As filed with the Securities and Exchange Commission on July 28, 2000
Securities Act of 1933 Registration No. 2-97506
Investment Company Act of 1940 File No. 811-4295
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 16 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 20 [X]
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STATE STREET RESEARCH MONEY MARKET TRUST
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(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617) 357-1200
Francis J. McNamara, III
Executive Vice President, General Counsel and Secretary
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
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(Name and Address of Agent for Service)
Copies of Communications to:
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
It is proposed that this filing will become effective under Rule 485:
[ ] Immediately upon filing pursuant to paragraph (b).
[X] On August 1, 2000 pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] On ______________ pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (c)(2).
[ ] On ______________ pursuant to paragraph (a)(2).
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
[LOGO] STATE STREET RESEARCH
Money Market Fund
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[GRAPHIC OF CLOCK]
A fund for short-term
cash investments or
current income.
Prospectus
August 1, 2000
This prospectus has information you should know before you invest. Please read
it carefully and keep it with your investment records.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus will also be available in Spanish in September by calling the
State Street Research Service Center at 1-888-638-3193
<PAGE>
Contents
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1 The Fund
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1 Goal and Strategies
3 Principal Risks
4 Volatility and Performance
6 Investor Expenses
8 Investment Management
9 Your Investment
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9 Opening an Account
9 Choosing a Share Class
11 Sales Charges
13 Dealer Compensation
14 Buying and Selling Shares
18 Account Policies
20 Distributions and Taxes
21 Investor Services
22 Other Information
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22 Other Securities and Risks
24 Financial Highlights
26 Board of Trustees
Back Cover For Additional Information
<PAGE>
The Fund 1
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[CHESS PIECE] Goal and Strategies
Fundamental Goal The fund seeks a high level of current income consistent with
the preservation of capital and maintenance of liquidity by investing in
high-quality, short-term money market instruments or in U.S. government
securities. These may include such short-term corporate debt securities as
commercial paper and master demand notes; securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities; and bank certificates of deposit and bankers' acceptances.
Principal Strategies The fund manages its portfolio subject to strict SEC
guidelines, which are designed so that the fund may maintain a stable $1.00
share price, although there is no guarantee that the fund will do so. All of the
fund's investments are short-term; the dollar-weighted average portfolio
maturity of the fund may not exceed 90 days.
The fund invests at least 95% of total assets in high-quality securities called
"first tier" securities. These include U.S. government securities and corporate
securities that at the time of purchase, are rated by such firms as Standard &
Poor's and Moody's in their highest short-term major rating categories, or are
unrated securities that
[MAGNIFYING GLASS] Who May Want To Invest
State Street Research Money Market Fund is designed for investors who seek one
or more of the following:
o a fund to complement a portfolio of more aggressive investments
o a fund for short-term investments
o a fund for emergency reserve money
The fund is not appropriate for investors who:
o require capital appreciation to meet their investment goals
o are seeking maximum income
<PAGE>
2 The Fund continued
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are considered equivalent by the investment manager. The fund invests more than
25% of its total assets in the financial services industry.
The fund may invest up to 5% of its portfolio in "second tier" securities, which
generally are corporate securities that, at the time of purchase, are rated by
such firms as Standard & Poor's and Moody's in their second highest short-term
major rating categories, or unrated securities that are considered equivalent by
the investment manager.
Investments typically include instruments such as commercial paper that are used
by corporations for short-term borrowings, as well as bank instruments such as
certificates of deposit. If it chooses, the fund may invest all of its assets in
any one type of first tier securities. Up to 50% of total assets may be invested
in restricted securities. Restricted securities generally are corporate
securities sold to institutional investors and subject to limited resale rights.
The fund may adjust the composition of its portfolio as market conditions and
economic outlooks change.
For more information about the fund's investments and practices, see page 22.
<PAGE>
3
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[STOP SIGN] Principal Risks
Because the fund invests in money market instruments and manages its portfolio
to maintain a stable share price, its major risks are those that could affect
the overall yield of the fund. Among these situations are those that would cause
short-term interest rates to decline, such as strong equity markets or a weak
economy. Such a decline would lower the fund's yield and the return on your
investment.
To the extent the fund invests in restricted securities, it could hamper the
fund's ability to raise cash to meet redemptions. This is because these
securities may be new and complex and trade only among institutions; the markets
for these securities are still developing and may not function as efficiently as
established markets.
The fund cannot be certain that it will achieve its goal. Furthermore, fund
shares are not bank deposits and are not guaranteed, endorsed or insured by any
financial institution, government entity or the FDIC. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible that
you could lose money by investing in the fund.
Information on other securities and risks appears on page 22.
A "snapshot" of the fund's investments may be found in the current annual or
semiannual report (see back cover).
[MAGNIFYING GLASS] The Uses of Money Market Funds
Money market funds can be a valuable tool in an investor's portfolio for a
variety of reasons. For example, money market funds are often used to meet
short-term cash investment needs. They also can serve as a place to hold cash
pending its use for a longer term investment. Finally, many investors use money
market funds to diversify a portfolio of more aggressive investments, especially
when they want to reduce their exposure to market volatility or when they expect
the market to decline.
<PAGE>
4 Volatility and Performance
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[The following table was depicted as a bar chart in the printed material.]
<TABLE>
<CAPTION>
Years ended December 31
----------------------------------------------------------------------
Year-by-Year Total Return (Class E) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.77 5.58 3.15 2.50 3.60 5.33 4.81 5.03 5.03 4.67
> Best quarter: second quarter 1990, up 1.92% Return from 1/1/00 - 6/30/00 (not annualized): up 2.77%
< Worst quarter: second quarter 1993, up 0.60%
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1999
------------------------------------------------------------------------------------------------------------
Average Annual Total Return (at maximum applicable sales charge) 1 Year 5 Years 10 Years
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
To obtain current yield Class B (%) (1.37) 3.59 4.06
information call 1-87-SSRFUNDS. Class B(1) (%)(a) (1.37) 3.59 4.06
Class C (%) 2.63 3.94 4.06
Class E (%) 4.67 4.97 4.74
Class S (%) 4.67 4.97 4.74
MetLife Securities Money Fund Class T (%)(b) 4.68 4.98 4.74
Three-month Treasury Bill Index (%) 4.74 5.11 4.95
Lipper Money Market Funds Index (%) 4.74 5.10 4.91
</TABLE>
(a) Performance for Class B(1) reflects Class B performance through December
31, 1998. Class B(1) was introduced on January 1, 1999.
(b) Performance for MetLife Securities Money Fund Class T reflects Class E
performance through July 31, 1998. Metlife Securities Money Fund Class T
was introduced on August 1, 1998.
<PAGE>
5
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[MAGNIFYING GLASS] Understanding Volatility and Performance
The chart and table on the opposite page are designed to show two aspects of
the fund's track record:
o Year-by-Year Total Return shows how volatile the fund has been: how much
the difference has been, historically, between its best years and worst
years. In general, funds with higher average annual total returns will
also have higher volatility. The graph includes the effects of fund
expenses, but not sales charges. If sales charges had been included,
returns would have been less than shown.
o Average Annual Total Return is a measure of the fund's performance over
time. It is determined by taking the fund's performance over a given
period and expressing it as an average annual rate. Average annual total
return includes the effects of fund expenses and maximum sales charges for
each class, and assumes that you sold your shares at the end of the
period.
Also included with the fund's average annual returns are two independent
measures of performance. The Three-month Treasury Bill Index is an unmanaged
index that measures the average yield of three-month Treasury bills. The Lipper
Money Market Funds Index shows you how well the fund has done compared to
competing funds. When making comparisons, keep in mind that the Three-month
Treasury Bill index does not include any management fees or other expenses.
The returns in both the chart and the table would have been lower if the
distributor had not voluntarily reduced the fund's expenses.
In both the chart and the table, the returns shown for the fund include
performance from before the creation of share classes in 1993. If the returns
for Class B(1), Class B and Class C from before 1993 had reflected their current
service/distribution (12b-1) fees (as described on page 6), these returns would
have been lower.
Keep in mind that past performance is no guarantee of future results.
<PAGE>
6 Investor Expenses
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<TABLE>
<CAPTION>
Class descriptions begin on page 9
---------------------------------------------------------
Shareholder Fees (% of offering price) Class B Class B(1) Class C Classes E, S & T
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum front-end sales charge (load) 0.00 0.00 0.00 0.00
Maximum deferred sales charge (load) 5.00 5.00 1.00 0.00
<CAPTION>
Annual Fund Operating Expenses (% of average net assets) Class B Class B(1) Class C Classes E, S & T
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fee 0.50 0.50 0.50 0.50
Service/distribution (12b-1) fees 1.00 1.00 1.00 0.00
Other expenses 0.67 0.67 0.67 0.67
---- ---- ---- ----
Total annual fund operating expenses* 2.17 2.17 2.17 1.17
==== ==== ==== ====
*Because some of the fund's expenses have been subsidized
or reduced through expense offset arrangements, actual
total operating expenses for the prior year were: 1.70(a) 1.70(a) 1.70(a) 0.70(a)
The fund expects the expense subsidy to continue through
the current fiscal year, although there is no guarantee that
it will.
<CAPTION>
Example Year Class B Class B(1) Class C Classes E, S & T
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $720/$220 $720/$220 $320/$220 $119
3 $979/$679 $979/$679 $679 $372
5 $1,364/$1,164 $1,364/$1,164 $1,164 $644
10 $2,249 $2,249 $2,503 $1,420
</TABLE>
(a)Reflects expense subsidy arrangement that became effective June 26,
2000, as if it had been in place during the fund's prior fiscal year.
<PAGE>
7
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[MAGNIFYING GLASS] Understanding Investor Expenses
The information on the opposite page is designed to give you an idea of what you
should expect to pay in expenses as an investor in the fund:
o Shareholder Fees are costs that are charged to you directly. These fees
are not charged on reinvestments or exchanges.
o Annual Fund Operating Expenses are deducted from the fund's assets every
year, and are thus paid indirectly by all fund investors.
o The Example is designed to allow you to compare the costs of this fund
with those of other funds. It assumes that you invested $10,000 over the
years indicated, reinvested all distributions, earned a hypothetical 5%
annual return and paid the maximum applicable sales charges. For Class
B(1) and Class B shares, it also assumes the automatic conversion to Class
E after eight years.
Where two numbers are shown separated by a slash, the first one assumes you sold
all your shares at the end of the period, while the second assumes you stayed in
the fund. Where there is only one number, the costs would be the same either
way.
The figures in the example assume full annual expenses, and would be lower if
they reflected the various expense reductions that may have been taken.
Investors should keep in mind that the example is for comparison purposes only.
The fund's actual performance and expenses may be higher or lower.
<PAGE>
8 The Fund continued
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[THINKER] Investment Management
The fund's investment manager is State Street Research & Management Company, One
Financial Center, Boston, Massachusetts 02111. The firm traces its heritage back
to 1924 and the founding of one of America's first mutual funds. Today the firm
has approximately $54 billion in assets under management (as of June 30, 2000),
including $19 billion in mutual funds.
The investment manager is responsible for the fund's investment and business
activities, and receives the management fee annually as compensation (0.50% of
net assets). The investment manager is a subsidiary of Metropolitan Life
Insurance Company.
<PAGE>
Your Investment 9
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[KEY] Opening an Account
If you are opening an account through a financial professional, he or she can
assist you with all phases of your investment.
If you are investing through a large retirement plan or other special program,
follow the instructions in your program materials.
To open an account without the help of a financial professional, please use the
instructions on these pages.
[CHECKLIST] Choosing a Share Class
The fund generally offers five share classes, each with its own sales charge and
expense structure: Class B(1), Class C, Class E, Class S and MetLife Securities
Money Fund Class T. The fund also offers Class B shares, but only to current
Class B shareholders through reinvestment of dividends and distributions or
through exchanges from existing Class B accounts of the State Street Research
funds.
Class E is the share class that is generally available for initial investment.
It is also the share class that is used for exchanges with Class A shares of
other State Street Research funds. Class B(1) and Class C are available only by
exchange from the corresponding share class of other funds.
<PAGE>
10 Your Investment continued
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If you are investing through a special program, such as a large
employer-sponsored retirement plan or certain programs available through
brokers, you may be eligible to purchase Class S shares.
MetLife Securities Money Fund Class T is for accounts available through MetLife
and its affiliates.
Class B(1) -- Back Load
o Available only to investors exchanging from Class B(1) shares of another
State Street Research fund
o No initial sales charge
o Deferred sales charge of 5% or less on shares you sell within six years
o Annual service/distribution (12b-1) fee of 1.00%
o Automatic conversion to Class E shares after eight years, reducing future
annual expenses
Class B -- Back Load
o Available only to current Class B shareholders. See page 11 for details.
Class C -- Level Load
o Available only to investors exchanging from Class C shares of another
State Street Research fund
o No initial sales charge
o Deferred sales charge of 1%, paid if you sell shares within one year of
purchase
o Lower deferred sales charge than Class B(1) shares
o Annual service/distribution (12b-1) fee of 1.00%
o No conversion to Class E shares after eight years, so annual expenses do
not decrease
Class E -- No Load
o Available to all investors purchasing fund shares directly
o No sales charge of any kind
o No service/distribution (12b-1) fees; annual expenses are lower than other
share classes
Class S -- Special Programs
o Available only through certain retirement accounts, advisory accounts of
the investment manager and other special programs, including programs
through financial professionals with recordkeeping and other services;
these programs usually involve special conditions and separate fees
(consult your financial professional or your program materials)
o No sales charges of any kind
o No service/distribution (12b-1) fees; annual expenses are lower than other
share classes
MetLife Securities Money Fund Class T
o For accounts available through MetLife and certain affiliates
o No sales charge of any kind
o No service/distribution (12b-1) fees; annual expenses are lower than other
share classes
<PAGE>
11
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Sales Charges
Class B(1) -- Back Load
<TABLE>
<CAPTION>
this % of net asset value
when you sell shares at the time of purchase (or
in this year after you of sale, if lower) is deduct-
bought them ed from your proceeds
--------------------------------------------------------
<S> <C>
First year 5.00
Second year 4.00
Third year 3.00
Fourth year 3.00
Fifth year 2.00
Sixth year 1.00
Seventh or eighth year None
</TABLE>
With Class B(1) shares, you pay no sales charge when you invest, but you are
charged a "contingent deferred sales charge" (CDSC) when you sell shares you
have held for six years or less, as described in the table above. See "Other
CDSC Policies" on page 12.
Class B(1) shares automatically convert to Class E shares after eight years;
Class E shares have lower annual expenses.
Class B -- Back Load
Class B shares are available only to current shareholders through reinvestment
of dividends and distributions or through exchanges from existing Class B
accounts of the State Street Research funds. Other investments made by current
Class B shareholders will be in Class B(1) shares.
With Class B shares, you are charged a "contingent deferred sales charge" (CDSC)
when you sell shares you have held for five years or less. The CDSC is a
percentage of net asset value at the time of purchase (or of sale, if lower) and
is deducted from your proceeds. When you sell shares in the first year after you
bought them, the CDSC is 5.00%; second year, 4.00%; third year, 3.00%; fourth
year, 3.00%; fifth year, 2.00%; sixth year or later, none. See "Other
CDSC Policies" on page 12.
Class B shares automatically convert to Class E shares after eight years.
Class C -- Level Load
<TABLE>
<CAPTION>
this % of net asset value
when you sell shares at the time of purchase (or
in this year after you of sale, if lower) is deduct-
bought them ed from your proceeds
--------------------------------------------------------------------------------
<S> <C>
First year 1.00
Second year or later None
</TABLE>
With Class C shares, you pay no sales charge when you invest, but you are
charged a "contingent deferred sales charge" (CDSC) when you sell shares you
have held for one year or less, as
<PAGE>
12 Your Investment continued
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described in the table on page 11. See "Other CDSC Policies" below.
Class C shares currently have the same annual expenses as Class B(1) shares, but
never convert to Class E shares (with their lower annual expenses).
Class E -- No Load;
Class S -- Special Programs;
MetLife Securities Money Fund Class T
These shares have no sales charges.
Other CDSC Policies
The CDSC will be based on the net asset value of the shares at the time of
purchase (or sale, if lower). Any shares acquired through reinvestment are not
subject to the CDSC. There is no CDSC on exchanges into other State Street
Research funds, and the date of your initial investment will continue to be used
as the basis for CDSC calculations when you exchange. To ensure that you pay the
lowest CDSC possible, the fund will always use the shares with the lowest CDSC
to fill your sell requests.
The CDSC is waived on shares sold for participant initiated distributions from
State Street Research prototype retirement plans. In other cases, the CDSC is
waived on shares sold for mandatory retirement distributions or for
distributions because of disability or death. Consult your financial
professional or the State Street Research Service Center for more information.
[MAGNIFYING GLASS] Understanding Service/Distribution Fees
As noted in the descriptions, Class B, Class B(1) and Class C have an annual
service/distribution fee, also called a 12b-1 fee.
Under its current 12b-1 plans, the fund may pay certain service and distribution
fees for these classes out of fund assets. Because 12b-1 fees are an ongoing
expense, they will increase the cost of your investment and, over time, could
potentially cost you more than if you had paid other types of sales charges.
