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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8322
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State Street Research Securities Trust
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, MA 02111
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(Address of principal executive offices) (Zip code)
Francis J. McNamara, III, Secretary
State Street Research
One Financial Center, Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 617-357-1200
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Date of fiscal year end: 10/31/03
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Date of reporting period: 11/01/02 - 10/31/03
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
ITEM 1 (REPORT TO SHAREHOLDERS): The Annual Report is attached.
[BACKGROUND GRAPHIC]
[LOGO] STATE STREET RESEARCH
[PHOTO]
Legacy Fund
October 31, 2003
Annual Report to Shareholders
Table of Contents
3 Performance Discussion
6 Portfolio Holdings
8 Financial Statements
12 Financial Highlights
14 Independent Auditors'
Report
16 Trustees and Officers
FROM THE CHAIRMAN
State Street Research
Optimism in the Economy
The uncertainty that plagued the markets early in the 12-month period covered by
this report, gave way to optimism as economic news improved. Low short-term
interest rates, a significant income tax cut and higher government spending
worked together to boost economic growth to its highest level in four years.
Housing sales remained strong, although auto sales slipped late in the period.
Corporate profits staged a solid rebound. The employment picture brightened
during the month of October, as payrolls grew for the third consecutive month.
A Weak Start, Then Stocks Move Higher
The economy's weak showing held stocks back early in the period as investors
backed away from risk in the buildup to war with Iraq. However, in the second
quarter of 2003 stocks began an impressive rally that continued until the last
weeks of the period and rebounded again in October. Technology stocks were the
strongest performers. Consumer stocks also gained ground as spending remained
strong. In general, small- and mid-cap stocks outperformed large-caps, and
growth stocks significantly outpaced value. Although all stock market indexes
reported solid gains for the period, they were trimmed somewhat in the final
weeks of September after news that consumer confidence had dropped and rebounded
again in October.
Bonds Retreat in Second Half
As investors began to add risk back into their portfolios, lower-quality
segments of the bond market staged an impressive comeback. High-yield bonds and
emerging market bonds were the period's strongest performers. However, as
interest rates began to climb and as investors moved money into the stock
market, bonds gave back some of their gains in the second half of the period.
Mortgage bonds lagged as mortgage prepayment activity heated up in the spring.
Municipal bonds were hurt by concerns over state budget deficits and revenue
shortfalls.
Looking Ahead
A revival for riskier segments of both the stock and bond markets took many
investors by surprise over the past year. Yet, it provided an excellent reminder
that the best way to take advantage of the market's strongest gains is to own a
diversified portfolio of stocks and bonds. We hope you will take time to talk to
your financial advisor about diversification. And as always, we look forward to
helping you achieve your long-term financial goals with State Street Research
Funds.
Sincerely,
/s/ Richard S. Davis
Richard S. Davis
Chairman
October 31, 2003
- --------------------------------------------------------------------------------
A Special Message on Recent News
Recent articles in the press have highlighted investigations into after-hours
trading and frequent-trading practices in the mutual fund industry. These are
serious matters, and we want to assure you that State Street Research is
committed to maintaining full compliance with all legal requirements and ethical
standards regarding these and other mutual fund trading practices. In fact, our
mutual fund trading processes are designed to prevent these types of activities
from taking place, and we are committed to maintaining their integrity. Our
trade processing procedures carefully track the forward-pricing requirements
contained in federal regulations and in our funds' prospectuses. We closely
monitor trading in our funds and take measures to prevent market timing whenever
it is identified. Furthermore, we do not enter into any special arrangements
that would permit investors to avoid the forward-pricing or market-timing
provisions of our prospectuses.
In recent weeks, we have carefully reviewed our trading policies, procedures and
operations. In addition, our firm recommended early on that the funds' Trustees
engage an independent accounting firm, which has been reviewing trading issues
on behalf of our funds' Audit Committee. While there is always more work that
can be done, I am pleased to report that we believe our processes are working
effectively, based on our preliminary findings. We understand that our
relationship with our shareholders is based on trust, and we are committed to
acting in the best interests of our shareholders at all times.
- --------------------------------------------------------------------------------
2
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PERFORMANCE
- ----------------
Discussion as of October 31, 2003
How State Street Research Legacy Fund Performed
State Street Research Legacy Fund returned 19.58% for the 12-month period ended
October 31, 2003.(1) That was less than the Russell 1000[RegTM] Growth Index,
which returned 21.81% over the same period.(2) However, the fund outperformed
the Lipper Large-Cap Growth Funds Average, which returned 19.03% over the same
period.(3)
Reasons for the Fund's Performance
The fund posted strong gains as investors regained confidence in the equity
markets after three years of negative returns. Although large-cap stocks
generally underperformed small- and mid-caps, all sectors of the market
benefited from a rallying stock market. The fund's emphasis on high-quality
companies that have demonstrated strong fundamental growth in earnings was a
slight drag on performance relative to our benchmark because lower-quality
stocks were the top performers during the period. However, our stock selection
among consumer-oriented stocks contributed to the fund's strong absolute
returns. Two of the fund's top performers were online travel leader Expedia and
Internet portal Yahoo!. Retailer Best Buy also delivered solid returns.
Although Energy stocks were generally market laggards during the year, several
of our positions did well, including natural gas and crude oil producer
Burlington Resources, equipment and service provider Halliburton and Ocean
Energy, a North American offshore drilling company.
The fund's Technology investments lagged the index because we were focused on
higher-quality names during a period when many of the lower-quality names that
had been punished during the bear market were the best performers. Consumer
Staples stocks were another disappointment. Pepsi Bottling Group and Kraft Foods
missed earnings targets, and as a result their stock prices came down.
Looking Ahead
Going forward we will continue to try to identify those companies exhibiting
stable or accelerating growth. In this regard, we have recently added to our
exposure to Technology companies, such as Intel, Texas Instruments and National
Semiconductor, which we believe will continue to benefit from a rebound in
business spending. However, we remain underweight in Technology because we
believe the outlook for the broader sector remains uncertain. We are also
underweight in Health Care, especially large pharmaceutical companies, which are
struggling from a slowdown in prescription growth and new products.
Top 10 Holdings
- --------------------------------------------------------------------------------
Issuer/Security % of Fund Net Assets
1 Intel 5.1%
---------------------------------------
2 Pfizer 4.0%
---------------------------------------
3 Dell 3.0%
---------------------------------------
4 InterActiveCorp 3.0%
---------------------------------------
5 Cisco Systems 2.6%
---------------------------------------
6 Microsoft 2.6%
---------------------------------------
7 News Corp. 2.5%
---------------------------------------
8 Procter & Gamble 2.5%
---------------------------------------
9 General Electric 2.3%
---------------------------------------
10 Citigroup 2.0%
---------------------------------------
Total 29.6%
Because financial markets and mutual fund strategies are constantly evolving, it
is possible that the fund's holdings, market stance, outlook for various
industries or securities and other matters discussed in this report have changed
since this information was prepared. Portfolio changes should not be considered
recommendations for action by individual investors.
Performance: Class A
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(4,5)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ----------------------------------------------------------------
Return Before Taxes 19.58% 0.73% 3.05%
- ----------------------------------------------------------------
Return After Taxes
on Distributions 19.58% 0.73% 3.05%
- ----------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 12.22% 0.58% 2.47%
- ----------------------------------------------------------------
Fund average annual total return as of 9/30/03(4,5,6)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ----------------------------------------------------------------
Return Before Taxes 14.73% -0.46% 0.78%
- ----------------------------------------------------------------
Return After Taxes
on Distributions 14.73% -0.46% 0.78%
- ----------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 9.19% -0.37% 0.63%
- ----------------------------------------------------------------
See pages 4, 5 and 15 for additional performance data for Class A shares and
for performance data on other share classes.
(1) Class A shares; does not reflect sales charge.
(2) The Russell 1000 Growth Index contains those stocks within the complete
Russell 1000[RegTM] Index (a large-company index) that show above-average
growth. The index is unmanaged and does not take transaction charges into
consideration. It is not possible to invest directly in the index.
(3) The Lipper Large-Cap Growth Funds Average shows performance of a category
of mutual funds with similar goals. The Lipper average shows you how well
the fund has done compared with competing funds.
(4) Keep in mind that past performance is no guarantee of future results. The
fund's share price, yield and return will fluctuate, and you may have a
gain or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
(5) After-tax returns are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown, and after-tax returns shown are
not relevant to investors who hold their fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts
(IRAs). Return After Taxes on Distributions and Sale of Fund Shares for a
period may be greater than or equal to Return After Taxes on Distributions
for the same period because of losses realized on the sale of fund shares.
