[FRONT COVER]
STATE STREET RESEARCH
AURORA FUND
SEMIANNUAL REPORT
March 31, 1998
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
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
The Economy
[bullet] The last quarter of 1997 and the first quarter of 1998 were periods of
solid economic growth, marked by low inflation and strong investment
returns. Unemployment and interest rates remain low, and consumer
confidence continues at near-record highs.
[bullet] Favorable economic factors have stimulated a boom in the housing
market and stronger-than-expected retail sales.
[bullet] An economic crisis in Southeast Asia raised concerns about the
potential impact on U.S. exports and profits at multinational
companies. However, the effects have yet to be felt on American
companies.
The Markets
[bullet] The S&P 500, a broad measure of common stock performance, gained
17.21% for the six-month period.(1) Small stocks were strong at the
beginning of the period, then gave back some of their gains as turmoil
in Southeast Asia led a retreat to large-capitalization brand-name
companies. Small stocks picked up again in March, the final month of
the reporting period.
[bullet] Bonds gained momentum at the beginning of the six-month period, as
long-term interest rates plunged below 6.0%, then delivered modest
gains in the second half. High-yield bonds were among the quarter's
strongest performers. Mortgage bonds held up well, despite concerns
that refinancing could become a negative factor in the period ahead.
THE FUND
Over the past six months
[bullet] For the six months ended March 31, 1998, Class A shares of Aurora Fund
returned +6.40% (does not reflect sales charge.)(2) The Fund lagged the
Russell 2000 Value Index, which gained 10.17% for the period, but led
the average small-company fund, which gained 5.32% according to Lipper
Analytical Services.
[bullet] The Fund's investments in energy companies, especially those in the
oil service segment, were a drag on performance.
[bullet] Investments in telecommunications and financial services stocks
performed well. Demand for new products and expanded service remained
high among telecommunications equipment companies. Stable interest
rates, merger activity and strong investment markets helped financial
companies.
Current strategy
[bullet] The manager continues to search for companies that sell at reasonable
valuations and offer more than one opportunity for improving
prospects.
March 31, 1998
(1)The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The Russell 2000 Value
Index is a weighted index comprised of the 2000 smallest stocks within the
Russell 3000 (a weighted index of the 3000 largest capitalized U.S. companies).
The indices are unmanaged and do not take transaction charges into account.
Direct investment in the indices is not possible; results are for illustrative
purposes only.
(2)+5.98% for Class B shares; +6.03% for Class C shares; +6.51% for Class S
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. "S" shares, offered without a sales charge,
are available only through certain employee benefit plans and special programs.
(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred, sales charges, where applicable.
(5)Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
Because the Fund invests in special situation companies, an investment in the
Fund may involve greater-than-average risk and above average price fluctuation.
Small-company stocks are more volatile than large-company stocks.
Please note that the discussion throughout this shareholder report is dated as
indicated and, because of possible changes in viewpoint, data and transactions,
should not be relied upon as being current thereafter.
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FUND INFORMATION (all data are for periods ended March 31, 1998)
- --------------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3),(4),(5)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Life of Fund
(since 2/13/95) 3 Years 1 Year
----------------- ----------- -----------
<S> <C> <C> <C>
Class A 41.07% 42.08% 50.21%
- --------- ----- ----- -----
Class B 41.61% 42.68% 51.01%
- --------- ----- ----- -----
Class C 41.91% 43.17% 55.01%
- --------- ----- ----- -----
Class S 43.50% 44.64% 57.57%
- --------------------------------------------------------------------------------
</TABLE>
Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses; without subsidization, performance would have been
lower.
Top 10 Holdings
(by percentage of net assets)
(1) Wyman-Gordon Aerospace components 2.5%
(2) Exide Battery company 2.3%
(3) Core Capital Mortgage finance 2.1%
(4) Coherent Laser systems 1.9%
(5) Excel Industries Automotive parts/equipment 1.8%
(6) Simpson Industries Automotive parts/equipment 1.7%
(7) Wolverine Tube Copper tubing 1.5%
(8) Ryerson Tull Steel service center 1.4%
(9) Mississippi Chemical Fertilizer manufacturer 1.4%
(10) Steinway Musical instruments 1.3%
These securities represent an aggregate of 17.9% 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)
- -------------------------------- [Bar Chart] -----------------------------------
Automotive 8.6%
Business service 8.4%
Machinery 8.4%
Metals and mining 7.3%
Chemical 4.8%
Total: 37.5%
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<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ---------------
<S> <C> <C>
COMMON STOCKS 93.5%
Basic Industries 25.8%
Chemical 4.8%
Agrium Inc. .................................... 265,900 $ 3,755,837
Amcol International Corp.* ..................... 15,000 226,875
American Pacific Corp.* ........................ 308,500 3,297,094
BetzDearborn Inc. .............................. 20,000 1,128,750
Cambrex Corp.* ................................. 6,450 324,919
Chart Industries Inc. .......................... 47,000 1,398,250
Chemi-Trol Chemical Co.* ....................... 15,300 345,206
Curagen Corp.* ................................. 97,900 1,131,969
Geon Co. ....................................... 175,000 3,915,625
Hawkins Chemical Inc.* ......................... 40,100 451,125
Lilly Industrial Inc. Cl. A* ................... 143,500 2,834,125
M.A. Hanna Co. ................................. 50,000 1,221,875
Mississippi Chemical Corp. ..................... 445,700 8,941,856
Stepan Chemical Co.* ........................... 85,600 2,600,100
-----------
31,573,606
-----------
Diversified 1.1%
Apogee Enterprises Inc. ........................ 100,000 1,325,000
Commercial Intertech Corp. ..................... 92,800 2,215,600
International Manufacturing Services Inc.
Cl. A* ...................................... 33,500 272,187
Noel Group Inc.* ............................... 102,000 267,750
Quixote Corp. .................................. 10,000 100,000
Recoton Corp.* ................................. 94,000 2,467,500
Titan International Inc. ....................... 30,000 577,500
-----------
7,225,537
-----------
Electrical Equipment 0.7%
Asia Pacific Wire & Cable Corp. Ltd.* .......... 102,000 816,000
Channell Commercial Corp.* ..................... 90,000 866,250
Compass Plastics & Technologies Inc.* .......... 90,000 579,375
Hughes Supply Inc. ............................. 12,000 434,250
Hybrid Networks Inc.* .......................... 4,500 32,063
JPM Co.* ....................................... 45,000 663,750
Methode Electronics Inc. Cl. A ................. 97,000 1,448,937
T. B. Woods Corp. .............................. 6,000 137,625
-----------
4,978,250
-----------
Forest Product 0.1%
Gaylord Container Corp. Cl. A* ................. 40,000 297,500
Gaylord Container Corp. Wts.* .................. 200 1,525
Morgan Products Ltd.* .......................... 50,500 277,750
-----------
576,775
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ---------------
<S> <C> <C>
Machinery 8.4%
ADE Corp.* ..................................... 7,000 $ 118,563
Axsys Technologies Inc.* ....................... 40,000 1,060,000
CTB International Corp.* ....................... 42,000 721,875
DT Industries Inc.* ............................ 77,500 2,974,062
Gleason Corp.* ................................. 16,000 561,000
Hanover Compressor Co.* ........................ 58,400 1,460,000
Howmet International Inc.* ..................... 151,700 2,711,637
ICF Kaiser International Inc.* ................. 265,600 780,200
Instron Corp. .................................. 73,700 1,400,300
Intermet Corp.* ................................ 212,700 4,785,750
International Comfort Products Inc.* ........... 76,300 677,163
ITEQ Inc.* ..................................... 28,200 401,850
Keystone Automotive Industries Inc.* ........... 20,000 477,500
Middleby Corp.* ................................ 225,700 1,608,112
Miller Industries Inc.* ........................ 75,000 548,438
OmniQuip International Inc.* ................... 16,000 396,000
Penn Engineering & Manufacturing Corp. ......... 154,700 3,940,016
Pentacon Inc.* ................................. 35,000 490,000
Rofin-Sinar Technologies Inc.* ................. 3,000 57,750
Specialty Equipment Companies Inc.* ............ 216,000 4,401,000
Sun Hydraulics Inc.* ........................... 19,000 270,750
Thermadyne Holdings Corp.* ..................... 192,100 6,507,387
Tokheim Corp.* ................................. 342,300 6,246,975
Varlen Corp. ................................... 72,000 2,772,000
Wolverine Tube Inc.* ........................... 242,600 9,734,325
-----------
55,102,653
-----------
Metal & Mining 7.3%
Carbide / Graphite Group Inc.* ................. 45,000 1,350,000
Carpenter Technology Corp.* .................... 46,000 2,484,000
Chase Industries Inc.* ......................... 53,400 1,652,063
Cleveland Cliffs Inc. .......................... 10,000 537,500
Commonwealth Industries Inc.* .................. 231,000 4,028,062
Easco Inc. ..................................... 61,700 940,925
Global Industrial Technologies Inc. ............ 327,500 5,403,750
Huntco Inc. Cl. A* ............................. 5,000 71,875
Interlake Corp.* ............................... 25,000 118,750
Keystone Consolidated Industries Inc.* ......... 10,197 124,276
Ladish Inc.* ................................... 215,400 3,311,775
N.N. Ball & Roller Inc. ........................ 122,300 1,322,369
NS Group Inc.* ................................. 10,000 146,250
Olympic Steel Inc.* ............................ 20,000 277,500
Ryerson Tull Inc. Cl. A* ....................... 474,500 9,134,125
Special Metals Corp.* .......................... 23,400 380,250
Webco Industries Inc.* ......................... 49,500 433,125
Wyman-Gordon Co.* .............................. 707,800 16,190,925
-----------
47,907,520
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH AURORA FUND
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INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ----------------
<S> <C> <C>
Railroad 2.6%
ABC Rail Products Corp.* ...................... 24,000 $ 429,000
Genesee & Wyoming Inc. Cl. A* ................. 180,600 4,763,325
Johnstown America Industries Inc.* ............ 114,000 1,866,750
OMI Corp. ..................................... 495,000 4,455,000
RailTex Inc.* ................................. 38,000 627,000
Tranz Rail Holdings Ltd. ADR* ................. 443,600 4,713,250
------------
16,854,325
------------
Truckers 0.8%
C.H. Robinson Worldwide* ...................... 37,300 969,800
Jevic Transportation Inc.* .................... 245,900 3,688,500
Smithway Motor Xpress Corp. Cl. A* ............ 20,000 297,500
Trailer Bridge Inc.* .......................... 54,900 545,569
------------
5,501,369
------------
Total Basic Industries ...................................... 169,720,035
------------
Consumer Cyclical 23.1%
Airline 0.8%
America West Holdings Corp. Cl. B* ............ 150,000 3,843,750
Virgin Express Holdings PLC ADR* .............. 68,000 1,615,000
------------
5,458,750
------------
Automotive 8.6%
Aftermarket Technology Corp.* ................. 15,000 331,875
Borg-Warner Automotive Inc. ................... 75,000 4,809,375
Budget Group Inc. Cl. A* ...................... 19,000 712,500
Collins & Aikman Corp.* ....................... 40,000 365,000
Control Devices Inc.* ......................... 206,000 3,167,250
Defiance Inc. ................................. 132,000 1,089,000
Dura Automotive Systems Inc.* ................. 30,000 963,750
Echlin Inc. ................................... 10,000 524,375
Excel Industries Inc.* ........................ 562,500 11,601,562
Exide Corp. ................................... 886,300 15,011,706
Gencorp Inc.* ................................. 15,000 461,250
Group 1 Automotive Inc.* ...................... 162,200 1,774,062
Lund International Holdings Inc.* ............. 21,000 283,500
Motorcar Parts & Accessories Inc. ............. 39,000 694,688
Simpson Industries Inc.* ...................... 778,700 10,901,800
Sonic Automotive Inc.* ........................ 100,000 1,725,000
Stoneridge Inc.* .............................. 42,600 852,000
TransPro Inc. ................................. 138,700 1,092,263
Walbro Corp.* ................................. 25,000 306,250
Wescast Industries Inc. Cl. A ................. 5,000 146,875
------------
56,814,081
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ----------------
<S> <C> <C>
Building 2.9%
Bluegreen Corp.* .............................. 120,000 $ 1,005,000
Cameron Ashley Inc.* .......................... 7,000 128,188
Castle & Cooke Inc.* .......................... 28,000 470,750
Centex Construction Products Inc. ............. 14,500 528,344
Dal-Tile International Inc.* .................. 31,000 401,062
Dayton Superior Corp. Cl. A* .................. 18,000 363,375
Dycom Industries Inc.* ........................ 15,000 420,937
Interface Inc. Cl. A* ......................... 85,000 3,532,812
Kevco Inc.* ................................... 178,000 3,315,250
Morrison Knudsen Corp.* ....................... 25,000 279,688
Nortek Inc.* .................................. 126,500 4,048,000
Shelby Williams Industries Inc. ............... 20,000 298,750
Simpson Manufacturing Inc.* ................... 4,000 163,000
Stimsonite Corp.* ............................. 134,500 882,656
Triangle Pacific Corp.* ....................... 88,000 3,344,000
-----------
19,181,812
-----------
Hotel & Restaurant 1.2%
Primadonna Resorts Inc.* ...................... 389,000 6,126,750
Silverleaf Resorts Inc.* ...................... 37,000 890,313
Total Entertainment Restaurant Corp.* ......... 10,000 70,000
Trendwest Resorts Inc.* ....................... 39,000 736,125
Vistana Inc.* ................................. 11,000 291,500
-----------
8,114,688
-----------
Photography 1.4%
CPI Corp.* .................................... 54,600 1,382,062
Imation Corp.* ................................ 401,800 7,433,300
-----------
8,815,362
-----------
Recreation 3.2%
Alliance Gaming Corp.* ........................ 155,000 842,812
