STATE STREET RESEARCH
MONEY MARKET FUND
Prospectus
August 1, 1995
The investment objective of State Street Research Money Market Fund (the
"Fund") is to seek a high level of current income consistent with preservation
of capital and maintenance of liquidity by investing in securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities as well as high quality, short-term money market
instruments such as bank certificates of deposit, bankers' acceptances and
such short-term corporate debt securities as commercial paper and master
demand notes.
As of March 31, 1995, the Fund's investments consisted predominantly of
corporate debt securities. The Investment Manager presently anticipates that
it will continue to emphasize such securities in managing the Fund's
portfolio.
State Street Research & Management Company serves as investment adviser for
the Fund (the "Investment Manager"). As of May 31, 1995, the Investment
Manager had assets of approximately $25.7 billion under management. State
Street Research Investment Services, Inc. serves as distributor (the
"Distributor") for the Fund.
Shareholders may have their shares redeemed directly by the Fund at the net
asset value next determined on the basis of amortized cost after the
Application and payment are received and accepted on behalf of the Fund, plus
the applicable contingent deferred sales charge, if any; redemptions processed
through securities dealers may be subject to processing charges. The Fund will
invest in U.S. dollar-denominated high quality securities having remaining
maturities of thirteen months or less and will maintain a dollar-weighted
average portfolio maturity of 90 days or less. The Fund follows these policies
in seeking to maintain a constant net asset value of $1.00 per share. The
Fund's net asset value is determined on each business day as of 12 noon and as
of the close of trading on the New York Stock Exchange (the "NYSE").
This Prospectus sets forth concisely the information a prospective investor
ought to know about the Fund before investing. It should be retained for
future reference. A Statement of Additional Information about the Fund dated
August 1, 1995 has been filed with the Securities and Exchange Commission and
is incorporated by reference in this Prospectus. It is available, at no
charge, upon request to the Fund at the address indicated on the back cover or
by calling 1-800-562-0032.
The Fund is a diversified series of State Street Research Money Market
Trust (the "Trust"), an open-end management investment company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Table of Contents Page
- ---------------------------------------
Table of Expenses 3
Financial Highlights 5
Yield Information 6
The Fund's Investments 6
Limiting Investment Risk 7
Purchase of Shares 8
Redemption of Shares 14
Shareholder Services 16
The Fund and its Shares 19
Management of the Fund 20
Dividends and Distributions; Taxes 21
Other Investment Practices 22
Calculation of Performance Data 22
- ---------------------------------------
<PAGE>
The Fund offers multiple classes of shares which may be purchased at the
next determined net asset value per share plus, in the case of Class B and
Class D shares only, a sales charge which is imposed on a deferred basis.
Class B and Class D shares are offered solely in connection with exchanges
from Eligible Funds. Only Class C and Class E shares are offered for direct
purchase. See "Purchase of Shares--Alternative Purchase Program" and
"Shareholder Services--Exchange Privilege."
Class B shares are subject to (i) a contingent deferred sales charge
(declining from 5% to 2%), which will be imposed on most redemptions made
within five years of purchase and (ii) annual distribution and service fees of
1% of the average daily net asset value of such shares. Class B shares
automatically convert into Class E shares (which pay lower ongoing expenses)
at the end of eight years after purchase. No contingent deferred sales charge
applies after the fifth year following the purchase of Class B shares.
Class C shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or redemption
of Class C shares. Class C shares do not pay any distribution or service fees.
Class D shares are subject to (i) a contingent deferred sales charge of 1%
if redeemed within one year following purchase and (ii) annual distribution
and service fees of 1% of the average daily net asset value of such shares.
Class E shares are not subject to any initial or contingent deferred sales
charges. Class E shares do not pay any distribution or service fees.
2
<PAGE>
<TABLE>
<CAPTION>
Table of Expenses
- -----------------------------------------------------------------------------------------------------
Class B Class C Class D Class E
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses (1)
Maximum Sales Charge Imposed on Purchases (as a percentage
of offering price) None None None None
Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None None None None
Maximum Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) 5% None 1% None
Redemption Fees (as a percentage of amount redeemed,
if applicable) None None None None
Exchange Fees None None None None
</TABLE>
- -------------------
(1) The maximum 5% contingent deferred sales charge on Class B shares applies
to redemptions during the first year after purchase; the charge declines
thereafter and no contingent deferred sales charge is imposed after the
fifth year. Class D shares are subject to a 1% contingent deferred sales
charge on any portion of the purchase redeemed within one year of the
sale. Long-term investors in a class of shares with a distribution fee
may, over a period of years, pay more than the economic equivalent of a
maximum sales charge permissible under applicable rules. See "Purchase of
Shares."
<TABLE>
<CAPTION>
Class B Class C Class D Class E
------- ------- ------- -------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.50% 0.50% 0.50% 0.50%
12b-1 Fees 1.00% None 1.00% None
Other Expenses 0.81% 0.81% 0.81% 0.81%
Less Voluntary Reduction (0.56%) (0.56%) (0.56%) (0.56%)
------- ------- ------- -------
Total Fund Operating Expenses (after voluntary reduction) 1.75% 0.75% 1.75% 0.75%
======= ======= ======= =======
</TABLE>
Example:
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption of the entire investment at the end of each
time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class B shares (1) $68 $85 $115 $180
Class C shares $ 8 $24 $ 42 $ 93
Class D shares $28 $55 $ 95 $206
Class E shares $ 8 $24 $ 42 $ 93
</TABLE>
You would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class B shares (1) $18 $55 $95 $180
Class D shares $18 $55 $95 $206
</TABLE>
- -------------------
(1) Ten-year figures assume conversion of Class B shares to Class E shares at
the end of eight years.
The example should not be considered as a representation of past or future
return or expenses. Actual return or expenses may be greater or less than
shown.
3
<PAGE>
The purpose of the table above is to assist the investor in understanding
the various costs and expenses that an investor will bear directly or
indirectly. The percentage expense levels shown in the table above are based
on experience with expenses during the fiscal year ended March 31, 1995;
actual expense levels for the current fiscal year and future years may vary
from the amounts shown. The table does not reflect charges for optional
services elected by certain shareholders, such as the $7.50 fee for remittance
of redemption proceeds by wire. For further information on sales charges, see
"Purchase of Shares--Alternative Purchase Program"; for further information on
management fees, see "Management of the Fund"; and for further information on
12b-1 fees, see "Purchase of Shares--Distribution Plan."
The Fund has been advised that the Distributor and its affiliates may from
time to time and in varying amounts voluntarily assume some portion of fees or
expenses relating to the Fund. For the fiscal year ended March 31, 1995, Total
Fund Operating Expenses as a percentage of average net assets of Class B,
Class C, Class D and Class E shares of the Fund would have been 2.16%, 1.07%,
2.30% and 1.31%, respectively, in the absence of the voluntary assumption of
fees or expenses by the Distributor and its affiliates, which amounted to
0.41%, 0.32%, 0.55% and 0.56% of average net assets of each of the Class B,
Class C, Class D and Class E shares of the Fund, respectively. The amount of
fees or expenses assumed during the fiscal year ended March 31, 1995 differed
among classes because of fluctuating relative levels of assets in each class,
expenses before reimbursement which may not be constant over time and
designation of share classes during the period. The Fund expects the
subsidization of fees or expenses to continue in the current year, although it
cannot give complete assurance that such assistance will be received.
4
<PAGE>
Financial Highlights
The data set forth below has been audited by Price Waterhouse LLP,
independent accountants, and their report thereon for the latest five years
is included in the Statement of Additional Information. For further
information about the performance of the Fund, see the Fund's Annual Report
which appears under the caption "Financial Statements" in the Statement of
Additional Information.
<TABLE>
<CAPTION>
Class E
---------------------------------------------------------------------------------------------------
August 25, 1986
Year ended March 31 (Commencement of
----------------------------------------------------------------------------------- Operations) to
1995 1994 1993 1992 1991 1990 1989 1988 March 31, 1987
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income* .042 .025 .028 .048 .072 .083 .074 .062 .032
Dividends from net investment
income (.042) (.025) (.028) (.048) (.072) (.083) (.074) (.062) (.032)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return 4.31%+ 2.48%+ 2.88%+ 4.85%+ 7.47%+ 8.61%+ 7.68%+ 6.32%+ 3.25%+++
Net assets at end of year (000s) $150,491 $138,129 $149,831 $168,088 $185,839 $122,002 $63,711 $59,952 $19,725
Ratio of operating expenses to
average net assets* 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.77% 0.80% 0.75%++
Ratio of net investment income
to average net assets* 4.26% 2.46% 2.84% 4.77% 7.21% 8.23% 7.44% 6.16% 5.33%++
- ---------------
* Reflects voluntary assumption
of fees or expenses per share
in each year $.006 $.003 $.001 $.001 $.002 $.003 $.003 $.002 $.002
</TABLE>
++Annualized.
+Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
Total return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Class C Class D
-------------------------- --------------------------- ---------------------------
Year ended Year ended Year ended
March 31, 1995 1994** March 31, 1995 1994** March 31, 1995 1994**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income* .032 .012 .042 .021 .032 .013
Dividends from net investment income (.032) (.012) (.042) (.021) (.032) (.013)
------ ------ ------ ------ ------ ------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Total return 3.27%+ 1.27%+++ 4.31%+ 2.08%+++ 3.28%+ 1.30%+++
Net assets at end of year (000s) $9,322 $3,028 $7,886 $1,786 $ 842 $ 174
Ratio of operating expenses to average net
assets* 1.75% 1.75%++ 0.75% 0.75%++ 1.75% 1.75%++
Ratio of net investment income to average
net assets* 3.53% 1.54%++ 4.66% 2.54%++ 3.30% 1.54%++
- ---------------
* Reflects voluntary assumption of fees or
expenses per share in each year $ .004 $ .007 $ .003 $ .006 $ .005 $ .002
**June 1, 1993 (commencement of share class designations) to March 31, 1994.
++Annualized.
+Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Yield Information
For the seven-day period ended March 31, 1995, the simple annualized yield of
the Fund's Class B, Class C, Class D and Class E shares was 4.40%, 5.40%,
4.40% and 5.40%, respectively; the compounded effective yield of the Fund's
Class B, Class C, Class D and Class E shares was 4.50%, 5.55%, 4.50% and
5.55%, respectively; and the Fund had a weighted average maturity of
investments of 29.0 days.
The Fund's Investments
The Fund's investment objective is to seek a high level of current income
consistent with preservation of capital and maintenance of liquidity by
investing in securities issued or guaranteed as to principal and interest by
the U.S. Government or its agencies or instrumentalities as well as
high-quality, short-term money market instruments such as bank certificates
of deposit, bankers' acceptances and such short-term corporate debt
securities as commercial paper and master demand notes. The Fund's investment
objective is a fundamental policy and may not be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding
voting securities.
The Fund invests only in U.S. dollar-denominated high quality securities as
described in this paragraph. At least 95% of the Fund's assets will consist of
government securities and "first tier" eligible securities as defined in Rule
2a-7 under the Investment Company Act of 1940, as amended (the "1940 Act"),
which have been (i) rated by at least two nationally recognized statistical
rating organizations (such as Standard & Poor's Corporation or Moody's
Investors Service, Inc.) in the highest rating category for short-term
obligations (or so rated by one such organization if it alone has rated the
security), (ii) issued by an issuer with comparable short-term obligations
that are rated in the highest rating category, or (iii) if unrated, determined
to be comparable to such securities. The balance of the Fund's assets will be
invested in "second tier" eligible securities as defined in Rule 2a-7. See the
Statement of Additional Information.
All securities in which the Fund invests have remaining maturities of
thirteen months or less at the date of acquisition. The Fund also maintains a
dollar-weighted average portfolio maturity of 90 days or less. The Fund
follows these policies in seeking to maintain a constant net asset value of
$1.00 per share, although there is no assurance it can do so on a continuing
basis.
Investors should recognize that in periods of declining interest rates the
inflow of net new money to the Fund from the continuous sale of its shares
will likely be invested in portfolio instruments producing lower yields than
the balance of the Fund's portfolio, thereby reducing the current yield of the
Fund. In periods of rising interest rates, the opposite can be true.
Securities in which the Fund invests may not produce as high a level of income
as can be obtained from securities with longer maturities or those having a
lesser degree of safety.
Corporate Obligations
The Fund may invest in U.S. dollar-denominated high quality corporate debt
securities such as commercial paper and bonds and long-term unsecured
debentures with remaining maturities of thirteen months or less. Such
commercial paper may be issued by domestic subsidiaries of foreign banks or
bank holding companies. The Investment Manager will monitor the value of the
Fund's investments in commercial paper, taking into account such factors as
the issuer's earning power, cash flow and other liquidity ratios. For further
information concerning debt securities ratings and permissible money market
investments of the Fund, see the Statement of Additional Information.
In making investments in qualifying foreign securities, up to 15% of the
Fund's total assets may be invested, subject to compliance with applicable
issuer diversification and quality limitations, in U.S. dollar-denominated
short-term Canadian Government and corporate money market instruments of the
type described above. See "Other Investment Practices--Foreign Banks and
Securities" herein.
Bank Obligations
Money market instruments of nongovernmental issuers may include but are not
limited to obligations of U.S. banks that are members of the Federal Deposit
6
<PAGE>
Insurance Corporation ("FDIC"), including their foreign branches
(Eurodollars), obligations of U.S. branches or agencies of foreign banks
(Yankee dollars), obligations of foreign branches of foreign banks and
obligations of savings banks or savings and loan associations that are
members of the FDIC (including certificates of deposit, U.S.
dollar-denominated time deposits maturing in seven days or less (provided
that not more than 10% of the Fund's total assets will be invested in time
deposits with maturities of two to seven days) and bankers' acceptances),
provided that any such institution has, at the date of investment, capital,
surplus and undivided profits (as of the date of its most recently published
financial statements) in excess of $50,000,000.
U.S. Government and Related Obligations
Securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies or instrumentalities in which the Fund may invest
include (a) direct obligations of the U.S. Treasury, including bills, bonds
and notes; and (b) obligations issued or guaranteed as to principal and
interest by U.S. Government agencies or instrumentalities and supported by any
of (i) the full faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association participation certificates); (ii) the right of
the issuer to borrow a limited amount from the U.S. Treasury (e.g., securities
of the Farmers Home Administration); (iii) the discretionary authority of the
U.S. Government to purchase certain obligations of the agency or
instrumentality (e.g., securities of the Federal National Mortgage
Association); or (iv) the credit of the agency or instrumentality (e.g.,
securities of a Federal Home Loan Bank). The Fund may also invest in
repurchase agreements with respect to such instruments, subject to certain
limitations, and purchase securities on a "when issued" basis. See "Other
Investment Practices."
Securities issued or guaranteed as to principal and interest by the U.S.
Government may be acquired by the Fund in the form of separately traded
principal and interest components of securities issued or guaranteed by the
U.S. Treasury. The principal and interest components of selected securities
are currently traded independently under the Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. Under the STRIPS
program, the principal and interest components are individually numbered and
separately issued by the U.S. Treasury at the request of depository financial
institutions, which then trade the component parts independently. The interest
and principal payments on the U.S. Treasury securities underlying STRIPS are
direct obligations of the U.S. Government.
Limiting Investment Risk
In seeking to lessen investment risk, the Fund operates under certain
investment restrictions. Under these restrictions, the Fund may not invest in
a security if the transaction would result in (a) more than 5% of the Fund's
total assets being invested in any one issuer; (b) the Fund's owning more
than 10% of any class of voting securities of an issuer; (c) more than 5% of
the Fund's total assets being invested in securities of issuers (including
predecessors) with less than three years of continuous operations; or (d)
more than 25% of the Fund's total assets being invested in any one industry.
None of the above restrictions applies to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, and
the restriction in clause (d) does not apply to investments in obligations of
domestic banks. For this purpose, (i) U.S. branches and agencies of foreign
banks will be considered "domestic banks" if it can be demonstrated that they
are subject to the same regulation as U.S. banks and (ii) foreign branches of
U.S. banks will be considered "domestic banks" if the U.S. parent is
unconditionally liable in the event the foreign branch fails to pay on the
instrument for any reason.
The Fund may not invest more than 10% of its total assets in illiquid
securities, including securities restricted as to resale (limited to 5% of
total assets), repurchase agreements extending for more than seven days and
other securities which are not readily marketable. The Fund will not make
loans except that it may purchase debt obligations, including money market
instruments, directly from the issuer thereof or in the open market and may
engage in repurchase transactions collateralized by obligations of the U.S.
Government and its agencies and instrumentalities.
7
<PAGE>
The restrictions set forth above may be changed only by a vote of the
holders of a majority of the Fund's outstanding voting securities. For further
discussion of these and other investment restrictions including nonfundamental
restrictions which may be changed without a shareholder vote, see the
Statement of Additional Information.
