STATE STREET RESEARCH SECURITIES TRUST, N-30D, 1998-01-02

STATE STREET RESEARCH SECURITIES TRUST
N-30D, 1998-01-02

Previous: FIRST TRUST SPECIAL SITUATIONS TRUST SERIES 105, 497J, 1998-01-02

Next: SMITH BARNEY TRAVELERS SERIES FUND INC, NSAR-B, 1998-01-02

[Front Cover]
State Street Research
INTERMEDIATE BOND FUND

SEMIANNUAL REPORT
October 31, 1997

WHAT'S INSIDE

Investment Update
About the Fund,
economy and markets

Fund Information
Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[Dalbar logo]
For Excellence
in
Shareholder Service

State Street Research Funds

<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------

INVESTMENT ENVIRONMENT
The Economy
[bullet] The economy slowed to a moderate pace in the second and third quarter
of 1997, reducing fears that had been raised by a
stronger-than-expected first quarter. The consensus of outside experts
is for 1997 growth in real GNP to average around 3% for the year.
[bullet] The Federal Reserve Board has kept short term interest rates at 5.50%,
unchanged throughout the past six months. The recent collapse in Asian
currencies and stock markets--and the volatility it has created in
U.S. financial markets--makes a rise in interest rates less likely for
the months ahead. However, it is widely expected that the Fed will act
decisively if any signs of inflation appear in the economy.
[bullet] Inflation remained low, although it actually picked up after declining
through the middle of the year.

The Markets
[bullet] After a slow start, bonds picked up during the past six-month period.
High yield and long-term U.S. Treasury bonds led other U.S. fixed
income sectors during the six month period. Intermediate bonds
returned 5.66%(1), as measured by the Lehman Brothers
Government/Corporate Intermediate Bond Index. The Lehman Brothers
Aggregate Bond Index, a measure of a mix of government, mortgage, and
corporate bonds, rose 7.07%(1)
[bullet] Foreign bonds had a strong showing early in the past six month period.
International debt gained 7.54%(1) as measured by the Salomon Brothers
Non-U.S. Dollar World Government Bond Index, despite weakness in
Southeast Asia, which brought many foreign bond markets down in
October.

THE FUND
Over the past six months
[bullet] Class S shares (formerly Class C) of State Street Research
Intermediate Bond Fund provided a total return of 5.63% for the six
months ended October 31, 1997. That was lower than the average
intermediate investment grade bond fund, which gained 6.38% during the
same period, according to Lipper Analytical Services.
[bullet] The Fund continued to emphasize high quality U.S. Treasury and
corporate bonds, especially in the bank and financial services sector.
During the period, the manager added to short-term industrial and
asset-backed bonds and reduced the Fund's investment in mortgage
bonds.
[bullet] Underexposure to bonds with shorter maturities and overweighting
longer-maturity bonds helped the Fund later in the period. However,
the shift in emphasis missed the July bond market rally.

Current Strategy
[bullet] The manager expects to continue to add shorter-maturity corporate
bonds to the portfolio.
[bullet] We expect to maintain a longer than benchmark duration.
[bullet] Our outlook is for continued slow growth and relatively stable
interest rates for the period ahead. In that context, we believe the
environment for bonds remains positive.

October 31, 1997

(1) Salomon Brothers Non-U.S. Dollar World Government Bond Index is a commonly
used measure of international bond performance. 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 Lehman Brothers Government/ Corporate
Intermediate Bond Index is a market-value weighted index of U.S. government
treasury and agency securities, corporate and yankee bonds. 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) 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 through certain
employee benefit plans and special programs.

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 October 31, 1997, except where
noted)
- --------------------------------------------------------------------------------
SEC Average Annual Compound
Rates of Return for periods ended 9/30/97(2,3)
- ----------------------------------------------
Life of Fund
(since 5/16/94) 1 Year
- ----------------------------------------------
Class S +7.12% +7.75%
Average Annual Compound Rates of Return(2,3)
- ----------------------------------------------
Life of Fund
(since 5/16/94) 1 Year
- ----------------------------------------------
Class S +7.26% +7.19%
- ----------------------------------------------
SEC Yield
- ----------------------------------------------
Class S 5.97%
- ----------------------------------------------

SEC yield is based on the net investment income produced for the 30 days ended
October 31, 1997.

Asset Allocation
(by percentage of net assets)

[pie chart]
Corporate bonds 41%
U.S. Treasury securities 37%
Canadian-Yankee 9%
Foreign government bonds 3%
Mortgage securities 6%
Cash 4%

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
- --------------------------------------------------------------------------------
October 31, 1997 (Unaudited)

Principal Maturity Value
Amount Date (Note 1)
------------ ------------ -------------
FIXED INCOME SECURITIES 96.4%
U.S. Treasury 37.2%
U.S. Treasury Bond, 8.75% ...... $ 375,000 5/15/2017 $ 482,344
U.S. Treasury Note, 6.875% ...... 575,000 8/31/1999 587,041
U.S. Treasury Note, 7.125% ...... 1,475,000 9/30/1999 1,513,955
U.S. Treasury Note, 6.875% ...... 275,000 3/31/2000 282,219
U.S. Treasury Note, 6.375% ...... 125,000 3/31/2001 127,383
U.S. Treasury Note, 6.625% ...... 150,000 7/31/2001 154,359
U.S. Treasury Note, 7.50% ...... 200,000 11/15/2001 212,312
U.S. Treasury Note, 6.25% ...... 225,000 2/28/2002 229,007
U.S. Treasury Note, 7.875% ...... 1,275,000 11/15/2004 1,421,421
U.S. Treasury Note, 6.50% ...... 1,250,000 8/15/2005 1,296,875
U.S. Treasury Note Inflation
Indexed, 3.375% ............... 76,110 1/15/2007 75,086
-----------
6,382,002
-----------
U.S. Agency Mortgage 3.8%
Federal National Mortgage
Association, 8.00% ............ 181,712 4/01/2008 189,948
Government National Mortgage
Association, 6.50% ............ 59,901 2/15/2009 60,321
Government National Mortgage
Association, 6.50% ............ 79,598 5/15/2009 80,170
Government National Mortgage
Association, 9.00% ............ 65,649 11/15/2016 71,270
Government National
Mortgage Association
REMIC Series 96-6-B, 6.50% 250,000 10/16/2017 253,670
-----------
655,379
-----------
U.S. Agency 2.4%
Federal Home Loan Mortgage
Corp. Note, 7.24% ............ 150,000 5/15/2002 150,820
Guaranteed Export Trust
Series 95-B Notes, 6.13% . 247,059 6/15/2004 247,331
Guaranteed Export Trust
Series 96-A Notes, 6.55% . 20,588 6/15/2004 20,975
-----------
419,126
-----------
Canadian-Yankee 9.2%
DR Investments Sr. Note,
7.10%+ ........................ 75,000 5/15/2002 77,481
Hydro Quebec Deb., 13.25% . 250,000 12/15/2013 280,237
News America Holdings Inc.
Sr. Note, 7.50% ............... 325,000 3/01/2000 333,430
Petroliam Nasional BHD Note,
6.875%+ ........................ 125,000 7/01/2003 125,213