Some of the 12b-1 fee is used to compensate those financial professionals who
sell fund shares and provide ongoing service to shareholders. The table on page
13 shows how these professionals' compensation is calculated.
The fund may continue to pay 12b-1 fees even if the fund is subsequently closed
to new investors.
<PAGE>
13
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[CHECK] Dealer Compensation
Financial professionals who sell shares of State Street Research funds and
perform services for fund investors may receive sales commissions, annual fees
and other compensation. These are paid by the fund's distributor, using money
from sales charges, service/distribution (12b-1) fees and its other resources.
Brokers and agents may charge a transaction fee on orders of fund shares placed
directly through them. The distributor may pay its affiliate MetLife Securities,
Inc. additional compensation of up to 0.25% of certain sales or assets.
Brokers for Portfolio Trades
When placing trades for the fund's portfolio, State Street Research chooses
brokers that provide the best execution (a term defined by service as well as
price), but may also consider the sale of shares of the State Street Research
Funds by the broker.
Dealer Commissions
<TABLE>
<CAPTION>
Initial commission (%) Annual fee (%)
----------------------------------------------------------
<S> <C> <C>
Class B(1) -- 0.25
Class B -- 0.25
Class C -- 1.00
Class E 0.00 0.00
Class S 0.00 0.00
Class T 0.00 0.00
</TABLE>
<PAGE>
14 Buying and Selling Shares
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[CASH REGISTER] Policies for Buying Shares
Once you have chosen a share class, the next step is to determine the amount you
want to invest.
Minimum Initial Investments:
o $1,000 for accounts that use the Investamatic program(a)
o $2,000 for Individual Retirement Accounts(a)
o $2,500 for all other accounts
Minimum Additional Investments:
o $50 for any account
Complete the enclosed application. You can avoid future inconvenience by
signing up now for any services you might later use.
Timing of Requests The processing of your order will depend upon the method of
payment you choose, as well as the time your order is received. If you are
paying for your shares with a check, an order received prior to 4:00 p.m.
eastern time will be processed as of 4:00 p.m. on the next business day and you
will begin earning dividends on the business day after that.
If you are paying for your shares with a wire transfer, an order and wire
payment received prior to 4:00 p.m. eastern time will generally be processed as
of 4:00 p.m. on the same day and you will begin earning dividends on the next
business day. Special procedures are available to enable you to begin earning
dividends immediately on wire transfers of $25,000 or more. To make a same-day
wire investment, please notify State Street Research by 9:30 a.m. of your
intention to wire funds, and make sure your wire arrives by 2:30 p.m. Other
special procedures are available for very large institutional accounts, as set
forth in the fund's Statement of Additional Information (see back cover).
Wire Transactions Funds may be wired between 8:00 a.m. and 4:00 p.m. eastern
time. Your bank may charge a fee for wiring money.
(a) Except $500 for Individual Retirement Accounts during special promotional
periods.
<PAGE>
Instructions for Buying Shares 15
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<TABLE>
<CAPTION>
To Open an Account To Add to an Account
<S> <C> <C>
[BRIEFCASE] Through a Consult your financial Consult your financial professional or
Professional professional or your program your program materials.
or Program materials.
By Mail [MAILBOX] Make your check payable to Fill out an investment slip or indicate
"State Street Research the fund name and account number on your
Funds." Forward the check and check. Make your check payable to "State
your application to State Street Research Funds." Forward the check
Street Research. and slip to State Street Research.
[CAPITAL BUILDING] By Federal Call to obtain an account Call State Street Research to obtain a
Funds Wire number and forward your control number. Instruct your bank to
application to State Street wire funds to:
Research. Wire funds using o State Street Bank and Trust Company,
the instructions at right. Boston, MA
o ABA: 011000028
o BNF: fund name and share class you want
to buy
o AC: 99029761
o OBI: your name and your account number
o Control: the number given to you by
State Street Research
By Electronic [PLUG] Verify that your bank is a Call State Street Research to verify that
Funds Transfer member of the ACH (Automated the necessary bank information is on file
(ACH) Clearing House) system. for your account. If it is, you may
Forward your application to request a transfer by telephone or
State Street Research. Please Internet. If not, please ask State Street
be sure to include the Research to provide you with an EZ Trader
appropriate bank information. application.
Call State Street Research to
request a purchase.
[CALENDAR] By Investamatic Forward your application, Call State Street Research to verify that
with all appropriate sections Investamatic is in place on your account,
completed, to State Street or to request a form to add it.
Research, along with a check Investments are automatic once
for your initial investment Investamatic is in place.
payable to "State Street
Research Funds."
By Exchange [ARROWS GOING IN Read the prospectus for the Read the prospectus for the fund into
OPPOSITE DIRECTIONS] fund into which you are which you are exchanging. Call State
exchanging. Call State Street Street Research or visit our Web site.
Research or visit our Web
site.
State Street Research Service Center PO Box 8408, Boston, MA 02266-8408 Internet www.StateStreetResearch.com
Call toll-free: 1-87-SSR-FUNDS (1-877-773-8637) (business days 8:00 a.m. - 6:00 p.m., eastern time)
</TABLE>
<PAGE>
16 Your Investment continued
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[CASH REGISTER] Policies for Selling Shares
Circumstances that Require Written Requests Please submit instructions in
writing when any of the following apply:
o you are selling more than $100,000 worth of shares
o the name or address on the account has changed within the last 30 days
o you want the proceeds to go to a name or address not on the account
registration
o you are transferring shares to an account with a different registration or
share class
o you are selling shares held in a corporate or fiduciary account; for these
accounts, additional documents are required:
corporate accounts: certified copy of a corporate resolution
fiduciary accounts: copy of power of attorney or other governing document
To protect your account against fraud, all signatures on these documents must be
guaranteed. You may obtain a signature guarantee at most banks and securities
dealers. A notary public cannot provide a signature guarantee.
Incomplete Sell Requests State Street Research will attempt to notify you
promptly if any information necessary to process your request is missing.
Timing of Requests If you want proceeds from a redemption to be wired on the
same business day, you must submit your request before 9:30 a.m. eastern time.
If you follow this procedure you will not earn a dividend for the day of
redemption. Other special procedures are available for very large institutional
accounts, as set forth in the fund's Statement of Additional Information (see
back cover).
Other redemption requests received before 4:00 p.m. will be processed as of 4:00
p.m. Proceeds for these redemptions will not be available until the next
business day but you will earn a dividend for the day of redemption. Redemption
requests received after 4:00 p.m. will be treated as if they had been received
as of the opening of the next business day.
Wire Transactions Proceeds sent by federal funds wire must total at least
$1,000. A fee of $7.50 will be deducted from all proceeds sent by wire, and your
bank may charge an additional fee to receive wired funds.
Selling Recently Purchased Shares If you sell shares before the check or
electronic funds transfer (ACH) for those shares has been collected, you will
not receive the proceeds until your initial payment has cleared. This may take
up to 15 days after your purchase was recorded (in rare cases, longer). If you
open an account with shares purchased by wire, you cannot sell those shares
until your application has been processed.
<PAGE>
Instructions for Selling Shares 17
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
[BRIEFCASE] Through a Consult your financial professional or your program materials.
Professional
or Program
By Mail [MAILBOX] Send a letter of instruction, an endorsed stock power or share certificates (if you hold
certificate shares) to State Street Research. Specify the fund, the account number and the
dollar value or number of shares. Be sure to include all necessary signatures and any
additional documents, as well as signature guarantees if required (see facing page).
[CAPITAL BUILDING] By Federal Check with State Street Research to make sure that a wire redemption privilege, including a
Funds Wire bank designation, is in place on your account. Once this is established, you may place your
request to sell shares with State Street Research. Proceeds will be wired to your
pre-designated bank account. (See "Wire Transactions" on facing page.)
By Electronic [PLUG] Check with State Street Research to make sure that the EZ Trader feature, including a bank
Funds Transfer designation, is in place on your account. Once this is established, you may place your request
(ACH) to sell shares with State Street Research by telephone or Internet. Proceeds will be sent to
your pre-designated bank account.
[COMPUTER] By Internet Visit our Web site. Certain limitations may apply.
By Telephone [TELEPHONE] As long as the transaction does not require a written request (see facing page), you or your
financial professional can sell shares by calling State Street Research. A check will be
mailed to your address of record on the following business day.
[ARROWS GOING IN By Exchange Read the prospectus for the fund into which you are exchanging. Call State Street Research or
OPPOSITE DIRECTIONS] visit our Web site.
By Systematic [CALENDAR] See plan information on page 21.
Withdrawal Plan
[CHECK] By Check The checkwriting privilege is available for Class E shares only. If you have requested this
privilege on your application, you may write checks for amounts of $500 or more.
State Street Research Service Center PO Box 8408, Boston, MA 02266-8408 Internet www.StateStreetResearch.com
Call toll-free: 1-87-SSR-FUNDS (1-877-773-8637) (business days 8:00 a.m. - 6:00 p.m., eastern time)
</TABLE>
<PAGE>
18 Your Investment continued
--------------------------------------------------------------------------------
[POLICIES] Account Policies
Telephone and Internet Requests When you open an account you automatically
receive telephone privileges, allowing you to place requests for your account by
telephone. Your financial professional can also use these privileges to request
exchanges for your account and, with your written permission, redemptions. For
your protection, all telephone calls are recorded.
You may also use our Web site for submitting certain requests over the Internet.
As long as State Street Research takes certain measures to authenticate requests
over the telephone or Internet for your account, you may be held responsible for
unauthorized requests. Unauthorized telephone requests are rare, but if you want
to protect yourself completely, you can decline the telephone privilege on your
application. Similarly, you may choose not to use the Internet for your account.
The fund may suspend or eliminate the telephone or Internet privileges at any
time.
Exchange Privileges There is no fee to exchange shares among State Street
Research funds. Your new fund shares will be the equivalent class of your
current shares. Any contingent deferred sales charges will continue to be
calculated from the date of your initial investment.
Accounts with Low Balances If the value of your account falls below $1,500,
State Street Research may mail you a notice asking you to bring the account back
up to $1,500 or close it out. If you do not take action within 60 days, State
Street Research may either sell your shares and mail the proceeds to you at the
address
<PAGE>
19
-----
of record or, depending on the circumstances, may deduct an annual maintenance
fee (currently $18).
The Fund's Business Hours The fund is open the same days as the New York Stock
Exchange (generally Monday through Friday). Fund representatives are available
from 8:00 a.m. to 6:00 p.m. eastern time on these days.
Calculating Share Price The fund calculates its net asset value every business
day at 2:30 p.m. eastern time and the close of regular trading on the New York
Stock Exchange (but not later than 4:00 p.m. eastern time). NAV is calculated by
dividing the fund's net assets by the number of its shares outstanding.
In calculating its NAV, the fund uses the amortized cost valuation method to
determine the value of portfolio securities. However, when the investment
manager believes that the use of amortized cost valuation may dilute or result
in unfairness to shareholders, the fund may take such action as it deems
appropriate to eliminate or reduce the extent of any dilution or unfairness.
Reinstating Recently Sold Shares For 120 days after you sell shares, you have
the right to "reinstate" your investment by putting some or all of the proceeds
into any currently available State Street Research fund at net asset value. Any
CDSC you paid on the amount you are reinstating will be credited to your
account. You may only use this privilege once in any twelve-month period with
respect to your shares of a given fund.
Additional Policies Please note that the fund maintains additional policies and
reserves certain rights, including:
o Requirements for initial or additional investments, reinvestments,
periodic investment plans, retirement and employee benefit plans,
sponsored arrangements and other similar programs may be changed from time
to time without further notice or supplement to this prospectus
o All orders to purchase shares are subject to acceptance by the fund
o At any time, the fund may change or discontinue its sales charge waivers
and any of its order acceptance practices, and may suspend the sale of its
shares
o The fund may delay sending you redemption proceeds for up to seven days,
or longer if permitted by the SEC
o The fund reserves the right to redeem in kind
o To permit investors to obtain the current price, dealers are responsible
for transmitting all orders to the State Street Research Service Center
promptly
<PAGE>
20 Your Investment continued
--------------------------------------------------------------------------------
["UNCLE SAM"] Distributions and Taxes
Income and Capital Gains Distributions The fund distributes its net income to
shareholders; it declares dividends daily and pays them monthly. The fund does
not anticipate paying any capital gains distributions.
You may have your distributions reinvested in the fund, invested in a different
State Street Research fund, deposited in a bank account or mailed out by check.
If you do not give State Street Research other instructions, your distributions
will automatically be reinvested in the fund.
Tax Effects of Distributions and Transactions In general, any dividends you
receive from the fund are taxable as ordinary income.
Every year, the fund will send you information detailing the amount of ordinary
income (and capital gains, if any) distributed to you for the previous year.
The sale of shares in your account could produce a gain or loss. For tax
purposes, an exchange is the same as a sale.
Your investment in the fund could have additional tax consequences. Please
consult your tax professional for assistance.
Backup Withholding By law, the fund must withhold 31% of your distributions and
proceeds if you have not provided complete, correct taxpayer information.
<PAGE>
21
-----
[HANDS] Investor Services
Investamatic Program Use Investamatic to set up regular automatic investments in
the fund from your bank account. You determine the frequency and amount of your
investments.
Systematic Withdrawal Plan This plan is designed for retirees and other
investors who want regular withdrawals from a fund account. The plan is free
and allows you to withdraw up to 12% of your fund assets a year (minimum $50 per
withdrawal) without incurring any contingent deferred sales charges. Certain
terms and minimums apply.
EZ Trader This service allows you to purchase or sell fund shares over the
telephone or over the Internet through the ACH (Automated Clearing House)
system.
Dividend Allocation Plan This plan automatically invests your distributions from
the fund into another fund of your choice, without any fees or sales charges.
Automatic Bank Connection This plan lets you route any distributions or
Systematic Withdrawal Plan payments directly to your bank account.
Retirement Plans State Street Research also offers a full range of prototype
retirement plans for individuals, sole proprietors, partnerships, corporations
and employees.
Call 1-87-SSR-FUNDS (1-877-773-8637) for information on any of the services
described above.
<PAGE>
22 Other Information
--------------------------------------------------------------------------------
[POLICIES] Other Securities and Risks
Each of the fund's portfolio securities and investment practices offers certain
opportunities and carries various risks. Major investments and risk factors are
outlined in the fund description starting on page 1. Below are brief
descriptions of other securities and practices, along with their associated
risks.
Restricted and Illiquid Securities Any securities that are thinly traded or
whose resale is restricted can be difficult to sell at a desired time and price.
Some of these securities are new and complex, and trade only among institutions;
the markets for these securities are still developing, and may not function as
efficiently as established markets. Owning a large percentage of restricted and
illiquid securities could hamper the fund's ability to raise cash to meet
redemptions. Also, because there may not be an established market price for
these securities, the fund may have to estimate their value, which means that
their valuation (and, to a much smaller extent, the valuation of the fund) may
have a subjective element.
Securities Ratings When securities are rated by one or more independent rating
agencies, the fund uses these ratings to determine credit quality. In cases
where a security has received a rating from only one independent rating agency,
it may rely on that rating. If a security has received ratings from two or more
rating agencies and at least two of the ratings are equivalent, the fund may
rely on the two equivalent ratings even if the other ratings are lower. In cases
where a security's two highest ratings are in conflicting categories, the fund
must follow the lower rating. If a security is unrated, the fund may assign it
to a given category based on its own credit research.
<PAGE>
23
-----
Foreign Investments Foreign bonds and instruments of foreign banks generally
have more risk than their domestic counterparts, in part because of higher
political and economic risks and lack of reliable information. The fund may
invest up to 15% of total assets in securities of Canadian issuers. The fund
also may invest up to 25% of total assets in obligations of foreign banks (other
than U.S. branches of foreign banks) and foreign branches of U.S. banks without
the guarantee of a U.S. bank. All foreign securities purchased by the fund are
denominated in U.S. dollars.
Repurchase Agreements The fund may buy securities with the understanding that
the seller will buy them back with interest at a later date. If the seller is
unable to honor its commitment to repurchase the securities, the fund could lose
money.
Derivatives Derivatives are financial instruments whose value derives from one
or more securities. Certain instruments that are first or second tier securities
also may be derivatives, such as short-term, high-quality asset-backed
securities. The fund uses derivatives to invest for potential income, and may
purchase them to the extent it can purchase any other type of first or second
tier security. The values of some derivatives are difficult to determine because
they are based on the values of other securities and the markets for some
derivatives may be limited. With some derivatives, such as certain option
contracts, there is also the risk that the counterparty may fail to honor its
contract terms, causing a loss for the fund.
<PAGE>
24 Financial Highlights
--------------------------------------------------------------------------------
These highlights are intended to help you understand the fund's performance over
the past five years. The information in these tables has been audited by
PricewaterhouseCoopers LLP, the fund's independent accountants. Their report and
the fund's financial statements are included in the fund's annual report, which
is available upon request. Total return figures assume reinvestment of all
distributions.
