STATE STREET RESEARCH SECURITIES TRUST, N-30D, 1998-06-25

STATE STREET RESEARCH SECURITIES TRUST
N-30D, 1998-06-25

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[cover]
STATE STREET RESEARCH

GALILEO FUND

ANNUAL REPORT

April 30, 1998

WHAT'S INSIDE

Investment Update

About the Fund,
economy and markets

Fund Information

Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[logo]
DALBAR KEY HONORS
COMMITMENT TO:
INVESTORS
1997

For Excellence
in
Shareholder Service

STATE STREET RESEARCH FUNDS

<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------

INVESTMENT ENVIRONMENT

The Economy
[bullet] The first four months of 1998 had continuing solid economic growth,
marked by low inflation and strong investment returns. Unemployment
fell to a 28-year low. Interest rates had little change, and consumer
confidence continued at near-record highs.

[bullet] Favorable economic factors have stimulated a boom in the housing
market and stronger-than-expected retail sales. Lower energy costs
kept inflation in check.

[bullet] Although last year's economic crisis in Southeast Asia raised concerns
about the U.S. exports and profits at multinational companies, the
effects have yet to make a significant impact on corporate
profitability here.

[bullet] Bonds delivered modest gains during the period. High-yield bonds were
among the strongest performers. Mortgage-backed securities held up
well, despite concerns that refinancing could become a negative factor
in the future.

THE FUND

Since the Fund's Inception
[bullet] Since the Fund's commencement of operations on March 11, 1998, Class A
shares of Galileo Fund returned 3.87% [does not reflect sales
charge].(2)

[bullet] Underweighting tobacco and high-yielding stocks helped the Fund's
performance.

[bullet] A larger-than-expected cash position from strong investment inflows
during a rising stock market held back performance for the period.

Current Strategy
[bullet] The Fund invests across the full range of industry sectors represented
in the Russell 1000 Index. Stocks are selected by 16 analysts at State
Street Research, specialists who seek to identify the most promising
securities within each sector. The Fund is structured to approximate
the sector weightings of the Russell 1000 Index.

April 30, 1998

(1)The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The index is unmanaged
and does not take sales charges into account. Direct investment in the index is
not possible; results are for illustrative purposes only.

(2)3.66% for Class B shares; 3.77% for Class C shares; 3.87% for Class S shares.

(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. "S" shares, offered without a sales charge,
are available only through certain employee benefit plans and special programs.

(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5%
"B"share or 1% "C" share contingent deferred sales charges, where applicable.

(5)Aggregate returns; not annualized.

Please note that the discussion throughout this shareholder report is dated as
indicated and, because of possible changes in viewpoint, data and transactions,
should not be relied upon as being current thereafter.

- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended April 30, 1998, except where
noted)
- --------------------------------------------------------------------------------

Aggregate Total Return for period
ended 3/31/98
(at maximum applicable sales charge)(3,4,5)

<TABLE>
<CAPTION>
- -------------------------------
Life of Fund
(since 3/11/98)
- -------------------------------
<S> <C>
Class A -1.60%
- -------------------------------
Class B -1.96%
- -------------------------------
Class C 2.04%
- -------------------------------
Class S 3.04%
- -------------------------------
</TABLE>

Aggregate Total Return
(does not reflect sales charge)(3,5)

<TABLE>
<CAPTION>
- -------------------------------
Life of Fund
(since 3/11/98)
- -------------------------------
<S> <C>
Class A 3.87%
- -------------------------------
Class B 3.66%
- -------------------------------
Class C 3.77%
- -------------------------------
Class S 3.87%
- -------------------------------
</TABLE>

Top 10 Holdings
(by percentage of net assets)

<TABLE>
<S> <C> <C>
1 Warner-Lambert Pharmaceuticals and consumer products 1.8%

2 WorldCom Telecommunication services 1.7%

3 Procter & Gamble Cosmetics & toiletries 1.6%

4 Chase Manhattan Money center banks 1.5%

5 Tyco International Diversified manufacturer 1.4%

6 Banc One Bank holding company 1.3%

7 Rohm & Haas Diversified chemicals 1.3%

8 Pfizer Pharmaceuticals, medical products 1.3%

9 BankAmerica Money center banks 1.2%

10 LCI International Telecommunication services 1.2%
</TABLE>

These securities represent an aggregate of 14.3% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.

Top 5 Industries
(by percentage of net assets)

[bar chart]
<TABLE>
<S> <C>
Banks and Savings & Loans 8.1%
Drugs and Biotechnology 8.1%
Insurance 6.6%
Telecommunications 5.7%
Multi-Sector 4.9%

Total: 33.4%
</TABLE>

Performance results for the Fund are increased by the voluntary reduction of
fund fees and expenses; without subsidization, performance would have been
lower.
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Value
Shares (Note 1)
- -----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 86.9%
Automobiles & Transportation 2.9%
Air Transport 0.5%
America West Holdings Corp. Cl. B ............... 2,800 $ 84,700
-----------
Automobile Parts 0.5%
Magna International, Inc. Cl. A ................. 1,200 89,475
-----------
Miscellaneous Transportation 1.0%
Harley Davidson, Inc. ........................... 4,800 172,800
-----------
Truckers 0.9%
CNF Transportation, Inc. ........................ 4,000 154,500
-----------
Total Automobiles & Transportation ..................... 501,475
-----------
Consumer Discretionary 9.1%
Casinos/Gambling, Hotel/Motel 0.7%
Mirage Resorts, Inc.* ........................... 5,300 116,931
-----------
Commercial Services 2.7%
Cendent Corp.* .................................. 7,900 197,500
Cintas Corp. .................................... 1,400 66,675
USA Waste Services, Inc.* ....................... 3,900 191,344
-----------
455,519
-----------
Consumer Products 0.6%
Avon Products, Inc. ............................. 1,200 98,625
-----------
Consumer Services 0.8%
Apollo Group, Inc. Cl. A* ....................... 4,005 137,171
-----------
Printing & Publishing 0.5%
News Corp. Ltd. ADR ............................. 3,200 87,400
-----------
Retail 2.5%
Dayton Hudson Corp. ............................. 1,800 157,162
Family Dollar Stores, Inc. ...................... 2,700 91,800
Limited, Inc. ................................... 1,500 50,344
Proffitts, Inc.* ................................ 3,400 135,150
-----------
434,456
-----------
Textile/Apparel Manufacturers 0.8%
Warnaco Group, Inc. Cl. A ....................... 3,000 126,750
-----------
Toys 0.5%
Mattel, Inc. .................................... 2,400 91,950
-----------
Total Consumer Discretionary .......................... 1,548,802
-----------
Consumer Staples 7.9%
Beverages 0.8%
Coca-Cola Enterprises, Inc. ..................... 2,100 79,275
PepsiCo, Inc. ................................... 1,600 63,500
-----------
142,775
-----------
Drug & Grocery Store Chains 3.5%
CVS Corp. ....................................... 2,100 $ 154,875
Kroger Co.* ..................................... 2,400 100,500
Rite Aid Corp. .................................. 5,800 186,325
Safeway Inc. .................................... 4,000 153,000
-----------
594,700
-----------
Foods 0.9%
Sara Lee Corp. .................................. 2,500 148,906
-----------
Household Products 2.7%
Colgate-Palmolive Co. ........................... 2,100 188,344
Procter & Gamble Co. ............................ 3,400 279,438
-----------
467,782
-----------
Total Consumer Staples ................................ 1,354,163
-----------
Financial Services 16.8%
Banks & Savings & Loans 8.1%
Banc One Corp. .................................. 3,900 229,369
BankAmerica Corp. ............................... 2,500 212,500
Chase Manhattan Corp. ........................... 1,900 263,269
Mellon Bank Corp. ............................... 2,450 176,400
NationsBank Corp. ............................... 1,200 90,900
Norwest Corp. ................................... 2,800 111,125
State Street Corp. .............................. 1,800 128,700
U.S. Bancorp .................................... 1,400 177,800
-----------
1,390,063
-----------
Insurance 6.6%
General Re Corp. ................................ 800 178,850
Hartford Financial Services Group, Inc. ......... 1,500 166,125
Mutual Risk Management Ltd. ..................... 2,500 84,687
NAC Re Corp. .................................... 1,800 90,000
Saint Paul Cos., Inc. ........................... 1,200 101,700
Travelers Property Casualty Corp. Cl. A ......... 3,000 126,000
UNUM Corp. ...................................... 1,500 80,625
ACE Ltd. ........................................ 4,900 185,587
Mid Ocean Ltd. .................................. 1,600 120,600
-----------
1,134,174
-----------
Miscellaneous Financial 2.1%
Federal National Mortgage Association ........... 2,500 149,687
AMBAC Financial Group, Inc. ..................... 1,800 102,038
Travelers Group, Inc. ........................... 1,600 97,900
-----------
349,625
-----------
Total Financial Services .............................. 2,873,862
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

2
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Value
Shares (Note 1)
- ----------------------------------------------------------------------------
<S> <C> <C>
Health Care 11.1%
Drugs & Biotechnology 8.1%
American Home Products Corp. ................ 1,160 $ 108,025
Bristol-Myers Squibb Co. .................... 1,410 149,284
Merck & Company, Inc. ....................... 1,020 122,910
Novartis AG ADR ............................. 1,200 99,204
Pfizer, Inc. ................................ 1,915 217,951
Schering-Plough, Inc. ....................... 1,420 113,778
Warner-Lambert Co. .......................... 1,600 302,700
Abbott Laboratories ......................... 1,100 80,437
Baxter International, Inc. .................. 1,600 88,700
Johnson & Johnson ........................... 1,400 99,925
-----------
1,382,914
-----------
Health Care Facilities 0.9%
Health Management Associates Cl. A* ......... 2,500 78,750
Tenet Healthcare Corp.* ..................... 1,800 67,387
-----------
146,137
-----------
Health Care Services 0.0%
HBO & Co. ................................... 100 5,981
-----------
Hospital Supply 2.1%
Boston Scientific Corp.* .................... 1,400 101,238
Guidant Corp. ............................... 2,700 180,562
U.S. Surgical Corp. ......................... 2,400 75,600
-----------
357,400
-----------
Total Health Care ...................................... 1,892,432
-----------
Integrated Oils 1.5%
Oil: Integrated Domestic 0.9%
Amerada Hess Corp. .......................... 1,100 63,250
Unocal Corp. ................................ 2,400 98,250
-----------
161,500
-----------
Oil: Integrated International 0.6%
Mobil Corp. ................................. 1,200 94,800
-----------
Total Integrated Oils .................................. 256,300
-----------
Materials & Processing 5.1%
Chemicals 2.9%
BOC Group PLC ADR ........................... 3,900 135,038
Cambrex Corp. ............................... 2,400 133,200
Rohm & Haas Co. ............................. 2,100 226,406
-----------
494,644
-----------
Miscellaneous Materials & Processing 0.7%
Wyman-Gordon Co.* ........................... 5,800 117,450
-----------
Steel 1.5%
Harsco Corp. ................................ 1,800 $ 82,800
British Steel Corp. PLC ADR ................. 3,000 81,562
LTV Corp. ................................... 7,200 93,600
-----------
257,962
-----------
Total Materials & Processing ........................... 870,056
-----------
Other 4.9%
Multi-Sector 4.9%
Cooper Industries, Inc. ..................... 1,400 93,625
General Electric Co. ........................ 2,300 195,787
Tyco International Ltd. ..................... 4,500 245,250
Trinity Industries, Inc. .................... 3,500 178,500
Raytheon Co. Cl. B .......................... 2,100 119,044
-----------
832,206
-----------
Total Other ............................................ 832,206
-----------
Other Energy 3.8%
Oil and Gas Producers 2.3%
Anadarko Petroleum Corp. .................... 1,800 131,850
Burlington Resources, Inc. .................. 2,100 98,700
Oryx Energy Co.* ............................ 2,800 73,150
Vastar Resources, Inc. ...................... 1,800 85,613
-----------
389,313
-----------
Oil Well Equipment & Services 1.5%
Ultramar Diamond Shamrock Co. ............... 2,100 67,856
Schlumberger Ltd. ........................... 1,200 99,450
Valero Energy Corp. ......................... 2,800 90,650
-----------
257,956
-----------
Total Other Energy ..................................... 647,269
-----------
Producer Durables 4.0%
Aerospace 0.8%
Boeing Co. .................................. 2,700 135,169
-----------
Electrical Equipment & Components 0.7%
Philips Electronics NV ...................... 1,400 126,000
-----------
Industrial Products 0.8%
Honeywell, Inc. ............................. 1,400 130,375
-----------
Miscellaneous Equipment 0.5%
Case Corp. .................................. 1,500 95,344
-----------
Office Furniture & Business Equipment 1.2%
Xerox Corp. ................................. 1,800 204,300
-----------
Total Producer Durables ................................ 691,188
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

3
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Value
Shares (Note 1)
- -----------------------------------------------------------------------------
<S> <C> <C>
Technology 10.1%
Communications Technology 2.1%
L.M. Ericsson Telephone Co. ADR Cl. B ......... 3,000 $ 154,313
Network Associates, Inc.* ..................... 1,400 95,900
Tellabs, Inc.* ................................ 1,500 106,313
-----------
356,526
-----------
Computer Software 2.8%
J.D. Edwards & Co.* ........................... 2,100 74,812
i2 Technologies, Inc.* ........................ 1,200 80,100
Microsoft Corp.* .............................. 1,150 103,644
SAP AG ADR .................................... 500 84,940
Checkpoint Software Technologies Ltd.* ........ 4,800 141,000
-----------
484,496
-----------
Computer Technology 1.5%
Cisco Systems, Inc.* .......................... 1,600 117,200
Electronic Data Systems Corp. ................. 600 25,800
Gateway 2000, Inc.* ........................... 1,900 111,506
-----------
254,506
-----------
Electronics: Semi-Conductors/Components 3.7%
Altera Corp.* ................................. 2,100 85,050
Analog Devices, Inc.* ......................... 5,200 202,475
Intel Corp. ................................... 2,200 177,787
Texas Instruments, Inc. ....................... 2,700 172,969
-----------
638,281
-----------
Total Technology ......................................... 1,733,809
-----------
Utilities 9.7%
Electrical 2.4%
DPL Inc. ...................................... 3,500 63,656
Idaho Power Co. ............................... 1,800 64,125
OGE Energy Corp. .............................. 1,600 87,900
Sierra Pacific Resources ...................... 1,800 63,000
Unicom Corp. .................................. 3,700 128,575
-----------
407,256
-----------
Gas Distribution 1.6%
Questar Corp. ................................. 2,800 121,450
Williams Cos., Inc. ........................... 4,800 151,800
-----------
273,250
-----------
Telecommunications 5.7%
US West Media Group* .......................... 3,900 $ 147,225
AirTouch Communications, Inc.* ................ 2,500 132,812
LCI International, Inc.* ...................... 5,200 206,700
Qwest Communications International, Inc.* ..... 5,200 200,525
WorldCom, Inc.* ............................... 6,600 282,357
-----------
969,619
-----------
Total Utilities .......................................... 1,650,125
-----------
Total Common Stocks (Cost $14,565,330) ................... 14,851,687
-----------
</TABLE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Principal Maturity
Amount Date
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER 8.3%
American Express Credit Corp.,
5.51% .............................. $532,000 5/01/1998 532,000
Ford Motor Credit Co., 5.50% ......... 604,000 5/05/1998 604,000
General Electric Capital Corp.,
5.45% .............................. 282,000 5/01/1998 282,000
-----------
Total Commerical Paper (Cost $1,418,000)...................... 1,418,000
-----------
Total Investments (Cost $15,983,330)--95.2%................... 16,269,687
Cash and Other Assets, Less Liabilities--4.8% ................ 828,656
-----------
Net Assets--100.0% ........................................... $17,098,343
===========
</TABLE>

<TABLE>
<S> <C>
Federal Income Tax Information:
At April 30, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $15,986,105 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost .......................................... $516,396
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................ (232,814)
--------
$283,582
========
</TABLE>

- --------------------------------------------------------------------------------
*Nonincome-producing securities

ADR stands for American Depositary Receipt, representing ownership of foreign
securities.

The accompanying notes are an integral part of the financial statements.