Principal Maturity Value
Amount Date (Note 1)
------------ ------------ -------------
Province of Manitoba Global
Note, 6.75% .................. $ 75,000 3/01/2003 $ 76,647
Province of Ontario Deb.,
11.50% ........................ 175,000 3/10/2013 185,670
Province of Quebec Deb.,
8.80% ........................ 250,000 4/15/2003 277,297
Southern Investments Capital
Trust Sr. Note, 6.375% ......... 75,000 11/15/2001 75,451
Talisman Energy Inc. Deb.,
7.125% ........................ 150,000 6/01/2007 154,367
-----------
1,585,793
-----------
Trust Certificates 0.8%
Rural Electric Cooperative
Grantor Trust Certificates,
10.11% ........................ 125,000 12/15/2017 131,834
-----------
Foreign Government 3.2%
Australian Dollar
Commonwealth of Australia, 9.00% 125,000 9/15/2004 103,765
Canadian Dollar
Government of Canada, 0.00% 50,000 2/05/1998 35,133
New Zealand Dollar
Government of New Zealand, 10.00% 75,000 3/15/2002 52,325
Government of New Zealand, 8.00% 175,000 11/15/2006 119,447
Pound Sterling
United Kingdom Treasury, 8.50% 125,000 12/07/2005 234,165
-----------
544,835
-----------
Finance/Mortgage 32.0%
Amresco Commercial
Mortgage Funding Corp.
Series 1997-A1, 6.73% ......... $ 98,918 6/17/2029 100,525
Associates Corp. of North
America Sr. Note, 6.70% ...... 175,000 5/29/2001 177,454
Associates Corp. of North
America Note, 6.375% ......... 150,000 10/15/2002 150,402
Banc One Auto Grantor Trust
Series 1997A, 6.27% ............ 154,001 11/20/2003 154,578
Chase Capital Securities
Series C, 6.36% ............... 150,000 3/01/2027 147,618
Chase Manhattan Master Trust
Series 1997-2A, 6.30% ......... 175,000 4/15/2003 175,711
Chase Mortgage Finance
Corp. Series 93L-5, 6.25% . 75,000 10/25/2024 74,273
Cigna Corp. Note, 7.40% ......... 175,000 5/15/2007 182,478
CIT Group Holdings Inc. Note,
6.20% ........................ 325,000 10/20/2000 325,523

The accompanying notes are an integral part of the financial statements.
2
<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)
CIT Group Holdings Inc. Note,
6.75% ....................................... $100,000 5/14/2001 $ 102,332
Columbia / HCA Healthcare
Corp. Note, 6.87% ........................... 125,000 9/15/2003 126,155
Countrywide Funding Corp.
Note, 6.58% ................................. 125,000 9/21/2001 126,021
Countrywide Funding Corp.
Note, 6.28% ................................. 175,000 1/15/2003 175,207
Countrywide Mortgage Inc.
Series 1994-2 Class A-7,
6.50% ....................................... 109,442 4/25/2008 109,236
Discover Credit Card Trust
Series 1993 A, 6.25% ........................ 125,000 8/16/2000 124,883
DLJ Mortgage Acceptance Corp.
Series 97-CF2-A1A, 6.55%+ . 75,000 11/15/2006 76,031
Finova Capital Corp. Note,
6.375% ....................................... 100,000 10/15/2000 100,543
First Union Lehman Brothers
Series 97-C1-A1, 7.15% ........................ 121,732 6/18/2029 127,058
First USA Credit Card Master
Trust Series 1997-6A,
6.42% ....................................... 175,000 3/17/2005 175,027
Ford Credit Auto Owner Trust
Series 1997B-A3, 6.05% ........................ 175,000 4/15/2001 175,779
GE Capital Mortgage Services
Inc., 6.50% ................................. 75,000 4/25/2024 74,906
General Motors Acceptance
Corp. Note, 7.85% ........................... 275,000 11/17/1997 275,195
GS Mortgage Securities Corp.
Series 97-GL1-A2B, 6.86% 125,000 7/13/2030 127,250
Household Affinity Master Trust
Series 1994-1A, 5.57% ........................ 150,000 3/15/1997 150,093
Household Finance Corp.
Note, 6.875% ................................. 75,000 3/01/2003 76,286
Los Angeles County, California
Pension Obligations Revenue
Bonds, Series 94-D, 6.65% ..................... 100,000 6/30/2003 101,869
MBNA Corp. Sr. Note, 6.875% 150,000 11/15/2002 151,361
NationsBank Capital Trust,
6.37% ....................................... 150,000 1/15/2027 144,615
NationsBank Master Trust
Series 1995-1, 6.45% ........................ 575,000 4/15/2003 579,847
Prudential Home Mortgage
Securities Co. Series 93-19
A-5, 7.00% .................................... 70,159 6/25/2023 70,027
</TABLE>

<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
----------- ------------ ------------
<S> <C> <C> <C>
Prudential Home Mortgage
Securities Co. Series 93-29
A-6 PAC, 6.75% .............................. $ 77,377 8/25/2008 $ 77,861
Prudential Home Mortgage
Securities Co. Series 94-15
A-7, 6.80% .................................... 176,804 5/25/2024 177,411
Sears Credit Account Master
Trust Series 1995-2, 8.10% 125,000 6/15/2004 129,335
Sears Credit Account Master
Trust Series 1997-1A,
6.20% ....................................... 75,000 7/16/2007 75,070
Structured Asset Securities
Corp. Series 97-LL1-A1,
6.79% ....................................... 175,000 10/15/2034 177,441
Suntrust Capital Securities
Series A, 6.48% .............................. 200,000 5/15/2027 198,750
-----------
5,494,151
-----------
Corporate 7.8%
Case Credit Corp. Note,
6.125% ....................................... 100,000 2/15/2003 98,734
Chevron Corp. Profit Sharing
Note, 8.11% ................................. 125,000 12/01/2004 132,866
Columbia/HCA Healthcare
Corp. Note, 8.12% ........................... 75,000 8/04/2003 80,144
Columbia/HCA Healthcare
Corp. Note, 6.91% ........................... 175,000 6/15/2005 173,366
Darden Restaurants Inc. Note,
6.375% ....................................... 175,000 2/01/2006 168,989
Electronic Data Systems Corp.
Note, 6.85%+ ................................. 250,000 5/15/2000 254,780
Hercules Inc. Note, 6.15% ..................... 100,000 8/01/2000 100,088
Raytheon Co. Note, 6.30% ........................ 175,000 8/15/2000 176,178
Southern California Edison Co.
Deb., 5.875% ................................. 150,000 1/15/2001 149,016
-----------
1,334,161
-----------
Total Fixed Income Securities (Cost $16,399,720) 16,547,281
-----------
SHORT-TERM OBLIGATIONS 2.5%
Chevron Oil Finance Co., 5.55% 128,000 11/03/1997 128,000
Chevron Oil Finance Co., 5.64% 293,000 11/06/1997 293,000
-----------
Total Short-Term Obligations (Cost $421,000) ... 421,000
-----------
Total Investments (Cost $16,820,720)--98.9%...... 16,968,281
Cash and Other Assets, Less Liabilities--1.1% ... 192,022
-----------
Net Assets--100.0% .............................. $17,160,303
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.
3
<PAGE>

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

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

Federal Income Tax Information:
At October 31, 1997, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $16,830,303 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost ....................................... $ 238,371
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value .......................................... (100,393)
----------
$ 137,978
==========

+ 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
October 31, 1997 were $523,802 and $533,505 (3.11% of net assets),
respectively. Forward currency exchange contracts outstanding at October 31,
1997 are as follows:

<TABLE>
<CAPTION>
Unrealized
Appreciation Delivery
Total Value Contract Price (Depreciation) Date
------------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Sell Australian dollars, Buy U.S. dollars 10,000 AUD .74214 AUD $ 387 11/14/97
Sell Australian dollars, Buy U.S. dollars 35,000 AUD .73289 AUD 1,015 12/10/97
Sell Australian dollars, Buy U.S. dollars 88,000 AUD .70843 AUD 325 1/23/98
Sell British pounds, Buy U.S. dollars 129,000 GBP 1.67200 GBP (5,784) 1/23/98
Sell New Zealand dollars, Buy U.S. dollars 80,000 NZD .62400 NZD 363 1/23/98
Sell New Zealand dollars, Buy U.S. dollars 190,000 NZD .62414 NZD 890 1/23/98
--------
$ (2,804)
========
</TABLE>

