-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KV277xTIEiUoTlfnVOxtXZ59jFo9cUsFpZTGp+TSJMHk9O7cBhU2eUoecuK4JEu1 GHkLuuJCuoNOFLbNssDY+Q== 0001047469-03-035098.txt : 20031030 0001047469-03-035098.hdr.sgml : 20031030 20031030160233 ACCESSION NUMBER: 0001047469-03-035098 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030831 FILED AS OF DATE: 20031030 EFFECTIVENESS DATE: 20031030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STATE STREET RESEARCH FINANCIAL TRUST CENTRAL INDEX KEY: 0000806390 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04911 FILM NUMBER: 03966793 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6173571340 MAIL ADDRESS: STREET 1: STATE STREET RESEARCH FINANCIAL TRUST STREET 2: ONE FINACIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: METLIFE STATE STREET FINANCIAL TRUST DATE OF NAME CHANGE: 19931228 FORMER COMPANY: FORMER CONFORMED NAME: METLIFE STATE STREET FIXED INCOME TRUST DATE OF NAME CHANGE: 19920703 N-CSRS 1 a2120469zn-csrs.txt N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04911 ---------------------------------------------- State Street Research Financial Trust ------------------------------------------------------------------------ (Exact name of registrant as specified in charter) One Financial Center, Boston, MA 02111 ------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Francis J. McNamara, III, Secretary State Street Research One Financial Center, Boston, MA 02111 ------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: 617-357-1200 ------------------ Date of fiscal year end: 02/28/04 ----------------- Date of reporting period: 03/1/03 - 08/31/03 ---------------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. ITEM 1 (REPORT TO SHAREHOLDERS): The Semiannual Report is attached. [STATE STREET RESEARCH LOGO] [GRAPHIC] HEALTH SCIENCES FUND AUGUST 31, 2003 SEMIANNUAL REPORT TO SHAREHOLDERS TABLE OF CONTENTS 3 Performance Discussion 4 Portfolio Holdings 5 Financial Statements 9 Financial Highlights 12 Trustees and Officers
FROM THE CHAIRMAN STATE STREET RESEARCH The uncertainty that plagued the markets early in the six-month period ended August 31, 2003, gave way to optimism as a military victory was declared in Iraq and economic news brightened. Lower short-term interest rates, a significant income tax cut and higher government spending worked together to boost economic growth in the last six months of the period. Housing and auto sales remained strong throughout the period. Corporate profits staged a solid rebound. Employment was the only holdout, as the jobless rate remained at a nine-year high. A WEAK START, THEN STOCKS MOVE HIGHER The economy's weak showing held stocks back early in the period as investors backed away from risk in the build-up to war. However, in the second quarter of 2003 stocks staged an impressive rally that continued through the summer. Technology stocks were the strongest performers. Consumer stocks also gained ground as spending remained strong. In general, small- and mid-cap stocks outperformed large-caps, and growth stocks significantly out-paced value. BONDS RETREAT IN SECOND HALF As investors began to add risk to their portfolios, lower-quality segments of the bond market staged an impressive comeback. High-yield and emerging market bonds were the period's strongest performers. However, as interest rates began to climb and as investors moved money into the stock market, they gave back some of their gains in the second half of the period. Mortgage bonds lagged as mortgage prepayment activity heated up in the spring. Municipal bonds were hurt by concerns over state budget deficits and revenue shortfalls. LOOKING AHEAD A revival for riskier segments of both the stock and bond markets took many investors by surprise over the past year. Yet, it provided an excellent reminder that the best way to take advantage of the market's strongest gains is to own a diversified portfolio of stocks and bonds. We hope you will take time to talk to your financial advisor about diversification. And as always, we look forward to helping you achieve your long-term financial goals with State Street Research Funds. Sincerely, /s/ Richard S. Davis Richard S. Davis Chairman August 31, 2003 2 PERFORMANCE DISCUSSION AS OF AUGUST 31, 2003 HOW STATE STREET RESEARCH HEALTH SCIENCES FUND PERFORMED State Street Research Health Sciences Fund returned 52.46% for the six-month period ended August 31, 2003.(1) The fund did significantly better than the Lipper Health/Biotechnology Funds Index, which returned 17.62%.(2) It also outperformed the S&P 500 Index, which returned 20.87% for the same period.