4
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<S> <C>
Assets
Investments, at value (Cost $15,983,330) (Note 1) ................. $16,269,687
Cash .............................................................. 39,193
Receivable for fund shares sold ................................... 751,824
Receivable from Distributor (Note 3) .............................. 34,714
Dividends and interest receivable ................................. 8,061
Deferred organization costs and other assets (Note 1) 91,276
-----------
17,194,755
Liabilities
Payable for securities purchased .................................. 38,641
Payable for fund shares redeemed .................................. 18,962
Accrued management fee (Note 2) ................................... 6,402
Accrued trustees' fees (Note 2) ................................... 5,364
Accrued distribution and service fees (Note 5) .................... 3,688
Accrued transfer agent and shareholder services
(Note 2) ........................................................ 3,600
Other accrued expenses ............................................ 19,755
-----------
96,412
-----------
Net Assets $17,098,343
===========
Net Assets consist of:
Undistributed net investment income .............................. $ 9,454
Unrealized appreciation of investments ........................... 286,357
Accumulated net realized loss .................................... (2,159)
Paid-in capital .................................................. 16,804,691
-----------
$17,098,343
===========
Net Asset Value and redemption price per share of
Class A shares ($6,131,691 [divided by] 618,158 shares) ......... $ 9.92
======
Maximum Offering Price per share of Class A shares
($9.92 [divided by] .955) ....................................... $10.39
======
Net Asset Value and offering price per share of
Class B shares ($5,142,190 [divided by] 519,235 shares)*......... $ 9.90
======
Net Asset Value and offering price per share of
Class C shares ($1,061,159 [divided by] 107,096 shares)*......... $ 9.91
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($4,763,303 [divided by] 480,088 shares) ........................ $ 9.92
======
</TABLE>

- --------------------------------------------------------------------------------
* Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.

- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------
For the period March 11, 1998
(commencement of operations) to April 30, 1998

<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $326 .................. $ 12,892
Interest ................................................. 13,018
--------
25,910
Expenses
Custodian fee ............................................ 10,800
Management fee (Note 2) .................................. 9,148
Audit fee ................................................ 6,588
Registration fees ........................................ 5,400
Trustees' fees (Note 2) .................................. 5,364
Transfer agent and shareholder services (Note 2) ......... 3,600
Reports to shareholders .................................. 3,600
Amortization of organization costs (Note 1) .............. 2,488
Service fee--Class A (Note 5) ............................ 925
Distribution and service fees--Class B (Note 5) .......... 2,740
Distribution and service fees--Class C (Note 5) .......... 972
Legal fees ............................................... 900
Miscellaneous ............................................ 900
--------
53,425
Expenses borne by the Distributor (Note 3) ............... (34,714)
--------
18,711
--------
Net investment income .................................... 7,199
--------
Realized and Unrealized Gain (Loss) on Investments
Net realized loss on investments (Notes 1 and 4) ......... (2,159)
Net unrealized appreciation of investments ............... 286,357
--------
Net gain on investments .................................. 284,198
--------
Net increase in net assets resulting from operations ..... $291,397
========
</TABLE>

The accompanying notes are an integral part of the financial statements.

5
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period March 11, 1998
(commencement of operations) to April 30, 1998

<TABLE>
<S> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income ...................................... $ 7,199
Net realized loss on investments ........................... (2,159)
Net unrealized appreciation of investments ................. 286,357
-----------
Net increase resulting from operations ..................... 291,397
-----------
Net increase from fund share transactions (Note 6) ......... 16,806,946
-----------
Total increase in net assets ............................... 17,098,343
Net Assets
Beginning of period ........................................ --
-----------
End of period (including undistributed net investment
income of $9,454) ........................................ $17,098,343
===========
</TABLE>

- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1998

Note 1

State Street Research Galileo Fund (the "Fund"), is a series of State Street
Research Securities Trust (the "Trust"), which was organized as a Massachusetts
business trust in January, 1994 and is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
commenced operations in March, 1998. The Trust presently consists of four
separate funds: State Street Research Galileo Fund, State Street Research
Legacy Fund, State Street Research Intermediate Bond Fund and State Street
Research Strategic Income Fund.

The Fund seeks to provide long-term growth of capital. Under normal market
conditions, the Fund invests at least 65% of total assets in stocks and
convertible securities of companies in the Russell 1000 Index and of other U.S.
and foreign companies of comparable size.

The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and an annual service fee of 0.25% of
average daily net assets. Class B shares are subject to a contingent deferred
sales charge on certain redemptions made within five years of purchase and pay
annual distribution and service fees of 1.00%. Class B shares automatically
convert into Class A shares (which pay lower ongoing expenses) at the end of
eight years after the issuance of the Class B shares. Class C shares are
subject to a contingent deferred sales charge of 1.00% on any shares redeemed
within one year of their purchase. Class C shares also pay annual distribution
and service fees of 1.00%. Class S shares are only offered through certain
retirement accounts, advisory accounts of State Street Research & Management
Company (the "Adviser"), an indirect wholly owned subsidiary of Metropolitan
Life Insurance Company ("Metropolitan"), and special programs. No sales charge
is imposed at the time of purchase or redemption of Class S shares. Class S
shares do not pay any distribution or service fees. The Fund's expenses are
borne pro-rata by each class, except that each class bears expenses, and has
exclusive voting rights with respect to provisions of the Plan of Distribution,
related specifically to that class. The Trustees declare separate dividends on
each class of shares.

The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.

A. Investment Valuation

Values for listed securities reflect final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at closing prices
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are at
the mean of the closing bid and asked quotations. Short-term securities maturing
within sixty days are valued at amortized cost. Other securities, if any, are
valued at their fair value as determined in accordance with established methods
consistently applied.

The accompanying notes are an integral part of the financial statements.

6
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------

B. Security Transactions

Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered.

C. Net Investment Income

Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to it,
while indirect expenses are allocated among all funds in the Trust.

D. Dividends

Dividends from net investment income, if any, are declared and paid or
reinvested annually. Net realized capital gains, if any, are distributed
annually, unless additional distributions are required for compliance with
applicable tax regulations.

Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.

E. Federal Income Taxes

No Provision for Federal income taxes is necessary because the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods.

F. Deferred Organization Costs

Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.

G. Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

H. Securities Lending

The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. During the period March 11, 1998 (commencement of operations) to April
30, 1998, there were no loaned securities.

Note 2

The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.65% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the period March 11, 1998 (commencement of
operations) to April 30, 1998, the fees pursuant to such agreement amounted to
$9,148.

State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the period March 11, 1998, (commencement of
operations) to April 30, 1998, the amount of such expenses was $1,387.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$5,364 during the period March 11, 1998 (commencement of operations) to April
30, 1998.

Note 3

The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the period March 11, 1998 (commencement of operations) to April 30,
1998, the amount of such expenses assumed by the Distributor and its affiliates
was $34,714.

Note 4

For the period March 11, 1998 (commencement of operations) to April 30, 1998,
purchases and sales of securities, exclusive of short-term obligations,
aggregated $15,543,714 and $976,225, respectively.

Note 5

The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. Under the Plan, the Fund pays
annual service fees to the Distributor at a rate of 0.25% of average daily net
assets for Class A, Class B and Class C shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal service and/or
the maintenance or servicing of shareholder accounts, to compensate or
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the period March 11, 1998,
(commencement of operations) to April 30, 1998, fees pursuant to such plan
amounted to $925, $2,740 and $972 for Class A, Class B and Class C shares,
respectively.

The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $9,170 and $28,702, respectively, on sales of Class A shares of the
Fund during the period March 11, 1998 (commencement of operations) to April 30,
1998, and that MetLife Securities, Inc. earned commissions aggregating $81,084
on sales of Class B shares during the same period.

7
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

Note 6

The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At April 30, 1998, Metropolitan
owned 52,356 shares of each of Class A, Class B and Class C and 471,204 Class S
shares of the Fund and the Adviser owned one share of each of Class A, Class B,
Class C and Class S of the Fund.

Share transactions were as follows:
<TABLE>
<CAPTION>
March 11, 1998
(Commencement of
Operations) to
April 30, 1998
-------------------------
Class A Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold ................ 622,025 $6,115,137
Shares repurchased ......... (3,867) (38,335)
------- ----------
Net increase ............... 618,158 $6,076,802
======= ==========
Class B Shares Amount
- ----------------------------------------------------------
Shares sold ................ 555,377 $5,459,591
Shares repurchased ......... (36,142) (355,963)
------- ----------
Net increase ............... 519,235 $5,103,628
======= ==========
Class C Shares Amount
- ----------------------------------------------------------
Shares sold ................ 107,096 $1,038,510
------- ----------
Net increase ............... 107,096 $1,038,510
======= ==========
Class S Shares Amount
- ----------------------------------------------------------
Shares sold ................ 480,088 $4,588,006
------- ----------
Net increase ............... 480,088 $4,588,006
======= ==========
</TABLE>

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding from March 11, 1998 (commencement of operations) to
April 30, 1998(1)

<TABLE>
<CAPTION>
Class A Class B Class C Class S
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 9.55 9.55 9.55
----- ----- ----- ------
Net investment income (loss) ($)* 0.01 (0.00) (0.00) 0.02
Net realized and unrealized gain on investments ($) 0.36 0.35 0.36 0.35
----- ------ ------ ------
Total from investment operations ($) 0.37 0.35 0.36 0.37
----- ------ ------ ------
Net asset value, end of period ($) 9.92 9.90 9.91 9.92
===== ====== ====== ======
Total return(2) (%) 3.87(3) 3.66(3) 3.77(3) 3.87(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 6,132 5,142 1,061 4,763
Ratio of operating expenses to average net assets (%)* 1.25(4) 2.00(4) 2.00(4) 1.00(4)
Ratio of net investment income (loss) to average net assets (%)* 0.45(4) (0.31)(4) (0.13)(4) 0.98(4)
Portfolio turnover rate (%) 13.04 13.04 13.04 13.04
*Reflects voluntary assumption of fees or expenses per share (Note 3) ($) 0.03 0.03 0.04 0.06
</TABLE>

- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.

(2) Does not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.

(3) Not annualized

(4) Annualized

8
<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Trustees of State Street Research
Securities Trust and Shareholders of
State Street Research Galileo Fund:

We have audited the accompanying statement of assets and liabilities of State
Street Research Galileo Fund, including the schedule of portfolio investments,
as of April 30, 1998, and the related statements of operations and changes in
net assets and the financial highlights for the period March 11, 1998
(commencement of operations) to April 30, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
April 30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Galileo Fund as of April 30, 1998, the results of its
operations and changes in its net assets and the financial highlights for the
period March 11, 1998 (commencement of operations) to April 30, 1998, in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 5, 1998

9
<PAGE>

STATE STREET RESEARCH GALILEO FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH SECURITIES
TRUST
- --------------------------------------------------------------------------------

Fund Information

State Street Research
Galileo Fund
One Financial Center
Boston, MA 02111

Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111

Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111

Shareholder Services
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032

Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110

Legal Counsel
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109

Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02110

Officers

Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer

Peter C. Bennett
Vice President

Thomas J. Dillman
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
Vice President

James M. Weiss
Vice President

Elizabeth McCombs Westvold
Vice President

Kennard Woodworth, Jr.
Vice President

Gerard P. Maus
Treasurer

Joseph W. Canavan
Assistant Treasurer

Douglas A. Romich
Assistant Treasurer

Francis J. McNamara, III
Secretary and General Counsel

Darman A. Wing
Assistant Secretary and
Assistant General Counsel

Amy L. Simmons
Assistant Secretary

Trustees

Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company

Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University

Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial
Officer, St. Regis Corp.

Edward M. Lamont
Formerly in banking
(with an affiliate of
J. P. Morgan & Co.
in New York);
presently engaged in private
investments and civic affairs

Robert A. Lawrence
Formerly Partner, Saltonstall & Co.

Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company

Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.

Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology

10
<PAGE>

[back cover]

State Street Research Galileo Fund
One Financial Center
Boston, MA 02111

[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #6
Hartford, CT

Questions? Comments?

Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com

[logo]STATE STREET RESEARCH

This report is prepared for the general information of current shareholders.

When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Galileo Fund
prospectus. When used after June 30, 1998, this report must be accompanied by a
current Quarterly Performance Update.

Portfolio changes should not be considered recommendations for action by
individual investors.

The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.

CONTROL NUMBER: 4994-980616(0799)SSR-LD GA-112F-0698
<PAGE>

[cover]
STATE STREET RESEARCH

LEGACY FUND

ANNUAL REPORT

April 30, 1998

WHAT'S INSIDE

Investment Update

About the Fund,
economy and markets

Fund Information

Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[logo]
DALBAR KEY HONORS
COMMITMENT TO:
INVESTORS
1997

For Excellence
in
Shareholder Service

STATE STREET RESEARCH FUNDS

<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------

INVESTMENT ENVIRONMENT
The Economy
[bullet] The first four months of 1998 had continuing solid economic growth,
marked by low inflation and strong investment returns. Unemployment
fell to a 28-year low. Interest rates had little change, and consumer
confidence continued at near-record highs.
[bullet] Favorable economic factors have stimulated a boom in the housing
market and stronger-than-expected retail sales. Lower energy costs
kept inflation in check.
[bullet] Although last year's economic crisis in Southeast Asia raised concerns
about the U.S. exports and profits at multinational companies, the
effects have yet to make a significant impact on corporate
profitability here.

The Markets
[bullet] The S&P 500, a broad measure of common stock performance, gained
15.11% for the four-month period ended April 30, 1998.(1) Small stocks
rebounded from losses following the turmoil in Southeast Asia, and
large-capitalization brand-name companies continued to benefit.
[bullet] Bonds delivered modest gains during the period. High-yield bonds were
among the strongest performers. Mortgage-backed securities held up
well, despite concerns that refinancing could become a negative factor
in the future.

THE FUND
Since the Fund's Inception
[bullet] Since the Fund's commencement of operations on December 31, 1997,
Class A shares of Legacy Fund returned 16.60% [does not reflect sales
charge].(2) The Fund has outperformed the Lipper Growth Funds Average
of 14.24% for the same period.
[bullet] Investments in technology and pharmaceutical companies, which
benefited from strong sales and earnings growth, helped boost the
Fund's performance during the period.
[bullet] The Fund's exposure to insurance, consumer staples and oil stocks
underperformed the overall market, as investors favored more dynamic
growth sectors. Falling oil prices hurt oil stocks.

Current Strategy
[bullet] The Fund invests in companies with higher potential for long-term
growth. To minimize yearly capital gains, the manager's strategy is to
focus on stocks with excellent growth potential that can be held for
the long term.

[bullet] The Fund's largest investments are in the financial, consumer staple,
health care and technology industries, and especially bank,
pharmaceutical and computer software stocks, where the manager has
confidence in earnings growth potential.

April 30, 1998

(2)16.40% for Class B shares; 16.30% for Class C shares; 16.80% for Class S
shares.

(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. "S" shares, offered without a sales charge,
are available through certain employee benefit plans and special programs.

(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred, sales charges, where applicable.

(5)Aggregate returns; not annualized.

Please note that the discussion throughout this shareholder report is dated as
indicated and, because of possible changes in viewpoint, data and transactions
should not be relied upon as being current thereafter.

Aggregate Total Return for
period ended 3/31/98
(at maximum applicable sales charge)(3,4,5)

<TABLE>
<CAPTION>
- -------------------------------
Life of Fund
(since 12/31/97)
- -------------------------------
<S> <C>
Class A 9.44%
- -------------------------------
Class B 9.40%
- -------------------------------
Class C 13.70%
- -------------------------------
Class S 14.40%
- -------------------------------
</TABLE>

Aggregate Total Return
(does not reflect sales charge)(3,5)

<TABLE>
<CAPTION>
- -------------------------------
Life of Fund
(since 12/31/97)
- -------------------------------
<S> <C>
Class A 16.60%
- -------------------------------
Class B 16.40%
- -------------------------------
Class C 16.30%
- -------------------------------
Class S 16.80%
- -------------------------------
</TABLE>

Top 10 Holdings
(by percentage of net assets)
<TABLE>
<S> <C> <C>
1 BankAmerica Money center banks 4.3%

2 Total Oil company 4.1%

3 Xerox Office automation & equipment 4.1%

4 Du Pont Chemicals 4.1%

5 Banc One Bank holding company 4.1%

6 General Electric Diversified manufacturer 4.1%

7 Coca-Cola Beverages 3.4%

8 Procter & Gamble Cosmetics & toiletries 3.3%

9 Johnson & Johnson Medical products 3.1%

10 Pfizer Pharmaceuticals, medical products 3.0%
</TABLE>

These securities represent an aggregate of 37.6% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.

