity Value
Amount Date (Note 1)
- ---------------------------- ------- ------- -----------
Commercial Paper 2.0%
American Express Credit
Corp., 5.50% $191,000 4/1/1996 $ 191,000
Ford Motor Credit Co., 5.77% 116,000 4/1/1996 116,000
General Electric Capital
Corp., 5.38% 775,000 4/8/1996 775,000
---------
Total Commercial Paper (Cost $1,082,000) 1,082,000
---------
Total Investments (Cost $47,096,247)--96.6% 53,538,364
Cash and Other Assets, Less Liabilities--3.4% 1,880,761
---------
Net Assets--100.0% $55,419,125
=========
Federal Income Tax Information:
At March 31, 1996, the net unrealized appreciation
of investments based on cost for Federal income
tax purposes of $47,096,247 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $ 8,762,476
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over value (2,320,359)
---------
$ 6,442,117
=========
* Nonincome-producing securities
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $47,096,247) (Note 1) $53,538,364
Cash 42,472
Receivable for securities sold 3,092,210
Receivable for fund shares sold 52,087
Receivable from Distributor (Note 3) 18,963
Dividends and interest receivable 15,413
Deferred organization costs and other assets (Note 1) 35,949
----------
56,795,458
Liabilities
Payable for securities purchased 1,097,924
Accrued transfer agent and shareholder services (Note 2) 75,217
Payable for fund shares redeemed 60,041
Accrued management fee (Note 2) 34,782
Accrued distribution and service fees (Note 5) 26,264
Accrued trustees' fees (Note 2) 14,194
Other accrued expenses 67,911
----------
1,376,333
----------
Net Assets $55,419,125
==========
Net Assets consist of:
Unrealized appreciation of investments $ 6,442,117
Accumulated net realized loss (1,024,747)
Shares of beneficial interest (Note 6) 50,001,755
----------
$55,419,125
==========
Net Asset Value and redemption price per share of Class A
shares ($18,172,718 / 1,848,694 shares of beneficial
interest) $9.83
==========
Maximum Offering Price per share of Class A shares
($9.83 / .955) $10.29
==========
Net Asset Value and offering price per share of Class B
shares ($22,007,445 / 2,275,417 shares of beneficial
interest)* $9.67
==========
Net Asset Value, offering price and redemption price per
share of Class C shares ($10,516,745 / 1,060,711 shares
of beneficial interest) $9.91
==========
Net Asset Value and offering price per share of Class D
shares ($4,722,217 / 488,237 shares of beneficial
interest)* $9.67
==========
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
STATEMENT OF OPERATIONS
For the six months ended March 31, 1996 (Unaudited)
Investment Income
Interest $ 72,877
Dividends, net of foreign taxes of $1,429 36,949
----------
109,826
Expenses
Management fee (Note 2) 224,388
Transfer agent and shareholder services (Note 2) 111,751
Custodian fee 64,450
Reports to shareholders 33,944
Service fee--Class A (Note 5) 23,909
Distribution and service fees--Class B (Note 5) 117,358
Distribution and service fees--Class D (Note 5) 28,643
Audit fee 9,788
Trustees' fees (Note 2) 7,627
Registration fees 7,309
Amortization of organization costs (Note 1) 3,265
Miscellaneous 2,951
----------
635,383
Expenses borne by the Distributor (Note 3) (136,370)
----------
499,013
----------
Net investment loss (389,187)
----------
Realized and Unrealized Gain
(Loss) on Investments
Net realized gain on investments (Notes 1 and 4) 5,135,126
Net unrealized depreciation of investments (4,535,932)
----------
Net gain on investments 599,194
----------
Net increase in net assets resulting from operations $ 210,007
==========
STATEMENT OF CHANGES IN NET ASSETS
Six months ended
March 31, 1996 Year ended
(Unaudited) September 30, 1995
- ----------------------------- ----------------- ------------------
Increase (Decrease) in Net Assets
Operations:
Net investment loss $ (389,187) $ (872,119)
Net realized gain (loss) on
investments* 5,135,126 (3,364,808)
Net unrealized appreciation
(depreciation) of
investments (4,535,932) 11,482,443
--------------- -----------------
Net increase resulting from
operations 210,007 7,245,516
--------------- -----------------
Net decrease from fund share
transactions (Note 6) (12,530,625) (7,844,245)
--------------- -----------------
Total decrease in net assets (12,320,618) (598,729)
Net Assets
Beginning of period 67,739,743 68,338,472
--------------- -----------------
End of period $ 55,419,125 $67,739,743
=============== =================
* Net realized gain (loss)
for Federal income tax
purposes (Note 1) $ 1,668,915 $(2,682,827)
=============== =================
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1996
Note 1
State Street Research Small Capitalization Growth Fund (the "Fund"), is a
series of State Street Research Capital Trust (the "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 Growth
Fund, State Street Research Capital Fund and State Street Research Small
Capitalization Value Fund.