(3) REASONS FOR THE FUND'S PERFORMANCE Health care stocks that underperformed during the past three years were buoyed by the market rally, and our stock selection allowed us to capitalize on that rebound. In general, the fund benefited from its investments in biotechnology and small-cap pharmaceutical companies. Within biotechnology, DOV Pharmaceutical and Axonyx, both micro-cap names with demonstrated product development, were strong performers. In the pharmaceutical industry, MGI Pharmaceutical and BioMarin Pharmaceutical also outperformed. In medical instruments, Staar Surgical, an optical supply firm that markets implants that improve a patient's vision, was also a strong performer. By contrast, our decision to overweight Wyeth, one of the world's largest drug makers, and Aradigm, a small firm that develops pulmonary drug delivery systems, detracted from performance. LOOKING AHEAD We expect that increased pressure to control health care costs will pose a challenge to the Health Care sector as the nation begins to count down to a presidential election. However, we will continue to focus on select small- and mid-cap securities, as well as international drug/biotech stocks, with innovative pipeline products that address unmet medical needs. We believe these stocks have the best potential to succeed in the current environment going forward. TOP 10 HOLDINGS
ISSUER/SECURITY % OF FUND NET ASSETS 1 Novartis AG 4.4% 2 Orphan Medical 4.4% 3 DOV Pharmaceutical 4.3% 4 Wyeth 4.0% 5 Pfizer 3.1% 6 Aspect Medical Systems 3.0% 7 Amgen 2.5% 8 Discovery Laboratories 2.5% 9 TheraSense 2.4% 10 Schering-Plough 2.3% TOTAL 32.9%
BECAUSE FINANCIAL MARKETS AND MUTUAL FUND STRATEGIES ARE CONSTANTLY EVOLVING, IT IS POSSIBLE THAT THE FUND'S HOLDINGS, MARKET STANCE, OUTLOOK FOR VARIOUS INDUSTRIES OR SECURITIES AND OTHER MATTERS DISCUSSED IN THIS REPORT HAVE CHANGED SINCE THIS INFORMATION WAS PREPARED. PORTFOLIO CHANGES SHOULD NOT BE CONSIDERED RECOMMENDATIONS FOR ACTION BY INDIVIDUAL INVESTORS. PERFORMANCE Fund average annual total return as of 8/31/03(4),(6),(7) (does not reflect sales charge)
SINCE INCEPTION 1 YEAR 3 YEARS (12/21/99) Class A 47.86% 5.77% 19.14% Class B(1) 46.82% 5.17% 18.59% Class B 46.85% 4.97% 18.41% Class C 46.94% 5.11% 18.54% Class S 48.33% 6.03% 19.38%
Fund average annual total return as of 9/30/03(4),(5),(6),(7) (at maximum applicable sales charge)
SINCE INCEPTION 1 YEAR 3 YEARS (12/21/99) Class A 53.24% 2.80% 17.61% Class B(1) 56.31% 3.30% 18.41% Class B 56.43% 3.11% 18.23% Class C 60.48% 4.17% 18.85% Class S 62.97% 5.12% 19.71%
(1) Class A shares; does not reflect sales charge. (2) The Lipper Health/Biotechnology Funds Index is an equally weighted index of typically the 30 largest mutual funds within its respective investment objective. The index is unmanaged and does not take transaction charges into consideration. It is not possible to invest directly in the index. (3) The S&P 500 Index (officially the "Standard & Poor's 500 Composite Stock Price Index") is an unmanaged index of 500 U.S. stocks. The index does not take transaction charges into consideration. It is not possible to invest directly in the index. (4) KEEP IN MIND THAT PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The fund's share price and return will fluctuate, and you may have a gain or loss when you sell your shares. All returns assume reinvestment of capital gains distributions and income dividends at net asset value. The returns shown do not reflect the deduction of taxes that a shareholder would pay on distributions or the redemption of fund shares. Because this fund is focused on one market sector, it may involve more risk than broadly diversified funds, since its entire portfolio will be impacted by the performance of the health care industry in general. Performance results for the fund are increased by voluntary reduction of fund fees and expenses; without subsidization, performance would have been lower. (5) Performance reflects a maximum 5.75% Class A share front-end sales charge, or a 5% Class B or Class B(1), or 1% Class C share contingent deferred sales charge, where applicable. (6) For Classes B(1), B, C and S, performance for the period December 21, 1999 through October 16, 2000 (commencement of share class) reflects performance of Class A shares. (7) Class S shares, offered without sales charge, are available through certain employee benefit plans and special programs. State Street Research HEALTH SCIENCES FUND 3 PORTFOLIO HOLDINGS AUGUST 31, 2003 (UNAUDITED)