Audio Book Club Inc.* ......................... 5,000 23,125
Bakou USA Inc.* ............................... 56,500 925,187
Championship Auto Racing Teams, Inc.* ......... 49,000 906,500
Cineplex Odeon Corp.* ......................... 20,000 33,750
HMG Worldwide Corp.* .......................... 22,000 26,813
K2 Inc. ....................................... 25,600 571,200
Lewis Galoob Toys Inc.* ....................... 26,000 258,375
Panavision Inc.* .............................. 43,200 1,136,700
Polaris Industries Inc. ....................... 40,000 1,480,000
Rawlings Sporting Goods Co.* .................. 104,200 1,419,725
Rockshox Inc.* ................................ 71,000 539,156
Safety First Inc.* ............................ 500 4,188
SFX Entertainment Inc. Cl. A* ................. 10,000 240,000
Steinway Musical Instruments Inc.* ............ 271,500 8,806,781
Sturm Ruger & Company Inc.* ................... 125,000 2,578,125
West Coast Entertainment Corp.* ............... 390,000 1,243,125
-----------
21,035,562
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- --------------
<S> <C> <C>
Retail Trade 3.9%
Acorn Products Inc.* ............................ 53,800 $ 517,825
Burlington Coat Factory Warehouse Corp. ......... 69,000 1,198,875
Childrens Place Retail Stores Inc.* ............. 15,000 135,000
Cole National Corp. Cl. A* ...................... 151,000 5,832,375
Corporate Express Inc.* ......................... 200,690 2,000,628
CSK Auto Corp.* ................................. 58,100 1,307,250
DSI Toys Inc.* .................................. 8,000 15,750
EKCO Group Inc.* ................................ 10,000 70,625
Finlay Enterprises Inc.* ........................ 136,300 3,467,131
Footstar Inc.* .................................. 40,700 1,465,200
Friedman's Inc Cl. A* ........................... 37,200 755,625
Mark Brothers Jewelers Inc.* .................... 150,000 2,971,875
Meadowcraft Inc.* ............................... 51,000 745,875
RDO Equipment Co. Cl. A* ........................ 114,600 1,719,000
SED International Holdings Inc.* ................ 182,900 2,080,488
Steelcase Inc.* ................................. 24,600 897,900
TBC Corp.* ...................................... 38,000 380,000
York Group Inc. ................................. 3,000 55,500
Zale Corp.* ..................................... 8,500 245,438
------------
25,862,360
------------
Textile & Apparel 1.1%
Carlyle Industries Inc.* ........................ 110,939 152,541
Chic By H.I.S. Inc.* ............................ 30,000 271,875
Columbia Sportswear Co.* ........................ 7,500 158,438
Hirsch International Corp. Cl. A* ............... 375,200 3,470,600
Marisa Christina Inc.* .......................... 10,000 45,000
Novel Denim Holdings Ltd.* ...................... 3,000 82,125
Oshkosh B' Gosh Inc. Cl. A ...................... 68,000 2,715,750
------------
6,896,329
------------
Total Consumer Cyclical ....................................... 152,178,944
------------
Consumer Staple 20.7%
Business Service 8.4%
Amerco* ......................................... 218,700 6,725,025
American Pad & Paper Co.* ....................... 70,000 507,500
American Residential Services Inc.* ............. 123,000 1,222,312
American Waste Savings Inc. Cl. A* .............. 100,000 393,750
Beacon Capital Partners Inc.*+ .................. 120,000 2,400,000
BioReliance Corp.* .............................. 37,200 613,800
Bridgestreet Accommodations Inc.* ............... 34,000 365,500
Career Education Corp.* ......................... 40,100 882,200
Carriage Services, Inc. Cl. A* .................. 14,000 336,000
Casella Waste Systems Inc. Cl. A* ............... 56,000 1,480,500
Comfort Systems USA Inc.* ....................... 51,000 1,102,875
Complete Management Inc.* ....................... 25,000 212,500
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- --------------
<S> <C> <C>
Core Capital Inc. Cl. A*+ ....................... 300,000 $ 13,689,000
DIANON Systems Inc.* ............................ 5,000 48,750
Dollar Thrifty Automotive Group* ................ 73,800 1,660,500
Edutrek International Inc. Cl. A* ............... 23,100 511,087
Envirosource Inc.* .............................. 454,700 1,051,494
Fair, Issac & Company Inc.* ..................... 20,000 755,000
Firearms Training Systems Inc. Cl. A* ........... 380,000 3,420,000
First Consulting Group, Inc.* ................... 12,000 247,500
Flow International Corp.* ....................... 5,000 50,938
GNI Inc.* ....................................... 5,000 32,500
Integrated Systems Consulting Group* ............ 57,000 790,875
International Total Services Inc.* .............. 160,000 2,980,000
Lydall Inc.* .................................... 72,000 1,300,500
Market Facts Inc.* .............................. 22,000 434,500
Marquee Group Inc.* ............................. 482,000 1,958,125
National Research Corp.* ........................ 12,000 105,750
OrthAlliance Inc. Cl. A* ........................ 5,000 70,000
Pameco Corp.* ................................... 11,100 203,963
Pierce Leahy Corp.* ............................. 43,000 1,088,437
ProMedCo Management Co.* ........................ 50,000 728,125
Protection One Inc.* ............................ 47,000 628,625
RCM Technologies Inc.* .......................... 18,000 483,750
Right Management Consultants Inc.* .............. 122,700 1,457,062
Ritchie Brothers Auctioneers Inc.* .............. 97,900 2,355,719
Staffing Resources Inc.* ........................ 6,500 45,500
Stratesec Inc.* ................................. 34,000 85,000
Todd-AO Corp. ................................... 45,000 475,313
Vestcom International Inc.* ..................... 36,000 375,750
Waddell & Reed Financial Inc. Cl. A* ............ 74,000 1,924,000
Waste Industries Inc.* .......................... 15,500 305,156
------------
55,504,881
------------
Container 2.5%
ACX Technologies Inc.* .......................... 51,800 1,239,963
Bway Corp.* ..................................... 9,000 232,875
Gundle / SLT Environmental Inc.* ................ 88,100 462,525
Home Products International Inc.* ............... 48,000 774,000
Intertape Polymer Group Inc.* ................... 40,000 925,000
Ivex Packaging Corp.* ........................... 110,200 2,699,900
Rock-Tenn Co. Cl. A* ............................ 56,950 907,641
Sealright Company Inc.* ......................... 3,000 41,250
Shorewood Packaging Corp.* ...................... 65,000 1,742,812
Silgan Holdings Inc.* ........................... 6,000 210,750
Trinity Industries Inc. ......................... 35,000 1,920,625
U.S. Can Corp.* ................................. 117,900 2,092,725
Ultra Pac Inc.* ................................. 205,000 3,126,250
------------
16,376,316
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ---------------
<S> <C> <C>
Drug 0.4%
Chirex Inc.* ................................... 25,000 $ 473,438
Martek Biosciences Corp.* ...................... 13,500 205,031
Mycogen Corp.* ................................. 87,500 1,591,406
Nutraceutical International Corp.* ............. 22,000 484,000
Province Healthcare Co.* ....................... 13,000 341,250
-----------
3,095,125
-----------
Food & Beverage 3.2%
American Italian Pasta Co. Cl. A* .............. 17,000 614,125
Authentic Specialty Foods Inc.* ................ 134,000 1,616,375
Beringer Wine Estates Holdings, Inc. Cl. B* 43,000 2,219,875
BJ's Wholesale Club Inc.* ...................... 23,000 897,000
Coca-Cola Bottling Co.* ........................ 2,500 144,375
Corn Products International Inc.* .............. 55,000 1,973,125
Darling International Inc.* .................... 90,400 779,700
Garden Fresh Restaurant Corp.* ................. 7,000 130,813
Hussmann International Inc.* ................... 50,000 937,500
International Home Foods Inc.* ................. 72,000 2,394,000
Keebler Foods Co.* ............................. 76,000 2,280,000
Northland Cranberries Inc. Cl. A* .............. 40,000 630,000
Robert Mondavi Corp. Cl. A* .................... 100,000 4,125,000
Star Buffet Inc.* .............................. 26,000 432,250
Zapata Corp.* .................................. 125,000 1,765,625
-----------
20,939,763
-----------
Hospital Supply 1.1%
Arrow International Inc. ....................... 10,000 343,750
Centennial Healthcare Corp.* ................... 15,500 389,437
Circon Corp.* .................................. 20,000 333,750
CN Biosciences Inc.* ........................... 33,000 858,000
Healthplan Services Corp. ...................... 5,000 131,562
Hyseq Inc.* .................................... 5,000 62,500
Invivo Corp.* .................................. 198,700 2,185,700
Lunar Corp.* ................................... 100,000 1,993,750
SeaMed Corp.* .................................. 11,000 189,750
Sunrise Medical Inc.* .......................... 1,000 15,938
Trigon Healthcare Inc.* ........................ 10,000 300,625
Vista Medical Technologies Inc.* ............... 39,000 433,875
-----------
7,238,637
-----------
Personal Care 1.5%
Bush Boake Allen Inc.* ......................... 153,600 4,896,000
Carson Inc. Cl. A* ............................. 36,400 366,275
Castle Dental Centers Inc.* .................... 8,100 93,150
First Brands Corp. ............................. 80,000 1,995,000
Mac-Gray Corp.* ................................ 12,000 199,500
Monarch Dental Corp.* .......................... 19,000 325,375
Polymer Group Inc.* ............................ 150,000 1,959,375
-----------
9,834,675
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ---------------
<S> <C> <C>
Printing & Publishing 2.4%
American Media Inc. Cl. A* ..................... 1,088,700 $ 8,573,512
Central Newspapers Inc. Cl. A .................. 3,000 213,188
Hollinger International, Inc. Cv. Pfd. ......... 178,000 2,547,625
Houghton Mifflin Co. ........................... 25,000 796,875
Journal Register Co.* .......................... 16,900 352,788
McClatchy Newspapers Inc. Cl. A ................ 23,000 685,687
Pulitzer Publishing Co.* ....................... 31,200 2,492,100
------------
15,661,775
------------
Tobacco 1.2%
800-JR CIGAR Inc.* ............................. 35,500 710,000
Dimon Inc. ..................................... 232,000 3,871,500
Standard Commercial Corp.* ..................... 198,140 3,157,856
------------
7,739,356
------------
Total Consumer Staple .......................................... 136,390,528
------------
Energy 3.4%
Oil 1.0%
Arakis Energy Corp.* ........................... 280,000 560,000
Crystal Oil Co.* ............................... 3,800 159,600
KCS Energy Inc. ................................ 105,000 1,680,000
Maxx Petroleum Ltd.* ........................... 1,900,000 2,493,750
Nuevo Energy Co.* .............................. 18,000 644,625
Pease Oil & Gas Co.* ........................... 100,000 100,000
Probe Exploration Inc.*[dbldag] ................ 277,800 1,019,557
------------
6,657,532
------------
Oil Service 2.4%
American Oilfield Divers Inc.* ................. 375,200 5,416,950
Atwood Oceanics Inc.* .......................... 56,200 3,038,313
Daniel Industries Inc. ......................... 30,000 601,875
Fred Olsen Energy ASA ADR* ..................... 54,100 950,791
Gulfmark Offshore Inc.* ........................ 15,000 412,500
Stolt Comex Seaway SA* ......................... 48,000 1,209,000
TMBR / Sharp Drilling Inc.* .................... 132,600 1,524,900
Transcoastal Marine Services Inc.* ............. 125,500 1,341,281
Willbros Group Inc.* ........................... 67,500 1,109,531
------------
15,605,141
------------
Total Energy .................................................... 22,262,673
------------
Finance 6.2%
Bank 0.5%
AMBANC Holding Co. Inc.* ....................... 6,000 114,000
Ambase Corp.* .................................. 5,000 20,200
Bank of the Ozarks Inc.* ....................... 24,000 720,000
First International Bancorp Inc.* .............. 7,000 112,875
ITLA Capital Corp.* ............................ 4,000 85,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- ------------------
<S> <C> <C>
Bank (cont'd)
Life Financial Corp.* ........................... 91,000 $ 1,820,000
Meritor Savings Bank* ........................... 60,000 213,750
Republic Banking Corp. of Florida* .............. 15,000 268,125
------------
3,353,950
------------
Financial Service 4.7%
Affiliated Managers Group Inc.* ................. 27,000 941,625
American Capital Strategies Ltd.* ............... 95,000 2,101,875
American Residential Investment Trust ........... 93,000 1,116,000
Cabot Industrial Trust* ......................... 69,000 1,643,062
CIT Group Inc. Cl. A ............................ 100,000 3,262,500
Delta Financial Corp.* .......................... 140,200 2,427,212
Entertainment Properties Trust .................. 369,200 7,245,550
FCA International Inc.* ......................... 59,900 397,403
Gentra Inc.* .................................... 12,000 41,331
Gilman & Ciocia Inc.* ........................... 53,900 693,962
Imperial Credit Commercial Mortgage
Investment Corp.* ............................ 185,000 2,775,000
Linc Capital Inc.* .............................. 67,000 1,139,000
Mego Financial Corp.* ........................... 48,200 251,544
MoneyGram Payment Systems Inc.* ................. 31,000 468,875
New Century Financial Corp.* .................... 47,500 469,063
S.L. Green Realty Corp. ......................... 27,000 690,188
Security Capital Group Inc. Cl. B* .............. 30,000 922,500
Tower Realty Trust Inc. ......................... 178,400 4,393,100
Triad Park LLC* ................................. 10,000 18,000
Willis Lease Finance Corp.* ..................... 6,000 134,250
------------
31,132,040
------------
Insurance 1.0%
American Safety Insurance Group Ltd.* ........... 12,000 162,000
Fidelity National Financial Inc.* ............... 38,610 1,418,918
Foremost Corp. .................................. 109,400 2,680,300
Paula Financial* ................................ 48,800 1,159,000
Stirling Cooke Brown Holdings Ltd.* ............. 29,000 775,750
------------
6,195,968
------------
Total Finance ................................................. 40,681,958
------------
Science & Technology 13.1%
Aerospace 0.8%
Curtiss-Wright Corp. ............................ 120,000 4,650,000
Doncasters PLC ADR* ............................. 22,900 598,262
First Aviation Services Inc.* ................... 35,000 214,375
------------
5,462,637
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------------- --------------
<S> <C> <C>
Computer Software & Service 3.3%
Advantage Learning Systems Inc.* ................ 14,500 $ 498,438
Bell & Howell Co.* .............................. 260,500 7,147,469
Best Software Inc.* ............................. 210,000 3,176,250
Box Hill Systems Corp.* ......................... 54,000 691,875