The investment objective of the Fund is to provide growth of capital. In
seeking to achieve its investment objective, the Fund invests primarily in
the equity securities of emerging growth and small capitalization companies.
The Fund offers four classes of shares. 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. Investments in Securities
Values for listed securities represent the last sale on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are
at the mean of the closing bid and asked quotations, except for 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.
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. At September 30, 1995, the Fund
had a capital loss carryforward of $2,693,662 available, to the extent
provided in regulations, to offset future capital gains, if any, of which
$10,835 and $2,682,827 expire on September 30, 2002 and 2003, respectively.
In order to meet certain excise tax distribution requirements under Section
4982 of the Internal Revenue Code, the Fund is required to measure and
distribute annually, if necessary, net capital gains realized during a
twelve-month period ending October 31. In this connection, the Fund is
permitted to defer into its next fiscal year any net capital losses incurred
between each November 1 and the end of its fiscal year. From November 1, 1994
through September 30, 1995, the Fund incurred net capital losses of
approximately $3,463,000 and intends to defer and treat such losses as
arising in the fiscal year ending September 30, 1996.
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.
E. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser
earns monthly fees equal to 1/16 of 1% (3/4 of 1% on an annual basis) of
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 $7,627 during the six
months ended March 31, 1996.
6
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
NOTES (cont'd)
State Street Research Shareholder Services, a division of State Street
Research Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. In addition, Metropolitan receives a fee for maintenance
of the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through
or under which shares of the Fund may be purchased. During the six months
ended March 31, 1996, the amount of such shareholder servicing and account
maintenance expenses was $30,107.
Note 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended March 31, 1996, the amount of such expenses
assumed by the Distributor and its affiliates was $136,370.
Note 4
For the six months ended March 31, 1996, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$47,173,694 and $59,938,721, 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 six months ended March 31, 1996, fees
pursuant to such plan amounted to $23,909, $117,358 and $28,643 for Class A,
Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $1,008 and $4,141, respectively, on sales of Class A shares of
the Fund during the six months ended March 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $2,913 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
aggregating $73,458 and $386 on redemptions of Class B and Class D shares,
respectively during the same period.
7
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At March 31, 1996, the
Distributor owned one Class C share of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
March 31, 1996 Year ended
(Unaudited) September 30, 1995
----------------------- ---------------------------
Class A Shares Amount Shares Amount
- ------------------------ -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 85,998 $ 793,075 585,876 $ 4,916,956
Shares redeemed (453,366) (4,246,426) (937,567) (7,864,550)
------ --------- -------- -----------
Net decrease (367,368) $(3,453,351) (351,691) $(2,947,594)
====== ========= ======== ===========
Class B Shares Amount Shares Amount
- ------------------------ ------ --------- -------- -----------
Shares sold 38,778 $ 353,973 477,595 $ 3,977,732
Shares redeemed (529,766) (4,846,536) (1,148,744) (9,420,297)
------ --------- -------- -----------
Net decrease (490,988) $(4,492,563) (671,149) $(5,442,565)
====== ========= ======== ===========
Class C Shares Amount Shares Amount
- ------------------------ ------ --------- -------- -----------
Shares sold 186,201 $ 1,756,517 836,117 $ 7,366,455
Shares redeemed (392,925) (3,742,412) (386,614) (3,415,989)
------ --------- -------- -----------
Net increase (decrease) (206,724) $(1,985,895) 449,503 $ 3,950,466
====== ========= ======== ===========
Class D Shares Amount Shares Amount
- ------------------------ ------ --------- -------- -----------
Shares sold 7,629 $ 71,070 85,008 $ 686,924
Shares redeemed (291,078) (2,669,886) (490,937) (4,091,476)
------ --------- -------- -----------
Net decrease (283,449) $(2,598,816) (405,929) $(3,404,552)
====== ========= ======== ===========
</TABLE>
8
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------
Six months ended Year ended
March 31, 1996 September 30,
(Unaudited)**** 1995**** 1994**
-------------------------------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.69 $8.56 $9.45
Net investment loss* (.05) (.08) (.02)
Net realized and unrealized gain (loss) on
investments .19 1.21 (.87)