Information on the Purchase of Shares, Redemption of Shares and Shareholder
Services is set forth on pages 8 to 19 below.
The Fund is available for investment by many kinds of investors including
participants investing through 401(k) or other retirement plan sponsors,
employees investing through savings plans sponsored by employers, Individual
Retirement Accounts ("IRAs"), trusts, corporations, individuals, etc. The
applicability of the general information and administrative procedures set
forth below accordingly will vary depending on the investor and the
recordkeeping system established for a shareholder's investment in the Fund.
Participants in 401(k) and other plans should first consult with the
appropriate person at their employer or refer to the plan materials before
following any of the procedures below. For more information or assistance,
anyone may call 1-800-562-0032.
Purchase of Shares
Methods of Purchase
Through Dealers
Shares of the Fund are continuously offered through securities dealers who
have entered into sales agreements with the Distributor at a price which is
expected to be maintained at $1.00 per share plus the applicable sales
charge. Purchases through dealers are confirmed at the offering price plus
the applicable sales charge next determined after the order is duly received
by State Street Research Shareholder Services ("Shareholder Services"), a
division of State Street Research Investment Services, Inc., from the dealer.
("Duly received" for purposes herein means in accordance with the conditions
of the applicable method of purchase as described below.) The dealer is
responsible for transmitting the order promptly to Shareholder Services in
order to permit the investor to obtain the current price. See "Purchase of
Shares--Net Asset Value" herein.
Purchases made by check are normally effective as of the business day after
the check is received by Shareholder Services and delivered by Shareholder
Services to the transfer agent and dividend paying agent, State Street Bank
and Trust Company (the "Transfer Agent"), and accrue dividends commencing the
business day after the effective date, subject to collection conditions. As
more fully described below, certain large purchases made with Federal Funds
received by 12 noon Boston time on any business day will normally be effective
and accrue dividends commencing that day. Other purchases made with Federal
Funds received after 12 noon and before 4 P.M. Boston time on any business day
will normally be effective that day and accrue dividends commencing the next
business day.
By Mail
Initial investments in the Fund may be made by mailing or delivering to the
investor's securities dealer a completed Application (accompanying this
Prospectus), together with a check for the total purchase price payable to
the Fund. The dealer must forward the Application and check in accordance
with the instructions on the Application.
Additional shares may be purchased by mailing to Shareholder Services a
check payable to the Fund in the amount of the total purchase price together
with any one of the following: (i) an Application; (ii) the stub from a
shareholder's account statement; or (iii) a letter setting forth the name of
the Fund, the class of shares and the shareholder's account name and number.
Shareholder Services will deliver the purchase order to the Transfer Agent.
If a check is not honored for its full amount, the purchaser could be
subject to additional charges to cover collection costs and any investment
loss, and the purchase may be cancelled.
8
<PAGE>
By Wire
An investor may purchase shares by wiring Federal Funds of not less than
$5,000 to State Street Bank and Trust Company, which also serves as the
Trust's custodian (the "Custodian"), as set forth below. Prior to making an
investment by wire, an investor must notify Shareholder Services at
1-800-521-6548 and obtain a control number and instructions. Following such
notification, Federal Funds should be wired through the Federal Reserve
System to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA
BNF=State Street Research Money Market Fund and class of shares
(B, C, D or E)
AC=99029761
OBI=Shareholder Name
Shareholder Account Number
Control #K (assigned by State Street
Research Shareholder Services)
In order for an investment to be effective on the same day Federal Funds
are received and also accrue dividends for that day, (i) the investor must
notify Shareholder Services by telephone by 9:30 A.M. Boston time on that day
of the investor's intention to make such investment for a minimum amount of
$25,000; and (ii) the Federal Funds must be received by 12 noon Boston time
that same day. To facilitate the timely processing of such investments, an
investor may establish special bank accounts and make other direct
arrangements with the Custodian, subject to related charges by the Custodian
payable directly by the investor. Transactions processed through such accounts
are only subject to the minimum amounts noted under the subcaption "Minimum
Investment" below and will be treated as the equivalent of a Federal Funds
wire for purposes of making investments and remitting redemption proceeds
hereunder. The use of such special accounts may be terminated by the Fund, and
special policies, procedures and limitations applicable to such special
accounts may be adopted without notice at any time. Contact the Distributor
for further information.
Wire investments not made as provided above will nonetheless be effective
on the same day if (i) the investor notifies Shareholder Services of his or
her intention to make such investment by 12 noon Boston time on the day of his
or her investment; and (ii) the wire is received by 4 P.M. Boston time that
same day. Dividends on such wire investments will commence on the business day
after the effective date of the purchase.
An investor making an initial investment by wire must promptly complete the
Application accompanying this Prospectus and deliver it to his or her
securities dealer, who should forward it as required. No redemptions will be
effected until the Application has been duly processed.
The Fund may in its discretion discontinue, suspend or change the practice
of accepting orders by any of the methods described above. Orders for the
purchase of shares are subject to acceptance by the Fund. The Fund reserves
the right to reject any purchase order, including orders in connection with
exchanges, for any reason which the Fund in its sole discretion deems
appropriate. The Fund reserves the right to suspend the sale of shares.
Minimum Investment
Class of Shares
------------------------------
B C D E
------ ----- ----- -----
Minimum Initial Investment
By Wire $5,000 (a) $5,000 $5,000
IRAs $2,000 (a) $2,000 $2,000
By Investamatic $1,000 (a) $1,000 $1,000
All other $2,500 (a) $2,500 $2,500
Minimum Subsequent Investment
By Wire $5,000 (a) $5,000 $5,000
IRAs $ 50 (a) $ 50 $ 50
By Investamatic $ 50 (a) $ 50 $ 50
All other $ 50 (a) $ 50 $ 50
(a) Special conditions apply; contact the Distributor.
The Fund reserves the right to vary the minimums for initial or subsequent
investments from time to time as in the case of, for example, exchanges and
investments under various retirement and employee benefit plans, sponsored
arrangements involving group solicitations of the members of an organization,
or other investment plans such as for reinvestment of dividends and
distributions or for periodic investments (e.g., Investamatic Check Program).
9
<PAGE>
Alternative Purchase Program
General
Alternative classes of shares permit investors to exchange their shares of an
Eligible Fund for shares of the corresponding class of the Fund. Only Class C
and Class E shares will be issued to investors purchasing shares of the Fund
other than by an exchange from an Eligible Fund. Class C and Class E shares
do not pay any distribution or service fees.
As described in greater detail below, securities dealers are paid differing
amounts of commission and other compensation depending on which class of
shares they sell.
The major differences among the various classes of shares are as follows:
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS D CLASS E
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales Charges Contingent deferred sales charge of 5% to None Contingent deferred sales charge of 1% None
2% applies to any shares redeemed within applies to any shares redeemed within one
first five years following their purchase; year following their purchase
no contingent deferred sales charge after
five years
Distribution Fee 0.75% for first eight years; Class B None 0.75% each year None
shares convert automatically to Class E
shares after eight years
Service Fee 0.25% each year None 0.25% each year None
Initial 4% None 1% None
Commission
Received by
Selling
Securities
Dealer
</TABLE>
In deciding which class of shares to purchase, the investor should consider
the amount of the investment, the length of time the investment is expected to
be held, and the ongoing service fee and distribution fee, among other
factors.
Class B shareholders pay no initial sales charge, but a contingent deferred
sales charge of up to 5% generally applies to shares redeemed within five
years of purchase. Class D shareholders also pay no initial sales charge, but
a contingent deferred sales charge of 1% generally applies to redemptions made
within one year of purchase. For Class B and Class D shareholders, therefore,
the entire purchase amount is immediately invested in the Fund.
Class B and Class D shares are assessed an annual service fee of 0.25% of
average daily net assets. Class B shares are assessed an annual distribution
fee of 0.75% of daily net assets for an eight-year period following the date
of purchase and are then automatically converted to Class E shares. Class D
shares are assessed an annual distribution fee of 0.75% of daily net assets
for as long as the shares are held. The prospective investor should consider
these fees plus the initial or contingent deferred sales charges in estimating
the costs of investing in the various classes of the Fund's shares.
10
<PAGE>
Only certain employee benefit plans and large institutions may make
investments in Class C shares.
Some of the service and distribution fees are allocated to dealers (see
"Distribution Plan" below). In addition, the Distributor will, at its expense,
provide additional cash and noncash incentives to securities dealers that sell
shares. Such incentives may be extended only to those dealers that have sold
or may sell significant amounts of shares and/or meet other conditions
established by the Distributor; for example, the Distributor may sponsor
special promotions to develop particular distribution channels or to reach
certain investor groups. The incentives may include merchandise and trips to
and attendance at sales seminars at resorts.
Class B Shares--Contingent Deferred Sales Charges
Class B shares are offered solely in connection with exchanges from Eligible
Funds.
Contingent Deferred Sales Charges
The public offering price of Class B shares is the net asset value per share
next determined after the purchase order is duly received, as defined herein.
No sales charge is imposed at the time of purchase; thus the full amount of
the investor's purchase payment will be invested in the Fund. However, a
contingent deferred sales charge may be imposed upon redemptions of Class B
shares as described below.
The Distributor will pay securities dealers at the time of sale a 4%
commission for selling Class B shares. The proceeds of the contingent deferred
sales charge and the distribution fee are used to offset distribution expenses
and thereby permit the sale of Class B shares without an initial sales charge.
Class B shares that are redeemed within a five-year period after their
purchase will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents (1) capital appreciation of
Fund assets or (2) reinvestment of dividends or capital gains distributions.
The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the net asset value of such shares at the time of
redemption or at the time of purchase, whichever is lower, by the applicable
percentage shown in the table below:
Contingent Deferred
Sales Charge
As A Percentage Of
Net Asset Value
Redemption During At Redemption
- ----------------- -------------------
1st Year Since Purchase 5%
2nd Year Since Purchase 4
3rd Year Since Purchase 3
4th Year Since Purchase 3
5th Year Since Purchase 2
6th Year Since Purchase and Thereafter None
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption of Class B shares is made first
of those shares having the greatest capital appreciation, next of shares
representing reinvestment of dividends and capital gains distributions and
finally of remaining shares held by the shareholder for the longest period of
time. The holding period for purposes of applying a contingent deferred sales
charge on Class B shares of the Fund acquired through an exchange from another
Eligible Fund, as described below, will be measured from the date that such
shares were initially acquired in the other Eligible Fund, and Class B shares
being redeemed will be considered to represent, as applicable, capital
appreciation or dividend and capital gains distribution reinvestments in such
other Eligible Fund. ("Eligible Funds" include the Fund and other funds so
designated by the Distributor from time to time.) These determinations will
result in any contingent deferred sales charge being imposed at the lowest
possible rate. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case
may be, on the amount realized on redemption. The amount of any contingent
deferred sales charge will be paid to the Distributor.
Contingent Deferred Sales Charge Waivers
The contingent deferred sales charge does not apply to exchanges, or to
redemptions under a systematic withdrawal plan which meets certain
conditions. In addition, the contingent deferred sales charge will be waived
for: (i) redemptions made within one year of the death or total disability,
as defined by the Social Security Administration, of all shareholders of an
account; (ii) redemptions made after attainment of a specific age in an
amount which represents the minimum distribution required at such age under
Section
11
<PAGE>
401(a)(9) of the Internal Revenue Code for retirement accounts or plans
(e.g., age 70-1/2 for IRAs and Section 403(b) plans), calculated solely on
the basis of assets invested in the Fund or other Eligible Funds; and (iii) a
redemption resulting from a tax-free return of an excess contribution to an
IRA. (The foregoing waivers do not apply to a tax-free rollover or transfer
of assets out of the Fund.) The Fund may modify or terminate the waivers
described above at any time; for example, the Fund may limit the application
of multiple waivers.
Conversion of Class B Shares to Class E Shares
A shareholder's Class B shares, including all shares received as dividends or
distributions with respect to such shares, will automatically convert to
Class E shares of the Fund at the end of eight years following the issuance
of such Class B shares; consequently, they will no longer be subject to the
higher expenses borne by Class B shares. The conversion rate will be
determined on the basis of the relative per-share net asset values of the two
classes and may result in a shareholder receiving either a greater or fewer
number of Class E shares than the Class B shares so converted. As noted
above, holding periods for Class B shares received in exchange for Class B
shares of other Eligible Funds will be counted toward the eight-year period.
Class C Shares--Institutional; No Sales Charge
The purchase price of a Class C share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase or
redemption. The Fund will receive the full amount of the investor's purchase
payment.
Class C shares are only available for new investments by certain employee
benefit plans and large institutions. See the Statement of Additional
Information. Information on the availability of Class C shares and further
conditions and limitations with respect thereto is available from the
Distributor.
Class C shares may be also issued in connection with mergers and
acquisitions involving the Fund, and under certain other circumstances as
described in this Prospectus (e.g., see "Shareholder Services--Exchange
Privilege").
Class C shares may have also been issued directly or through exchanges to
those shareholders of the Fund or other Eligible Funds who previously held
shares not subject to any future sales charge or service fees or distribution
fees.
Class D Shares--Spread Sales Charges
Class D shares are offered solely in connection with exchanges from Eligible
Funds.
The purchase price of a Class D share of the Fund is the Fund's per share
net asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase; thus the
full amount of the investor's purchase payment will be invested in the Fund.
Class D shares are subject to a 1% contingent deferred sales charge on any
portion of the purchase redeemed within one year of the sale. The contingent
deferred sales charge will be 1% of the lesser of the net asset value of the
shares at the time of purchase or at the time of redemption. The Distributor
pays securities dealers a 1% commission for selling Class D shares at the time
of purchase. The proceeds of the contingent deferred sales charge and the
distribution fee are used to offset distribution expenses and thereby permit
the sale of Class D shares without an initial sales charge.
Class D shares that are redeemed within one year after purchase will not be
subject to the contingent deferred sales charge to the extent that the value
of such shares represents (1) capital appreciation of Fund assets or (2)
reinvestment of dividends or capital gains distributions. In addition, the
contingent deferred sales charge will be waived for certain other redemptions
as described under "Contingent Deferred Sales Charge Waivers" above (as
otherwise applicable to Class B shares). For federal income tax purposes, the
amount of the contingent deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any contingent deferred sales charge will be paid to the
Distributor.
Class E Shares--General; No Sales Charge
The purchase price of a Class E share of the Fund is the Fund's per share net
asset value next determined after the purchase order is duly received, as
defined
12
<PAGE>
herein. No sales charge is imposed at the time of purchase or redemption. The
Fund will receive the full amount of the investor's purchase payment.
Class E shares may have also been issued directly or through exchanges to
certain shareholders of the Fund or other Eligible Funds who previously held
shares which are not subject to any future sales charge or service fees or
distribution fees.
Net Asset Value
The Fund's per share net asset values are determined Monday through Friday as
of 12 noon and as of the close of the NYSE exclusive of days on which the
NYSE is closed. The NYSE ordinarily closes at 4 P.M. New York City time. Net
asset value per share is calculated by adding the value of all instruments
and other assets of the Fund, deducting its actual and accrued liabilities,
and dividing the difference by the number of shares outstanding.
The Fund's portfolio instruments are valued on the basis of the amortized
cost valuation method. This involves valuing an instrument initially at its
cost and thereafter assuming a constant amortization of premium or accretion
of discount to maturity, regardless of the impact of fluctuating interest
rates on the market value of the instrument. For this purpose securities whose
interest rates are adjusted periodically to market rates will in general be
deemed to have maturities equal to the period remaining until the next
interest rate adjustment, subject to applicable limitations under Rule 2a-7
under the 1940 Act. It is the intention of the Fund to maintain a per share
net asset value of $1.00, although this cannot be assured. See "Net Asset
Value" in the Statement of Additional Information.
Distribution Plan
The Fund has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Distribution Plan") in accordance with the regulations under the 1940 Act.
Under the provisions of the Distribution Plan, the Fund makes payments to the
Distributor based on an annual percentage of the average daily value of the
net assets of each class of shares as follows:
Class Service Fee Distribution Fee
----- ----------- ----------------
B 0.25% 0.75%
C None None
D 0.25% 0.75%
E None None
Some or all of the service fees are used to reimburse securities dealers
(including securities dealers that are affiliates of the Distributor) for
personal services and/or the maintenance of shareholder accounts. A portion of
any initial commission paid to dealers for the sale of shares of the Fund
represents payment for personal services and/or the maintenance of shareholder
accounts by such dealers. Dealers who have sold Class B and Class D shares are
eligible for further reimbursement after the first year during which such
shares have been held of record by such dealer as nominee for its clients (or
by such clients directly). Any service fees received by the Distributor and
not allocated to dealers may be applied by the Distributor in reduction of
expenses incurred by it directly for personal services and the maintenance of
shareholder accounts.