Top 5 Industries
(by percentage of net assets)

[bar chart]

<TABLE>
<S> <C>
Bank 8.4%
Drug 7.7%
Computer Software & Service 7.2%
Retail Trade 6.8%
Office Equipment 6.7%
</TABLE>

Performance results for the Fund are increased by the voluntary reduction of
fund fees and expenses; without subsidization, performance would have been
lower.
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 96.0%
Basic Industries 10.4%
Chemical 4.1%
E.I. Du Pont De Nemours & Co. ................. 23,000 $ 1,674,688
-----------
Electrical Equipment 4.1%
General Electric Co. .......................... 19,400 1,651,425
-----------
Machinery 2.2%
Tyco International Ltd. ....................... 16,600 904,700
-----------
Total Basic Industries ........................ 4,230,813
-----------
Consumer Cyclical 14.8%
Automotive 3.0%
Danaher Corp. ................................. 17,000 1,221,875
-----------
Recreation 5.0%
News Corp. Ltd. ADR ........................... 34,700 947,744
US West Inc.* ................................. 28,800 1,087,200
-----------
2,034,944
-----------
Retail Trade 6.8%
CVS Corp. ..................................... 11,500 848,125
Dayton Hudson Corp. ........................... 11,600 1,012,825
Home Depot Inc. ............................... 13,400 932,975
-----------
2,793,925
-----------
Total Consumer Cyclical ....................... 6,050,744
-----------
Consumer Staple 28.1%
Business Service 4.6%
Apollo Group Inc. Cl. A* ...................... 14,400 493,200
HBO & Co. ..................................... 7,500 448,594
Interpublic Group of Companies, Inc. .......... 14,400 919,800
-----------
1,861,594
-----------
Drug 7.7%
Merck & Company, Inc. ......................... 8,700 1,048,350
Pfizer Inc. ................................... 10,900 1,240,556
Warner-Lambert Co. ............................ 4,400 832,425
-----------
3,121,331
-----------
Food & Beverage 5.9%
Coca-Cola Co. ................................. 18,450 1,399,894
Sara Lee Corp. ................................ 17,200 1,024,475
-----------
2,424,369
-----------
Hospital Supply 4.5%
Johnson & Johnson ............................. 17,600 1,256,200
Medtronic Inc. ................................ 11,200 589,400
-----------
1,845,600
-----------
Personal Care 5.4%
Gillette Co. .................................. 7,500 $ 865,781
Procter & Gamble Co. .......................... 16,300 1,339,656
-----------
2,205,437
-----------
Total Consumer Staple ......................... 11,458,331
-----------
Energy 4.1%
Oil 4.1%
Total SA Cl. B ADR ............................ 28,800 1,692,000
-----------
Total Energy .................................. 1,692,000
-----------
Finance 15.9%
Bank 8.4%
Banc One Corp. ................................ 28,300 1,664,394
BankAmerica Corp. ............................. 20,500 1,742,500
-----------
3,406,894
-----------
Financial Service 2.7%
American Express Co. .......................... 10,700 1,091,400
-----------
Insurance 4.8%
Ace Ltd. ...................................... 27,300 1,033,987
UNUM Corp. .................................... 17,100 919,125
-----------
1,953,112
-----------
Total Finance ................................. 6,451,406
-----------
Science & Technology 19.9%
Aerospace 1.7%
Boeing Co. .................................... 14,200 710,888
-----------
Computer Software & Service 7.2%
Cisco Systems Inc.* ........................... 15,200 1,113,400
i2 Technologies Inc.* ......................... 5,300 353,775
J.D. Edwards & Co.* ........................... 12,300 438,187
Microsoft Corp.* .............................. 11,600 1,045,450
-----------
2,950,812
-----------
Electronic Components 2.1%
Analog Devices Inc.* .......................... 21,600 841,050
-----------
Electronic Equipment 2.2%
Lucent Technologies Inc. ...................... 11,800 898,275
-----------
Office Equipment 6.7%
International Business Machines Corp. ......... 8,900 1,031,287
Xerox Corp. ................................... 14,900 1,691,150
-----------
2,722,437
-----------
Total Science & Technology .................... 8,123,462
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

2
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Utility 2.8%
Telephone 2.8%
AirTouch Communications Inc.* .................. 21,500 $1,142,188
----------
Total Utility .................................. 1,142,188
----------
Total Common Stocks (Cost $36,586,915) ......... 39,148,944
----------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Maturity
Amount Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER 3.9%
American Express Credit Corp.,
5.51% .............................. $ 276,000 5/04/1998 276,000
Ford Motor Credit Co., 5.50% ......... 1,007,000 5/05/1998 1,007,000
General Electric Capital Corp.,
5.45% .............................. 316,000 5/01/1998 316,000
-----------
Total Commercial Paper (Cost $1,599,000)....................... 1,599,000
-----------
Total Investments (Cost $38,185,915)--99.9%.................... 40,747,944
Cash and Other Assets, Less Liabilities--0.1% ................. 27,380
-----------
Net Assets--100.0% ............................................ $40,775,324
===========
</TABLE>

<TABLE>
<S> <C>
Federal Income Tax Information:
At April 30, 1998, the net unrealized
appreciation of investments based on cost
for Federal income tax purposes of
$38,185,915 was as follows:
Aggregate gross unrealized appreciation
for all investments in which there is an
excess of value over tax cost ........ $ 2,660,042
Aggregate gross unrealized depreciation
for all investments in which there is an
excess of tax cost over value ........ (98,013)
-----------
$ 2,562,029
===========
</TABLE>

- --------------------------------------------------------------------------------
*Nonincome-producing securities

ADR stands for American Depository Receipt, representing ownership of foreign
securities.

- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<S> <C>
Assets
Investments, at value (Cost $38,185,915)(Note 1) ..................... $40,747,944
Cash ................................................................. 10,796
Receivable for fund shares sold ...................................... 1,247,306
Receivable from Distributor (Note 3) ................................. 39,280
Dividends and interest receivable .................................... 12,916
Deferred organization costs (Note 1) ................................. 77,878
-----------
42,136,120
Liabilities
Payable for securities purchased ..................................... 1,180,078
Accrued distribution and service fees (Note 5) ....................... 18,759
Accrued management fee (Note 2) ...................................... 17,581
Accrued transfer agent and shareholder services
(Note 2) ........................................................... 16,450
Accrued trustees' fees (Note 2) ...................................... 8,168
Payable for fund shares redeemed ..................................... 2,082
Other accrued expenses ............................................... 117,678
-----------
1,360,796
-----------
Net Assets $40,775,324
===========
Net Assets consist of:
Unrealized appreciation of investments .............................. $ 2,562,029
Accumulated net realized gain ....................................... 57,450
Paid-in capital ..................................................... 38,155,845
-----------
$40,775,324
===========
Net Asset Value and redemption price per share of
Class A shares ($11,984,052 [divided by] 1,027,449 shares) ......... $11.66
=======
Maximum Offering Price per share of Class A shares
($11.66 [divided by] .955) ......................................... $12.21
=======
Net Asset Value and offering price per share of Class
B shares ($19,687,904 [divided by] 1,692,083 shares)* .............. $11.64
=======
Net Asset Value and offering price per share of Class
C shares ($4,976,619 [divided by] 427,799 shares)* ................. $11.63
=======
Net Asset Value, offering price and redemption price
per share of Class S shares
($4,126,749 [divided by] 353,464 shares) ........................... $11.68
=======
</TABLE>

The accompanying notes are an integral part of the financial statements.

3
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period December 31, 1997
(commencement of operations) to April 30, 1998

<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $139 .................. $ 36,889
Interest ................................................. 42,045
----------
78,934
Expenses
Management fee (Note 2) .................................. 38,533
Custodian fee ............................................ 27,960
Transfer agent and shareholder services (Note 2) ......... 16,450
Audit fee ................................................ 14,820
Registration fees ........................................ 11,400
Trustees' fees (Note 2) .................................. 8,168
Reports to shareholders .................................. 8,164
Amortization of organization costs (Note 1) .............. 5,432
Service fee-Class A (Note 5) ............................. 3,702
Distribution and service fees--Class B (Note 5) .......... 24,737
Distribution and service fees--Class C (Note 5) .......... 7,487
Legal fees ............................................... 2,032
Miscellaneous ............................................ 1,972
----------
170,857
Expenses borne by the Distributor (Note 3) ............... (75,650)
----------
95,207
----------
Net investment loss ...................................... (16,273)
----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 4) ......... 68,845
Net unrealized appreciation of investments ............... 2,562,029
----------
Net gain on investments .................................. 2,630,874
----------
Net increase in net assets resulting from operations ..... $2,614,601
==========
</TABLE>

- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period December 31, 1997
(commencement of operations) to April 30, 1998

<TABLE>
<S> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss ........................................ $ (16,273)
Net realized gain on investments ........................... 68,845
Net unrealized appreciation of investments ................. 2,562,029
-----------
Net increase resulting from operations ..................... 2,614,601
-----------
Net increase from fund share transactions (Note 6) ......... 38,160,723
-----------
Total increase in net assets ............................... 40,775,324
Net Assets
Beginning of period ........................................ --
-----------
End of period .............................................. $40,775,324
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

4
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1998

Note 1

State Street Research Legacy Fund (the "Fund"), is a series of State Street
Research Securities Trust (the "Trust"), which was organized as a Massachusetts
business trust in January, 1994 and is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
commenced operations in December, 1997. The Trust presently consists of four
separate funds: State Street Research Legacy Fund, State Street Research
Galileo Fund, State Street Research Intermediate Bond Fund and State Street
Research Strategic Income Fund.

The investment objective of the Fund is to provide long-term growth of capital.
In seeking to achieve its investment objective, the Fund invests at least 65%
of total assets in stocks and convertible securities of mid- and large-size
companies. The Fund employs a tax-managed strategy, generally seeking to
identify stocks with long-term growth potential and holding them for extended
periods.

A. Investment Valuation

Values for listed securities represent final sales on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are at
the mean of the closing bid and asked quotations. Short-term securities
maturing within sixty days are valued at amortized cost. Other securities, if
any, are valued at their fair value as determined in accordance with
established methods consistently applied.

B. Security Transactions

Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered.

C. Net Investment Income

D. Dividends

Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.

E. Federal Income Taxes

No provision for Federal income taxes is necessary because the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods.

F. Deferred Organization Costs

Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.

G. Estimates

H. Securities Lending

The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. During the period December 31, 1997 (commencement of operations) to April
30, 1998, there were no loaned securities.

5
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

Note 2

The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.65% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the period December 31, 1997 (commencement of
operations) to April 30, 1998, the fees pursuant to such agreement amounted to
$38,533.

State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. During the period December 31, 1997 (commencement of
operations) to April 30, 1998, the amount of such expenses was $2,774.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$8,168 during the period December 31, 1997 (commencement of operations) to
April 30, 1998.

Note 3

The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the period December 31, 1997 (commencement of operations) to April 30,
1998, the amount of such expenses assumed by the Distributor and its affiliates
was $75,650.

Note 4

For the period December 31, 1997 (commencement of operations) to April 30,
1998, purchases and sales of securities, exclusive of short-term obligations,
aggregated $37,581,040 and $1,062,970, respectively.

Note 5

The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. Under the Plan, the Fund pays
annual service fees to the Distributor at a rate of 0.25% of average daily net
assets for Class A, Class B and Class C shares. In addition, the Fund pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal service and/or
the maintenance or servicing of shareholder accounts, to compensate or
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the period December 31, 1997
(commencement of operations) to April 30, 1998, fees pursuant to such plan
amounted to $3,702, $24,737 and $7,487 for Class A, Class B and Class C shares,
respectively.

The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $18,809 and $60,247, respectively, on sales of Class A shares of
the Fund during the period December 31, 1997 (commencement of operations) to
April 30, 1998, and that MetLife Securities, Inc. earned commissions
aggregating $223,185 on sales of Class B shares during the same period.

Note 6

The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At April 30, 1998, the Adviser
owned one share of each of Class A, Class B, Class C and Class S and
Metropolitan owned 50,000 shares of each of Class A, Class B, Class C and
350,000 Class S shares of the Fund.

Share transactions were as follows:

<TABLE>
<CAPTION>
December 31, 1997
(Commencement of
Operations) to
April 30, 1998
---------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
<S> <C> <C>
Shares sold ................ 1,060,271 $11,720,798
Shares repurchased ......... (32,822) (360,909)
--------- -----------
Net increase ............... 1,027,449 $11,359,889
========= ===========
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold ................ 1,699,460 $18,706,942
Shares repurchased ......... (7,377) (83,326)
--------- -----------
Net increase ............... 1,692,083 $18,623,616
========= ===========
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold ................ 428,033 $ 4,641,277
Shares repurchased ......... (234) (2,653)
--------- -----------
Net increase ............... 427,799 $ 4,638,624
========= ===========
Class S Shares Amount
- ----------------------------------------------------------------
Shares sold ................ 353,464 $ 3,538,594
--------- -----------
Net increase ............... 353,464 $ 3,538,594
========= ===========
</TABLE>

6
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

For a share outstanding from December 31, 1997 (commencement of operations) to
April 30,1998(1)

<TABLE>
<CAPTION>
Class A Class B Class C Class S
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 10.00 10.00 10.00
------ ------ ------ -----
Net investment income (loss) ($)* 0.00 (0.03) (0.03) 0.03
Net realized and unrealized gain on investments ($) 1.66 1.67 1.66 1.65
------ ------ ------ -----
Total from investment operations ($) 1.66 1.64 1.63 1.68
------ ------ ------ -----
Net asset value, end of period ($) 11.66 11.64 11.63 11.68
====== ====== ====== =====
Total return(2) (%) 16.60(3) 16.40(3) 16.30(3) 16.80(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 11,984 19,688 4,977 4,127
Ratio of operating expenses to average net assets (%)* 1.25(4) 2.00(4) 2.00(4) 1.00(4)
Ratio of net investment income (loss) to average net assets (%)* 0.01(4) (0.76)(4) (0.69)(4) 0.60(4)
Portfolio turnover rate (%) 6.44 6.44 6.44 6.44
*Reflects voluntary assumption of fees or expenses per share (Note 3) ($) 0.04 0.04 0.04 0.09
</TABLE>

- --------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) Does not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
(3) Not annualized
(4) Annualized

7
<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Trustees of State Street Research
Securities Trust and Shareholders of
State Street Research Legacy Fund:

We have audited the accompanying statement of assets and liabilities of State
Street Research Legacy Fund, including the schedule of portfolio investments,
as of April 30, 1998, and the related statements of operations and changes in
net assets and the financial highlights for the period December 31, 1997
(commencement of operations) to April 30, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Legacy Fund as of April 30, 1998, the results of its operations
and changes in its net assets and the financial highlights for the period
December 31, 1997 (commencement of operations) to April 30, 1998, in conformity
with generally accepted accounting principles.

Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 5, 1998

8
<PAGE>

STATE STREET RESEARCH LEGACY FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH SECURITIES
TRUST
- --------------------------------------------------------------------------------

Fund Information

State Street Research
Legacy Fund
One Financial Center
Boston, MA 02111

Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111

Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111

Shareholder Services
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032

Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110

Legal Counsel
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02110

Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02110

Officers

Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer

Peter C. Bennett
Vice President

Thomas J. Dillman
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
Vice President

James M. Weiss
Vice President

Elizabeth McCombs Westvold
Vice President

Kennard Woodworth, Jr.
Vice President

Gerard P. Maus
Treasurer

Joseph W. Canavan
Assistant Treasurer

Douglas A. Romich
Assistant Treasurer

Francis J. McNamara, III
Secretary and General Counsel

Darman A. Wing
Assistant Secretary and
Assistant General Counsel

Amy L. Simmons
Assistant Secretary

Trustees

Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company

Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University

Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial
Officer, St. Regis Corp.

Edward M. Lamont
Formerly in banking
(with an affiliate of
J.P. Morgan & Co.
in New York); presently
engaged in private
investments and civic affairs

Robert A. Lawrence
Formerly Partner, Saltonstall & Co.

Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company

Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.

Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology

9
<PAGE>

[blank page]

<PAGE>

[back cover]

State Street Research Legacy Fund
One Financial Center
Boston, MA 02111

[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #6
Hartford, CT

Questions? Comments?

Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com

[logo]STATE STREET RESEARCH

This report is prepared for the general information of current shareholders.