--------------- --------------- -----------------
Net asset value, end of period $9.83 $9.69 $8.56
=============== =============== =================
Total return 1.44%+++ 13.20%+ (9.42)%+++
Net assets at end of period (000s) $18,173 $21,480 $21,986
Ratio of operating expenses to average
net assets* 1.35%++ 1.35% 1.35%++
Ratio of net investment loss to average
net assets* (0.98)%++ (0.93)% (0.58)%++
Portfolio turnover rate 81.53% 178.60% 83.61%
Average commission rate $.0031 -- --
*Reflects voluntary assumption of fees or
expenses per share in each period (Note 3). $.02 $.06 $.02
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------
Six months ended Year ended
March 31, 1996 September 30,
(Unaudited)**** 1995**** 1994**
-------------------------------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.52 $9.45
Net investment loss* (.08) (.14) (.06)
Net realized and unrealized gain (loss) on
investments .17 1.20 (.87)
--------------- --------------- -----------------
Net asset value, end of period $9.67 $9.58 $8.52
=============== =============== =================
Total return 0.94%+++ 12.44%+ (9.84)%+++
Net assets at end of period (000s) $22,007 $26,489 $29,287
Ratio of operating expenses to average
net assets* 2.10%++ 2.10% 2.10%++
Ratio of net investment loss to average
net assets* (1.73)%++ (1.67)% (1.32)%++
Portfolio turnover rate 81.53% 178.60% 83.61%
Average commission rate $.0031 -- --
*Reflects voluntary assumption of fees or
expenses per share in each period (Note 3). $.02 $.06 $.02
</TABLE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------
Six months ended Year ended
March 31, 1996 September 30,
(Unaudited)**** 1995**** 1994***
-------------------------------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.77 $8.60 $9.55
Net investment loss* (.04) (.06) (.06)
Net realized and unrealized gain (loss) on
investments .18 1.23 (.89)
--------------- --------------- -----------------
Net asset value, end of period $9.91 $9.77 $8.60
=============== =============== =================
Total return 1.43%+++ 13.60%+ (9.95)%+++
Net assets at end of period (000s) $10,517 $12,380 $7,033
Ratio of operating expenses to average
net assets* 1.10%++ 1.10% 1.10%++
Ratio of net investment loss to average
net assets* (0.74)%++ (0.71)% (0.68)%++
Portfolio turnover rate 81.53% 178.60% 83.61%
Average commission rate $.0031 -- --
*Reflects voluntary assumption of fees or
expenses per share in each period (Note 3). $.02 $.06 $.04
</TABLE>
<TABLE>
<CAPTION>
Class D
-----------------------------------------------------------
Six months ended Year ended
March 31, 1996 September 30,
(Unaudited)**** 1995**** 1994**
-------------------------------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.52 $9.45
Net investment loss* (.08) (.14) (.06)
Net realized and unrealized gain (loss) on
investments .17 1.20 (.87)
--------------- --------------- -----------------
Net asset value, end of period $9.67 $9.58 $8.52
=============== =============== =================
Total return 0.94%+++ 12.44%+ (9.84)%+++
Net assets at end of period (000s) $4,722 $7,391 $10,032
Ratio of operating expenses to average
net assets* 2.10%++ 2.10% 2.10%++
Ratio of net investment loss to average
net assets* (1.72)%++ (1.67)% (1.32)%++
Portfolio turnover rate 81.53% 178.60% 83.61%
Average commission rate $.0031 -- --
*Reflects voluntary assumption of fees or
expenses per share in each period (Note 3). $.02 $.06 $.02
</TABLE>
++ Annualized
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++ Represents aggregate return for the period without annualization and
does not reflect any front-end or contingent deferred sales charges.
Total return would be lower if the Distributor and its affiliates had
not voluntarily assumed a portion of the Fund's expenses.
** February 1, 1994 (commencement of share class designations) to September
30, 1994.
*** October 4, 1993 (commencement of operations) to September 30, 1994.
**** Per-share figures have been calculated using the average shares method.
9
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION GROWTH FUND
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH CAPITAL
TRUST
Fund Information
State Street Research
Small Capitalization
Growth Fund
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Charles S. Glovsky
Vice President
Rudolph K. Kluiber
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
10
<PAGE>
[back cover]
State Street Research
Small Capitalization Growth Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was
not industry-wide.
CONTROL NUMBER: 3155-960524(0697)SSR-LD Cover Illustration by Dorothy
Cullinan SCG-006E-596
<PAGE>
[front cover]
[State Street Research logo]
STATE STREET RESEARCH
SMALL CAPITALIZATION VALUE FUND
SEMIANNUAL REPORT
March 31, 1996
[graphic of man climbing blocks]
WHAT'S INSIDE
Investment Update:
About the Fund,
economy and markets
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
[Dalbar logo]
For Excellence
in
Shareholder Service
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
INVESTMENT UPDATE
INVESTMENT ENVIRONMENT
The Economy
(bullet) After slowing in late 1995, economic growth picked up speed in the
early months of 1996. Inflation has remained low, however.