<TABLE>
<CAPTION>
Class B(1) Class B
------------------------------------------------------------------------
Years ended March 31
Per Share Data 1999(b) 2000 1996 1997 1998 1999 2000
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 1.00 1.00 1.00 1.00 1.00 1.00 1.00
------ ------ ------ ------ ------ ------ ------
Net investment income ($)* 0.008 0.038 0.041 0.037 0.040 0.038 0.038
Dividends from net investment income ($) (0.008) (0.038) (0.041) (0.037) (0.040) (0.038) (0.038)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of year ($) 1.00 1.00 1.00 1.00 1.00 1.00 1.00
====== ====== ====== ====== ====== ====== ======
Total return (%)(a) 0.84(c) 3.88 4.16 3.72 4.09 3.85 3.88
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 732 2,620 11,884 15,982 14,567 30,288 29,486
Expense ratio (%)* 1.66(d) 1.66 1.75 1.75 1.65 1.66 1.66
Expense ratio after expense reductions (%)* 1.65(d) 1.65 1.75 1.75 1.65 1.65 1.65
Ratio of net investment income
to average net assets (%)* 3.40(d) 3.97 4.06 3.69 4.01 3.73 3.84
*Reflects voluntary reduction of expenses
per share of these amounts ($) 0.000 0.002 0.003 0.002 0.002 0.001 0.002
</TABLE>
<TABLE>
<CAPTION>
Class C
-------------------------------------------------
Years ended March 31
Per Share Data 1996 1997 1998 1999 2000
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 1.00 1.00 1.00 1.00 1.00
------ ------ ------ ------ ------
Net investment income ($)* 0.041 0.037 0.040 0.038 0.038
Dividends from net investment income ($) (0.041) (0.037) (0.040) (0.038) (0.038)
------ ------ ------ ------ ------
Net asset value, end of year ($) 1.00 1.00 1.00 1.00 1.00
====== ====== ====== ====== ======
Total return (%)(a) 4.16 3.72 4.09 3.85 3.88
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 1,964 959 2,314 2,286 1,607
Expense ratio (%)* 1.75 1.75 1.65 1.66 1.66
Expense ratio after expense reductions (%)* 1.75 1.75 1.65 1.65 1.65
Ratio of net investment income
to average net assets (%)* 4.08 3.68 4.01 3.72 3.83
*Reflects voluntary reduction of expenses
per share of these amounts ($) 0.003 0.002 0.002 0.001 0.002
</TABLE>
<PAGE>
25
-----
<TABLE>
<CAPTION>
Class E
----------------------------------------------------
Years ended March 31
Per Share Data 1996 1997 1998 1999 2000
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 1.00 1.00 1.00 1.00 1.00
------- ------- ------- ------- -------
Net investment income ($)* 0.051 0.047 0.050 0.048 0.048
Dividends from net investment income ($) (0.051) (0.047) (0.050) (0.048) (0.048)
------- ------- ------- ------- -------
Net asset value, end of year ($) 1.00 1.00 1.00 1.00 1.00
======= ======= ======= ======= =======
Total return (%)(a) 5.20 4.78 5.12 4.88 4.92
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 197,109 192,360 221,475 331,094 319,740
Expense ratio (%)* 0.75 0.75 0.65 0.66 0.66
Expense ratio after expense reductions (%)* 0.75 0.75 0.65 0.65 0.65
Ratio of net investment income
to average net assets (%)* 5.06 4.69 5.01 4.74 4.79
*Reflects voluntary reduction of expenses
per share of these amounts ($) 0.003 0.002 0.002 0.001 0.003
</TABLE>
<TABLE>
<CAPTION>
MetLife
Securities
Money Fund
Class S Class T
--------------------------------------------------------------------------
Years ended March 31
Per Share Data 1996 1997 1998 1999 2000 1999(e) 2000
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 1.00 1.00 1.00 1.00 1.00 1.00 1.00
------ ------ ------ ------ ------ ----- ------
Net investment income ($)* 0.051 0.047 0.050 0.048 0.048 0.031 0.048
Dividends from net investment income ($) (0.051) (0.047) (0.050) (0.048) (0.048) (0.031) (0.048)
------ ------ ------ ------ ------ ----- ------
Net asset value, end of year ($) 1.00 1.00 1.00 1.00 1.00 1.00 1.00
====== ====== ====== ====== ====== ===== ======
Total return (%)(a) 5.20 4.78 5.12 4.88 4.92 3.15(c) 4.93
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 16,191 14,710 13,500 26,842 19,629 491 71,819
Expense ratio (%)* 0.75 0.75 0.65 0.66 0.66 0.66(d) 0.66
Expense ratio after expense reductions (%)* 0.75 0.75 0.65 0.65 0.65 0.65(d) 0.65
Ratio of net investment income
to average net assets (%)* 5.03 4.69 5.01 4.77 4.77 4.65(d) 4.78
*Reflects voluntary reduction of expenses
per share of these amounts ($) 0.003 0.002 0.002 0.001 0.002 0.001 0.003
</TABLE>
(a) 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 reduced the fund's expenses.
(b) January 1, 1999 (commencement of share class) to March 31, 1999.
(c) Not annualized.
(d) Annualized.
(e) August 1, 1998 (commencement of share class) to March 31, 1999.
<PAGE>
26 Board of Trustees
--------------------------------------------------------------------------------
[COLUMNS] The Board of Trustees is responsible for the operation of the fund.
They establish the fund's major policies, review investments, and provide
guidance to the investment manager and others who provide services to the fund.
The Trustees have diverse backgrounds and substantial experience in business and
other areas.
Gerard P. Maus
Chief Financial Officer,
Chief Administrative Officer,
Director and Interim Chief Operating Officer,
State Street Research & Management
Bruce R. Bond
Former Chairman of the Board, Chief
Executive Officer and President,
PictureTel Corporation
Steve A. Garban
Former Senior Vice President for Finance
and Operations and Treasurer,
The Pennsylvania State University
Dean O. Morton
Former Executive Vice President,
Chief Operating Officer and Director,
Hewlett-Packard Company
Susan M. Phillips
Dean, School of Business and Public
Management, George Washington
University, former Member of the Board of
Governors of the Federal Reserve System
and Chairman and Commissioner of the
Commodity Futures Trading Commission
Toby Rosenblatt
President, Founders Investments Ltd.
President, The Glen Ellen Company
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
<PAGE>
Notes 27
--------------------------------------------------------------------------------
<PAGE>
28 Notes
--------------------------------------------------------------------------------
<PAGE>
Notes 29
--------------------------------------------------------------------------------
<PAGE>
For Additional Information
--------------------------------------------------------------------------------
If you have questions about the fund or would like to request a free copy of the
current annual/semiannual report or SAI, contact State Street Research or your
financial professional.
[LOGO] STATE STREET RESEARCH
Service Center
P.O. Box 8408, Boston, MA 02266
Telephone: 1-87-SSR-FUNDS
(1-877-773-8637)
Internet: www.StateStreetResearch.com
You can also obtain information about the fund, including the SAI and certain
other fund documents, on the SEC's EDGAR database on the Internet at
www.sec.gov, by electronic request at [email protected], in person at the SEC's
Public Reference Room in Washington, DC (telephone 1-202-942-8090) or by mail by
sending your request, along with a duplicating fee, to the SEC's Public
Reference Section, Washington, DC 20549-0102.
prospectus
--------------------------------------------------------------------------------
SEC File Number: 811-4295
You can find additional information on the fund's structure and its performance
in the following documents:
Annual/Semiannual Reports While the prospectus describes the fund's potential
investments, these reports detail the fund's actual investments as of the report
date. The annual report also includes the report of the fund's independent
accountants on the fund's financial statements.
Statement of Additional Information (SAI) A supplement to the prospectus, the
SAI contains further information about the fund and its investment limitations
and policies. A current SAI for this fund is on file with the Securities and
Exchange Commission and is incorporated by reference (is legally part of this
prospectus).
<TABLE>
<CAPTION>
Ticker Symbols
--------------------------------------------------------------------------------
<S> <C>
Class B(1) (proposed) SSPXX
Class B SSBXX
Class C (proposed) SSDXX
Class E SSRXX
Class S (proposed) SSSXX
Class T SRMXX
</TABLE>
MM-2150-0700
Control Number: (exp 0801)SSR-LD
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
STATE STREET RESEARCH MONEY MARKET FUND
a Series of State Street Research Money Market Trust
August 1, 2000
This Statement of Additional Information is divided into two sections:
Section I contains specific information about the Fund's investment policies.
Section II contains more general information about the Fund and additional
information about certain securities and investment practices.
The Statement of Additional Information is not a Prospectus. It should be
read in conjunction with the prospectus dated August 1, 2000.
The Prospectus may be obtained without charge from State Street Research
Investment Services, Inc., One Financial Center, Boston, Massachusetts
02111-2690, or by calling 1-87-SSR-FUNDS (1-877-773-8637).
Financial statements for the Fund, as of and for the fiscal year ended
March 31, 2000 are included in the Fund's Annual Report to Shareholders for that
year. The annual report is incorporated by reference herein and is available
without charge, upon request by calling the State Street Research Service Center
at 1-87-SSR-FUNDS (1-877-773-8637).
CONTROL NUMBER: (exp0801)SSR-LD MM-0800
<PAGE>
TABLE OF CONTENTS
Page
----
DEFINITIONS............................................................. (ii)
SECTION I............................................................... I-1
STATE STREET RESEARCH MONEY MARKET FUND............................. I-1
A. The Fund........................................................ I-1
B. Investment Objective............................................ I-1
C. Fundamental and Nonfundamental Restrictions..................... I-1
D. Restricted Securities........................................... I-3
E. Industry Classifications........................................ I-4
F. Money Market Instruments........................................ I-6
G. Control Persons and Principal Holders of Securities............. I-11
H. Trustee Compensation............................................ I-14
I. Investment Advisory Fee......................................... I-14
J. Brokerage Commissions........................................... I-15
K. Sales Charges on Shares of the Fund............................. I-15
L. Rule 12b-1 Fees................................................. I-15
M. Performance..................................................... I-17
(i)
<PAGE>
DEFINITIONS
-----------
Each of the following terms used in this Statement of Additional
Information has the meaning set forth below.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Distributor" means State Street Research Investment Services, Inc., One
Financial Center, Boston, Massachusetts 02111-2690
"Investment Manager" means State Street Research & Management Company, One
Financial Center, Boston, Massachusetts 02111-2690.
"MetLife" means Metropolitan Life Insurance Company.
"NYSE" means the New York Stock Exchange, Inc.
"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.
(ii)
<PAGE>
SECTION I
---------
1. STATE STREET RESEARCH MONEY MARKET FUND
A. The Fund
State Street Research Money Market Fund (the "Fund") was organized in 1985
as a separate series of State Street Research Money Market Trust, a
Massachusetts business trust (the "Trust"). The Trust is an "open-end"
management investment company as defined in the 1940 Act. A "series" is a
separate pool of assets of the Trust which is separately managed and may have a
different investment objective and different investment policies from the
objective and policies of another series. The Trust currently is comprised of
one series: State Street Research Money Market Fund.
The Fund is a "diversified company" as those terms are defined in the 1940
Act. The Fund also intends to qualify as a "money market fund" within the
meaning of Rule 2a-7 under the 1940 Act, which includes complying with the
portfolio quality, maturity and diversification requirements of that rule.
Pursuant to Rule 2a-7, compliance with the diversification requirements under
the rule constitutes meeting the definitional requirements of a diversified
company under the 1940 Act. Generally, a fund that intends to meet its
diversification requirements under Rule 2a-7 may not invest more than 5% of its
total assets in any one issuer, although this limit may be greater if the
securities are held for short periods, are guaranteed or are subject to certain
redemption or resale rights, and there is no limit on investments in U.S.
Government securities.
B. Investment Objective
The investment objective of State Street Research Money Market Fund is
fundamental and may not be changed by the Fund except by the affirmative vote of
a majority of the outstanding voting securities of the Fund.
C. Fundamental and Nonfundamental Restrictions
The Fund has adopted certain investment restrictions, and those investment
restrictions are either fundamental or not fundamental. Fundamental restrictions
may not be changed by the Fund except by the affirmative vote of a majority of
the outstanding voting securities of the Fund. Restrictions that are not
fundamental may be changed by a vote of a majority of the Trustees of the Trust.
Fundamental Investment Restrictions
It is the Fund's policy:
I-1
<PAGE>
(1) not to purchase a security of any one issuer (other than securities
issued or guaranteed as to principal or interest by the U.S.
Government or its agencies or instrumentalities) if such purchase
would, with respect to 75% of the Fund's total assets, cause more
than 5% of the Fund's total assets to be invested in the securities
of such issuer or cause more than 10% of the voting securities of
such issuer to be held by the Fund;
(2) not to issue senior securities;
(3) not to underwrite or participate in the marketing of securities of
other issuers;
(4) not to purchase or sell real estate in fee simple;
(5) not to invest in commodities or commodity contracts;
(6) not to lend money directly to natural persons; however, the Fund may
lend portfolio securities and purchase bonds, debentures, notes,
bills and any other debt-related instruments or interests directly
from the issuer thereof or in the open market and may enter into
repurchase transactions collateralized by obligations of the U.S.
Government and its agencies and instrumentalities or other high
quality securities;
(7) not to conduct arbitrage transactions;
(8) 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);
(9) not to make any investment which would cause more than 25% of the
value of the Fund's total assets to be invested in the securities of
issuers principally engaged in any one industry, as based on
industry classifications as may be described in the Fund's
Prospectus or Statement of Additional Information, as amended from
time to time, except that the Fund will invest more than 25% of its
total assets in the financial services industry and except that this
limitation does not apply to securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities or obligations
of banks as described in the Fund's Prospectus or Statement of
Additional Information, as amended from time to time; and
(10) not to borrow money (through reverse repurchase agreements or
otherwise) except for extraordinary and emergency purposes, such as
permitting
I-2
<PAGE>
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 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.
Nonfundamental Investment Restrictions
It is the Fund's policy:
(1) not to purchase any security or enter into a repurchase agreement if
as a result more than 10% of its net assets would be invested in
securities that are illiquid (including repurchase agreements not
entitling the holder to payment of principal and interest within
seven days);
(2) not to 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;
(3) 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; and
(4) not to purchase a security issued by another investment company,
except to the extent permitted under the 1940 Act or except by
purchase in the open market involving only customary brokers'
commissions, or securities acquired as dividends or distributions or
in connection with a merger, consolidation or similar transaction or
other exchange.
D. Restricted Securities
It is the Fund's policy to not make an investment in restricted
securities, including restricted securities sold in accordance with Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities") and other restricted
securities, if as a result more than 50% of its total assets are invested in
such securities, provided not more than 10% of its total assets are
I-3
<PAGE>
invested in non-Rule 144A restricted securities.
E. Industry Classifications
In determining how much of the portfolio is invested in a given industry,
the following industry classifications are currently used. Securities issued by
foreign governments are excluded. Companies engaged in the business of financing
may be classified according to the industries of their parent or sponsor
companies, or industries that otherwise most affect such financing companies.
The Fund will invest more than 25% of its total assets in the financial services
industries. Issuers of asset-backed pools will be classified as separate
industries based on the nature of the underlying assets, such as mortgages and
credit card receivables. "Asset-backed--Mortgages" includes private pools of
nongovernment-backed mortgages. The industry concentration limitations do not
apply to bank money instruments, e.g., interest bearing negotiable certificates,
issued by the foreign branch of a domestic bank, if the domestic parent would be
unconditionally liable in the event that the foreign branch failed to pay on its
instruments for any reason.
I-4
<PAGE>
<TABLE>
<S> <C> <C>
Autos & Transportation Real Estate Investment Trusts Other Energy
Air Transport Rental & Leasing Services: Gas Pipelines
Auto Parts Commercial Miscellaneous Energy
Automobiles Securities Brokerage & Offshore Drilling
Miscellaneous Services Oil and Gas Producers
Transportation Health Care Oil Well Equipment &
Railroad Equipment Drugs & Biotechnology Services
Railroads Health Care Facilities Producer Durables
Recreational Vehicles & Boats Health Care Services Aerospace
Tires & Rubber Hospital Supply Electrical Equipment &
Truckers Service Miscellaneous Components
Consumer Discretionary Integrated Oils Electronics: Industrial
Advertising Agencies Oil: Integrated Domestic Homebuilding
Casino/Gambling, Oil: Integrated International Industrial Products
Hotel/Motel Materials & Processing Machine Tools
Commercial Services Agriculture Machinery
Communications, Media & Building & Construction Miscellaneous Equipment
Entertainment Chemicals Miscellaneous Producer
Consumer Electronics Containers & Packaging Durables
Consumer Products Diversified Manufacturing Office Furniture & Business
Consumer Services Engineering & Contracting Equipment
Household Furnishings Services Pollution Control and
Leisure Time Fertilizers Environmental Services
Photography Forest Products Production Technology
Printing & Publishing Gold & Precious Metals Equipment
Restaurants Miscellaneous Materials & Telecommunications
Retail Processing Equipment
Shoes Non-Ferrous Metals Technology
Textile Apparel Manufacturers Office Supplies Communications Technology
Toys Paper and Forest Products Computer Software
Consumer Staples Real Estate & Construction Computer Technology
Beverages Steel Electronics
Drug & Grocery Store Chains Textile Products Electronics: Semi-
Foods Other Conductors/Components
Household Products Trust Certificates - Miscellaneous Technology
Tobacco Government Related Utilities
Financial Services Lending Miscellaneous Utilities
Banks & Savings and Loans Asset-backed-Mortgages Utilities: Cable TV & Radio
Financial Data Processing Asset-backed-Credit Card Utilities: Electrical
Services & Systems Receivables Utilities: Gas Distribution
Insurance Miscellaneous Utilities: Telecommunications
Miscellaneous Financial Multi-Sector Companies Utilities: Water
</TABLE>
I-5
<PAGE>
F. Money Market Instruments
The following describes further the money market instruments in which the
Fund may invest, as well as certain debt ratings used by the Fund, and is
provided as a supplement to the discussion appearing in the Fund's Prospectus.