The accompanying notes are an integral part of the financial statements.
4
<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND FUND
- -------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------
October 31, 1997 (Unaudited)

Assets
Investments, at value (Cost $16,820,720) (Note 1) ... $16,968,281
Cash ................................................ 677
Interest receivable ................................. 242,178
Receivable from Distributor (Note 3) .................. 16,100
Receivable for open forward contracts ............... 2,980
Receivable for fund shares sold ..................... 970
Deferred organization costs and other assets (Note 1) 35,185
-----------
17,266,371
Liabilities
Accrued transfer agent and shareholder services
(Note 2) .......................................... 13,833
Accrued trustees' fees (Note 2) ..................... 9,697
Accrued management fee (Note 2) ..................... 7,965
Payable for open forward contracts .................. 5,784
Payable for fund shares redeemed ..................... 711
Other accrued expenses .............................. 68,078
-----------
106,068
-----------
Net Assets $17,160,303
===========
Net Assets consist of:
Undistributed net investment income .................. $ 124,566
Unrealized appreciation of investments ............... 147,561
Unrealized depreciation of forward contracts
and foreign currency .............................. (2,724)
Accumulated net realized loss ........................ (14,568)
Shares of beneficial interest ........................ 16,905,468
-----------
$17,160,303
===========
Net Asset Value, offering price and redemption price
per share of Class S shares ($17,160,303 [divided by]
1,754,349 shares of beneficial interest) ............ $ 9.78
===========

- -------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------
For the six months ended October 31, 1997 (Unaudited)

Investment Income
Interest ................................................ $ 577,519

Expenses
Management fee (Note 2) ................................. 47,162
Custodian fee .......................................... 35,972
Reports to shareholders ................................. 14,720
Transfer agent and shareholder services (Note 2) ......... 12,012
Registration fees ....................................... 10,480
Trustees' fees (Note 2) ................................. 10,216
Amortization of organization costs (Note 1) ............ 8,885
Audit fee ................................................ 8,384
Legal fees ............................................. 5,523
Miscellaneous .......................................... 4,074
---------
157,428
Expenses borne by the Distributor (Note 3) ............... (93,116)
---------
64,312
---------
Net investment income .................................... 513,207
---------
Realized and Unrealized Gain (Loss) on
Investments, Forward Contracts
and Foreign Currency
Net realized gain on investments (Notes 1 and 4) ......... 50,601
Net realized gain on forward contracts and foreign
currency (Note 1) .................................... 8,878
---------
Total net realized gain .............................. 59,479
---------
Net unrealized appreciation of investments ............... 357,353
Net unrealized depreciation of forward contracts and
foreign currency ....................................... (5,313)
---------
Total net unrealized appreciation ..................... 352,040
---------
Net gain on investments, foreign currency and
forward contracts .................................... 411,519
---------
Net increase in net assets resulting from operations . $ 924,726
=========

The accompanying notes are an integral part of the financial statements.
5
<PAGE>

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

Six months ended
Year ended October 31, 1997
April 30, 1997 (Unaudited)
---------------- -----------------
Increase (Decrease) in Net Assets
Operations:
Net investment income ............ $ 1,031,538 $ 513,207
Net realized gain (loss) on
investments, forward
contracts and foreign
currency ..................... (66,897) 59,479
Net unrealized appreciation
(depreciation) of
investments, forward
contracts and foreign
currency ..................... (10,806) 352,040
------------ -----------
Net increase resulting from
operations ..................... 953,835 924,726
------------ -----------
Dividends from net
investment income:
Class A ........................ (28,352) --
Class S ........................ (1,049,495) (494,144)
------------ -----------
(1,077,847) (494,144)
------------ -----------
Distribution from net realized
gains:
Class A ........................ (4,744) --
Class S ........................ (129,421) --
------------ -----------
(134,165) --
------------ -----------
Net increase from fund share
transactions (Note 6) ......... 59,232 260,749
------------ -----------
Total increase (decrease) in
net assets ..................... (198,945) 691,331
Net Assets
Beginning of period ............ 16,667,917 16,468,972
------------ -----------
End of period (including
undistributed net
investment income of
$105,503 and $124,566,
respectively) .................. $ 16,468,972 $17,160,303
============ ===========

- ---------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- ---------------------------------------
October 31, 1997

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 two separate funds: State Street Research Intermediate
Bond 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. 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 (formerly Class D shares) are subject to
a contingent deferred sales charge of 1.00% on any shares redeemed within one
year of their purchase. Class C shares also pay annual distribution and service
fees of 1.00%. Class S shares (formerly Class C shares) are only offered to
certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class 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
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.
6
<PAGE>

STATE STREET RESEARCH INTERMEDIATE BOND 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. 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 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 between both 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.

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 has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods. At April 30, 1997, the Fund had a capital
loss carryforward of $13,811 available, to the extent provided in regulations,
to offset future capital gains, if any, which expires on April 30, 2005.

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 approximately
$51,000 and intends to defer and treat such losses as arising in the fiscal
year ended April 30, 1998.

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
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.

Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser earns
monthly fees at an annual rate of 0.55% 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 six months ended October 31, 1997, the fees pursuant to such
agreement amounted to $47,162.

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 six months ended
October 31 1997, the amount of such expenses was $2,927.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$10,216 during the six months ended October 31, 1997.

7
<PAGE>

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

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

Note 3
The Distributor and its affiliates may from time to time and in varying amounts
voluntarily assume some portion of fees or expenses relating to the Fund.
During the six months ended October 31, 1997, the amount of such expenses
assumed by the Distributor and its affiliates was $93,116.

Note 4
For the six months ended October 31, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $10,455,190 and $9,690,946
(including $5,401,775 and $8,184,604 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 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 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.

Note 6
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share. At October 31, 1997,
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>
Six months ended
Year ended October 31, 1997
April 30, 1997 (Unaudited)
----------------------------- -----------------------------
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 80,780 $ 782,738
Issued upon reinvestment of:
Dividends from net investment income ...... 18,873 180,151 10,126 97,417
Distribution from net realized gains ...... 13,453 129,421 -- --
Shares repurchased ........................ (39,884) (384,145) (63,833) (619,406)
------- ---------- ------- ---------
Net increase .............................. 67,342 $ 644,391 27,073 $ 260,749
======= ========== ======= =========
</TABLE>

8
<PAGE>

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

For a share outstanding throughout each period:

<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 period ($) 9.55 9.66 9.75
------- ------ -----
Net investment income ($)* 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 ($) (0.44) (0.60) (0.54)
------- ------ -----
Net asset value, end of period ($) 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 period ($ 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 period (Note 3). ($) 0.11 0.09 0.12
</TABLE>

<TABLE>
<CAPTION>
Class S
----------------------------------------------------
Years ended April 30 Six months ended
---------------------------------- October 31, 1997
1995(2) 1996(1) 1997(1) (Unaudited)(1)
-------------- --------- --------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 9.55 9.67 9.68 9.53
------ ------ ----- -----
Net investment income ($)* 0.56 0.61 0.60 0.29
Net realized and unrealized gain (loss) on
investments, foreign currency and forward
contracts ($) 0.02 0.09 (0.05) 0.24
------ ------ ----- -----
Total from investment operations ($) 0.58 0.70 0.55 0.53
------ ------ ----- -----
Dividends from net investment income ($) (0.46) (0.61) (0.62) (0.28)
Distributions from net realized gains ($) -- (0.08) (0.08) --
------ ------ ----- -----
Total distributions ($) (0.46) (0.69) (0.70) (0.28)
------ ------ ----- -----
Net asset value, end of period ($) 9.67 9.68 9.53 9.78
====== ====== ===== =====
Total return(3) (%) 6.30(4) 7.25 5.85 5.63(4)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 3,738 16,075 16,469 17,160
Ratio of operating expenses to average
net assets (%)* 0.75(5) 0.75 0.75 0.75(5)
Ratio of net investment income to average
net assets (%)* 6.17(5) 6.16 6.14 5.98(5)
Portfolio turnover rate (%) 157.75 117.28 68.61 59.94
* Reflects voluntary assumption of fees or
expenses per share in each period (Note 3). ($) 0.10 0.11 0.11 0.05
</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

9
<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

Officers

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

Peter C. Bennett
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
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
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs

Robert A. Lawrence
Associate, Saltonstall & Co.