Corsair Communications Inc.* .................... 6,000 112,875
DRS Technologies Inc.* .......................... 56,500 783,937
Duane Reade Inc.* ............................... 5,000 127,813
Eidos PLC ADR* .................................. 45,000 849,375
Exodus Communications Inc.* ..................... 5,800 162,400
H.T.E. Inc.* .................................... 110,000 2,488,750
Information Management Associates Inc.* ......... 59,000 789,125
Information Storage Devices Inc.* ............... 3,000 17,156
InTEST Corp.* ................................... 66,000 589,875
ISS Group Inc.* ................................. 8,500 330,438
J.D. Edwards & Co.* ............................. 51,800 1,693,212
Larscom Inc. Cl. A* ............................. 1,100 9,109
Ontrack Data International Inc.* ................ 30,000 487,500
Pegasus Systems Inc.* ........................... 15,000 386,250
Phoenix International Inc.* ..................... 10,000 230,000
Puma Technology Inc.* ........................... 92,500 566,562
QAD Inc.* ....................................... 25,000 367,188
SeaChange International Inc.* ................... 100 700
Template Software Inc.* ......................... 11,000 134,750
Titan Corp.* .................................... 10,000 65,625
Walsh International Inc.* ....................... 17,000 263,500
-----------
21,970,172
-----------
Electronic Components 4.7%
Alpha Technologies Group Inc.* .................. 40,000 187,500
BEI Electronics Inc.* ........................... 215,000 886,875
BEI Technologies Inc.* .......................... 300,000 5,062,500
BMC Industries Inc.* ............................ 281,200 5,465,825
DeCrane Aircraft Holdings Inc.* ................. 74,000 1,313,500
Denison International PLC ADR* .................. 263,200 4,869,200
Electro Scientific Industries Inc.* ............. 5,000 193,125
Fusion Systems Corp.* ........................... 1,000 219
Kemet Corp.* .................................... 137,000 2,543,062
Kulicke & Soffa Industries Inc.* ................ 15,000 326,250
Optek Technology Inc.* .......................... 182,600 4,679,125
Peak International Ltd.* ........................ 27,000 685,125
Power-One Inc.* ................................. 61,000 1,037,000
Reliability Inc.* ............................... 54,000 648,000
Reptron Electronics Inc.* ....................... 245,000 2,817,500
Richey Electronics Inc.* ........................ 10,000 98,750
-----------
30,813,556
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- ---------------
<S> <C> <C>
Electronic Equipment 3.7%
Aehr Test Systems Inc.* ....................... 4,800 $ 28,800
ATMI Inc.* .................................... 35,000 1,058,750
Benchmarq Microelectronics Inc.* .............. 100,000 1,725,000
Brooks Automation Inc.* ....................... 23,000 362,250
Coherent Inc.* ................................ 528,000 12,771,000
Detection Systems Inc.* ....................... 137,400 1,631,625
FARO Technologies Inc.* ....................... 88,400 1,060,800
Flir Systems Inc.* ............................ 7,500 151,875
General Scanning Inc.* ........................ 30,000 645,000
Helix Technology Corp.* ....................... 10,000 200,000
Igen International, Inc.* ..................... 65,000 2,754,375
Instrumentation Laboratories SPA ADR* ......... 40,000 90,000
Mackie Designs Inc.* .......................... 15,000 105,000
Novametrix Medical Systems Inc.* .............. 133,000 1,014,125
Pioneer-Standard Electronics Inc. ............. 17,000 208,250
Plantronics Inc.* ............................. 16,000 655,000
Positron Fiber Systems Corp. Cl. A* ........... 31,300 240,619
Silicon Valley Group Inc.* .................... 1,000 19,500
------------
24,721,969
------------
Office Equipment 0.6%
CompX International Inc. Cl. A* ............... 39,100 913,963
Davel Communications Group* ................... 8,000 205,000
Exabyte Corp.* ................................ 298,000 2,570,250
------------
3,689,213
------------
Total Science & Technology ............................. 86,657,547
------------
Utility 1.2%
Natural Gas 0.1%
Continental Natural Gas Inc.* ................. 30,000 300,000
TransTexas Gas Corp.* ......................... 32,500 509,844
------------
809,844
------------
Telephone 1.1%
Global Telesystems Group Inc.* ................ 31,000 1,449,250
Metromedia Fiber Network Inc. Cl. A* .......... 87,000 2,925,375
NACT Telecommunications Inc.* ................. 20,000 442,500
NEXTLINK Communications Inc. Cl. A* ........... 45,000 1,445,625
Peoples Telephone Co.* ........................ 170,000 541,875
PhoneTel Technologies Inc.* ................... 200,000 400,000
------------
7,204,625
------------
Total Utility .......................................... 8,014,469
------------
Total Common Stocks (Cost $541,611,856)................. 615,906,154
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
-------------- ----------- ----------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 6.8%
Chevron U.S.A. Inc., 5.55% ............ $17,000,000 4/01/1998 $ 17,000,000
Ford Motor Credit Co., 5.62% .......... 1,117,000 4/06/1998 1,117,000
General Electric Capital Corp.,
5.54% ............................... 1,527,000 4/06/1998 1,527,000
General Electric Capital Corp.,
5.60% ............................... 15,595,000 4/09/1998 15,595,000
Norwest Financial Inc., 5.54% ......... 9,655,000 4/06/1998 9,655,000
------------
Total Short-Term Obligations (Cost $44,894,000)................... 44,894,000
------------
Total Investments (Cost $586,505,856)--100.3%..................... 660,800,154
Other Assets, Less Liabilities--(0.3%) ........................... (2,201,536)
------------
Net Assets--100.0% ............................................... $658,598,618
============
</TABLE>
<TABLE>
<S> <C>
Federal Income Tax Information:
At March 31, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $586,518,336 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost .......................................... $99,744,958
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................ (25,463,140)
-----------
$74,281,818
===========
</TABLE>
- --------------------------------------------------------------------------------
*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
buyers. The total cost and market value of Rule 144A securities owned at March
31, 1998 were $15,900,000 and $16,089,000 (2.44% of net assets), respectively.
[dbldag]Security restricted as to public resale. The total cost and market
value of restricted securities owned at March 31, 1998 were $414,535 and
$1,019,557 (0.15% of net assets), respectively.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $586,505,856) (Note 1).................... $660,800,154
Receivable for securities sold ....................................... 2,066,565
Receivable for fund shares sold ...................................... 752,707
Dividends and interest receivable .................................... 625,104
Deferred organization costs and other assets (Note 1) ................ 85,623
------------
664,330,153
Liabilities
Payable for securities purchased ..................................... 2,830,654
Payable for fund shares redeemed ..................................... 1,078,921
Accrued management fee (Note 2) ...................................... 869,270
Accrued distribution and service fees (Note 4) ....................... 766,214
Payable to custodian ................................................. 92,342
Accrued trustees' fees (Note 2) ...................................... 18,761
Other accrued expenses ............................................... 75,373
------------
5,731,535
------------
Net Assets $658,598,618
============
Net Assets consist of:
Unrealized appreciation of investments .............................. $74,294,298
Accumulated net realized gain ....................................... 18,341,042
Paid-in capital ..................................................... 565,963,278
------------
$658,598,618
============
Net Asset Value and redemption price per share of
Class A shares ($216,885,262 [divided by] 9,957,436 shares)......... $21.78
======
Maximum Offering Price per share of Class A shares
($21.78 [divided by] .955).......................................... $22.81
======
Net Asset Value and offering price per share of Class
B shares ($339,286,724 [divided by] 15,933,224 shares)* ............ $21.29
======
Net Asset Value and offering price per share of Class
C shares ($101,192,085 [divided by] 4,753,989 shares)*.............. $21.29
======
Net Asset Value, offering price and redemption price
per share of Class S shares ($1,234,547 [divided by] 56,290
shares) ............................................................ $21.93
======
</TABLE>
- --------------------------------------------------------------------------------
* Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $14,559................ $ 1,962,423
Interest (Note 1) ........................................ 3,089,062
-----------
5,051,485
Expenses
Management fee (Note 2) .................................. 2,517,266
Transfer agent and shareholder services (Note 2) ......... 301,073
Service fee-Class A (Note 4) ............................. 247,146
Distribution and service fees-Class B (Note 4) ........... 1,503,864
Distribution and service fees-Class C (Note 4) ........... 445,498
Registration fees ........................................ 145,348
Custodian fee ............................................ 108,720
Reports to shareholders .................................. 24,195
Trustees' fees (Note 2) .................................. 21,861
Audit fee ................................................ 9,506
Amortization of organization costs (Note 1) .............. 7,211
Legal fees ............................................... 1,088
Miscellaneous ............................................ 3,749
-----------
5,336,525
-----------
Net investment loss ...................................... (285,040)
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) ......... 21,321,671
Net unrealized appreciation of investments ............... 15,004,155
-----------
Net gain on investments .................................. 36,325,826
-----------
Net increase in net assets resulting from operations ..... $36,040,786
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
Year ended March 31, 1998
September 30, 1997 (Unaudited)
-------------------- -----------------
Increase (Decrease) in Net Assets
<S> <C> <C>
Operations:
Net investment loss .................. $ (233,376) $ (285,040)
Net realized gain on investments 4,589,402 21,321,671
Net unrealized appreciation of
investments ........................ 57,978,769 15,004,155
------------ ------------
Net increase resulting from
operations ......................... 62,334,795 36,040,786
------------ ------------
Distributions from net realized
gains:
Class A ............................. (275,192) (2,253,302)
Class B ............................. (38,226) (3,455,053)
Class C ............................. (38,226) (1,036,555)
Class S ............................. (1,776,578) (107,482)
------------ ------------
(2,128,222) (6,852,392)
------------ ------------
Net increase from fund share
transactions (Note 5) .............. 406,056,397 153,955,612
------------ ------------
Total increase in net assets ......... 466,262,970 183,144,006
Net Assets
Beginning of period .................. 9,191,642 475,454,612
------------ ------------
End of period ........................ $475,454,612 $658,598,618
============ ============
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 1998
Note 1
State Street Research Aurora 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 Aurora Fund, State Street Research Emerging 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. Effective November 5,
1997, the Fund discontinued offering all four classes of shares. Before
November 1, 1997, Class C shares were designated Class D and Class S shares
were designated Class C. Class A share 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 the eight
years after the issuance of the Class B shares. Class C shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one
year of their purchase. Class C shares also pay annual distribution and service
fees of 1.00%. Class S shares are only offered through certain retirement
accounts, advisory accounts of State Street Research & Management Company (the
"Adviser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance
Company ("Metropolitan"), and special programs. No sales charge is imposed at
the time of purchase or redemption of Class S shares. Class S shares do not pay
any distribution or service fees. The Fund's expenses are borne pro rata by
each class, except that each class bears expenses, and has exclusive voting
rights with respect to provisions of the Plan of Distribution, related
specifically to that class. The Trustees declared 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
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
Securities 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 period.
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.
F. Securities Lending
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At March 31, 1998, the value of the securities loaned and the value of
collateral were $26,576,850 and $26,915,230, respectively. During the six
months ended March 31, 1998, income from securities lending amounted to
$282,651 and is included in interest income.
Note 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.85% 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. During the six months ended March 31, 1998, the fees
pursuant to such agreement amounted to $2,517,266.
State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), and 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, 1998, the amount of
such expenses was $184,052.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$21,861 during the six months ended March 31, 1998.
Note 3
For the six months ended March 31, 1998, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$339,846,149 and $109,863,766, 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 C shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal services and/or
the maintenance or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing
expenses. For the six months ended March 31, 1998, fees pursuant to such plan
amounted to $247,146, $1,503,864, and $445,498 for Class A, Class B and Class C
shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $167,760 and $197,594, respectively, on sales of Class A shares of
the Fund during the six months ended March 31, 1998, and that MetLife
Securities, Inc. earned commissions aggregating $622,639 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
aggregating $186,725 and $20,663 on redemptions of Class B and Class C shares,
respectively, during the same period.