Short-Term Corporate and Other Securities
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. State Street Research & Management Company, the Fund's investment
manager (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 within the A-1 or A-2 categories by Standard &
Poor's Corporation ("S&P") or within the Prime-1 or Prime-2 categories by
Moody's Investors Service, Inc. ("Moody's"), or, if not rated, issued by
companies having an outstanding debt issue rated at least within the AA category
by S&P or within the Aa category 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 397 calendar days remaining
either to the date of maturity or
I-6
<PAGE>
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 397 calendar days 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 term
"Eligible Security" is limited to any security that:
(i) (a) either (1) has received a short-term rating from a nationally
recognized statistical rating organization ("NRSRO") or has been
issued by an issuer that has received a short-term rating from an
NRSRO with respect to a class of debt obligations (or any debt
obligation within that class) that is comparable in priority and
security with the security or (2) is subject to a guarantee that has
received a short-term rating from an NRSRO, or a guarantee issued by
a guarantor that has received a short-term rating from an NRSRO with
respect to a class of debt obligations (or any debt obligation
within that class) that is comparable in priority and security with
the guarantee, (b) has a remaining maturity of 397 calendar days or
less and (c) has received a rating from the requisite number of
NRSROs (i.e., two, if two organizations have issued ratings and one
if only one has issued a rating) in one of the two highest
short-term major rating categories; or
(ii) is unrated but is of comparable quality to a rated security as
described in (i), above, and which at the time of issuance (a) had a
remaining maturity of more than 397 calendar days and now has a
remaining maturity of 397 calendar days or less, and (b) has not
received a long-term rating from an NRSRO in any NRSRO major rating
category outside of the NRSRO's three highest major rating
categories, unless the security has receive a long-term rating from
the requisite number of NRSROs (i.e., two, if two organizations have
issued ratings and one if only one has issued a rating) in one of
the three highest long-term major rating categories.
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 generally 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
I-7
<PAGE>
of any single issuer.
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. Treasury Obligations
U.S. Government securities consist of various types of marketable
securities issued by the U.S. Treasury, that is, 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.
I-8
<PAGE>
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.
U.S. Government Agency and Similar Securities
U.S. 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 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, 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).
The Fund may also invest in the obligations of mixed-ownership Government
corporations. Certain obligations of Resolution Funding Corporation, a
mixed-ownership Government corporation, are backed with respect to interest
payments by the U.S. Treasury, and with respect to principal payments by U.S.
Treasury obligations held in a segregated account with a Federal Reserve Bank.
Except for certain mortgage-related securities, the Fund will only invest in
obligations issued by mixed-ownership Government corporations where such
securities are guaranteed as to payment of principal or interest by the U.S.
Government or a U.S. Government agency or instrumentality, and any unguaranteed
principal or interest is otherwise supported by U.S. Government obligations held
in a segregated account.
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
I-9
<PAGE>
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 within the "A" category (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
credits within the "BBB" category 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 category assigned
by Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
Prime-1, Prime-2 or Prime-3.
Description of the Highest Corporate Bond and Debenture Ratings of S&P
AAA: An obligation rated within the AAA category has the highest rating
assigned by S&P. Capacity to meet the financial commitment on the obligation is
extremely strong.
AA: An obligation rated within the AA category differs from AAA issues
only in small degree. Capacity to meet the financial commitment on the
obligation is very strong.
Description of the Highest Corporate Bond and Debenture Ratings of Moody's
Aaa: Bonds which are rated within the Aaa category are judged to be of the
best quality. 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
I-10
<PAGE>
issues.
Aa: Bonds which are rated within the Aa category 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 greater
than in Aaa securities.
For more information on certain investment practices that the Fund may
follow, see "Additional Risks and Information Concerning Investment Techniques"
in Section Two.
G. Control Persons and Principal Holders of Securities
As of June 30, 2000, the Trustees and principal officers of the Trust 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(1), Class B, Class C, Class S or Class
T shares.
Also, as of June 30, 2000, 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:
<TABLE>
<CAPTION>
Shareholder %
----------- -
<S> <C> <C>
Class B(1) I.J. Murdock 7.2
H.E. Wilton 6.9
Class C PaineWebber for the 6.9
Benefit of J.B. Boyd, Trustee
Gatefield Corporation
Prudential Securities, Inc. FBO 15.4
American National Bank & Trust Company
as Trustee for Lincoln Group LP
</TABLE>
I-11
<PAGE>
<TABLE>
Class E Metropolitan Life 19.5
<S> <C>
Class S State Street Bank Ttee 21.8
Billy Graham Evangelistic Assoc.
1994 Pension Plan
Chase Manhattan Bank Ttee
Pension Plan in MetLife Savings Plan Program 23.3
MetLife Defined Contribution Group 21.6
SSRM Holdings, Inc. 11.9
MetLife Securities Pershing Division of DLJ Sec. Corp. 99.7
Money Fund
Class T
</TABLE>
I-12
<PAGE>
The full name and address of each of the above persons or entities are as
follows:
I.J. Murdock
H.E. Wilton
c/o State Street Research Service Center
One Financial Center
Boston, MA 02111
Metropolitan Life Insurance Company (a)
One Madison Ave
New York, NY 10010
PaineWebber for the Benefit of J.B. Boyd,
Trustee
Gatefield Corporation 401K
47436 Fremont Blvd.
Fremont, CA 94583-6503
Chase Manhattan Bank Trust,
MetLife Savings Plan Program (c)
4 New York Plaza
New York, NY 10004
MetLife Defined Contribution Group
600 Parsippany Road
Parsippany, NJ 07054-3715
Prudential Securities Inc., FBO American
National Bank & Trust Company
as Trustee for
Lincoln Group
500 Skokie Blvd.
Ste 310
Northbrook, IL
State Street Bank, Trustee
Billy Graham Evangelistic Assoc.
1994 Pension Plan
P.O. Box 9427 Alt 3
Boston, MA 02209-9427
Pershing Division of DLJ Secs Corp. (b)
State Street Money Fund
Customer Accounts
Pershing Plaza
Jersey City, NY 07399-0002
SSRM Holdings, Inc.
One Financial Center
Boston, MA 02111
(a) Metropolitan, a New York corporation, was the record and/or beneficial
owner, directly or indirectly, through its subsidiaries or affiliates, of
such shares.
(b) The Fund believes that each named recordholder does not have beneficial
ownership of such shares.
(c) Chase Manhattan Bank, N.A. holds such shares as trustee under certain
employment benefit plans serviced by Metropolitan Life Insurance Company.
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.
I-13
<PAGE>
H. Trustee Compensation
The Trustees were compensated as follows:
<TABLE>
<CAPTION>
Total
Compensation
Total From All State Street
Compensation Research Funds and
Aggregate From All State Street Metropolitan Series
Name of Compensation Research Funds Paid Fund, Inc. Paid
Trustee From Fund(a) to Trustees(b) to Trustees(c)
------- ------------ -------------- --------------
<S> <C> <C> <C>
Bruce R. Bond $3,275 $ 55,495 $ 55,495
Steve A. Garban $3,883 $ 80,150 $ 110,900
Gerard P. Maus $ 0 $ 0 $ 0
Dean O. Morton $3,992 $ 81,150 $ 108,900
Susan M. Phillips $3,575 $ 57,150 $ 57,150
Toby Rosenblatt $3,275 $ 67,900 $ 67,900
Michael S. Scott Morton $4,142 $ 82,250 $ 113,000
</TABLE>
(a) For the Fund's fiscal year ended March 31, 2000. The Fund does not provide
any pension or retirement benefits for the Trustees.
(b) Includes compensation on behalf of all series of 11 investment companies
for which the Investment Manager serves as a sole investment adviser. The
figure in this column is for the 12 months ended December 31, 1999.
(c) Includes compensation on behalf of all series of 11 investment companies
for which the Investment Manager serves as sole investment adviser and all
series of Metropolitan Series Fund, Inc. The primary adviser to
Metropolitan Series Fund, Inc. is Metropolitan Life Insurance Company,
which has retained State Street Research & Management Company as
sub-adviser to certain series of Metropolitan Series Fund, Inc. The figure
in this column includes compensation relating to series of Metropolitan
Series Fund, Inc. which are not advised by State Street Research &
Management Company. The figure is for the 12 months ended December 31,
1999.
For more information on the Trustees and officers of State Street Research
Money Market Trust, see Section II, B of this Statement of Additional
Information.
I. Investment Advisory Fee
The advisory fee payable monthly by the Fund to the Investment Manager is
computed as a percentage of the average of the value of the net assets of the
Fund as determined at the close of regular trading on 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 Distributor and its affiliates have from time to time and in varying
amounts voluntarily assumed some portion of fees or expenses relating to the
Fund. For the fiscal
I-14
<PAGE>
years ended March 31, 1998, 1999 and 2000, the Fund's investment advisory fee
prior to the assumption of fees or expenses was $1,219,931, $1,589,742 and
$2,235,923, respectively. For the same periods, the voluntary reduction of fees
or assumption of expenses amounted to $494,474, $364,563 and $1,134,257,
respectively.
For more information on the investment advisory arrangements, see Section
II, C of this Statement of Additional Information.
J. Brokerage Commissions
During the fiscal years ended March 31, 1998, 1999 and 2000, the Fund paid
no brokerage commissions in secondary trading. During and at the end of its most
recent fiscal year, the Fund held in its portfolio no securities of any entity
that might be deemed to be a regular broker-dealer of the Fund as defined under
the 1940 Act.
For more information on brokerage commissions, see Section II, G of this
Statement of Additional Information.
K. Sales Charges on Shares of the Fund
For the periods shown below, the Distributor received contingent deferred
sales charges upon redemption of Class B(1), Class B and Class C shares of the
Fund and paid initial commissions to securities dealers for sales of shares as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
March 31, 2000 March 31, 1999 March 31, 1998
-------------- -------------- --------------
Contingent Commissions Contingent Commissions Contingent Commissions
Deferred Paid to Deferred Paid to Deferred Paid to
Sales Charges Dealers Sales Charges Dealers Sales Charges Dealers
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Class B(1)* $ 17,886 $40,922 $ 110 $ 1,490 -- --
Class B $336,266 $ 8,618 $246,572 $19,921 $185,067 $15,662
Class C $ 10,023 $ 591 $ 806 $ 0 $ 6,967 $ 814
</TABLE>
----------
*Class B(1) introduced January 1, 1999
For more information about sales charges, see Section II, I of this
Statement of Additional Information.
L. Rule 12b-1 Fees
The Fund has adopted plans of distribution pursuant to Rule 12b-1 under
the 1940 Act ("Distribution Plan(s)"). Under the Distribution Plans, the Fund
may engage, directly or indirectly, in financing any activities primarily
intended to result in the sale of shares of the
I-15
<PAGE>
Fund. Under the Distribution Plans, the Fund provides the Distributor with a
service fee at an annual rate of 0.25% on the average daily net assets of Class
B(1), Class B and Class C shares. The Fund also provides a distribution fee at
an annual rate of 0.75% on the average daily net assets of Class B(1), Class B
and Class C shares. The service and distribution fees are used to cover personal
services and/or the maintenance of shareholder accounts provided by the
Distributor, brokers, dealers, financial professionals or others, and sales,
promotional and marketing activities relating to the respective classes.
Under the Distribution Plan covering Class B and Class C shares, the
Fund's payments are intended to reimburse the Distributor for expenditures
incurred under the plan, and any unused payments are returnable to the Fund.
Under the Distribution Plan covering Class B(1) shares, the Fund's
payments compensate the Distributor for services and expenditures incurred under
the plan, and one of the payments are returnable to the Fund. The Distributor
may have also used additional resources of its own for further expenses on
behalf of the Fund.
During the fiscal year ended March 31, 2000, 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:
I-16
<PAGE>
<TABLE>
<CAPTION>
Class B(1) Class B Class C
---------- ------- -------
<S> <C> <C> <C>
Advertising 0 0 0
Printing and mailing of prospectuses to 0 0 0
other than current shareholders
Compensation to Dealers 1,031 326,000 4,114
Compensation to sales personnel 12,126 0 10,962
Interest 0 0 0
Carrying or other financing charges 0 0 0
Other expenses: marketing; general 10,531 433 9,282
Total fees received 26,688 326,433 24,358
</TABLE>
<TABLE>
<CAPTION>
Class B(1) Class B Class C
---------- ------- -------
<S> <C> <C> <C>
Unreimbursed expenses
carried forward: $20,161 -- 445,869
Amount
% of net assets at year end 0 -- 27.7%
</TABLE>
The Distributor may have also used additional resources of its own for further
expenses on behalf of the Fund.
For more information about Rule 12b-1 fees, see Section II, I of this
Statement of Additional Information.
M. Performance
All calculations of performance data in this section reflect the voluntary
measures, if any, by the Investment Manager or its affiliates to reduce fees or
expenses relating to the Fund.
Performance data for a specified class includes periods prior to the
adoption of class designations on June 1, 1993, when designations were assigned
based on the pricing and Rule 12b-1 fees applicable to shares sold thereafter.
The application of the additional Rule 12b-1
I-17
<PAGE>
fees, if any, of up to 1% will, for periods after June 1, 1993, adversely affect
Fund performance results. Thus, 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. Performance for Class B(1) shares reflects Class B
performance through December 31, 1998. Class B(1) shares were introduced on
January 1, 1999. Performance for Class T reflects Class E performance through
July 31, 1998. Class T was introduced on August 1, 1998.
Standard Total Return
---------------------
The average annual total return ("standard total return") of each class of
the Fund's shares was as follows:
<TABLE>
<CAPTION>
Ten Years Five Years One Year
Ended Ended Ended
March 31, 2000 March 31, 2000 March 31, 2000
-------------- -------------- --------------
<S> <C> <C> <C>
Class B(1) 3.97% 3.59% (1.12%)
Class B 3.97% 3.59% (1.12%)
Class C 3.98% 3.94% 2.88%
Class E 4.68% 4.98% 4.92%
Class S 4.68% 4.98% 4.92%
Class T 4.68% 4.98% 4.93%
</TABLE>
Nonstandard Total Return
------------------------
The nonstandard total return of each class of shares of the Fund for the
six months ended March 31, 2000, without taking sales charges into account, was
as follows:
<TABLE>
<S> <C>
Class C 2.12%
Class E 2.63%
Class S 2.63%
Class T 2.63%
</TABLE>
For more information about performance, see Section II, K of this
Statement of Additional Information.
I-18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SECTION II
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
A. Additional Risks and Information Concerning Certain
Investment Techniques......................................II-1
B. The Trust, The Trustees and Officers, and Fund Shares......II-4
C. Investment Advisory Services...............................II-12
D. Purchase and Redemption of Fund Shares.....................II-13
E. Shareholder Accounts.......................................II-17
F. Net Asset Value............................................II-22
G. Portfolio Transactions.....................................II-23
H. Certain Tax Matters........................................II-27
I. Distribution of Shares of the Fund.........................II-28
J. Calculation of Performance Data............................II-30
K. Custodian..................................................II-32
L. Independent Accountants....................................II-32
M. Financial Reports..........................................II-33
</TABLE>
This Section II contains general information applicable to the fund
identified on the cover page of this Statement of Additional Information.
A. Additional Risks and Information Concerning Certain Investment Techniques
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 "Money Market
Instruments," in Section I. The Fund expects that investment, 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 a U.S. 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 in the Prospectus, subject to the issuer diversification and other
restrictions described in the Prospectus and Statement of Additional
Information. 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.
II-1
<PAGE>
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 that 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 U.S. 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 will be limited to 30% of the Fund's net assets, except that
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
net assets.
Securities Lending
------------------
The Fund may lend portfolio securities with a value of up to 33 1/3% of
its total assets. The Fund will receive cash or cash equivalents (e.g., U.S.
Government obligations) as collateral in an amount equal to at least 100% of the
current market value of any loaned securities plus accrued interest. Collateral
received by the Fund will generally be held in the form tendered, although cash
may be invested in unaffiliated mutual funds with quality short-term portfolios,
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, repurchase agreements or other similar investments. The
investing of cash collateral received from loaning portfolio securities involves
leverage which magnifies the potential for gain or loss on monies invested and,
therefore, results in an increase in the volatility of the Fund's outstanding
securities. Such loans may be terminated at any time.