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

Thomas L. Phillips
Retired; formerly Chairman of the Board and Chief Executive Officer, Raytheon
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

Jeptha H. Wade
Retired; formerly Of Counsel, Choate, Hall & Stewart

<PAGE>

[Back Cover]
State Street Research Intermediate Bond Fund
One Financial Center
Boston, MA 02111

Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 600

Question? Comments?
Call us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]

[state street research 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 December 31, 1997, 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: 4485-971219(0199)SSR-LD IB-110E-1297IBSRN

<PAGE>

[Front Cover]
State Street Research
STRATEGIC INCOME FUND

SEMIANNUAL REPORT
October 31, 1997

WHAT'S INSIDE

Investment Update
About the Fund,
economy and markets

Fund Information
Facts and figures

Plus, Complete Portfolio Holdings
and Financial Statements

[Dalbar logo]
For Excellence
in
Shareholder Service

State Street Research Funds

<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------

INVESTMENT ENVIRONMENT

The Economy
[bullet] The economy slowed to a moderate pace in the second and third quarters
of 1997, reducing fears that had been raised by a
stronger-than-expected first quarter. The consensus of outside experts
is for 1997 growth in real GNP to average around 3% for the year.
[bullet] The Federal Reserve Board has kept short term interest rates at 5.50%,
unchanged throughout the past six months. The recent collapse in Asian
currencies and stock markets--and the volatility it has created in
U.S. financial markets--makes a rise in interest rates less likely for
the months ahead. However, it is widely expected that the Fed will act
decisively if any signs of inflation appear in the economy.
[bullet] Inflation remained low, although it actually picked up after declining
through the middle of the year.

The Markets
[bullet] High yield bonds led other U.S. fixed income sectors during the past
six months, although they lost some ground in the last month of the
period. The strongest performance came from the lowest-rated high
yield bonds.
[bullet] For the six months ended October 31, 1997, the First Boston High Yield
Index, a measure of high yield bond performance, was up 8.25%(1)
compared to the Lehman Brothers Aggregate Bond Index, a measure of a
mix of government, mortgage, and corporate bonds, which rose 7.07%.(1)
[bullet] Foreign bonds had a strong showing early in the six month period.
International debt gained 7.54%(1) as measured by the Salomon Brothers
Non-U.S. Dollar World Government Bond Index, despite weakness in
Southeast Asia, which brought many foreign bond markets down in
October.

THE FUND
Over the past six months
[bullet] Class A shares of State Street Research Strategic Income Fund provided
a total return of 8.76% for the six months ended October 31, 1997
(without sales charge).(2) That was significantly higher than the
average multi-sector income fund, which gained 6.52% during the same
period, according to Lipper Analytical Services.
[bullet] The Fund benefited from the manager's decision to lengthen duration
among both high grade and nondollar or foreign bonds. Duration is a
measure of a bond's sensitivity to changing interest rates.
[bullet] A decision to limit exposure to emerging markets, in general, also
helped performance.
[bullet] The Fund benefited from a shift in asset allocation, increasing the
Fund's exposure to high yield bonds from 41% to 57% and reducing
exposure to high grade bonds from 44% to 19%. Nondollar bonds were
increased from 11% to 21%.

Current Strategy
[bullet] We will continue to maintain our current mix of bonds, managing the
high grade sector with longer duration and the high yield sector with
intermediate durations.
[bullet] Our outlook is for continued growth and relatively stable interest
rates for the period ahead. In that context, we believe the
environment for high yield bonds remains positive. We also believe
that the prospects for declining interest rates abroad make our
opportunistic investment in nondollar bonds attractive.

October 31, 1997

(1) The First Boston High Yield Index is a commonly used measure of high yield
bond performance. 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. Salomon Brothers Non-U.S. Dollar World Government Bond Index is
a commonly used measure of international bond performance. 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) +8.37% for Class B shares; +8.37% for Class C shares; +8.90% for Class S
shares. Returns do not reflect sales charges.

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

Life of Fund
(since 8/30/96) 1 Year
----------------- -------
Class A +8.28% +6.89%
- --------- ------ -----
Class B +7.46% +6.89%
- --------- ------ -----
Class C +12.02% +6.89%
- --------- ------ -----
Class S +13.23% +6.89%
- -------------------------------------------
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)(3,4)
- -------------------------------------------

Life of Fund
(since 8/30/96) 1 Year
----------------- --------
Class A +8.20% +6.30%
- --------- ------ ------
Class B +7.41% +5.50%
- --------- ------ ------
Class C +11.61% +9.50%
- --------- ------ ------
Class S +12.81% +11.58%
- -------------------------------------------
SEC Yield
- -------------------------------------------

Class A 6.04%
- --------- ----
Class B 5.58%
- --------- ----
Class C 5.58%
- --------- ----
Class S 6.58%
- -------------------------------------------

SEC yield is based on the net investment income produced for the 30 days ended
October 31, 1997.

Asset Allocation
(by percentage of net assets)

[pie chart]

High-Yield Corporate Bond Sector 57%
International Bond Sector 21%
U.S. Government Bond Sector 19%
Cash 3%

<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
October 31, 1997 (Unaudited)

<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
-------------------- ------------ -------------
<S> <C> <C> <C>
FIXED INCOME SECURITIES 93.5%
U.S. Treasury 10.2%
U.S. Treasury Bond, 13.75% ...... $ 725,000 8/15/2004 $ 1,041,057
U.S. Treasury Bond, 11.625% ...... 500,000 11/15/2004 663,280
U.S. Treasury Bond, 12.00% ...... 1,175,000 8/15/2013 1,721,739
U.S. Treasury Bond, 9.875% ...... 1,000,000 11/15/2015 1,399,220
U.S. Treasury Bond, 8.75% ......... 1,325,000 5/15/2017 1,704,281
U.S. Treasury Bond, 8.125% ...... 525,000 8/15/2021 647,309
U.S. Treasury Note, 7.875% ...... 525,000 11/15/2004 585,291
U.S. Treasury Note, 6.50% ......... 125,000 8/15/2005 129,688
U.S. Treasury Note Inflation
Indexed, 3.375% ............... 152,220 1/15/2007 150,174
U.S. Treasury STRIPS, 0.00% ...... 1,000,000 11/15/2001 794,860
U.S. Treasury STRIPS, 0.00% ...... 1,225,000 5/15/2007 694,673
-----------
9,531,572
-----------
U.S. Agency Mortgage 8.5%
Federal Home Loan Mortgage
Corp. TBA, 7.00% ............... 725,000 12/15/2012 734,063
Federal Home Loan Mortgage
Corp., 6.50% .................. 375,000 10/15/2019 374,880
Federal National Mortgage
Association TBA, 7.00% ......... 350,000 11/20/2004 354,375
Federal National Mortgage
Association, 8.50% ............ 1,000,000 2/01/2005 1,045,930
Federal National Mortgage
Association, 9.00% ............ 858,678 5/01/2009 912,080
Federal National Mortgage
Association TBA, 7.50% ......... 1,000,000 12/15/2012 1,024,375
Federal National Mortgage
Association, 8.00% ............ 436,033 5/01/2016 456,199
Government National Mortgage
Association, 8.00% ............ 1,835,006 11/15/2017 1,931,913
Government National Mortgage
Association, 6.50% ............ 508,984 1/15/2024 503,416
Government National Mortgage
Association, 7.50% ............ 552,069 9/15/2025 564,832
-----------
7,902,063
-----------
Foreign Government 21.3%
Commonwealth of Australia, Australian Dollar
9.00% ........................... 8,300,000 9/15/2004 6,889,968
Government of Canada, Canadian Dollar
0.00% ........................... 1,575,000 2/05/1998 1,106,696
Government of New Zealand, New Zealand Dollar
10.00% ........................ 3,050,000 3/15/2002 2,127,143
Government of New Zealand,
8.00% ........................... 3,200,000 11/15/2006 2,184,176
</TABLE>