(6) Performance reflects a maximum 5.75% Class A share front-end sales charge,
where applicable.
State Street Research Legacy Fund 3
- ----------------
PERFORMANCE
- ----------------
Discussion as of October 31, 2003
These two pages focus on the fund's long-term track record. While a mutual
fund's past performance is not a guarantee of future results, long-term returns
can serve as an important context for evaluating recent performance. There are
three ways of measuring long-term performance: cumulative total returns,
average annual total returns and the change in dollar value over time of a
given investment. Information about these measures follows, while the share
class boxes contain the results of these measures for each share class.
Cumulative Total Return
Represents the total percentage you would have earned or lost if you had
invested a lump sum in the fund and left it there until the end of the period
indicated.
Average Annual Total Return
Represents the rate you would have had to earn during each year of a given time
period in order to end up with the fund's actual cumulative return for those
years. In reality, of course, fund performance varies from year to year.
Because of this, a fund's actual performance for a given year may be higher or
lower than an average annual performance figure.
$10,000 Over Life of Fund
Similar to cumulative total return, but uses dollars rather than percentages,
and assumes that the lump sum you invested was $10,000 (less the applicable
maximum sales charge, if any) and compares fund performance to the performance
of a market index.
Class A
Life of Fund
1 Year 5 Years (12/31/97)
- ----------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 19.58% 3.71% 19.16%
- ----------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 12.70% -2.25% 12.31%
- ----------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 12.70% -0.46% 2.01%
- ----------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class A Growth Index
------- ------------
'97 $ 9,425 $10,000
'98 $10,829 $11,824
'99 $13,796 $15,874
'00 $15,455 $17,355
'01 $10,910 $10,422
'02 $ 9,392 $ 8,377
'03 $11,231 $10,204
Class B(1)
Life of Fund
1 Year 5 Years (12/31/97)
- ----------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 18.73% -0.04% 14.16%
- ----------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 13.73% -2.03% 14.16%
- ----------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 13.73% -0.41% 2.14%
- ----------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class B(1) Growth Index
---------- ------------
'97 $10,000 $10,000
'98 $11,420 $11,824
'99 $14,437 $15,874
'00 $16,048 $17,355
'01 $11,246 $10,422
'02 $ 9,615 $ 8,377
'03 $11,416 $10,204
4
Class B (only available through exchanges from another Class B account)
Life of Fund
1 Year 5 Years (12/31/97)
- -----------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 19.86% 2.07% 16.56%
- -----------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 14.86% 0.07% 16.56%
- -----------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 14.86% 0.01% 2.66%
- -----------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class B Growth Index
------- ------------
'97 $10,000 $10,000
'98 $11,420 $11,824
'99 $14,437 $15,874
'00 $16,118 $17,355
'01 $11,326 $10,422
'02 $ 9,725 $ 8,377
'03 $11,656 $10,204
Class C
Life of Fund
1 Year 5 Years (12/31/97)
- -------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 18.73% -0.04% 14.16%
- -------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 17.73% -0.04% 14.16%
- -------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 17.73% -0.01% 2.30%
- -------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class C Growth Index
------- ------------
'97 $10,000 $10,000
'98 $11,420 $11,824
'99 $14,437 $15,874
'00 $16,058 $17,355
'01 $11,246 $10,422
'02 $ 9,615 $ 8,377
'03 $11,416 $10,204
Class R
Life of Fund
1 Year 5 Years (12/31/97)
- ------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 19.48% 3.62% 19.06%
- ------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 19.48% 3.62% 19.06%
- ------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 19.48% 0.71% 3.03%
- ------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class R Growth Index
------- ------------
'97 $10,000 $10,000
'98 $11,490 $11,824
'99 $14,637 $15,874
'00 $16,398 $17,355
'01 $11,576 $10,422
'02 $ 9,965 $ 8,377
'03 $11,906 $10,204
Class S
Life of Fund
1 Year 5 Years (12/31/97)
- ------------------------------------------------------------------------
Cumulative Total Return
(does not reflect sales charge) 20.02% 5.70% 21.76%
- ------------------------------------------------------------------------
Cumulative Total Return
(at maximum applicable sales charge) 20.02% 5.70% 21.76%
- ------------------------------------------------------------------------
Average Annual Total Return
(at maximum applicable sales charge) 20.02% 1.11% 3.43%
- ------------------------------------------------------------------------
$10,000 Over Life of Fund
(reflects maximum applicable sales charge)
[TABULAR REPRESENTATION OF LINE CHART]
Russell 1000
Class S Growth Index
------- ------------
'97 $10,000 $10,000
'98 $11,520 $11,824
'99 $14,707 $15,874
'00 $16,618 $17,355
'01 $11,756 $10,422
'02 $10,145 $ 8,377
'03 $12,176 $10,204
Keep in mind that past performance is no guarantee of future results. The fund's
share price, yield and return will fluctuate, and you may have a gain or loss
when you sell your shares. All returns assume reinvestment of capital gains
distributions and income dividends at net asset value. The returns shown do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions, or the redemption of fund shares. Performance reflects a maximum
5.75% Class A share front-end sales charge, or 5% Class B(1) or Class B share or
1% Class C share contingent deferred sales charge, where applicable. Performance
for Class B(1) shares reflects Class B share performance through December 31,
1998, and Class B(1) performance thereafter. Performance for Class R shares
reflects Class A share performance through April 2, 2003, and Class R share
performance thereafter. If the returns for Class B(1) and Class R shares had
reflected their current service/distribution (Rule 12b-1) fees for the entire
period, returns would have been lower. Class R and S shares, offered without
sales charge, are available through certain retirement plans and special
programs. The Russell 1000 Growth Index contains those stocks within the
complete Russell 1000 Index (a large-company index) that show above-average
growth. The index is unmanaged and does not take transaction charges into
consideration. It is not possible to invest directly in the index.
State Street Research Legacy Fund 5
- ----------------
PORTFOLIO
- ----------------
Holdings
October 31, 2003
Issuer Shares Value
- --------------------------------------------------------------------------------
Common Stocks 98.7%
Automobiles & Transportation 1.1%
Air Transport 1.1%
Expeditors International Inc. .................. 43,600 $ 1,636,744
Ryanair Holdings plc ADR* ...................... 39,600 2,039,400
-----------
Total Automobiles & Transportation ............................. 3,676,144
-----------
Consumer Discretionary 26.5%
Casinos/Gambling, Hotel/Motel 1.9%
International Game Technology Inc. ............. 197,900 6,481,225
-----------
Commercial Services 4.0%
InterActiveCorp* ............................... 282,103 10,356,001
Manpower Inc. .................................. 76,800 3,563,520
-----------
13,919,521
-----------
Communications, Media & Entertainment 3.5%
Univision Communications Inc.* ................. 149,600 5,078,920
Walt Disney Co. ................................ 313,600 7,099,904
-----------
12,178,824
-----------
Consumer Electronics 2.0%
Yahoo!, Inc.* .................................. 161,200 7,044,440
-----------
Consumer Products 1.7%
Avon Products Inc. ............................. 88,900 6,041,644
-----------
Consumer Services 2.0%
Apollo Group Inc.* ............................. 44,900 2,852,497
Career Education Corp.* ........................ 74,600 3,994,830
-----------
6,847,327
-----------
Printing & Publishing 2.5%
News Corp. Ltd. ADR ............................ 246,900 8,801,985
-----------
Restaurants 0.7%
Starbucks Corp.* ............................... 82,000 2,591,200
-----------
Retail 7.1%
Bed Bath & Beyond Inc.* ........................ 76,100 3,214,464
Best Buy Company Inc.* ......................... 64,200 3,743,502
Dollar General Corp. ........................... 77,800 1,748,166
Gap Inc. ....................................... 112,700 2,150,316
Lowes Companies Inc. ........................... 87,600 5,162,268
Staples Inc.* .................................. 131,400 3,524,148
Wal-Mart Stores Inc. ........................... 91,400 5,388,030
-----------
24,930,894
-----------
Shoes 0.5%
Nike Inc. ...................................... 28,400 1,814,760
-----------
Textile Apparel Manufacturers 0.6%
Coach Inc.* .................................... 56,000 1,986,320
-----------
Total Consumer Discretionary ................................... 92,638,140
-----------
Consumer Staples 6.0%
Beverages 1.9%
Coca-Cola Co. .................................. 148,100 6,871,840
-----------
Issuer Shares Value
- --------------------------------------------------------------------------------
Drug & Grocery Store Chains 0.8%
Whole Foods Market Inc.* ....................... 45,900 $ 2,719,116
-----------