The Fund may receive a lending fee and will retain rights to dividends,
interest or other distributions, on the loaned securities. Voting rights pass
with the lending, although the Fund may call loans to vote proxies if desired.
Should the borrower of the securities fail financially, there is a risk of delay
in recovery of the securities or loss of rights in the collateral. Loans are
made only to borrowers which are deemed by the Investment Manager or its agents
to be of good financial standing.
II-2
<PAGE>
When-Issued Securities
----------------------
The Fund may purchase "when-issued" 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 months, or over a year or
more; during this period dividends or interest on the securities are not
payable. A frequent form of when-issued trading occurs when corporate securities
to be created by a merger of companies are traded prior to the actual
consummation of the merger. Such transactions may involve a risk of loss if the
value of the securities falls below the price committed to prior to actual
issuance. The Trust's custodian will establish a segregated account when the
Fund purchases securities on a when-issued basis consisting of cash or liquid
securities equal to the amount of the when-issued commitments. Securities
transactions involving delayed deliveries or forward commitments are frequently
characterized as when-issued transactions and are similarly treated by the Fund.
Restricted Securities
---------------------
The Fund may invest in restricted securities sold 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. The Trustees will periodically monitor the
liquidity determinations. 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.
Other Investment Companies
--------------------------
The Fund may invest in securities of other investment companies, including
affiliated investment companies, such as open- or closed-end management
investment companies, hub and spoke (master/feeder) funds, pooled accounts or
other similar, collective investment vehicles. As a shareholder of an investment
company, the Fund may indirectly bear service and other fees in addition to the
fees the Fund pays its service providers. Similarly, other investment companies
may invest in the Fund. Other investment companies that invest in the Fund may
hold significant portions of the Fund and materially affect the sale and
redemption of Fund shares and the Fund's portfolio transactions.
B. The Trust, the Trustees and Officers, and Fund Shares
The Trustees of the Trust have authority to issue an unlimited number of
shares of
II-3
<PAGE>
beneficial interest of each separate series, $.001 par value per share. The
Trustees also 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 classes. The Trustees have
authorized shares of the Fund to be issued in six classes: Class B(1)
(introduced January 1, 1999), Class B, Class C, Class E, Class S and Class T.
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(1), Class B and Class C 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. Except for those
differences between classes of shares described above, in the Fund's Prospectus
and otherwise in this Statement of Additional Information, 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 by the Fund.
Shareholder rights granted under the Master Trust Agreement may be
modified by the Trustees provided, however, that the Master Trust Agreement may
not be amended if such amendment (a) repeals the limitations on personal
liability of any shareholder or Trustee, or repeals the prohibition of
assessment upon shareholders, without the express consent of each shareholder or
Trustee involved or (b) adversely modifies any shareholder right without the
consent of the holders of a majority of the outstanding shares entitled to vote.
On any matter submitted to the shareholders, the holder of a Fund share is
entitled to one vote per share (with proportionate voting for fractional shares)
regardless of the relative net asset value thereof. Except as provided by law,
the Trustees may otherwise modify the rights of shareholders at any time.
Under the Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there ordinarily will be no shareholder meetings
unless required by the 1940 Act. Except as otherwise provided under the 1940
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 for the
Trust. However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of
II-4
<PAGE>
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.
The Trustees and Officers of each Trust are identified below, together
with biographical information.
II-5
<PAGE>
<TABLE>
<CAPTION>
Master Money
STATE STREET Capital Equity Exchange Financial Growth Income Investment Market Securities Tax-Exempt
RESEARCH: Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust
------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TRUSTEES AND
PRINCIPAL
OFFICERS
------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce R. Bond Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
John R. Vice
Borzilleri President
Paul J. Vice President
Clifford, Jr.
Catherine Vice
Dudley President
Bruce A. Ebel Vice
President
Steve A. Garban Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
Bartlett R. Vice Vice Vice
Geer President President President
Lawrence J. Vice
Haverty, Jr. President
F. Gardner Vice
Jackson, Jr. President
John H. Kallis Vice Vice Vice Vice Vice President
President President President President
Dyann H. Vice
Kiessling President
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Master Money
STATE STREET Capital Equity Exchange Financial Growth Income Investment Market Securities Tax-Exempt
RESEARCH: Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust
------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TRUSTEES AND
PRINCIPAL
OFFICERS
------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rudolph K. Vice
Kluiber President
Francis J. Secretary Secretary Secretary Secretary Secretary Secretary Secretary Secretary Secretary Secretary
McNamara, III
Gerard P. Maus Trustee, Trustee, Trustee, Trustee, Trustee, Trustee, Trustee, Trustee, Trustee, Trustee,
Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman Chairman of
of the of the of the of the of the of the of the of the of the the Board,
Board, Board, Board, Board, Board, Board, Board, Board, Board, President,
President, President, President, President, President President President President, President, Chief
Chief Chief Chief Chief Chief Chief Chief Chief Chief Executive
Executive Executive Executive Executive Executive Executive Executive Executive Executive Officer and
Officer Officer Officer Officer Officer Officer Officer Officer Officer Treasurer
and and and and and and and and and
Treasurer Treasurer Treasurer Treasurer Treasurer Treasurer Treasurer Treasurer Treasurer
Thomas P. Vice Vice
Moore, Jr. President President
Dean O. Morton Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
Brian P. O'Dell Vice
President
Kim M. Peters Vice
President
Susan M. Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
Phillips
E.K. Easton Vice
Ragsdale, Jr. President
Daniel J. Rice Vice
III President
Toby Rosenblatt Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
Michael S. Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee Trustee
Scott Morton
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Master Money
STATE STREET Capital Equity Exchange Financial Growth Income Investment Market Securities Tax-Exempt
RESEARCH: Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust
------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TRUSTEES AND
PRINCIPAL
OFFICERS
------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas A. Vice Vice Vice Vice Vice
Shively President President President President President
Tucker Walsh Vice
President
James M. Weiss Vice Vice Vice Vice Vice Vice Vice Vice
President President President President President Presiden President President
Elizabeth M. Vice
Westvold President
John T. Wilson Vice Vice
President President
Kennard Vice Vice Vice Vice
Woodworth, Jr. President President President President
Peter A. Zuger Vice
President
</TABLE>
II-8
<PAGE>
Additional information on the Trustees, Directors and principal officers
of the State Street Research Funds is provided below. The address for each
person is One Financial Center, Boston, Massachusetts 02111.
Bruce R. Bond: He is 54. During the past five years, Mr. Bond has also
served as Chairman of the Board, Chief Executive Officer and President of
PictureTel Corporation, Chief Executive Officer of ANS Communications (a
communications networking company) and as managing director of British
Telecommunications PLC.
*John R. Borzilleri, MD: He is 41 and his principal occupation is Senior
Vice President of the Investment Manager. During the past five years he has also
served as a Vice President of the Investment Manager, as a Vice President of
Montgomery Securities and as an equity analyst at Dean Witter.
*Paul J. Clifford, Jr.: He is 38 and his principal occupation is Senior
Vice President of the Investment Manager. During the past five years he has also
served as Vice President of the Investment Manager.
*Catherine Dudley: She is 39 and her principal occupation is senior Vice
President of the Investment Manager. During the past five years she has also
served as a senior portfolio manager at Chancellor Capital Management and as a
portfolio manager at Phoenix Investment Council.
*Bruce A. Ebel: He is 44 and his principal occupation is Senior Vice
President of the Investment Manager. During the past five years he has also
served as a Vice President and portfolio manager at Loomis, Sayles & Company,
L.P.
+Steve A. Garban: He is 62 and he is retired and was formerly Senior Vice
President for Finance and Operations and Treasurer of The Pennsylvania State
University. Mr. Garban is also a Director of Metropolitan Series Fund, Inc. (an
investment company).
*Bartlett R. Geer: He is 45 and his principal occupation is currently, and
during the past five years has been, Senior Vice President of the Investment
Manager.
*Lawrence J. Haverty, Jr.: He is 56 and his principal occupation is
currently, and during the past five years has been, Senior Vice President of the
Investment Manager.
*F. Gardner Jackson, Jr.: He is 57 and his principal occupation is
currently, and during the past five years has been Senior Vice President of the
Investment Manager.
*John H. Kallis: He is 59 and his principal occupation is currently, and
during the past five years has been, Senior Vice President of the Investment
Manager.
II-9
<PAGE>
*Dyann H. Kiessling: She is 37 and her principal occupation is Vice
President of the Investment Manager. During the past five years she has also
served as a fixed income trader for the Investment Manager.
*Rudolph K. Kluiber: He is 40 and his principal occupation currently is
Senior Vice President of the Investment Manager. During the past five years he
has also served as a Vice President of the Investment Manager.
*Gerard P. Maus: He is 48 and his principal occupation is currently, and
during the past five years has been, Executive Vice President, Treasurer, Chief
Financial Officer, Chief Administrative Officer and Director of the Investment
Manager, and since May 2000 Interim Chief Operating Officer of the Investment
Manager. Mr. Maus's other principal business affiliations include Executive Vice
President, Chief Financial Officer, Chief Administrative Officer, Treasurer and
Director of State Street Research Investment Services, Inc.; Treasurer and Chief
Financial Officer of SSRM Holdings, Inc.; and Director of SSR Realty Advisors,
Inc.
*Francis J. McNamara, III: He is 44 and his principal occupation is
Executive Vice President, General Counsel and Secretary of the Investment
Manager. During the past five years he has also served as Senior Vice President
of the Investment Manager. Mr. McNamara's other principal business affiliations
include Executive Vice President, General Counsel and Clerk of State Street
Research Investment Services, Inc.; and Secretary and General Counsel of SSRM
Holdings, Inc.
*Thomas P. Moore, Jr.: He is 61 and his principal occupation is currently,
and during the past five years has been, Senior Vice President of the Investment
Manager.
+Dean O. Morton: He is 67 and he is retired and was formerly Executive
Vice President, Chief Operating Officer and Director of Hewlett-Packard Company.
Mr. Morton is also a Director of Metropolitan Series Fund, Inc. (an investment
company).
*Brian P. O'Dell: He is 34 and his principal occupation is currently
Assistant Portfolio Manager for the Investment Manager. During the past five
years he has also served as a portfolio manager and analyst at Freedom Capital
Management Corporation.
*Kim M. Peters: He is 47 and his principal occupation is currently, and
during the past five years has been, Senior Vice President of the Investment
Manager.
Susan M. Phillips: She is 55 and her principal occupation is currently
Dean of the School of Business and Public Management at George Washington
University and Professor of Finance. Previously, she was a member of the Board
of Governors of the Federal Reserve System and Chairman and Commissioner of the
Commodity Futures Trading Commission.
*E.K. Easton Ragsdale, Jr.: He is 48 and his principal occupation is
Senior Vice President of the Investment Manager. During the past five years he
has also served as Vice President of the Investment Manager.
II-10
<PAGE>
*Daniel J. Rice III: He is 48 and his principal occupation is currently,
and during the past five years has been, Senior Vice President of the Investment
Manager.
Toby Rosenblatt: He is 62 and his principal occupations during the past
five years have been President of Founders Investments Ltd. and President of The
Glen Ellen Company, a private investment company.
+Michael S. Scott Morton: He is 62 and 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. Dr. Scott Morton is
also a Director of Metropolitan Series Fund, Inc. (an investment company).
*Thomas A. Shively: He is 46 and his principal occupation is currently,
and during the past five years has been, Executive Vice President of the
Investment Manager. Mr. Shively is also a Director of the Investment Manager.
Mr. Shively's other principal business affiliations include Director of State
Street Research Investment Services, Inc.
*Tucker Walsh: He is 30 and his principal occupation is Vice President of
the Investment Manager. During the past five years he has also served as an
analyst for the Investment Manager and for Chilton Investment Partners and Cowen
Asset Management.
*James M. Weiss: He is 53 and his principal occupation is Executive Vice
President and Director of the Investment Manager. During the past five years he
has also served as Senior Vice President of the Investment Manager and as
President and Chief Investment Officer of IDS Equity Advisors.
*Elizabeth M. Westvold: She is 40 and her principal occupation is Senior
Vice President of the Investment Manager. During the past five years she has
also served as Vice President for the Investment Manager.
*John T. Wilson: He is 36 and his principal occupation is Senior Vice
President of the Investment Manager. During the past five years he has also
served as a Vice President of the Investment Manager, as an analyst and
portfolio manager at Phoenix Home Life Mutual Insurance Company and as a Vice
President of Phoenix Investment Counsel Inc.
*Kennard Woodworth, Jr.: He is 62 and his principal occupation is
currently, and during the past five years has been, Senior Vice President of the
Investment Manager.
II-11
<PAGE>
*Peter A. Zuger: He is 52. His principal occupation is Senior Vice
President of State Street Research & Management Company. During the past five
years he has also served as Vice President of American Century Investment
Management Company.
-----------------
* These Trustees and/or Officers are 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 Director of Metropolitan Series Fund, Inc., which has an
advisory relationship with the Investment Manager or its parent,
Metropolitan Life Insurance Company.
C. Investment Advisory Services
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.
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 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.
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 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 Agreement provides that it shall continue in effect with
respect to the Fund for a period of two years after its initial effectiveness
and will continue from year to year thereafter as long as it is approved at
least annually both (i) by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) or by the Trustees of the
Trust, and (ii) in either event by a vote of a majority of the Trustees who are
not parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be
II-12
<PAGE>
terminated on 60 days' written notice by either party and will terminate
automatically in the event of its assignment, as defined under the 1940 Act and
regulations thereunder. Such regulations provide that a transaction which does
not result in a change of actual control or management of an adviser is not
deemed an assignment.
Under a 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, employee benefit plans, and
similar programs or plans through or under which the Fund's shares may be
purchased.
The Fund, the Investment Manager, and the Distributor have adopted a code
of Ethics pursuant to the requirement of the 1940 Act. Under the Code of Ethics
of the Investment Manager, personnel are only permitted to engage in personal
securities transactions in accordance with certain conditions relating to such
person's position, the identity of the security, the timing of the transaction,
and similar factors. Transactions in securities that may be held by the Fund are
permitted, subject to compliance with applicable provisions of the Code.
Personal securities transactions must be reported quarterly and broker
confirmations of such transactions must be provided for review.
D. Purchase and Redemption of Shares
Shares of the Fund are distributed by State Street Research Investment
Services, Inc., 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 E, Class S and Class T shares, a sales
charge, which is imposed on a deferred basis (the Class B(1), Class B and Class
C shares). Class B shares are available only to current Class B shareholders
through reinvestment of dividends and capital gains distributions or through
exchanges from existing Class B accounts of the State Street Research Funds.
General information on how to buy shares of the Fund, as well as sales charges
involved, are set forth under "Your Investment" in the Prospectus. The following
supplements that information.
Purchase Orders. When a purchase order is placed through a dealer, that
----------------
dealer is responsible for transmitting the order promptly to the State Street
Research Service Center (the "Service Center") in order to permit the investor
to obtain the current price. Any loss suffered by an investor which results from
a dealer's failure to transmit an order promptly is a matter for settlement
between the investor and the dealer.
Class B(1), Class B and Class C Shares. Class B(1), Class B and Class C
---------------------------------------
shares are offered solely in connection with exchanges from "Eligible Funds"
(which include the Fund and other funds as designated by the Distributor from
time to time).
Conversion of Class B(1) and Class B Shares to Class E Shares. A
--------------------------------------------------------------
shareholder's Class
II-13
<PAGE>
B(1) and Class B shares of the Fund, 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 shares; consequently, they will no longer be subject to the higher expenses
borne by Class B(1) and 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 shares so converted. As noted above, holding periods for Class
B(1) shares received in exchange for Class B(1) shares of other Eligible Funds
and for Class B shares received in exchange for Class B shares of other Eligible
Funds, will be counted toward the eight-year period.
Contingent Deferred Sales Charges. The amount of any contingent deferred
----------------------------------
sales charge paid on Class B(1), Class B or Class C shares of the Fund will be
paid to the Distributor. The Distributor will pay dealers at the time of sale a
4% commission for selling Class B(1) shares and a 1% commission for selling
Class C shares. In certain cases, a dealer may elect to waive the 4% commission
on Class B(1) and Class B shares and receive in lieu thereof an annual fee,
usually 1% with respect to such outstanding shares. The proceeds of the
contingent deferred sales charges and the distribution fees are used to offset
distribution expenses and thereby permit the sale of Class B(1), Class B and
Class C shares without an initial sales charge.
In determining the applicability and rate of any contingent deferred sales
charge of Class B(1), Class B or Class C shares, it will be assumed that a
redemption of the 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. Class B(1) shares that are redeemed
within a six-year period after their purchase, Class B shares that are redeemed
within a five-year period after their purchase, and Class C shares that are
redeemed within a one-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 holding period for purposes of
applying a contingent deferred sales charge for a particular class of shares of
the Fund acquired through an exchange from another Eligible Fund will be
measured from the date that such shares were initially acquired in the other
Eligible Fund, and shares of the same class being redeemed will be considered to
represent, as applicable, capital appreciation or dividend and capital gains
distribution reinvestments in such other Eligible Fund. These determinations
will result in any contingent deferred sales charge being imposed at the lowest
possible rate. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case may
be, on the amount realized on redemption.