When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Legacy Fund
prospectus. When used after June 30, 1998, this report must be accompanied by a
current Quarterly Performance Update.

Portfolio changes should not be considered recommendations for action by
individual investors.

CONTROL NUMBER: 4995-980616(0799)SSR-LD LF-111F-0698
<PAGE>

[cover]
STATE STREET RESEARCH

STRATEGIC INCOME FUND

ANNUAL REPORT

April 30, 1998

WHAT'S INSIDE

From the Chairman

Another year of solid growth

Portfolio Manager's Review

Bonds deliver in an ideal environment

Fund Information

Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[logo]
DALBAR
HONORS COMMITMENT TO:
INVESTORS
1997

For Excellence
in
Shareholder Service

STATE STREET RESEARCH FUNDS

<PAGE>

FROM THE CHAIRMAN

[photo of Roger F. Verni]

Dear Shareholder:

Americans have enjoyed another year of solid economic growth, low inflation and
strong investment returns. Unemployment has hit a record 28-year low, consumer
confidence continues at near-record highs, and interest rates remain low.
Together these favorable factors have stimulated a boom in the housing market
and stronger-than-expected retail sales.

Stocks

The stock market delivered a third consecutive calendar year of double-digit
gains despite periods of volatility. In October 1997, the Dow Jones Industrial
Average recorded its largest one-day drop because of Southeast Asian economic
turmoil. The technology-heavy Nasdaq, Dow Jones Industrial Average and the S&P
500 all set record highs.(1) Investors continued to be attracted to the quality
of large, blue-chip companies. However, smaller stocks picked up ground later
in the first quarter of 1998.

In international markets, Southeast Asian stocks rallied early in the new year,
then stumbled again late in the period. In Europe, many major markets
outperformed the U.S., bolstered by lower interest rates, low inflation, and
corporate restructurings. Japan had a modest gain during the first quarter of
1998, but hardly enough to offset three previous weak periods.

Bonds

After a fourth quarter rally, bond markets steadied early in 1998. Treasuries
were buoyed by the same energy cost cuts that briefly boosted the stock market.
High-yield bonds were the star performers as investors sought more robust
returns. Mortgage bonds have held steady, and global bond markets continue to
benefit from Asia's economic difficulties.

What's Ahead

The combination of solid real economic growth and no significant inflation is
likely to keep short-term interest rates unchanged for the period ahead.
Although it would be imprudent to expect the stock market to continue to
generate double-digit gains, a more modest, positive trend seems likely. With
inflation and government spending under control, bond markets are well
positioned to reap any gains that could accrue from any future interest rate
cut. In fact, the possibility that the U.S. could have its first federal budget
surplus could provide the downward pressure on rates that would be necessary to
lift the bond market.

As always, it makes sense for investors to put the market's short-term
performance in perspective. Maintain a diversified portfolio, and let your
long-term goals lead your investment decisions. Talk to your financial
professional if you have any questions or concerns about the markets. Thank you
for investing with State Street Research.

Sincerely,
/s/ Ralph F. Verni
Ralph F. Verni
Chairman
April 30, 1998

(1)The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The Lehman Brothers
Aggregate Bond Index is a market-value weighted index of fixed-rate debt issues,
including U.S. Treasury, agency, and corporate bond issues, and mortgage-backed
securities. The indices are unmanaged and do not take transaction charges into
consideration. Direct investment in the indices is not possible; results are for
illustrative purposes only.

(2)12.74% for Class B shares; 12.74% for Class C shares; 13.99% for Class S
shares.

(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. "S" shares, offered without a sales charge,
are available through certain employee benefit plans and special programs.

(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges, where applicable.

(5)Before November 1, 1997, Class C shares were designated Class D and Class S
shares were designated Class C.

- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended April 30, 1998, except where
noted.)
- --------------------------------------------------------------------------------

Average Annual Total Return
for period ended 3/31/98
(at maximum applicable sales charge)(3,4,5)

<TABLE>
<CAPTION>
- ------------------------------------------
Life of Fund
(since 8/30/96) 1 Year
- ------------------------------------------
<S> <C> <C>
Class A 8.79% 9.68%
- ------------------------------------------
Class B 8.62% 8.88%
- ------------------------------------------
Class C 11.00% 12.88%
- ------------------------------------------
Class S 12.26% 15.14%
- ------------------------------------------
</TABLE>

Average Annual Total Return
(does not reflect sales charge)(3,5)

<TABLE>
<CAPTION>
- ------------------------------------------
Life of Fund
(since 8/30/96) 1 Year
- ------------------------------------------
<S> <C> <C>
Class A 11.58% 13.70%
- ------------------------------------------
Class B 10.61% 12.74%
- ------------------------------------------
Class C 10.61% 12.74%
- ------------------------------------------
Class S 11.86% 13.99%
- ------------------------------------------
</TABLE>

SEC Yield(5)

<TABLE>
<S> <C>
- -----------------
Class A 5.94%
- -----------------
Class B 5.48%
- -----------------
Class C 5.48%
- -----------------
Class S 6.48%
- -----------------
</TABLE>

SEC yield is based on the net investment income produced for the 30 days ended
April 30, 1998.

A high yield could be indicative of high risk bond holdings that have decreased
in price because of financial problems of the issuers of the bonds.
<PAGE>

PORTFOLIO MANAGER'S REVIEW
Strategic Income Fund: Bonds Deliver in an Ideal Environment

[photo of John Kallis]
John H. Kallis
Portfolio Manager

Jack Kallis, portfolio manager of State Street Research Strategic Income Fund,
comments on the year ended April 30, 1998 and his outlook for the period ahead.

Q: How did the Fund perform last year?

A: It was a strong year for Strategic Income Fund. Class A shares returned
13.70% for the year ended April 30, 1998 [does not reflect sales charge].2 That
was higher than the average multi-sector income fund return of 11.39%, as
reported by Lipper Analytical Services. The Fund also outperformed the Lehman
Brothers Aggregate Bond Index, which returned 10.91% over the same period.1

Q: What factors accounted for the Fund's strong performance?

A: The Fund benefited from a 1% decline in long-term interest rates in the U.S.
and more dramatic interest rate declines overseas. We had positioned the Fund
to anticipate declining interest rates, and that helped performance. Finally,
the Fund's largest concentration was in high-yield corporate bonds at the end
of the period. And because that was the best-performing sector for the year, it
made a significant contribution to performance.

Q: How did the Asian currency crisis affect the Fund?

A: The Asian currency crisis had no direct effect on the Fund. We had no
positions in emerging markets in that part of the world.

Q: What is your outlook for bonds for the period ahead?

A: While most financial experts expect interest rates to rise over the next
year, we expect interest rates to drop. Here's our reasoning: The U.S. economy
is strong, but much of its strength is in capital goods, especially computers;
and between price reductions and lower export trade with Asia, the computer
industry has significant obstacles in the period ahead. Unemployment is low,
but there has been little wage pressure because of productivity gains. The
strength of the U.S. dollar has also kept inflation at bay. Taken together, we
believe these factors add up to a slowing economy. Therefore, although the
Federal Reserve Board has talked about raising rates because it is worried
about an overheated stock market, we believe the decision it is more likely to
face in the short term is whether, and when, to lower rates to stimulate
economic growth.

Q: How have you positioned the Fund to take advantage of this environment?

A: We have lengthened the duration of the portfolio from 4.6 to 4.9 years.
Duration is a measure of the Fund's sensitivity to changing interest rates. If
we are right, and interest rates fall, the longer duration will boost the value
of bonds in the portfolio. Of course, if we are wrong, and interest rates rise,
the longer duration can reduce the value of the Fund's holdings. We also
continue to favor U.S. high-yield bonds. A relatively healthy U.S. economy is
favorable for this sector. Finally, we have restricted our non-dollar bond
exposure to three markets: the United Kingdom, Australia and New Zealand.

Q: What's attractive about these three markets?

A: We picked the U.K. because they have raised rates to cool off their economy,
and we expect them to lower rates again if they are successful in slowing the
economy. Australia and New Zealand have suffered from the regional effects of
the Asian crisis. We expect their interest rates to come down as they work to
get economic growth back on track.

April 30, 1998

- --------------------------------------------------------------------------------

Asset Allocation
(by percentage of net assets)

[pie chart]

High-Yield Corporate 49%
Finance/Mortgage 9%
Equities 3%
International 11%
U.S. Government 28%

Performance by Sector
(12 months ended 4/30/98)

[bar chart]
<TABLE>
<CAPTION>
% Return
<S> <C>
High-Grade 11.4
High-Yield 20.1
International 12.5
</TABLE>

2
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED INCOME SECURITIES 96.8%
U.S. Treasury 18.9%
U.S. Treasury Bond, 11.625% ..... $1,125,000 11/15/2004 $1,481,130
U.S. Treasury Bond, 12.00% ...... 1,175,000 8/15/2013 1,721,927
U.S. Treasury Bond, 9.875% ...... 175,000 11/15/2015 248,145
U.S. Treasury Bond, 8.75% ....... 625,000 5/15/2017 816,700
U.S. Treasury Bond, 8.50% ....... 600,000 2/15/2020 777,096
U.S. Treasury Bond, 8.125% ...... 4,375,000 8/15/2021 5,498,150
U.S. Treasury Bond, 6.875% ...... 1,550,000 8/15/2025 1,722,686
U.S. Treasury Bond, 6.625% ...... 425,000 2/15/2027 459,995
U.S. Treasury Note, 6.875% ...... 800,000 8/31/1999 813,128
U.S. Treasury Note, 5.625% ...... 1,800,000 10/31/1999 1,800,558
U.S. Treasury Note, 7.875% ...... 1,375,000 11/15/2004 1,533,345
U.S. Treasury TIPS, 3.625% ...... 150,311 1/15/2008 148,666
U.S. Treasury STRIPS, 0.00% ..... 1,400,000 11/15/2001 1,148,686
U.S. Treasury STRIPS, 0.00% ..... 2,400,000 5/15/2007 1,423,295
----------
19,593,507
----------
U.S. Agency Mortgage 8.8%
Federal Home Loan Mortgage
Corp., 6.50% .................. 375,000 10/15/2019 376,755
Federal Home Loan Mortgage
Corp. TBA, 7.00% .............. 1,025,000 5/18/2013 1,044,219
Federal Home Loan Mortgage
Corp. TBA, 6.00% .............. 1,000,000 5/18/2013 986,875
Federal National Mortgage
Association, 8.50% ............ 1,000,000 2/01/2005 1,041,560
Federal National Mortgage
Association, 9.00% ............ 759,688 5/01/2009 805,261
Federal National Mortgage
Association, 8.00% ............ 394,928 5/01/2016 413,194
Federal National Mortgage
Association TBA, 7.00% ........ 575,000 5/13/2028 581,289
Federal National Mortgage
Association TBA, 6.50% ........ 1,175,000 5/13/2028 1,162,895
Government National Mortgage
Association, 8.00% ............ 1,659,328 11/15/2017 1,747,471
Government National Mortgage
Association, 6.50% ............ 485,395 1/15/2024 480,993
Government National Mortgage
Association, 7.50% ............ 527,719 9/15/2025 542,226
----------
9,182,738
----------
Foreign Government 11.0%
Australian Dollar
Commonwealth of Australia,
8.75% ......................... 2,975,000 8/15/2008 2,364,043
New Zealand Dollar
Government of New Zealand,
10.00% ........................ 3,150,000 3/15/2002 1,898,805
New Zealand Dollar
Government of New Zealand,
8.00% ......................... 3,200,000 11/15/2006 $1,897,321
Pound Sterling
United Kingdom Treasury,
8.50% ......................... 2,695,000 12/07/2005 5,213,698
----------
11,373,867
----------
Finance/Mortgage 8.9%
American Express Credit
Account Master Trust Series
97-1A, 6.40% .................. $ 800,000 4/15/2005 811,744
AT&T Universal Card Master
Trust 95-2A, 5.95% ............ 1,000,000 10/17/2002 1,001,250
BankAmerica Institutional
Capital Series B, 7.70%+ ...... 350,000 12/31/2026 364,665
Capital One Bank Note, 6.28% 250,000 2/20/2001 249,653
CNA Financial Corp. Note,
6.50% ......................... 400,000 4/15/2005 398,276
Countrywide Funding Corp.
Note, 6.58% ................... 575,000 9/21/2001 579,830
DLJ Mortgage Acceptance
Corp. Series 97-CF2-A1A,
6.55%+ ........................ 145,782 11/15/2006 147,558
DMARC Corp. 98-1 A1, 6.22% ...... 298,800 6/15/2031 302,162
DMARC Corp. 98-C1 A2,
6.54% ......................... 275,000 6/15/2031 281,188
ERAC USA Finance Co. Note,
6.625%+ ....................... 150,000 2/15/2005 149,700
Finova Capital Corp. Note,
6.50% ......................... 400,000 7/28/2002 400,928
First Union Lehman Brothers
Commercial 97-C2 A2,
6.60% ......................... 1,000,000 11/18/2029 1,007,500
Florida Windstorm Sr. Sec.
Note Series 1997, 6.85%+ ...... 175,000 8/25/2007 179,456
Ford Credit Auto Owner Trust
1996-A A3, 6.50% .............. 317,728 11/15/1999 318,522
Ford Credit Auto Owner Trust
Series 1997B-A3, 6.05% ........ 750,000 4/15/2001 753,281
GMAC Commercial Mortgage
Security Inc. 98-C1 A1,
6.41% ......................... 200,000 11/15/2007 200,997
LB Commercial Conduit
Mortgage Trust 98-C1 A1,
6.33% ......................... 172,823 2/18/2030 171,095
Morgan Stanley Capital Inc.
98-A1, 6.34% .................. 174,113 1/15/2007 177,498
</TABLE>

The accompanying notes are an integral part of the financial statements.

3
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance/Mortgage (cont'd)
Prudential Home Mortgage
Securities Co. Series 93-45
A-2 PAC, 6.75% ................... $ 325,525 11/25/2007 $ 325,014
Prudential Home Mortgage
Securities Co. Series 93-47
A-11 PAC, 6.10% .................. 375,000 12/25/2023 365,272
Wells Fargo Capital Sec. Note,
7.73%+ ........................... 500,000 12/01/2026 517,870
World Omni Inc. Note 98-1 A4,
6.07% ............................ 200,000 2/15/2002 199,875
Zurich Capital Trust Note,
8.38%+ ........................... 350,000 6/01/2037 381,118
---------
9,284,452
---------
Corporate 49.2%
Advanstar Commerce Inc. Sr.
Note, 9.25%+ ..................... 900,000 5/01/2008 901,125
Allbritton Communications Co.
Series B Sr. Sub. Deb., 9.75% 725,000 11/30/2007 761,250
American Lawyer Media Inc.
Sr. Sub. Note, 9.75%+ ............ 500,000 12/15/2007 518,750
American Pacific Corp.
Sr. Note, 9.25% .................. 550,000 3/01/2005 566,500
American Telecasting Inc. Sr.
Note, 0.00% to 6/14/99,
14.50% from 6/15/99 to
maturity ......................... 450,000 6/15/2004 93,375
Ameristar Casinos Inc. Sr. Sub.
Note, 10.50% ..................... 750,000 8/01/2004 796,875
Archibald Candy Corp. Sr. Sec.
Note, 10.25% ..................... 750,000 7/01/2004 806,250
Benedek Communications Corp.
Sr. Sub. Note, 0.00% to
5/14/2001, 13.25% from
5/15/2001 to maturity ............ 1,500,000 5/15/2006 1,185,000
Capstar Broadcasting Partners
Sr. Note, 0.00% to
1/31/2002, 12.75% from
2/1/2002 to maturity ............. 1,000,000 2/01/2009 745,000
Cargill Inc. Sr. Note, 6.875%+ ..... 200,000 5/01/2028 210,220
Cellnet Data Systems Inc. Sr.
Note Series B, 0.00% to
9/30/2002, 14.00% from
10/1/2002 to maturity ............ 750,000 10/01/2007 420,000
CHC Helicopter Corp. Sr. Sub.
Note, 11.50% ..................... 1,000,000 7/15/2002 1,062,500
Clearnet Communications Inc.
Sr. Note, 0.00% to
12/14/2000, 14.75% from
12/15/2000 to maturity ........... $ 900,000 12/15/2005 $ 749,250
Columbia/HCA Healthcare Corp.
Deb., 7.50% ...................... 175,000 12/15/2023 163,618
Columbia/HCA Healthcare Corp.
Note, 8.12% ...................... 325,000 8/04/2003 331,172
Columbia/HCA Healthcare Corp.
Note, 7.69% ...................... 175,000 6/15/2025 167,092
Dobson Communications Corp.
Sr. Note, 11.75% ................. 250,000 4/15/2007 272,500
Drypers Corp. Series B Sr.
Note, 10.25% ..................... 750,000 6/15/2007 772,500
Econophone Inc. Sr. Note,
13.50% ........................... 1,000,000 7/15/2007 1,125,000
Econophone Inc. Sr. Note,
0.00% to 2/14/2003,
11.00% from 2/15/2003 to
maturity+ ........................ 500,000 2/15/2008 283,750
Elgar Holdings Inc. Sr. Note,
9.875%+ .......................... 500,000 2/01/2008 505,000
Elgin National Industries Inc.
Sr. Note, 11.00%+ ................ 250,000 11/01/2007 265,000
Empire Gas Corp. Sr. Sec.
Note, 7.00% to 7/14/99,
12.875% from 7/15/99 to
maturity ......................... 1,000,000 7/15/2004 920,000
Envirosource Inc. Note, 9.75% ...... 1,500,000 6/15/2003 1,530,000
Envirosource Inc. Sr. Note
Series B, 9.75%+ ................. 250,000 6/15/2003 251,563
Finlay Fine Jewelry Corp. Sr.
Note, 8.375% ..................... 500,000 5/01/2008 500,000
First Wave Marine Inc. Sr.
Note, 11.00% ..................... 250,000 2/01/2008 262,500
French Fragrances Inc. Series B
Sr. Note, 10.375% ................ 500,000 5/15/2007 527,500
Golden Ocean Group Ltd. Sr.
Note, 10.00%+ .................... 1,000,000 8/31/2001 855,000
Henry Co. Sr. Note, 10.00%+ ........ 350,000 4/15/2008 356,125
ICF International Inc. Sr. Sub.
Note, 13.00% ..................... 500,000 12/31/2003 532,500
ICG Services Inc. Sr. Note,
0.00% to 2/14/2003,
10.00% from 2/15/2003 to
maturity+ ........................ 750,000 2/15/2008 465,000
</TABLE>

The accompanying notes are an integral part of the financial statements.