Household Products 3.3%
Clorox Co. ..................................... 64,000 2,899,200
Procter & Gamble Co. ........................... 87,800 8,629,862
-----------
11,529,062
-----------
Total Consumer Staples ......................................... 21,120,018
-----------
Financial Services 10.1%
Banks & Savings & Loan 1.4%
Goldman Sachs Group Inc. ....................... 53,600 5,033,040
-----------
Insurance 1.1%
American International Group Inc. .............. 64,800 3,941,784
-----------
Miscellaneous Financial 7.1%
American Express Co. ........................... 122,550 5,751,272
Capital One Financial Corp. .................... 38,000 2,310,400
Citigroup Inc. ................................. 151,206 7,167,164
MBNA Corp. ..................................... 205,900 5,096,025
SLM Corp. ...................................... 115,000 4,503,400
-----------
24,828,261
-----------
Securities Brokerage & Services 0.5%
Ameritrade Holding Corp.* ...................... 119,100 1,624,524
-----------
Total Financial Services ....................................... 35,427,609
-----------
Health Care 18.4%
Drugs & Biotechnology 16.5%
Allergan Inc. .................................. 31,800 2,404,716
Amgen Inc.* .................................... 100,950 6,234,672
Chiron Corp.* .................................. 46,900 2,562,147
Eli Lilly & Co. ................................ 52,200 3,477,564
Forest Laboratories Inc.* ...................... 68,900 3,445,689
Genentech, Inc.* ............................... 45,800 3,754,226
Gilead Sciences, Inc.* ......................... 28,200 1,539,156
Invitrogen Corp.* .............................. 17,400 1,106,466
Johnson & Johnson Ltd. ......................... 127,820 6,433,181
Millennium Pharmaceuticals Inc.* ............... 198,500 3,160,120
Novartis AG ADR ................................ 122,000 4,681,140
Pfizer Inc. .................................... 442,254 13,975,226
Sanofi Synthelabo Inc. ADR ..................... 109,700 3,389,730
Teva Pharmaceutical Industries Ltd. ADR ........ 28,400 1,615,676
-----------
57,779,709
-----------
Hospital Supply 1.9%
Guidant Corp. .................................. 34,600 1,764,946
Medtronic Inc. ................................. 102,890 4,688,697
-----------
6,453,643
-----------
Total Health Care .............................................. 64,233,352
-----------
Materials & Processing 0.9%
Chemicals 0.9%
Air Products & Chemicals Inc. .................. 70,160 3,185,966
-----------
Total Materials & Processing ................................... 3,185,966
-----------
Other 2.3%
Multi-Sector 2.3%
General Electric Co. ........................... 276,730 8,027,937
-----------
Total Other .................................................... 8,027,937
-----------
Other Energy 3.4%
Oil & Gas Producers 2.0%
Apache Corp. ................................... 38,500 2,684,220
Burlington Resources Inc. ...................... 51,600 2,509,824
Newfield Exploration Co.* ...................... 43,700 1,736,201
-----------
6,930,245
-----------
6 The notes are an integral part of the financial statements.
Issuer Shares Value
- --------------------------------------------------------------------------------
Oil Well Equipment & Services 1.4%
Halliburton Co. .................................. 93,500 $ 2,232,780
Nabors Industries Ltd.* .......................... 74,100 2,800,980
------------
5,033,760
------------
Total Other Energy .............................................. 11,964,005
------------
Producer Durables 2.4%
Production Technology Equipment 2.4%
Applied Materials Inc.* .......................... 278,000 6,496,860
Teradyne Inc.* ................................... 91,000 2,072,980
------------
Total Producer Durables ......................................... 8,569,840
------------
Technology 26.5%
Communications Technology 2.6%
Cisco Systems Inc.* .............................. 435,880 9,144,762
------------
Computer Software 5.7%
Microsoft Corp. .................................. 349,140 9,130,011
SAP AG ADR ....................................... 104,070 3,802,718
Siebel Systems Inc. * ............................ 286,800 3,610,812
Veritas Software Co.* ............................ 95,200 3,441,480
------------
19,985,021
------------
Computer Technology 4.7%
Apple Computer Inc.* ............................. 70,400 1,611,456
Dell Inc.* ....................................... 289,800 10,467,576
EMC Corp.* ....................................... 237,400 3,285,616
Sandisk Corp.* ................................... 11,900 959,140
------------
16,323,788
------------
Electronics 1.7%
Nokia Corp. ADR .................................. 150,600 2,558,694
Sanmina-SCI Corp.* ............................... 319,400 3,369,670
------------
5,928,364
------------
Electronics: Semiconductors/Components 11.8%
Broadcom Corp. Cl. A* ............................ 113,400 3,623,130
Cypress Semiconductor Corp.* ..................... 255,600 5,485,176
Intel Corp. ...................................... 536,460 17,730,003
Linear Technology Corp. .......................... 127,800 5,445,558
National Semiconductor Corp.* .................... 99,000 4,022,370
Texas Instruments Inc. ........................... 177,900 5,144,868
------------
41,451,105
------------
Total Technology ................................................ 92,833,040
------------
Utilities 1.1%
Cable Television & Radio 1.1%
Comcast Corp.* ................................... 118,590 3,868,406
------------
Total Utilities ................................................. 3,868,406
------------
Total Common Stocks (Cost $280,314,444) ......................... 345,544,457
------------
Short-Term Investments 6.3%
State Street Navigator Securities Lending
Prime Portfolio ................................ 21,817,751 21,817,751
------------
Total Short-Term Investments (Cost $21,817,751) ................. $ 21,817,751
------------
Maturity Amount of
Issuer Date Principal
- --------------------------------------------------------------------------------
Commercial Paper 0.9%
American Express
Credit Corp., 1.02% ......... 11/04/2003 $1,500,000 $1,499,873
Morgan Stanley
Dean Witter & Co., 1.02% 11/03/2003 1,536,000 1,535,912
------------
Total Commercial Paper (Cost $3,035,785) ........................ 3,035,785
------------
% of
Net Assets
- --------------------------------------------------------------------------------
Summary of Portfolio Assets
Investments (Cost $305,167,980).................. 105.9% 370,397,993
Cash and Other Assets, Less Liabilities ......... (5.9%) (20,475,339)
----- ------------
Net Assets ...................................... 100.0% $349,922,654
===== ============
KEY TO SYMBOLS
* Denotes a security which has not paid a dividend during the last year.
ADR Stands for American Depository Receipt.
Federal Income Tax Information
At October 31, 2003, the net unrealized appreciation
of investments based on cost for federal income tax
purposes of $305,569,127 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost $66,949,511
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (2,120,645)
-----------
$64,828,866
===========
The notes are an integral part of the financial statements.
State Street Research Legacy Fund 7
- -------------
FINANCIAL
- -------------
Statements
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
October 31, 2003
Assets
Investments, at value (Cost $305,167,980) (Note 1) .......... $ 370,397,993
Cash ........................................................ 397
Receivable for fund shares sold ............................. 2,099,912
Receivable for securities sold .............................. 992,870
Dividends receivable ........................................ 274,268
Other assets ................................................ 77,313
-------------
373,842,753
-------------
Liabilities
Payable for collateral received on securities loaned ........ 21,817,751
Payable for securities purchased ............................ 1,079,231
Payable for fund shares redeemed ............................ 341,001
Accrued management fee ...................................... 198,103
Accrued transfer agent and shareholder services ............. 171,670
Accrued distribution and service fees ....................... 155,846
Accrued trustees' fees ...................................... 15,739
Accrued administration fee .................................. 10,791
Other accrued expenses ...................................... 129,967
-------------
23,920,099
-------------
Net Assets .................................................. $ 349,922,654
=============
Net Assets consist of:
Unrealized appreciation of investments .................... $ 65,230,013
Accumulated net realized loss ............................. (176,701,086)
Paid-in capital ........................................... 461,393,727
-------------
$ 349,922,654
=============
Net Asset Value (NAV) of Each Share Class
Except where noted, the NAV is the offering and the redemption price for each
class.
Class Net Assets [divided by] Number of Shares = NAV
A $103,246,826 8,668,785 $11.91*
B(1) $108,125,488 9,475,658 $11.41**
B $ 47,034,013 4,036,809 $11.65**
C $ 30,516,372 2,673,826 $11.41**
R $ 121,604 10,222 $11.90
S $ 60,878,351 5,001,613 $12.17
* Maximum offering price per share = $12.64 ($11.91 [divided by] 0.9425)
** When you sell Class B(1), Class B or Class C shares, you receive the net
asset value minus deferred sales charge, if any.