ISSUER SHARES VALUE - ------------------------------------------------------------------------------ COMMON STOCKS 86.2% FINANCIAL SERVICES 1.5% INSURANCE 0.8% Cigna Corp. 7,440 $ 354,739 WellChoice Inc.* 11,250 326,475 ------------ Total Financial Services 681,214 ------------ HEALTH CARE 84.7% DRUGS & BIOTECHNOLOGY 67.6% Abbott Laboratories Inc. 11,110 447,733 Adolor Corp.* 35,530 505,947 Altana AG ADR 7,490 387,233 Amgen Inc.* 17,720 1,167,748 Atrix Laboratories Inc.* 27,395 827,329 Aventis ADR 3,430 168,070 Axonyx Inc.* 322,560 877,363 Biogen Inc.* 17,495 690,353 BioMarin Pharmaceutical Inc.* 32,505 307,172 Bristol-Myers Squibb Co. 25,500 646,935 CV Therapeutics Inc.* 12,425 318,701 Cypress Biosciences Inc.* 176,600 1,040,174 Cytyc Corp.* 37,050 484,614 Discovery Laboratories Inc.* 155,290 1,152,252 DOV Pharmaceutical Inc.* 136,710 2,011,004 First Horizon Pharmaceutical Corp.* 166,670 1,008,354 Forest Laboratories Inc.* 17,230 809,810 Genzyme Corp.* 5,820 274,413 ICN Pharmaceuticals Inc. 28,020 490,350 Indevus Pharmaceuticals Inc.* 174,720 1,043,078 Inspire Phamaceutical Inc.* 25,660 375,919 InterMune Inc.* 47,790 909,922 Johnson & Johnson Ltd. 21,090 1,045,642 Millennium Pharmaceuticals Inc.* 24,590 341,801 Mylan Laboratories Inc. 12,810 466,284 Novartis AG ADR 55,360 2,046,659 Orphan Medical Inc.* 167,690 2,037,433 OSI Pharmaceuticals Inc.* 9,670 368,427 Penwest Pharmaceuticals Co.* 20,090 439,569 Pfizer Inc. 48,099 1,439,122 Progenics Pharmaceuticals Inc.* 57,890 995,708 Protein Design Laboratories, Inc.* 40,600 499,380 QLT PhotoTherapeutics Inc.* 11,000 149,380 SangStat Medical Corp.* 21,240 474,289 Sanofi Synthelabo Inc. ADR 13,210 372,258 Schering-Plough Inc. 68,930 1,047,047 Shire Pharmaceuticals Group ADR* 18,990 441,518 Teva Pharmaceutical Industries Ltd. ADR 3,920 230,151 Transkaryotic Therapies Inc.* 50,680 635,983 Vicuron Phamaceuticals Inc.* 23,550 351,837 Watson Pharmaceuticals Inc.* 5,130 210,843 Wyeth Inc. 42,950 1,840,408 ------------ 31,378,213 ------------ HEALTH CARE FACILITIES 1.5% HCA Inc. 18,835 715,542 ------------ HEALTH CARE SERVICES 4.6% Aetna Inc. 8,420 $ 479,940 Anthem Inc.* 7,038 515,182 Caremark Rx Inc.* 12,200 306,586 Universal Health Services Inc.* 10,050 500,289 WellPoint Health Networks Inc. Cl. A* 4,240 330,720 ------------ 2,132,717 ------------ HOSPITAL SUPPLIES 11.0% Aspect Medical Systems Inc.* 137,461 1,408,975 Becton Dickinson & Co. 11,890 434,461 Conceptus Inc.* 26,640 431,834 Guidant Corp. 16,660 836,332 Medtronic Inc. 6,700 332,186 Staar Surgical Co.* 45,790 551,770 TheraSense Inc.* 79,050 1,126,462 ------------ 5,122,020 ------------ Total Health Care 39,348,492 ------------ TOTAL COMMON STOCKS (COST $29,120,055) 40,029,706 ------------ SHORT-TERM INVESTMENTS 24.8% State Street Navigator Securities Lending Prime Portfolio 11,526,033 11,526,033 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $11,526,033) 11,526,033 ------------ MATURITY AMOUNT OF DATE PRINCIPAL - ------------------------------------------------------------------------------ COMMERCIAL PAPER 13.0% American Express Credit Corp., 0.98% 9/08/2003 $ 980,000 979,813 American Express Credit Corp., 1.04% 9/08/2003 558,000 557,887 American Express Credit Corp., 1.02% 9/22/2003 624,000 623,629 Federal National Mortgage Association, 1.02% 9/02/2003 673,000 672,981 Federal National Mortgage Association, 1.03% 9/02/2003 1,500,000 1,499,957 General Electric Capital Corp., 1.05% 9/22/2003 1,687,000 1,685,967 ---------- TOTAL COMMERCIAL PAPER (COST $6,020,234) 6,020,234 ---------- % OF NET ASSETS - ------------------------------------------------------------------------------ SUMMARY OF PORTFOLIO ASSETS Investments (Cost $46,666,322) 124.0% 57,575,973 Cash and Other Assets, Less Liabilities (24.0%) (11,139,444) ------ ------------- Net Assets 100.0% $ 46,436,529 ====== =============
KEY TO SYMBOLS * Denotes a security which has not paid a dividend during the last year. ADR Stands for American Depositary Receipt, representing ownership of foreign securities. FEDERAL INCOME TAX INFORMATION At August 31, 2003, the net unrealized appreciation of investments based on cost for federal income tax purposes of $47,505,298 was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 10,828,904 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (758,229) ------------ $ 10,070,675 ============
The notes are an integral part of the financial statements. 4 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES August 31, 2003 (unaudited) ASSETS Investments, at value (cost $46,666,322) (NOTE I) $ 57,575,973 Cash 4,396 Receivable for fund shares sold 417,722 Receivable for securities sold 150,633 Receivable from distributor 28,355 Dividends receivable 26,494 Foreign tax receivable 3,053 Other assets 22,423 ------------ 58,229,049 ------------ LIABILITIES Payable for collateral received on securities loaned 11,526,033 Payable for fund shares redeemed 50,319 Accrued transfer agent and shareholder services 39,136 Accrued management fee 27,355 Accrued distribution and service fees 22,263 Accrued administration fee 9,816 Accrued trustees' fees 5,476 Other accrued expenses 112,122 ------------ 11,792,520 ------------ NET ASSETS $ 46,436,529 ============ Net Assets consist of: Unrealized appreciation of investments $ 10,909,651 Accumulated net realized loss (3,392,805) Paid-in capital 38,919,683 ------------ $ 46,436,529 ============
NET ASSET VALUE (NAV) OF EACH SHARE CLASS EXCEPT WHERE NOTED, THE NAV IS THE OFFERING AND THE REDEMPTION PRICE FOR EACH CLASS.