Contingent Deferred Sales Charge Waivers. With respect to Class B(1),
-----------------------------------------
Class B and Class C shares of the Fund, the contingent deferred sales charge
does not apply to exchanges or to redemptions under a systematic withdrawal plan
which meets certain conditions. The contingent deferred sales charge will be
waived for participant initiated distributions from State Street Research
prototype employee retirement plans. In addition, the contingent deferred sales
charge will be waived for: (i) redemptions made within one year of the death or
total
II-14
<PAGE>
disability, as defined by the Social Security Administration, of all
shareholders of an account; (ii) redemptions made after attainment of a specific
age in an amount which represents the minimum distribution required at such age
under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, for
retirement accounts or plans (e.g., age 70 1/2 for Individual Retirement
Accounts 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 Individual Retirement
Account. (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 at any
time; for example, the Fund may limit the application of multiple waivers and
establish other conditions for employee benefit plans. Certain employee benefit
plans sponsored by a financial professional may be subject to other conditions
for waivers under which the plans may initially invest in Class B(1) or Class B
shares and then Class A shares of certain funds upon meeting specific criteria.
Class E Shares. Class E shares may be issued directly or through exchanges
---------------
to certain shareholders of the Fund or other Eligible Funds who previously held
shares that are not subject to any future sales charge or service fees or
distribution fees.
Class S Shares. Class S shares are currently available to certain employee
---------------
benefit plans such as qualified retirement plans which meet criteria relating to
number of participants, service arrangements, or similar factors; insurance
companies; investment companies; advisory accounts of the Investment Manager;
endowment funds of nonprofit organizations with substantial minimum assets
(currently a minimum of $10 million); and other similar institutional investors.
Class S shares may be acquired through programs or products sponsored by
MetLife, its affiliates, or both for which Class S shares have been designated.
Class S shares are available through programs under which, for example,
investors pay an asset-based fee and/or a transaction fee to intermediaries.
Class S share availability is determined by the Distributor and intermediaries
based on the overall direct and indirect costs of a particular program, expected
assets, account sizes and similar considerations.
In the discretion of the distributor, Class S shares may be made available
to (a) current and former employees, officers and directors of the Investment
Manager and Distributor; (b) current and former directors or trustees of the
investment companies for which the Investment Manager serves as the primary
investment adviser; and (c) relatives of any such individuals, provided that the
relationship is directly verified by such individuals to the Distributor, and
any beneficial account for such relatives or individuals. Class E shares
acquired by such individuals and relatives may, in the discretion of the
Distributor, be converted into Class S shares. This purchase program is subject
to such administrative policies, regarding the qualification of purchasers and
any other matters, as may be adopted by the Distributor from time to time.
Class T Shares. MetLife Securities Money Fund Class T shares are for
---------------
accounts available through Metropolitan and its affiliates.
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
II-15
<PAGE>
security holders.
In-Kind Purchase Option. In the discretion of the Investment Manager,
------------------------
shares of the Fund may be offered for purchase partly or entirely in exchange
for securities. This option is available only in very limited circumstances.
The Investment Manager will not approve the acceptance of any securities in
exchange for Fund shares unless it believes the securities are appropriate
investments for the Fund.
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.
Systematic Withdrawal Plan. A shareholder who owns noncertificated Class E
---------------------------
or Class S shares with a value of $5,000 or more, or Class B(1), Class B or
Class C 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 of the Fund shall be credited to
participating shareholders in additional shares of the Fund. Thus, the
withdrawal amounts paid can only be realized by redeeming shares of the Fund
under the Plan. To the extent such amounts paid exceed dividends and
distributions from the Fund, a shareholder's investment will decrease and may
eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales
charges, no such charges will be imposed on withdrawals of up to 12% annually
(minimum $50 per withdrawal) of either (a) the value, at the time the Systematic
Withdrawal 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 Systematic Withdrawal Plan was initiated, whichever is higher.
Expenses of the Systematic Withdrawal Plan are borne by the Fund. A
participating shareholder may withdraw from the Systematic Withdrawal Plan, and
the Fund may terminate the Systematic Withdrawal Plan at any time on written
notice. Purchase of additional shares while a shareholder is receiving payments
under a Systematic Withdrawal Plan is ordinarily disadvantageous because of
duplicative sales charges. For this reason, a shareholder may not participate in
the Investamatic Program (see "Your Investment--Investor Services--Investamatic
Program" in the Fund's Prospectus) and the Systematic Withdrawal Plan at the
same time.
Request to Dealer to Repurchase. For the convenience of shareholders, the
--------------------------------
Fund has authorized the Distributor as its agent to accept orders from
broker-dealers by wire or telephone for the repurchase of shares by the
Distributor from the broker-dealer. The Fund may revoke or suspend this
authorization at any time. The repurchase price is the net asset value for the
applicable shares next determined following the time at which the shares are
offered for repurchase by the dealer to the Distributor. The broker-dealer is
responsible for promptly transmitting a shareholder's order to the Distributor.
Under certain pre-established operational arrangements, the price may be
determined as of the time the order is received by the broker-dealer or its
designee.
II-16
<PAGE>
Signature Guarantees. Signature guarantees are required for, among other
---------------------
things: (1) written requests for redemptions for more than $100,000; (2) written
requests for redemptions for any amount if the proceeds are transmitted to other
than the current address of record (unchanged in the past 30 days); (3) written
requests for redemptions for any amount submitted by corporations and certain
fiduciaries and other intermediaries; (4) requests to transfer the registration
of shares to another owner; and (5) if checkwriting is available for the
account, 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 in
certain instances.
Dishonored Checks. If a purchaser's 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 canceled.
Processing Charges. Purchases and redemptions processed through securities
-------------------
dealers may be subject to processing charges imposed by the securities dealer in
addition to sales charges that may be imposed by the Fund or the Distributor.
Special Procedures for Institutional Accounts. To facilitate the timely
----------------------------------------------
processing of investments, institutions may establish special bank accounts and
other direct arrangements with the Fund's custodian bank, subject to related
charges by the custodian bank payable directly by the institution.
Institutional accounts with $50,000,000 or more in shares of the Fund,
that submit purchase orders and funds which are received in good order by not
later than 2:30 p.m., may earn a dividend for that day on the shares purchased.
Institutional accounts with $50,000,000 or more in shares of the Fund,
that submit redemption requests which are received in good order by not later
than 2:30 p.m., may arrange for the proceeds of the redemption to be wired out
on the same day.
E. Shareholder Accounts
General information on shareholder accounts is included in the Fund's
Prospectus under "Your Investment." The following supplements that information.
Maintenance Fees and Involuntary Redemption. Because of the relatively
--------------------------------------------
high cost of maintaining small shareholder accounts, the Fund reserves the right
to 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
involuntarily 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
II-17
<PAGE>
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 (the "SEC") may by order
permit for the protection of investors; and (b) the payment of redemption
proceeds may be postponed as otherwise provided under "Purchase and Redemption
of Shares" in this Statement of Additional Information.
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 through
dealers, by wire or by mailing a check payable to "State Street
Research Funds" under the terms set forth above under "Purchase and
Redemption of Shares" in this Statement of Additional Information.
2. The following methods of receiving dividends from investment income
and distributions from capital gains generally 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 as described
II-18
<PAGE>
below. See "--Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, 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 the
Service Center. Dividends and distributions are reinvested at net asset value
without a sales charge.
Requests by Check. 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
currently is 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.
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 the Service Center.
Canceled 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.
Exchange Privileges. 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(1), Class B and
Class C 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
II-19
<PAGE>
purposes of computing the contingent deferred sales charge that may be payable
upon disposition of any acquired Class A, Class B(1), Class B and Class C
shares, the holding period of the redeemed shares is "tacked" to the holding
period of any 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. Class T shares may not be exchanged into
shares of any other Eligible Fund, and no shares of any other Eligible Fund may
be exchanged into Class T shares.
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 with
respect to the Fund (see "Your Investment--Account Policies--Telephone Requests"
in the Fund's Prospectus and "--Telephone and Internet Privileges," below) as
the existing account unless the Service Center 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.
Reinvestment Privilege. A shareholder of the Fund who has redeemed shares
-----------------------
or had shares repurchased at his or her request may reinvest all or any portion
of the proceeds (plus that amount necessary to acquire a fractional share to
round off his or her reinvestment to full 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 120 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 the Service
Center of such shareholder's written purchase request and delivery of the
request by the Service Center to the Transfer Agent. A shareholder may exercise
this reinvestment privilege only once per 12-month period with respect to his or
her shares of the Fund.
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
dividends and distributions are directed is initially funded with the requisite
minimum amount.
II-20
<PAGE>
Telephone and Internet Privileges. The following privileges are available:
----------------------------------
o Telephone Exchange Privilege for Shareholder and Shareholder's
Financial Professional
o Shareholders automatically receive this privilege unless
declined.
o This privilege allows the shareholder or the shareholder's
financial professional to request exchanges into other State
Street Research funds.
o Telephone Redemption Privilege for Shareholder
o Shareholders automatically receive this privilege unless
declined.
o This privilege allows the shareholder to phone requests to
sell shares, with the proceeds sent to the address of record.
o Telephone Redemption Privilege for Shareholder's Financial
Professional
o Shareholders automatically receive this privilege unless
declined.
o This privilege allows the shareholder's financial professional
to phone requests to sell shares, with the proceeds to be sent
to the address of record on the account.
o Internet Privilege for Shareholder
o Shareholders may access the Fund's Web site to enter
transactions and for other purposes, subject to acceptance of
the important conditions set forth on the Web site.
A shareholder with the above telephone privileges is deemed to authorize
the Service Center and the Transfer Agent to: (1) act upon the telephone
instructions of any person purporting to be any of the shareholders of an
account or a shareholder's financial professional to redeem or exchange, shares
from any account; and (2) honor any written instructions for a change of address
regardless of whether such request is accompanied by a signature guarantee. All
telephone calls will be recorded. Neither the Fund, the other Eligible Funds,
the Transfer Agent, the Investment Manager nor 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.
Alternative Means of Contacting the Fund. It is unlikely, during periods
-----------------------------------------
of extraordinary market conditions, that a shareholder may have difficulty in
reaching the Service Center. In that event, however, the shareholder should
contact the Service Center at 1-800-562-0032, 1-617-357-7800 or otherwise at its
main office at One Financial Center, Boston, Massachusetts 02111-2690.
F. Net Asset Value
II-21
<PAGE>
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 2:30 p.m. and the close of regular
trading on the NYSE, which is ordinarily 4 P.M. New York City time. The NYSE is
currently closed on New Year's Day, Martin Luther King, Jr., 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 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
II-22
<PAGE>
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 397 calendar days 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.
G. 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 397 calendar days 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.
II-23
<PAGE>
Brokerage Allocation
--------------------
The Investment Manager's policy is to seek for its clients, including the
Fund, what in the Investment Manager's judgment will be the best overall
execution of purchase or sale orders and the most favorable net prices in
securities transactions consistent with its judgment as to the business
qualifications of the various broker or dealer firms with whom the Investment
Manager may do business, and the Investment Manager may not necessarily choose
the broker offering the lowest available commission rate. Decisions with respect
to the market where the transaction is to be completed, to the form of
transaction (whether principal or agency), 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 their
proven integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to particular
markets or securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their willingness
to commit capital, and their clearance and settlement capability. The Investment
Manager makes every effort to keep informed of commission rate structures and
prevalent bid/ask spread characteristics of the markets and securities in which
transactions for the Fund occur. Against this background, the Investment Manager
evaluates the reasonableness of a commission or a net price with respect to a
particular transaction by considering such factors as difficulty of execution or
security positioning by the executing firm. The Investment Manager may or may
not solicit competitive bids based on its judgment of the expected benefit or
harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may also be
given by the Investment Manager to services other than execution services which
certain of such firms have provided in the past or may provide in the future.
Negotiated commission rates and prices, however, are based upon the Investment
Manager's judgment of the rate which reflects the execution requirements of the
transaction without regard to whether the broker provides services in addition
to execution. Among such other services are the supplying of supplemental
investment research; general economic, political and business information;
analytical and statistical data; relevant market information, quotation
equipment and services; reports and information about specific companies,
industries and securities; purchase and sale recommendations for stocks and
bonds; portfolio strategy services; historical statistical information; market
data services providing information on specific issues and prices; financial
publications; proxy voting data and analysis services; technical analysis of
various aspects of the securities markets, including technical charts; computer
hardware used for brokerage and research purposes; computer software and
databases (including those contained in certain trading systems and used for
portfolio analysis and modeling and also including software providing investment
personnel with efficient access to current and historical data from a variety of
internal and external sources) and portfolio evaluation services and relative
performance of accounts.
In the case of the Fund and other registered investment companies advised
by the Investment Manager or its affiliates, the above services may include data
relating to performance, expenses and fees of those investment companies and
other investment companies. This information is used by the Trustees or
Directors of the investment companies
II-24
<PAGE>
to fulfill their responsibility to oversee the quality of the Investment
Manager's advisory contracts between the investment companies and the Investment
Manager. The Investment Manager considers these investment company services only
in connection with the execution of transactions on behalf of its investment
company clients and not its other clients. Certain of the nonexecution services
provided by broker-dealers may in turn be obtained by the broker-dealers from
third parties who are paid for such services by the broker-dealers.
The Investment Manager regularly reviews and evaluates the services
furnished by broker-dealers. The Investment Manager's investment management
personnel seek to evaluate the quality of the research and other services
provided by various broker-dealer firms, and the results of these efforts are
made available to the equity trading department, which uses this information as
consideration to the extent described above in the selection of brokers to
execute portfolio transactions.
Some services furnished by broker-dealers may be used for research and
investment decision-making purposes, and also for marketing or administrative
purposes. Under these circumstances, the Investment Manager allocates the cost
of the services to determine the proportion which is allocable to research or
investment decision-making and the proportion allocable to other purposes. The
Investment Manager pays directly from its own funds for that portion allocable
to uses other than research or investment decision-making. Some research and
execution services may benefit the Investment Manager's clients as a whole,
while others may benefit a specific segment of clients. Not all such services
will necessarily be used exclusively in connection with the accounts which pay
the commissions to the broker-dealer providing the services.
The Investment Manager has no fixed agreements or understandings with any
broker-dealer as to the amount of brokerage business which the firm may expect
to receive for services supplied to the Investment Manager 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 an
allocation of a specified amount of brokerage business. These understandings are
honored to the extent possible in accordance with the policies set forth above.
It is not the Investment Manager's policy to intentionally pay a firm a
brokerage commission higher than that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services) provided. However, the Investment Manager is aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, the Investment Manager relies on the provisions of
Section 28(e) of the Securities Exchange Act of 1934.
In the case of the purchase of fixed income securities in underwriting
transactions, the Investment Manager follows any instructions received from its
clients as to the allocation of new issue discounts, selling commissions and
designations to brokers or dealers which provide the client with research,
performance evaluation, master trustee and other services. In the absence of
instructions from the client, the Investment Manager may make such allocations
to
II-25
<PAGE>
broker-dealers which have provided the Investment Manager with research and
brokerage services.
In some instances, certain clients of the Investment Manager request it to
place all or part of the orders for their account with certain brokers or
dealers, which in some cases provide services to those clients. The Investment
Manager generally agrees to honor these requests to the extent practicable.
Clients may request that the Investment Manager only effect transactions with
the specified broker-dealers if the broker-dealers are competitive as to price
and execution. Where the request is not so conditioned, the Investment Manager
may be unable to negotiate commissions or obtain volume discounts or best
execution. In cases where the Investment Manager is requested to use a
particular broker-dealer, different commissions may be charged to clients making
the requests. A client who requests the use of a particular broker-dealer should
understand that it may lose the possible advantage which non-requesting clients
derive from aggregation of orders for several clients as a single transaction
for the purchase or sale of a particular security. Among other reasons why best
execution may not be achieved with directed brokerage is that, in an effort to
achieve orderly execution of transactions, execution of orders that have
designated particular brokers may, at the discretion of the trading desk, be
delayed until execution of other non-designated orders has been completed.
When more than one client of the Investment Manager is seeking to buy or
sell the same security, the sale or purchase is carried out in a manner which is
considered fair and equitable to all accounts. In allocating investments among
various clients (including in what sequence orders for trades are placed), the
Investment Manager will use its best business judgment and will take into
account such factors as the investment objectives of the clients, the amount of
investment funds available to each, the size of the order, the relative sizes of
the accounts, the amount already committed for each client to a specific
investment and the relative risks of the investments, all in order to provide on
balance a fair and equitable result to each client over time.
In addition, when the Investment Manager is seeking to buy or sell the
same security on behalf of more than one client at approximately the same time,
the Investment Manager may follow the practice of grouping orders of various
clients for execution to get the benefit of lower prices or commission rates.