(bullet) Consumer confidence and spending inched upward, despite higher debt
levels.
(bullet) The Federal Reserve cut interest rates by one-quarter point in
December 1995 and again in January 1996. Because of the stronger
economy, the Fed left rates untouched at its March meeting.
The Markets
(bullet) Stocks performed well, with gains concentrated in the largest
stocks. The Dow Jones Industrial Average, which represents 30
stocks, notched a gain of +18.04% for the six months ended March 31,
1996. The much broader Standard & Poor's 500 Index provided a total
return of +11.70% over the same time period.(1)
(bullet) Bond performance was mixed. The Lehman Brothers Government/Corporate
Bond Index provided a total return of +2.21% for the six months
ended March 31, 1996.(1) Yields on 30-year U.S. Treasury bonds
climbed to 6.67% by the end of March.
The Fund
Over the past six months
(bullet) For the six months ended March 31, 1996, Small Capitalization Value
Fund's Class A shares provided a total return of +16.97% (does not
reflect sales charge).(2) The average total return for 355 funds in
Lipper Analytical Services' Small Company Growth Funds category was
+7.93% (does not reflect sales charge).
(bullet) Small Capitalization Value Fund's performance was driven by sizable
gains in the airline, oil service, and business service areas. The
Fund also eluded the sharp sell-off in technology stocks, which
impacted many other small-cap funds.
Current strategy
(bullet) Our general approach is to find small companies at attractive prices
that offer potential for stock price appreciation.
(bullet) We continue to pay careful attention to stocks' prices relative to
earnings and cash flow. Given the rise in the stock market, we're
working harder than ever to find inexpensive, undervalued
businesses.
(bullet) We continue to invest in special situation stocks, such as
turnarounds or restructurings.
(1)The Standard & Poor's Composite Index (S&P 500) includes 500 widely traded
common stocks and is a commonly used measure of U.S. stock performance. The
Lehman Brothers Government/Corporate Bond Index is a commonly used measure of
bond market performance. The indices are unmanaged and do not take sales
charges into account. Direct investment in the indices is not possible;
results are for illustrative purposes only.
(2)+16.52% for Class B shares; +17.11% for Class C shares; +16.52% for Class
D shares.
(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance results for the Fund are
increased by the Distributor's voluntary reduction of Fund fees and expenses.
The first figure reflects expense reduction; the second shows results without
subsidization.
(4)Performance reflects maximum "A" share front-end, or 5% "B" share or 1%
"D" share contingent deferred, sales charges. "C" shares, offered without a
sales charge, are available only to certain employee benefit plans and
institutions.
(5)Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
Please note that the discussion throughout this shareholder report is dated
as indicated and because of possible changes in viewpoint, data, and
transactions, should not be relied upon as being current thereafter.
FUND INFORMATION (all data are for periods ended March 31, 1996)
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3,4)
Life of Fund
(since 2/13/95) 1 year
- -------- ----------------- ------------------
Class A +26.26%/+23.47% +27.12%/+24.36%
- -------- --------------- -----------------
Class B +27.11%/+24.21% +27.14%/+24.26%
- -------- --------------- -----------------
Class C +31.85%/+28.94% +33.51%/+30.61%
- -------- --------------- -----------------
Class D +29.68%/+26.79% +31.14%/+28.26%
Cumulative Total Returns
(do not reflect sales charge)(3,5)
Life of Fund
(since 2/13/95) 1 year
- -------- ----------------- -----------------
Class A +36.32%/+32.92% +33.11%/+30.22%
- -------- --------------- ---------------
Class B +35.19%/+31.81% +32.14%/+29.26%
- -------- --------------- ---------------
Class C +36.73%/+33.33% +33.51%/+30.61%
- -------- --------------- ---------------
Class D +35.19%/+31.81% +32.14%/+29.26%
======== =============== ===============
Top 10 Holdings
(by percentage of net assets)