10
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
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>
Year ended
September 30, 1997
---------------------------
Class A Shares Amount
- -------------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Shares sold .............................................................. 7,718,462 $141,142,332
Issued upon reinvestment of distributions from net realized gains ........ 20,767 275,171
Shares repurchased ....................................................... (191,210) (3,448,807)
--------- ------------
Net increase ............................................................. 7,548,019 $137,968,696
========= ============
Class B Shares Amount
- -------------------------------------------------------------------------- ---------- ------------
Shares sold .............................................................. 11,670,966 $208,229,024
Issued upon reinvestment of distributions from net realized gains ........ 2,920 38,204
Shares repurchased ....................................................... (78,457) (1,385,012)
---------- ------------
Net increase ............................................................. 11,595,429 $206,882,216
========== ============
Class C (Formerly Class D) Shares Amount
- -------------------------------------------------------------------------- ---------- ------------
Shares sold .............................................................. 3,388,937 $ 60,155,313
Issued upon reinvestment of distributions from net realized gains ........ 2,921 38,204
Shares repurchased ....................................................... (100,246) (1,718,615)
---------- ------------
Net increase ............................................................. 3,291,612 $ 58,474,902
========== ============
Class S (Formerly Class C) Shares Amount
- -------------------------------------------------------------------------- ---------- ------------
Shares sold .............................................................. 68,257 $ 1,187,984
Issued upon reinvestment of distributions from net realized gains ........ 133,575 1,776,556
Shares repurchased ....................................................... (14,394) (233,957)
---------- ------------
Net increase (decrease) .................................................. 187,438 $ 2,730,583
========== ============
<CAPTION>
Six months ended
March 31, 1998
(Unaudited)
----------------------------
Class A Shares Amount
- -------------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
Shares sold .............................................................. 4,526,095 $ 92,797,637
Issued upon reinvestment of distributions from net realized gains ........ 97,354 1,913,445
Shares repurchased ....................................................... (2,287,337) (45,712,116)
---------- -------------
Net increase ............................................................. 2,336,112 $ 48,998,966
========== =============
Class B Shares Amount
- --------------------------------------------------------------------------- ---------- -------------
Shares sold .............................................................. 5,156,229 $ 104,570,453
Issued upon reinvestment of distributions from net realized gains ........ 119,083 2,282,631
Shares repurchased ....................................................... (948,508) (18,645,937)
---------- -------------
Net increase ............................................................. 4,326,804 $ 88,207,147
========== =============
Class C (Formerly Class D) Shares Amount
- --------------------------------------------------------------------------- ---------- -------------
Shares sold .............................................................. 1,813,689 $ 36,764,458
Issued upon reinvestment of distributions from net realized gains ........ 31,557 603,253
Shares repurchased ....................................................... (393,860) (7,731,463)
---------- -------------
Net increase ............................................................. 1,451,386 $ 29,636,248
========== =============
Class S (Formerly Class C) Shares Amount
- --------------------------------------------------------------------------- ---------- -------------
Shares sold .............................................................. 7,508 $ 158,848
Issued upon reinvestment of distributions from net realized gains ........ 5,331 107,482
Shares repurchased ....................................................... (654,517) (13,153,079)
---------- -------------
Net increase (decrease) .................................................. (641,678) $ (12,886,749)
========== =============
</TABLE>
11
<PAGE>
STATE STREET RESEARCH AURORA FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Years ended September 30 Six months ended
--------------------------------------- March 31, 1998
1995(2) 1996(1) 1997(1) (Unaudited)(1)
-------------- ------------ ----------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 11.13 15.14 20.71
----- -------- --------- -------
Net investment income (loss) ($)* 0.07 (0.06) 0.03 0.04
Net realized and unrealized gain on investments ($) 1.51 4.66 9.02 1.26
----- -------- --------- -------
Total from investment operations ($) 1.58 4.60 9.05 1.30
----- -------- --------- -------
Dividend from net investment income ($) -- (0.09) -- --
Distributions from net realized gains ($) -- (0.50) (3.48) (0.23)
----- -------- --------- -------
Total distributions ($) -- (0.59) (3.48) (0.23)
----- -------- --------- -------
Net asset value, end of period ($) 11.13 15.14 20.71 21.78
===== ======== ========= =======
Total return(3) (%) 16.54(4) 43.63 72.70 6.40(4)
Ratios / supplemental data:
Net assets at end of period ($ thousands) 5,782 1,110 157,853 216,885
Ratio of operating expenses to
average net assets (%)* 1.45(5) 1.45 1.34 1.31(5)
Ratio of net investment income (loss) to
average net assets (%)* 1.05(5) (0.56) 0.17 0.40(5)
Portfolio turnover rate (%) 47.34 124.79 25.03 22.72
Average commission rate(6) ($) -- 0.0174 0.0154 0.0132
*Reflects voluntary assumption of fees or
expenses per share in each period ($) 0.15 0.32 0.02 --
<CAPTION>
Class B
---------------------------------------------------------
Years ended September 30 Six months ended
--------------------------------------- March 31, 1998
1995(2) 1996(1) 1997(1) (Unaudited)(1)
-------------- ------------ ----------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 11.08 15.02 20.33
----- -------- --------- -------
Net investment income (loss) ($)* 0.02 (0.17) (0.09) (0.04)
Net realized and unrealized gain on investments ($) 1.51 4.65 8.88 1.23
----- -------- --------- -------
Total from investment operations ($) 1.53 4.48 8.79 1.19
----- -------- --------- -------
Dividend from net investment income ($) -- (0.04) -- --
Distributions from net realized gains ($) -- (0.50) (3.48) (0.23)
----- -------- --------- -------
Total distributions ($) -- (0.54) (3.48) (0.23)
----- -------- --------- -------
Net asset value, end of period ($) 11.08 15.02 20.33 21.29
===== ======== ========= =======
Total return(3) (%) 16.02(4) 42.52 71.34 5.98(4)
Ratios / supplemental data:
Net assets at end of period ($ thousands) 116 165 235,938 339,287
Ratio of operating expenses to
average net assets (%)* 2.20(5) 2.20 2.08 2.06(5)
Ratio of net investment income (loss) to
average net assets (%)* 0.32(5) (1.38) (0.55) (0.36)(5)
Portfolio turnover rate (%) 47.34 124.79 25.03 22.72
Average commission rate(6) ($) -- 0.0174 0.0154 0.0132
*Reflects voluntary assumption of fees or
expenses per share in each period ($) 0.15 0.32 0.01 --
</TABLE>
<TABLE>
<CAPTION>
Class C (Formerly Class D)
---------------------------------------------------------
Years ended September 30 Six months ended
-------------------------------------- March 31, 1998
1995(2) 1996(1) 1997(1) (Unaudited)(1)
-------------- ------------ ---------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 11.08 15.02 20.32
------- ----- ------ -----
Net investment income (loss) ($)* 0.02 (0.17) (0.09) (0.04)
Net realized and unrealized gain on investments ($) 1.51 4.65 8.87 1.24
------- ----- ------ -----
Total from investment operations ($) 1.53 4.48 8.78 1.20
------- ----- ------ -----
Dividend from net investment income ($) -- (0.04) -- --
Distributions from net realized gains ($) -- (0.50) (3.48) (0.23)
------- ----- ------ -----
Total distributions ($) -- (0.54) (3.48) (0.23)
------- ----- ------ -----
Net asset value, end of period ($) 11.08 15.02 20.32 21.29
======= ===== ====== =====
Total return(3) (%) 16.02(4) 42.52 71.26 6.03(4)
Ratios / supplemental data:
Net assets at end of period ($ thousands) 116 165 67,121 101,192
Ratio of operating expenses to
average net assets (%)* 2.20(5) 2.20 2.09 2.06(5)
Ratio of net investment income (loss) to
average net assets (%)* 0.32(5) (1.38) (0.58) (0.36)(5)
Portfolio turnover rate (%) 47.34 124.79 25.03 22.72
Average commission rate(6) ($) -- 0.0174 0.0154 0.0132
*Reflects voluntary assumption of fees or
expenses per share in each period ($) 0.15 0.32 0.01 --
<CAPTION>
Class S (Formerly Class C)
-----------------------------------------------------
Years ended September 30 Six months ended
----------------------------------- March 31, 1998
1995(2) 1996(1} 1997(1) (Unaudited)(1)
----------- --------- ---------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 11.15 15.18 20.83
------- ----- ------ -----
Net investment income (loss) ($)* 0.09 (0.06) (0.00) 0.06
Net realized and unrealized gain on investments ($) 1.51 4.70 9.13 1.27
------- ----- ------ -----
Total from investment operations ($) 1.60 4.64 9.13 1.33
------- ----- ------ -----
Dividend from net investment income ($) -- (0.11) -- --
Distributions from net realized gains ($) -- (0.50) (3.48) (0.23)
------- ----- ------ -----
Total distributions ($) -- (0.61) (3.48) (0.23)
------- ----- ------ -----
Net asset value, end of period ($) 11.15 15.18 20.83 21.93
======= ===== ====== =====
Total return(3) (%) 16.75(4) 43.95 73.10 6.51(4)
Ratios / supplemental data:
Net assets at end of period ($ thousands) 117 7,752 14,542 1,235
Ratio of operating expenses to
average net assets (%)* 1.20(5) 1.20 1.16 1.06(5)
Ratio of net investment income (loss) to
average net assets (%)* 1.32(5) (0.43) (0.02) 0.64(5)
Portfolio turnover rate (%) 47.34 124.79 25.03 22.72
Average commission rate(6) ($) -- 0.0174 0.0154 0.0132
*Reflects voluntary assumption of fees or
expenses per share in each period ($) 0.15 0.32 0.12 --
</TABLE>
- -------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) February 13, 1995 (commencement of operations) to September 30, 1995.
(3) Does not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
(4) Not annualized.
(5) Annualized.
(6) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
September 30, 1996.
12
<PAGE>
STATE STREET RESEARCH AURORA FUND
- -------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH CAPITAL TRUST
- -------------------------------------------------------------------------------
Fund Information
State Street Research
Aurora 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
Service Center
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
Jesus A. Cabrera
Vice President
Lawrence J. Haverty, Jr.
Vice President
Richard J. Jodka
Vice President
Rudolph K. Kluiber
Vice President
James M. Weiss
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial Officer, St. Regis Corp.
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Associate, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
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
13
<PAGE>
[BACK COVER]
State Street Research Aurora Fund ----------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Permit #20
Holliston, MA
01746
----------------
Questions? Comments?
Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408 or
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com
[SSR Logo] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Aurora Fund
prospectus. When used after June 30, 1998, this report must be accompanied by a
current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 4930-980522(0699)SSR-LD SCV-207E-0598
<PAGE>
[FRONT COVER]
STATE STREET RESEARCH
CAPITAL FUND
SEMIANNUAL REPORT
March 31, 1998
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
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
The Economy
[bullet] The last quarter of 1997 and the first quarter of 1998 were periods of
solid economic growth, marked by low inflation and strong investment
returns. Unemployment and interest rates remain low, and consumer
confidence continues at near-record highs.
[bullet] Favorable economic factors have stimulated a boom in the housing
market and stronger-than-expected retail sales. Lower energy costs
helped keep inflation in check.
[bullet] An economic crisis in Southeast Asia raised concerns about the
potential impact on U.S. exports and profits at multinational
companies. However, the effects have been modest so far on most
American companies.
The Markets
[bullet] The S&P 500, a broad measure of common stock performance, gained
17.21% for the six-month period(1). Small stocks were strong at the
beginning of the period, then gave back some of their gains as turmoil
in Southeast Asia led a retreat to large-capitalization brand-name
companies. Small stocks picked up again in the final month of the
period.
[bullet] Bonds gained momentum at the beginning of the six-month period, as
long-term interest rates plunged below 6.0%, then delivered modest
gains in the second half. High-yield bonds were among the quarter's
strongest performers. Mortgage bonds held up well, despite concerns
that refinancing could become a negative factor in the period ahead.
THE FUND
Over the past six months
[bullet] For the six months ended March 31, 1998, Class A shares of Capital Fund
returned +5.97% [does not reflect sales charge.](2) The Fund
underperformed other capital appreciation funds, which averaged a gain
of 7.19% for the period, according to Lipper Analytical Services.
[bullet] Although the Fund lagged its peer group for the period, it delivered
solid returns in the last three months of the period and was among the
strongest of all capital appreciation funds.
[bullet] The Fund's investments in consumer and media stocks helped boost
performance as many of these companies reported higher earnings.
[bullet] The Fund's exposure to technology was a drag on performance as these
stocks were brought down with the turmoil in Asia last year.
Current Strategy
[bullet] New manager Richard Jodka cut back on the Fund's investment in
volatile technology stocks and placed more emphasis on mid-sized
consumer and health care stocks with above-average growth potential.
[bullet] Reduced turnover, lower volatility and an emphasis on valuation are
all part of the manager's plans for the Fund.
March 31, 1998
(1) The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The index is unmanaged
and does not take sales charges into account. Direct investment in the index is
not possible; results are for illustrative purposes only.
(2) +5.48% for Class B shares; +5.54% for Class C shares; +6.09% for Class S
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 may include periods
prior to the adoption of class designations in 1993, which resulted in new or
increased 12b-1 fees of up to 1% per class thereafter and which will reduce
subsequent performance. "S" shares, offered without a sales charge, are
available through certain employee benefit plans and special programs.
(4) Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges, where applicable.
(5) Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
Because the Fund invests in emerging growth and special situation companies, an
investment in the Fund may involve greater-than-average risk and above-average
price fluctuation. Small-company stocks are more volatile than large-company
stocks.