Statement of Operations
- --------------------------------------------------------------------------------
For the year ended October 31, 2003
Investment Income
Dividends, net of foreign taxes of $45,694 (Note 1) ......... $ 2,583,002
Interest (Note 1) ........................................... 61,889
------------
2,644,891
------------
Expenses
Management fee (Note 2) ..................................... 1,872,758
Transfer agent and shareholder services (Note 2) ............ 883,314
Custodian fee ............................................... 114,912
Administration fee (Note 2) ................................. 97,252
Distribution and service fees - Class A (Note 4) ............ 248,957
Distribution and service fees - Class B(1) (Note 4) ......... 945,120
Distribution and service fees - Class C (Note 4) ............ 286,175
Distribution and service fees - Class R (Note 4) ............ 326
Registration fees ........................................... 62,244
Audit fee ................................................... 29,232
Trustees' fees (Note 2) ..................................... 21,489
Legal fees .................................................. 17,136
Reports to shareholders ..................................... 5,086
Amortization of organizational costs ........................ 2,857
Miscellaneous ............................................... 17,307
------------
4,604,165
Fees paid indirectly (Note 2) ............................... (7,189)
------------
4,596,976
------------
Net investment loss ......................................... (1,952,085)
------------
Realized and Unrealized Gain (Loss) on
Investments
Net realized loss on investments (Notes 1 and 3) ............ (16,699,994)
Change in unrealized appreciation of investments ............ 80,572,206
------------
Net gain on investments ..................................... 63,872,212
------------
Net increase in net assets resulting from operations ........ $ 61,920,127
============
8 The notes are an integral part of the financial statements.
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Years ended October 31
----------------------------------
2003 2002*
----------------------------------
Increase (Decrease) In Net Assets
Operations:
Net investment loss ...................... $ (1,952,085) $ (2,162,679)
Net realized loss on investments ......... (16,699,994) (45,795,611)
Change in unrealized appreciation
of investments ......................... 80,572,206 4,761,780
------------- -------------
Net increase (decrease) resulting
from operations ........................ 61,920,127 (43,196,510)
------------- -------------
Net increase (decrease) from fund
share transactions (Note 7) ............ 46,837,642 (63,007,052)
------------- -------------
Total increase (decrease)
in net assets .......................... 108,757,769 (106,203,562)
Net Assets
Beginning of year ........................ 241,164,885 347,368,447
------------- -------------
End of year .............................. $ 349,922,654 $ 241,164,885
============= =============
* Audited by other auditors
Notes to Financial Statements
- --------------------------------------------------------------------------------
October 31, 2003
Note 1
State Street Research Legacy Fund is a series of State Street Research
Securities Trust (the "Trust"), which is a Massachusetts business trust, and is
registered under the Investment Company Act of 1940 as an open-end management
investment company.
The fund seeks to provide long-term growth of capital. In seeking to achieve
its investment objective, the fund invests at least 80% of total assets in
stocks and convertible securities of mid- and large-size companies. The fund
employs a tax-managed strategy, generally seeking to identify stocks with
long-term growth potential and holding them for extended periods.
The fund offers six classes of shares. Class A shares are subject to an initial
sales charge of up to 5.75% and pay annual service and distribution fees equal
to 0.30% of average daily net assets. Class B(1) shares pay annual service and
distribution fees equal to 1.00% of average daily net assets and automatically
convert into Class A shares (which pay lower ongoing expenses) at the end of
eight years. Class B(1) and Class B shares are subject to a contingent deferred
sales charge on certain redemptions made within six years and five years of
purchase, respectively. Class B shares are offered only to current shareholders
through reinvestment of dividends and distributions or through exchanges from
existing Class B accounts of State Street Research funds and also automatically
convert to Class A shares at the end of eight years. Class B shares may also be
subject to annual service and distribution fees equal to 1.00% of average daily
net assets. However, these fees are currently waived under the terms of the
distribution plan. Class C shares are subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of purchase. Class C
shares also pay annual service and distribution fees equal to 1.00% of average
daily net assets. Class R shares are offered to retirement plans participating
in certain platforms sponsored by broker-dealers which may involve multiple
fund families. Class R shares pay a service and distribution fee of 0.50%. No
sales charge is imposed at the time of purchase or redemption of Class R
shares. Class S shares are only offered through certain retirement accounts,
advisory accounts of State Street Research & Management Company (the
"Adviser"), an investment management subsidiary of MetLife, Inc. ("MetLife"),
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 service or
distribution fees. The fund's expenses are borne prorata by each class, except
that each class bears expenses, and has exclusive voting rights with respect to
provisions of the plans of distribution, related specifically to that class.
The Trustees declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by the
fund in preparing its financial statements, and such policies are in conformity
with accounting principles generally accepted in the United States of America.
A. Investment Valuation
Values for listed equity securities reflect final sales 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 closing prices
supplied through such system. If not quoted on the Nasdaq system, such
securities are valued at prices obtained from independent brokers. In the
absence of recorded sales, valuations are at the mean of the closing bid and
asked quotations. Short-term securities maturing within sixty days are valued
at amortized cost. Other securities, if any, are valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the supervision of the Trustees. If trading or events occurring in
other markets after the close of the principal market in which foreign
securities are traded, and before the close of business of the fund, are
expected to materially affect the value of these securities, then they are
valued at their fair value taking this trading or these events into account.
The notes are an integral part of the financial statements.
State Street Research Legacy Fund 9
Notes (continued)
- --------------------------------------------------------------------------------
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered.
C. Net Investment Income
Net investment income is determined daily and consists of interest and
dividends accrued and discount earned, less the estimated daily expenses of the
fund. Interest income is accrued daily as earned. Dividend income is accrued on
the ex-dividend date. The fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Trust.
D. Dividends
Dividends from net investment income 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 gains distributions are determined in accordance
with federal income tax regulations which may differ from accounting principles
generally accepted in the United States of America. The difference is primarily
due to differing treatments for wash sale deferrals.
E. Federal Income Taxes
No provision for federal income taxes is necessary because 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.
At October 31, 2003, the fund had a capital loss carryforward of $176,299,939
available, to the extent provided in regulations, to offset future capital
gains, if any, of which $353,559, $2,301,316, $15,859,209, $63,108,010,
$76,300,059 and $18,377,786 expire on October 31, 2006, 2007, 2008, 2009, 2010
and 2011, respectively. A portion of the losses expiring in 2009, 2010 and
2011, which amounted to $34,309,485, $30,166,954 and $2,078,939, respectively,
were acquired in connection with the merger of the State Street Research
Large-Cap Growth Fund. Future utilization of these losses may be limited under
current tax laws.
To the extent book/tax differences are permanent in nature, such amounts are
reclassified within the capital accounts based on federal tax basis treatment.
The fund reclassified for book purposes amounts arising from permanent book/tax
differences primarily relating to net operating losses. At October 31, 2003,
the components of distributable earnings on a tax basis differ from the amounts
reflected in the Statement of Assets and Liabilities by temporary book/tax
differences largely arising from wash sales and capital loss carryforwards. At
October 31, 2003, the tax basis distributable earnings were $0 in undistributed
ordinary income, $0 in undistributed short-term capital gains and $0 in
undistributed long-term gains.
F. Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 these
estimates.
G. 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 October 31, 2003, the value of the securities loaned and the value of
collateral were $21,240,547 and $21,817,751 (consisting entirely of cash
collateral invested in State Street Navigator Securities Lending Prime
Portfolio), respectively. During the year ended October 31, 2003, income from
securities lending amounted to $22,578 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 0.65% of the fund's average 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 year ended October 31, 2003, the fees pursuant to
such agreement amounted to $1,872,758.
State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), 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, MetLife receives a
fee for maintenance of the accounts of certain shareholders who are participants
in sponsored arrangements, such as employee benefit plans, through or under
which shares of the fund may be purchased. Total shareholder service costs are
allocated to each fund in the same ratios as the transfer agent costs. During
the year ended October 31, 2003, the amount of such expenses allocated to the
fund was $367,220.
The fund has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the fund's expense. During the year ended October 31, 2003, the
fund's transfer agent fees were reduced by $7,189 under this arrangement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$21,489 during the year ended October 31, 2003.
The fund has agreed to pay the Adviser for certain administrative costs
incurred in providing other assistance and services to the fund. The fee was
based on a fixed amount that has been allocated equally among the State Street
Research funds. During the year ended October 31, 2003, the amount of such
expenses was $97,252.
Note 3
For the year ended October 31, 2003, purchases and sales of securities,
exclusive of short-term obligations, aggregated $320,823,438, and $355,176,741,
respectively.