CLASS NET ASSETS DIVIDED BY NUMBER OF SHARES = NAV A $ 23,816,984 1,349,811 $ 17.64* B(1) $ 15,198,304 876,333 $ 17.34** B $ 2,820,223 163,588 $ 17.24** C $ 3,158,012 182,486 $ 17.31** S $ 1,443,006 81,183 $ 17.77
* Maximum offering price per share = $18.72 ($17.64 DIVIDED BY 0.9425) ** When you sell Class B(1), Class B or Class C shares, you receive the net asset value minus deferred sales charge, if any. STATEMENT OF OPERATIONS For the six months ended August 31, 2003 (unaudited) INVESTMENT INCOME Interest (NOTE 1) $ 23,147 Dividends, net of foreign taxes (NOTE 1) 103,852 -------------- 126,999 EXPENSES Management fee (NOTE 2) 129,183 Transfer agent and shareholder services (NOTE 2) 114,180 Custodian fee 43,478 Administration fee (NOTE 2) 40,637 Reports to shareholders 6,033 Distribution and service fees - Class A (NOTE 5) 24,728 Distribution and service fees - Class B(1) (NOTE 5) 60,921 Distribution and service fees - Class B (NOTE 5) 11,261 Distribution and service fees - Class C (NOTE 5) 11,119 Registration fees 26,925 Audit fee 10,971 Trustees' fees (NOTE 2) 6,350 Legal fees 644 Miscellaneous 9,526 -------------- 495,956 Expenses borne by the distributor (NOTE 3) (173,503) Fees paid indirectly (NOTE 2) (881) -------------- 321,572 -------------- Net investment loss (194,573) -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments (NOTES 1 AND 4) 2,092,385 Net realized loss on foreign currency (337) -------------- Total net realized gain 2,092,048 -------------- Change in unrealized appreciation of investments 10,927,974 -------------- Net gain on investments 13,020,022 -------------- Net increase in net assets resulting from operations $ 12,825,449 ==============
The notes are an integral part of the financial statements. 5 STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED AUGUST 31, 2003 YEAR ENDED (UNAUDITED) FEBRUARY 28, 2003 ------------------------------------ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment loss $ (194,573) $ (354,863) Net realized gain (loss) on investments and foreign currency 2,092,048 (5,060,168) Change in unrealized appreciation (depreciation) of investments 10,927,974 (873,778) ------------------------------------ Net increase (decrease) resulting from operations 12,825,449 (6,288,809) ------------------------------------ Distribution from capital gains: Class A -- (32,999) Class B(1) -- (29,756) Class B -- (6,142) Class C -- (3,829) Class S -- (2,787) ------------------------------------ -- (75,513) ------------------------------------ Net increase (decrease) from fund share transactions (NOTE 7) 11,139,616 (588,099) ------------------------------------ Total increase (decrease) in net assets 23,965,065 (6,952,421) NET ASSETS Beginning of period 22,471,464 29,423,885 ------------------------------------ End of period $ 46,436,529 $ 22,471,464 ====================================
NOTES TO UNAUDITED FINANCIAL STATEMENTS August 31, 2003 NOTE 1 State Street Research Health Sciences Fund (the "Fund"), is a series of State Street Research Financial Trust (the "Trust"), which was organized as a Massachusetts business trust in November, 1986, and is registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists presently of two separate funds: State Street Research Health Sciences Fund and State Street Research Government Income Fund. The investment objective of the fund is to provide long-term growth of capital. Under normal market conditions, the fund invests at least 80% of total assets in securities of companies in health sciences and related industries. These may include common and preferred stocks, convertible securities, warrants and depositary receipts. The fund offers five classes of shares. Class A shares are subject to an initial sales charge of up to 5.75% and pay annual service and distribution fees equal to 0.30% of average daily net assets. Class B(1) and Class B shares pay annual service and distribution fees of 1.00% and automatically convert into Class A shares (which pay lower ongoing expenses) at the end of eight years. Class B(1) and Class B shares are subject to a contingent deferred sales charge on certain redemptions made within six years and five years of purchase, respectively. Class B shares are offered only to current shareholders through reinvestment of dividends and distributions or through exchanges from existing Class B accounts of State Street Research funds. Class C shares are subject to a contingent deferred sales charge of 1.00% on any shares redeemed within one year of their purchase, and also pay annual service and distribution 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 investment manager subsidiary of MetLife, Inc. ("MetLife"), and special programs. No sales charge is imposed at the time of purchase or redemption of Class S shares. Class S shares do not pay any service or distribution fees. The fund's expenses are borne prorata by each class, except that each class bears expenses, and has exclusive voting rights with respect to provisions of the plans of distribution, related specifically to that class. The Trustees declare separate dividends on each class of shares. The following significant accounting policies are consistently followed by the fund in preparing its financial statements, and such policies are in conformity with accounting principles generally accepted in the United States of America. A. INVESTMENT VALUATION Values for listed equity securities reflect final sales on national securities exchanges quoted prior to the close of the New York Stock Exchange. Over-the-counter securities quoted on the National Association of Securities Dealers Automated Quotation ("Nasdaq") system are valued at closing prices supplied through such system. If not quoted on the Nasdaq system, such securities are valued at prices obtained from independent brokers. In the absence of recorded sales, valuations are at the mean of the closing bid and asked quotations. Short-term securities maturing within sixty days are valued at amortized cost. Other securities, if any, are valued at their fair value as determined in good faith under consistently applied procedures established by and under the supervision of the Trustees. If trading or events occurring in other markets after the close of the principal market in which foreign securities are traded, and before the close of business of the fund, are expected to materially affect the value of these securities, then they are valued at their fair value taking this trading or these events into account. 