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, 1998)
- --------------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3),(4),(5)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
10 Years 5 Years 1 Year
------------ ------------ ------------
<S> <C> <C> <C>
Class A +17.23% +15.16% +25.36%
- --------- ------ ------ ------
Class B +17.35% +15.16% +25.16%
- --------- ------ ------ ------
Class C +17.37% +15.43% +29.19%
- --------- ------ ------ ------
Class S +17.95% +16.54% +31.49%
- --------------------------------------------------------------------------------
</TABLE>
Top 10 Holdings
(by percentage of net assets)
(1) Cendant Global consumer & business services 4.2%
(2) America Online Internet software 3.1%
(3) Republic Industries Waste management 3.1%
(4) Tyco Diversified manufacturer 2.3%
(5) News Corp International media company 1.9%
(6) Mens' Wearhouse Retail apparel 1.9%
(7) Advanced Fibre Communications
Telecommunications equipment 1.9%
(8) Universal Outdoor Advertising company 1.8%
(9) Snyder Communications Advertising services 1.8%
(10) HBO Healthcare computerized systems 1.7%
These securities represent an aggregate of 23.7% 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)
- -------------------------------- [Bar Chart] -----------------------------------
Business Service 14.6%
Retail Trade 14.1%
Computer Software
& Service 14.0%
Recreation 11.0%
Insurance 5.8%
Total: 59.5%
- --------------------------------------------------------------------------------
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ --------------
<S> <C> <C>
COMMON STOCKS 98.0%
Basic Industries 4.0%
Electrical Equipment 0.3%
Sunbeam Corp. .................................... 92,100 $ 4,058,156
-----------
Machinery 3.7%
Harsco Corp. ..................................... 154,600 7,101,938
Terex Corp.* ..................................... 352,200 9,531,412
Tyco International Ltd. .......................... 504,600 27,563,775
-----------
44,197,125
-----------
Total Basic Industries ..................................... 48,255,281
-----------
Consumer Cyclical 34.8%
Automotive 3.3%
Budget Group Inc. Cl. A* ......................... 426,700 16,001,250
Danaher Corp. .................................... 186,000 14,124,375
Magna International, Inc. Cl. A .................. 130,300 10,155,257
-----------
40,280,882
-----------
Building 0.5%
Boston Properties Inc.* .......................... 174,400 6,136,700
-----------
Hotel & Restaurant 3.5%
Extended Stay America Inc.* ...................... 885,000 12,998,438
Interstate Hotels Co.* ........................... 310,200 11,128,425
Landry Seafood Restaurants Inc.* ................. 135,300 4,160,475
Mirage Resorts Inc.* ............................. 555,400 13,503,162
-----------
41,790,500
-----------
Recreation 11.0%
CBS Corp. ........................................ 526,500 17,868,094
Chancellor Media Corp. ........................... 293,400 13,459,725
Florida Panthers Holdings Inc. Cl. A* ............ 521,900 11,612,275
Harley Davidson Inc. ............................. 386,500 12,754,500
International Game Technology Inc. ............... 570,000 14,250,000
News Corp. Ltd. ADR .............................. 845,900 22,786,431
Royal Caribbean Cruises Ltd.* .................... 144,200 10,103,012
TCA Cable TV Inc.* ............................... 125,000 7,390,625
Ticketmaster Group Inc.* ......................... 315,300 9,498,413
Univision Communications Inc. Cl. A* ............. 300,200 11,182,450
USA Networks Inc.* ............................... 94,600 2,577,850
-----------
133,483,375
-----------
Retail Trade 14.1%
Borders Group Inc.* .............................. 532,700 18,145,094
Cendant Corp.* ................................... 1,294,861 51,308,867
CVS Corp. ........................................ 115,600 8,727,800
Dayton Hudson Corp. .............................. 140,000 12,320,000
Family Dollar Stores Inc. ........................ 212,400 8,071,200
Fred Meyer Inc.* ................................. 149,200 6,891,175
Jones Apparel Group Inc.* ........................ 218,600 12,036,662
Value
Shares (Note 1)
----------- ------------
Linens 'n Things Inc.* ........................... 292,100 $16,047,244
Proffitts Inc.* .................................. 425,200 15,413,500
Safeway Inc. ..................................... 516,000 19,059,750
Steelcase Inc. Cl. A* ............................ 82,000 2,993,000
-----------
171,014,292
-----------
Textile & Apparel 2.4%
Men's Wearhouse, Inc.* ........................... 614,775 22,746,675
Tommy Hilfiger Corp.* ............................ 102,800 6,174,425
-----------
28,921,100
-----------
Total Consumer Cyclical .................................... 421,626,849
-----------
Consumer Staple 23.9%
Business Service 14.6%
Apollo Group Inc. Cl. A* ......................... 206,600 9,942,625
Caribiner International Inc.* .................... 462,000 17,787,000
Central Parking Corp. ............................ 55,700 2,659,675
Creative Technology Ltd.* ........................ 317,600 7,146,000
HBO & Co. ........................................ 338,600 20,442,975
Jacor Communications Inc.* ....................... 56,600 3,348,244
Outdoor Systems Inc.* ............................ 512,662 17,975,211
Republic Industries Inc.* ........................ 1,450,900 37,451,356
Snyder Communications Inc.* ...................... 459,200 21,525,000
Universal Outdoor Holdings Inc.* ................. 343,000 22,123,500
USA Waste Services Inc.* ......................... 380,800 16,969,400
-----------
177,370,986
-----------
Container 0.5%
Trinity Industries Inc. .......................... 106,200 5,827,725
-----------
Drug 1.6%
Warner-Lambert Co. ............................... 110,600 18,836,563
-----------
Food & Beverage 0.8%
Starbucks Corp.* ................................. 223,400 10,122,813
-----------
Hospital Supply 4.5%
Boston Scientific Corp.* ......................... 141,000 9,517,500
Health Management Associates Inc. Cl. A* ......... 431,100 12,340,237
Lincare Holdings Inc.* ........................... 29,700 2,097,562
Sybron International Corp.* ...................... 429,100 11,210,238
Tenet Healthcare Corp. ........................... 347,700 12,625,856
Trigon Healthcare Inc.* .......................... 219,300 6,592,706
-----------
54,384,099
-----------
Personal Care 1.1%
Avon Products Inc. ............................... 165,800 12,932,400
-----------
Printing & Publishing 0.8%
Valassis Communications Inc. ..................... 237,000 9,717,000
-----------
Total Consumer Staple ..........................................289,191,586
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ----------------
<S> <C> <C>
Energy 1.8%
Oil 0.7%
Oryx Energy Co. .................................. 335,600 $ 8,725,600
-------------
Oil Service 1.1%
Ensco International Inc. ......................... 241,700 6,707,175
Schlumberger Ltd. ................................ 75,800 5,741,850
-------------
12,449,025
-------------
Total Energy .............................................. 21,174,625
-------------
Finance 9.1%
Bank 1.6%
Bank United Corp. Cl. A* ......................... 255,400 12,770,000
H.F. Ahmanson & Co. .............................. 12,400 961,000
TCF Financial Corp. .............................. 155,700 5,284,069
-------------
19,015,069
-------------
Financial Service 1.7%
Merrill Lynch & Company Inc. ..................... 210,800 17,496,400
Sirrom Capital Corp.* ............................ 126,400 3,799,900
-------------
21,296,300
-------------
Insurance 5.8%
Ace Ltd. ......................................... 414,300 15,613,931
Hartford Financial Services Group, Inc.* ......... 121,100 13,139,350
Provident Companies, Inc. ........................ 322,200 11,055,488
Travelers Group Inc. ............................. 295,850 17,751,000
UNUM Corp. ....................................... 230,700 12,731,756
-------------
70,291,525
-------------
Total Finance ............................................. 110,602,894
-------------
Science & Technology 23.3%
Computer Software & Service 14.0%
America Online Inc.* ............................. 553,400 37,804,137
Ascend Communications Inc.* ...................... 185,200 7,014,450
Check Point Software Technologies Ltd.* .......... 156,100 7,131,819
Cisco Systems Inc.* .............................. 264,550 18,088,606
Computer Associates International Inc. ........... 335,000 19,346,250
EMC Corp.* ....................................... 387,600 14,656,125
Fiserv Inc.* ..................................... 121,600 7,706,400
I2 Technologies Inc.* ............................ 126,900 8,327,812
Industir-Matematik International Corp.* .......... 237,100 7,439,013
Microsoft Corp.* ................................. 179,600 16,074,200
Networks Associates Inc.* ........................ 214,800 14,230,500
Oracle Systems Corp.* ............................ 357,600 11,286,750
-------------
169,106,062
-------------
Value
Shares (Note 1)
----------- -------------
Electronic Components 4.6%
Analog Devices Inc.* ............................. 450,300 $14,972,475
CHS Electronics Inc.* ............................ 348,550 6,535,313
Intel Corp.* ..................................... 78,100 6,096,681
Sanmina Corp.* ................................... 162,300 11,350,856
Texas Instruments Inc. ........................... 213,000 11,528,625
Vishay Intertechnology Inc.* ..................... 232,500 5,463,750
-------------
55,947,700
-------------
Electronic Equipment 3.3%
Advanced Fibre Communications, Inc.* ............. 619,500 22,534,313
Sterling Commerce Inc.* .......................... 123,600 5,731,950
Tellabs Inc.* .................................... 171,000 11,478,375
-------------
39,744,638
-------------
Office Equipment 1.4%
Sun Microsystems Inc.* ........................... 410,200 17,113,031
-------------
Total Science & Technology .................................
281,911,431
-------------
Utility 1.1%
Telephone 1.1%
LCI International Inc. ........................... 268,200 10,325,700
Qwest Communications International Inc.* ......... 89,800 3,490,975
-------------
13,816,675
-------------
Total Utility ..............................................
13,816,675
-------------
Total Common Stocks (Cost $819,225,083).....................
1,186,579,341
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
------------- -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 2.1%
American Express Credit
Corp., 5.68% ................ $2,350,000 4/06/1998 2,350,000
Merrill Lynch & Company
Inc., 5.80% ................. 17,000,000 4/01/1998 17,000,000
Norwest Financial Inc., 5.54% . 6,490,000 4/01/1998 6,490,000
----------
Total Short-Term Obligations (Cost $25,840,000) ......... 25,840,000
----------
Total Investments (Cost $845,065,083)--100.1% ........... 1,212,419,341
Cash and Other Assets, Less Liabilities--(0.1%) ......... (1,682,548)
-------------
Net Assets--100.0% ...................................... $1,210,736,793
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Federal Income Tax Information:
At March 31, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $846,116,976 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost .... $373,518,969
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value .... (7,216,604)
------------
$366,302,365
============
</TABLE>
- --------------------------------------------------------------------------------
* Nonincome-producing securities
ADR stands for American Despositary Receipt, representing ownership of foreign
securities.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $845,065,083) (Note 1)................. $1,212,419,341
Cash .............................................................. 970
Receivable for securities sold .................................... 21,017,211
Receivable for fund shares sold ................................... 739,601
Dividends and interest receivable ................................. 210,935
Other assets ...................................................... 436,764
--------------
1,234,824,822
Liabilities
Payable for securities purchased .................................. 18,829,650
Payable for fund shares redeemed .................................. 2,712,170
Accrued transfer agent and shareholder services
(Note 2) ........................................................ 1,129,093
Accrued management fee (Note 2) ................................... 777,586
Accrued distribution and service fees (Note 4) .................... 607,911
Accrued trustees' fees (Note 2) ................................... 19,936
Other accrued expenses ............................................ 11,683
--------------
24,088,029
---------------
Net Assets $1,210,736,793
==============
Net Assets consist of:
Unrealized appreciation of investments ........................... $ 367,354,258
Accumulated net realized gain .................................... 35,014,750
Paid-in capital .................................................. 808,367,785
-------------
$1,210,736,793
==============
Net Asset Value and redemption price per share of
Class A shares ($444,576,625 [divided by] 28,744,932 shares) $15.47
======
Maximum Offering Price per share of Class A shares
($15.47 [divided by] .955)....................................... $16.20
======
Net Asset Value and offering price per share of Class
B shares ($512,261,997 [divided by] 34,446,699 shares)* ......... $14.87
======
Net Asset Value and offering price per share of Class
C shares ($84,383,371 [divided by] 5,663,710 shares)*............ $14.90
======
Net Asset Value, offering price and redemption price
per share of Class S shares ($169,514,800 [divided by]
10,785,026 shares) .............................................. $15.72
======
</TABLE>
- --------------------------------------------------------------------------------
* Redemption price per share for Class B and Class C is equal to net
asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $12,851.................... $ 1,808,160
Interest (Note 1) ............................................ 1,144,912
-----------
2,953,072
Expenses
Management fee (Note 2) ...................................... 4,432,844
Transfer agent and shareholder services (Note 2) ............. 1,668,468
Service fee-Class A (Note 4) ................................. 528,665
Distribution and service fees--Class B (Note 4) .............. 2,489,211
Distribution and service fees--Class C (Note 4) .............. 467,725
Custodian fee ................................................ 125,063
Registration fees ............................................ 111,531
Reports to shareholders ...................................... 64,549
Trustees' fees (Note 2) ...................................... 19,605
Audit fee .................................................... 18,904
Legal fees ................................................... 817
Miscellaneous ................................................ 21,456
-----------
9,948,838
-----------
Net investment loss .......................................... (6,995,766)
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) ............. 44,494,418
Net unrealized appreciation of investments ................... 18,016,916
-----------
Net gain on investments ...................................... 62,511,334
-----------
Net increase in net assets resulting from operations ......... $55,515,568
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
Year ended March 31, 1998
September 30, 1997 (Unaudited)
--------------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss ................. $ (8,567,006) $ (6,995,766)
Net realized gain on investments..... 11,938,430 44,494,418
Net unrealized appreciation of
investments ....................... 91,743,820 18,016,916
-------------- --------------
Net increase resulting from
operations......................... 95,115,244 55,515,568
-------------- --------------
Distribution from net realized
gains:
Class A ............................ -- (3,841,210)
Class B ............................ -- (4,724,013)
Class C ............................ -- (889,094)
Class S ............................ -- (1,541,241)
-------------- --------------
-- (10,995,558)
-------------- --------------
Net increase (decrease) from fund
share transactions (Note 5) ....... 521,782,662 (176,980,857)
-------------- --------------
Total increase (decrease) in net
assets ............................ 616,897,906 (132,460,847)
Net Assets
Beginning of period ................. 726,299,734 1,343,197,640
-------------- --------------
End of period ....................... $1,343,197,640 $1,210,736,793
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 1998
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 Emerging
Growth Fund and State Street Research Aurora 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. Before November 1, 1997, Class C shares
were designated Class D and Class S shares were designated Class C. 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 subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase. Class
C shares also pay annual distribution and service fees of 1.00%. Class S shares
are only offered through certain retirement accounts, advisory accounts of
State Street Research & Management Company (the "Adviser"), an indirect wholly
owned subsidiary of Metropolitan Life Insurance Company ("Metropolitan"), and
special programs. No sales charge is imposed at the time of purchase or
redemption of Class S shares. Class S shares do not pay any distribution or
service fees. The Fund's expenses are borne pro-rata by each class, except that
each class bears expenses, and has exclusive voting rights with respect to
provisions of the 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 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.
E. Securities Lending
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At March 31, 1998, the value of the securities loaned and the value of
collateral were $63,509,625 and $67,676,074, respectively. During the six
months ended March 31, 1998, income from securities lending amounted to
$102,452 and is included in interest income.
Note 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.75% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the six months ended March 31, 1998, the fees
pursuant to such agreement amounted to $4,432,844.
State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
6
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
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, 1998, the amount of such expenses was $393,319.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$19,605 during the six months ended March 31, 1998.
Note 3
For the six months ended March 31, 1998, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$443,261,480 and $655,475,332, 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 C shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal services and/or
the maintenance or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing
expenses. For the six months ended March 31, 1998, fees pursuant to such plan
amounted to $528,665, $2,489,211 and $467,725 for Class A, Class B and Class C
shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $45,107 and $283,196, respectively, on sales of Class A shares of
the Fund during the six months ended March 31, 1998, and that MetLife
Securities, Inc. earned commissions aggregating $483,546 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges of
$730,572 and $11,026 on redemptions of Class B and Class C shares,
respectively, during the same period.