<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
-------------------- ------------ -------------
<S> <C> <C> <C>
United Kingdom Treasury, Pound Sterling
8.50% ........................... 4,045,000 12/07/2005 $ 7,577,551
-----------
19,885,534
-----------
Finance/Mortgage 6.9%
American Express Credit
Account Master Trust Series
97-1A, 6.40% .................. $1,000,000 4/15/2005 1,010,000
AT&T Universal Card Master
Trust Series Series 95-2A,
5.95% ........................... 1,000,000 10/17/2002 995,620
BankAmerica Institutional
Capital Series B, 7.70%+ ...... 500,000 12/31/2026 510,735
Citicorp Capital Security Note,
7.93% ........................... 550,000 2/15/2027 571,318
Countrywide Funding Corp.
Note, 6.58% ..................... 575,000 9/21/2001 579,698
DLJ Mortgage Acceptance
Corp. Series 97-CF2-A1A,
6.55%+ ........................ 150,000 11/15/2006 152,063
Ford Credit Auto Owner Trust
Series Series 1997B-A3,
6.05% ........................... 1,000,000 4/15/2001 1,004,453
Prudential Home Mortgage
Securities Co. Series 93-45
A-2 PAC, 6.75% .................. 346,038 11/25/2007 344,197
Prudential Home Mortgage
Securities Co. Series 93-47
A-11 PAC, 6.10% ............... 375,000 12/25/2023 360,585
Wells Fargo Capital Sec. Note,
7.73%+ ........................ 500,000 12/01/2026 508,350
Zurich Capital Trust Note,
8.37%+ ........................ 350,000 6/01/2037 373,376
-----------
6,410,395
-----------
Corporate 46.6%
Allbritton Communications Co.
Series B Sr. Sub. Deb.,
9.75% ........................... 725,000 11/30/2007 730,437
Alvey Systems Inc. Sr. Sub.
Note, 11.375% .................. 500,000 1/31/2003 515,000
American Telecasting Inc. Sr.
Note, 0.00% to 6/14/99,
14.50% from 6/15/99 to
maturity ........................ 450,000 6/15/2004 178,875
Ameristar Casinos Inc. Sr. Sub.
Note, 10.50%+ .................. 250,000 8/01/2004 250,000
Archibald Candy Corp. Sr. Sec.
Notes, 10.25%+ .................. 750,000 7/01/2004 787,500
</TABLE>

The accompanying notes are an integral part of the financial statements.
2
<PAGE>

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

Principal Maturity Value
Amount Date (Note 1)
------------ ------------ -------------
Corporate (cont'd)
Axiohm Inc. Sr. Sub. Note,
9.75%+ ........................... $ 250,000 10/01/2007 $ 253,750
Belden & Blake Corp. Sr. Sub.
Note, 9.875%+ ..................... 250,000 6/15/2007 252,500
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 1,050,000
Busse Broadcasting Corp. Sr.
Sec. Note, 11.625% ............... 500,000 10/15/2000 535,000
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 690,000
CHC Helicopter Corp. Sr. Sub.
Note, 11.50% ..................... 1,000,000 7/15/2002 1,065,000
Clearnet Communications Inc.
Sr. Note, 0.00% to
12/14/2000, 14.75% from
12/15/2000 to maturity ............ 500,000 12/15/2005 365,000
Columbia/HCA Healthcare Corp.
Deb., 7.50% ..................... 175,000 12/15/2023 173,320
Columbia/HCA Healthcare Corp.
Note, 8.12% ..................... 325,000 8/04/2003 347,289
Columbia/HCA Healthcare Corp.
Note, 7.69% ..................... 175,000 6/15/2025 166,584
Dobson Communications Corp.
Sr. Note, 11.75% .................. 250,000 4/15/2007 256,250
Drypers Corp. Series B Sr.
Note, 10.25% ..................... 750,000 6/15/2007 766,875
Econophone Inc. Sr. Note,
13.50%+ ........................... 750,000 7/15/2007 802,500
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 935,000
Envirosource Inc. Note, 9.75% . 1,500,000 6/15/2003 1,470,000
Envirosource Inc. Series B Sr.
Note, 9.75%+ ..................... 250,000 6/15/2003 247,500
Exide Corp. Sr. Note, 10.00% ...... 500,000 4/15/2005 525,000
French Fragrances Inc. Series B
Sr. Note, 10.375% ............... 750,000 5/15/2007 776,250
Golden Ocean Group Ltd. Sr.
Note, 10.00%+ ..................... 250,000 8/31/2001 206,250
ICF International Inc. Sr. Sub.
Note, 13.00% ..................... 500,000 12/31/2003 525,000
International Knife & Saw Inc.
Sr. Sub. Note, 11.375% ............ 500,000 11/15/2006 540,000

Principal Maturity Value
Amount Date (Note 1)
------------ ------------ -------------
Intertek Finance PLC Series B
Sr. Sub. Note, 10.25% ............ $1,000,000 11/01/2006 $ 1,050,000
Ionica PLC Sr. Note, 13.50% ......... 500,000 8/15/2006 530,000
Johnstown America Industries
Inc. Sr. Sub. Note, 11.75% ...... 500,000 8/15/2005 545,000
Krystal Co. Sr. Note, 10.25%+ ...... 750,000 10/01/2007 748,125
L3 Communications Corp. Sr.
Sub. Note, 10.375%+ ............... 250,000 5/01/2007 268,750
La Petite Holdings Corp. Sr.
Sec. Note, 9.625% ............... 1,500,000 8/01/2001 1,530,000
Mobile Telecommunication
Technology, Inc. Sr. Sub.
Note, 13.50% ..................... 500,000 12/15/2002 566,250
Muzak L.P. Sr. Note, 10.00% ......... 250,000 10/01/2003 256,250
National Energy Group Inc.
Series C Sr. Note, 10.75%+ . 250,000 11/01/2006 260,625
NBTY Inc. Sr. Sub. Note,
8.625%+ ........................... 625,000 9/15/2007 612,500
New York City Transitional
Finance Authority Series A,
5.00% ........................... 1,000,000 8/15/2027 956,670
North Atlantic Trading Inc. Sr.
Note, 11.00%+ ..................... 1,000,000 6/15/2004 1,010,000
Orion Network Systems Inc. Sr.
Note, 11.25% ..................... 1,000,000 1/15/2007 1,120,000
Outdoor Systems Inc. Sr. Sub.
Note, 9.375% ..................... 500,000 10/15/2006 517,500
Packaging Resources Inc. Sr.
Sec. Note, 11.625% ............... 750,000 5/01/2003 785,625
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 1,079,875
PCI Chemical Inc. Sr. Sec.
Note, 9.25%+ ..................... 250,000 10/15/2007 245,000
Premier Parks Inc. Series A Sr.
Note, 12.00% ..................... 250,000 8/15/2003 277,500
Pricellular Wireless Corp. Sr.
Note, 10.75% ..................... 125,000 11/01/2004 135,000
Primus Telecommunications
Group Sr. Note, 11.75% ............ 500,000 8/01/2004 527,500
Quest Diagnostics Inc. Sr. Sub.
Note, 10.75% ..................... 1,000,000 12/15/2006 1,085,000
RSL Communications Ltd. Sr.
Note, 12.25% ..................... 500,000 11/15/2006 557,500
Sheffield Steel Corp. First
Mortgage Note, 12.00% ............ 750,000 11/01/2001 772,500
Spanish Broadcasting Systems
Inc. Sr. Note, 7.50% ............ 1,000,000 6/15/2002 1,155,000