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. The notes are an integral part of the financial statements. 6 C. NET INVESTMENT INCOME Net investment income is determined daily and consists of interest and dividends accrued and discount earned, less the estimated daily expenses of the fund. Interest income is accrued daily as earned. Dividend income is accrued on the ex-dividend date. The fund is charged for expenses directly attributable to it, while indirect expenses are allocated between both funds in the Trust. D. DIVIDENDS Dividends from net investment income are declared and paid or reinvested annually. Net realized capital gains, if any, are distributed annually, unless additional distributions are required for compliance with applicable tax regulations. Income dividends and capital gains distributions are determined in accordance with federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. The difference is primarily due to differing treatments for wash sale deferrals. The fund hereby designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form 1099 for the calendar year 2003. 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 February 28, 2003, the fund had a capital loss carryforward of $2,643,815 available, to the extent provided in regulations, to offset future capital gains, if any, which expires on February 28, 2011. 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, 2002 through February 28, 2003, the fund incurred net capital losses of approximately $1,413,000 and intends to defer and treat such losses as arising in the fiscal year ended February 28, 2004. F. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. G. SECURITIES LENDING The fund may seek additional income by lending portfolio securities to qualified institutions. The fund will receive cash or securities as collateral in an amount equal to at least 100% of the current market value of any loaned securities plus accrued interest. By reinvesting any cash collateral it receives in these transactions, the fund could realize additional gains and losses. If the borrower fails to return the securities and the value of the collateral has declined during the term of the loan, the fund will bear the loss. At August 31, 2003, the value of the securities loaned and the value of collateral were $11,350,377 and $11,526,033 (including $11,472,847 of collateral cash invested in State Street Navigator Securities Lending prime portfolio and $53,186 of U.S. Government obligations), respectively. During the six months ended August 31, 2003, income from securities lending amounted to $8,028 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 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 August 31, 2003, the fees pursuant to such agreement amounted to $129,183. State Street Research Service Center, a division of State Street Research Investment Services, Inc., the Trust's principal underwriter (the "Distributor"), provides certain shareholder services to the fund such as responding to inquiries and instructions from investors with respect to the purchase and redemption of shares of the fund. In addition, MetLife receives a fee for maintenance of the accounts of certain shareholders who are participants in sponsored arrangements, such as employee benefit plans, through or under which shares of the fund may be purchased. Total shareholder service costs are allocated to each fund in the same ratios as the transfer agent costs. During the six months ended August 31, 2003, the amount of such expenses allocated to the Fund was $29,674. The fund has entered into an arrangement with its transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the six months ended August 31, 2003, the fund's transfer agent fees were reduced by $881 under this arrangement. The fees of the Trustees not currently affiliated with the Adviser amounted to $6,350 during the six months ended August 31, 2003. The fund has agreed to pay the Adviser for certain administrative costs incurred in providing other assistance and services to the fund. The fee was based on a fixed amount that has been allocated equally among State Street Research funds. During the six months ended August 31 2003, the amount of such expenses was $40,637. 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 August 31, 2003, the amount of such expenses assumed by the Distributor and its affiliates was $173,503. NOTE 4 For the six months ended August 31, 2003, purchases and sales of securities, exclusive of short-term obligations and U.S. government obligations, aggregated $23,482,664, and $18,700,860, respectively. NOTE 5 The Trust has adopted plans of distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the plans, the fund pays annual service fees to the Distributor at a rate of 0.25% of average daily net assets for Class A, Class B(1) and Class C shares. In addition, the fund pays annual distribution fees of 0.05% of average daily net assets for Class A shares. The fund pays annual distribution fees of 0.75% of average daily net assets for Class B(1), Class B and Class C shares. The Distributor uses such payments for personal services and/or the maintenance of shareholder accounts, to reimburse securities