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
Year ended
September 30, 1997
---------------------------------
Class A Shares Amount
- ------------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
Shares sold ....................................................... 3,871,815 $ 51,103,143
Issued in connection with acquisition of Capital Appreciation Fund 26,138,898 353,659,292
Issued upon reinvestment of distribution from net realized gains .. -- --
Shares repurchased ................................................ (6,367,582) (84,655,673)
---------- ---------------
Net increase (decrease) ........................................... 23,643,131 $ 320,106,762
========== ===============
Class B Shares Amount
- ------------------------------------------------------------------- ---------- ---------------
Shares sold ....................................................... 6,813,680 $ 86,756,398
Issued in connection with acquisition of Capital Appreciation Fund 14,162,121 185,240,546
Issued upon reinvestment of distribution from net realized gains .. -- --
Shares repurchased ................................................ (10,341,798) (133,779,126)
----------- ---------------
Net increase (decrease) ........................................... 10,634,003 $ 138,217,818
=========== ===============
<CAPTION>
Six months ended
March 31, 1998
(Unaudited)
--------------------------------
Class A Shares Amount
- ------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
Shares sold ....................................................... 1,577,857 $ 22,052,809
Issued in connection with acquisition of Capital Appreciation Fund -- --
Issued upon reinvestment of distribution from net realized gains .. 290,200 3,744,989
Shares repurchased ................................................ (5,067,187) (70,735,323)
---------- ------------
Net increase (decrease) ........................................... (3,199,130) $(44,937,525)
========== ============
Class B Shares Amount
- -------------------------------------------------------------------- ---------- ------------
Shares sold ....................................................... 1,961,590 $ 26,558,597
Issued in connection with acquisition of Capital Appreciation Fund -- --
Issued upon reinvestment of distribution from net realized gains .. 363,257 4,523,184
Shares repurchased ................................................ (7,385,052) (99,123,638)
---------- ------------
Net increase (decrease) ........................................... (5,060,205) $(68,041,857)
========== ============
</TABLE>
<TABLE>
<CAPTION>
Class C (Formerly Class D) Shares Amount
- ------------------------------------------------------------------- ----------- ----------------
<S> <C> <C>
Shares sold ....................................................... 3,002,442 $ 38,095,940
Issued in connection with acquisition of Capital Appreciation Fund 361,359 4,733,802
Issued upon reinvestment of distribution from net realized gains .. -- --
Shares repurchased ................................................ (9,125,682) (119,035,228)
---------- -------------
Net decrease ...................................................... (5,761,881) $ (76,205,486)
========== =============
Class S (Formerly Class C) Shares Amount
- ------------------------------------------------------------------- ---------- -------------
Shares sold ....................................................... 1,093,116 $ 14,973,137
Issued in connection with acquisition of Capital Appreciation Fund 10,217,407 140,284,992
Issued upon reinvestment of distribution from net realized gains .. -- --
Shares repurchased ................................................ (1,127,539) (15,594,561)
---------- -------------
Net increase (decrease) ........................................... 10,182,984 $ 139,663,568
========== =============
<CAPTION>
Class C (Formerly Class D) Shares Amount
- ------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
Shares sold ....................................................... 665,064 $ 9,299,667
Issued in connection with acquisition of Capital Appreciation Fund -- --
Issued upon reinvestment of distribution from net realized gains .. 65,127 810,829
Shares repurchased ................................................ (3,484,975) (47,386,126)
---------- ------------
Net decrease ...................................................... (2,754,784) $(37,275,630)
========== ============
Class S (Formerly Class C) Shares Amount
- -------------------------------------------------------------------- ---------- ------------
Shares sold ....................................................... 1,955,543 $ 28,046,417
Issued in connection with acquisition of Capital Appreciation Fund -- --
Issued upon reinvestment of distribution from net realized gains .. 115,761 1,516,467
Shares repurchased ................................................ (3,968,374) (56,288,729)
---------- ------------
Net increase (decrease) ........................................... (1,897,070) $(26,725,845)
========== ============
</TABLE>
7
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
Years ended September 30 Six months ended
----------------------------------------------------------- March 31, 1998
1993(2) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
------------- ---------- ---------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 8.03 10.43 9.92 13.53 13.76 14.74
------- ------ ------ ------- ------- --------
Net investment loss ($) (0.03) (0.04) (0.04) (0.05) (0.08) (0.06)
Net realized and
unrealized gain on
investments ($) 2.43 0.28 3.69 1.30 1.06 0.92
------- ------- ------- ------- ------- --------
Total from investment
operations ($) 2.40 0.24 3.65 1.25 0.98 0.86
------- ------- ------- ------- ------- --------
Distributions from net
realized gains ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- ------- --------
Total distributions ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- ------- --------
Net asset value, end of
period ($) 10.43 9.92 13.53 13.76 14.74 15.47
======= ======= ======= ======= ======= ========
Total return(4) (%) 24.61(5) 2.51 36.95 10.12 7.12 5.97(5)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 7,251 19,891 55,250 114,247 470,977 444,577
Ratio of operating expenses
to average net assets (%) 2.43(6) 1.41 1.33 1.26 1.21 1.35(6)
Ratio of net investment loss
to average net assets (%) (1.43)(6) (0.55) (0.34) (0.39) (0.60) (0.85)(6)
Portfolio turnover rate (%) 129.57 167.08 214.59 215.07 230.66 38.90
Average commission rate(7) ($) -- -- -- 0.0278 0.0337 0.0376
<CAPTION>
Class B
---------------------------------------------------------------------------------
Years ended September 30 Six months ended
--------------------------------------------------------------- March 31, 1998
1993(3) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
---------------- ---------- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 8.68 10.40 9.82 13.29 13.40 14.24
------ -------- ------- ------- ------- --------
Net investment loss ($) (0.04) (0.08) (0.12) (0.14) (0.17) (0.11)
Net realized and
unrealized gain on
investments ($) 1.76 0.25 3.63 1.27 1.01 0.87
------- -------- ------- ------- ------- --------
Total from investment
operations ($) 1.72 0.17 3.51 1.13 0.84 0.76
------- -------- ------- ------- ------- --------
Distributions from net
realized gains ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- -------- ------- ------- ------- --------
Total distributions ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- -------- ------- ------- ------- --------
Net asset value, end of
period ($) 10.40 9.82 13.29 13.40 14.24 14.87
======= ======== ======= ======= ======= ========
Total return(4) (%) 19.82(5) 1.79 35.90 9.33 6.27 5.48(5)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 16,044 73,354 203,446 386,899 562,392 512,262
Ratio of operating expenses
to average net assets (%) 3.16(6) 2.16 2.08 2.01 1.98 2.09(6)
Ratio of net investment loss
to average net assets (%) (2.15)(6) (1.28) (1.10) (1.13) (1.32) (1.59)(6)
Portfolio turnover rate (%) 129.57 167.08 214.59 215.07 230.66 38.90
Average commission rate(7) ($) -- -- -- 0.0278 0.0337 0.0376
</TABLE>
- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) February 17, 1993 (commencement of share class designations) to September
30, 1993.
(3) March 15, 1993 (commencement of share class designations) to September 30,
1993.
(4) Does not reflect any front-end or contingent deferred sales charges.
(5) Not annualized
(6) Annualized
(7) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
September 30, 1996.
8
<PAGE>
STATE STREET RESEARCH CAPITAL FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C (Formerly Class D)
-----------------------------------------------------------------------------------
Years ended September 30 Six months ended
-------------------------------------------------------------- March 31, 1998
1993(3) 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
------------------ ---------- ---------- ----------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 8.68 10.39 9.83 13.31 13.42 14.26
------- ------- ------- ------- -------- ------
Net investment loss ($) (0.04) (0.09) (0.12) (0.14) (0.17) (0.11)
Net realized and
unrealized gain on
investments ($) 1.75 0.28 3.64 1.27 1.01 0.88
------- ------- ------- ------- -------- -------
Total from investment
operations ($) 1.71 0.19 3.52 1.13 0.84 0.77
------- ------- ------- ------- -------- -------
Distributions from net
realized gains ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- -------- -------
Total distributions ($) -- (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- -------- -------
Net asset value, end of
period ($) 10.39 9.83 13.31 13.42 14.26 14.90
======= ======= ======= ======= ======== =======
Total return(4) (%) 19.70(5) 2.00 36.07 9.23 6.26 5.54(5)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 5,011 37,783 95,797 190,319 120,051 84,383
Ratio of operating expenses
to average net assets (%) 3.16(6) 2.16 2.08 2.01 1.98 2.08(6)
Ratio of net investment loss
to average net assets (%) (2.16)(6) (1.28) (1.09) (1.13) (1.30) (1.59)(6)
Portfolio turnover rate (%) 129.57 167.08 214.59 215.07 230.66 38.90
Average commission rate(7) ($) -- -- -- 0.0278 0.0337 0.0376
<CAPTION>
Class S (Formerly Class C)
---------------------------------------------------------------------------
Years ended September 30 Six months ended
--------------------------------------------------------- March 31, 1998
1993 1994 1995(1) 1996(1) 1997(1) (Unaudited)(1)
---------- ---------- ---------- ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 7.96 10.46 9.99 13.66 13.94 14.96
------- ------- ------- ------ -------- ---------
Net investment loss ($) (0.06) (0.03) (0.01) (0.01) (0.05) (0.04)
Net realized and
unrealized gain on
investments ($) 3.90 0.31 3.72 1.31 1.07 0.93
------- ------- ------- ------- -------- ---------
Total from investment
operations ($) 3.84 0.28 3.71 1.30 1.02 0.89
------- ------- ------- ------- -------- ---------
Distributions from net
realized gains ($) (1.34) (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- -------- ---------
Total distributions ($) (1.34) (0.75) (0.04) (1.02) -- (0.13)
------- ------- ------- ------- -------- ---------
Net asset value, end of
period ($) 10.46 9.99 13.66 13.94 14.96 15.72
======= ======= ======= ======= ======== =========
Total return(4) (%) 55.46 2.91 37.30 10.41 7.32 6.09(5)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 18,342 23,967 47,553 34,835 189,778 169,515
Ratio of operating expenses
to average net assets (%) 2.11 1.16 1.08 1.01 0.96 1.09(6)
Ratio of net investment loss
to average net assets (%) (1.30) (0.32) (0.07) (0.08) (0.37) (0.59)(6)
Portfolio turnover rate (%) 129.57 167.08 214.59 215.07 230.66 38.90
Average commission rate(7) ($) -- -- -- 0.0278 0.0337 0.0376
</TABLE>
- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) February 17, 1993 (commencement of share class designations) to September
30, 1993.
(3) March 15, 1993 (commencement of share class designations) to September 30,
1993.
(4) Does not reflect any front-end or contingent deferred sales charges.
(5) Not annualized
(6) Annualized
(7) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
September 30, 1996.
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
Service Center
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
Jesus A. Cabrera
Vice President
Lawrence J. Haverty, Jr.
Vice President
Richard J. Jodka
Vice President
Rudolph K. Kluiber
Vice President
James M. Weiss
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Steve A. Garban
Retired; formerly Senior Vice President for Finance and Operations and
Treasurer, The Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the Board and Chief Financial Officer,
St. Regis Corp.
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Associate, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
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
10
<PAGE>
[BACK COVER]
State Street Research Capital Fund ----------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Permit #20
Holliston, MA
01746
----------------
Questions? Comments?
Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408 or
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com
[SSR LOGO] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Capital Fund
prospectus. When used after June 30, 1998, this report must be accompanied by a
current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 4931-980522(0699)SSR-LD CF-593D-0598
<PAGE>
[FRONT COVER]
STATE STREET RESEARCH
EMERGING GROWTH FUND
SEMIANNUAL REPORT
March 31, 1998
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
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
The Economy
[bullet] The last quarter of 1997 and the first quarter of 1998 were periods of
solid economic growth, marked by low inflation and strong investment
returns. Unemployment and interest rates remain low, and consumer
confidence continues at near-record highs.
[bullet] Favorable economic factors have stimulated a boom in the housing
market and stronger-than-expected retail sales.
[bullet] An economic crisis in Southeast Asia raised concerns about the
potential impact on U.S. exports and profits at multinational
companies. However, the effects have yet to be felt by American
companies.
The Markets
[bullet] The S&P 500, a broad measure of common stock performance, gained
17.21% for the six-month period.(1) Small stocks were strong at the
beginning of the period, then gave back some of their gains as turmoil
in Southeast Asia led a retreat to large-capitalization brand-name
companies. Small stocks picked up again in March, the final month of
the period.
[bullet] Bonds gained momentum at the beginning of the six-month period, as
long-term interest rates plunged below 6.0%, then delivered modest
gains in the second half. High-yield bonds were among the quarter's
strongest performers. Mortgage bonds held up well, despite concerns
that refinancing could become a negative factor in the period ahead.
THE FUND
Over the past six months
[bullet] For the six months ended March 31, 1998, Class A shares of Emerging
Growth Fund returned 5.59% [does not reflect sales charge.](2) The Fund
outperformed the Russell 2000 Growth Index, a common measure of small
company growth stock performance, which gained 2.71% over the same
period, and the Lipper Small Cap Fund Average, which was up 5.32%.
[bullet] Good stock selection among the consumer, financial, health care and
technology sectors helped boost performance. Both the consumer and
financial sectors offer growth potential at attractive valuations.
Business prospects have improved for health care companies. And
technology recovered from a sell-off during the fourth quarter of 1997.
[bullet] Declining oil prices hurt the Fund's investment in energy stocks.
Current Strategy
[bullet] The manager added to the Fund's investment in technology and health
care stocks.
[bullet] Because the small-cap sector, in general, is at or near a historical
low in valuation relative to large-cap stocks, the Fund continues to
seek opportunity among small-cap stocks with growth potential and
attractive valuations.
March 31, 1998
(1)The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The index is unmanaged
and does not take sales charges into account. Direct investment in the index is
not possible; results are for illustrative purposes only.
(2) 5.15% for Class B shares; 5.16% for Class C shares; 5.73% for Class S
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 may include periods
prior to the adoption of class designations in 1994, which resulted in new or
increased 12b-1 fees of up to 1% per class thereafter and which will reduce
subsequent performance. "S" shares, offered without a sales charge, are
available through certain employee benefit plans and special programs.
(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges, where applicable.
(5) Before November 1, 1997, Class C shares were designated Class D, and Class S
shares were designated Class C.
Because the Fund invests in emerging growth and special situation companies, an
investment in the Fund may involve greater-than-average risk and above-average
price fluctuation. Small-company stocks are more volatile than large-company
stocks.
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, 1998)
- --------------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3),(4),(5)
<TABLE>
<CAPTION>
Life of Fund
(since 10/4/93) 1 year
----------------- -----------
<S> <C> <C>
Class A 13.56% 50.29%
- --------- ----- -----
Class B 13.65% 51.17%
- --------- ----- -----
Class C 13.95% 55.44%
- --------- ----- -----
Class S 15.07% 57.94%
</TABLE>
Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses; without subsidization, performance would have been
lower.