1 Protection One Residential alarm company 3.2%
2 Carbide/Graphite Group Graphite electrode company 3.2%
3 Sunshine Mining/Refining Silver mining company 2.7%
4 Nortek Building supply company 2.3%
5 Masland Automotive supplier 2.3%
6 Lewis Galoob Toys Toy company 2.2%
7 Webco Industries Steel tubing company 2.2%
8 Noel Group Diversified company 2.0%
9 Staffing Resources Temporary personnel provider 1.9%
10 Easco Aluminum parts manufacturer 1.8%
These securities represent an aggregate of 23.8% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Top 5 Industries
(by percentage of net assets)
[typeset representation of bar chart]
Metal and mining 18.3%
Business service 7.6%
Building 7.3%
Automotive 7.1%
Recreation 6.8%
Total: 47.1%
[end bar chart]
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
INVESTMENT PORTFOLIO
March 31, 1996 (Unaudited)
-------------------------------------------- ----- -----------
Value
Shares (Note 1)
- -------------------------------------------- ----- -----------
COMMON STOCKS 95.0%
Basic Industries 33.7%
Chemical 3.6%
Applied Extrusion Technologies, Inc.* 3,000 $ 32,625
Cambrex Corp. 800 36,900
Carlisle Plastics, Inc. Cl. A* 15,000 61,875
McWhorter Technologies, Inc.* 2,000 34,750
Mississippi Chemical Corp.* 2,000 40,500
Triple S Plastics, Inc.* 3,000 21,750
Uniroyal Chemical Corp.* 4,000 38,500
---------
266,900
---------
Diversified 4.8%
Alltrista Corp.* 1,000 23,875
Commercial Intertech Corp. 3,000 56,625
DeSoto, Inc.* 12,000 64,500
Noel Group, Inc.* 20,000 145,000
Triton Group Ltd.* 5,600 2,450
Zero Corp.* 3,300 55,275
---------
347,725
---------
Forest Product 1.8%
Gaylord Container Corp. Wts.* 15,000 131,250
---------
Machinery 4.8%
Arden Industrial Products, Inc.* 8,000 32,000
Hardinge, Inc. 2,000 52,000
Inter-City Products Corp.* 20,000 32,500
Memtec Ltd. ADR* 3,500 94,062
Specialty Equipment Companies, Inc.* 1,000 14,625
Thermoquest Corp.* 1,000 17,000
Thermo Sentron, Inc.* 7,000 112,000
---------
354,187
---------
Metal & Mining 18.3%
Algoma Steel, Inc.* 3,000 11,551
Bayou Steel Corp. Cl. A* 3,000 12,375
Carbide/Graphite Group, Inc.* 13,000 234,000
Castech Aluminum Group, Inc.* 8,000 115,000
Chase Brass Industries, Inc.* 7,000 94,500
Citation Corp.* 2,500 31,563
Easco, Inc.* 14,000 131,250
Encore Wire Corp.* 1,000 9,000
Interlake, Inc.* 48,000 90,000
Maxxam, Inc.* 3,000 48,875
N.N. Ball and Roller, Inc.* 3,000 66,375
Sinter Metals, Inc. Cl. A* 6,000 85,500
Sunshine Mining & Refining Co. Pfd.* 19,900 199,000
Webco Industries, Inc.* 22,000 159,500
Wyman Gordon Co.* 3,000 50,625
---------
1,339,114
---------
Railroad 0.4%
Westinghouse Air Brake Co.* 3,000 $ 32,250
---------
Total Basic Industries 2,471,426
---------
Consumer Cyclical 32.4%
Airline 3.1%
America West Airline, Inc.* 5,500 117,562
Midwest Express Holdings, Inc.* 1,500 56,250
Vanguard Airlines, Inc.* 6,000 55,500
---------
229,312
---------
Automotive 7.1%
Borg Warner Automotive, Inc. 500 16,625
Exide Corp. 1,200 28,050
Federal-Mogul Corp. 6,000 111,750
Masland Corp.* 9,500 166,250
Penske Motorsports, Inc.* 200 7,450
Tower Automotive, Inc.* 3,000 48,375
Transpro, Inc. 8,500 69,063
Wescast Industries, Inc. Cl. A* 6,000 72,000
---------
519,563
---------
Building 7.3%
Belmont Homes, Inc.* 3,000 54,000
Cameron Ashley, Inc.* 8,500 74,375
Centex Construction Products, Inc. 6,500 88,562
Falcon Building Products, Inc.* 5,000 46,875
Miles Homes, Inc.* 20,000 40,000
Nortek, Inc.* 14,000 169,750
Simpson Manufacturing, Inc.* 4,000 63,000
---------
536,562
---------
Hotel & Restaurant 2.1%
Hollywood Casino Corp. Cl. A* 10,000 34,375
Primadonna Resorts, Inc.* 8,000 122,000
---------
156,375
---------
Recreation 6.8%
All American Communications, Inc.* 4,000 35,000
Bakou USA, Inc.* 5,000 75,625
Cineplex Odeon Corp.* 45,000 61,875
Lewis Galoob Toys, Inc. Cv. Pfd.* 4,500 162,000
Granite Broadcasting Co.* 6,000 72,000
HMG Worldwide Corp.* 27,000 43,875
Silver King Communications, Inc.* 1,400 43,400
---------
493,775
---------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
INVESTMENT PORTFOLIO (cont'd)
- -------------------------------------------- ----- -----------
Value
Shares (Note 1)