dealers for distribution and marketing services, to furnish ongoing assistance to investors and to defray a portion of its distribution and marketing expenses. For the six months ended August 31, 2003, fees pursuant to such plans amounted to $24,728, $60,921, $11,261 and $11,119 for Class A, Class B(1), Class B and Class C shares, respectively. The payments compensate the distributor for services and expenditures incurred under the plan, and none of the payments are returnable to the fund. The fund has been informed that the Distributor and MetLife Securities, Inc., a wholly-owned subsidiary of MetLife, earned initial sales charges aggregating $20,917 and $33,364, respectively, on sales of Class A shares of the fund during the six months ended August 31, 2003, and that MetLife Securities, Inc., earned commissions aggregating $25,310 and $345 on sales of Class B(1) and Class C shares, respectively, and the Distributor collected contingent deferred sales charges aggregating $18,925, $253 and $647 on redemptions of Class B(1), Class B and Class C shares, respectively, during the same period. 7 NOTE 6 PricewaterhouseCoopers LLP resigned as the fund's independent accountants as of April 25, 2003. The Trustees voted to appoint Deloitte & Touche LLP as the fund's independent accountants for the fund's fiscal year ended February 28, 2004. During the previous two years, PricewaterhouseCoopers LLP's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two previous fiscal years and through April 25, 2003, there were no disagreements between the Fund and PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused it to make reference to the disagreements in its report on the financial statements for such years. NOTE 7 These transactions break down by share class as follows:
SIX MONTHS ENDED AUGUST 31, 2003 YEAR ENDED (UNAUDITED) FEBRUARY 28, 2003 --------------------------------------------------------- CLASS A SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Shares sold 1,054,599 $ 17,050,522 424,141 $ 5,509,615 Issued upon reinvestment of distribution from capital gains -- -- 2,097 31,088 Shares redeemed (504,142) (8,301,853) (532,299) (6,628,461) ---------- ------------ ---------- ------------ Net increase (decrease) 550,457 $ 8,748,669 (106,061) $ (1,087,758) ========== ============ ========== ============ CLASS B(1) SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Shares sold 133,754 $ 2,138,102 216,449 $ 2,769,137 Issued upon reinvestment of distribution from capital gains -- -- 1,989 29,278 Shares redeemed (71,324) (1,024,648) (199,671) (2,377,172) ---------- ------------ ---------- ------------ Net increase 62,430 $ 1,113,454 18,767 $ 421,243 ========== ============ ========== ============ CLASS B SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Shares sold 32,723 $ 520,034 34,052 $ 442,039 Issued upon reinvestment of distribution from capital gains -- -- 412 6,044 Shares redeemed (14,845) (220,545) (65,760) (795,205) ---------- ------------ ---------- ------------ Net increase (decrease) 17,878 $ 299,489 (31,296) $ (347,122) ========== ============ ========== ============ CLASS C SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Shares sold 115,428 $ 1,808,927 43,631 $ 582,314 Issued upon reinvestment of distribution from capital gains -- -- 257 3,769 Shares redeemed (46,317) (743,055) (22,332) (267,641) ---------- ------------ ---------- ------------ Net increase 69,111 $ 1,065,872 21,556 $ 318,442 ========== ============ ========== ============ CLASS S SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Shares sold 14,877 $ 231,335 17,914 $ 229,325 Issued upon reinvestment of distribution from capital gains -- -- 187 2,787 Shares redeemed (18,574) (319,203) (9,811) (125,016) ---------- ------------ ---------- ------------ Net increase (decrease) (3,697) $ (87,868) 8,290 $ 107,096 ========== ============ ========== ============
8 FINANCIAL HIGHLIGHTS
CLASS A ---------------------------------------------------- SIX MONTHS ENDED YEARS ENDED FEBRUARY 28 AUGUST 31, 2003 -------------------------------- (UNAUDITED)(a) 2003(a) 2002(a) 2001(a) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.57 14.43 14.14 13.33 ----- ----- ----- ----- Net investment loss ($)* (0.06) (0.12) (0.13) (0.06) Net realized and unrealized gain (loss) on investments and foreign currency ($) 6.13 (2.70) 0.47 1.88 ----- ----- ----- ----- TOTAL FROM INVESTMENT OPERATIONS ($) 6.07 (2.82) 0.34 1.82 ----- ----- ----- ----- Distributions from capital gains ($) -- (0.04) (0.05) (1.01) ----- ----- ----- ----- TOTAL DISTRIBUTIONS ($) -- (0.04) (0.05) (1.01) ----- ----- ----- ----- NET ASSET VALUE, END OF PERIOD ($) 17.64 11.57 14.43 14.14 ===== ===== ===== ===== Total return (%)(b) 52.46 (19.63) 2.41 14.31 RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 23,817 9,250 13,069 6,863 Expense ratio (%)* 1.56(d) 1.56 1.58 1.57 Expense ratio after expense reductions (%)* 1.55(d) 1.55 1.55 1.54 Ratio of net investment loss to average net assets (%)* (0.80)(d) (0.99) (0.88) (0.48) Portfolio turnover rate (%) 59.87 157.37 75.31 139.09 *Reflects voluntary reduction of expenses of these amounts (%) 0.96(d) 1.48 1.83 6.87 CLASS A -------------------- DECEMBER 21, 1999 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 2000(a) - ---------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.00 ------ Net investment loss ($)* (0.00) Net realized and unrealized gain (loss) on investments and foreign currency ($) 3.33 ------ TOTAL FROM INVESTMENT OPERATIONS ($) 3.33 ------ Distributions from capital gains ($) -- ------ TOTAL DISTRIBUTIONS ($) -- ------ NET ASSET VALUE, END OF PERIOD ($) 13.33 ====== Total return (%)(b) 33.30(c) RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 1,654 Expense ratio (%)* 1.50(d) Expense ratio after expense reductions (%)* 1.50(d) Ratio of net investment loss to average net