The distribution fees are used primarily to offset initial and ongoing
commissions paid to securities dealers for selling such shares. Any
distribution fees received by the Distributor and not allocated to dealers may
be applied by the Distributor in connection with sales or marketing efforts,
including special promotional fees and cash and noncash incentives based upon
sales by securities dealers.
The Distributor provides distribution services on behalf of other funds
having distribution plans and receives similar payments from, and incurs
similar expenses on behalf of, such other funds. When expenses of the
Distributor cannot be identified as relating to a specific fund, the
Distributor allocates expenses among the funds in a manner deemed fair and
equitable to each fund.
Commissions and other cash and noncash incentives and payments to dealers,
to the extent payable out of the general profits, revenues or other sources of
the Distributor (including the advisory fees paid by the Fund), have also been
authorized pursuant to the Distribution Plan.
13
<PAGE>
A rule of the National Association of Securities Dealers, Inc. ("NASD")
limits the annual expenditures which the Fund may incur under the Distribution
Plan to 1%, of which 0.75% may be used to pay distribution expenses and 0.25%
may be used to pay shareholder service fees. The NASD rule also limits the
aggregate amount which the Fund may pay for such distribution costs to 6.25%
of gross share sales of a class since the inception of any asset-based sales
charge plus interest at the prime rate plus 1% on unpaid amounts thereof (less
any contingent deferred sales charges). Such limitation does not apply to
shareholder service fees. Payments to the Distributor or to dealers funded
under the Distribution Plan may be discontinued at any time by the Trustees of
the Trust.
Redemption of Shares
Shareholders may redeem all or any portion of their accounts on any day the
NYSE is open for business. Redemptions will be effective at the net asset
value per share next determined (see "Purchase of Shares--Net Asset Value"
herein) after receipt of the redemption request, in accordance with the
requirements described below, by Shareholder Services and delivery of the
request by Shareholder Services to the Transfer Agent. To allow time for the
clearance of checks used for the purchase of any shares which are tendered
for redemption shortly after purchase, the remittance of the redemption
proceeds for such shares could be delayed for 15 days or more after the
purchase. Shareholders who anticipate the need for immediate access to their
investments should, therefore, purchase shares by wire. Except as noted,
redemption proceeds from the Fund are normally remitted within seven days
after receipt of the redemption request by the Fund and any necessary
documents in good order.
Methods of Redemption
Request By Mail
A shareholder may write to request redemption of shares, with proceeds to be
mailed to the shareholder or wired to a predesignated bank account (see
"Proceeds By Wire" below), by sending to State Street Research Shareholder
Services, P.O. Box 8408, Boston, Massachusetts 02266-8408: (1) a written
request for redemption signed by the registered owner(s) of the shares,
exactly as the account is registered; (2) an endorsed stock power in good
order with respect to the shares or, if issued, the share certificates for
the shares endorsed for transfer or accompanied by an endorsed stock power;
(3) any required signature guarantees (see "Redemption of Shares--Signature
Guarantees" below); and (4) any additional documents which may be required
for redemption in the case of corporations, trustees, etc., such as certified
copies of corporate resolutions, governing instruments, powers of attorney,
and the like. The Transfer Agent will not process requests for redemption
until it has received all necessary documents in good order. A shareholder
will be notified promptly if a redemption request cannot be accepted.
Shareholders having any questions about the requirements for redemption
should call Shareholder Services toll-free at 1-800-562-0032.
Request By Telephone
Shareholders may request redemption by telephone with proceeds to be
transmitted by check or by wire (see "Proceeds By Wire" below). A shareholder
can request a redemption for $50,000 or less to be transmitted by check. Such
check for the proceeds will be made payable to the shareholder of record and
will be mailed to the address of record. There is no fee for this service. It
is not available if the address of record has been changed within 30 days of
the redemption request. The Fund may revoke or suspend the telephone
redemption privilege at any time and without notice. See "Shareholder
Services--Telephone Services" for a discussion of the conditions and risks
associated with Telephone Privileges.
Request By Check (Class E Shares Only)
Shareholders of Class E shares of the Fund may redeem shares by checks drawn
on State Street Bank and Trust Company. Checks may be made payable to the
order of any person or organization designated by the shareholder and must be
for amounts of at least $500. Shareholders will continue to earn dividends on
the shares to be redeemed until the check clears. There is currently no
charge associated with redemption of shares by check. Checkbooks are supplied
for a $2 fee. Checks will be sent only to the registered owner at the address
of record. A $10 fee will be charged against an account in the event a
redemption check is presented for payment and not honored pursuant to the
terms and conditions established by State Street Bank and Trust Company.
14
<PAGE>
Shareholders can request the checkwriting privilege by completing the
signature card which is part of the Application. In order to arrange for
redemption-by-check after an account has been opened, a revised Application
with signature card and signatures guaranteed must be sent to Shareholder
Services. Cancelled checks will be returned to shareholders at the end of each
month.
The redemption-by-check service is subject to State Street Bank and Trust
Company's rules and regulations applicable to checking accounts (as amended
from time to time), and is governed by the Massachusetts Uniform Commercial
Code. All notices with respect to checks drawn on State Street Bank and Trust
Company must be given to State Street Bank and Trust Company. Stop payment
instructions with respect to checks must be given to State Street Bank and
Trust Company by calling 1-617-985-8543. Shareholders may not close out an
account by check.
Proceeds By Wire
Upon a shareholder's written request or by telephone if the shareholder has
Telephone Privileges (see "Shareholder Services--Telephone Services" herein),
the Trust's custodian will wire redemption proceeds to the shareholder's
predesignated bank account. If a telephone redemption request for a minimum
of $25,000 is received by 9:30 A.M., redemption proceeds will normally be
wired that day. All other redemptions will normally be wired on the business
day after receipt of the redemption request. In any event, redemption
proceeds will be wired not later than seven days, in most cases, after
receipt of the redemption request and all necessary documents. To make the
request, the shareholder should call 1-800-521-6548. A $7.50 charge against
the shareholder's account will be imposed for each wire redemption. This
charge is subject to change without notice. The shareholder's bank may also
impose a charge for receiving wires of redemption proceeds. The minimum
redemption by wire is $1,000.
The Fund has reserved the right to change, modify or terminate the services
described above at any time.
Additional Information
Because of the relatively high cost of maintaining small shareholder
accounts, the Fund reserves the right to involuntarily redeem at its option
any shareholder account which remains below $1,500 for a period of 60 days
after notice is mailed to the applicable shareholder, or to impose a
maintenance fee on such account after 60 days' notice. Such involuntary
redemptions will be subject to applicable sales charges, if any. The Fund may
increase such minimum account value above such amount in the future after
notice to affected shareholders. Involuntarily redeemed shares will be priced
at the net asset value on the date fixed for redemption by the Fund, and the
proceeds of the redemption will be mailed to the affected shareholder at the
address of record. Currently, the maintenance fee is $18 annually, which is
paid to the Transfer Agent. The fee does not apply to certain retirement
accounts or if the shareholder has more than an aggregate $50,000 invested in
the Fund and other Eligible Funds combined. Imposition of a maintenance fee
on a small account could, over time, exhaust the assets of such account.
To cover the cost of additional compliance administration, a $20 fee will
be charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Fund may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for more than seven days, except that (a) it
may elect to suspend the redemption of shares or postpone the date of payment
of redemption proceeds: (1) during any period that the NYSE is closed (other
than customary weekend and holiday closings) or trading on the NYSE is
restricted; (2) during any period in which an emergency exists as a result of
which disposal of portfolio securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the Fund's net asset values; or
(3) during such other periods as the Securities and Exchange Commission may by
order permit for the protection of investors; and (b) the payment of
redemption proceeds may be postponed as otherwise provided under "Redemption
of Shares" herein.
Signature Guarantees
To protect shareholder accounts, the Transfer Agent, the Fund, the Investment
Manager and the Distributor from possible fraud, signature guarantees are
required for certain redemptions. Signature guarantees enable the Transfer
Agent to be certain that the person who
15
<PAGE>
has authorized a redemption from the account is, in fact, the shareholder.
Signature guarantees are required for: (1) all redemptions requested by mail;
(2) requests to transfer the registration of shares to another owner; and (3)
authorizations to establish the checkwriting privilege. Signatures must be
guaranteed by a bank, a member firm of a national stock exchange, or other
eligible guarantor institution. The Transfer Agent will not accept guarantees
(or notarizations) from notaries public. The above requirements may be waived
by the Fund in certain instances.
Shareholder Services
The Open Account System
Under the Open Account System full and fractional shares of the Fund owned by
shareholders are credited to their accounts by the Transfer Agent, State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110. Share certificates will not be issued. Shareholders will receive
periodic statements of transactions in their accounts.
The Fund's Open Account System provides the following options:
1. Additional purchases of shares of the Fund may be made by wire or by
mailing a check payable to the Fund to Shareholder Services under the
terms set forth above under "Purchase of Shares."
2. The following methods of receiving dividends from investment income and
distributions from capital gains (if any) are available:
(a) All income dividends and capital gains distributions reinvested in
additional shares of the Fund.
(b) All income dividends and capital gains distributions in cash.
(c) All income dividends and capital gains distributions invested in
any one available Eligible Fund designated by the shareholder. See
"Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, that account will be automatically coded for reinvestment of all
dividends and distributions in additional shares of the same class of the
Fund. Selections may be changed at any time by telephone or written notice to
Shareholder Services. Dividends and distributions are reinvested at net asset
value without a sales charge.
Exchange Privilege
Shareholders of the Fund may exchange their shares for available shares with
corresponding characteristics of any of the other Eligible Funds at any time
on the basis of the relative net asset values of the respective shares to be
exchanged, subject to compliance with applicable securities laws.
Shareholders of any other Eligible Fund may similarly exchange their shares
for Fund shares with corresponding characteristics. Prior to making an
exchange, shareholders should obtain the Prospectus of the Eligible Fund into
which they are exchanging. Under the Direct Program, subject to certain
conditions, shareholders may make arrangements for regular exchanges from the
Fund into other Eligible Funds. To effect an exchange, Class B and Class D
shares may be redeemed without the payment of any contingent deferred sales
charge that might otherwise be due upon an ordinary redemption of such
shares. Exchanges of Class E shares of the Fund into Class A shares of any
other Eligible Fund are subject to the initial sales charge or contingent
deferred sales charge applicable to an initial investment in such Class A
shares, unless a prior Class A sales charge has been paid directly or
indirectly with respect to the shares redeemed. For purposes of computing the
contingent deferred sales charge that may be payable upon disposition of any
acquired Class A, Class B and Class D shares, the holding period of the
redeemed shares is "tacked" to the holding period of the acquired shares. The
period any Class E shares are held is not tacked to the holding period of any
acquired shares. No exchange transaction fee is currently imposed on any
exchange.
For the convenience of the shareholders who have Telephone Privileges, the
Fund permits exchanges by telephone request from either the shareholder or his
or her dealer. Shares may be exchanged by telephone provided that the
registration of the two accounts is
16
<PAGE>
the same. The toll-free number for exchanges is 1-800-521-6548. See
"Telephone Services" herein for a discussion of conditions and risks
associated with Telephone Privileges.
The exchange privilege may be exercised only in those states where shares
of the relevant other Eligible Fund may legally be sold. For tax purposes,
each exchange actually represents the sale of shares of one fund and the
purchase of shares of another. Accordingly, exchanges may produce a capital
gain or loss for tax purposes. The exchange privilege may be terminated or
suspended or its terms changed at any time, subject, if required under
applicable regulations, to 60 days' prior notice. New accounts established for
investments upon exchange from an existing account in another fund will have
the same Telephone Privileges as the existing account, unless Shareholder
Services is instructed otherwise. Related administrative policies and
procedures may also be adopted with regard to a series of exchanges, street
name accounts, sponsored arrangements and other matters.
If an exchange request in good order is received by Shareholder Services
and delivered by Shareholder Services to the Transfer Agent by 12 noon Boston
time on any business day, the exchange usually will occur that day. For
further information regarding the exchange privilege, shareholders should
contact Shareholder Services.
Reinvestment Privilege
A shareholder of the Fund who has redeemed shares or had shares repurchased
at his or her request may reinvest any portion or all of the proceeds (plus
that amount necessary to acquire a fractional share to round off his or her
reinvestment to full shares) in shares, of the same class as the shares
redeemed, of the Fund or any other Eligible Fund at net asset value and
without subjecting the reinvestment to an initial sales charge, provided such
reinvestment is made within 30 calendar days after a redemption or
repurchase. Upon such reinvestment, the shareholder will be credited with any
contingent deferred sales charge previously charged with respect to the
amount reinvested. The redemption of shares is, for federal income tax
purposes, a sale on which the shareholder may realize a gain or loss. If a
redemption at a loss is followed by a reinvestment within 30 days, the
transaction may be a "wash sale" resulting in a denial of the loss for
federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject to
any applicable minimum account standards imposed by the fund into which the
reinvestment is made. Shares are sold to a reinvesting shareholder at the net
asset value thereof next determined following timely receipt by Shareholder
Services of such shareholder's written purchase request and delivery of the
request by Shareholder Services to the Transfer Agent. A shareholder may
exercise this reinvestment privilege only once with respect to his or her
shares of the Fund. No charge is imposed by the Fund for such reinvestments;
however, dealers may charge fees in connection with the reinvestment
privilege. The reinvestment privilege may be exercised with respect to an
Eligible Fund only in those states where shares of the relevant other Eligible
Fund may legally be sold.
Investment Plans
The Fund offers Class E shareholders the Investamatic Check Program. Under
this Program, shareholders may make regular investments by authorizing
withdrawals from their bank accounts each month or quarter on the Application
available from Shareholder Services.
The Fund also offers tax-sheltered retirement plans, including prototype
and other employee benefit plans for employees, sole proprietors, partnerships
and corporations and IRAs. Details of these investment plans and their
availability may be obtained from securities dealers or from Shareholder
Services.
Systematic Withdrawal Plan
A shareholder who owns Class C or Class E shares with a value of $5,000 or
more, or Class B or Class D shares with a value of $10,000 or more, may
elect, by participating in the Fund's Systematic Withdrawal Plan, to have
periodic checks issued for specified amounts. These amounts may not be less
than certain minimums, depending on the class of shares held. The Plan
provides that all income dividends and capital gains distributions (if any)
of the Fund shall be credited to participating shareholders in additional
shares of the Fund. Thus, the withdrawal amounts
17
<PAGE>
paid can only be realized by redeeming shares of the Fund under the Plan. To
the extent such amounts paid exceed dividends and distributions from the
Fund, a shareholder's investment will decrease and may eventually be
exhausted.
In the case of shares otherwise subject to contingent deferred sales
charges, no such charges will be imposed on withdrawals of up to 8% annually
of either (a) the value, at the time the Plan is initiated, of the shares then
in the account or (b) the value, at the time of a withdrawal, of the same
number of shares as in the account when the Plan was initiated, whichever is
higher.
Expenses of the Plan are borne by the Fund. A participating shareholder may
withdraw from the Plan, and the Fund may terminate the Plan at any time on
written notice. Purchase of additional shares while a shareholder is receiving
payments under a Plan is ordinarily disadvantageous because of duplicative
sales charges. For this reason, a shareholder may not simultaneously
participate in the Investamatic Check Program and the Systematic Withdrawal
Plan in connection with shares which are subject to an initial or contingent
deferred sales charge.
Dividend Allocation Plan
The Dividend Allocation Plan allows shareholders to elect to have all their
dividends and any other distributions from the Fund or any Eligible Fund
automatically invested at net asset value in one other such Eligible Fund
designated by the shareholder, provided the account into which the investment
is made is initially funded with the requisite minimum amount. The number of
shares purchased will be determined as of the dividend payment date. The
Dividend Allocation Plan is subject to state securities law requirements, to
suspension at any time, and to such policies, limitations and restrictions,
such as may be applicable to street name or master accounts, that may be
adopted from time to time.
Automatic Bank Connection
A shareholder may elect, by participating in the Fund's Automatic Bank
Connection ("ABC"), to have dividends and other distributions, including
Systematic Withdrawal Plan payments, automatically deposited in the
shareholder's bank account by electronic funds transfer. Some contingent
deferred sales charges may apply. See "Systematic Withdrawal Plan" herein.
Reports
Reports for the Fund will be sent to shareholders of record at least
semiannually. These reports will include a list of the securities owned by
the Fund as well as the Fund's financial statements.