- -------------------------------------------- ----- -----------
Retail Trade 6.0%
Central Garden & Pet Co.* 6,000 $ 57,000
Cole National Corp. Cl. A* 4,000 54,000
Finlay Enterprises, Inc.* 4,000 57,000
Krause's Furniture, Inc.* 20,200 24,620
Little Switzerland, Inc.* 16,000 64,000
Palm Harbor Homes, Inc.* 1,500 38,625
Party City Corp.* 3,000 43,500
Rhodes, Inc.* 5,000 47,500
TBC Corp.* 7,000 50,750
---------
436,995
---------
Total Consumer Cyclical 2,372,582
---------
Consumer Staple 15.4%
Business Service 7.6%
Computer Learning Centers, Inc.* 2,000 17,000
Data Documents, Inc.* 8,500 74,375
Ideon Group, Inc. 5,000 55,625
Protection One, Inc.* 16,000 236,000
Staffing Resources, Inc.* 6,500 139,750
Triad Systems Corp.* 6,500 38,187
---------
560,937
---------
Container 3.1%
Continental Can Company, Inc.* 5,500 83,188
Lufkin Industries, Inc. 2,000 36,500
U.S. Can Corp.* 6,500 110,500
---------
230,188
---------
Drug 1.6%
Immulogic Pharmaceutical, Inc.* 2,000 26,500
Martek Biosciences Corp.* 2,500 90,000
---------
116,500
---------
Hospital Supply 1.9%
Renal Care Group, Inc.* 1,000 27,750
Safetytek Corp.* 7,000 94,500
Sunrise Medical, Inc.* 1,000 14,000
---------
136,250
---------
Printing & Publishing 1.0%
Katz Media Group, Inc.* 4,500 74,250
---------
Tobacco 0.2%
Schweitzer-Mauduit International, Inc.* 500 13,750
---------
Total Consumer Staple 1,131,875
---------
Energy 6.7%
Oil 4.3%
Crystal Oil Corp.* 3,800 $ 126,350
Gerrity Oil & Gas Corp. Cv. Pfd. 10,000 130,000
Optima Petroleum Corp.* 20,000 57,500
---------
313,850
---------
Oil Service 2.4%
Atwood Oceanics, Inc.* 1,500 54,000
Dual Drilling Co.* 3,500 59,938
Global Marine, Inc.* 6,000 60,000
---------
173,938
---------
Total Energy 487,788
---------
Finance 3.2%
Bank 1.3%
AMBANC Holding Company, Inc.* 6,000 60,000
Springfield Institution For Savings Bank* 2,000 34,250
---------
94,250
---------
Financial Service 1.9%
Gentra, Inc.* 12,000 17,953
Hawthorne Financial Corp.* 20,000 97,500
Midland Financial Group, Inc.* 2,000 23,000
---------
138,453
---------
Total Finance 232,703
---------
Science & Technology 3.1%
Computer Software & Service 2.8%
Alphanet Solutions, Inc.* 5,000 50,000
Computervision Corp.* 8,000 83,000
Dataware Technologies, Inc.* 3,000 20,203
Health Systems Design, Inc.* 2,000 27,500
Information Storage Devices, Inc.* 3,000 25,500
---------
206,203
---------
Electronic Components 0.3%
MEMC Electronic Materials, Inc.* 500 18,188
---------
Total Science & Technology 224,391
---------
Utility 0.5%
Natural Gas 0.5%
TransTexas Gas Corp.* 4,000 40,000
---------
Total Utility 40,000
---------
Total Common Stocks and Investments
(Cost $5,987,656)--95.0% 6,960,765
Cash and Other Assets, Less Liabilities--5.0% 366,979
---------
Net Assets--100.0% $7,327,744
=========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
Federal Income Tax Information:
At March 31, 1996, the net unrealized appreciation
of investments based on cost for Federal income
tax purposes of $5,987,656 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $1,271,869
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value (298,760)
---------
$ 973,109
=========
* Nonincome-producing securities
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (Unaudited)
Assets
Investments, at value (Cost $5,987,656) (Note 1) $6,960,765
Cash 3,349
Receivable for securities sold 394,842
Receivable for fund shares sold 250,000
Dividends and interest receivable 250
Deferred organization costs and other assets (Note 1) 85,029
---------
7,694,235
Liabilities
Payable for securities purchased 328,203
Accrued trustees' fees (Note 2) 7,477
Accrued management fee (Note 2) 4,816
Accrued transfer agent and shareholder services (Note 2) 1,738
Accrued distribution and service fees (Note 5) 491
Other accrued expenses 23,766
---------
366,491
---------
Net Assets $7,327,744
=========
Net Assets consist of:
Unrealized appreciation of investments $ 973,109
Accumulated net realized gain 609,389
Shares of beneficial interest (Note 6) 5,745,246
---------
$7,327,744
=========
Net Asset Value and redemption price per share of Class
A shares ($757,088 / 61,408 shares of beneficial
interest) $12.33
=========
Maximum Offering Price per share of Class A shares