assets (%)* (0.13)(d) Portfolio turnover rate (%) 44.48 *Reflects voluntary reduction of expenses of these amounts (%) 8.56(d) CLASS B(1) ------------------------------------------------------- SIX MONTHS ENDED YEARS ENDED FEBRUARY 28 AUGUST 31, 2003 ----------------------------------- (UNAUDITED)(a) 2003(a) 2002(a) 2001(a)(e) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.41 14.34 14.14 15.50 ------ ------ ------ ------ Net investment loss ($)* (0.11) (0.21) (0.23) (0.04) Net realized and unrealized gain (loss) on investments and foreign currency ($) 6.04 (2.68) 0.48 (0.63) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ($) 5.93 (2.89) 0.25 (0.67) ------ ------ ------ ------ Distributions from capital gains ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ TOTAL DISTRIBUTIONS ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ($) 17.34 11.41 14.34 14.14 ====== ====== ====== ====== Total return (%)(b) 51.97(c) (20.24) 1.77 (4.47)(c) RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 15,198 9,290 11,399 4,645 Expense ratio (%)* 2.26(d) 2.26 2.28 2.28(d) Expense ratio after expense reductions (%)* 2.25(d) 2.25 2.25 2.25(d) Ratio of net investment loss to average net assets (%)* (1.50)(d (1.69) (1.59) (0.81)(d) Portfolio turnover rate (%) 59.87 157.37 75.31 139.09 *Reflects voluntary reduction of expenses of these amounts (%) 1.06(d) 1.48 1.71 6.26(d)
9
CLASS B ------------------------------------------------------- SIX MONTHS ENDED YEARS ENDED FEBRUARY 28 AUGUST 31, 2003 ----------------------------------- (UNAUDITED)(a) 2003(a) 2002(a) 2001(a)(e) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.34 14.31 14.12 15.50 ------ ------ ------ ------ Net investment loss ($)* (0.11) (0.21) (0.22) (0.04) Net realized and unrealized gain (loss) on investments and foreign currency ($) 6.01 (2.72) 0.46 (0.65) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ($) 5.90 (2.93) 0.24 (0.69) ------ ------ ------ ------ Distributions from capital gains ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ TOTAL DISTRIBUTIONS ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ($) 17.24 11.34 14.31 14.12 ====== ====== ====== ====== Total return (%)(b) 52.03(c) (20.56) 1.70 (4.61)(c) RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 2,820 1,653 2,533 1,964 Expense ratio (%)* 2.26(d) 2.26 2.28 2.28(d) Expense ratio after expense reductions (%)* 2.25(d) 2.25 2.25 2.25(d) Ratio of net investment loss to average net assets (%)* (1.51)(d) (1.70) (1.57) (0.83)(d) Portfolio turnover rate (%) 59.87 157.37 75.31 139.09 *Reflects voluntary reduction of expenses of these amounts (%) 1.05(d) 1.47 1.97 6.36(d) CLASS C ------------------------------------------------------- SIX MONTHS ENDED YEARS ENDED FEBRUARY 28 AUGUST 31, 2003 ----------------------------------- (UNAUDITED)(a) 2003(a) 2002(a) 2001(a)(e) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.39 14.31 14.11 15.50 ------ ------ ------ ------ Net investment loss ($)* (0.12) (0.21) (0.23) (0.04) Net realized and unrealized gain (loss) on investments and foreign currency ($) 6.04 (2.67) 0.48 (0.66) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ($) 5.92 (2.88) 0.25 (0.70) ------ ------ ------ ------ Distributions from capital gains ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ TOTAL DISTRIBUTIONS ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ($) 17.31 11.39 14.31 14.11 ====== ====== ====== ====== Total return (%)(b) 51.98(c) (20.21) 1.77 (4.67)(c) RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 3,158 1,291 1,314 645 Expense ratio (%)* 2.26(d) 2.26 2.28 2.28(d) Expense ratio after expense reductions (%)* 2.25(d) 2.25 2.25 2.25(d) Ratio of net investment loss to average net assets (%)* (1.50)(d) (1.69) (1.58) (0.83)(d) Portfolio turnover rate (%) 59.87 157.37 75.31 139.09 *Reflects voluntary reduction of expenses of these amounts (%) 0.97(d) 1.49 1.71 5.87(d) CLASS S ------------------------------------------------------- SIX MONTHS ENDED YEARS ENDED FEBRUARY 28 AUGUST 31, 2003 ----------------------------------- (UNAUDITED)(a) 2003(a) 2002(a) 2001(a)(e) - -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.64 14.48 14.14 15.50 ------ ------ ------ ------ Net investment income (loss) ($)* (0.04) (0.09) (0.08) 0.01 Net realized and unrealized gain (loss) on investments and foreign currency ($) 6.17 (2.71) 0.47 (0.68) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS ($) 6.13 (2.80) 0.39 (0.67) ------ ------ ------ ------ Distributions from capital gains ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ TOTAL DISTRIBUTIONS ($) -- (0.04) (0.05) (0.69) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD ($) 17.77 11.64 14.48 14.14 ====== ====== ====== ====== Total return (%)(b) 52.66(c) (19.42) 2.76 (4.48)(c) RATIOS/SUPPLEMENTAL DATA: Net assets at end of period ($ thousands) 1,443 988 1,109 946 Expense ratio (%)* 1.26(d) 1.26 1.28 1.28(d) Expense ratio after expense reductions (%)* 1.25(d) 1.25 1.25 1.25(d) Ratio of net investment income (loss) to average net assets (%)* (0.50)(d) (0.69) (0.56) 0.18(d) Portfolio turnover rate (%) 59.87 157.37 75.31 139.09 *Reflects voluntary reduction of expenses of these amounts (%) 1.06(d) 1.49 1.97 5.58(d)
(a) Per-share figures have been calculated using the average shares method. (b) Does not reflect any front-end or contingent deferred sales charges. Total return would be lower if the distributor and its affiliates had not voluntarliy assumed a portion of the fund's expenses. (c) Not annualized (d) Annualized (e) October 16, 2000 (commencement of share class) to February 28, 2001 10 TRUSTEES AND OFFICERS STATE STREET RESEARCH FINANCIAL TRUST