Telephone Services
The following telephone privileges ("Telephone Privileges") can be used:
(1) the privilege allowing the shareholder to make telephone redemptions
for amounts up to $50,000 to be mailed to the shareholder's address of
record is available automatically;
(2) the privilege allowing the shareholder or his or her dealer to make
telephone exchanges is available automatically; and
(3) the privilege allowing the shareholder to make telephone redemptions
for amounts over $1,000, to be remitted by wire to the shareholder's
predesignated bank account, is available by election on the Application
accompanying this Prospectus. A current shareholder who did not
previously request such telephone wire privilege on his or her original
Application may request the privilege by completing a Telephone
Redemption-by-Wire Form which may be obtained by calling
1-800-521-6548. The Telephone Redemption-by-Wire Form requires a
signature guarantee.
A shareholder may decline the automatic Telephone Privileges set forth in
(1) and (2) above by so indicating on the Application accompanying this
Prospectus.
A shareholder may discontinue any Telephone Privilege at any time by
advising Shareholder Services that the shareholder wishes to discontinue the
use of such privileges in the future.
Unless such Telephone Privileges are declined, a shareholder is deemed to
authorize Shareholder Services
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and the Transfer Agent to: (1) act upon the telephone instructions of any
person purporting to be the shareholder to redeem, or purporting to be the
shareholder or the shareholder's dealer to exchange, shares from any account
for which such services have been authorized; and (2) honor any written
instructions for a change of address regardless of whether such request is
accompanied by a signature guarantee. All telephone calls will be recorded.
None of the Fund, the other Eligible Funds, the Transfer Agent, the
Investment Manager or the Distributor will be liable for any loss, expense or
cost arising out of any request, including any fraudulent or unauthorized
requests. Shareholders assume the risk to the full extent of their accounts
that telephone requests may be unauthorized. Reasonable procedures will be
followed to confirm that instructions communicated by telephone are genuine.
The shareholder will not be liable for any losses arising from unauthorized
or fraudulent instructions if such procedures are not
followed.
Shareholders may redeem or exchange shares by calling toll-free
1-800-521-6548. Although it is unlikely, during periods of extraordinary
market conditions, a shareholder may have difficulty in reaching Shareholder
Services at such telephone number. In that event, the shareholder should
contact Shareholder Services at 1-800-562-0032, 1-617-357-7805 or otherwise at
its main office at One Financial Center, Boston, Massachusetts 02111-2690.
Shareholder Account Inquiries:
Please call 1-800-562-0032
Call this number for assistance in answering general questions on your
account, including account balance, available shareholder services, statement
information and performance of the Fund. Account inquiries may also be made
in writing to State Street Research Shareholder Services, P.O. Box 8408,
Boston, Massachusetts 02266-8408. A fee of up to $10 will be charged against
an account for providing additional account transcripts or photocopies of
paid redemption checks or for researching records in response to special
requests.
Shareholder Telephone Transactions:
Please call 1-800-521-6548
Call this number for assistance in purchasing shares by wire and for
telephone redemptions or telephone exchange transactions. Shareholder
Services will require some form of personal identification prior to acting
upon instructions received by telephone. Written confirmation of each
transaction will be provided.
The Fund and its Shares
The Fund was organized in 1985 as a series of State Street Research Money
Market Trust, a Massachusetts business trust. The Trustees have authorized
shares of the Fund to be issued in four classes: Class B, Class C, Class D
and Class E shares. The Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company.
The fiscal year end of the Fund is March 31.
Except for those differences between the classes of shares described below
and elsewhere in the Prospectus, each share of the Fund has equal dividend,
redemption and liquidation rights with other shares of the Fund and when
issued is fully paid and nonassessable. In the future, certain classes may be
redesignated, for administrative purposes only, to conform to standard class
designations and common usage of terms which may develop in the mutual fund
industry. For example, Class C shares may be redesignated as Class Y shares
and Class D shares may be redesignated as Class C shares. Any redesignations
would not affect any substantive rights respecting the shares.
Each share of each class of shares represents an identical legal interest
in the same portfolio of investments of the Fund, has the same rights and is
identical in all respects, except that Class B and Class D shares bear the
expenses of the deferred sales arrangement and any expenses (including the
higher service and distribution fees) resulting from such sales arrangement,
and certain other incremental expenses related to a class. Each class will
have exclusive voting rights with respect to provisions of the Rule 12b-1
distribution plan pursuant to which the service and distribution fees, if any,
are paid. Although the legal rights of holders of each class of shares are
identical, it is likely that the different expenses borne by each class will
result in different net asset values and dividends. The different classes of
shares of the Fund also have different exchange privileges.
19
<PAGE>
The rights of holders of shares may be modified by the Trustees at any
time, so long as such modifications do not have a material, adverse effect on
the rights of any shareholder. On any matter submitted to the shareholders,
the holder of shares of the Fund is entitled to one vote per share (with
proportionate voting for fractional shares) regardless of the relative net
asset value thereof.
Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there will ordinarily be no shareholder
meetings unless required by the 1940 Act. Except as otherwise provided under
said Act, the Board of Trustees will be a self-perpetuating body until fewer
than two thirds of the Trustees serving as such are Trustees who were elected
by shareholders of the Trust. In the event less than a majority of the
Trustees serving as such were elected by shareholders of the Trust, a meeting
of shareholders will be called to elect Trustees. Under the Master Trust
Agreement, any Trustee may be removed by vote of two thirds of the outstanding
Trust shares; holders of 10% or more of the outstanding shares of the Trust
can require that the Trustees call a meeting of shareholders for purposes of
voting on the removal of one or more Trustees. In connection with such
meetings called by shareholders, shareholders will be assisted in shareholder
communications to the extent required by applicable law.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and provides for
indemnification for all losses and expenses of any shareholder of the Fund
held personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to meet its
obligations. The Investment Manager believes that, in view of the above, the
risk of personal liability to shareholders is remote.
As of June 30, 1995, Metropolitan Life Insurance Company ("Metropolitan"),
was the record and/or beneficial owner, directly or indirectly through its
subsidiaries or affiliates, of approximately 32% of the outstanding Class E
shares of the Fund, and may be deemed to be in control of such Class E shares
of the Fund. Ownership of 25% or more of a voting security is deemed "control"
as defined in the 1940 Act. So long as 25% of a class of shares is so owned,
such owners will be presumed to be in control of such class of shares for
purposes of voting on certain matters, such as any Distribution Plan for a
given class.
Management of the Fund
Under the provisions of the Trust's Master Trust Agreement and the laws of
Massachusetts, responsibility for the management and supervision of the Fund
rests with the Trustees.
The Fund's investment manager is State Street Research & Management
Company. The Investment Manager is charged with the overall responsibility for
managing the investments and business affairs of the Fund, subject to the
authority of the Board of Trustees.
The Investment Manager was founded by Paul Cabot, Richard Saltonstall and
Richard Paine to serve as investment adviser to one of the nation's first
mutual funds, presently known as State Street Research Investment Trust, which
they had formed in 1924. Their investment management philosophy emphasized
comprehensive fundamental research and analysis, including meetings with the
management of companies under consideration for investment. The Investment
Manager's portfolio management group has extensive investment industry
experience managing equity and debt securities. In managing debt securities,
if any, for a portfolio, the Investment Manager may consider yield curve
positioning, sector rotation and duration, among other factors.
The Investment Manager and the Distributor are indirect wholly-owned
subsidiaries of Metropolitan and are located at One Financial Center, Boston,
Massachusetts 02111-2690.
The Investment Manager has entered into an Advisory Agreement with the
Trust pursuant to which
20
<PAGE>
investment research and management, administrative services, office
facilities and personnel are provided for the Fund in consideration of a fee
from the Fund.
Under its Advisory Agreement with the Trust, the Investment Manager
receives a monthly investment advisory fee equal to 0.50% (on an annual basis)
of the average daily value of the net assets of the Fund. The Fund bears all
costs of its operation other than those incurred by the Investment Manager
under the Advisory Agreement. In particular, the Fund pays, among other
expenses, investment advisory fees, certain distribution expenses under the
Fund's Distribution Plan and the compensation and expenses of the Trustees who
are not otherwise currently affiliated with the Investment Manager or any of
its affiliates. The Investment Manager will reduce its management fee payable
by the Fund up to the amount of any expenses (excluding permissible items,
such as brokerage commissions, Rule 12b-1 payments, interest, taxes and
litigation expenses) paid or incurred in any year in excess of the most
restrictive expense limitation imposed by any state in which the Fund sells
shares, if any. The Investment Manager compensates Trustees of the Trust if
such persons are employees or affiliates of the Investment Manager or its
affiliates.
Subject to the policy of seeking best overall price and execution, sales of
shares of the Fund may be considered by the Investment Manager in the
selection of broker or dealer firms for the Fund's portfolio transactions.
The Investment Manager has a Code of Ethics governing personal securities
transactions of certain of its employees; see the Statement of Additional
Information.
Dividends and Distributions; Taxes
The Fund qualified and elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code for its most recent
fiscal year and intends to qualify as such in future fiscal years, although
it cannot give complete assurance that it will do so. As long as it so
qualifies and satisfies certain distribution requirements, it will not be
subject to federal income tax on its taxable income (including capital gains,
if any) distributed to its shareholders. Consequently, the Fund intends to
distribute annually to its shareholders substantially all of its net
investment income and any capital gain net income (capital gains net of
capital losses).
The Fund declares dividends from its net investment income on each day on
which it is open for business and pays dividends monthly. Unless a shareholder
chooses a different available distribution method, dividends will be
automatically reinvested in additional shares of the Fund at net asset value.
A shareholder may change the method of receiving dividends at any time by
notifying Shareholder Services. The Fund will provide its shareholders of
record with annual information on a timely basis concerning the federal tax
status of dividends and distributions during the preceding calendar year.
Dividends paid by the Fund from taxable net investment income and
distributions of any net short-term capital gains, whether paid in cash or
reinvested in additional shares, will be taxable for federal income tax
purposes to shareholders as ordinary income. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, which are designated as capital gains distributions, whether
paid in cash or reinvested in additional shares, will be taxable for federal
income tax purposes to shareholders as long-term capital gains, regardless of
how long shareholders have held their shares.
Dividends and other distributions and proceeds of redemption of Fund shares
paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if the Transfer Agent is not provided with the
shareholder's correct taxpayer identification number and certification that
the shareholder is not subject to such backup withholding.
The foregoing discussion relates only to generally applicable federal
income tax provisions in effect as of the date of this Prospectus. Dividends
from the Fund that represent interest income from U.S. Government securities
may not be tax-exempt at some state and local levels. Therefore, prospective
shareholders are urged to consult their own tax advisers regarding tax
matters, including state and local tax consequences.
21
<PAGE>
Other Investment Practices
Foreign Banks and Securities
The Fund may elect to concentrate its investments in obligations of domestic
banks, including certain U.S. branches and agencies of foreign banks and
certain foreign branches of U.S. banks as described under "Limiting
Investment Risk." The Fund expects that investments, if any, in such
obligations will consist principally of obligations which are issued by U.S.
branches and agencies of foreign banks for sale in the U.S., and the
Investment Manager believes that the risks described below are reduced in the
case of such bank obligations. The Fund also may invest up to 25% of its
total assets in obligations of foreign banks located abroad and obligations
of foreign branches of domestic banks not having a guarantee of the domestic
bank.
The Fund may invest up to 15% of its total assets in money market
instruments of issuers organized and located in Canada payable in U.S. dollars
as described under "The Fund's Investments," subject to the issuer
diversification and other restrictions described under "Limiting Investment
Risk." Securities of such issuers guaranteed as to principal and interest by a
U.S. parent and otherwise meeting applicable quality standards will not be
included for purposes of calculating the 15% limitation.
Investing in foreign branches of U.S. banks, U.S. branches of foreign
banks, foreign branches of foreign banks and U.S. agencies of foreign banks
may involve risks. These risks may include future unfavorable political and
economic developments, possible withholding or confiscatory taxes, seizure of
foreign deposits, currency controls, interest limitations and other
governmental restrictions which might affect payment of principal or interest,
and possible difficulties pursuing or enforcing claims against banks located
outside the U.S. Additionally, foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards or other
regulatory requirements and practices comparable to domestic issuers, and
there may be less public information available about foreign banks and their
branches and agencies.
Repurchase Agreements
The Fund may enter into repurchase agreements. Repurchase agreements occur
when the Fund acquires a security and the seller, which may be either (i) a
primary dealer in U.S. Government securities or (ii) an FDIC-insured bank
having gross assets in excess of $500 million, simultaneously commits to
repurchase it at an agreed-upon price on an agreed-upon date within a
specified number of days (usually not more than seven) from the date of
purchase. The repurchase price reflects the purchase price plus an
agreed-upon market rate of interest which is unrelated to the coupon rate or
maturity of the acquired security. The Fund will only enter into repurchase
agreements involving U.S. Government securities. Repurchase agreements could
involve certain risks in the event of default or insolvency of the other
party, including possible delays or restrictions upon the Fund's ability to
dispose of the underlying securities. Repurchase agreements extending for
more than seven days when combined with any other illiquid securities held by
the Fund will be limited to 10% of the Fund's total assets.
When-Issued Securities
The Fund may purchase "when-issued" debt securities, which are traded on a
price or yield basis prior to actual issuance. Such purchases will be made
only to achieve the Fund's investment objective and not for leverage. The
when-issued trading period generally lasts from a few days to up to a month
or more; during this period interest will not accrue. A frequent form of
when-issued trading occurs in the U.S. Treasury market when dealers begin to
trade a new issue of bonds or notes shortly after a Treasury financing is
announced, but prior to the actual sale of the securities. Such transactions
may involve a risk of loss if the value of the securities falls below the
price committed to prior to actual issuance. The Trust's custodian will
establish a segregated account for the Fund when it purchases securities on a
when-issued basis consisting of cash or liquid securities equal to the amount
of the when-issued commitments.
Calculation of Performance Data
From time to time, in advertisements or in communications to shareholders or
prospective investors, the
22
<PAGE>
Fund may compare the performance of its Class B, Class C, Class D or Class E
shares to that of other mutual funds with similar investment objectives, to
certificates of deposit and/or to other financial alternatives. The Fund may
also compare its performance to appropriate indices such as the Consumer
Price Index and/or to appropriate rankings or averages such as those compiled
by Lipper Analytical Services, Inc. for the Money Market Instrument Fund
category or to those compiled by Morningstar, Inc., Money Magazine, Business
Week, Forbes Magazine, The Wall Street Journal, Fortune Magazine, Investor's
Daily or Donoghue's Money Fund Report.
The current yield of the Fund quoted at any time represents the amount
being earned on a current basis, based on dividends declared daily from net
investment income, and is a function of the types of instruments in the Fund's
portfolio, their quality and length of maturity, and the Fund's operating
expenses. The length of maturity for the portfolio is the average
dollar-weighted maturity of the portfolio. This means that the portfolio has
an average maturity of a stated number of days for all of its issues. The
calculation is weighted by the relative value of each investment. Net
investment income consists of interest income accrued on the portfolio assets
of the Fund, less all expenses and liabilities of the Fund chargeable against
such income including all recurring charges. Recurring and nonrecurring
charges for optional services which only certain shareholders elect and which
involve nominal fees, such as the $7.50 fee for remittance of redemption
proceeds by wire, are not taken into account. The Fund's simple annualized
yield is its net investment income expressed as a percentage of assets on an
annualized basis for a seven-day period. The Fund's compounded effective yield
is calculated similarly except, when annualized, the income earned is assumed
to be reinvested.
The yield of the Fund is computed separately for each class of shares and
fluctuates daily as the income earned on the investments of the Fund
fluctuates. Accordingly, there is no assurance that the yield quoted on any
given occasion will remain in effect for any period of time. There is also no
guarantee that the net asset value or stated rate of return will remain
constant. A shareholder's investment in the Fund is not insured. Investors
comparing results of the Fund with investment results and yields from other
sources, such as banks or savings and loan associations, should understand
this distinction. In addition, shareholders and prospective investors should
note that yields of funds valuing their securities portfolio at market prices
will not be comparable to the yield of the Fund, which values its securities
portfolio at amortized cost. Any voluntary waiver of fees or assumption of
expenses by the Fund's affiliates will increase performance results.
In its supplemental sales literature, the Fund may provide total return
calculations. Total return is computed separately for each class of shares of
the Fund. The average annual total return ("standard total return") for shares
of the Fund is computed by determining the average annual compounded rate of
return for a designated period that, if applied to a hypothetical $1,000
initial investment (less the maximum initial or contingent deferred sales
charge, if applicable), would produce the redeemable value of that investment
at the end of the period, assuming reinvestment of all dividends and
distributions and with recognition of all recurring charges. Standard total
return may be accompanied with non-standard total return information computed
in the same manner, but for differing periods and with or without annualizing
the total return or taking sales charges, if any, into account.