4
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate (cont'd)
ICG Services Inc. Sr. Note,
0.00% to 4/30/2003, 9.875%
from 5/1/2003 to maturity+ ......... $ 500,000 5/01/2008 $ 300,000
International Knife & Saw Inc.
Sr. Sub. Note, 11.375% ............. 500,000 11/15/2006 546,250
International Shipholding Corp.
Sr. Note, 9.00%+ ................... 250,000 7/01/2003 256,563
International Shipholding Corp.
Sr. Note Series B, 7.75% ........... 750,000 10/15/2007 734,062
Intertek Finance PLC Series B
Sr. Sub. Note, 10.25% .............. 1,250,000 11/01/2006 1,325,000
Ionica PLC Sr. Note, 13.50% .......... 750,000 8/15/2006 656,250
J. Crew Group Inc. Sr. Note,
0.00% to 10/14/2002,
13.125% from 10/15/2002 to
maturity ........................... 250,000 10/15/2008 130,000
J. Crew Operating Corp. Sr.
Sub. Note, 10.375% ................. 500,000 10/15/2007 475,000
J.B. Poindexter Inc. Sr. Note,
12.50% ............................. 750,000 5/15/2004 774,375
Johnstown America Industries
Inc. Sr. Sub. Note, 11.75% ......... 750,000 8/15/2005 836,250
Johnstown America Industries
Inc. Sr. Sub. Note Series C,
11.75% ............................. 250,000 8/15/2005 278,750
K-III Communications Corp. Sr.
Note, 8.50% ........................ 750,000 2/01/2006 761,250
Kaiser Aluminum & Chemical
Corp. Sub. Note, 12.75% ............ 500,000 2/01/2003 531,250
Krystal Co. Sr. Note, 10.25% ......... 500,000 10/01/2007 515,000
L 3 Communications Corp. Sr.
Sub. Note, 10.375% ................. 250,000 5/01/2007 275,625
Microcell Telecommunications
Inc. Sr. Note Series B, 0.00%
to 10/14/2002, 11.125% from
10/15/2002 to maturity ............. 1,250,000 10/15/2007 568,202
National Energy Group Inc. Sr.
Note Series D, 10.75% .............. 250,000 11/01/2006 237,500
NBTY Inc. Sr. Sub. Note Series
B, 8.625% .......................... 625,000 9/15/2007 635,937
Newpark Resources Inc. Sr.
Sub. Note Series B,
8.625%+ ............................ 250,000 12/15/2007 252,500
Nextel Communications Inc. Sr.
Note, 0.00% to 2/14/2003,
9.95% from 2/15/2003 to
maturity+ .......................... 500,000 2/15/2008 318,750
North Atlantic Trading Inc. Sr.
Note, 11.00% ....................... $1,000,000 6/15/2004 $1,015,000
Orion Network Systems Inc. Sr.
Note, 11.25% ....................... 1,000,000 1/15/2007 1,140,000
Owens-Illinois Inc. Sr. Note,
8.10% .............................. 500,000 5/15/2007 530,175
Packaging Resources Inc. Sr.
Sec. Note, 11.625% ................. 750,000 5/01/2003 735,000
Pagemart Nationwide Inc. Sr.
Note, 0.00% to 1/31/2000,
15.00% from 2/1/2000 to
maturity ........................... 1,325,000 2/01/2005 1,185,875
Pagemart Wireless Inc. Sr. Sub.
Note, 0.00% to 1/31/2003,
11.25% from 2/1/2003 to
maturity+ .......................... 500,000 2/01/2008 312,500
Phase Metrics Inc. Sr. Note,
10.75%+ ............................ 500,000 2/01/2005 490,000
Primus Telecommunications
Group Sr. Note, 11.75% ............. 500,000 8/01/2004 568,750
Quest Diagnostics Inc. Sr. Sub.
Note, 10.75% ....................... 1,000,000 12/15/2006 1,117,500
RSL Communications Ltd. Sr.
Note, 12.25% ....................... 700,000 11/15/2006 798,000
Service Corp. International
Note, 6.30% ........................ 350,000 3/15/2020 349,244
SFX Entertainment Inc. Sr. Sub.
Note, 9.125%+ ...................... 200,000 2/01/2008 195,000
Spanish Broadcasting Systems
Inc. Sr. Note, 7.50% ............... 1,000,000 6/15/2002 1,150,000
Stena AB Sr. Note, 8.75% ............. 500,000 6/15/2007 512,500
Sun Media Corp. Sr. Sub. Note,
9.50% .............................. 650,000 2/15/2007 695,500
Tekni Plex Inc. Series B Sr.
Sub. Note, 11.25% .................. 500,000 4/01/2007 556,250
Tokheim Corp. Series B Sr. Sub.
Note, 11.50% ....................... 750,000 8/01/2006 836,250
Tom's Foods Inc. Sr. Sec. Note,
10.50% ............................. 500,000 11/01/2004 507,500
Tracor Inc. Sr. Sub. Deb., 8.50% ..... 250,000 3/01/2007 270,000
Transamerican Energy Corp. Sr.
Sec. Note Series B, 11.50% 1,250,000 6/15/2002 1,240,625
Transamerican Energy Corp. Sr.
Sec. Note Series B, 11.50% 1,000,000 6/15/2002 850,000
Transwestern Publishing Co. LP
Sr. Sub. Note, 9.625%+ ............. 250,000 11/15/2007 261,875
</TABLE>

The accompanying notes are an integral part of the financial statements.

5
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate (cont'd)
Trump Atlantic City Associates
First Mortgage Note, 11.25% $ 500,000 5/01/2006 $ 501,250
U.S.A. Mobile Communications
Inc. Sr. Note, 14.00% ........... 1,250,000 11/01/2004 1,375,000
Unilab Corp. Sr. Note, 11.00% ..... 500,000 4/01/2006 527,500
Usinor Sacilor SA Note, 7.25% 650,000 8/01/2006 664,768
Viacom Inc. Sr. Note, 7.75% ....... 750,000 6/01/2005 790,642
Viatel Inc. Sr. Note Series A,
0.00% to 4/14/2003,
12.50% from 4/15/2003 to
maturity+ ....................... 500,000 4/15/2008 305,000
Viatel Inc. Sr. Note Series A,
11.25% .......................... 1,000,000 4/15/2008 1,060,000
Wainoco Oil Corp. Sr. Note,
9.125%+ ......................... 500,000 2/15/2006 492,500
Wireless One Inc. Sr. Note,
13.00% .......................... 1,000,000 10/15/2003 237,500
Wireless One Inc. Sr. Note,
0.00% to 7/31/2001, 13.50%
from 8/1/2001 to maturity ....... 750,000 8/01/2006 90,000
Woodside Finance Ltd. Note,
6.60%+ .......................... 300,000 4/15/2008 295,050
-----------
50,967,183
-----------
Total Fixed Income Securities (Cost $100,318,548).......... 100,401,747
-----------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Shares
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER 2.9%
Ameriking Inc. Com.+* ....................... 300 15,000
Ameriking Inc. Sr. Exch. Pfd.- .............. 14,069 379,859
Econophone Inc. Wts.+* ...................... 750 30,000
Golden Ocean Group Ltd. Wts.+* .............. 250 2,375
Hollinger International, Inc. Cv. Pfd. ...... 158,600 2,131,187
Ionica PLC Wts.+* ........................... 1,000 100,000
North Atlantic Trading Inc. Sr. Pfd.- ....... 10,897 283,322
Orion Network Systems Inc. Wts.+* ........... 1,000 13,500
Primus Telecommunications Group Wts.+* ...... 500 1,350
RSL Communications Ltd. Wts.+* .............. 500 49,500
Wireless One Inc. Wts.* ..................... 750 8
----------
Total Common Stocks & Other (Cost $2,537,380) ............ 3,006,101
-----------
SHORT-TERM INVESTMENTS 15.4%
Navigator Securities Lending Prime Portfolio 15,943,830 15,943,830
----------
Total Short-Term Investments (Cost $15,943,830)........... 15,943,830
-----------
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER 3.1%
American Express Credit
Corp., 5.51% ...................................... $1,619,000 5/01/1998 $ 1,619,000
American Express Credit
Corp., 5.53% ...................................... 1,169,000 5/04/1998 1,169,000
General Electric Capital Corp.,
5.51% ............................................. 421,000 5/13/1998 421,000
-------------
Total Commercial Paper (Cost $3,209,000) ..................................... 3,209,000
-------------
Total Investments (Cost $122,008,758)--118.2% ................................ 122,560,678
Cash and Other Assets, Less Liabilities--(18.2%) ............................. (18,861,995)
-------------
Net Assets--100.0% ........................................................... $103,698,683
=============
Federal Income Tax Information:
At April 30, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $122,016,651 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost .............................................................. $ 3,180,749
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ................................................................. (2,636,722)
-------------
$ 544,027
=============
</TABLE>

The accompanying notes are an integral part of the financial statements.

6
<PAGE>

* Nonincome-producing securities
+ Security restricted in accordance with Rule 144A under the Securities Act of
1933, which allows for the resale of such securities among certain
qualified buyers. The total cost and market value of Rule 144A securities
owned at April 30, 1998 were $11,391,102 and $11,669,863 (11.25% of net
assets), respectively.
TBA Represents "TBA" (to be announced) purchase commitment to purchase
securities for a fixed unit price at a future date beyond customary
settlement time. Although the unit price has been established, the
principal value has not been finalized and may vary by no more than 1%.
[diamond] Payments of income may be made in cash or in the form of additional
securities.

Forward currency exchange contracts outstanding at April 30, 1998 are as
follows:

<TABLE>
<CAPTION>
Unrealized
Appreciation Delivery
Total Value Contract Price (Depreciation) Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sell Australian dollars, Buy U.S. dollars ... 3,516,000 AUD .67830 AUD $ 91,088 5/13/98
Sell Australian dollars, Buy U.S. dollars ... 350,000 AUD .66880 AUD 5,626 6/10/98
Sell Australian dollars, Buy U.S. dollars ... 1,100,000 AUD .65110 AUD (2,471) 7/23/98
Buy Australian dollars, Sell U.S. dollars ... 1,081,000 AUD .66197 AUD (10,353) 5/13/98
Buy Australian dollars, Sell U.S. dollars ... 350,000 AUD .66125 AUD (2,983) 6/10/98
Sell Canadian dollars, Buy U.S. dollars ..... 805,000 CAD .70033 CAD (159) 7/23/98
Sell British pounds, Buy U.S. dollars ....... 3,045,000 GBP 1.67265 GBP 19,986 7/23/98
Sell New Zealand dollars, Buy U.S. dollars .. 110,000 NZD .58265 NZD 3,059 5/13/98
Sell New Zealand dollars, Buy U.S. dollars .. 4,025,000 NZD .55600 NZD 18,119 7/23/98
Sell New Zealand dollars, Buy U.S. dollars .. 2,710,000 NZD .55570 NZD 11,386 7/23/98
---------
$ 133,298
=========
</TABLE>

The accompanying notes are an integral part of the financial statements.

7
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<S> <C>
Assets
Investments, at value (Cost $122,008,758) (Note 1) ................ $122,560,678
Cash .............................................................. 340
Interest and dividends receivable ................................. 2,083,615
Receivable for securities sold .................................... 2,036,687
Receivable for fund shares sold ................................... 296,436
Receivable for open forward contracts ............................. 149,264
Receivable from Distributor (Note 3) .............................. 21,031
Deferred organization costs and other assets (Note 1) ............. 60,098
------------
127,208,149
Liabilities
Payable for collateral received on securities loaned .............. 15,943,830
Payable for securities purchased .................................. 6,411,174
Payable for fund shares redeemed .................................. 550,858
Dividends payable ................................................. 353,559
Accrued management fee (Note 2) ................................... 63,475
Accrued distribution and service fees (Note 5) .................... 49,835
Accrued transfer agent and shareholder services
(Note 2) ........................................................ 31,285
Payable for open forward contracts ................................ 15,966
Accrued trustees' fees (Note 2) ................................... 8,481
Other accrued expenses ............................................ 81,003
------------
23,509,466
------------
Net Assets $103,698,683
============
Net Assets consist of:
Undistributed net investment income .............................. $ 724,718
Unrealized appreciation of investments ........................... 551,920
Unrealized appreciation of forward contracts and
foreign currency ............................................... 130,912
Accumulated net realized gain .................................... 1,243,762
Paid-in capital .................................................. 101,047,371
------------
$103,698,683
============
Net Asset Value and redemption price per share of
Class A shares ($41,348,122 [divided by] 5,643,672 shares) ...... $7.33
======
Maximum Offering Price per share of Class A shares
($7.33 [divided by] .955) ....................................... $7.68
======
Net Asset Value and offering price per share of
Class B shares ($37,432,377 [divided by] 5,120,654 shares)* ..... $7.31
======
Net Asset Value and offering price per share of
Class C shares ($13,242,764 [divided by] 1,811,375 shares)* ..... $7.31
======
Net Asset Value, offering price and redemption price
per share of Class S shares
($11,675,420 [divided by] 1,593,399 shares) ..................... $7.33
======
</TABLE>

- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the year ended April 30, 1998

<TABLE>
<S> <C>
Investment Income
Interest (Note 1) ........................................ $ 7,940,496
Dividends ................................................ 257,333
-----------
8,197,829
Expenses
Management fee (Note 2) .................................. 693,828
Custodian fee ............................................ 158,393
Service fee--Class A (Note 5) ............................ 103,060
Distribution and service fees--Class B (Note 5) .......... 284,733
Distribution and service fees--Class C (Note 5) .......... 113,502
Transfer agent and shareholder services (Note 2) ......... 97,004
Reports to shareholders .................................. 51,295
Registration fees ........................................ 41,037
Audit fee ................................................ 21,691
Trustees' fees (Note 2) .................................. 16,552
Amortization of organization costs (Note 1) .............. 16,246
Legal fees ............................................... 14,119
Miscellaneous ............................................ 10,697
-----------
1,622,157
Expenses borne by the Distributor (Note 3) ............... (103,440)
-----------
1,518,717
-----------
Net investment income .................................... 6,679,112
-----------
Realized and Unrealized Gain on Investments,
Foreign Currency and Forward Contracts
Net realized gain on investments (Notes 1 and 4) ......... 2,034,196
Net realized gain on forward contracts and foreign
currency (Note 1) ...................................... 1,133,581
-----------
Total net realized gain ................................ 3,167,777
-----------
Net unrealized appreciation of investments ............... 1,192,559
Net unrealized appreciation of forward contracts and
foreign currency ....................................... 96,501
-----------
Total net unrealized appreciation ...................... 1,289,060
-----------
Net gain on investments, foreign currency and
forward contracts ...................................... 4,456,837
-----------
Net increase in net assets resulting from operations ..... $11,135,949
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