Although sharing large transactions may sometimes affect price or volume of
shares acquired or sold, the Investment Manager believes that grouping orders
generally provide an advantage in execution. Where an aggregate order is
executed in a series of transactions at various prices on a given day, each
participating account's proportionate share of such order will reflect the
average price paid or received with respect to the total order. The Investment
Manager may decide not to group orders, however, based on such factors as the
size of the account and the size of the trade. For example, the Investment
Manager may not aggregate trades where it believes that it is in the best
interest of clients not to do so, including situations where aggregation might
result in a large number of small transactions with consequent increased
custodial and other transactional costs which may disproportionately impact
smaller accounts. Such disaggregation, depending on the circumstances, may or
may not result in such accounts receiving more or less favorable overall
execution (including transactions costs) relative to other clients.
II-26
<PAGE>
The Investment Manager has developed certain internal policies governing
its short sale trading activities, including prior notification in certain
circumstances to portfolio managers of accounts holding long positions in the
same security. Generally, however, sales of long positions will take precedence
over short sales, regardless of the order in which the trade orders are
received.
Subject to the policy of seeking best overall price and execution as
stated above, sales of shares of investment companies under the Investment
Manager's management may be considered by the Investment Manager in the
selection of broker or dealer firms to execute portfolio transactions for
investment companies under its management.
H. Certain Tax Matters
Taxation of the Fund--In General
--------------------------------
The Fund intends to qualify and elects 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 qualify to 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"); and (b) satisfy certain
diversification requirements on a quarterly basis.
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
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 (or deemed 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, or be deemed to have distributed, an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain
extraordinary losses) for the 12-month period ending on October 31 of the
calendar year and (3) all ordinary income and capital gains for previous years
that were not distributed during such years. For this purpose, any income or
gain retained by the Fund that is subject to corporate tax will be considered to
have been distributed by year-end. The Fund intends to make sufficient
distributions to avoid this 4% excise tax.
II-27
<PAGE>
Taxation of the Fund's Shareholders
-----------------------------------
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, 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 capital gains, regardless of how long shareholders have held
their shares.
The foregoing discussion of United States federal income tax law relates
solely to the application of that law to United States persons, that is, United
States citizens and residents and United States corporations, partnerships,
trusts and estates. Each shareholder who is not a United States person should
consider the United States and foreign tax consequences of ownership of shares
of the Fund, including the possibility that such a shareholder may be subject to
United States withholding tax at a rate of up to 30% (or at a lower rate under
an applicable treaty) on distributions from the Fund.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this Statement of Additional Information
in light of their particular tax situations.
I. Distribution of Shares of the Fund
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(1), Class B and Class C
shares). The Distributor may allow all or portions of such sales charges as
concessions to dealers.
II-28
<PAGE>
Plan(s) of Distribution Pursuant to Rule 12b-1
----------------------------------------------
The Fund may have one or more Distribution Plans under Rule 12b-1, as set
forth in Section I of this Statement of Additional Information for the Fund.
Under the Fund's Distribution Plans, the Fund may engage, directly or
indirectly, in financing any activities primarily intended to result in the sale
of shares, including, but not limited to, (1) the payment of commissions to
underwriters, securities dealers and others engaged in the sale of shares,
including payments to the Distributor to be used to pay commissions to
securities dealers (which securities dealers may be affiliates of the
Distributor), (2) expenditures incurred by the Distributor in connection with
the distribution and marketing of shares and the servicing of investor accounts,
and (3) expenses incurred by the Distributor in connection with the servicing of
shareholder accounts including payments to securities dealers and others for the
provision of personal service to investors and/or the maintenance or servicing
of shareholder accounts. In addition, the Distribution Plans authorize the
Distributor and the Investment Manager to make payments out of management fees,
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 an indirect financing of any activity primarily
resulting in the sale of shares of the Fund within the scope of Rule 12b-1 under
the 1940 Act. Payments by the Fund under the Distribution Plan may be
discontinued at any time. The Distributor may also voluntarily waive receipt of
payments from the Fund from time to time.
A rule of the National Association of Securities Dealers, Inc. ("NASD")
limits annual expenditures that the Fund may incur to 0.75% for distribution
expenses and 0.25% for service fees. The NASD Rule also limits the aggregate
amount that 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 the
service fees.
Some or all of the service fees are used to pay or reimburse dealers
(including dealers that are affiliates of the Distributor) or others 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 or servicing of
shareholder accounts by such dealers. The distribution fees are used primarily
to offset initial and ongoing commissions paid to dealers for selling such
shares and for other sales and marketing expenditures. Dealers who have sold
Class A shares are eligible for ongoing payments commencing as of the time of
such sale. Dealers who have sold Class B(1), Class B and Class C shares are
eligible for ongoing payments 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).
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.
II-29
<PAGE>
The payment of service and distribution fees may continue even if the Fund
ceases, temporarily or permanently, to sell one or more classes of shares to new
accounts. During the period the Fund is closed to new accounts, the distribution
fee will not be used for promotion expenses. The service and distribution fees
are used during a closed period to cover services provided to current
shareholders and to cover the compensation of financial professionals in
connection with the prior sale of Fund shares, among other non-promotional
distribution expenditures.
The Distributor may pay certain dealers and other intermediaries
additional compensation for sales and administrative services. The Distributor
may provide cash and noncash incentives to intermediaries who, for example, sell
significant amounts of shares or develop particular distribution channels. The
Distributor may compensate dealers with clients who maintain their investments
in the Fund over a period of years. The incentives can include merchandise and
trips to, and attendance at, sales seminars at resorts. The Distributor may pay
for administrative services, such as technological and computer systems support
for the maintenance of pension plan participant records, for subaccounting and
for distribution through mutual fund supermarkets or similar arrangements.
No interested Trustee of the Trust has any direct or indirect financial
interest in the operation of the Distribution Plans. The Distributor's interest
in the Distribution Plans is described above.
J. Calculation of Performance Data
From time to time, in advertisements or in communications to shareholders
or prospective investors, the Fund may compare the performance of its Class B,
Class B(1), Class C, Class E, Class S or Class T shares to the performance 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 and averages such as those compiled by Lipper Analytical
Services, Inc. for the Money Market Instrument Fund category or those complied
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 average annual total return ("standard total return") of the Class B,
Class B(1) Class C, Class E, Class S and Class T shares of the Fund will be
calculated as set forth below. Total return is computed separately for each
class of shares of the Fund.
Standard total return is computed separately for each class of shares by
determining the average annual compounded rates of return over the designated
periods that, if applied to the initial amount invested, would produce the
ending redeemable value in accordance with the following formula:
II-30
<PAGE>
<TABLE>
<CAPTION>
P(1+T)^n = ERV
<S> <C> <C>
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
</TABLE>
The calculation is based on the further assumptions that the highest
applicable initial or contingent deferred sales charge 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 later herein.
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(1), Class B,
Class C, Class E, Class S and Class T 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 compounded effective yield for each of the Fund's Class
B(1), Class B, Class C, Class E, Class S and Class T 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
carry forward will be distributed to shareholders of the Fund from time to time
as is deemed appropriate in
II-31
<PAGE>
maintaining the Fund's net asset value at one dollar per share.
Accrued Expenses and Recurring Charges
--------------------------------------
Accrued expenses include all recurring charges that are charged to all
shareholder accounts in proportion to the length of the base period. The
standard total return results take sales charges, if applicable, into account
although the results do not take into account recurring and nonrecurring charges
for optional services which only certain shareholders elect and which involve
nominal fees, such as the $7.50 fee for wire orders.
Accrued expenses do not include the subsidization, if any, by affiliates
of fees or expenses during the subject period. In the absence of such
subsidization, the performance of the Fund would have been lower.
Nonstandardized Total Return
----------------------------
The Fund may provide the above described standard total return results for
Class B(1), Class B, Class C, Class E, Class S and Class T shares for periods
which end no earlier than the most recent calendar quarter end and which begin
one, five and ten years before. In addition, the Fund may provide
nonstandardized total return results for differing periods, such as for the most
recent six months, and/or without taking sales charges into account. Such
nonstandardized total return is computed as otherwise described under "Total
Return" except the result may or may not be annualized, and, as noted, any
applicable sales charge, if any, may not be taken into account and therefore not
deducted from the hypothetical initial payment of $1,000.
K. 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.
L. Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, serves as the Trust's independent accountants, providing professional
services including (1) audits of the Fund's annual financial statements, (2)
assistance and consultation in connection with SEC filings and (3) review of the
annual income tax returns filed on behalf of the Fund.
II-32
<PAGE>
M. 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 through electronic or other media. Shareholders with substantial holdings
in one or more State Street Research Funds may also receive reports and other
information which reflect or analyze their positions in a consolidated manner.
For more information, call the State Street Research Service Center.
II-33
<PAGE>
STATE STREET RESEARCH MONEY MARKET TRUST
PART C
OTHER INFORMATION
Item 23. Exhibits
(1)(a) Second Amended and Restated Master Trust Agreement, Amendment
No. 1 and Amendment No. 2 (12)
(1)(b) Amendment No. 3 to Second Amended and Restated Master
Trust Agreement (13)
(1)(c) Amendment No. 4 to Second Amended and Restated Master Trust
Agreement (16)
(1)(d) Amendment No. 5 to Second Amended and Restated Master Trust
Agreement
(2)(a) Amended and Restated By-Laws of the Registrant (1)***
(2)(b) Amendment No. 1 to Amended and Restated By-Laws effective
September 30, 1992 (9)***
(3) Not applicable
(4) Deleted
(5)(a) Advisory Agreement with MetLife - State Street Investment
Services, Inc. (2)*,***
C-1
<PAGE>
(5)(c) Transfer and Assumption of Responsibilities and Rights relating
to the Advisory Agreement between State Street Financial
Services, Inc. and State Street Research & Management Company
(9)*,***
(6)(a) First Amended and Restated Distribution Agreement with State
Street Research Investment Services, Inc.(14)
(6)(b) Form of Selected Dealer Agreement (12)
(6)(c) Form of Bank and Bank-Affiliated Broker-Dealer Agreement (12)
(6)(d) Form of Supplement No. 1 to Selected Dealer Agreement (13)
(7) Not applicable
(8)(a) Custodian Contract with State Street Bank and Trust Company
(2)***
(8)(a)(i)Amendment to the Custodian Contract with State Street Bank
and Trust Company (5)***
(8)(a)(ii)Amendment to the Custodian Contract with State Street Bank
and Trust Company(14)
(8)(b) Data Access Services Addendum to Custodian Contract (16)
(9) Not applicable (9)
(10) Opinion and consent of Goodwin, Procter & Hoar (2)***
(11) Consent of PricewaterhouseCoopers LLP
(12) Not applicable
(13)(a) Purchase Agreement and Investment Letter (2)***
(13)(b) Purchase Agreement and Investment Letter (2)***
(14)(a) Deleted
(14)(b) Deleted
(14)(c) Deleted
(15)(a) Plan of Distribution Pursuant to Rule 12b-1 (10)***
(15)(b) Amendment No. 1 to Plan of Distribution Pursuant to
Rule 12b-1 (11)***
(15)(c) Rule 12b-1 Plan for Class B(1) Shares (16)
(16)(a) Deleted
(16)(b) Deleted
(17)(a) First Amended and Restated Multiple Class Expense
Allocation Plan (13)
(17)(b) Addendum to First Amended and Restated Multiple Class Expense
Allocation Plan (16)
(17)(c) State Street Research & Management Company Code of Ethics
C-2
<PAGE>
(18)(a) Powers of Attorney (12)
(18)(b) Power of Attorney for Susan M. Phillips (16)
(18)(c) Power of Attorney for Bruce R. Bond (16)
(18)(d) Power of Attorney for Gerard P. Maus
(19) Certificate of Board Resolution Respecting Powers of
Attorney(16)
(20) Application Forms(14)
----------
* MetLife - State Street Investment Services, Inc. changed its name to State
Street Financial Services, Inc. effective as of June 18, 1992, and
subsequently changed its name to State Street Research Investment Services,
Inc. effective October 28, 1992. Documents in this listing of Exhibits
which were effective prior to the most recent name change accordingly refer
to MetLife - State Street Investment Services, Inc. or State Street
Financial Services, Inc.
** The MetLife - State Street Money Market Fund changed its name to MetLife -
State Street Research Money Market Fund effective as of August 1, 1994, and
to State Street Research Money Market Fund effective August 1, 1995.
Documents in this listing of Financial Statements and Exhibits which were
effective prior to the most recent name change accordingly refer to a
former name of the Series.
*** Restated in electronic format in Post-Effective Amendment No. 12 filed on
July 31, 1997
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
<TABLE>
<CAPTION>
Footnote Securities Act of 1933
Reference Registration/Amendment Date Filed
--------- ---------------------- ----------
<S> <C> <C>
1 Pre-Effective Amendment No. 3 March 25, 1986
2 Pre-Effective Amendment No. 4 July 18, 1986
3 Post-Effective Amendment No. 1 April 30, 1987
4 Post-Effective Amendment No. 2 July 21, 1988
5 Post-Effective Amendment No. 3 July 17, 1989
6 Post-Effective Amendment No. 4 June 1, 1990
7 Post-Effective Amendment No. 5 May 30, 1991
8 Post-Effective Amendment No. 6 August 1, 1992
9 Post-Effective Amendment No. 7 April 1, 1993
10 Post-Effective Amendment No. 8 June 1, 1993
11 Post-Effective Amendment No. 9 July 15, 1994
12 Post-Effective Amendment No. 10 July 28, 1995
13 Post-Effective Amendment No. 11 July 29, 1996
14 Post-Effective Amendment No. 12 July 31, 1997
15 Post-Effective Amendment No. 14 June 7, 1998
16 Post-Effective Amendment No. 15 July 30, 1999
</TABLE>
C-3
<PAGE>
Item 24. Not applicable
C-4
<PAGE>
Item 25. Indemnification
Under Article VI of the Registrant's Second Amended and Restated Master Trust
Agreement, as further amended ("Master Trust Agreement") each of its Trustees
and officers or persons serving in such capacity with another entity at the
request of the Registrant ("Covered Person") shall be indemnified against all
liabilities, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in whcih such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office of thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office (such conduct
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before which the proceeding was brought that
the person to be indemnified was not liable by reason of Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Registrant as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion.
Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's distributor, the Registrant
has agreed to indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may hereafter be an office,
director, employee or agent of State Street Research Investment Services, Inc.
against any loss, damage or expense reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon a violation of any of its covenants herein contained or
any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statments made
not misleading, in a Registration Statement or Prospectus of the Registrant, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written information furnished by State Street Research
Investment Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to trustees, officers, underwriters
and controlling persons of the Registrant, pursuant to Article VI of the
Registrant's Master Trust Agreement, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of an action, suit or proceeding) is asserted against the
Registration by such trustee, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
C-5
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a substantial
nature in which each investment adviser of the Registrant, and each director,
officer or partner of any such investment adviser, is or has been, at any time
during the past two fiscal years, engaged for his own account or in the capacity
of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Research & Investment Adviser Various investment advisory Boston, MA
Management Company clients
Abbott, Christopher C. Senior Managing Pioneer Investment Mgmt. Boston, MA
Executive Vice Director
President (until 10/99)
Bangs, Linda L. None
Vice President
Barghaan, Dennis C. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Senior Vice President Metropolitan Life Insurance Company New York, NY
(until 12/98)
Barnwell, Amy F. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Beatty, T. Kevin Vice President Fleet Investment Advisors Boston, MA
Vice President (until 9/99)
Bigley, Gary M. None
Vice President
Bochman, Kathleen M. None
Vice President
Borzilleri, John Vice President State Street Research Financial Trust Boston, MA
Senior Vice President
Bray, Michael J. None
Senior Vice President
Brezinski, Karen None
Vice President
Brown, Susan H. None
Vice President
Buffum, Andrea L. None
Vice President
Burbank, John F. None
Senior Vice President
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Calame, Mara D. Vice President, Assistant State Street Research Investment Services, Inc. Boston, MA
Vice President, Clerk and Counsel
Assistant Secretary Assistant Secretary State Street Research Institutional Funds Boston, MA
and Assistant Counsel
Carley, Linda C. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President Assistant Secretary State Street Research Institutional Funds Boston, MA
Carstens, Linda C. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Senior Vice President
Coleman, Thomas J. None
Vice President
Cullen, Terrence J. Vice President, Assistant State Street Research Investment Services, Inc. Boston, MA
Vice President, Clerk and Counsel
Assistant Secretary
and Assistant Counsel
D'Vari, Ronald None
Senior Vice President
Depp, Maureen G. None
Vice President
DeVeuve, Donald None
Vice President
Dudley, Catherine Vice President State Street Research Capital Trust Boston, MA
Senior Vice President Vice President State Street Research Institutional Funds Boston, MA
Duggan, Peter J. None
Senior Vice President
Ebel, Bruce A.