Shares of the Fund had no class designations until June 1, 1993, when
designations were assigned based on the pricing and Rule 12b-1 fees applicable
to shares sold thereafter. Performance data for a specified class includes
periods prior to the adoption of class designations.
Performance data for periods prior to June 1, 1993 will not reflect
additional Rule 12b-1 Distribution Plan fees, if any, of up to 1% per year,
depending on the class of shares, which will adversely affect performance
results for periods after such date. Performance data or rankings for a given
class of shares should be interpreted carefully by investors who hold or may
invest in a different class of shares.
23
<PAGE>
STATE STREET RESEARCH
MONEY MARKET FUND
One Financial Center
Boston, MA 02111
INVESTMENT ADVISER
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
DISTRIBUTOR
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
SHAREHOLDER SERVICES
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266
800-562-0032
CUSTODIAN
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
MM-614D-895IBS CONTROL NUMBER:2473-950726(0896)SSR-LD
[State Street Research logo]
State Street Research
Money Market Fund
August 1, 1995
PROSPECTUS
State Street Research Money Market Fund
a Series of
State Street Research Money Market Trust
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1995
TABLE OF CONTENTS
Page
----
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS.............................. 2
MONEY MARKET INSTRUMENTS..................................................... 4
DEBT SECURITIES RATINGS...................................................... 8
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES.............................................. 9
TRUSTEES AND OFFICERS....................................................... 11
INVESTMENT ADVISORY SERVICES................................................ 17
PURCHASE AND REDEMPTION OF SHARES........................................... 18
NET ASSET VALUE............................................................. 20
PORTFOLIO TRANSACTIONS...................................................... 21
CERTAIN TAX MATTERS......................................................... 23
DISTRIBUTION OF SHARES OF THE FUND.......................................... 24
CALCULATION OF PERFORMANCE DATA............................................. 27
CUSTODIAN................................................................... 30
INDEPENDENT ACCOUNTANTS..................................................... 30
FINANCIAL STATEMENTS........................................................ 31
The following Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus of State Street Research Money
Market Fund (the "Fund") dated August 1, 1995, which may be obtained without
charge from the offices of State Street Research Money Market Trust (the
"Trust") or State Street Research Investment Services, Inc. (the "Distributor"),
One Financial Center, Boston, Massachusetts 02111-2690.
CONTROL NUMBER: 1285L-950810(0996)SSR-LD MM-879D-895
<PAGE>
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS
As set forth under "The Fund's Investments" and "Limiting Investment
Risk" in the Fund's Prospectus, the Fund has adopted certain investment
restrictions.
All of the Fund's fundamental investment restrictions are set forth
below. These fundamental investment restrictions may not be changed except by
the affirmative vote of a majority of the Fund's outstanding voting securities
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
(Under the 1940 Act, a "vote of the majority of the outstanding voting
securities" means the vote, at the annual or a special meeting of security
holders duly called, (i) of 67% or more of the voting securities present at the
meeting if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy or (ii) of more than 50% of the outstanding
voting securities, whichever is less.) Under these restrictions, it is the
Fund's policy:
(1) not to invest in a security if the transaction would result in more
than 5% of the Fund's total assets being invested in any one issuer,
except that this restriction does not apply to investments in
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities;
(2) not to invest in a security if the transaction would result in the
Fund's owning more than 10% of any class of voting securities of an
issuer, except that this restriction does not apply to investments in
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities;
(3) not to invest in a security if the transaction would result in more
than 5% of the Fund's total assets being invested in securities of
issuers (including predecessors) with less than three years of
continuous operations, except that this restriction does not apply to
investments in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities;
(4) not to issue senior securities;
(5) not to underwrite or participate in the marketing of securities of
other issuers;
(6) not to purchase or sell real estate in fee simple;
(7) not to invest in commodities or commodity contracts;
(8) not to make loans except that the Fund may purchase bonds, debentures,
notes and similar debt obligations, including money market
instruments, directly from the issuer thereof or in the open market
and may engage in repurchase transactions collateralized by
2
<PAGE>
obligations of the U.S. Government and its agencies and
instrumentalities;
(9) not to invest in excess of 10% of its total assets in illiquid
securities, including securities restricted as to resale (limited to
5% of total assets), repurchase agreements extending for more than
seven days and other securities which are not readily marketable;
(10) not to conduct arbitrage transactions;
(11) not to invest in interests in oil, gas or other mineral exploration or
development programs (provided that the Fund may invest in securities
which are based, directly or indirectly, on the credit of companies
which invest in or sponsor such programs);
(12) not to make any investment which would cause more than 25% of the
value of the Fund's total assets to be invested in securities of
issuers principally engaged in any one industry (for purposes of this
restriction, (a) utilities will be divided according to their services
so that, for example, gas, gas transmission, electric and telephone
companies will each be deemed in a separate industry, (b) oil and oil
related companies will be divided by type so that, for example, oil
production companies, oil service companies and refining and marketing
companies will each be deemed in a separate industry, and (c)
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities or obligations of domestic banks (including
certificates of deposit, bankers' acceptances, time deposits or bank
repurchase agreements) shall be excluded provided that for this
purpose, (i) U.S. branches and agencies of foreign banks will be
considered "domestic banks" if it can be demonstrated that they are
subject to the same regulation as U.S. banks and (ii) foreign branches
of U.S. banks will be considered "domestic banks" if the U.S. parent
is unconditionally liable in the event the foreign branch fails to pay
on the instrument for any reason); and
(13) not to borrow money (through reverse repurchase agreements or
otherwise) except for extraordinary and emergency purposes, such as
permitting redemption requests to be honored, and then not in an
amount in excess of 10% of the value of its total assets, provided
that additional investments will be suspended during any period when
borrowings exceed 5% of the Fund's total assets and provided further
that reverse repurchase agreements shall not exceed 5% of the Fund's
total assets. Reverse repurchase agreements occur when the Fund sells
money market securities and agrees to repurchase such securities at an
agreed-upon price, date and interest payment. The Fund would use the
proceeds from the transaction to buy other money market securities,
which are either maturing or under the terms of a resale agreement, on
3
<PAGE>
the same day as (or day prior to) the expiration of the reverse
repurchase agreement, and would employ a reverse repurchase agreement
when interest income from investing the proceeds of the transaction is
greater than the interest expense of the reverse repurchase
transaction.
The following investment restrictions may be changed by vote of a
majority of the Trustees. Under these restrictions, it is the Fund's policy:
(1) not to purchase securities on margin, make a short sale of any
securities or purchase or deal in puts, calls, straddles or spreads
with respect to any security;
(2) not to hypothecate, mortgage or pledge any of its assets except as may
be necessary in connection with permitted borrowings and then not in
excess of 15% of the Fund's total assets, taken at cost;
(3) not to purchase a security issued by another investment company if,
immediately after such purchase, the Fund would own, in the aggregate,
(i) more than 3% of the total outstanding voting stock of such other
investment company; (ii) securities issued by such other investment
company having an aggregate value in excess of 5% of the value of the
Fund's total assets; or (iii) securities issued by such other
investment company and all other investment companies (other than
treasury stock of the Fund) having an aggregate value in excess of 10%
of the value of the Fund's total assets; provided, however, that the
Fund may purchase investment company securities without limit for the
purpose of completing a merger, consolidation or other acquisition of
assets;
(4) not to purchase for or retain any security of an issuer if, to the
knowledge of the Trust, those of its officers and Trustees and
officers and directors of its investment advisers who individually own
more than 1/2 of 1% of the securities of such issuer, when combined,
own more than 5% of the securities of such issuer taken at market; and
(5) not to invest in companies for the purpose of exercising control over
their management.
MONEY MARKET INSTRUMENTS
The following describes further the money market instruments in which the
Fund will invest and is provided as a supplement to the discussion appearing in
the Fund's Prospectus.
4
<PAGE>
Short-Term Corporate Debt Instruments. Short-term corporate debt
instruments include commercial paper (i.e., short-term, unsecured promissory
notes) issued by corporations (including bank holding companies) to finance
short-term credit needs. Commercial paper is usually sold on a discounted basis
and has a maturity at the time of issuance not exceeding nine months.
Short-term corporate debt instruments also include master demand notes.
Master demand notes are obligations of companies that permit an investor to
invest fluctuating amounts at varying rates of interest pursuant to arrangements
between the investor, as lender, and the companies, as borrowers. The Fund will
have the right, at any time, to increase the amount lent up to the full amount
provided by a note. Because the Fund may also decrease the amount lent at any
time, such instruments are highly liquid and in effect have a maturity of one
business day. The borrower will have the right, at any time, to prepay up to the
full amount of the amount borrowed without penalty. Because the notes are direct
lending obligations between the Fund and the borrowers, they are generally not
traded and there is no secondary market. Consequently, the Fund's ability to
receive repayment will depend upon the borrower's ability to pay principal and
interest on the Fund's demand. The Fund will invest only in notes that either
have the ratings described below for commercial paper or (because notes are not
typically rated by credit rating agencies) unrated notes that are issued by
companies having the ratings described below for issuers of commercial paper.
The Fund does not expect that the notes will be backed by bank letters of
credit. The Investment Manager will monitor the value of the Fund's investments
in commercial paper and master demand notes, taking into account such factors as
the issuer's earning power, cash flow and other liquidity ratios.
Commercial paper investments at the time of purchase will be rated in one
of the two highest rating categories by a nationally recognized statistical
rating organization, such as A-1 or A-2 by Standard & Poor's Corporation ("S&P")
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's"), or, if not
rated, issued by companies having an outstanding debt issue rated at least AA by
S&P or Aa by Moody's or equivalent. See "Debt Securities Ratings" below for
further information.
Under certain limited circumstances, the Fund may invest in
nonconvertible corporate debt securities (e.g., bonds and debentures which may
be issued by U.S. or Canadian corporations) with no more than thirteen months
remaining either to the date of maturity or the date on which, under the
indenture governing the security, it may be sold back to the issuer thereof for
payment of principal and accrued interest. Corporate debt securities with a
remaining maturity of thirteen months or less are liquid (and tend to become
more liquid as their maturities lessen) and are traded as money market
securities. Such securities also tend to have considerably less market value
fluctuation than longer term issues.
Corporate debt and other securities in which the Fund invests must be
U.S. dollar-denominated Eligible Securities (as defined in Rule 2a-7 under the
1940 Act) that are determined to present minimal credit risks. In general, the
5
<PAGE>
term "Eligible Securities" is limited to:
(i) securities with remaining maturities of 13 months or less that are
rated (or have been issued by an issuer that is rated with respect to
a class of short-term debt obligations, or any securities within that
class, that are comparable in priority and security with the relevant
security) by the requisite number (i.e., two, if two organizations
have issued ratings and one if only one has issued a rating) of
nationally recognized statistical rating organizations ("NRSROs") in
one of the two highest rating categories for short-term debt
obligations (within which there may be sub-categories or gradations
indicating relative standing), or
(ii) securities that at the time of issuance were long-term securities
(i.e., that had remaining maturities greater than 366 days) but that
now have remaining maturities of 397 calendar days or less and which
were issued by an issuer that has received from the requisite NRSROs a
rating, with respect to a class of short-term debt obligations (or any
security within that class) that is comparable in priority and
security with the relevant security, in one of the two highest rating
categories for short-term debt obligations (within which there may be
sub-categories or gradations indicating relative standing), or
(iii) securities which are "unrated" (as defined in Rule 2a-7) but
determined to be of comparable quality to the foregoing by the Fund's
Board of Trustees or the investment manager under their supervision
(provided that a security that at the time of issuance was a long-term
security but that has a remaining maturity of 397 calendar days or
less and that is an "unrated" security is not an "Eligible Security"
if the security has a long-term rating from any NRSRO that is not
within the NRSRO's two highest categories (within which there may be
sub-categories or gradations indicating relative standing)).
As indicated in the Fund's Prospectus, at least 95% of the Fund's total
assets will consist of government securities and "first tier" eligible
securities as defined in Rule 2a-7 under the 1940 Act, with the balance of the
Fund's assets invested in "second tier" eligible securities as defined in Rule
2a-7. For this purpose, "second tier" eligible securities are those which have
been (i) rated by at least two nationally recognized statistical rating
organizations in one of the two highest rating categories for short-term
obligations (or so rated by one such organization if it alone has rated the
security), (ii) issued by an issuer with comparable short-term obligations that
are rated in one of the two highest rating categories, or (iii) if unrated,
determined to be comparable to such securities. The Fund may not invest more
than the greater of 1% of its total assets or $1 million in "second tier"
eligible securities of any single issuer.
6
<PAGE>
Bank Money Investments. Bank money investments include but are not
limited to certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are generally short-term (i.e., less than one year),
interest-bearing negotiable certificates issued by commercial banks or savings
and loan associations against funds deposited in the issuing institution. A
banker's acceptance is a time draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods). A banker's acceptance may be
obtained from a domestic or foreign bank including a U.S. branch or agency of a
foreign bank. The borrower is liable for payment as well as the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity. Time deposits are nonnegotiable deposits
for a fixed period of time at a stated interest rate. The Fund will not invest
in any such bank money investment unless the investment is issued by a U.S. bank
that is a member of the Federal
Deposit Insurance Corporation ("FDIC"), including any foreign branch thereof, a
U.S. branch or agency of a foreign bank, a foreign branch of a foreign bank, or
a savings bank or savings and loan association that is a member of the FDIC and
which at the date of investment has capital, surplus and undivided profits (as
of the date of its most recently published financial statements) in excess of
$50 million. The Fund will not invest in time deposits maturing in more than
seven days and will not invest more than 10% of its total assets in time
deposits maturing in two to seven days.
U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and regulated
either federally or under state law. U.S. federal branches or agencies of
foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect FDIC insurance. Unlike U.S. branches of foreign banks,
U.S. agencies of foreign banks may not accept deposits and thus are not eligible
for FDIC insurance. Both branches and agencies can maintain credit balances,
which are funds received by the office incidental to or arising out of the
exercise of their banking powers and can exercise other commercial functions,
such as lending activities.
U.S. Government Securities. U.S. Government securities consist of various
types of marketable securities issued by the U.S. Treasury, i.e., bills, notes
and bonds. Such securities are direct obligations of the U.S. Government and
differ mainly in the lengths of their maturities. Treasury bills, the most
frequently issued marketable government security, have a maturity of up to one
year and are issued on a discount basis. U.S. Government securities also include
securities issued under the U.S. Department of Treasury's STRIPS program, which
is described in the Fund's Prospectus.
Government Agency Securities. Government agency securities consist of
fixed income securities issued or guaranteed by agencies and instrumentalities
of the U.S. Government, including the various types of instruments currently
7
<PAGE>
outstanding or which may be offered in the future. Agencies and
instrumentalities include, among others, the Federal Housing Administration,
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association, Farmers Home Administration, Export-Import Bank of the U.S.,
Federal Maritime Administration, General Services Administration and Tennessee
Valley Authority. Instrumentalities include, for example, the Central Bank for
Cooperatives, Federal Home Loan Banks, Federal Farm Credit Banks, Student Loan
Marketing Association, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks and the U.S. Postal Service. The
Fund will purchase such securities only so long as they are backed by any of (i)
the full faith and credit of the U.S. Treasury (e.g., U.S. Treasury bills, bonds
and notes and GNMA participation certificates), (ii) the right of the issuer to
borrow a limited amount from the U.S. Treasury (e.g., securities of the Farmers
Home Administration), (iii) the discretionary authority of the U.S. Government
to purchase certain obligations of the agency or instrumentality (e.g.,
securities of the Federal National Mortgage Association) or (iv) the credit of
the agency or instrumentality (e.g., securities of a Federal Home Loan Bank).
Custodial Receipts. The Fund may acquire, subject to the limitations
described herein, custodial receipts that evidence ownership of future interest
payments, principal payments or both on certain U.S. Treasury notes or bonds in
connection with programs sponsored by banks and brokerage firms. Such notes and
bonds are held in custody by a bank on behalf of the owners of the receipts.
These custodial receipts are known by various names, including "Treasury
Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs") and
"Certificates of Accrual on Treasury Securities" ("CATS"), and may not be
treated as U.S. Government securities.
DEBT SECURITIES RATINGS
Description of Commercial Paper Ratings
Commercial paper rated A (highest quality) by S&P is issued by entities
which have liquidity ratios which are adequate to meet cash requirements.
Long-term senior debt is rated A or better, although in some cases BBB credits
may be allowed. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. The relative strength or weakness of the
above factors determines whether the issuer's commercial paper is rated A-1, A-2
or A-3. (Those A-1 issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign: A-1+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
8
<PAGE>
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
Prime-1, Prime-2 or Prime-3.