Top 10 Holdings
(by percentage of net assets)
(1) Total Renal Care Dialysis centers 4.0%
(2) Chicago Miniature Lamp Lighting products 2.7%
(3) Biovail International pharmaceutical company 2.6%
(4) Radiant Systems Integrated systems 2.1%
(5) Remec Defense systems equipment 2.1%
(6) Intelligent Polymers Drug delivery systems 2.0%
(7) Steiner Leisure Commerical services 2.0%
(8) Aeroflex Electronics 1.8%
(9) ITEQ Industrial products & services 1.6%
(10) Wesley Jessen VisionCare Contact lens products 1.6%
These securities represent an aggregate of 22.5% 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)
- -------------------------------- [Bar Chart] -----------------------------------
Computer Software & Service 13.1%
Business Service 8.6%
Drug 8.5%
Hospital Supply 8.4%
Electronic Equipment 7.1%
Total: 45.7%
- --------------------------------------------------------------------------------
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------------- -----------
<S> <C> <C>
COMMON STOCKS 92.1%
Basic Industries 6.6%
Electrical Equipment 1.5%
Aztec Manufacturing Co.* ....................... 60,000 $ 862,500
Essex International Inc.* ...................... 24,300 959,850
----------
1,822,350
----------
Machinery 3.0%
ITEQ Inc.* ..................................... 136,000 1,938,000
Terex Corp.* ................................... 64,200 1,737,412
----------
3,675,412
----------
Metal & Mining 1.8%
Chicago Bridge & Iron Co. NV* .................. 39,700 664,975
Wyman-Gordon Co.* .............................. 69,600 1,592,100
----------
2,257,075
----------
Truckers 0.3%
CNF Transportation Inc. ........................ 11,800 424,063
----------
Total Basic Industries ........................................... 8,178,900
----------
Consumer Cyclical 13.8%
Automotive 0.7%
Budget Group Inc. Cl. A* ....................... 22,300 836,250
----------
Hotel & Restaurant 0.3%
Landry Seafood Restaurants Inc.* ............... 10,000 307,500
----------
Recreation 4.1%
Cinar Films Inc.* .............................. 7,100 302,638
International Game Technology Inc. ............. 36,400 910,000
Royal Olympic Cruise Lines Inc.* ............... 21,400 358,450
Steiner Leisure Ltd.* .......................... 47,550 2,416,134
USA Networks Inc.* ............................. 41,200 1,122,700
----------
5,109,922
----------
Retail Trade 6.4%
Abercrombie & Fitch Co. Cl. A* ................. 20,200 849,662
Blyth Industries Inc.* ......................... 17,300 590,363
Borders Group Inc.* ............................ 29,500 1,004,844
Brylane Inc.* .................................. 18,700 1,048,369
CSK Auto Corp.* ................................ 10,300 231,750
InaCom Corp.* .................................. 17,200 475,150
Jones Apparel Group Inc.* ...................... 22,200 1,222,387
Linens 'n Things Inc.* ......................... 17,300 950,419
Proffitts Inc.* ................................ 28,900 1,047,625
RDO Equipment Co. Cl. A* ....................... 33,400 501,000
----------
7,921,569
----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------------- ----------------
<S> <C> <C>
Textile & Apparel 2.3%
Columbia Sportswear Co.* ....................... 1,400 $ 29,575
Men's Wearhouse, Inc.* ......................... 21,800 806,600
Timberland Co. Cl. A* .......................... 13,400 958,100
Warnaco Group Inc. Cl. A ....................... 26,500 1,040,125
----------
2,834,400
----------
Total Consumer Cyclical ............................................. 17,009,641
----------
Consumer Staple 29.5%
Business Service 8.6%
American Eco Corp.* ............................ 64,300 622,906
Avis Rent A Car, Inc.* ......................... 11,600 376,275
Caribiner International Inc.* .................. 32,700 1,258,950
Dollar Thrifty Automotive Group, Inc.* ......... 20,600 463,500
Hagler Bailly Inc.* ............................ 39,400 985,000
HBO & Co. ...................................... 20,800 1,255,800
PMT Services Inc.* ............................. 46,800 839,475
Snyder Communications Inc.* .................... 39,000 1,828,125
Staff Leasing Inc.* ............................ 19,500 541,125
Universal Outdoor Holdings Inc.* ............... 20,400 1,315,800
Waddell & Reed Financial Inc. Cl. A* ........... 13,400 348,400
Waterlink Inc.* ................................ 58,600 820,400
----------
10,655,756
----------
Container 0.9%
Trinity Industries Inc. ........................ 20,000 1,097,500
----------
Drug 8.5%
Atrix Laboratories Inc.* ....................... 38,700 735,300
Biovail Corp.* ................................. 67,700 3,266,525
Columbia Laboratories Inc.* .................... 44,100 609,131
Intelligent Polymers Ltd.* ..................... 79,000 2,429,250
Kos Pharmaceuticals Inc. ....................... 118,900 1,114,688
Nutraceutical International Corp.* ............. 4,700 103,400
Pathogenesis Corp.* ............................ 18,400 616,400
PharmaPrint Inc.* .............................. 39,200 470,400
Spiros Development Corp.* ...................... 71,800 1,148,800
----------
10,493,894
----------
Hospital Supply 8.4%
Aradigm Corp.* ................................. 49,700 627,463
Aviron Corp.* .................................. 35,300 816,312
Henry Schein Inc.* ............................. 16,000 664,000
National Surgery Centers Inc.* ................. 29,100 743,869
Respironics Inc.* .............................. 41,314 1,195,524
Total Renal Care Holdings Inc.* ................ 149,500 4,980,219
Trigon Healthcare Inc.* ........................ 17,900 538,119
Vital Signs Inc.* .............................. 31,900 721,737
----------
10,287,243
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ----------
<S> <C> <C>
Personal Care 1.6%
Wesley Jessen VisionCare Inc.* .................. 58,300 $1,916,612
----------
Printing & Publishing 1.5%
Hollinger International, Inc. Cl. A* ............ 52,400 871,150
Valassis Communications Inc. .................... 24,900 1,020,900
----------
1,892,050
----------
Total Consumer Staple ............................................. 36,343,055
----------
Energy 4.8%
Oil 3.3%
Abacan Resource Corp.* .......................... 397,200 558,563
Arakis Energy Corp.* ............................ 187,700 375,400
KCS Energy Inc. ................................. 44,200 707,200
Maxx Petroleum Ltd.* ............................ 335,900 440,869
Post Energy Corp.* .............................. 174,800 505,826
Seagull Energy Corp.* ........................... 31,700 608,244
Seven Seas Petroleum Inc.* ...................... 33,500 868,906
----------
4,065,008
----------
Oil Service 1.5%
Cliffs Drilling Co.* ............................ 15,800 652,737
TMBR / Sharp Drilling Inc.* ..................... 400 4,600
UTI Energy Corp.* ............................... 37,300 613,119
Willbros Group Inc.* ............................ 35,900 590,106
----------
1,860,562
----------
Total Energy ...................................................... 5,925,570
----------
Finance 11.1%
Bank 2.0%
Bank United Corp. Cl. A* ........................ 17,600 880,000
Commercial Federal Corp. ........................ 22,050 802,069
North Fork Bancorporation Inc.* ................. 20,800 803,400
----------
2,485,469
----------
Financial Service 5.2%
Contifinancial Corp.* ........................... 37,100 1,131,550
CRIIMI MAE Inc.* ................................ 27,700 427,619
FirstPlus Financial Group Inc.* ................. 25,200 1,058,400
Healthcare Financial Partners Inc.* ............. 22,300 1,056,462
Medallion Financial Corp.* ...................... 33,300 903,263
T & W Financial Corp.* .......................... 64,300 1,848,625
----------
6,425,919
----------
Insurance 3.9%
Chartwell Re Corp.* ............................. 19,400 657,175
Delphi Financial Group Inc. Cl. A* .............. 12,852 684,369
E.W. Blanch Holdings Inc.* ...................... 30,000 1,151,250
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ----------
<S> <C> <C>
Fidelity National Financial Inc.* ............... 21,692 $ 797,174
HCC Insurance Holdings Inc. ..................... 19,500 448,500
Mutual Risk Management Ltd. ..................... 30,332 1,027,496
----------
4,765,964
----------
Total Finance ..................................................... 13,677,352
----------
Science & Technology 25.9%
Aerospace 0.6%
Anaren Microwave Inc.* .......................... 34,100 750,200
----------
Computer Software & Service 13.1%
Box Hill Systems Corp.* ......................... 39,800 509,938
Check Point Software Technologies Ltd.* ......... 27,300 1,247,269
Diamond Multimedia Systems Inc.* ................ 67,400 1,002,575
Duane Reade Inc.* ............................... 4,600 117,588
Genesys Telecommunications, Inc.* ............... 28,100 1,067,800
I2 Technologies Inc.* ........................... 10,000 656,250
Industir-Matematik International Corp.* ......... 40,100 1,258,137
JDA Software Group Inc.* ........................ 14,800 786,250
QAD Inc.* ....................................... 34,300 503,781
Radiant Systems Inc.* ........................... 106,200 2,628,450
Saville Systems PLC ADR* ........................ 12,600 645,750
Standard Microsystems Corp.* .................... 34,500 336,375
STB Systems Inc. ................................ 37,600 752,000
TCSI Corp.* ..................................... 82,400 587,100
Titan Corp.* .................................... 68,900 452,156
Transition Systems Inc.* ........................ 44,300 902,612
Veritas Software Co.* ........................... 14,900 880,962
Walker Interactive Systems, Inc.* ............... 52,400 1,025,075
Xylan Corp.* .................................... 32,700 797,063
----------
16,157,131
----------
Electronic Components 4.6%
CHS Electronics Inc.* ........................... 30,850 578,438
ONIX Systems Inc.* .............................. 53,300 772,850
Remec Inc.* ..................................... 90,900 2,607,694
RF Micro Devices Inc.* .......................... 42,000 614,250
Vitesse Semiconductor Corp.* .................... 11,900 561,159
World Access Inc.* .............................. 17,500 568,750
----------
5,703,141
----------
Electronic Equipment 7.1%
Advanced Fibre Communications, Inc.* ............ 16,100 585,638
Aeroflex Inc.* .................................. 169,800 2,249,850
Applied Micro Circuits Corp.* ................... 28,000 630,000
ATMI Inc.* ...................................... 12,200 369,050
Chicago Miniature Lamp, Inc.* ................... 86,400 3,358,800
Pacific Aerospace Inc.* ......................... 85,000 499,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 1)
-------- --------------
<S> <C> <C>
Electronic Equipment (cont'd)
Spectrian Corp.* ................ 33,300 $ 553,613
Sterling Commerce Inc.* ......... 9,800 454,475
-----------
8,700,801
-----------
Office Equipment 0.5%
Gateway 2000 Inc.* .............. 13,000 610,187
-----------
Total Science & Technology ............... 31,921,460
-----------
Utility 0.4%
Natural Gas 0.4%
Calpine Corp.* .................. 26,000 463,125
-----------
Total Utility ............................ 463,125
-----------
Total Common Stocks (Cost $89,546,734).... 113,519,103
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
------------ -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 6.6%
American Express Credit Corp.,
5.56% ............................... $ 563,000 4/03/1998 563,000
American Express Credit Corp.,
5.59% ............................... 2,769,000 4/08/1998 2,769,000
Cargill Inc., 6.00% ................... 991,000 4/01/1998 991,000
Norwest Financial Inc., 5.54% ......... 3,868,000 4/03/1998 3,868,000
---------
Total Short-Term Obligations (Cost $8,191,000).................... 8,191,000
---------
Total Investments (Cost $97,737,734)--98.7%....................... 121,710,103
Cash and Other Assets, Less Liabilities--1.3% .................... 1,605,564
-----------
Net Assets--100.0% ............................................... $123,315,667
============
</TABLE>
<TABLE>
<S> <C>
Federal Income Tax Information:
At March 31, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $97,764,378 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost .......................................... $27,752,098
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................ (3,806,373)
-----------
$23,945,725
===========
</TABLE>
- --------------------------------------------------------------------------------
* Nonincome-producing securities
ADR stands for American Depository Receipt, representing ownership of foreign
securities.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $97,737,734) (Note 1).................... $121,710,103
Cash ................................................................ 600,278
Receivable for securities sold ...................................... 1,163,013
Receivable for fund shares sold ..................................... 337,644
Dividends and interest receivable ................................... 14,754
Receivable from Distributor (Note 3) ................................ 7,366
Deferred organization costs and other assets (Note 1) ............... 27,225
------------
123,860,383
Liabilities
Accrued management fee (Note 2) ..................................... 135,230
Accrued distribution and service fees (Note 5) ...................... 120,240
Payable for fund shares redeemed .................................... 114,591
Payable for securities purchased .................................... 43,500
Accrued transfer agent and shareholder services
(Note 2) .......................................................... 29,812
Accrued trustees' fees (Note 2) ..................................... 10,885
Other accrued expenses .............................................. 90,458
------------
544,716
------------
Net Assets $123,315,667
============
Net Assets consist of:
Unrealized appreciation of investments ............................. $23,972,369
Accumulated net realized gain ...................................... 3,002,423
Paid-in capital .................................................... 96,340,875
------------
$123,315,667
============
Net Asset Value and redemption price per share of
Class A shares ($43,079,940 [divided by] 3,225,300 shares)......... $13.36
======
Maximum Offering Price per share of Class A shares
($13.36 [divided by] .955)......................................... $13.99
======
Net Asset Value and offering price per share of Class
B shares ($62,568,057 [divided by] 4,871,336 shares)*.............. $12.84
======
Net Asset Value and offering price per share of Class
C shares ($9,713,267 [divided by] 756,054 shares)*................. $12.85
======
Net Asset Value, offering price and redemption price
per share of Class S shares ($7,954,403 [divided by] 585,390
shares) ........................................................... $13.59
======
</TABLE>
- --------------------------------------------------------------------------------
* Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $673....................... $ 105,495
Interest (Note 1) ............................................ 367,388
----------
472,883
Expenses
Management fee (Note 2) ...................................... 359,237
Transfer agent and shareholder services (Note 2) ............. 92,571
Custodian fee ................................................ 55,488
Service fee--Class A (Note 5) ................................ 43,691
Distribution and service fees--Class B (Note 5) .............. 231,720
Distribution and service fees--Class C (Note 5) .............. 38,874
Registration fees ............................................ 25,122
Reports to shareholders ...................................... 21,927
Audit fee .................................................... 10,008
Trustees' fees (Note 2) ...................................... 9,518
Legal fees ................................................... 5,138
Amortization of organization costs (Note 1) .................. 3,239
Miscellaneous ................................................ 3,441
----------
899,974
Expenses borne by the Distributor (Note 3) ................... (58,868)
----------
841,106
----------
Net investment loss .......................................... (368,223)
----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) ............. 6,040,071
Net unrealized appreciation of investments ................... 2,341,296
----------
Net gain on investments ...................................... 8,381,367
----------
Net increase in net assets resulting from operations ......... $8,013,144
==========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
Year ended March 31, 1998
September 30, 1997 (Unaudited)
-------------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss .................. $ (615,038) $ (368,223)
Net realized gain on
investments ........................ 14,594,498 6,040,071
Net unrealized appreciation of
investments ........................ 12,653,977 2,341,296
----------- ------------
Net increase resulting from
operations.......................... 26,633,437 8,013,144
----------- ------------
Distributions from net
realized gains:
Class A ............................. (1,462,798) (5,928,768)
Class B ............................. (1,761,067) (7,729,363)
Class C ............................. (320,673) (1,418,848)
Class S ............................. (1,026,873) (1,185,620)
----------- ------------
(4,571,411) (16,262,599)
----------- ------------
Net increase from fund share
transactions (Note 6) .............. 6,103,327 42,139,958
----------- ------------
Total increase in net assets ......... 28,165,353 33,890,503
Net Assets
Beginning of period .................. 61,259,811 89,425,164
----------- ------------
End of period ........................ $89,425,164 $123,315,667
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 1998
Note 1
State Street Research Emerging 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 Emerging Growth Fund, State Street Research
Capital Fund and State Street Research Aurora 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. Before November 1, 1997, Class C shares
were designated Class D and Class S shares were designated Class C. 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 subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase. Class
C shares also pay annual distribution and service fees of 1.00%. Class S shares
are only offered through certain retirement accounts, advisory accounts of
State Street Research & Management Company (the "Adviser"), an indirect wholly
owned subsidiary of Metropolitan Life Insurance Company ("Metropolitan"), and
special programs. No sales charge is imposed at the time of purchase or
redemption of Class S shares. Class S shares do not pay any distribution or
service fees. The Fund's expenses are borne pro-rata by each class, except that
each class bears expenses, and has exclusive voting rights with respect to
provisions of the 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.