8
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
August 30, 1996
(Commencement of
Operations) to Year ended
April 30, 1997 April 30, 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income ................ $ 2,657,867 $ 6,679,112
Net realized gain on
investments, foreign
currency and forward
contracts .......................... 277,915 3,167,777
Net unrealized appreciation
(depreciation) of
investments, foreign
currency and forward
contracts .......................... (606,228) 1,289,060
----------- ------------
Net increase resulting from
operations ......................... 2,329,554 11,135,949
----------- ------------
Dividends from net
investment income:
Class A ............................. (1,394,457) (3,130,569)
Class B ............................. (441,102) (1,958,332)
Class C ............................. (234,066) (778,492)
Class S ............................. (442,284) (898,928)
----------- ------------
(2,511,909) (6,766,321)
----------- ------------
Distributions from net realized
gains:
Class A ............................. (69,832) (648,291)
Class B ............................. (23,447) (436,211)
Class C ............................. (12,082) (179,325)
Class S ............................. (21,004) (176,107)
----------- ------------
(126,365) (1,439,934)
----------- ------------
Net increase from fund share
transactions (Note 6) .............. 75,595,297 25,482,412
----------- ------------
Total increase in net assets ......... 75,286,577 28,412,106
Net Assets
Beginning of year .................... -- 75,286,577
----------- ------------
End of year (including
undistributed net
investment income of
$150,952 and $724,718,
respectively) ...................... $75,286,577 $103,698,683
=========== ============
</TABLE>

Note 1

State Street Research Strategic Income Fund (the "Fund"), is a series of State
Street Research Securities Trust (the "Trust"), which was organized as a
Massachusetts business trust in January, 1994 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund commenced operations in August, 1996. The Trust
consists presently of four separate funds: State Street Research Strategic
Income Fund, State Street Research Intermediate Bond Fund, State Street
Research Legacy Fund and State Street Research Galileo Fund.

The investment objective of the Fund is to provide high current income
consistent with overall total return. In seeking to achieve its investment
objective, the Fund invests primarily in U.S. Government securities; high
yield, high risk debt securities (commonly known as "junk bonds"), as well as
investment grade debt, of U.S. issuers; and international debt securities of
governmental and private issuers.

The Fund offers four classes of shares. Before November 1, 1997, Class C shares
were designated Class D and Class S shares were designated Class C. Class A
shares are subject to an initial sales charge of up to 4.50% and an annual
service fee of 0.25% of average daily net assets. Class B shares are subject to
a contingent deferred sales charge on certain redemptions made within five
years of purchase and pay annual distribution and service fees of 1.00%. Class
B shares automatically convert into Class A shares (which pay lower ongoing
expenses) at the end of eight years after the issuance of the Class B shares.
Class C shares are subject to a contingent deferred sales charge of 1.00% on
any shares redeemed within one year of their purchase. Class C shares also pay
annual distribution and service fees of 1.00%. Class S shares are only offered
to certain employee retirement accounts, advisory accounts of State Street
Research & Management Company (the "Adviser"), an indirect wholly owned
subsidiary of Metropolitan Life Insurance Company ("Metropolitan"). No sales
charge is imposed at the time of purchase or redemption of Class S shares.
Class S shares do not pay any distribution or service fees. The Fund's expenses
are borne pro-rata by each class, except that each class bears expenses, and
has exclusive voting rights with respect to provisions of the Plan of
Distribution, related specifically to that class. The Trustees declare separate
dividends on each class of shares.

A. Investment Valuation

Securities are valued by a pricing service, which utilizes market transactions,
quotations from dealers, and various relationships among securities in
determining value. Short-term securities maturing within sixty days are valued
at amortized cost. Securities quoted in foreign currencies are translated into
U.S. dollars at the current exchange rate.

The accompanying notes are an integral part of the financial statements.

9
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

B. Security Transactions

Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered. Gains and losses that arise from
changes in exchange rates are not segregated from gains and losses that arise
from changes in market prices of investments.

C. Net Investment Income

Net investment income is determined daily and consists of interest and
dividends accrued and discount earned, less the estimated daily expenses of the
Fund. Interest income is accrued daily as earned. Dividend income is accrued on
the ex-dividend date. Discount on debt obligations is amortized under the
effective yield method. The Fund is charged for expenses directly attributable
to it, while indirect expenses are allocated among all funds in the Trust.

D. Dividends

Dividends from net investment income are declared daily and paid or reinvested
monthly. Net realized capital gains, if any, are distributed annually, unless
additional distributions are required for compliance with applicable tax
regulations. For the year ended April 30, 1998, the Fund has designated its
distributions from net realized gains as $109,468 from 28% rate gains.

Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles. The difference is primarily due to differing treatments
for foreign currency transactions.

E. Federal Income Taxes

No provision for Federal income taxes is necessary because the Fund intends to
qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods.

F. Deferred Organization Costs

Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.

G. Forward Contracts and Foreign Currencies

The Fund enters into forward foreign currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to hedge certain purchase and sale commitments
denominated in foreign currencies. A forward foreign currency exchange contract
is an obligation by the Fund to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the origination date of
the contract. Forward foreign currency exchange contracts establish an exchange
rate at a future date. These contracts are transferable in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. Risks may arise from the potential inability of a
counterparty to meet the terms of a contract and from unanticipated movements
in the value of foreign currencies relative to the U.S. dollar. The aggregate
principal amount of forward currency exchange contracts is recorded in the
Fund's accounts. All commitments are marked-to-market at the applicable
transaction rates resulting in unrealized gains or losses. The Fund records
realized gains or losses at the time the forward contracts are extinguished by
entry into a closing contract or by delivery of the currency. Neither spot
transactions nor forward currency exchange contracts eliminate fluctuations in
the prices of the Fund's portfolio securities or in foreign exchange rates, or
prevent loss if the price of these securities should decline.

H. Estimates

I. Securities Lending

The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At April 30, 1998, the value of the securities loaned and the value of
collateral were $15,273,499 and $15,943,830, respectively. During the year
ended April 30, 1998, income from securities lending amount to $8,928 and is
included in interest income.

Note 2

The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.75% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the year ended April 30, 1998, the fees pursuant
to such agreement amounted to $693,828.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$16,552 during the year ended April 30, 1998.

Note 3

The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the year ended April 30, 1998, the amount of such expenses assumed by
the Distributor and its affiliates was $103,440.

10
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------

Note 4

For the year ended April 30, 1998, purchases and sales of securities, exclusive
of short-term obligations, aggregated $188,597,010 and $161,883,244 (including
$74,671,940 and $79,882,521 of U.S. Government securities), respectively.

Note 5

The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940. Under the Plan, the Fund will
pay annual service fees to the Distributor at a rate of 0.25% of average daily
net assets for Class A, Class B and Class C shares. In addition, the Fund will
pay annual distribution fees of 0.75% of average daily net assets for Class B
and Class C shares. The Distributor uses such payments for personal service
and/or the maintenance or servicing of shareholder accounts, to compensate or
reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the year ended April 30, 1998, fees
pursuant to such plan amounted to $103,060, $284,733 and $113,502 for Class A,
Class B and Class C shares, respectively.

The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly-owned subsidiary of Metropolitan, earned initial sales charges
aggregating $43,099 and $206,531, respectively, on sales of Class A shares of
the Fund during the year ended April 30, 1998, and that MetLife Securities,
Inc. earned commissons aggregating $380,665 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges aggregating
$45,086 and $2,321 on redemptions of Class B and Class C shares, respectively,
during the same period.

Note 6

The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At
April 30, 1998, Metropolitan owned 2,815,111 Class A shares and 1,308,518 Class
S shares of the Fund.

Share transactions were as follows:

<TABLE>
<CAPTION>
August 30, 1996
(Commencement of
Operations) to Year ended
April 30, 1997 April 30, 1998
------------------------------ --------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold .................................... 5,223,108 $ 36,828,959 1,831,188 $ 13,384,860
Issued upon reinvestment of:
Dividends from net investment income .......... 28,848 206,117 113,717 832,229
Distributions from net realized gains ......... 9,432 68,100 84,556 616,483
Shares repurchased ............................. (145,983) (1,045,400) (1,501,194) (10,988,056)
--------- ------------ ---------- -------------
Net increase ................................... 5,115,405 $ 36,057,776 528,267 $ 3,845,516
========= ============ ========== =============

Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 2,999,935 $ 21,442,086 3,029,126 $ 22,080,859
Issued upon reinvestment of:
Dividends from net investment income .......... 25,978 185,010 132,474 967,752
Distributions from net realized gains ......... 2,030 14,616 45,675 332,565
Shares repurchased ............................. (235,035) (1,686,127) (879,529) (6,410,034)
--------- ------------ ---------- -------------
Net increase ................................... 2,792,908 $ 19,955,585 2,327,746 $ 16,971,142
========= ============ ========== =============

Class C (Formerly Class D) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 1,451,840 $ 10,376,070 837,933 $ 6,117,105
Issued upon reinvestment of:
Dividends from net investment income .......... 6,358 45,216 19,637 143,668
Distributions from net realized gains ......... 1,044 7,497 20,990 152,814
Shares repurchased ............................. (240,114) (1,709,452) (286,313) (2,097,991)
--------- ------------ ---------- -------------
Net increase ................................... 1,219,128 $ 8,719,331 592,247 $ 4,315,596
========= ============ ========== =============

Class S (Formerly Class C) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
Shares sold .................................... 1,545,061 $ 10,861,897 21,859 $ 158,930
Issued upon reinvestment of:
Dividends from net investment income .......... 2,993 21,210 20,699 151,403
Distributions from net realized gains ......... 2,899 20,952 24,029 175,173
Shares repurchased ............................. (5,790) (41,454) (18,351) (135,348)
--------- ------------ ---------- -------------
Net increase ................................... 1,545,163 $ 10,862,605 48,236 $ 350,158
========= ============ ========== =============
</TABLE>

11
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

For a share outstanding throughout each year:

<TABLE>
<CAPTION>
Class A
---------------------------------------
August 30, 1996
(Commencement
of Operations) to Year ended
April 30, 1997(1) April 30, 1998(1)
---------------------------------------
<S> <C> <C>
Net asset value, beginning of year ($) 7.00 7.06
------- -------
Net investment income ($)* 0.38 0.55
Net realized and unrealized gain on investments,
foreign currency and forward contracts ($) 0.01 0.38
------- -------
Total from investment operations ($) 0.39 0.93
------- -------
Dividends from net investment income ($) (0.31) (0.55)
Distributions from net realized gains ($) (0.02) (0.11)
------- -------
Total distributions ($) (0.33) (0.66)
------- -------
Net asset value, end of year ($) 7.06 7.33
======= =======
Total return(2) (%) 5.60(3) 13.70
Ratios/supplemental data:
Net assets at end of year ($ thousands) 36,110 41,348
Ratio of operating expenses to average net assets (%)* 1.35(4) 1.35
Ratio of net investment income to average net assets (%)* 7.30(4) 7.51
Portfolio turnover rate (%) 110.37 179.82
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.01 0.01

<CAPTION>
Class B
--------------------------------------
August 30, 1996
(Commencement
of Operations) to Year ended
April 30, 1997(1) April 30, 1998(1)
--------------------------------------
<S> <C> <C>
Net asset value, beginning of year ($) 7.00 7.05
------ ------
Net investment income ($)* 0.31 0.49
Net realized and unrealized gain on investments,
foreign currency and forward contracts ($) 0.04 0.38
------ ------
Total from investment operations ($) 0.35 0.87
------ ------
Dividends from net investment income ($) (0.28) (0.50)
Distributions from net realized gains ($) (0.02) (0.11)
------ ------
Total distributions ($) (0.30) (0.61)
------ ------
Net asset value, end of year ($) 7.05 7.31
====== ======
Total return(2) (%) 4.96(3) 12.74
Ratios/supplemental data:
Net assets at end of year ($ thousands) 19,678 37,432
Ratio of operating expenses to average net assets (%)* 2.10(4) 2.10
Ratio of net investment income to average net assets (%)* 6.73(4) 6.77
Portfolio turnover rate (%) 110.37 179.82
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.01 0.01
</TABLE>

<TABLE>
<CAPTION>
Class C (Formerly Class D)
---------------------------------------
August 30, 1996
(Commencement
of Operations) to Year ended
April 30, 1997(1) April 30, 1998(1)
---------------------------------------
<S> <C> <C>
Net asset value, beginning of year ($) 7.00 7.05
------ ------
Net investment income ($)* 0.32 0.49
Net realized and unrealized gain on investments,
foreign currency and forward contracts ($) 0.03 0.38
------ ------
Total from investment operations ($) 0.35 0.87
------ ------
Dividends from net investment income ($) (0.28) (0.50)
Distributions from net realized gains ($) (0.02) (0.11)
------ ------
Total distributions ($) (0.30) (0.61)
------ ------
Net asset value, end of year ($) 7.05 7.31
====== ======
Total return(2) (%) 4.96(3) 12.74
Ratios/supplemental data:
Net assets at end of year ($ thousands) 8,590 13,243
Ratio of operating expenses to average net assets (%)* 2.10(4) 2.10
Ratio of net investment income to average net assets (%)* 6.67(4) 6.77
Portfolio turnover rate (%) 110.37 179.82
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.01 0.01

<CAPTION>
Class S (Formerly Class C)
--------------------------------------
August 30, 1996
(Commencement
of Operations) to Year ended
April 30, 1997(1) April 30, 1998(1)
--------------------------------------
<S> <C> <C>
Net asset value, beginning of year ($) 7.00 7.06
------ ------
Net investment income ($)* 0.39 0.57
Net realized and unrealized gain on investments,
foreign currency and forward contracts ($) 0.02 0.38
------ ------
Total from investment operations ($) 0.41 0.95
------ ------
Dividends from net investment income ($) (0.33) (0.57)
Distributions from net realized gains ($) (0.02) (0.11)
------ ------
Total distributions ($) (0.35) (0.68)
------ ------
Net asset value, end of year ($) 7.06 7.33
====== ======
Total return(2) (%) 5.76(3) 13.99
Ratios/supplemental data:
Net assets at end of year ($ thousands) 10,908 11,675
Ratio of operating expenses to average net assets (%)* 1.10(4) 1.10
Ratio of net investment income to average net assets (%)* 7.51(4) 7.74
Portfolio turnover rate (%) 110.37 179.82
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.01 0.01
</TABLE>

- --------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) Does not reflect any front-end or contingent deferred sales charge. Total
return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
(3) Not annualized.
(4) Annualized.

12
<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Trustees of State Street Research
Securities Trust and Shareholders of
State Street Research Strategic Income Fund:

We have audited the accompanying statement of assets and liabilities of State
Street Research Strategic Income Fund, including the schedule of portfolio
investments, as of April 30, 1998, and the related statement of operations for
the year then ended, the statement of changes in net assets and the financial
highlights for the year then ended and for the period August 30, 1996
(commencement of operations) to April 30, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
April 30, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Strategic Income Fund as of April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period August 30, 1996
(commencement of operations) to April 30, 1997, in conformity with generally
accepted accounting principles.

Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 5, 1998

13
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------

State Street Research Strategic Income Fund was ranked in the top quartile of
its Lipper category for the year ended April 30, 1998.* The total return for
the Fund's Class A shares was 13.70% (does not reflect sales charge). The Fund
outperformed the average of the 82 multi-sector income fund classes tracked by
Lipper Analytical Services, which rose 11.39%.

During the period, the Fund benefited from declining U.S. interest rates and a
healthy economy. The Fund's investment in long-term U.S. Treasuries helped
performance, as did its exposure to high-yield bonds. Once again, high-yield
bonds were the best-performing sector in the bond market.