Description of the highest corporate bond and debenture ratings of S&P
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
Description of the highest corporate bond and debenture ratings of Moody's
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES
When-Issued Securities
The Fund may purchase "when-issued" debt securities, which are traded on
a price or yield basis prior to actual issuance. Such purchases will be made
only to achieve the Fund's investment objective and not for leverage. The
when-issued trading period generally lasts from a few days to up to a month or
more; during this period interest will not accrue. A frequent form of
when-issued trading occurs in the U.S. Treasury market when dealers begin to
trade a new issue of bonds or notes shortly after a Treasury financing is
announced, but prior to the actual sale of the securities. Such transactions may
9
<PAGE>
involve a risk of loss if the value of the securities falls below the price
committed to prior to actual issuance. The Trust's custodian will establish a
segregated account for the Fund when it purchases securities on a when-issued
basis consisting of cash or liquid securities equal to the amount of the
when-issued commitments.
Rule 144A Securities
The Fund may buy or sell restricted securities in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities"). Securities may
be resold pursuant to Rule 144A under certain circumstances only to qualified
institutional buyers as defined in the rule, and the markets and trading
practices for such securities are relatively new and still developing; depending
on the development of such markets, such Rule 144A Securities may be deemed to
be liquid as determined by or in accordance with methods adopted by the
Trustees. Under such methods the following factors are considered, among others:
the frequency of trades and quotes for the security, the number of dealers and
potential purchasers in the market, marketmaking activity, and the nature of the
security and marketplace trades. Investments in Rule 144A Securities could have
the effect of increasing the level of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
such securities. Also, the Fund may be adversely impacted by the possible
illiquidity and subjective valuation of such securities in the absence of a
market for them.
10
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, their addresses, and their
principal occupations and positions with certain affiliates of State Street
Research & Management Company (the "Investment Manager") are set forth below.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791, serves
as Trustee of the Trust. He is 68. He is engaged principally in private
investments and civic affairs, and is an author of business history. Previously,
he was with Morgan Guaranty Trust Company of New York.
+Robert A. Lawrence, Saltonstall & Co., 50 Congress Street, Boston, MA
02109, serves as Trustee of the Trust. He is 68. His principal occupation during
the past five years has been Partner, Saltonstall & Co., a private investment
firm.
*+Francis J. McNamara, III has served as Secretary and General Counsel of
the Trust since May, 1995. He is 39. His principal occupation is Senior Vice
President, Secretary and General Counsel of the Investment Manager. During the
past five years he has also served as Senior Vice President, General Counsel and
Assistant Secretary of The Boston Company, Inc., Boston Safe Deposit and Trust
Company and The Boston Company Advisors, Inc. Mr. McNamara's other principal
business affiliations include Senior Vice President, Clerk and General Counsel
of State Street Research Investment Services, Inc.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Trust. He is 44. His principal occupation is Executive Vice
President, Treasurer and Director of State Street Research & Management Company.
During the past five years he has also served as Executive Vice President and
Chief Financial Officer of New England Investment Companies and Senior Vice
President and Vice President of New England Mutual Life Insurance Company. Mr.
Maus's other principal business affiliations include Executive Vice President,
Treasurer, Chief Financial Officer and Director of State Street Research
Investment Services, Inc.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Trust. He is 63. He is retired, having served during the past
five years, until October 1992, as Executive Vice President, Chief Operating
Officer and Director, Hewlett-Packard Company.
- ----------
* or + See footnotes on page 13.
11 & 12
<PAGE>
*JoAnne C. Mulligan, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. She is 38. Her principal occupation is Vice
President of State Street Research & Management Company. During the past five
years she has also served as a portfolio manager and a fixed-income trader for
State Street Research & Management Company.
+Thomas L. Phillips, 141 Spring Street, Lexington, MA 02173 serves as
Trustee of the Trust. He is 71. He is retired and was formerly Chairman of the
Board and Chief Executive Officer of Raytheon Company, of which he remains a
Director.
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118, serves as
Trustee of the Trust. He is 57. His principal occupation during the past five
years has been President of The Glen Ellen Company, a private investment
company, and Vice President of Founders Investments Ltd.
+Michael S. Scott Morton, Massachusetts Institute of Technology, 77
Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of the Trust. He is
57. His principal occupation during the past five years has been Jay W.
Forrester Professor of Management at Sloan School of Management, Massachusetts
Institute of Technology.
*+Thomas A. Shively, One Financial Center, Boston, MA 02111, serves as
Vice President of the Trust. He is 41. His principal occupation is Executive
Vice President and Director of State Street Research & Management Company.
During the past five years he has also served as Senior Vice President of State
Street Research & Management Company. Mr. Shively's other principal business
affiliations include Director of State Street Research Investment Services, Inc.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Trust. He is 52. His principal occupation is Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research & Management
Company. During the past five years he also served as President and Chief
Executive Officer of New England Investment Companies and Chief Investment
Officer and Director of New England Mutual Life Insurance Company. Mr. Verni's
other principal business affiliations include Chairman of the Board, President,
Chief Executive Officer and Director of State Street Research Investment
Services, Inc.
- ----------
* or + See footnotes on page 13.
13 & 14
<PAGE>
+Jeptha H. Wade, 251 Old Billerica Road, Bedford, MA 01730, serves as
Trustee of the Trust. He is 70. He is retired and was formerly Of Counsel for
the law firm Choate, Hall & Stewart. He was a partner of that firm from 1960 to
1987.
- ----------
* These Trustees and/or officers are or may be deemed to be "interested
persons" of the Trust under the 1940 Act because of their affiliations with
the Fund's investment adviser.
+ Serves as a Trustee and/or officer of one or more of the following
investment companies, each of which has an advisory or distribution
relationship with the Investment Manager or its affiliates: MetLife - State
Street Equity Trust, MetLife - State Street Financial Trust, State Street
Research Income Trust, State Street Research Money Market Trust, State
Street Research Tax-Exempt Trust, State Street Research Capital Trust,
State Street Research Exchange Trust, State Street Research Growth Trust,
State Street Research Master Investment Trust, State Street Research
Securities Trust, State Street Research Portfolios, Inc. and Metropolitan
Series Fund, Inc.
15
<PAGE>
As of June 30, 1995, the following persons or entities were the record
and/or beneficial owners of the approximate amounts of each class of shares of
the Fund as set forth beside their names:
Shareholder %
Class C Metropolitan Life Insurance Company 7.2
State Street Bank and Trust Company 49.0
Bank of New York 6.8
United States Trust Company 21.0
Class D T.S. Robin & M. Connor, Joint Tenants 16.0
Bear Stearns 5.3
State Street Bank and Trust Company 5.6
F.T. May 5.8
J. Jaffe 6.1
Morgan Keegan & Company 17.1
W.T. Boone & H.B. Boone, Tr Wros 14.4
Class E Metropolitan Life Insurance Company 36.4
The full name and address of each of the above persons or entities are as
follows:
T.S. Robin & M. Connor, Joint Tenants (a)
F.T. May (a)
J. Jaffe (a)
W.T. Boone & H.B. Boone, Tr Wros (a)
Metropolitan Life Insurance Company (b)
One Madison Avenue
New York, New York 10010
State Street Bank and Trust Company (c)
225 Franklin Street
Boston, Massachusetts 02110
Bank of New York (c)
52 William Street
New York, New York 10005
United States Trust Company (c)
770 Broadway
New York, New York 10003
Bear Stearns Securities Corp. (c)
One Metrotech Center North
Brooklyn, New York 11201
Morgan Keegan & Company (c)
971 Lakeland Drive
Jackson, Mississippi 39216
____________
(a) The address for each of the above persons is:
c/o State Street Research Shareholder Services
One Financial Center
Boston, Massachusetts 02111
(b) Metropolitan Life Insurance Company ("Metropolitan"), a New York
corporation, was the record and/or beneficial owner, directly or indirectly
through its subsidiaries or affiliates, of such shares.
(c) The Fund believes that such entity does not have beneficial ownership of
such shares.
As of June 30, 1995, the Trustees and officers of the Fund as a group
owned less than 1% of the Fund's outstanding Class E shares, and owned no shares
of the Fund's outstanding Class B, Class C or Class D shares.
Ownership of 25% or more of a voting security is deemed "control" as
defined in the 1940 Act. So long as 25% of a class of shares is so owned, such
owners will be presumed to be in control of such class of shares for purposes of
voting on certain matters submitted to a vote of shareholders, such as any
Distribution Plan for a given class.
During the Fund's most recent fiscal year, the Trustees were compensated
as follows:
<PAGE>
Total
Compensation
Aggregate From Trust and
Name of Compensation Complex Paid
Trustee From Trust to Trustees(a)
- ------- ---------- --------------
Edward M. Lamont $3,675 $55,411
Robert A. Lawrence $3,675 $82,775
Dean O. Morton $4,075 $93,625
Thomas L. Phillips $3,575 $65,525
Toby Rosenblatt $3,675 $55,411
Michael S. Scott Morton $4,075 $90,375
Ralph F. Verni - -
Jeptha H. Wade $3,675 $65,475
(a) Includes compensation from Metropolitan Series Fund, Inc., for which the
Investment Manager serves as sub-investment adviser, State Street Research
Portfolios, Inc., for which State Street Research Investment Services, Inc.
serves as distributor, and all investment companies for which the
Investment Manager serves as primary investment adviser, comprising a total
of 30 series. The Trust does not provide any pension or retirement benefits
for the Trustees.
16
<PAGE>
INVESTMENT ADVISORY SERVICES
State Street Research & Management Company, the Investment Manager, a
Delaware corporation, with offices at One Financial Center, Boston,
Massachusetts 02111-2690, acts as investment adviser to the Fund. The Advisory
Agreement provides that the Investment Manager shall furnish the Fund with an
investment program, office facilities and such investment advisory, research and
administrative services as may be required from time to time. The Investment
Manager compensates all executive and clerical personnel and Trustees of the
Trust if such persons are employees of the Investment Manager or its affiliates.
The Investment Manager is an indirect, wholly-owned subsidiary of Metropolitan.
The advisory fee payable monthly by the Fund to the Investment Manager is
computed as a percentage of the average of the value of the Fund's net assets as
determined at the close of the New York Stock Exchange (the "NYSE") on each day
the NYSE is open for trading, at the annual rate of 0.50% of the net assets of
the Fund. The Fund has been advised that the Distributor and its affiliates may
from time to time and in varying amounts voluntarily assume some portion of fees
or expenses relating to the Fund. For the fiscal years ended March 31, 1993,
1994 and 1995, the investment advisory fees for the Fund were $797,459,
$702,726 and $843,948, respectively. For the same periods, the voluntary
reduction of fees or assumption of expenses amounted to $88,898, $482,571 and
$922,515, respectively.
Further, to the extent required under applicable state regulatory
requirements, the Investment Manager will reduce its management fee up to the
amount of any expenses (excluding permissible items, such as brokerage
commissions, if any, Rule 12b-1 payments, interest, taxes and litigation
expenses) paid or incurred by the Fund in any fiscal year which exceed specified
percentages of the average daily net assets of the Fund for such fiscal year.
The most restrictive of such percentage limitations is currently 2.5% of the
first $30 million of average net assets, 2.0% of the next $70 million of average
net assets and 1.5% of the remaining average net assets. These commitments may
be amended or rescinded in response to changes in the requirements of the
various states by the Trustees without shareholder approval.
The Advisory Agreement provides that it shall continue in effect from
year to year with respect to the Fund as long as it is approved at least
annually both (i) by a vote of a majority of the outstanding voting securities
of the Fund (as defined in the 1940 Act) or by the Trustees of the Trust, and
(ii) in either event by a vote of a majority of the Trustees who are not parties
to the Advisory Agreement or "interested persons" of any party thereto, cast in
person at a meeting called for the purpose of voting on such approval. The
Advisory Agreement may be terminated on 60 days' written notice by either party
and will terminate automatically in the event of its assignment, as defined
under the 1940 Act and regulations thereunder. Such regulations provide that a
transaction which does not result in a change of actual control or management of
an adviser is not deemed an assignment.
17
<PAGE>
Under a Funds Administration Agreement between the Investment Manager and
the Distributor, the Distributor provides assistance to the Investment Manager
in performing certain fund administration services for the Trust, such as
assistance in determining the daily net asset value of shares of series of the
Trust and in preparing various reports required by regulations.
Under a Shareholders' Administrative Services Agreement between the Trust
and the Distributor, the Distributor provides shareholders' administrative
services, such as responding to inquiries and instructions from investors
respecting the purchase and redemption of shares of the Fund, and is entitled to
reimbursements of its costs for providing such services. Under certain
arrangements for Metropolitan to provide subadministration services,
Metropolitan may receive a fee for the maintenance of certain share ownership
records for participants in sponsored arrangements, such as employee benefit
plans, through or under which Fund shares may be purchased.
Under the Code of Ethics of the Investment Manager, its employees in
Boston, where investment management operations are conducted, are only permitted
to engage in personal securities transactions which do not involve securities
which the Investment Manager has recommended for purchase or sale, or purchased
or sold, on behalf of its clients. Such employees must report their personal
securities transactions quarterly and supply broker confirmations to the
Investment Manager.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are distributed by the Distributor. The Fund offers
multiple classes of shares which may be purchased at the next determined net
asset value per share plus, in the case of all classes except Class C and Class
E shares, a sales charge which is imposed on a deferred basis (the Class B and
Class D shares). General information on how to buy shares of the Fund, as well
as sales charges involved, are set forth under "Purchase of Shares" in the
Prospectus. The following supplements that information.
Class C Shares - Class C shares are currently available to benefit
plans such as qualified retirement plans, other than individual retirement
accounts and self-employed retirement plans, which meet certain criteria
relating to minimum assets, minimum participants, service agreements, or similar
factors; banks and insurance companies; endowment funds of nonprofit
organizations with substantial minimum assets; and other similar institutional
investors.
18
<PAGE>
Reorganizations - In the event of mergers or reorganizations with other
public or private collective investment entities, including investment companies
as defined in the 1940 Act, as amended, the Fund may issue its shares at net
asset value (or more) to such entities or to their security holders.
Redemptions - The Fund reserves the right to pay redemptions in kind with
portfolio securities in lieu of cash. In accordance with its election pursuant
to Rule 18f-1 under the 1940 Act, the Fund may limit the amount of redemption
proceeds paid in cash. Although it has no present intention to do so, the Fund
may, under unusual circumstances, limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000 or (ii)
1% of the net asset value of the Fund at the beginning of such period. In
connection with any redemptions paid in kind with portfolio securities,
brokerage and other costs may be incurred by the redeeming shareholder in the
sale of the securities received.
19
<PAGE>
NET ASSET VALUE
Securities held by the Fund are valued on the basis of amortized cost,
which involves a constant amortization of premium or accretion of discount to
maturity regardless of the impact of fluctuating interest rates on the market
value of the security. While this method provides certainty in valuation, it may
result in periods in which the value as determined by amortized cost is higher
or lower than the price the Fund would receive if it sold the security. On each
day that the NYSE is open for unrestricted trading, the net asset value of the
shares of the Fund is determined as of 12 noon and as of the close of the NYSE,
which is ordinarily 4 P.M. New York City time. The NYSE is currently closed on
New Year's Day, Presidents Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The Fund anticipates that under ordinary and usual circumstances it will
be able to maintain a constant net asset value of $1.00 per share and the Fund
will use its best efforts to do so. However, such maintenance at $1.00 might not
be possible if (1) there are changes in short-term interest rates or other
factors such as unfavorable changes in the credit of issuers affecting the
values of the securities held by the Fund and the Fund is compelled to sell such
securities at a time when the prices which it is able to realize vary
significantly from the values determined on the amortized cost basis or (2) the
Fund should have negative net income. It is expected that the Fund will have
positive net income at the time of each determination thereof. If for any reason
the net income of the Fund is negative, the Fund will first offset the negative
amount with respect to each shareholder account against the dividends which
accrued during the month with respect to each such account. If and to the extent
that such negative amount exceeds such accrued dividends at the end of the month
(or at any earlier time when redemption by the shareholder would reduce the net
asset value of the shares of the Fund in his account to less than the excess of
such negative account over accrued dividends), the Fund will reduce the number
of its outstanding shares by treating the shareholder as having contributed to
the capital of the Fund that number of shares of the Fund in the account of such
shareholder which represents the amount of such excess. Each shareholder will be
deemed to have agreed to such contributions in these circumstances by his
investment in the Fund.