F. Securities Lending
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At March 31, 1998, the value of the securities loaned and the value of
collateral were $14,517,406 and $14,620,424, respectively. During the six
months ended March 31, 1998, income from securities lending amounted to $41,978
and is included in interest income.
Note 2
The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees equal to 0.75% of the Fund's average daily net
assets. In consideration of these fees, the Adviser furnishes the Fund with
management, investment advisory, statistical and research facilities and
services. The Adviser also pays all salaries, rent and certain other expenses
of management. During the six months ended March 31, 1998, the fees pursuant to
such agreement amounted to $359,237.
6
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. In addition, Metropolitan receives a fee for maintenance of
the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through or
under which shares of the Fund may be purchased. During the six months ended
March 31, 1998, the amount of such shareholder servicing and account
maintenance expenses was $33,717.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$9,518 during the six months ended March 31, 1998.
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, 1998, the amount of such expenses assumed
by the Distributor and its affiliates was $58,868.
Note 4
For the six months ended March 31, 1998, exclusive of short-term investments
and U.S. Government obligations, purchases and sales of securities aggregated
$71,223,900 and $49,130,766, 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 C shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal services and/or
the maintenance or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing
expenses. For the six months ended March 31, 1998, fees pursuant to such plan
amounted to $43,691, $231,720 and $38,874 for Class A, Class B and Class C,
respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $26,287 and $127,824, respectively, on sales of Class A shares of
the Fund during the six months ended March 31, 1998, and that MetLife
Securities, Inc. earned commissions aggregating $344,018 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
aggregating $21,951 and $642 on redemptions of Class B and Class C shares,
respectively, during the same period.
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
Year ended March 31, 1998
September 30, 1997 (Unaudited)
------------------------------ --------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold ...................................................... 736,606 $ 9,356,719 1,140,623 $4,056,279
Issued upon reinvestment of distributions from net realized gains 133,558 1,418,423 462,113 5,446,850
Shares redeemed .................................................. (399,385) (4,800,572) (595,557) 7,690,303)
-------- ------------ --------- ----------
Net increase ..................................................... 470,779 $ 5,974,570 1,007,179 $1,812,826
======== ============ ========= ==========
Class B Shares Amount Shares Amount
- ------------------------------------------------------------------ -------- ------------ --------- ----------
Shares sold ...................................................... 916,437 $ 11,267,074 1,990,256 $3,456,402
Issued upon reinvestment of distributions from net realized gains 157,306 1,632,835 522,996 5,952,742
Shares redeemed .................................................. (519,013) (5,932,931) (326,400) 3,908,395)
-------- ------------ --------- ----------
Net increase ..................................................... 554,730 $ 6,966,978 2,186,852 $5,500,749
======== ============ ========= ==========
Class C (Formerly Class D) Shares Amount Shares Amount
- ------------------------------------------------------------------ -------- ------------ --------- ----------
Shares sold ...................................................... 146,268 $ 1,835,625 268,459 $3,250,515
Issued upon reinvestment of distributions from net realized gains 29,013 300,866 74,509 848,275
Shares redeemed .................................................. (86,639) (977,990) (81,091) (949,941)
-------- ------------ --------- ----------
Net increase ..................................................... 88,642 $ 1,158,501 261,877 $3,148,849
======== ============ ========= ==========
Class S (Formerly Class C) Shares Amount Shares Amount
- ------------------------------------------------------------------ -------- ------------ --------- ----------
Shares sold ...................................................... 315,695 $ 3,716,288 152,697 $1,899,856
Issued upon reinvestment of distributions from net realized gains 95,612 1,026,868 98,988 1,185,510
Shares redeemed .................................................. (1,129,494) (12,739,878) (111,798) 1,407,832)
---------- ------------ --------- ----------
Net increase (decrease) .......................................... (718,187) $ (7,996,722) 139,887 $1,677,534
========== ============ ========= ==========
</TABLE>
7
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------
Years ended September 30
----------------------------------------------------- Six months ended
March 31, 1998
1994(2) 1995(1) 1996(1) 1997(1) (Unaudited)(1)
---------------- ---------- ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.45 8.56 9.69 11.33 15.53
----- ------ ------ ------ -----
Net investment loss ($)* (0.02) (0.08) (0.09) (0.08) (0.02)
Net realized and unrealized gain (loss)
on investments ($) (0.87) 1.21 1.73 5.13 0.46
------ ------- ------- ------- ------
Total from investment operations ($) (0.89) 1.13 1.64 5.05 0.44
------ ------- ------- ------- ------
Distributions from net realized gains ($) -- -- -- (0.85) (2.61)
------ ------- ------- ------- ------
Total distributions ($) -- -- -- (0.85) (2.61)
------ ------- ------- ------- ------
Net asset value, end of period ($) 8.56 9.69 11.33 15.53 13.36
====== ======= ======= ======= ======
Total return(4) (%) (9.42)(5) 13.20 16.92 48.00 5.59(5)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 21,986 21,480 19,791 34,446 43,080
Ratio of operating expenses to
average net assets (%)* 1.35(6) 1.35 1.35 1.35 1.35(6)
Ratio of net investment loss to
average net assets (%)* (0.58)(6) (0.93) (0.96) (0.64) (0.36)(6)
Portfolio turnover rate (%) 83.61 178.60 155.85 273.33 54.48
Average commission rate(7) ($) -- -- 0.0159 0.0201 0.0172
*Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) ($) 0.02 0.06 0.04 0.04 0.01
<CAPTION>
Class B
------------------------------------------------------------------------
Years ended September 30 Six months ended
------------------------------------------------------ March 31, 1998
1994(2) 1995(1) 1996(1) 1997(1) (Unaudited)(1)
----------------- ---------- ------------ ------------ -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.45 8.52 9.58 11.11 15.09
------ ------ ------ ------ -----
Net investment loss ($)* (0.06) (0.14) (0.17) (0.16) (0.07)
Net realized and unrealized gain (loss)
on investments ($) (0.87) 1.20 1.70 4.99 0.43
------- ------- ------- ------- ------
Total from investment operations ($) (0.93) 1.06 1.53 4.83 0.36
------- ------- ------- ------- ------
Distributions from net realized gains ($) -- -- -- (0.85) (2.61)
------- ------- ------- ------- ------
Total distributions ($) -- -- -- (0.85) (2.61)
------- ------- ------- ------- ------
Net asset value, end of period ($) 8.52 9.58 11.11 15.09 12.84
======= ======= ====== ====== ======
Total return(4) (%) (9.84)(5) 12.44 15.97 46.91 5.15(5)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 29,287 26,489 23,656 40,512 62,568
Ratio of operating expenses to
average net assets (%)* 2.10(6) 2.10 2.10 2.10 2.10(6)
Ratio of net investment loss to
average net assets (%)* (1.32)(6) (1.67) (1.71) (1.40) (1.11)(6)
Portfolio turnover rate (%) 83.61 178.60 155.85 273.33 54.48
Average commission rate(7) ($) -- -- 0.0159 0.0201 0.0172
*Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) ($) 0.02 0.06 0.04 0.03 0.01
</TABLE>
<TABLE>
<CAPTION>
Class C (Formerly Class D)
---------------------------------------------------------------------------
Years ended September 30
-------------------------------------------------------- Six months ended
March 31, 1998
1994(2) 1995(1) 1996(1) 1997(1) (Unaudited)(1)
----------------- ------------ ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.45 8.52 9.58 11.10 15.10
------ ------ ------ ------ -----
Net investment loss ($)* (0.06) (0.14) (0.16) (0.16) (0.07)
Net realized and unrealized gain (loss)
on investments ($) (0.87) 1.20 1.68 5.01 0.43
------- ------ ------- ------- ------
Total from investment operations ($) (0.93) 1.06 1.52 4.85 0.36
------- ------ ------- ------- ------
Distributions from net realized gains ($) -- -- -- (0.85) (2.61)
------- ------ ------- ------- ------
Total distributions ($) -- -- -- (0.85) (2.61)
------- ------ ------- ------- ------
Net asset value, end of period ($) 8.52 9.58 11.10 15.10 12.85
======= ====== ======= ======= ======
Total return(4) (%) (9.84)(5) 12.44 15.87 47.15 5.16(5)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 10,032 7,391 4,503 7,460 9,713
Ratio of operating expenses to
average net assets (%)* 2.10(6) 2.10 2.10 2.10 2.10(6)
Ratio of net investment loss to
average net assets (%)* (1.32)(6) (1.67) (1.71) (1.41) (1.11)(6)
Portfolio turnover rate (%) 83.61 178.60 155.85 273.33 54.48
Average commission rate(7) (%) -- -- 0.0159 0.0201 0.0172
*Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) ($) 0.02 0.06 0.04 0.03 0.01
<CAPTION>
Class S (Formerly Class C)
-----------------------------------------------------------------------
Years ended September 30 Six months ended
----------------------------------------------------- March 31, 1998
1994(3) 1995(1) 1996(1) 1997(1) (Unaudited)(1)
---------------- ---------- ------------ ------------ -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 8.60 9.77 11.44 15.73
----- ------ ------ ------ -----
Net investment loss ($)* (0.06) (0.06) (0.07) (0.04) (0.01)
Net realized and unrealized gain (loss)
on investments ($) (0.89) 1.23 1.74 5.18 0.48
------ ------- ------- ------- ------
Total from investment operations ($) (0.95) 1.17 1.67 5.14 0.47
------ ------- ------- ------- ------
Distributions from net realized gains ($) -- -- -- (0.85) (2.61)
------ ------- ------- ------- ------
Total distributions ($) -- -- -- (0.85) (2.61)
------ ------- ------- ------- ------
Net asset value, end of period ($) 8.60 9.77 11.44 15.73 13.59
====== ======= ======= ======= ======
Total return(4) (%) (9.95)(5) 13.60 17.09 48.34 5.73(5)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 7,033 12,380 13,311 7,008 7,954
Ratio of operating expenses to
average net assets (%)* 1.10(6) 1.10 1.10 1.10 1.10(6)
Ratio of net investment loss to
average net assets (%)* (0.68)(6) (0.71) (0.71) (0.39) (0.11)(6)
Portfolio turnover rate (%) 83.61 178.60 155.85 273.33 54.48
Average commission rate(7) (%) -- -- 0.0159 0.0201 0.0172
*Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) ($) 0.04 0.06 0.04 0.03 0.01
</TABLE>
- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) February 1, 1994 (commencement of share class designations) to September
30, 1994.
(3) October 4, 1993 (commencement of operations) to September 30, 1994.
(4) 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.
(5) Not annualized.
(6) Annualized.
(7) Average commission rate per share paid by the Fund for security trades on
which commissions are charged beginning with the fiscal year ended
September 30, 1996.
8
<PAGE>
STATE STREET RESEARCH EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH CAPITAL TRUST
- --------------------------------------------------------------------------------
Fund Information
State Street Research
Emerging 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
Service Center
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
Jesus A. Cabrera
Vice President
Lawrence J. Haverty, Jr.
Vice President
Richard J. Jodka
Vice President
Rudolph K. Kluiber
Vice President
James M. Weiss
Vice President
Gerard P. Maus
Treasurer
Joseph W. Canavan
Assistant Treasurer
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Assistant Secretary
Trustees
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Steve A. Garban
Retired; formerly Senior Vice President for Finance and Operations and
Treasurer, The Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the Board and Chief Financial
Officer, St. Regis Corp.
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Associate, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
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
9
<PAGE>
[BACK COVER]
State Street Research Emerging Growth Fund ----------------
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Permit #20
Holliston, MA
01746
----------------
Questions? Comments?
Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408, or
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com
[SSR Logo] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied by a current State Street Research Emerging Growth Fund prospectus.
When used after June 30, 1998, this report must be accompanied by a current
Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 4932-980522(0699)SSR-LD SCG-006E-0598