Going forward, we anticipate a slowing U.S. economy. And, contrary to
conventional opinion, we expect interest rates to fall, not rise in the period
ahead. To that end, we have lengthened the Fund's duration from 4.6 to 4.9
years, slightly longer than its benchmark. The Fund continues to own high-yield
bonds, which we believe have the potential to add more return. The Fund owns
bonds in the United Kingdom, Australia and New Zealand, all markets where we
expect interest rates to decline over the period ahead.

April 30, 1998

*Lipper Analytical Services, Inc. ranked the Fund's Class A, B, C and S shares
11, 21, 21 and 10, respectively, out of 82 fund classes for the 12 months ended
April 30, 1998. Rankings do not reflect sales charges and are based on total
return. All classes of the Fund have a common portfolio.

All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Performance reflects maximum 4.5% "A" share
front-end sales charge, or 5% "B" share or 1% "C" share contingent deferred
sales charges, where applicable. "S" shares, offered without a sales charge,
are available through certain employee benefit plans and special programs. The
Lehman Brothers Aggregate Bond Index is a market-value weighted index of
fixed-rate debt issues, including U.S. Treasury, agency, and corporate bond
issues, and mortgage-backed securities. Direct investment in the index is not
possible; results are for illustrative purposes only. Before November 1, 1997,
Class C shares were designated Class D, and Class S shares were designated
Class C.

Change In Value Of $10,000
Based On The Lehman Brothers Aggregate Bond Index
Compared To Change In Value Of $10,000
Invested In Strategic Income Fund

[line charts]
Lehman Brothers
Strategic Income Fund Aggregate Bond Index
Class A Shares

Inception 8/30/96 9550 10000
4/30/97 10085 10577
4/30/98 11466 11731

- ---------------------------
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
- ---------------------------
8.59% 8.55%
- ---------------------------

Lehman Brothers
Strategic Income Fund Aggregate Bond Index
Class B Shares

Inception 8/30/96 10000 10000
4/30/97 10496 10577
4/30/98 11832 11731

- ---------------------------
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
- ---------------------------
7.74% 8.35%
- ---------------------------

Lehman Brothers
Strategic Income Fund Aggregate Bond Index
Class C Shares

Inception 8/30/96 10000 10000
4/30/97 10496 10577
4/30/98 11832 11731

- ---------------------------
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
- ---------------------------
11.74% 10.61%
- ---------------------------

Lehman Brothers
Strategic Income Fund Aggregate Bond Index
Class S Shares

Inception 8/30/96 10000 10000
4/30/97 10576 10577
4/30/98 12056 11731

- ---------------------------
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
- ---------------------------
13.99% 11.86%
- ---------------------------

14
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH SECURITIES
TRUST
- --------------------------------------------------------------------------------

Fund Information

State Street Research
Strategic Income Fund
One Financial Center
Boston, MA 02111

Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111

Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111

Shareholder Services
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032

Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110

Legal Counsel
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109

Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109

Officers

Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer

Peter C. Bennett
Vice President

Thomas J. Dillman
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
Vice President

James M. Weiss
Vice President

Elizabeth McCombs Westvold
Vice President

Kennard Woodworth, Jr.
Vice President

Gerard P. Maus
Treasurer

Joseph W. Canavan
Assistant Treasurer

Douglas A. Romich
Assistant Treasurer

Francis J. McNamara, III
Secretary and General Counsel

Darman A. Wing
Assistant Secretary and
Assistant General Counsel

Amy L. Simmons
Assistant Secretary

Trustees

Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company

Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University

Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial
Officer, St. Regis Corp.

Edward M. Lamont
Formerly in banking
(with an affiliate of
J.P. Morgan & Co.
in New York);
presently engaged in private
investments and civic affairs

Robert A. Lawrence
Formerly Partner, Saltonstall & Co.

Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company

Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.

Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School
of Management, Massachusetts
Institute of Technology

15
<PAGE>

[back cover]

State Street Research Strategic Income Fund
One Financial Center
Boston, MA 02111

[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #6
Hartford, CT

Questions? Comments?

Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com

[logo]STATE STREET RESEARCH

This report is prepared for the general information of current shareholders.

When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Strategic Income Fund
prospectus. When used after June 30, 1998, this report must be accompanied by a
current Quarterly Performance Update.

Portfolio changes should not be considered recommendations for action by
individual investors.

CONTROL NUMBER: 5002-980616(0799)SSR-LD SI-666E-0698

<PAGE>

[cover]
STATE STREET RESEARCH

INTERMEDIATE BOND FUND

ANNUAL REPORT

April 30, 1998

WHAT'S INSIDE

From the Chairman
Another year of solid growth

Fund Information
Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[logo]
DALBAR KEY HONORS
COMMITMENT TO:
INVESTORS
1997

For Excellence
in
Shareholder Service

STATE STREET RESEARCH FUNDS

<PAGE>

FROM THE CHAIRMAN

[photo of Ralph F. Verni]

Dear Shareholder:

Americans have enjoyed another year of solid economic growth, low inflation and
strong investment returns. Unemployment has hit a record 28-year low, consumer
confidence continues at near-record highs and interest rates remain low.
Together these favorable factors have stimulated a boom in the housing market
and stronger-than-expected retail sales.

Stocks

Bonds

What's Ahead

Sincerely,
/s/ Ralph F. Verni
--------------
Ralph F. Verni
Chairman
April 30, 1998

(1)The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely held common stocks. The index is
unmanaged. Direct investment in the index is not possible; results are for
illustrative purposes only.

(2)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends.

(3)"S" shares, offered without a sales charge, are available only through
certain employee benefit plans and special programs.

(4)Before November 1, 1997, Class S shares were designated Class C.

<TABLE>
<CAPTION>
- ------------------------------------------
Life of Fund
(since 5/16/94) 1 Year
- ------------------------------------------
<S> <C> <C>
Class S 7.13% 9.52%
- ------------------------------------------
</TABLE>

Average Annual Total Return(2,3,4)

<TABLE>
<CAPTION>
- ------------------------------------------
Life of Fund
(since 5/16/94) 1 Year
- ------------------------------------------
<S> <C> <C>
Class S 7.09% 8.70%
- ------------------------------------------
</TABLE>

SEC Yield(4)

<TABLE>
- ------------------------------------------
<S> <C>
Class S 5.51%
- ------------------------------------------
</TABLE>

SEC yield is based on the net investment income produced for the 30 days ended
April 30, 1998.

Performance results for the Fund are increased by the voluntary reduction of
fund fees and expenses; without subsidization, performance would have been
lower.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED INCOME SECURITIES 94.5%
U.S. Treasury 38.2%
U.S. Treasury Bond, 8.50% ........... $ 650,000 2/15/2020 $ 841,854
U.S. Treasury Bond, 8.125% .......... 475,000 8/15/2021 596,942
U.S. Treasury Note, 7.125% .......... 925,000 9/30/1999 944,222
U.S. Treasury Note, 5.625% .......... 450,000 10/31/1999 450,140
U.S. Treasury Note, 6.25% ........... 50,000 8/31/2000 50,672
U.S. Treasury Note, 6.625% .......... 50,000 7/31/2001 51,422
U.S. Treasury Note, 7.50% ........... 200,000 11/15/2001 211,594
U.S. Treasury Note, 6.25% ........... 900,000 2/28/2002 917,577
U.S. Treasury Note, 7.875% .......... 1,100,000 11/15/2004 1,226,676
U.S. Treasury Note, 7.50% ........... 300,000 2/15/2005 329,343
U.S. Treasury Note, 6.50% ........... 425,000 8/15/2005 443,594
U.S. Treasury STRIPS, 0.00% ......... 650,000 5/15/2003 490,177
----------
6,554,213
----------
U.S. Agency Mortgage 3.2%
Federal National Mortgage
Association, 8.00% ................ 162,518 4/01/2008 169,933
Government National
Mortgage Association, 6.50% 55,002 2/15/2009 55,603
Government National
Mortgage Association, 6.50% 72,933 5/15/2009 73,730
Government National
Mortgage Association
REMIC Series 96-6-B, 6.50% 250,000 10/16/2017 253,125
----------
552,391
----------
U.S. Agency 1.5%
Guaranteed Export Trust
Series 95-B Notes, 6.13% .......... 229,412 6/15/2004 230,104
Guaranteed Export Trust
Series 96-A Notes, 6.55% .......... 19,118 6/15/2004 19,492
----------
249,596
----------
Canadian-Yankee 5.2%
DR Investments Sr. Note,
7.10%+ ............................ 75,000 5/15/2002 76,937
Hydro Quebec Deb., 13.25% ........... 250,000 12/15/2013 272,377
Petroliam Nasional BHD Note,
6.875%+ ........................... 125,000 7/01/2003 119,208
Province of Manitoba Global
Note, 6.75% ....................... 75,000 3/01/2003 76,733
Province of Quebec Deb.,
8.80% ............................. 250,000 4/15/2003 276,345
Southern Investments Sr.
Note, 6.375% ...................... 75,000 11/15/2001 75,083
----------
896,683
----------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Foreign Government 1.9% Australian Dollar
Commonwealth of Australia, 8.75% 50,000 8/15/2008 $ 39,732
New Zealand Dollar
Government of New Zealand, 10.00% 75,000 3/15/2002 45,210
Government of New Zealand, 8.00% 175,000 11/15/2006 103,760
Pound Sterling
United Kingdom Treasury, 8.50% 75,000 12/07/2005 145,093
--------
333,795
--------
Finance/Mortgage 28.5%
Amresco Commercial
Mortgage Funding Corp.
Series 1997-A1, 6.73% ............. $ 96,678 6/17/2029 98,129
Associates Corp. of North
America Sr. Note, 6.70% ........... 175,000 5/29/2001 178,148
Associates Corp. of North
America Note, 6.375% .............. 150,000 10/15/2002 150,675
Chase Capital Securities
Series C, 6.27% ................... 150,000 3/01/2027 147,618
Chase Manhattan Master
Trust Series 1997-2A,
6.30% ............................. 175,000 4/15/2003 176,202
Chase Mortgage Finance
Corp. Series 1993N-A5,
6.75% ............................. 171,622 11/25/2024 171,354
Cigna Corp. Note, 7.40% ............. 175,000 5/15/2007 184,046
CIT Group Holdings Inc. Note,
6.20% ............................. 325,000 10/20/2000 326,160
CIT Group Holdings Inc. Note,
6.75% ............................. 100,000 5/14/2001 101,722
Countrywide Funding Corp.
Note, 6.58% ....................... 125,000 9/21/2001 126,050
Countrywide Funding Corp.
Note, 6.28% ....................... 175,000 1/15/2003 174,102
Countrywide Mortgage Inc.
Series 1994-2 Class A-7,
6.50% ............................. 51,459 4/25/2008 51,314
Credit Suisse First Boston
97C2-A2, 6.52% .................... 175,000 7/17/2007 176,039
DLJ Mortgage Acceptance
Corp. Series 97-CF2-A1A,
6.55%+ ............................ 73,232 11/15/2006 74,124
Finova Capital Corp. Note,
6.375% ............................ 100,000 10/15/2000 100,556
First Union Lehman Brothers
Series 97-C1-A1, 7.15% ............ 117,617 2/18/2004 121,260
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance/Mortgage (cont'd)
First USA Credit Card Master
Trust Series 1997-6A,
6.42% ........................................... $175,000 3/17/2005 $ 177,564
Ford Credit Auto Owner Trust
Series 1997B-A3, 6.05% .......................... 175,000 4/15/2001 175,766
GS Mortgage Securities Corp.
Series 97-GL1-A2B, 6.86%......................... 125,000 7/13/2030 128,438
Household Finance Corp.
Note, 6.875% .................................... 75,000 3/01/2003 76,493
Los Angeles County, California
Pension Series 94-D,
6.65% ........................................... 100,000 6/30/2003 102,257
MBNA Corp. Sr. Note,
6.875% .......................................... 150,000 11/15/2002 152,289
NationsBank Capital Trust,
6.37% ........................................... 150,000 1/15/2027 146,055
NationsBank Master Trust
Series 1995-1, 6.45% ............................ 575,000 4/15/2003 581,469
Prudential Home Mortgage
Securities Co. Series 93-19
A-5, 7.00% ...................................... 1,395 6/25/2023 1,390
Prudential Home Mortgage
Securities Co. Series 93-29
A-6 PAC, 6.75% .................................. 63,939 8/25/2008 64,158
Prudential Home Mortgage
Securities Co. Series 94-15
A-7, 6.80% ...................................... 164,912 5/25/2024 165,375
Sears Credit Account Master
Trust Series 1995-2, 8.10%....................... 125,000 6/15/2004 128,710
Sears Credit Account Master
Trust Series 1997-1A,
6.20% ........................................... 75,000 7/16/2007 75,510
Structured Asset Securities
Corp. Series 97-LL1-A1,
6.79% ........................................... 173,079 6/12/2004 177,136
Suntrust Capital Securities
Series A, 6.295% ................................ 200,000 5/15/2027 200,000
World Omni Automobile Lease
Trust 97B-A3, 6.18% ............................. 175,000 11/25/2003 175,752
----------
4,885,861
----------
Corporate 16.0%
Ameritech Capital Funding
Corp. Note, 5.65% ............................... 350,000 1/15/2001 347,634
California Infrastructure and
Economic Development
Bank Series 1997-A4, 6.15% ...................... 75,000 3/25/2004 76,415
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California Infrastructure and
Economic Development
Bank Series 1997-A5,
6.25% ........................................... $150,000 6/25/2004 $ 151,078
Chevron Corp. Profit Sharing
Note, 8.11% ..................................... 115,000 12/01/2004 122,876
Columbia/HCA Healthcare
Corp. Note, 8.12% ............................... 75,000 8/04/2003 76,424
Columbia/HCA Healthcare
Corp. Note, 6.87% ............................... 125,000 9/15/2003 118,998
Columbia/HCA Healthcare
Corp. Note, 6.91% ............................... 175,000 6/15/2005 166,280
Darden Restaurants Inc. Note,
6.375% .......................................... 175,000 2/01/2006 169,726
Electronic Data Systems Corp.
Note, 6.85%+ .................................... 250,000 5/15/2000 254,240
General Electric Capital Corp.
Note, 5.43% ..................................... 350,000 1/17/2000 349,344
Ingersoll-Rand Co., 6.20% ......................... 350,000 11/15/1999 351,001
News America Holdings Inc.
Deb., 7.375% .................................... 225,000 10/17/2008 232,825
Raytheon Co. Note, 6.30% .......................... 175,000 8/15/2000 176,008
Southern California Edison Co.
Deb., 5.875% .................................... 150,000 1/15/2001 149,590
------------
2,742,439
------------
Total Fixed Income Securities (Cost $16,173,953)................................. 16,214,978
------------
COMMERCIAL PAPER 4.3%
American Express Credit
Corp., 5.51% .................................... 735,000 5/01/1998 735,000
------------
Total Commercial Paper (Cost $735,000)........................................... 735,000
------------
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Shares
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS 9.2%
Navigator Securities Lending Prime
Portfolio ..................................................... 1,583,815 1,583,815
-----------
Total Short-Term Investments (Cost $1,583,815) .................................. 1,583,815
-----------
Total Investments (Cost $18,492,768)--108.0%..................................... 18,533,793
Cash and Other Assets, Less Liabilities--(8.0%) (1,379,667)
------------
Net Assets--100.0% .............................................................. $17,154,126
============
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

<TABLE>
- -----------------------------------------------------------------
<S> <C>
Federal Income Tax Information:
At April 30, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $18,495,760 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost ..................................... $ 173,775
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................ (135,742)
---------
$ 38,033
=========
</TABLE>

- --------------------------------------------------------------------------------
+ Security restricted in accordance with Rule 144A under the Securities Act of
1933, which allows for the resale of such securities among certain qualified
buyers. The total cost and market value of Rule 144A securities owned at April
30, 1998 were $522,029 and $524,509 (3.06% of net assets), respectively.