($12.33 / .955) $12.91
=========
Net Asset Value and offering price per share of Class B
shares ($134,926 / 10,991 shares of beneficial
interest)* $12.28
=========
Net Asset Value, offering price and redemption price per
share of Class C shares ($6,300,804 / 510,147 shares
of beneficial interest) $12.35
=========
Net Asset Value and offering price per share of Class D
shares ($134,926 / 10,991 shares of beneficial
interest)* $12.28
=========
*Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
STATEMENT OF OPERATIONS
For the six months ended March 31, 1996 (Unaudited)
Investment Income
Dividends, net of foreign taxes of $18 $ 23,996
Interest 790
--------
24,786
Expenses
Custodian fee 34,686
Management fee (Note 2) 26,562
Amortization of organization costs (Note 1) 7,269
Trustees' fees (Note 2) 6,624
Audit fee 5,652
Registration fees 4,734
Legal fees 4,140
Transfer agent and shareholder services (Note 2) 2,700
Reports to shareholders 2,376
Service fee--Class A (Note 5) 6,305
Distribution and service fees--Class B (Note 5) 595
Distribution and service fees--Class D (Note 5) 595
Miscellaneous 3,551
--------
105,789
Expenses borne by the Distributor (Note 3) (60,349)
--------
45,440
--------
Net investment loss (20,654)
--------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 609,270
Net unrealized appreciation of investments 436,704
--------
Net gain on investments 1,045,974
--------
Net increase in net assets resulting from operations $1,025,320
========
STATEMENT OF CHANGES IN NET ASSETS
February 13, 1995
Six months ended (Commencement
March 31, 1996 of Operations) to
(Unaudited) September 30, 1995
- ---------------------------- ----------------- ------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss) $ (20,654) $ 36,497
Net realized gain on
investments* 609,270 275,486
Net unrealized appreciation
of investments 436,704 536,405
--------------- -----------------
Net increase resulting from
operations 1,025,320 848,388
--------------- -----------------
Dividend from net investment
income:
Class A (46,536) --
Class B (430) --
Class C (1,112) --
Class D (430) --
--------------- -----------------
(48,508) --
--------------- -----------------
Distribution from net realized
gains:
Class A (259,563) --
Class B (5,268) --
Class C (5,268) --
Class D (5,268) --
--------------- -----------------
(275,367) --
--------------- -----------------
Net increase from fund share
transactions (Note 6) 495,026 5,282,885
--------------- -----------------
Total increase in net assets 1,196,471 6,131,273
Net Assets
Beginning of period 6,131,273 --
--------------- -----------------
End of period $7,327,744 $6,131,273
=============== =================
*Net realized gain for
Federal income tax
purposes (Note 1) $ 609,270 $ 275,486
=============== =================
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1996
Note 1
State Street Research Small Capitalization Value Fund (the "Fund"), is a
series of State Street Research Capital Trust (the "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 investment objective of 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.
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. Investments in Securities
Values for listed securities represent the last sale on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are
at the mean of the closing bid and asked quotations, except for 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.
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.
E. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser
earns monthly fees at an annual rate of 0.85% 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 $6,624 during the six months ended March 31, 1996.
State Street Research Shareholder Services, a division of State Street
Research Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the six months ended March 31, 1996, the amount of
such expenses was $90.
6
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
NOTES (cont'd)
Note 3
The Distributor and its affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended March 31, 1996, the amount of such expenses
assumed by the Distributor and its affiliates was $60,349.