The accompanying notes are an integral part of the financial statements.
3
<PAGE>

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

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

Principal Maturity Value
Amount Date (Note 1)
------------ ------------ ------------
Corporate (cont'd)
Speedway Motorsports Inc. Sr.
Sub. Note, 8.50% .................. $ 250,000 8/15/2007 $ 252,500
Spinnaker Industries Inc. Sr.
Sec. Note, 10.75% .................. 250,000 10/15/2006 261,875
Star Market Inc. Sr. Sub. Note,
13.00% .............................. 500,000 11/01/2004 572,500
Stena AB Sr. Note, 8.75% ............ 500,000 6/15/2007 503,750
Sun Media Corp. Sr. Sub. Note,
9.50% .............................. 1,000,000 2/15/2007 1,050,000
Tekni Plex Inc. Series B Sr.
Sub. Note, 11.25% .................. 500,000 4/01/2007 546,250
TFM SA de CV Sr. Note,
10.25%+ ........................... 650,000 6/15/2007 643,500
Tokheim Corp. Series B Sr. Sub.
Note, 11.50% ........................ 1,000,000 8/01/2006 1,140,000
Tracor Inc. Sr. Sub. Deb., 8.50% . 250,000 3/01/2007 252,500
Transamerican Energy Corp. Sr.
Note, 11.50%+ ..................... 1,250,000 6/15/2002 1,281,250
Transamerican Energy Corp. Sr.
Note, 0.00% to 6/14/99,
13.00% from 6/15/99 to
maturity+ ........................... 1,250,000 6/15/2002 1,043,750
Trump Atlantic City Associates
First Mortgage Note, 11.25% . 750,000 5/01/2006 738,750
TV Azteca SA de CV Series B
Sr. Note, 10.50% .................. 750,000 2/15/2007 738,750
U.S.A. Mobile Communications
Inc. Sr. Note, 14.00% ............... 1,500,000 11/01/2004 1,680,000
Unilab Corp. Sr. Note, 11.00% . 500,000 4/01/2006 495,000
Universal Outdoor Inc. Sr. Sub.
Note, 9.75% ........................ 250,000 10/15/2006 277,500
Viatel Inc. Sr. Note, 0.00% to
1/14/2000, 15.00% from
1/15/2000 to maturity ............... 250,000 1/15/2005 190,000
Wireless One Inc. Sr. Note,
13.00% .............................. 1,000,000 10/15/2003 527,500
Wireless One Inc. Sr. Note,
0.00% to 7/31/2001, 13.50%
from 8/1/2001 to maturity ......... 750,000 8/01/2006 187,500
-----------
43,385,925
-----------
Total Fixed Income Securities (Cost $85,730,721) ............... 87,115,489
-----------

<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------------------------------------- --------------
<S> <C> <C>
COMMON STOCKS & OTHER 3.9%
Adelphia Communications Corp. Series A
Exch. Pfd.* .............................. 1,250 $ 143,125
Ameriking Inc. Com.* ........................ 300 15,000
Ameriking Inc. Sr. Exch. Pfd.* ............ 13,198 356,346
Golden Ocean Group Ltd. Wts.* ............... 250 1,250
Hollinger International, Inc. Cv. Pfd. ...... 158,600 1,863,550
Ionica PLC Wts.* ........................... 1,000 250,000
Nextel Communications Inc. Series D
Exch. Pfd.* .............................. 250 275,000
North Atlantic Trading Inc. Sr. Pfd.* ...... 10,273 267,098
Orion Network Systems Inc. Wts.* ............ 1,000 13,000
Primus Telecommunications Group Wts.* ...... 500 500
RSL Communications Ltd. Wts.+* ............ 500 50,000
WBK STRYPES Trust Exch. Pfd. ............... 12,000 372,000
Wireless One Inc. Wts.* ..................... 750 188
-----------
Total Common Stocks & Other (Cost $3,210,948) .......................................... 3,607,057
-----------
</TABLE>

<TABLE>
<CAPTION>
Principal Maturity
Amount Date
-------- ---------
SHORT-TERM OBLIGATIONS 3.0%
<S> <C> <C> <C>
Ford Motor Credit Co., 5.60% ...... $2,423,000 11/05/1997 2,423,000
Ford Motor Credit Co., 5.60% ...... 410,000 11/05/1997 410,000
-----------
Total Short-Term Obligations (Cost $2,833,000) .......................................... 2,833,000
-----------
REPURCHASE AGREEMENTS 0.3%
State Street Bank and Trust Co.,
dated 10/31/97, repurchase
proceeds $272,032,
collateralized by $295,000
U.S. Treasury Bill, 4.25%,
due 4/30/98, market value
$281,824 ........................ 272,000 11/03/1997 272,000
-----------
Total Repurchase Agreements (Cost $272,000) ............................................. 272,000
-----------
Total Investments (Cost $92,046,669)-100.7% ............................................. 93,827,546
Cash and Other Assets, Less Liabilities--(0.7%) .......................................... (645,934)
-----------
Net Assets--100.0% ..................................................................... $93,181,612
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.
4
<PAGE>

Federal Income Tax Information:
At October 31, 1997, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $92,052,581 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $ 3,036,200
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (1,261,235)
------------
$ 1,774,965
============

* 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 October 31, 1997 were $11,011,952 and $11,459,497 (12.30% 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%.

Forward currency exchange contracts outstanding at October 31, 1997 are as
follows:

<TABLE>
<CAPTION>
Unrealized
Appreciation Delivery
Total Value Contract Price (Depreciation) Date
--------------------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Sell Australian dollars, Buy U.S. dollars ... 2,120,000 AUD .74235 AUD $ 82,471 11/14/97
Sell Australian dollars, Buy U.S. dollars ... 1,396,000 AUD .73565 AUD 44,953 11/14/97
Sell Australian dollars, Buy U.S. dollars ... 857,000 AUD .74215 AUD 33,164 11/14/97
Sell Australian dollars, Buy U.S. dollars ... 1,100,000 AUD .73289 AUD 31,916 12/10/97
Sell Australian dollars, Buy U.S. dollars ... 2,260,000 AUD .73480 AUD 69,890 12/10/97
Sell Australian dollars, Buy U.S. dollars ... 420,000 AUD .70843 AUD 1,552 1/23/98
Sell Australian dollars, Buy U.S. dollars ... 1,043,000 AUD .70350 AUD 54 11/14/97
Sell Spanish peseta, Buy U.S. dollars ...... 37,700,000 ESP .00637 ESP (19,207) 11/14/97
Buy Spanish peseta, Sell U.S. dollars ...... 37,700,000 ESP .00669 ESP 7,044 11/14/97
Sell British pounds, Buy U.S. dollars ...... 103,000 GBP 1.62800 GBP (4,516) 1/23/98
Sell British pounds, Buy U.S. dollars ...... 4,256,000 GBP 1.62700 GBP (190,843) 1/23/98
Buy Italian lira, Sell U.S. dollars ......... 2,200,000,000 ITL .00058 ITL 28,031 11/14/97
Sell Italian lira, Buy U.S. dollars ......... 2,200,000,000 ITL .00055 ITL (91,427) 11/14/97
Sell New Zealand dollars, Buy U.S. dollars 1,400,000 NZD .64000 NZD 28,761 1/23/98
Sell New Zealand dollars, Buy U.S. dollars 2,625,000 NZD .62400 NZD 11,927 1/23/98
Sell New Zealand dollars, Buy U.S. dollars 2,710,000 NZD .62414 NZD 12,693 1/23/98
----------
$ 46,463
==========
</TABLE>

The accompanying notes are an integral part of the financial statements.
5
<PAGE>