Forward currency exchange contracts outstanding at April 30, 1998 are as
follows:

The accompanying notes are an integral part of the financial statements.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
April 30, 1998

<TABLE>
<S> <C>
Assets
Investments, at value (Cost $18,492,768) (Note 1).............. $18,533,793
Cash .......................................................... 9,464
Interest receivable ........................................... 220,290
Receivable from Distributor (Note 3) .......................... 15,976
Receivable for fund shares sold ............................... 3,799
Receivable for open forward contracts ......................... 1,683
Deferred organization costs and other assets (Note 1) ......... 29,067
-----------
18,814,072
Liabilities
Payable for collateral received on securities loaned .......... 1,583,815
Accrued trustees' fees (Note 2) ............................... 8,353
Accrued management fee (Note 2) ............................... 7,737
Accrued transfer agent and shareholder services
(Note 2) .................................................... 3,502
Payable for open forward contracts ............................ 134
Other accrued expenses ........................................ 56,405
-----------
1,659,946
-----------
Net Assets $17,154,126
===========
Net Assets consist of:
Undistributed net investment income .......................... $ 133,413
Unrealized appreciation of investments ....................... 41,025
Unrealized appreciation of forward contracts
and foreign currency ....................................... 1,414
Accumulated net realized gain ................................ 49,298
Paid-in capital .............................................. 16,928,976
-----------
$17,154,126
===========
Net Asset Value, offering price and redemption price
per share of Class S shares
($17,154,126 [divided by] 1,756,790 shares) ................. $9.76
=====
</TABLE>

<TABLE>
<S> <C>
Investment Income
Interest (Note 1) ............................................ $1,150,421

Expenses
Management fee (Note 2) ...................................... 94,036
Custodian fee ................................................ 62,209
Reports to shareholders ...................................... 22,376
Trustees' fees (Note 2) ...................................... 20,097
Audit fee .................................................... 20,067
Registration fees ............................................ 18,687
Amortization of organization costs (Note 1) .................. 17,529
Transfer agent and shareholder services (Note 2) ............. 9,817
Legal fees ................................................... 4,474
Miscellaneous ................................................ 5,875
----------
275,167
Expenses borne by the Distributor (Note 3) ................... (147,054)
----------
128,113
----------
Net investment income ........................................ 1,022,308
----------
Realized and Unrealized Gain (Loss) on
Investments, Forward Contracts
and Foreign Currency
Net realized gain on investments (Notes 1 and 4) ............. 112,009
Net realized gain on forward contracts and foreign
currency (Note 1) .......................................... 36,561
----------
Total net realized gain ..................................... 148,570
----------
Net unrealized appreciation of investments ................... 250,817
Net unrealized depreciation of forward contracts and
foreign currency ........................................... (1,175)
----------
Total net unrealized appreciation ........................... 249,642
----------
Net gain on investments, forward contracts and
foreign currency ........................................... 398,212
----------
Net increase in net assets resulting from operations ......... $1,420,520
==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Years ended April 30
---------------------------------
1997 1998
- ---------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income ........... $ 1,031,538 $ 1,022,308
Net realized gain (loss) on
investments, forward
contracts and foreign
currency ...................... (66,897) 148,570
Net unrealized appreciation
(depreciation) of
investments, forward
contracts and foreign
currency ...................... (10,806) 249,642
----------- -----------
Net increase resulting from
operations..................... 953,835 1,420,520
----------- -----------
Dividends from net
investment income:
Class A ........................ (28,352) --
Class S ........................ (1,049,495) (1,019,623)
----------- -----------
(1,077,847) (1,019,623)
----------- -----------
Distribution from net realized
gains:
Class A ........................ (4,744) --
Class S ........................ (129,421) --
----------- -----------
(134,165) --
----------- -----------
Net increase from fund share
transactions (Note 7) ......... 59,232 284,257
----------- -----------
Total increase (decrease) in
net assets .................... (198,945) 685,154

Net Assets
Beginning of year ............... 16,667,917 16,468,972
----------- -----------
End of year (including
undistributed net
investment income of
$105,503 and $133,413,
respectively) ................. $16,468,972 $17,154,126
=========== ===========
</TABLE>

Note 1

State Street Research Intermediate Bond Fund (the "Fund"), is a series of State
Street Research Securities Trust (the "Trust"), which was organized as a
Massachusetts business trust in January, 1994 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund commenced operations in May, 1994. The Trust
presently consists of four separate funds: State Street Research Intermediate
Bond Fund, State Street Research Galileo Fund, State Street Research Legacy
Fund and State Street Research Strategic Income Fund.

The investment objective of the Fund is to provide total return, consisting
primarily of current income and secondarily of capital appreciation,
commensurate with reasonable investment risk. In seeking to achieve this
investment objective, the Fund invests primarily in a diversified portfolio of
debt securities considered investment grade by one or more nationally
recognized rating agencies or of comparable quality by the Fund's investment
manager.

The Fund is authorized to issue four classes of shares. Only Class S shares are
presently available for purchase. Class A, Class B and Class C shares are not
being offered at this time. Effective March 27, 1997, the Fund discontinued
offering Class A shares. Before November 1, 1997, Class S shares were
designated Class C. Class A shares are subject to an initial sales charge of up
to 4.50% and an annual service fee of 0.25% of average daily net assets. Class
B shares are subject to a contingent deferred sales charge on certain
redemptions made within five years of purchase and pay annual distribution and
service fees of 1.00%. Class B shares automatically convert into Class A shares
(which pay lower ongoing expenses) at the end of eight years after the issuance
of the Class B shares. Class C shares are subject to a contingent deferred
sales charge of 1.00% on any shares redeemed within one year of their purchase.
Class C shares also pay annual distribution and service fees of 1.00%. Class S
shares are only offered through certain retirement accounts, advisory accounts
of State Street Research & Management Company (the "Adviser"), an indirect
wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), and special programs. No sales charge is imposed at the time
of purchase or redemption of Class S shares. Class S shares do not pay any
distribution or service fees. The Fund's expenses are borne pro-rata by each
class, except that each class bears expenses, and has exclusive voting rights
with respect to provisions of the Plan of Distribution, related specifically to
that class. The Trustees declare separate dividends on each class of shares.

The accompanying notes are an integral part of the financial statements.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------

A. Investment Valuation

B. Security Transactions

C. Net Investment Income

Net investment income is determined daily and consists of interest accrued and
discount earned, less the estimated daily expenses of the Fund. Interest income
is accrued daily as earned. Discount on debt obligations is amortized under the
effective yield method. The Fund is charged for expenses directly attributable
to it, while indirect expenses are allocated among all funds in the Trust.

D. Dividends

Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually, unless
additional distributions are required for compliance with applicable tax
regulations.

E. Federal Income Taxes

In order to meet certain excise tax distribution requirements under Section
4982 of the Internal Revenue Code, the Fund is required to measure and
distribute annually, if necessary, net capital gains realized during a
twelve-month period ending October 31. In this connection, the Fund is
permitted to defer into its next fiscal year any net capital losses incurred
between each November 1 and the end of its fiscal year. From November 1, 1996
through April 30, 1997, the Fund incurred net capital losses of $50,653 and has
deferred and treated such losses as arising in the fiscal year ended April 30,
1998. From November 1, 1997 through April 30, 1998, the Fund incurred net long-
term capital losses of approximately $5,000 and intends to defer and treat such
losses as arising, in the fiscal year ended April 30, 1999.

F. Deferred Organization Costs

Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.

G. Forward Contracts and Foreign Currencies

H. Estimates

I. Securities Lending

The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At April 30, 1998, the value of the securities loaned and the value of
collateral were $1,549,602 and $1,583,815, respectively. During the year ended
April 30, 1998, income from securities lending amounted to $1,436 and is
included in interest income.

Note 2

The Trust and the Adviser have entered into an agreement under which the
Adviser earns monthly fees at an annual rate of 0.55% of the Fund's average
daily net assets. In consideration of these fees, the Adviser furnishes the
Fund with management, investment advisory, statistical and research facilities
and services. The Adviser also pays all salaries, rent and certain other
expenses of management. During the year ended April 30, 1998, the fees pursuant
to such agreement amounted to $94,036.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Fund such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Fund. In addition, Metropolitan receives a fee for maintenance of
the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through or
under which shares of the Trust may be purchased. During the year ended April
30, 1998, the amount of such expenses was $5,845.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$20,097 during the year ended April 30, 1998.

Note 3

Note 4

For the year ended April 30, 1998, purchases and sales of securities, exclusive
of short-term obligations, aggregated $17,950,191 and $17,495,829 (including
$10,626,744 and $13,472,085 of U.S. Government securities), respectively.

Note 5

Note 6

At a meeting held on May 6, 1998, the Board of Trustees voted to liquidate the
Fund and to distribute the proceeds of such liquidation to the shareholders of
the Fund. The Board of Trustees authorized the Fund's officers to determine the
effective date of such liquidation and to effect the necessary actions to
execute the liquidation.

Note 7

The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At April 30, 1998, Metropolitan
owned 1,406,327 Class S shares of the Fund and the Adviser owned 10,548 Class S
shares of the Fund.

Share transactions were as follows:

<TABLE>
<CAPTION>
Years ended April 30
----------------------------------------------------------------
1997 1998
----------------------------- --------------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares repurchased ............................ (60,764) $(585,159) -- $ --
------- --------- -------- -----------
Net decrease .................................. (60,764) $(585,159) -- $ --
======= ========= ======== ===========
Class S Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------
Shares sold ................................... 74,900 $ 718,964 134,376 $ 1,306,253
Issued upon reinvestment of:
Dividends from net investment income ......... 18,873 180,151 20,464 197,832
Distribution from net realized gains ......... 13,453 129,421 -- --
Shares repurchased ............................ (39,884) (384,145) (125,326) (1,219,828)
------- --------- -------- -----------
Net increase .................................. 67,342 $ 644,391 29,514 $ 284,257
======= ========= ======== ===========
</TABLE>

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

For a share outstanding throughout each year:

<TABLE>
<CAPTION>
Class A
-------------------------------------------
Years ended April 30
------------------------ May 1, 1996 to
1995(2) 1996(1) March 27, 1997(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year ($) 9.55 9.66 9.75
----- ----- -----
Net investment income ($)* 0.54 0.59 0.57
Net realized and unrealized gain (loss) on
investments, foreign currency and forward
contracts ($) 0.01 0.10 (0.15)
----- ----- -----
Total from investment operations ($) 0.55 0.69 0.42
----- ----- -----
Dividends from net investment income ($) (0.44) (0.52) (0.46)
Distributions from net realized gains ($) -- (0.08) (0.08)
----- ----- -----
Total distributions ($) (0.44) (0.60) (0.54)
----- ----- -----
Net asset value, end of year ($) 9.66 9.75 9.63
===== ===== =====
Total return(3) (%) 5.96(4) 7.13 4.40(4)

Ratios/supplemental data:
Net assets at end of year ($ thousands) 10,222 593 --
Ratio of operating expenses to average
net assets (%)* 1.00(5) 1.00 1.00(5)
Ratio of net investment income to average
net assets (%)* 5.92(5) 5.91 5.87(5)
Portfolio turnover rate (%) 157.75 117.28 68.61
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.11 0.09 0.12

<CAPTION>
Class S (Formerly Class C)
-----------------------------------------------
Years ended April 30
-----------------------------------------------
1995(2) 1996(1) 1997(1) 1998(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ($) 9.55 9.67 9.68 9.53
----- ----- ----- -----
Net investment income ($)* 0.56 0.61 0.60 0.58
Net realized and unrealized gain (loss) on
investments, foreign currency and forward
contracts ($) 0.02 0.09 (0.05) 0.23
----- ----- ----- -----
Total from investment operations ($) 0.58 0.70 0.55 0.81
----- ----- ----- -----
Dividends from net investment income ($) (0.46) (0.61) (0.62) (0.58)
Distributions from net realized gains ($) -- (0.08) (0.08) --
----- ----- ----- -----
Total distributions ($) (0.46) (0.69) (0.70) (0.58)
----- ----- ----- -----
Net asset value, end of year ($) 9.67 9.68 9.53 9.76
==== ===== ===== =====
Total return(3) (%) 6.30(4) 7.25 5.85 8.70

Ratios/supplemental data:
Net assets at end of year ($ thousands) 3,738 16,075 16,469 17,154
Ratio of operating expenses to average
net assets (%)* 0.75(5) 0.75 0.75 0.75
Ratio of net investment income to average
net assets (%)* 6.17(5) 6.16 6.14 5.98
Portfolio turnover rate (%) 157.75 117.28 68.61 107.56
* Reflects voluntary assumption of fees or
expenses per share in each year (Note 3) ($) 0.10 0.11 0.11 0.08
</TABLE>

- --------------------------------------------------------------------------------
(1) Per share figures have been calculated using the average shares method.
(2) May 16, 1994 (commencement of operations) to April 30, 1995.
(3) Does not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
(4) Not annualized
(5) Annualized

<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Trustees of State Street Research
Securities Trust and Shareholders of
State Street Research Intermediate Bond Fund:

We have audited the accompanying statement of assets and liabilities of State
Street Research Intermediate Bond Fund, including the schedule of portfolio
investments, as of April 30, 1998, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
April 30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Intermediate Bond Fund as of April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.

Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 5, 1998

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------

State Street Research Intermediate Bond Fund finished below the average of its
peers for the year ended April 30, 1998 with a total return for its Class S
shares of 8.70%. The Fund's Class S shares underperformed the average of 209
intermediate investment-grade fund classes tracked by Lipper Analytical
Services, which rose 9.84%, and the Lehman Brothers Government/
Corporate Intermediate Bond Index which returned 8.94%.

In the latter half of its fiscal year, the Fund was overweighted in short-term,
higher-yielding corporate bonds of very high quality. The manager added
duration through U.S. Treasury bonds during market weakness, ending with
interest rate sensitivity one-half year longer than the Index. The portfolio
also had greater yield than the Index.

The economic outlook is for continued growth and relatively stable interest
rates. In that context, the manager believes the environment for bond investing
remains positive.

April 30, 1998

Change In Value Of $10,000 Based On
The Lehman Brothers Government/Corporate
Intermediate Bond Index
Compared To Change In Value Of $10,000
Invested In Intermediate Bond Fund

[line chart]

LB Government/Corporate
Intermediate Bond Fund Intermediate Bond Index
Class S Shares

5/14/94 10000 10000
4/30/95 10630 10647
4/30/96 11402 11483
4/30/97 12069 12218
4/30/98 13118 13311

- ---------------------------
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
- ---------------------------
8.70% 7.09%
- ---------------------------

All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in the
Fund will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. "S" shares, offered without a sales charge,
are available only through certain employee benefit plans and special programs.
Performance results for the Fund are increased by the voluntary reduction of
fund fees and expenses. Without subsidization, performance would have been
lower. The Lehman Brothers Government/Corporate Intermediate Bond Index is a
commonly used measure of bond market performance. The index is unmanaged.
Direct investment in the index is not possible; results are for illustrative
purposes only.

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH SECURITIES
TRUST
- --------------------------------------------------------------------------------

Fund Information

State Street Research
Intermediate Bond Fund
One Financial Center
Boston, MA 02111

Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111

Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111

Shareholder Services
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032

Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110

Legal Counsel
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109

Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109

Officers

Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer

Peter C. Bennett
Vice President

Thomas J. Dillman
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
Vice President

James M. Weiss
Vice President

Elizabeth McCombs Westvold
Vice President

Kennard Woodworth, Jr.
Vice President

Gerard P. Maus
Treasurer

Joseph W. Canavan
Assistant Treasurer

Douglas A. Romich
Assistant Treasurer

Francis J. McNamara, III
Secretary and General Counsel

Darman A. Wing
Assistant Secretary and
Assistant General Counsel

Amy L. Simmons
Assistant Secretary

Trustees

Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company

Steve A. Garban
Retired; formerly Senior Vice
President for Finance and
Operations and Treasurer, The
Pennsylvania State University

Malcolm T. Hopkins
Former Vice Chairman of the
Board and Chief Financial
Officer, St. Regis Corp.

Edward M. Lamont
Formerly in banking
(with an affiliate of J.P. Morgan
& Co. in New York); presently
engaged in private investments
and civic affairs

Robert A. Lawrence
Formerly Partner, Saltonstall & Co.

Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company

Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.

Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School
of Management, Massachusetts
Institute of Technology

<PAGE>

[blank page]

<PAGE>

[blank page]

<PAGE>

[back cover]

State Street Research Intermediate Bond Fund
One Financial Center
Boston, MA 02111

[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #6
Hartford, CT

Questions? Comments?

Call us at 1-800-562-0032, or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com

[logo]STATE STREET RESEARCH

This report is prepared for the general information of current shareholders.

When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Intermediate Bond
Fund prospectus. When used after June 30, 1998, this report must be accompanied
by a current Quarterly Performance Update.

Portfolio changes should not be considered recommendations for action by
individual investors.

CONTROL NUMBER: 5001-980616(0799)SSR-LD IB-283E-0698