Note 4
The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the plans, 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(1), Class B, Class C and Class R shares. In addition, the fund pays
annual distribution fees of 0.05% of average daily net assets for Class A
shares. The fund pays annual distribution fees of 0.75% of average daily net
assets for Class B(1), Class B and Class C shares and 0.25% of average net
assets for Class R shares. Currently, the annual service and distribution fees
paid by Class B shares have been voluntarily waived to 0.00%. The fund expects
this waiver to continue, although there is no guarantee that it will. The
Distributor uses such payments for personal services and/or the maintenance of
shareholder accounts, to reimburse securities dealers for distribution and
marketing services, to furnish ongoing assistance to investors and to defray a
portion of its distribution and marketing expenses. For the year ended October
31, 2003, fees pursuant to such plans amounted to $248,957, $945,120, $286,175,
and $326 for Class A, Class B(1), Class C and Class R shares, respectively. For
Class A, Class B and Class C shares, the payments are intended to reimburse the
distributor for expenditures incurred under the plan, and any unused payments
are returnable to the fund. As of October 31, 2003, there were $2,175,499,
$369,014, and $3,079,497 for Class A, B and Class C shares, respectively, of
unreimbursed distribution and shareholder servicing related expenses to be
carried forward to future plan years. For Class B(1) and Class R shares, the
payments compensate the distributor for services and expenditures incurred under
the plan, and none of the payments are returnable to the fund.
The fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of MetLife, earned initial sales charges aggregating
$29,995 and $79,976, respectively, on sales of Class A shares of the fund
during the year ended October 31, 2003, and that MetLife Securities, Inc.
earned commissions aggregating $137,356 and $456 on sales of Class B(1) and
Class C shares, and the Distributor collected contingent deferred sales charges
aggregating $240,656, $67 and $1,021 on redemptions of Class B(1), Class B and
Class C shares, respectively, during the same period.
10
Note 5
On February 21, 2003, the fund acquired the assets and liabilities of State
Street Research Large-Cap Growth Fund ("Large-Cap Growth Fund") in exchange for
shares of each class of the fund. The acquisition was accounted for as a
tax-free exchange of 1,381,114 Class A shares, 1,052,996 Class B(1) shares,
1,177,017 Class B shares, 189,286 Class C shares and 5,164,031 Class S shares
of the fund for the net assets of Large-Cap Growth Fund, which amounted to
$12,873,626, $9,449,657, $10,711,357, $1,699,127 and $49,094,754 for Class A,
Class B(1), Class B, Class C and Class S shares, respectively. The net assets
of Large-Cap Growth Fund included $2,667,331 of unrealized appreciation at the
close of business on February 21, 2003. The net assets of the fund immediately
after the acquisition were $289,204,119.
Note 6
PricewaterhouseCoopers LLP resigned as the fund's independent accountants as of
April 25, 2003. The Trustees voted to appoint Deloitte & Touche LLP as the
fund's independent accountants for the fund's fiscal year ended October 31,
2003. During the previous two years, PricewaterhouseCoopers LLP's audit reports
contained no adverse opinion or disclaimer of opinion; nor were its reports
qualified or modified as to uncertainty, audit scope or accounting principle.
Further, in connection with its audits for the two previous fiscal years and
through April 25, 2003, there were no disagreements between the fund and
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which if not
resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused it
to make reference to the disagreements in its report on the financial
statements for such years.
Note 7
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest at $0.001 par value per share. At October 31, 2003, the
Adviser held 10,215 Class R shares.
These transactions break down by share class as follows:
Years ended October 31
-----------------------------------------------------------------
2003 2002*
-----------------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 2,808,906 $ 29,638,800 2,347,522 $ 26,463,991
Issued in connection with acquisition of Large-Cap Growth Fund 1,381,114 12,873,626 -- --
Shares redeemed (3,231,893) (32,827,334) (3,614,279) (40,038,598)
------------ ------------ ------------ ------------
Net increase (decrease) 958,127 $ 9,685,092 (1,266,757) $(13,574,607)
============ ============ ============ ============
Class B(1) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 915,478 $ 9,067,543 854,046 $ 9,647,585
Issued in connection with acquisition of Large-Cap Growth Fund 1,052,996 9,449,657 -- --
Shares redeemed (1,917,706) (18,595,910) (2,957,847) (31,775,421)
------------ ------------ ------------ ------------
Net increase (decrease) 50,768 $ (78,710) (2,103,801) $(22,127,836)
============ ============ ============ ============
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 147,808 $ 1,489,996 102,866 $ 1,131,310
Issued in connection with acquisition of Large-Cap Growth Fund 1,177,017 10,711,357 -- --
Shares redeemed (1,237,332) (12,313,930) (1,656,107) (17,930,234)
------------ ------------ ------------ ------------
Net increase (decrease) 87,493 $ (112,577) (1,553,241) $(16,798,924)
============ ============ ============ ============
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 539,004 $ 5,333,886 708,473 $ 7,622,873
Issued in connection with acquisition of Large-Cap Growth Fund 189,286 1,699,127 -- --
Shares redeemed (1,308,159) (12,850,337) (1,622,024) (17,909,743)
------------ ------------ ------------ ------------
Net decrease (579,869) $ (5,817,324) (913,551) $(10,286,870)
============ ============ ============ ============
Class R Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 10,222 $ 100,075 -- $ --
------------ ------------ ------------ ------------
Net increase 10,222 $ 100,075 -- $ --
============ ============ ============ ============
Class S Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
Shares sold 15,143 $ 150,862 26,420 $ 311,840
Issued in connection with acquisition of Large-Cap Growth Fund 5,164,031 49,094,754 -- --
Shares redeemed (587,753) (6,184,530) (48,561) (530,655)
------------ ------------ ------------ ------------
Net increase (decrease) 4,591,421 $ 43,061,086 (22,141) $ (218,815)
============ ============ ============ ============
* Audited by other auditors
State Street Research Legacy Fund 11
- ------------
FINANCIAL
- ------------
Highlights
For a share outstanding throughout each year:
Class A
--------------------------------------------
Years ended October 31
--------------------------------------------
2003(a) 2002(a)(g) 2001(a)(g)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 9.96 11.56 16.39
---------- ---------- ----------
Net investment loss ($)* (0.05) (0.03) (0.05)
Net realized and unrealized gain (loss) on investments ($) 2.00 (1.57) (4.78)
---------- ---------- ----------
Total from investment operations ($) 1.95 (1.60) (4.83)
---------- ---------- ----------
Distribution from capital gains ($) -- -- --
---------- ---------- ----------
Total distribution ($) -- -- --
---------- ---------- ----------
Net asset value, end of year ($) 11.91 9.96 11.56
========== ========== ==========
Total return (%)(b) 19.58 (13.84) (29.47)
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 103,247 76,798 103,774
Expense ratio (%)* 1.38 1.39 1.35
Expense ratio after expense reductions (%)* 1.38 1.38 1.33
Ratio of net investment loss to average net assets (%)* (0.47) (0.28) (0.39)
Portfolio turnover rate (%) 112.57 30.87 21.61
*Reflects voluntary reduction of expenses of these amounts (%) -- -- --
Class A
------------------------------------------------------
Years ended April 30
Six months ended --------------------------
October 31, 2000(a)(f)(g) 2000(a)(g) 1999(a)(g)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 15.99 14.42 11.66
------- ------- -------
Net investment loss ($)* (0.04) (0.05) (0.02)
Net realized and unrealized gain (loss) on investments ($) 0.44 1.62 2.79
------- ------- -------
Total from investment operations ($) 0.40 1.57 2.77
------- ------- -------
Distribution from capital gains ($) -- -- (0.01)
------- ------- -------
Total distribution ($) -- -- (0.01)
------- ------- -------
Net asset value, end of year ($) 16.39 15.99 14.42
======= ======= =======
Total return (%)(b) 2.50(d) 10.89 23.73
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 151,920 143,037 58,642
Expense ratio (%)* 1.34(e) 1.22 1.20
Expense ratio after expense reductions (%)* 1.34(e) 1.21 1.19
Ratio of net investment loss to average net assets (%)* (0.54)(e) (0.34) (0.14)
Portfolio turnover rate (%) 11.07 33.23 42.09
*Reflects voluntary reduction of expenses of these amounts (%) -- -- 0.03
Class B(1)
----------------------------------------
Years ended October 31