The utilization of the amortized cost method of valuation requires
compliance with the requirements of Rule 2a-7 under the 1940 Act. Such
compliance requires, among other things, the following:
(1) The Trustees must adopt procedures whereby the extent of deviation, if
any, of the current net asset value per share calculated using
available market quotations (or an appropriate substitute which
reflects current market conditions) from the Fund's net asset value
per share under the amortized cost valuation method will be determined
at such intervals as the Trustees deem appropriate and reasonable in
light of current market conditions, and the Trustees must review
20
<PAGE>
periodically the amount of the deviation as well as the methods used
to calculate the deviation;
(2) In the event such deviation from the Fund's net asset value under the
amortized cost valuation method exceeds 1/2 of 1%, the Trustees must
promptly consider what action should be initiated by them, and when
the Trustees believe the extent of any deviation from the Fund's net
asset value per share under the amortized cost valuation method may
result in material dilution or any other unfair results to investors
or existing shareholders, they must take such action as they deem
appropriate to eliminate or reduce to the extent reasonably
practicable such dilution or unfair results (shareholders will be
notified in the event any such corrective action is taken by the
Trustees);
(3) The Fund may not purchase any instrument with a remaining maturity
greater than thirteen months or maintain a dollar-weighted average
portfolio maturity which exceeds 90 days;
(4) The Fund must limit its portfolio investments, including repurchase
agreements, to those United States dollar-denominated instruments
which the Trustees determine present minimal credit risks and which
are eligible securities as defined in Rule 2a-7; and
(5) The Fund must record, maintain and preserve certain records and
observe certain reporting obligations in accordance with Rule 2a-7.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Fund's portfolio turnover rate is determined by dividing the lesser
of securities purchases or sales for a year by the monthly average value of
securities held by the Fund (excluding, for purposes of this determination,
securities the maturities of which as of the time of their acquisition were one
year or less). Because the Fund only invests in securities with remaining
maturities of thirteen months or less, virtually all of which are excludable in
determining the rate of portfolio turnover, the portfolio turnover rate for the
Fund's two most recent fiscal year ends has been zero.
Brokerage Allocation
The Fund and the Investment Manager seek the best overall execution of
purchase or sale orders and the most favorable net price in securities
transactions consistent with their judgment as to the business qualifications of
the various broker or dealer firms with which the Fund may do business.
21
<PAGE>
Decisions with respect to the market where the transaction is to be completed,
and to the allocation of orders among brokers or dealers, are made in accordance
with this policy. In selecting brokers or dealers to effect portfolio
transactions, consideration is given to the performance, integrity and financial
responsibility of the various firms as well as to their demonstrated execution
experience and capability generally and in regard to
particular markets or securities and, in agency transactions, to the
competitiveness of the commission rates (or in principal transactions, of the
net prices) they charge. The Investment Manager keeps current as to the range of
rates or prices charged by various firms and against this background evaluates
the reasonableness of a commission or price charged with respect to a particular
transaction by considering such factors as difficulty of execution or security
positioning by the executing firm.
When it appears that a number of firms can satisfy the required standards
in respect of a particular transaction, consideration may also be given to
services other than execution services which such firms have provided in the
past or may provide in the future. Among such other services are the supplying
of supplemental investment research, general economic and political information,
analytical and statistical data, relevant market information and daily market
quotations for computation of net asset value. In this connection it should be
noted that a substantial portion of brokerage commissions paid, or principal
transactions entered, by the Fund may be with brokers and investment banking
firms which, in the normal course of business, publish statistical, research and
other material which is received by the Investment Manager and which may or may
not prove useful to the Investment Manager, the Fund or other clients under the
management of the Investment Manager.
Neither the Fund nor the Investment Manager has any definite agreements
with any firm as to the amount of business which that firm may expect to receive
for services supplied or otherwise. There may be, however, understandings with
certain firms that in order for such firms to be able to continuously supply
certain services, they need to receive allocation of a specified amount of
business. These understandings are honored to the extent possible in accordance
with the policy set forth above. Neither the Fund nor the Investment Manager
intends to pay a firm in excess of that which another would charge for handling
the same transaction in recognition of services (other than execution services)
provided. However, the Fund and the Investment Manager are aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, rely on the provisions of Section 28(e) of the
Securities Exchange Act of 1934, to the extent applicable. During the fiscal
years ended March 31, 1993, 1994 and 1995, the Fund paid no brokerage
commissions. During and at the end of its most recent fiscal year, the Fund held
no securities of any entity that might be deemed to be a regular broker dealer
of the Fund as defined under the 1940 Act.
Occasions may arise when the Investment Manager determines that an
investment in a particular security, or the disposition of a particular
security, is simultaneously a proper investment decision for the Fund as well as
for the portfolio of one or more of its other clients. In this event, a purchase
22
<PAGE>
or sale, as the case may be, of any such security on any given day will be
normally averaged as to price and allocated as to amount among the several
clients in a manner deemed equitable to each client.
On occasions when the Investment Manager deems the purchase or sale of a
security to be in the best interests of the Fund, as well as other clients of
the Investment Manager, the Investment Manager, to the extent permitted by
applicable laws and regulations, may aggregate such securities to be sold or
purchased for the Fund with those to be sold or purchased for other customers in
order to obtain best execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Investment Manager in
the manner it considers to be most equitable and consistent with its fiduciary
obligations to all such customers, including the Fund. In some instances, this
procedure may affect the price and size of the positions obtainable for the
Fund.
CERTAIN TAX MATTERS
The Fund intends to qualify and elect to be treated each taxable year as
a "regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), although it cannot give complete assurance
that it will do so. Accordingly, the Fund must, among other things, (a) derive
at least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive less than 30% of its gross
income in each taxable year from the sale or other disposition of any of the
following held for less than three months (the "30% test"): (i) stocks or
securities, (ii) options, futures, or forward contracts (other than options,
futures or forward contracts on foreign currencies), or (iii) foreign currencies
(or options, futures, or forward contracts on foreign currencies) but only if
such currencies (or options, futures or forward contracts) are not directly
related to the Fund's principal business of investing in stocks or securities
(or options and futures with respect to stocks or securities); (c) satisfy
certain diversification requirements; and (d) in order to be entitled to utilize
the dividends paid deduction, distribute annually at least 90% of its investment
company taxable income (determined without regard to the deduction for dividends
paid).
If the Fund should fail to qualify as a regulated investment company in
any year, it would lose the beneficial tax treatment accorded regulated
investment companies under Subchapter M of the Code and all of its taxable
income would be subject to tax at regular corporate rates without any deduction
for distributions to shareholders and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings and profits. Also, the shareholders, if they received a
distribution in excess of current or accumulated earnings and profits, would
23
<PAGE>
receive a return of capital that would reduce the basis of their shares of the
Fund.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Fund must
distribute an amount equal to at least 98% of the sum of its ordinary income
(not taking into account any capital gains or losses) for the calendar year, and
its capital gain net income for the 12-month period ending on October 31, in
addition to any undistributed portion of the respective balances from the prior
year. The Fund intends to make sufficient distributions to avoid this 4% excise
tax.
Dividends paid by the Fund will be taxable for federal income tax
purposes, whether received in cash or reinvested in additional shares, as
ordinary income. Dividends paid by the Fund are not expected to be eligible for
the dividends received deduction available to corporations.
DISTRIBUTION OF SHARES OF THE FUND
State Street Research Money Market Trust (formerly, MetLife - State
Street Money Market Trust) is currently comprised of one series, State Street
Research Money Market Fund. The Trustees have authorized the Fund to issue four
classes of shares: Class B, Class C, Class D and Class E shares. The Trustees of
the Trust have authority to issue an unlimited number of shares of beneficial
interest of separate series, $.001 par value per share. A "series" is a separate
pool of assets of the Trust which is separately managed and has a different
investment objective and different investment policies from those of another
series. The Trustees have authority, without the necessity of a shareholder
vote, to create any number of new series or classes or to commence the public
offering of shares of any previously established series or class.
The Trust has entered into a Distribution Agreement with State Street
Research Investment Services, Inc., as Distributor, whereby the Distributor acts
as agent to sell and distribute shares of the Fund. Shares of the Fund are sold
through dealers who have entered into sales agreements with the Distributor. The
Distributor distributes shares of the Fund on a continuous basis at an offering
price which is based on the net asset value per share of the Fund plus a sales
charge which is imposed on a deferred basis (the Class B and Class D shares).
The Distributor may allow all or portions of such sales charges as concessions
to dealers. For the fiscal year ended March 31, 1993, no underwriting
commissions or sales charges were paid in connection with the distribution of
shares of the Fund. For the period June 1, 1993 (commencement of share class
designations) to November 30, 1993 (redesignation of Class A shares to Class E
shares), total sales charges on Class A shares paid to the Distributor amounted
to $13,553, of which $3,436 was retained by the Distributor after reallowance of
concessions to dealers. For the fiscal year ended March 31, 1995, no
24
<PAGE>
under-writing commissions or sales charges were paid in connection with the
distribution of Class E shares of the Fund.
For the periods shown below, the Distributor received contingent deferred
sales charges upon redemption of Class B and Class D shares of the Fund and paid
initial commissions to securities dealers for sales of such Class B and Class D
shares as follows:
June 1, 1993
(commencement of
Fiscal Year share class
Ended designations) to
March 31, 1995 March 31, 1994
-------------- --------------
Contingent Commissions Contingent Commissions
Deferred Paid to Deferred Paid to
Sales Charges Dealers Sales Charges Dealers
------------- ------- ------------- -------
Class B $ 74,696 $7,654 $1,229 $5,828
Class D $ 1,884 $ 123 $ 141 $2,524
For information on the amount of distribution fees paid by the Fund to
the Distributor, see below.
The Fund has adopted a "Plan of Distribution Pursuant to Rule 12b-1" (the
"Distribution Plan") under which the Fund may engage, directly or indirectly, in
financing any activities primarily intended to result in the sale of Class B and
Class D shares, including, but not limited to, (1) the payment of commissions
and/or reimbursement to underwriters, securities dealers and others engaged in
the sale of shares, including payments to the Distributor to be used to pay
commissions and/or reimbursement to securities dealers (which securities dealers
may be affiliates of the Distributor) engaged in the distribution and marketing
of shares and furnishing ongoing assistance to investors, (2) reimbursement of
direct out-of-pocket expenditures incurred by the Distributor in connection with
the distribution and marketing of shares and the servicing of investor accounts
including expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of Prospectuses of the Fund and reports
for recipients other than existing shareholders of the Fund, and obtaining such
information, analyses and reports with respect to marketing and promotional
activities and investor accounts as the Fund may, from time to time, deem
advisable, and (3) reimbursement of expenses incurred by the Distributor in
connection with the servicing of shareholder accounts including payments to
securities dealers and others in consideration of the provision of personal
services to investors and/or the maintenance of shareholder accounts and
expenses associated with the provision of personal service by the Distributor
directly to investors. In addition, the Distribution Plan is deemed to authorize
25
<PAGE>
the Distributor and the Investment Manager to make payments out of general
profits, revenues or other sources to underwriters, securities dealers and
others in connection with sales of shares, to the extent, if any, that such
payments may be deemed to be within the scope of Rule 12b-1 under the 1940 Act.
The expenditures to be made pursuant to the Distribution Plan may not
exceed with respect to Class B and Class D shares, an annual rate of 0.75% of
the average daily value of the net assets represented by such Class B or Class D
shares (as the case may be) to finance sales or promotion expenses and an annual
rate of 0.25% of the average daily value of the net assets represented by such
Class B or Class D shares (as the case may be) to make payments for personal
services and/or the maintenance of shareholder accounts. Proceeds from the
service fee will be used by the Distributor to compensate securities dealers and
others selling shares of the Fund for rendering service to shareholders on an
ongoing basis. Such amounts are based on the net asset value of shares of the
Fund held by such dealers as nominee for their customers or which are owned
directly by such customers for so long as such shares are outstanding and the
Distribution Plan remains in effect with respect to the Fund. Any amounts
received by the Distributor and not so allocated may be applied by the
Distributor as reimbursement for expenses incurred in connection with the
servicing of investor accounts. The distribution and servicing expenses of a
particular class will be borne solely by that class.
During the fiscal year ended March 31, 1995, the Fund paid the
Distributor fees under the Distribution Plan and the Distributor used all of
such payments for expenses incurred on behalf of the Fund as follows:
Class B Class D
------- -------
Advertising $ 9,658 $ 2,318
Printing and mailing of prospectuses to
other than current shareholders 2,677 643
Compensation to dealers 8,597 0
Compensation to sales personnel 22,382 5,375
Interest 0 0
Carrying or other financing charges 0 0
Other expenses: marketing 18,318 4,399
------- -------
Total fees $61,632 $12,735
======= =======
26
<PAGE>
The Distributor may have also used additional resources of its own for further
expenses on behalf of the Fund.
No interested Trustee of the Trust has any direct or indirect financial
interest in the operation of the Distribution Plan or any related agreements
thereunder. The Distributor's interest in the Distribution Plan is described
above.
To the extent that the Glass-Steagall Act may be interpreted as
prohibiting banks and other depository institutions from being paid for
performing services under the Distribution Plan, the Fund will attempt to make
alternative arrangements for such services for shareholders who acquired shares
through such institutions.
CALCULATION OF PERFORMANCE DATA
The average annual total return and yield of the Class B, Class C, Class
D and Class E shares of the Fund will be calculated as set forth below. Total
return and yield are computed separately for each class of shares of the Fund.
Performance data for a specified class includes periods prior to the adoption of
class designations. Shares of the Fund had no class designations until June 1,
1993, when designations were assigned based on the pricing and Rule 12b-1 fees
applicable to shares sold thereafter.
The performance data reflects Rule 12b-1 fees and sales charges as set
forth below:
Rule 12b-1 Fees Sales Charges
------------------------------- ------------------------------
Current
Class Amount Period
- ----- ------ ------
B 1.00% 0% until June 1, 1993; 1- and 5-year periods reflect a
1.00% June 1, 1993 to 5% and a 2% contingent
present; fee will reduce deferred sales charge,
performance for periods respectively
after June 1, 1993
C 0.00% Since commencement of None
operations to present
D 1.00% 0% until June 1, 1993; 1-year period reflects a 1%
1.00% June 1, 1993 to contingent deferred sales charge
present; fee will reduce
performance for periods
after June 1, 1993
E 0.00% Since commencement of None
operations to present
27
<PAGE>
All calculations of performance data in this section reflect the
voluntary measures, if any, by the Fund's affiliates to reduce fees or expenses
relating to the Fund; see "Accrued Expenses" later in this section.
The net income of the Fund, as defined below, is determined as of the
normal close of trading on the NYSE (currently 4 P.M. New York City time) on
each business day on which the NYSE is open and all the net income of the Fund
so determined is declared as a dividend to its shareholders as of that time. For
this purpose the net income of the Fund shall consist of all interest income
accrued on the portfolio assets of the Fund from the time of the immediately
preceding determination of net income, less all expenses and liabilities of the
Fund chargeable against such income. Interest income includes discounts or
premiums accrued (including both original issue and market discount) on discount
paper or otherwise pursuant to the amortized cost method of valuation, accrued
ratably to the date of maturity. Expenses, including the compensation payable to
the Investment Manager, are accrued each day.
Accrued Expenses
Accrued expenses include all recurring expenses that are charged to all
shareholder accounts in proportion to the length of the base period. Accrued
expenses do not take into account recurring and nonrecurring charges for
optional services which only certain shareholders elect and which involve
nominal fees, such as the $7.50 fee for wire orders. Accrued expenses do not
include the subsidization, if any, by affiliates of fees or expenses relating to
the Fund during the subject period. In the absence of such subsidization, the
performance of the Fund would have been lower.
Yield
The Fund's yield is its investment income, less expenses, expressed as a
percentage of assets on an annualized basis for a seven-day period. The yield is
expressed as a simple annualized yield and as a compounded effective yield.
The simple annualized yield for each of the Fund's Class B, Class C,
Class D and Class E shares is computed by determining the net change (exclusive
of realized gains and losses from the sale of securities and unrealized
appreciation and depreciation) in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the seven-day period,
dividing the net change in account value by the value of the account at the
beginning of the period, and annualizing the resulting quotient (base period
return) on a 365- day basis. The net change in account value reflects the value
of additional shares purchased with dividends from the original shares in the
account during the seven-day period, and expenses accrued during the period. The
28
<PAGE>
compounded effective yield for each of the Fund's Class B, Class C, Class D and
Class E shares is computed by compounding the unannualized base period return,
by adding one to the base period return, raising the sum to a power equal to 365
divided by seven and subtracting one from the result.
The simple annualized and compounded effective yields as quoted in
advertisements will not be based on information as of a date more than 14 days
prior to the date of publication. Actual yield will vary depending on market
conditions, and principal is not insured. Actual yield also depends on the
qualities, maturities and types of instruments held by the Fund as well as its
operating expenses.
Any net realized capital gains of the Fund in excess of any available
loss carryforward will be distributed to shareholders of the Fund from time to
time as is deemed appropriate in maintaining the Fund's net asset value at one
dollar per share.