STATE STREET RESEARCH STRATEGIC INCOME FUND
- -------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------
October 31, 1997 (Unaudited)

Assets
Investments, at value (Cost $92,046,669) (Note 1) ............ $ 93,827,546
Cash ......................................................... 162
Receivable for securities sold .............................. 3,697,182
Interest and dividends receivable ........................... 1,947,073
Receivable for open forward contracts ........................ 352,456
Receivable for fund shares sold .............................. 194,262
Receivable from Distributor (Note 3) ........................ 13,319
Deferred organization costs and other assets (Note 1) ......... 85,491
------------
100,117,491
Liabilities
Payable for securities purchased .............................. 6,006,006
Dividends payable ............................................. 355,656
Payable for open forward contracts ........................... 305,993
Payable for fund shares redeemed .............................. 82,465
Accrued management fee (Note 2) .............................. 59,024
Accrued distribution and service fees (Note 5) ............... 42,024
Accrued trustees' fees (Note 2) .............................. 8,177
Accrued transfer agent and shareholder services
(Note 2) ................................................... 3,587
Other accrued expenses ....................................... 72,947
------------
6,935,879
------------
Net Assets $ 93,181,612
============
Net Assets consist of:
Undistributed net investment income ........................ $ 169,879
Unrealized appreciation of investments ..................... 1,780,877
Unrealized appreciation of forward contracts
and foreign currency ....................................... 51,119
Accumulated net realized gain .............................. 1,509,747
Shares of beneficial interest .............................. 89,669,990
------------
$ 93,181,612
============
Net Asset Value and redemption price per share of
Class A shares ($42,375,359 [divided by] 5,732,042 shares
of beneficial interest) .................................... $ 7.39
============
Maximum Offering Price per share of Class A shares
($7.39 [divided by] .955) ................................. $ 7.74
============
Net Asset Value, offering price and redemption price
per share of Class B shares ($27,604,975 [divided by]
3,741,770 shares of beneficial interest)* .................. $ 7.38
============
Net Asset Value and offering price and redemption
price per share of Class C shares ($11,649,971 [divided by]
1,578,986 shares of beneficial interest)* .................. $ 7.38
============
Net Asset Value, offering price and redemption price
per share of Class S shares ($11,551,307 [divided by]
1,562,381 shares of beneficial interest) .................. $ 7.39
============

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

- -------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------
For the six months ended October 31, 1997 (Unaudited)

Investment Income
Interest ............................................. $3,578,176
Dividends ............................................. 115,447
----------
3,693,623
Expenses
Management fee (Note 2) .............................. 321,967
Custodian fee ....................................... 70,246
Service fee--Class A (Note 5) ........................ 49,763
Distribution and service fees--Class B (Note 5) ...... 122,132
Distribution and service fees--Class C (Note 5) ...... 51,099
Reports to shareholders .............................. 26,137
Transfer agent and shareholder services (Note 2) ...... 25,336
Registration fees .................................... 16,419
Audit fee ............................................. 11,326
Trustees' fees (Note 2) .............................. 9,298
Amortization of organization costs (Note 1) ......... 8,190
Legal fees .......................................... 3,808
Miscellaneous ....................................... 6,074
----------
721,795
Expenses borne by the Distributor (Note 3) ............ (26,776)
----------
695,019
----------
Net investment income ................................. 2,998,604
----------
Realized and Unrealized Gain on Investments,
Foreign Currency and Forward Contracts
Net realized gain on investments (Notes 1 and 4) ...... 1,455,026
Net realized gain on forward contracts and foreign
currency (Note 1) ................................. 84,626
----------
Total net realized gain ........................... 1,539,652
----------
Net unrealized appreciation of investments ............ 2,421,516
Net unrealized appreciation of forward contracts and
foreign currency .................................... 16,708
----------
Total net unrealized appreciation .................. 2,438,224
----------
Net gain on investments, foreign currency and
forward contracts ................................. 3,977,876
----------
Net increase in net assets resulting from operations $6,976,480
==========

The accompanying notes are an integral part of the financial statements.
6
<PAGE>

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

August 30, 1996
(Commencement of Six months ended
Operations) to October 31, 1997
April 30, 1997 (Unaudited)
------------------ -----------------
Increase (Decrease) in Net Assets
Operations:
Net investment income ............ $ 2,657,867 $ 2,998,604
Net realized gain on
investments, foreign
currency and forward
contracts ..................... 277,915 1,539,652
Net unrealized appreciation
(depreciation) of
investments, foreign
currency and forward
contracts ..................... (606,228) 2,438,224
------------ ------------
Net increase resulting from
operations ..................... 2,329,554 6,976,480
------------ ------------
Dividends from net
investment income:
Class A ........................ (1,394,457) (1,434,392)
Class B ........................ (441,102) (790,090)
Class C ........................ (234,066) (329,119)
Class S ........................ (442,284) (426,076)
------------ ------------
(2,511,909) (2,979,677)
------------ ------------
Distributions from net realized
gains:
Class A ........................ (69,832) (84,286)
Class B ........................ (23,447) (49,708)
Class C ........................ (12,082) (20,881)
Class S ........................ (21,004) (24,868)
------------ ------------
(126,365) (179,743)
------------ ------------
Net increase from fund share
transactions (Note 6) ......... 75,595,297 14,077,975
------------ ------------
Total increase in net assets ... 75,286,577 17,895,035
Net Assets
Beginning of period ............ -- 75,286,577
------------ ------------
End of period (including
undistributed net
investment of $150,952
and $169,879, respectively) . $ 75,286,577 $ 93,181,612
============ ============

- ---------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- ---------------------------------------
October 31, 1997

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 two separate funds: State Street Research Strategic
Income Fund and State Street Research Intermediate Bond 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. 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 (formerly
Class D shares) are subject to a contingent deferred sales charge of 1.00% on
any shares redeemed within one year of their purchase. Class C shares also pay
annual distribution and service fees of 1.00%. Class S shares (formerly Class C
shares) are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or redemption
of Class 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.
7
<PAGE>

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

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

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 between both 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.

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.

Note 2
The Trust and State Street Research & Management Company (the "Adviser"), an
indirect wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"), have entered into an agreement under which the Adviser earns
monthly fees at an annual rate of 0.75% of the Fund's average daily net assets.
In consideration of these fees, the Adviser furnishes the Fund with management,
investment advisory, statistical and research facilities and services. The
Adviser also pays all salaries, rent and certain other expenses of management.
During the six months ended October 31, 1997, the fees pursuant to such
agreement amounted to $321,967.

The fees of the Trustees not currently affiliated with the Adviser amounted to
$9,298 during the six months ended October 31, 1997.

Note 4
For the six months ended October 31, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $99,468,435 and $84,619,572
(including $32,873,429 and $48,751,044 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.

8
<PAGE>

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

Note 5 (cont'd)

The Distributor uses such payments for personal service and/or the maintenance
or servicing of shareholder accounts, to reimburse securities dealers for
distribution and marketing services, to furnish ongoing assistance to investors
and to defray a portion of its distribution and marketing expenses. For the six
months ended October 31, 1997, fees pursuant to such plan amounted to $49,763,
$122,132 and $51,099 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 $20,731 and $110,452, respectively, on sales of Class A shares of
the Fund during the six months ended October 31, 1997, and that MetLife
Securities, Inc. earned commissons aggregating $163,783 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
aggregating $20,828 and $507 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
October 31, 1997, Metropolitan owned 3,587,264 Class A shares and 1,291,411
Class S shares of the Fund and the Adviser owned one share of each of Class A,
Class B, Class C and Class S shares of the Fund.