----------------------------------------
2003(a) 2002(a)(g) 2001(a)(g)
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 9.61 11.23 16.04
------- ------- -------
Net investment loss ($)* (0.12) (0.11) (0.15)
Net realized and unrealized gain (loss) on investments ($) 1.92 (1.51) (4.66)
------- ------- -------
Total from investment operations ($) 1.80 (1.62) (4.81)
------- ------- -------
Net asset value, end of year ($) 11.41 9.61 11.23
======= ======= =======
Total return (%)(b) 18.73 (14.43) (29.99)
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 108,125 90,564 129,464
Expense ratio (%)* 2.08 2.09 2.05
Expense ratio after expense reductions (%)* 2.08 2.08 2.03
Ratio of net investment loss to average net assets (%)* (1.17) (0.98) (1.09)
Portfolio turnover rate (%) 112.57 30.87 21.61
*Reflects voluntary reduction of expenses of these amounts (%) -- -- --
Class B(1)
---------------------------------------------------------
Years ended April 30
Six months ended -----------------------------
October 31, 2000(a)(f)(g) 2000(a)(g) 1999(a)(c)(g)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 15.71 14.28 13.08
------- ------- -------
Net investment loss ($)* (0.10) (0.17) (0.04)
Net realized and unrealized gain (loss) on investments ($) 0.43 1.60 1.24
------- ------- -------
Total from investment operations ($) 0.33 1.43 1.20
------- ------- -------
Net asset value, end of year ($) 16.04 15.71 14.28
======= ======= =======
Total return (%)(b) 2.10(d) 10.01 9.17(d)
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 184,818 153,359 24,454
Expense ratio (%)* 2.04(e) 1.97 1.88(e)
Expense ratio after expense reductions (%)* 2.04(e) 1.96 1.87(e)
Ratio of net investment loss to average net assets (%)* (1.25)(e) (1.13) (1.00)(e)
Portfolio turnover rate (%) 11.07 33.23 42.09
*Reflects voluntary reduction of expenses of these amounts (%) -- -- 0.03(e)
Class B
-------------------------------------
Years ended October 31
-------------------------------------
2003(a) 2002(a)(g) 2001(a)(g)
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 9.72 11.31 16.11
------ ------ ------
Net investment loss ($)* (0.01) (0.07) (0.11)
Net realized and unrealized gain (loss) on investments ($) 1.94 (1.52) (4.69)
------ ------ ------
Total from investment operations ($) 1.93 (1.59) (4.80)
------ ------ ------
Distribution from capital gains ($) -- -- --
------ ------ ------
Total distribution ($) -- -- --
------ ------ ------
Net asset value, end of year ($) 11.65 9.72 11.31
====== ====== ======
Total return (%)(b) 19.86 (14.06) (29.80)
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 47,034 38,368 62,244
Expense ratio (%)* 1.08 1.74 1.76
Expense ratio after expense reductions (%)* 1.08 1.73 1.74
Ratio of net investment loss to average net assets (%)* (0.13) (0.66) (0.80)
Portfolio turnover rate (%) 112.57 30.87 21.61
*Reflects voluntary reduction of expenses of these amounts (%) -- -- --
Class B
-------------------------------------------------------
Years ended April 30
Six months ended ---------------------------
October 31, 2000(a)(f)(g) 2000(a)(g) 1999(a)(g)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 15.74 14.28 11.64
------- ------- -------
Net investment loss ($)* (0.07) (0.12) (0.11)
Net realized and unrealized gain (loss) on investments ($) 0.44 1.58 2.76
------- ------- -------
Total from investment operations ($) 0.37 1.46 2.65
------- ------- -------
Distribution from capital gains ($) -- -- (0.01)
------- ------- -------
Total distribution ($) -- -- (0.01)
------- ------- -------
Net asset value, end of year ($) 16.11 15.74 14.28
======= ======= =======
Total return (%)(b) 2.35(d) 10.22 22.74
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 106,027 109,135 88,383
Expense ratio (%)* 1.69(e) 1.77 1.95
Expense ratio after expense reductions (%)* 1.69(e) 1.76 1.94
Ratio of net investment loss to average net assets (%)* (0.89)(e) (0.87) (0.89)
Portfolio turnover rate (%) 11.07 33.23 42.09
*Reflects voluntary reduction of expenses of these amounts (%) -- -- 0.03
12
Class C
--------------------------------------
Years ended October 31
--------------------------------------
2003(a) 2002(a)(g) 2001(a)(g)
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 9.61 11.23 16.05
------ ------ ------
Net investment loss ($)* (0.11) (0.11) (0.15)
Net realized and unrealized gain (loss) on investments ($) 1.91 (1.51) (4.67)
------ ------ ------
Total from investment operations ($) 1.80 (1.62) (4.82)
------ ------ ------
Distribution from capital gains ($) -- -- --
------ ------ ------
Total distribution ($) -- -- --
------ ------ ------
Net asset value, end of year ($) 11.41 9.61 11.23
====== ====== ======
Total return (%)(b) 18.73 (14.43) (30.03)
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 30,516 31,274 46,809
Expense ratio (%)* 2.08 2.09 2.05
Expense ratio after expense reductions (%)* 2.08 2.08 2.03
Ratio of net investment loss to average net assets (%)* (1.15) (0.99) (1.08)
Portfolio turnover rate (%) 112.57 30.87 21.61
*Reflects voluntary reduction of expenses of these amounts (%) -- -- --
Class C
-------------------------------------------------------
Years ended April 30
Six months ended ---------------------------
October 31, 2000(a)(f)(g) 2000(a)(g) 1999(a)(g)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 15.71 14.28 11.63
------ ------ ------
Net investment loss ($)* (0.10) (0.16) (0.11)
Net realized and unrealized gain (loss) on investments ($) 0.44 1.59 2.77
------ ------ ------
Total from investment operations ($) 0.34 1.43 2.66
------ ------ ------
Distribution from capital gains ($) -- -- (0.01)
------ ------ ------
Total distribution ($) -- -- (0.01)
------ ------ ------
Net asset value, end of year ($) 16.05 15.71 14.28
====== ====== ======
Total return (%)(b) 2.16(d) 10.01 22.85
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 76,137 69,061 26,399
Expense ratio (%)* 2.04(e) 1.97 1.95
Expense ratio after expense reductions (%)* 2.04(e) 1.96 1.94
Ratio of net investment loss to average net assets (%)* (1.24)(e) (1.10) (0.90)
Portfolio turnover rate (%) 11.07 33.23 42.09
*Reflects voluntary reduction of expenses of these amounts (%) -- -- 0.03
Class R
--------------
2003(a)(h)
- ----------------------------------------------------------------------
Net asset value, beginning of period ($) 9.79
------
Net investment loss ($) (0.05)
Net realized and unrealized gain on investments ($) 2.16
------
Total from investment operations ($) 2.11
------
Net asset value, end of period ($) 11.90
======
Total return (%)(b) 21.55(d)
Ratios/Supplemental Data
- ----------------------------------------------------------------------
Net assets at end of period ($ thousands) 122
Expense ratio (%) 1.58(e)
Expense ratio after expense reductions (%) 1.58(e)
Ratio of net investment loss to average net assets (%) (0.79)(e)
Portfolio turnover rate (%) 112.57
Class S
-------------------------------------
Years ended October 31
-------------------------------------
2003(a) 2002(a)(g) 2001(a)(g)
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 10.14 11.74 16.61
------ ------ ------
Net investment income (loss) ($)* (0.02) 0.00 (0.01)
Net realized and unrealized gain (loss) on investments ($) 2.05 (1.60) (4.86)
------ ------ ------
Total from investment operations ($) 2.03 (1.60) (4.87)
------ ------ ------
Distribution from capital gains ($) -- -- --
------ ------ ------
Total distribution ($) -- -- --
------ ------ ------
Net asset value, end of year ($) 12.17 10.14 11.74
====== ====== ======
Total return (%)(b) 20.02 (13.63) (29.32)
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 60,878 4,161 5,077
Expense ratio (%)* 1.08 1.09 1.05
Expense ratio after expense reductions (%)* 1.08 1.08 1.03
Ratio of net investment income (loss) to average net assets (%)* (0.19) 0.03 (0.09)
Portfolio turnover rate (%) 112.57 30.87 21.61
*Reflects voluntary reduction of expenses of these amounts (%) -- -- --
Class S
----------------------------------------------------
Years ended April 30
Six months ended ------------------------
October 31, 2000(a)(f)(g) 2000(a)(g) 1999(a)(g)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ($) 16.09 14.48 11.68
------ ------ ------
Net investment income (loss) ($)* (0.02) (0.00) 0.02
Net realized and unrealized gain (loss) on investments ($) 0.54 1.61 2.79
------ ------ ------
Total from investment operations ($) 0.52 1.61 2.81
------ ------ ------
Distribution from capital gains ($) -- -- (0.01)
------ ------ ------
Total distribution ($) -- -- (0.01)
------ ------ ------
Net asset value, end of year ($) 16.61 16.09 14.48
====== ====== ======
Total return (%)(b) 3.23(d) 11.12 24.04
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 7,126 8,097 6,367
Expense ratio (%)* 1.04(e) 0.97 0.95
Expense ratio after expense reductions (%)* 1.04(e) 0.96 0.94
Ratio of net investment income (loss) to average net assets (%)* (0.24)(e) (0.06) 0.16
Portfolio turnover rate (%) 11.07 33.23 42.09
*Reflects voluntary reduction of expenses of these amounts (%) -- -- 0.03
(a) Per-share figures have been calculated using the average shares method.