Note 4
For the six months ended March 31, 1996, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$3,481,805 and $3,748,760, 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 six months ended March 31, 1996, fees
pursuant to such plan amounted to $6,305, $595 and $595 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 March 31, 1996,
Metropolitan owned one share of each of Class A, Class B, Class C and Class D
shares and the Adviser owed 15,453 Class A shares, 10,968 Class B shares,
510,124 Class C shares and 10,968 Class D shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
February 13, 1995
Six months ended (Commencement
March 31, 1996 of Operations) to
(Unaudited) September 30, 1995
----------------------- ---------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------ -------- ----------- ------ -----------
<S> <C> <C> <C> <C>
Shares sold 20,708 $ 254,801 519,451 $4,982,255
Issued upon reinvestment of:
Distribution from net realized gains 24,487 259,562 -- --
Dividend from net investment income 211 2,242 -- --
Shares repurchased (503,449) (5,964,374) -- --
------ --------- ---- ---------
Net increase (decrease) (458,043) $(5,447,769) 519,451 $4,982,255
====== ========= ==== =========
Class B Shares Amount Shares Amount
- ------------------------------------------------ ------ --------- ---- ---------
Shares sold -- $ -- 10,493 $ 100,210
Issued upon reinvestment of distribution from
net realized gains 498 5,265 -- --
------ --------- ---- ---------
Net increase 498 $ 5,265 10,493 $ 100,210
====== ========= ==== =========
Class C Shares Amount Shares Amount
- ------------------------------------------------ ------ --------- ---- ---------
Shares sold 499,157 $ 5,927,000 10,493 $ 100,210
Issued upon reinvestment of distribution from
net realized gains 497 5,265 -- --
------ --------- ---- ---------
Net increase 499,654 $ 5,932,265 10,493 $ 100,210
====== ========= ==== =========
Class D Shares Amount Shares Amount
- ------------------------------------------------ ------ --------- ---- ---------
Shares sold -- $ -- 10,493 $ 100,210
Issued upon reinvestment of distribution from
net realized gains 498 5,265 -- --
------ --------- ---- ---------
Net increase 498 $ 5,265 10,493 $ 100,210
====== ========= ==== =========
</TABLE>
7
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A Class B
--------------------------------- ----------------
Six months ended Six months ended
March 31, 1996 March 31, 1996
(Unaudited)*** 1995** (Unaudited)***
----------------------------------------------------- --------------- --------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.13 $9.55 $11.08
Net investment income (loss)* (.03) .07 (.08)
Net unrealized gain on investments 1.82 1.51 1.82
Dividend from net investment income (.09) -- (.04)
Distribution from net realized gains (.50) -- (.50)
------------- ------------- ---------------
Net asset value, end of period $12.33 $11.13 $12.28
============= ============= ===============
Total return+ 16.97% 16.54% 16.52%
Net assets at end of period (000s) $757 $5,782 $135
Ratio of operating expenses to average net assets* 1.45%++ 1.45%++ 2.20%++
Ratio of net investment income (loss) to average net
assets* (0.67)%++ 1.05%++ (1.42)%++
Portfolio turnover rate 55.12% 47.34% 55.12%
Average commission rate $.0041 -- $.0041
*Reflects voluntary assumption of fees
or expenses per share in each period (Note 3). $.10 $.15 $.10
</TABLE>
<TABLE>
<CAPTION>
Class B Class C Class D
------------ --------------------------- -----------------------------
Six months ended Six months ended
March 31, 1996 March 31, 1996
1995** (Unaudited)*** 1995** (Unaudited)*** 1995**
------------------------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 9.55 $11.15 $ 9.55 $11.08 $ 9.55
Net investment income (loss)* .02 (.01) .09 (.08) .02
Net unrealized gain on
investments 1.51 1.82 1.51 1.82 1.51
Dividend from net investment
income -- (.11) -- (.04) --
Distribution from net realized
gains -- (.50) -- (.50) --
---------- ---------- ---------- ---------- ------------
Net asset value, end of period $11.08 $12.35 $11.15 $12.28 $11.08
========== ========== ========== ========== ============
Total return+ 16.02% 17.11% 16.75% 16.52% 16.02%
Net assets at end of period
(000s) $116 $6,301 $117 $135 $116
Ratio of operating expenses to
average net assets* 2.20%++ 1.20%++ 1.20%++ 2.20%++ 2.20%++
Ratio of net investment income
(loss) to average net
assets* 0.32%++ (0.42)%++ 1.32%++ (1.42)%++ 0.32%++
Portfolio turnover rate 47.34% 55.12% 47.34% 55.12% 47.34%
Average commission rate -- $.0041 -- $.0041 --
*Reflects voluntary assumption
of fees or expenses per share
in each period (Note 3). $.15 $.10 $.15 $.10 $.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.
** February 13, 1995 (commencement of operations) to September 30, 1995.
*** Per-share figures have been calculated using the average shares method.
8
<PAGE>
STATE STREET RESEARCH SMALL CAPITALIZATION VALUE FUND
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH CAPITAL
TRUST
Fund Information
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 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Charles S. Glovsky
Vice President
Rudolph K. Kluiber
Vice President
Frederick R. Kobrick
Vice President
Thomas P. Moore, Jr.
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Thomas L. Phillips
Retired; formerly Chairman of
the Board and Chief Executive
Officer, Raytheon Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
Jeptha H. Wade
Retired; formerly Of Counsel,
Choate, Hall & Stewart
9
<PAGE>
[back cover]
State Street Research
Small Capitalization Value Fund
One Financial Center
Boston, MA 02111
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Research logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was
not industry-wide.
CONTROL NUMBER: 3156-960524(0697)SSR-LD Cover Illustration by Dorothy
Cullinan SCV-207E-596