Total Return
The Fund's average annual total returns of each class of shares were as
follows:
Commencement of Five Years One Year
Operations (August 25, 1986) Ended Ended
through March 31, 1995 March 31, 1995 March 31, 1995
---------------------------- -------------- --------------
Class B 5.32% 3.67% -1.73%
Class C 5.55% 4.39% 4.31%
Class D 5.33% 4.02% 2.28%
Class E 5.54% 4.38% 4.31%
Standard total return is computed by determining the average annual
compounded rates of return over the designated periods that, if applied to the
initial amount invested, would produce the ending redeemable value in accordance
with the following formula:
P(1+T)^n = ERV
Where P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
designated period assuming a hypothetical $1,000
payment made at the beginning of the designated
period
29
<PAGE>
The calculation is based on the further assumptions that the maximum
initial or contingent deferred sales charge applicable to the investment is
deducted, and that all dividends and distributions by the Fund are reinvested at
net asset value on the reinvestment dates during the periods. All accrued
expenses and recurring charges are also taken into account as described above.
Nonstandardized Total Return
The Fund may provide the above described standard total return results
for Class B, Class C, Class D and Class E shares for periods which end no
earlier than the most recent calendar quarter end and which begin twelve months
before, five years before and at the time of commencement of the Fund's
operations. In addition, the Fund may provide nonstandardized total return
results for differing periods, such as for the most recent six months, and/or
without taking sales charges, if any, into account. Such nonstandardized total
return is computed as otherwise described under "Total Return" except the result
may or may not be annualized and as noted, any applicable sales charge may not
be taken into account and therefore not deducted from the hypothetical initial
payment of $1,000. For example, the Fund's nonstandardized total returns for the
six months ended March 31, 1995, without taking sales charges into account, were
as follows:
Class B 1.98%
Class C 2.49%
Class D 1.98%
Class E 2.49%
30
<PAGE>
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Trust's custodian. As custodian, State Street Bank
and Trust Company is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities and collecting interest and dividends on the Fund's investments.
State Street Bank and Trust Company is not an affiliate of the Investment
Manager or its affiliates.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as the Trust's independent accountants, providing professional services
including (1) an audit of the Fund's annual financial statements, (2) assistance
and consultation in connection with Securities and Exchange Commission filings
and (3) review of the annual income tax returns filed on behalf of the Fund.
FINANCIAL STATEMENTS
In addition to the reports provided to holders of record on a semiannual
basis, other supplementary financial reports may be made available from time to
time and holders of record may request a copy of a current supplementary report,
if any, by calling State Street Research Shareholder Services.
The following financial statements of MetLife - State Street Research
Money Market Fund are for the Fund's fiscal year ended March 31, 1995. MetLife -
State Street Research Money Market Fund changed its name to "State Street
Research Money Market Fund" on August 1, 1995.
31
<PAGE>
Investment Portfolio
March 31, 1995
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
<S> <C> <C> <C>
COMMERCIAL PAPER 100.5%
Aerospace 3.3%
Raytheon Co., 5.94% $5,535,000 4/18/1995 $ 5,519,474
Bank Holding Company 4.7%
Canadian Imperial Holdings Inc.,
5.99% 8,000,000 5/12/1995 7,945,425
Business Service 8.3%
AT&T Corp., 5.90% 8,000,000 4/21/1995 7,973,778
BellSouth Telecommunications,
Inc., 5.95% 6,000,000 4/12/1995 5,989,092
13,962,870
Canadian Foreign 14.7%
Canadian Wheat Board, 6.08% 9,000,000 5/03/1995 8,951,360
Government of Canada, 6.00% 8,000,000 5/15/1995 7,941,333
Manitoba Hydro-Electric Board,
6.04% 8,000,000 6/15/1995 7,899,333
24,792,026
Captive Automobile Finance 10.1%
Ford Motor Credit Co., 5.98% 9,000,000 4/03/1995 8,997,010
General Motors Acceptance Corp.,
6.05% 8,000,000 5/01/1995 7,959,667
16,956,677
Captive Business Finance 8.3%
Chevron Oil Finance Co., 6.03% 7,000,000 4/19/1995 6,978,895
Pitney Bowes Credit Corp., 6.02% 7,000,000 6/01/1995 6,928,596
13,907,491
Chemicals 5.0%
Monsanto Co., 6.00% 8,500,000 4/14/1995 8,481,583
Consumer Finance 14.2%
American Express Credit Corp.,
6.00% $8,000,000 5/22/1995 $ 7,932,000
Beneficial Corp., 6.04% 9,000,000 4/10/1995 8,986,410
Sears Roebuck Acceptance Corp.,
6.03% 7,000,000 4/11/1995 6,988,275
23,906,685
Diversified Finance 14.1%
CIT Group Holdings, Inc., 6.05% 7,000,000 6/27/1995 6,897,654
General Electric Capital Corp.,
6.00% 8,000,000 5/18/1995 7,937,333
Transamerica Finance Group, Inc.,
6.02% 9,000,000 4/07/1995 8,990,970
23,825,957
Electric 1.4%
Southern California Edison Co.,
6.10% 2,384,000 4/11/1995 2,379,961
Food Products 10.0%
Nestle Capital Corp., 5.97% 8,000,000 5/23/1995 7,931,013
Philip Morris Cos., Inc., 6.01% 9,000,000 4/17/1995 8,975,960
16,906,973
Office Equipment 4.7%
Hewlett-Packard Co., 5.95% 8,000,000 4/25/1995 7,968,267
Retail 1.7%
Wal-Mart Stores, Inc., 6.00% 2,840,000 4/04/1995 2,838,580
Total Investments (Cost $169,391,969)-100.5% 169,391,969
Cash and Other Assets, Less Liabilities--(0.5)% (850,389)
Net Assets--100.0% $168,541,580
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets and Liabilities
March 31, 1995
Assets
Investments, at value (Cost $169,391,969) (Note 1) $ 169,391,969
Cash 1,633
Receivable for fund shares sold 3,095,394
Receivable from Distributor (Note 3) 17,313
Other assets 31,935
172,538,244
Liabilities
Payable for fund shares redeemed 3,422,725
Accrued transfer agent and shareholder services (Note
2) 205,048
Dividends payable 186,609
Accrued management fee (Note 2) 71,283
Accrued distribution fee (Note 5) 8,837
Accrued trustees' fees (Note 2) 5,261
Other accrued expenses 96,901
3,996,664
Net Assets $ 168,541,580
Net Assets consist of:
Shares of beneficial interest $168,541,580
Net Asset Value and offering price per share of Class B
shares ($9,322,261 / 9,322,261 shares of beneficial
interest)* $1.00
Net Asset Value, offering price and redemption price
per share of Class C shares ($7,886,281 / 7,886,281
shares of beneficial interest) $1.00
Net Asset Value and offering price per share of Class D
shares ($841,770 / 841,770 shares of beneficial
interest)* $1.00
Net Asset Value, offering price and redemption price
per share of Class E shares ($150,491,268 /
150,491,268 shares of beneficial interest) $1.00
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
Statement of Operations
For the year ended March 31, 1995
Investment Income
Interest $ 8,492,935
Expenses
Transfer agent and shareholder services (Note 2) 995,359
Management fee (Note 2) 843,948
Registration fees 100,366
Custodian fee 91,535
Reports to shareholders 46,508
Legal fees 33,839
Audit fee 30,068
Trustees' fees (Note 2) 29,330
Distribution fee--Class B (Note 5) 61,632
Distribution fee--Class D (Note 5) 12,735
Miscellaneous 17,474
2,262,794
Expenses borne by the Distributor (Note 3) (922,515)
1,340,279
Net investment income and net increase in net
assets resulting from operations $ 7,152,656
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
March 31, 1995
Year ended March 31
1995 1994
Increase (Decrease) in Net Assets
Operations:
Net investment income and net
increase resulting from
operations $ 7,152,656 $ 3,454,182
Dividends from net investment
income:
Class A -- (31,881)
Class B (217,870) (5,300)
Class C (256,892) (5,739)
Class D (42,149) (1,634)
Class E (6,635,745) (3,409,628)
(7,152,656) (3,454,182)
Net increase (decrease) from
fund share transactions
(Note 6) 25,424,190 (6,713,162)
Total increase (decrease) in
net assets 25,424,190 (6,713,162)
Net Assets
Beginning of year 143,117,390 149,830,552
End of year $168,541,580 $ 143,117,390
The accompanying notes are an integral part of the financial statements.
Notes to Financial Statements
Note 1
MetLife-State Street Research Money Market Fund, formerly MetLife-State Street
Money Market Fund (the "Fund") is a series of MetLife-State Street Money Market
Trust (the "Trust"), which was organized as a Massachusetts business trust in
April, 1985 and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund commenced
operations in August, 1986. The Fund is presently the only active series of the
Trust, although the Trustees have the authority to create an unlimited number
of series.
The Fund offers four classes of shares. Effective November 30, 1993, the Fund
discontinued offering Class A shares and any existing Class A shares were
redesignated Class E shares. Class A shares were subject to an initial sales
charge of up to 4.50% and annual service fees of 0.25% of average daily net
assets. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class E shares (which pay lower ongoing expenses) at the end of eight
years after the issuance of the Class B shares. Class C shares are only offered
to certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class C shares. Class C shares
do not pay any distribution or service fees. Class D shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one
year of their purchase. Class D shares also pay annual distribution and service
fees of 1.00%. Class E shares are offered to any individual. Class E shares are
not subject to any initial or contingent deferred sales charges and do not pay
any distribution or service fees. The Fund's expenses are borne pro rata by
each class, except that each class bears expenses, and has exclusive voting
rights with respect to provisions of the Plan of Distribution, related
specifically to that class. The Trustees declare separate dividends on each
class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. Investment Valuation
The Fund values securities at amortized cost, pursuant to which the Fund must
adhere to certain conditions. The amortized cost method involves valuing a
portfolio security initially at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium regardless of the effect of
fluctuating interest rates on the market value of the investments.
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, if any, are reported on the
basis of identified cost of securities delivered.
<PAGE>
C. Net Investment Income
Net investment income is determined daily and consists of interest accrued and
discount earned, less amortization of premium and the estimated daily expenses
of the Fund. Interest income is accrued daily as earned.
D. Dividends
Dividends from net investment income are declared daily and paid or reinvested
monthly. Net realized capital gains, if any, are distributed annually, unless
additional distributions are required for compliance with applicable tax
regulations.
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.
Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly-owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser earns
monthly fees at an annual rate of 0.50% of the Fund's average daily net assets.
In consideration of these fees, the Adviser furnishes the Fund with management,
investment advisory, statistical and research facilities and services. The
Adviser also pays all salaries, rent and certain other expenses of management.
During the year ended March 31, 1995, the fees pursuant to such agreement
amounted to $843,948.
State Street Research Shareholder Services, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly-owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the year ended March 31, 1995, the amount of such
expenses was $207,459.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$29,330 during the year ended March 31, 1995.
Note 3
The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the year ended March 31, 1995, the amount of such expenses assumed by
the Distributor and its affiliates was $922,515.
Note 4
For the year ended March 31, 1995, purchases and sales, including maturities,
of securities aggregated $2,447,822,476 and $2,432,360,000, respectively.
Note 5
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. Under the Plan, the Fund pays
annual distribution and service fees to the Distributor at a rate of 0.75% and
0.25%, respectively, of average daily net assets for Class B and Class D
shares. The Distributor uses such payments for personal services and/or the
maintenance of shareholder accounts, to reimburse securities dealers for
distribution and marketing services, to furnish ongoing assistance to investors
and to defray a portion of its distribution and marketing expenses. For the
year ended March 31, 1995, fees pursuant to such plan amounted to $61,632 and
$12,735 for Class B and Class D shares, respectively.
The Fund has been informed that MetLife Securities, Inc., a wholly-owned
subsidiary of Metropolitan, earned commissions aggregating $5,325 on sales of
the Fund's Class B shares and that the Distributor collected contingent
deferred sales charges of $174,696 and $1,884 on redemptions of Class B and
Class D shares, respectively, during the year ended March 31, 1995.
<PAGE>
Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
At March 31, 1995, Metropolitan owned 1,000 shares of each of Class B and Class
D and 157,977 Class C shares and Metropolitan and certain of its affiliates
held of record 47,354,144 Class E shares of the Fund. The Adviser owned 21,481
Class E shares and the Distributor owned 500,000 Class E shares of the Fund.
<TABLE>
<CAPTION>
June 1, 1993
Year ended (Commencement of Share Class
March 31, 1995 Designations) to March 31, 1994
Class B Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 23,182,577 $ 23,182,577 11,394,503 $ 11,394,503
Issued upon reinvestment of dividends 187,109 187,109 4,313 4,313
Shares repurchased (17,075,600) (17,075,600) (8,370,641) (8,370,641)
Net increase 6,294,086 $ 6,294,086 3,028,175 $ 3,028,175
Class C Shares Amount Shares Amount
Shares sold 29,413,278 $ 29,413,278 8,648,848 $ 8,648,848
Issued upon reinvestment of dividends 136,567 136,567 4,728 4,728
Shares repurchased (23,449,528) (23,449,528) (6,867,612) (6,867,612)
Net increase 6,100,317 $ 6,100,317 1,785,964 $ 1,785,964
Class D Shares Amount Shares Amount
Shares sold 4,119,869 $ 4,119,869 1,992,156 $ 1,992,156
Issued upon reinvestment of dividends 35,281 35,281 912 912
Shares repurchased (3,487,480) (3,487,480) (1,818,968) (1,818,968)
Net increase 667,670 $ 667,670 174,100 $ 174,100
Year ended
March 31, 1994
Class E Shares Amount Shares Amount
Shares sold* 895,389,466 $ 895,389,466 938,841,690 $ 938,841,690
Issued upon reinvestment of dividends 4,099,011 4,099,011 2,038,966 2,038,966
Shares repurchased (887,126,360) (887,126,360) (952,582,057) (952,582,057)
Net increase (decrease) 12,362,117 $ 12,362,117 (11,701,401) $ (11,701,401)
</TABLE>
*Effective November 30, 1993, the Fund discontinued offering Class A shares and
the existing 2,342,436 shares and $2,342,436 were redesignated from Class A to
Class E shares during the year ended March 31, 1994.
<PAGE>
Financial Highlights
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class B Class C Class D
Year ended Year ended Year ended
March 31, 1995 1994** March 31, 1995 1994** March 31, 1995 1994**
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income* .032 .012 .042 .021 .032 .013
Dividends from net investment income (.032) (.012) (.042) (.021) (.032) (.013)
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 1.000
Total return 3.27%+ 1.27%+++ 4.31%+ 2.08%+++ 3.28%+ 1.30%+++
Net assets at end of year (000s) $ 9,322 $ 3,028 $ 7,886 $ 1,786 $ 842 $ 174
Ratio of operating expenses to average net assets* 1.75% 1.75%++ 0.75% 0.75%++ 1.75% 1.75%++
Ratio of net investment income to average net
assets* 3.53% 1.54%++ 4.66% 2.54%++ 3.30% .54%++
*Reflects voluntary assumption of fees or expenses
per share in each year (Note 3) $ .004 $ .007 $ .003 $ .006 $ .005 $ .002
</TABLE>
<TABLE>
<CAPTION>
Class E
Year ended March 31
1995 1994*** 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income* .042 .025 .028 .048 .072
Dividends from net investment income (.042) (.025) (.028) (.048) (.072)
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
Total return 4.31%+ 2.48%+ 2.88%+ 4.85%+ 7.47%+
Net assets at end of year (000s) $150,491 $138,129 $149,831 $168,088 $185,839
Ratio of operating expenses to average
net assets* 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average
net assets* 4.26% 2.46% 2.84% 4.77% 7.21%
*Reflects voluntary assumption of fees or
expenses per share in each year (Note 3). $.006 $.003 $.001 $.001 $.002
</TABLE>
**June 1, 1993 (commencement of share class designations) to March 31, 1994.
++Annualized.
+Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++Represents aggregate return for the period without annualization and does not
reflect any front-end or contingent deferred sales charges. Total return
would be lower if the Distributor and its affiliates had not voluntarily
assumed a portion of the Fund's expenses.
***Effective November 30, 1993, the Fund discontinued offering Class A shares
and any existing Class A shares were redesignated Class E shares. Net
investment income and dividends amounted to $.011 per share for Class A
shares during the period June 1, 1993 (commencement of share class
designations) to November 30, 1993.
<PAGE>
Report of Independent Accountants
To the Trustees of MetLife-State Street
Money Market Trust and the Shareholders
of MetLife-State Street Research Money Market Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of MetLife-State Street Research
Money Market Fund (formerly MetLife-State Street Money Market Fund) (a series
of MetLife-State Street Money Market Trust, hereafter referred to as the
"Trust") at March 31, 1995, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities owned at March 31, 1995 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
May 12, 1995