(b) 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.
(c) January 1, 1999 (commencement of share class) to April 30, 1999
(d) Not annualized
(e) Annualized
(f) Effective August 2, 2000, the fiscal year-end of the fund changed from April
30 to October 31.
(g) Audited by other auditors
(h) April 3, 2003 (commencement of share class) to October 31, 2003
State Street Research Legacy Fund 13
- --------------------------
INDEPENDENT AUDITORS'
- --------------------------
Report
To the Board of Trustees and Shareholders
of State Street Research Legacy Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio holdings, of State Street Research Legacy Fund (the "Fund"), a
series of State Street Research Securities Trust, as of October 31, 2003, and
the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year ended October 31, 2003. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended October 31, 2002, and the financial
highlights for each of the years in the three-year period ended October 31,
2002, the six months ended October 31, 2000, and the years ended April 30, 2000
and 1999, were audited by other auditors whose report dated December 13, 2002,
expressed an unqualified opinion on such statement and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 2003, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of October 31, 2003, the results of its operations, the changes in its
net assets, and the financial highlights for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 15, 2003
14
- ---------------------------
THE FUND AT A GLANCE (continued from page 3)
- ---------------------------
Performance: Class B(1)
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(1,3)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 18.73% -0.01% 2.29%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 18.73% -0.01% 2.29%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 11.69% -0.01% 1.85%
- ---------------------------------------------------------------
Fund average annual total return as of 9/30/03(1,2,3)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 15.80% -0.43% 0.91%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 15.80% -0.43% 0.91%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 9.86% -0.35% 0.73%
- ---------------------------------------------------------------
Performance: Class C
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(1,3)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 18.73% -0.01% 2.29%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 18.73% -0.01% 2.29%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 11.69% -0.01% 1.85%
- ---------------------------------------------------------------
Fund average annual total return as of 9/30/03(1,2,3)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 19.80% -0.03% 1.08%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 19.80% -0.03% 1.07%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 12.35% -0.02% 0.86%
- ---------------------------------------------------------------
Performance: Class S
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(1,3,4)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 20.02% 1.11% 3.43%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 20.02% 1.11% 3.43%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 12.49% 0.89% 2.79%
- ---------------------------------------------------------------
Fund average annual total return as of 9/30/03(1,2,3,4)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 22.09% 1.10% 2.20%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 22.09% 1.10% 2.20%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 13.78% 0.89% 1.78%
- ---------------------------------------------------------------
Performance: Class B
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(1,3)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 19.86% 0.41% 2.66%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 19.86% 0.41% 2.66%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 12.39% 0.33% 2.15%
- ---------------------------------------------------------------
Fund average annual total return as of 9/30/03(1,2,3)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 16.93% -0.03% 1.42%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 16.93% -0.04% 1.42%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 10.57% -0.03% 1.14%
- ---------------------------------------------------------------
Performance: Class R
- --------------------------------------------------------------------------------
Fund average annual total return as of 10/31/03(1,3,4)
(does not reflect sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 19.48% 0.71% 3.03%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 19.48% 0.71% 3.03%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 12.22% 0.58% 2.47%
- ---------------------------------------------------------------
Fund average annual total return as of 9/30/03(1,2,3,4)
(at maximum applicable sales charge)
Life of Fund
1 Year 5 Years (12/31/97)
- ---------------------------------------------------------------
Return Before Taxes 21.51% 0.69% 1.79%
- ---------------------------------------------------------------
Return After Taxes
on Distributions 21.73% 0.72% 1.82%
- ---------------------------------------------------------------
Return After Taxes on
Distributions and Sale of
Fund Shares 13.56% 0.58% 1.47%
- ---------------------------------------------------------------
(1) Keep in mind that past performance is no guarantee of future results. The
fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gains distributions and income dividends at net asset value.
Performance for Class B(1) shares reflects Class B share performance through
December 31, 1998, and Class B(1) performance thereafter. Performance for
Class R shares reflects Class A share performance through April 2, 2003, and
Class R share performance thereafter. If the returns for Class B(1) and
Class R shares had reflected their current service/distribution (Rule 12b-1)
fees for the entire period, these returns would have been lower.
(2) Performance reflects a maximum 5.75% Class A front-end sales charge or 5%
Class B or Class B(1) share or 1% Class C share contingent deferred sales
charge where applicable.
(3) Ater-tax returns are calculated using the highest historical federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown, and after-tax returns shown are not relevant to
investors who hold their fund shares through tax-deferred arrangement, such
as 401(k) plans or individual retirement accounts (IRAs). Return After
Distributions and Sales of Fund Shares for a period may be greater than or
equal to Returns After Taxes on Distributions for the same period because of
losses realized on the sale of fund shares.
(4) Class R and Class S, shares offered without sales charge, are only available
through retirement plans and through special programs.
State Street Research Legacy Fund 15
- --------------------------
TRUSTEES AND OFFICERS
- --------------------------
State Street Research Securities Trust
Number of Funds
Name, Position(s) Term of Office in Fund Complex Other
Address Held with and Length of Principal Occupations Overseen by Directorships Held
and Age(a) Fund Time Served(b) During Past 5 Years Trustee/Officer(c) by Trustee/Officer
====================================================================================================================================
Independent Trustees
Bruce R. Bond Trustee Since Retired; formerly Chairman of 19 Avaya Corp.
(57) 1999 the Board, Chief Executive
Officer and President,
PictureTel Corporation (video
conferencing systems)
- ------------------------------------------------------------------------------------------------------------------------------------
Steve A. Garban Trustee Since Retired; formerly Senior Vice 55 Metropolitan Series Fund, Inc.(d)
(66) 1997 President for Finance and
Operations and Treasurer, The
Pennsylvania State University
- ------------------------------------------------------------------------------------------------------------------------------------
Dean O. Morton Trustee Since Retired; formerly Executive 55 The Clorox Company; KLA-Tencor
(71) 1994 Vice President, Chief Corporation; BEA Systems, Inc.;
Operating Officer and Cepheid; Pharsight Corporation; and
Director, Hewlett-Packard Metropolitan Series Fund, Inc.(d)
Company (computer
manufacturer)
- ------------------------------------------------------------------------------------------------------------------------------------
Susan M. Phillips Trustee Since Dean, School of Business and 19 The Kroger Co.
(59) 1999 Public Management, George
Washington University;
formerly a member of the
Board of Governors of the
Federal Reserve System; and
Chairman and Commissioner of
the Commodity Futures Trading
Commission
- ------------------------------------------------------------------------------------------------------------------------------------
Toby Rosenblatt Trustee Since President, Founders 55 A.P. Pharma, Inc.; and Metropolitan
(65) 1994 Investments Ltd. Series Fund, Inc.(d)
(investments); formerly
President, The Glen Ellen
Company (private investment
firm)
- ------------------------------------------------------------------------------------------------------------------------------------
Michael S. Trustee Since Jay W. Forrester Professor of 55 Metropolitan Series Fund, Inc.(d)
Scott Morton (66) 1994 Management, Sloan School of
Management, Massachusetts
Institute of Technology
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Storey Trustee Since Attorney; formerly Partner, 19 SEI Investments Funds (consisting of
(72) 2002 Dechert (law firm) 104 portfolios); and The
Massachusetts Health & Education
Tax-Exempt Trust
====================================================================================================================================
Interested Trustees
Richard S. Davis(+) Trustee Since Chairman of the Board, 19 None
(58) 2000 President and Chief Executive
Officer of State Street
Research & Management
Company; formerly Senior Vice
President, Fixed Income
Investments, Metropolitan
Life Insurance Company
====================================================================================================================================
Officers
Maureen G. Depp Vice Since Managing Director of State 6 None
(49) President 2000 Street Research & Management
Company; formerly Senior Vice
President and Vice President,
State Street Research &
Management Company
- ------------------------------------------------------------------------------------------------------------------------------------
Edward Dowd Vice Since Vice President of State Street 3 None
(36) President 2003 Research & Management Company;
formerly Vice President,
Independence Investment LLC
and equity research associate,
Donaldson, Lufkin and Jenrette
- ------------------------------------------------------------------------------------------------------------------------------------
C. Kim Goodwin Vice Since Managing Director and Chief 18 None
(44) President 2002 Investment Officer - Equities
of State Street Research &
Management Company; formerly
Chief Investment Officer -
U.S. Growth Equities, American
Century
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey Lindsey Vice Since Managing Director of State 3 None
(41) President 2003 Street Research & Management
Company; formerly Managing
Direct and Senior Vice
President, Putnam Investments
- ------------------------------------------------------------------------------------------------------------------------------------
John S. Lombardo Vice Since Managing Director, Chief 19 None
(49) President 2001 Financial Officer and
Director of State Street
Research & Management
Company; formerly Executive
Vice President, State Street
Research & Management
Company; and Senior Vice
President, Product and
Financial Management, MetLife
Auto & Home
- ------------------------------------------------------------------------------------------------------------------------------------
Ajay Mehra Vice Since Managing Director - Equities 2 None
(39) President 2003 Research of State Street
Research & Management Company;
formerly Senior Vice
President and Portfolio
Manager, Columbia Management
Group; and Equity Research
Analyst, Morgan Stanley & Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Denis J. Walsh, III Vice Since Managing Director of State 2 None
(43) President 2003 Street Research & Management
Company; formerly Senior
Equity Research Analyst,
Fleet Investment Advisors.