Share transactions were as follows:

<TABLE>
<CAPTION>
August 30, 1996
(Commencement of Six months ended
Operations) to October 31, 1997
April 30, 1997 (Unaudited)
---------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Class A Shares Amount Shares Amount
- ---------------------------------------------- --------- ------------ --------- ------------
Shares sold ................................. 5,223,108 $ 36,828,959 820,886 $ 5,966,340
Issued upon reinvestment of:
Dividends from net investment income ...... 28,848 206,117 47,245 344,602
Distributions from net realized gains ...... 9,432 68,100 11,159 80,682
Shares repurchased ........................... (145,983) (1,045,400) (262,653) (1,909,062)
--------- ------------ -------- ------------
Net increase ................................. 5,115,405 $ 36,057,776 616,637 $ 4,482,562
========= ============ ========= ============
Class B Shares Amount Shares Amount
- ----------------------------------------------- --------- ------------ --------- ------------
Shares sold ................................. 2,999,935 $ 21,442,086 1,303,178 $ 9,431,057
Issued upon reinvestment of:
Dividends from net investment income ...... 25,978 185,010 53,770 391,627
Distributions from net realized gains ...... 2,030 14,616 5,065 36,515
Shares repurchased ........................... (235,035) (1,686,127) (413,151) (2,997,934)
--------- ------------ --------- ------------
Net increase ................................. 2,792,908 $ 19,955,585 948,862 $ 6,861,265
========= ============ ========= ============
Class C Shares Amount Shares Amount
- ----------------------------------------------- --------- ------------ --------- ------------
Shares sold ................................. 1,451,840 $ 10,376,070 433,073 $ 3,145,191
Issued upon reinvestment of:
Dividends from net investment income ...... 6,358 45,216 11,718 85,413
Distributions from net realized gains ...... 1,044 7,497 2,526 18,213
Shares repurchased ........................... (240,114) (1,709,452) (87,459) (638,031)
--------- ------------ --------- ------------
Net increase ................................. 1,219,128 $ 8,719,331 359,858 $ 2,610,786
========= ============ ========= ============
Class S Shares Amount Shares Amount
- ----------------------------------------------- --------- ------------ --------- ------------
Shares sold ................................. 1,545,061 $ 10,861,897 13,058 $ 94,250
Issued upon reinvestment of:
Dividends from net investment income ...... 2,993 21,210 9,764 71,161
Distributions from net realized gains ...... 2,899 20,952 3,422 24,742
Shares repurchased ........................... (5,790) (41,454) (9,026) (66,791)
--------- ------------ --------- ------------
Net increase ................................. 1,545,163 $ 10,862,605 17,218 $ 123,362
========= ============ ========= ============
</TABLE>

9
<PAGE>

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

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
Class A
--------------------------------------
August 30, 1996
(Commencement Six months ended
of Operations) to October 31, 1997
April 30, 1997(1) (Unaudited)(1)
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ($) 7.00 7.06
------ ------
Net investment income ($)* 0.38 0.27
Net realized and unrealized gain on investments,
currency and forward contracts ($) 0.01 0.34
------ ------
Total from investment operations ($) 0.39 0.61
------ ------
Dividends from net investment income ($) (0.31) (0.26)
Distributions from net realized gains ($) (0.02) (0.02)
------ ------
Total distributions ($) (0.33) (0.28)
------ ------
Net asset value, end of period ($) 7.06 7.39
====== ======
Total return(2) (%) 5.60(3) 8.76(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 36,110 42,375
Ratio of operating expenses to average net assets (%)* 1.35(4) 1.35(4)
Ratio of net investment income to average net assets (%)* 7.30(4) 7.28(4)
Portfolio turnover rate (%) 110.37 102.43
* Reflects voluntary assumption of fees or
expenses per share in each period (Note 3) ($) 0.01 0.00
</TABLE>

<TABLE>
<CAPTION>
Class B
-------------------------------------
August 30, 1996
(Commencement Six months ended
of Operations) to October 31, 1997
April 30, 1997(1) (Unaudited)(1)
------------------- -----------------
<S> <C> <C>
Net asset value, beginning of period ($) 7.00 7.05
------ ------
Net investment income ($)* 0.31 0.24
Net realized and unrealized gain on investments,
currency and forward contracts ($) 0.04 0.35
------ ------
Total from investment operations ($) 0.35 0.59
------ ------
Dividends from net investment income ($) (0.28) (0.24)
Distributions from net realized gains ($) (0.02) (0.02)
------ ------
Total distributions ($) (0.30) (0.26)
------ ------
Net asset value, end of period ($) 7.05 7.38
====== ======
Total return(2) (%) 4.96(3) 8.37(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 19,678 27,605
Ratio of operating expenses to average net assets (%)* 2.10(4) 2.10(4)
Ratio of net investment income to average net assets (%)* 6.73(4) 6.50(4)
Portfolio turnover rate (%) 110.37 102.43
* Reflects voluntary assumption of fees or
expenses per share in each period (Note 3) ($) 0.01 0.00
</TABLE>

<TABLE>
<CAPTION>
Class C
--------------------------------------
August 30, 1996
(Commencement Six months ended
of Operations) to October 31, 1997
April 30, 1997(1) (Unaudited)(1)
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ($) 7.00 7.05
------ ------
Net investment income ($)* 0.32 0.24
Net realized and unrealized gain on investments,
currency and forward contracts ($) 0.03 0.35
------ ------
Total from investment operations ($) 0.35 0.59
------ ------
Dividends from net investment income ($) (0.28) (0.24)
Distributions from net realized gains ($) (0.02) (0.02)
------ ------
Total distributions ($) (0.30) (0.26)
------ ------
Net asset value, end of period ($) 7.05 7.38
====== ======
Total return(2) (%) 4.96(3) 8.37(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 8,590 11,650
Ratio of operating expenses to average net assets (%)* 2.10(4) 2.10(4)
Ratio of net investment income to average net assets (%)* 6.67(4) 6.50(4)
Portfolio turnover rate (%) 110.37 102.43
* Reflects voluntary assumption of fees or
expenses per share in each period (Note 3) ($) 0.01 0.00
</TABLE>

<TABLE>
<CAPTION>
Class S
-------------------------------------
August 30, 1996
(Commencement Six months ended
of Operations) to October 31, 1997
April 30, 1997(1) (Unaudited)(1)
------------------- -----------------
<S> <C> <C>
Net asset value, beginning of period ($) 7.00 7.06
------ ------
Net investment income ($)* 0.39 0.28
Net realized and unrealized gain on investments,
currency and forward contracts ($) 0.02 0.34
------ ------
Total from investment operations ($) 0.41 0.62
------ ------
Dividends from net investment income ($) (0.33) (0.27)
Distributions from net realized gains ($) (0.02) (0.02)
------ ------
Total distributions ($) (0.35) (0.29)
------ ------
Net asset value, end of period ($) 7.06 7.39
====== ======
Total return(2) (%) 5.76(3) 8.90(3)
Ratios/supplemental data:
Net assets at end of period ($ thousands) 10,908 11,551
Ratio of operating expenses to average net assets (%)* 1.10(4) 1.10(4)
Ratio of net investment income to average net assets (%)* 7.51(4) 7.51(4)
Portfolio turnover rate (%) 110.37 102.43
* Reflects voluntary assumption of fees or
expenses per share in each period (Note 3) ($) 0.01 0.00
</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.

10
<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

Officers

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

Peter C. Bennett
Vice President

Bartlett R. Geer
Vice President

John H. Kallis
Vice President

Kim M. Peters
Vice President

Thomas A. Shively
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
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs

Robert A. Lawrence
Associate, Saltonstall & Co.

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

Thomas L. Phillips
Retired; formerly Chairman of the Board and Chief Executive Officer, Raytheon
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

Jeptha H. Wade
Retired; formerly Of Counsel, Choate, Hall & Stewart

<PAGE>

[Back Cover]
State Street Research Strategic Income Fund
One Financial Center
Boston, MA 02111

Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 600

Question? Comments?
Call us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]

[state street research 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 December 31, 1997, 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: 4486-971219(0199)SSR-LD SI-520E-1297IBSRN