Senior Vice President Vice President Loomis, Sayles & Company, L.P. Chicago, IL
(since 3/99)
Vice President State Street Research Institutional Funds Boston, MA
Vice President State Street Research Financial Trust Boston, MA
Even, Karen L. None
Vice President
Fazo, Steven A. None
Vice President
Federoff, Alex G. None
Senior Vice President
(Vice President until 4/00)
Fee, Richard E. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Feliciano, Rosalina None
Vice President
Feeney, Kimberley Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Ficco, Bonnie A. None
Vice President
Fochtman, Jr., Leo None
Vice President
Forcione, Anthony F. None
Frey, Kenneth Analyst The Boston Company Boston, MA
Vice President (until 10/99)
Frank, Christopher
Vice President
Gallivan Jr., Edward T. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Gardner, Michael D. None
Senior Vice President
Geer, Bartlett R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Giroux, June M. None
Vice President
Goganian, David H. Vice President Scudder Kemper Investments Boston, MA
Vice President (until 6/99)
Vice President State Street Research Investment Services, Inc. Boston, MA
Goodman, Stephanie B. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Govoni, Electra None
Vice President
Grace, Evan S. None
Vice President
Granger, Allison None
Vice President
Hadelman, Peter J. Vice President Pioneer Investment Management Boston, MA
Vice President (until 5/00)
Haggerty, Bryan D. None
Vice President
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
Treasurer and Director North Conway Institute Boston, MA
Hasson, Ira P. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Haverty, Jr., Lawrence J. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
Heineke, George R. None
Vice President
Hickman, Joanne Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Senior Vice President
Holland, Thomas Senior Vice President Putnam Investments Boston, MA
Vice President (until 6/99)
Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Jackson, Jr., F. Gardner Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Trustee Certain trusts of related and
non-related individuals
Trustee and Chairman of the Vincent Memorial Hospital Boston, MA
Board
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Joseph, Robert I. None
Vice President
Kallis, John H. Vice President State Street Research Financial Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Institutional Funds Boston, MA
Vice President State Street Research Money Market Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Kasper, M. Katherine Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Keelan, David E.
Vice President
Keen, Miyeko C. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Kiessling, Dyann H. Vice President State Street Research Money Market Trust Boston, MA
Vice President
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
(Vice President
until 4/99)
Kuhn, Stephen P. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Langholm, Knut Director SSR Pegasus Funds Luxembourg
Senior Vice President
(Vice President
until 4/99)
Leary, Eileen M. None
Vice President
Ledbury, Richard D. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Lomasney, Mary T. None
Vice President
Lubas, Amy C.
Vice President
Marinella, Mark A. Portfolio Manager STW Fixed Income Management, Ltd. Boston, MA
Senior Vice President (Until 8/98)
Vice President State Street Research Institutional Funds Boston, MA
Markel, Gregory S. None
Vice President
Marsh, Eleanor H. Portfolio Manager Evergreen Investment Management Company Boston, MA
Vice President (Until 3/00)
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Maus, Gerard P. Chairman, President, Chief Executive State Street Research Equity Trust Boston, MA
Director, Executive Officer, Trustee and Treasurer
Vice President Chairman, President, Chief Executive State Street Research Income Trust Boston, MA
Treasurer, Chief Officer, Trustee and Treasurer
Financial Officer and Chairman, President, Chief Executive State Street Research Tax-Exempt Trust Boston, MA
Chief Administrative Officer, Trustee and Treasurer
Officer Chairman, President, Chief Executive State Street Research Capital Trust Boston, MA
Officer, Trustee and Treasurer
Chairman, President, Chief Executive State Street Research Exchange Trust Boston, MA
Officer, Trustee and Treasurer
Chairman, President, Chief Executive State Street Research Growth Trust Boston, MA
Officer, Trustee and Treasurer
Chairman, President, Chief Executive State Street Research Master Boston, MA
Officer, Trustee and Treasurer Investment Trust
Chairman, President, Chief Executive State Street Research Institutional Boston, MA
Officer, Trustee and Treasurer Funds
Chairman, President, Chief Executive State Street Research Securities Trust Boston, MA
Officer, Trustee and Treasurer
Chairman, President, Chief Executive State Street Research Money Market Boston, MA
Officer, Trustee and Treasurer Trust
Chairman, President, Chief Executive State Street Research Financial Trust Boston, MA
Officer, Trustee and Treasurer
Director, President, Chief Financial State Street Research Investment Boston, MA
Officer, Chief Administrative Services, Inc.
Officer and Treasurer
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Treasurer and Chief SSRM Holdings, Inc. Boston, MA
Financial Officer
Director SSR Pegasus Funds Luxembourg
McGrath, Ann None
Vice President
McKown, Elizabeth G. Vice President State Street Research Investment Boston, MA
Vice President Services, Inc.
McNamara, III, Francis J. Executive Vice President, State Street Research Investment Boston, MA
Executive Vice Clerk and General Counsel Services, Inc.
President, Secretary Secretary and General Counsel State Street Research Master Boston, MA
and General Counsel Invesment Trust Boston, MA
Secretary and General Counsel State Street Research Capital Trust Boston, MA
Secretary and General Counsel State Street Research Exchange Trust Boston, MA
Secretary and General Counsel State Street Research Growth Trust Boston, MA
Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel State Street Research Equity Trust Boston, MA
Secretary and General Counsel State Street Research Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money
Market Trust Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Secretary and General Counsel State Street Research Institutional
Funds Boston, MA
Moore, Jr., Thomas P. Vice President State Street Research Financial Trust Boston, MA
Senior Vice Vice President State Street Research Equity Trust Boston, MA
President Director Hibernia Savings Bank Quincy, MA
Governor on the Board Association for Investment Management Charlottesville, VA
of Governors and Research
Morey, Andrew F. None
Vice President
Mulligan, JoAnne C. None
Senior Vice President
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
Paddon, Steven W. Vice President State Street Research Investment Boston, MA
Vice President Services, Inc.
Pannell, James C. Vice President State Street Research Institutional Boston, MA
Executive Vice President Funds
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President Vice President State Street Research Institutional Funds Boston, MA
Pierce, James D. None
Vice President
Poritzky, Dean E. None
Senior Vice President
(Vice President
until 4/00)
Ragsdale, E.K. Easton Vice President State Street Research Financial Trust Boston, MA
Senior Vice President
Ransom, Clifford F. None
Vice President
Rawlins, Jeffrey A. Vice President State Street Research Institutional Funds Boston, MA
Senior Vice President
Rice III, Daniel Joseph Vice President State Street Research Equity Trust Boston, MA
Senior Vice President
Rolnick, Michael A. None
Vice President
Romich, Douglas A. Assistant Treasurer State Street Research Equity Trust Boston, MA
Senior Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust Boston, MA
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Institutional Funds Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Vice President and SSRM Holdings, Inc. Boston, MA
Assistant Treasurer
Ryan, Michael J. None
Senior Vice President
Sanderson, Derek None
Senior Vice President
Schrage, Michael M. None
Senior Vice President
(Vice President
until 4/00)
Shean, William G. None
Senior Vice President
(Vice President
until 4/00)
Sheldon, Michael A. None
Vice President
Shively, Thomas A. Vice President State Street Research Financial Trust Boston, MA
Executive Vice Vice President State Street Research Income Trust Boston, MA
President Vice President State Street Research Money Market Trust Boston, MA
(Director until Vice President State Street Research Tax-Exempt Trust Boston, MA
(7/00) Director State Street Research Investment Services, Inc. Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Vice President State Street Research Institutional Funds Boston, MA
Shoemaker, Richard D. None
Senior Vice President
Silverstein, Jill None
Vice President
Simi, Susan None
Vice President
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Simmons, Amy L. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President Assistant Secretary State Street Research Capital Trust Boston, MA
Assistant Secretary State Street Research Exchange Trust Boston, MA
Assistant Secretary State Street Research Growth Trust Boston, MA
Assistant Secretary State Street Research Master Investment Trust Boston, MA
Assistant Secretary State Street Research Securities Trust Boston, MA
Assistant Secretary State Street Research Equity Trust Boston, MA
Assistant Secretary State Street Research Financial Trust Boston, MA
Assistant Secretary State Street Research Income Trust Boston, MA
Assistant Secretary State Street Research Money Market Trust Boston, MA
Assistant Secretary State Street Research Tax-Exempt Trust Boston, MA
Stambaugh, Kenneth D. None
Vice President
Stolberg, Thomas B. None
Vice President
Strelow, Daniel R. None
Senior Vice President
Swanson, Amy McDermott Vice President State Street Research Institutional Funds Boston, MA
Senior Vice President
Tice, Robyn S. None
Vice President
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
Tucher, Anne Senior Analyst J.P. Morgan & Co. New York, NY
Vice President (until 6/00)
Wallace, Julie K. None
Vice President
Walsh III, Denis J. None
Vice President
Walsh, Tucker Vice President State Street Research Capital Trust Boston, MA
Vice President
Weiss, James M. Vice President State Street Research Exchange Trust Boston, MA
Director and Executive Vice President State Street Research Financial Trust Boston, MA
Vice President Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Institutional Funds Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Vice President State Street Research Capital Trust Boston, MA
Vice President State Street Research Equity Trust Boston, MA
Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Director State Street Research Investment Services, Inc. Boston, MA
Welch, Timothy M. None
Vice President
Westvold, Vice President State Street Research Institutional Funds Boston, MA
Elizabeth McCombs Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
Wilkins, Kevin Executive Vice President State Street Research Investment Services, Inc. Boston, MA
Executive Vice President (Senior Vice President
(Senior Vice President until 4/00)
until 4/00)
Wilson, John T. Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice President Vice President State Street Research Institutional Funds Boston, MA
Winandy, Angela Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
---- ---------- ------------ -----------------------
<S> <C> <C> <C>
Wing, Darman A. Senior Vice President, State Street Research Investment Services, Inc. Boston, MA
Senior Vice President, Assistant Clerk & Assistant
Assistant Secretary General Counsel
and Assistant Assistant Secretary and State Street Research Capital Trust Boston, MA
General Counsel Assistant General Counsel
Assistant Secretary and State Street Research Exchange Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Growth Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Master Investment Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Securities Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Equity Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Financial Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Income Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Money Market Trust Boston, MA
Assistant General Counsel
Assistant Secretary and State Street Research Tax-Exempt Trust Boston, MA
Assistant General Counsel
Assistant Secretary and SSRM Holdings, Inc. Boston, MA
Assistant General Counsel
Woodbury, Robert S. None
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Financial Trust Boston, MA
President Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Institutional Funds Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
Yalamanchili, Kishore K. None
Vice President
Yannone, John T. Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President Vice President John Hancock Company Boston, MA
(until 1/00)
Yu, Mandy Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Zuger, Peter A. Vice President State Street Research Equity Trust Boston, MA
Senior Vice Portfolio Manager American Century
President (until 9/98) Investment Management
</TABLE>
C-13
<PAGE>
Item 27. Principal Underwriters
(a) State Street Research Investment Services, Inc. serves as principal
underwriter for State Street Research Equity Trust, State Street Research
Financial Trust, State Street Research Income Trust, State Street Research Money
Market Trust, State Street Research Tax-Exempt Trust, State Street Research
Capital Trust, State Street Research Growth Trust, State Street Research Master
Investment Trust, State Street Research Securities Trust and State Street
Research Institutional Funds.
(b) Directors and Officers of State Street Research Investment Services,
Inc. are as follows:
<TABLE>
<CAPTION>
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ ---------------- ---------------------
<S> <C> <C>
Gerard P. Maus President, Chief Chairman of the Board,
One Financial Center Financial Officer, Chief President, Chief Executive
Boston, MA 02111 Administrative Officer, Officer, Treasurer and
Treasurer and Director Trustee
James M. Weiss Director None
One Financial Center
Boston, MA 02111
Francis J. McNamara, III Executive Vice Secretary
One Financial Center President, General
Boston, MA 02111 Counsel and Clerk
Kevin Wilkins Executive Vice None
One Financial Center President
Boston, MA 02111
Dennis C. Barghaan Senior Vice President None
One Financial Center
Boston, MA 02111
Peter Borghi Senior Vice President None
One Financial Center
Boston, MA 02111
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3)
Positions
Name and Principal and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ ---------------- ---------------------
<S> <C> <C>
Paul V. Daly Senior Vice President None
One Financial Center
Boston, MA 02111
Joanne Hickman Senior Vice Presidnet None
One Financial Center
Boston, MA 02111
Thomas Holland Senior Vice President None
One Financial Center
Boston, MA 02111
Douglas A. Romich Senior Vice President Assistant Treasurer
One Financial Center
Boston, MA 02111
Darman A. Wing Senior Vice President, Assistant Secretary
One Financial Center Assistant General Counsel
Boston, MA 02111 and Assistant Clerk
Amy Barnwell Vice President None
One Financial Center
Boston, MA 02111
Mara D. Calame Vice President, None
One Financial Center Assistant Clerk and
Boston, MA 02111 Counsel
Linda Cook Carley Vice President None
One Financial Center
Boston, MA 02111
Linda C. Carstens Vice President None
One Financial Center
Boston, MA 02111
Terrence J. Cullen Vice President, None
One Financial Center Assistant Clerk
Boston, MA 02111 and Counsel
Richard E. Fee Vice President None
One Financial Center
Boston, MA 02111
Kimberley Feeney Vice President None
One Financial Center
Boston, MA 02111
David Goganian Vice President None
One Financial Center
Boston, MA 02111
Stephanie B. Goodman Vice President None
One Financial Center
Boston, MA 02111
Ira P. Hasson Vice President None
One Financial Center
Boston, MA 02111
M. Katherine Kasper Vice President None
One Financial Center
Boston, MA 02111
C. Miyeko Keen Vice President None
One Financial Center
Boston, MA 02111
Stephen F. Kuhn Vice President None
One Financial Center
Boston, MA 02111
Richard C. Ledbury Vice President None
One Financial Center
Boston, MA 02111
Elizabeth G. McKown Vice President None
One Financial Center
Boston, MA 02111
Stephen W. Paddon Vice President None
One Financial Center
Boston, MA 02111
Amy L. Simmons Vice President Assistant Secretary
One Financial Center
Boston, MA 02111
Evan D. Watts, Jr. Vice President None
One Financial Center
Boston, MA 02111
Angela L. Winandy Vice President None
One Financial Center
Boston, MA 02111
Robert S. Woodbury Vice President None
One Financial Center
Boston, MA 02111
John T. Yannone Vice President None
One Financial Center
Boston, MA 02111
</TABLE>
C-15
<PAGE>
Item 28. Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 29. Management Services
Under a Shareholders' Administrative Services Agreement between the
Registrant 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 series of the
Registrant and received the amounts set forth below:
<TABLE>
<CAPTION>
Year-end Year-end Year-end
Fund 3/31/98 3/31/99 3/31/00
---- ------- ------- -------
<S> <C> <C> <C>
Money Market $87,520 $235,705 $542,363
</TABLE>
Item 30. Undertakings
(a) Deleted.
(b) The Registrant undertakes to hold a special meeting of shareholders of
the Trust for the purpose of voting upon the question of removal of any trustee
or trustees when requested in writing to do so by the record holders of not less
than 10 per centum of the outstanding shares of the Trust and, in connection
with such meeting, to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
C-16
<PAGE>
Notice
A copy of the Second Amended and Restated Master Trust Agreement, as
further amended ("Master Trust Agreement") of the Registrant is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that the obligations of the Registrant hereunder, and the authorization,
execution and delivery of this amendment to the Registrant's Registration
Statement, shall not be binding upon any of the Trustees, shareholders,
nominees, officers, assistant officers, agents or employees of the Registrant as
individuals or personally, but shall bind only the property of the Funds of the
Registrant, as provided in the Master Trust Agreement. Each Fund of the
Registrant shall be solely and exclusively responsible for all of its direct or
indirect debts, liabilities and obligations, and no other Fund shall be
responsible for the same.
C-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 16 to its Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the 28th day of July, 2000.
STATE STREET RESEARCH MONEY
MARKET TRUST
By *
-----------------------------
Gerard P. Maus
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed on the
above date by the following persons in the capacities indicated:
<TABLE>
<CAPTION>
Signature Capacity
--------- --------
<S> <C>
* Trustee, Chairman of the Board and Chief
------------------------------------ Executive Officer (principal executive
Gerard P. Maus officer) and Treasurer (principal
financial and accounting officer)
* Trustee
------------------------------------
Bruce R. Bond
* Trustee
------------------------------------
Steve A. Garban
<PAGE>
* Trustee
------------------------------------
Dean O. Morton
* Trustee
------------------------------------
Susan M. Phillips
* Trustee
------------------------------------
Toby Rosenblatt
* Trustee
------------------------------------
Michael S. Scott Morton
</TABLE>
*By: /s/ Francis J. McNamara, III
------------------------------
Francis J. McNamara, III,
Attorney-in-Fact under Powers of
Attorney filed July 28, 1995, July 30, 1999
and under a Power of Attorney
filed herein.
91755.C2
<PAGE>
1933 Act Registration No. 2-97506
1940 Act File No. 811-4295
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 20 [X]
--------------------
STATE STREET RESEARCH MONEY MARKET TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
--------------------
EXHIBITS
================================================================================
<PAGE>
INDEX TO EXHIBITS
(1)(d) Amendment No. 5 to Second Amended and Restated Master Trust
Agreement
(11) Consent of PricewaterhouseCoopers LLP
(17)(c) State Street Research & Management Company Code of Ethics
(18)(d) Power of Attorney for Gerard P. Maus