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas A. Romich Treasurer Since Senior Vice President and 19 None
(47) 2001 Treasurer of State Street
Research & Management Company;
formerly Vice President and
Assistant Treasurer, State
Street Research &
Management Company
- ------------------------------------------------------------------------------------------------------------------------------------
Francis J. Secretary Since Managing Director, General 19 None
McNamara, III (48) 1995 Counsel and Secretary of State
Street Research & Management
Company; formerly Executive
Vice President, State Street
Research & Management Company
- ------------------------------------------------------------------------------------------------------------------------------------
The fund's Statement of Additional Information includes additional information
about the fund's trustees, and is available without charge, by contacting State
Street Research, One Financial Center, Boston, Massachusetts 02111-2690, or by
calling toll-free 1-87-SSR-FUNDS (1-877-773-8637).
(a) The address of each person is c/o State Street Research & Management
Company, One Financial Center, Boston, MA 02111-2690.
(b) A Trustee serves until he or she retires, resigns or is removed as provided
in the master trust agreement of the respective Trust. Each Trust has
adopted a mandatory retirement age of 72. Each officer holds office until he
or she resigns, is removed or a successor is elected.
(c) Includes all series of 9 investment companies for which State Street
Research & Management Company serves as sole investment adviser and all
series of Metropolitan Series Fund, Inc. The primary adviser to Metropolitan
Series Fund, Inc., is MetLife Advisers, LLC, which has retained State Street
Research & Management Company as sub-adviser to certain series of
Metropolitan Series Fund, Inc.
(d) Serves as Director of Metropolitan Series Fund, Inc., an investment company
comprising 36 separate portfolios.
(+) Mr. Davis is an "interested person" of the Trust under the Investment
Company Act of 1940 by reason of his affiliation with the Trust's Investment
Manager, State Street Research & Management Company, as noted.
16
[LOGO] STATE STREET RESEARCH
One Financial Center
Boston, MA 02111-2690
----------------
PRSRT STD
U.S. POSTAGE
PAID
PERMIT #6
HUDSON, MA
----------------
- --------------------------------------------------------------------------------
New accounts, mutual fund purchases, exchanges and account information
Internet www.ssrfunds.com
E-mail info@ssrfunds.com
Phone 1-87-SSR-FUNDS (1-877-773-8637),
toll-free, 7 days a week, 24 hours a day
Hearing-impaired: 1-800-676-7876
Chinese- and Spanish-speaking: 1-888-638-3193
Fax 1-617-737-9722 (request confirmation number
first from the Service Center by calling 1-877-773-8637)
Mail State Street Research Service Center
P.O. Box 8408, Boston, MA 02266-8408
Did You Know?
State Street Research offers electronic delivery of quarterly statements,
shareholder reports and fund prospectuses. If you elect this option, we will
send these materials to you via e-mail. To learn more, visit us on the Web at
www.ssrfunds.com and click on "Go to Your Account" or call us at 1-87-SSR-FUNDS
(1-877-773-8637).
Did you know that you can give a State Street Research mutual fund as a gift?
Call a service center representative at 1-87-SSR-FUNDS (1-877-773-8637), Monday
through Friday, 8am-6pm eastern time, to learn more.
- --------------------------------------------------------------------------------
OverView
For more information on the products and services we offer, refer to OverView,
our quarterly shareholder newsletter.
Webcasts
For a professional perspective on the markets, the economy and timely investment
topics, tune in to a State Street Research webcast by visiting our website at
www.ssrfunds.com.
Complete Fund Listing
For a list of our funds, visit our website at www.ssrfunds.com under Research
Our Funds.
[GRAPHIC]
for Excellence in Shareholder Communications
[GRAPHIC]
for Excellence in Service
This report must be accompanied or preceded by a current prospectus. When used
as sales material after December 31, 2003, this report must be accompanied by a
current Quarterly Performance Update.
To obtain a prospectus for any State Street Research fund call 1-87-SSR-FUNDS
(1-877-773-8637) or by visiting our website at www.ssrfunds.com. The prospectus
contains more complete information, including sales charges and expenses. Please
read the prospectus carefully before investing or sending money.
The DALBAR awards recognize quality shareholder service and quality shareholder
communications, 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 industrywide.
Member NASD, SIPC
(C)2003 State Street Research Investment Services, Inc.
One Financial Center
Boston, MA 02111-2690
www.ssrfunds.com
CONTROL NUMBER:(exp1204)SSR-LD LF-2851-1203
<Page>
FORM N-CSR(2 OF 3)
ITEM 2:
(a) The Registrant has, as of the end of the period covered by this
report, adopted a code of ethics pursuant to Section 406 of the
Sarbanes-Oxley Act and as defined in the instructions to Form N-CSR
that applies to the Registrant's principal executive officer,
principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of
whether these individuals are employed by the Registrant or a third
party.
(b) During the period covered by this report, there were not any amendments
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers or
implicit waivers to a provision of the code of ethics adopted in 2(a)
above.
ITEM 3:
The Registrant's Board of Directors has determined that Steve A. Garban,
a member of the Registrant's Board of Directors and Audit Committee,
qualifies as the "audit committee financial expert" as such term is
defined in the instructions to Form N-CSR. Mr. Garban is "independent,"
as defined in the instructions to Form N-CSR.
ITEM 4 (PRINCIPAL ACCOUNTANT FEES AND SERVICES): Not applicable to this filing.
ITEM 5 (RESERVED)
ITEM 6 (RESERVED)
ITEM 7 (DISCLOSURE OF PROXY VOTING POLICIES & PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES): Not applicable to this filing.
ITEM 8 (RESERVED)
ITEM 9 (CONTROLS AND PROCEDURES):
SUB-ITEM 9a - The Principal Executive Officer and the Principal Financial
Officer have concluded that the State Street Research Securities Trust
disclosure controls and procedures (as defined in Rule 30-a2(c) under the
Investment Company Act) provide reasonable assurances that material
information relating to the State Street Research Securities Trust is
made known to them by the appropriate persons, based on their evaluation
of these controls and procedures as of a date within 90 days of the
filing date of this report.
SUB-ITEM 9b - There were no significant changes in the registrant's
internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation referenced in
(a)(i) above.
ITEM 10 (EXHIBITS):
(a)(1) Code of Ethics required to be disclosed under Item 2 of Form
N-CSR attached hereto as Exhibit 99.CODE ETH
(a)(2) Certification for each principal executive and principal
financial officer of the Registrant required by Rule 30a-2(a)
under the Investment Company Act of 1940, as amended
(17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.302CERT
(b) Certification required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) attached
hereto as Exhibit 99.906CERT
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
State Street Research Securities Trust
By: /s/ Richard S. Davis
------------------------------------------------------
Richard S. Davis, President, Chairman and
Chief Executive Officer
Principal Executive Officer
Date December 31, 2003
------------------------------------------------------
<Page>
FORM N-CSR(3 OF 3)
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities, and on the
dates indicated.
By: /s/ Richard S. Davis
------------------------------------------------------
Richard S. Davis, President, Chairman and
Chief Executive Officer
Principal Executive Officer
Date December 31, 2003
------------------------
By: /s/ Douglas A. Romich
------------------------------------------------------
Douglas A. Romich, Treasurer
Principal Financial Officer
Date December 31, 2003
------------------------