NUMBER OF FUNDS NAME, POSITION(S) TERM OF OFFICE IN FUND COMPLEX OTHER ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DIRECTORSHIPS HELD AND AGE(a) FUND TIME SERVED(b) DURING PAST 5 YEARS TRUSTEE/OFFICER(c) BY TRUSTEE/OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES BRUCE R. BOND Trustee Since Retired; formerly Chairman of the Board, 19 Ceridian Corporation (57) 1999 Chief Executive Officer and President, PictureTel Corporation (video conferencing systems) STEVE A. GARBAN Trustee Since Retired; formerly Senior Vice President 55 Metropolitan Series (66) 1997 for Finance and Operations and Treasurer, Fund, Inc.(d) The Pennsylvania State University DEAN O. MORTON Trustee Since Retired; formerly Executive Vice 55 The Clorox Company; (71) 1987 President, Chief Operating Officer and KLA-Tencor Director, Hewlett-Packard Company Corporation; BEA (computer manufacturer) Systems, Inc.; Cepheid; Pharsight Corporation; and Metropolitan Series Fund, Inc. SUSAN M. PHILLIPS Trustee Since Dean, School of Business and Public 19 The Kroger Co. (58) 1998 Management, George Washington University; formerly a member of the Board of Governors of the Federal Reserve System; and Chairman and Commissioner of the Commodity Futures Trading Commission TOBY ROSENBLATT Trustee Since President, Founders Investments Ltd. 55 A.P. Pharma, Inc.; (65) 1993 (investments); formerly President, The and Metropolitan Glen Ellen Company (private investment Series Fund, Inc.(d) firm) MICHAEL S. Trustee Since Jay W. Forrester Professor of Management, 55 Metropolitan Series SCOTT MORTON (66) 1987 Sloan School of Management, Massachusetts Fund, Inc.(d) Institute of Technology JAMES M. STOREY Trustee Since Attorney; formerly Partner, Dechert (law 19 SEI Investments Funds (72) 2002 firm) (consisting of 104 portfolios); and The Massachusetts Health & Education Tax-Exempt Trust INTERESTED TRUSTEES RICHARD S. DAVIS(+) Trustee Since Chairman of the Board, President and Chief 19 None (57) 2000 Executive Officer of State Street Research & Management Company; formerly Senior Vice President, Fixed Income Investments, Metropolitan Life Insurance Company OFFICERS C. KIM GOODWIN Vice Since Managing Director and Chief Investment 18 None (44) President 2002 Officer - Equities of State Street Research & Management Company; formerly Chief Investment Officer - U.S. Growth Equities, American Century JOHN S. LOMBARDO Vice Since Managing Director, Chief Financial Officer 19 None (48) President 2001 and Director of State Street Research & Management Company; formerly Executive Vice President, State Street Research & Management Company; and Senior Vice President, Product and Financial Management, MetLife Auto & Home MARK A. MARINELLA Vice Since Managing Director and Chief Investment 9 None (45) President 2003 Officer - Fixed Income, State Street Research & Management Company; formerly Executive Vice President and Senior Vice President, State Street Research & Management Company; and Chief Investment Officer and Head of Fixed Income, Columbia Management Group AJAY MEHRA (38) Vice Since Managing Director, State Street Research & 2 None President 2003 Management Company; formerly Senior Vice President, Vice President and portfolio manager, Columbia Management Group ELIZABETH M. Vice Since Managing Director, State Street Research & 8 None WESTVOLD (43) President 2003 Management Company; formerly Senior Vice President, State Street Research & Management Company ERIN XIE (35) Vice Since Senior Vice President, State Street 2 None President 2003 Research & Management Company; formerly Vice President, State Street Research & Management Company; and research associate, Sanford Bernstein & Company DOUGLAS A. ROMICH Treasurer Since Senior Vice President and Treasurer of 19 None (46) 2001 State Street Research & Management Company; formerly Vice President and Assistant Treasurer, State Street Research & Management Company FRANCIS J. Secretary Since Managing Director, General Counsel and 19 None McNAMARA, III (48) 1995 Secretary of State Street Research & Management Company; formerly Executive Vice President, State Street Research & Management Company
The fund's Statement of Additional Information includes additional information about the fund's trustees, and is available without charge, by contacting State Street Research, One Financial Center, Boston, Massachusetts 02111-2690, or by calling toll-free 1-87-SSR-FUNDS (1-877-773-8637). (a) The address of each person is c/o State Street Research & Management Company, One Financial Center, Boston, MA 02111-2690. (b) A Trustee serves until he or she retires, resigns or is removed as provided in the master trust agreement of the respective Trust. Each Trust has adopted a mandatory retirement age of 72. Each officer holds office until he or she resigns, is removed or a successor is elected. (c) Includes all series of 9 investment companies for which State Street Research & Management Company has served as sole investment adviser and all series of Metropolitan Series Fund, Inc. The primary adviser to Metropolitan Series Fund, Inc., is MetLife Advisers, LLC, which has retained State Street Research & Management Company as sub-adviser to certain series of Metropolitan Series Fund, Inc. (d) Serves as Director of Metropolitan Series Fund, Inc., an investment company comprising 36 separate portfolios. (+) Mr. Davis is an "interested person" of the Trust under the Investment Company Act of 1940 by reason of his affiliation with the Trust's Investment Manager, State Street Research & Management Company, as noted. 11 [STATE STREET RESEARCH LOGO] PRSRT STD U.S. POSTAGE One Financial Center PAID Boston, MA 02111-2690 PERMIT #6 HUDSON, MA Did You Know? State Street Research offers electronic delivery of quarterly statements, shareholder reports and fund prospectuses. If you elect this option, we will send these materials to you via e-mail. To learn more, visit us on the Web at www.ssrfunds.com and click on "Go to Your Account" or call us at 1-87-SSR-FUNDS (1-877-773-8637). Did you know that you can give a State Street Research mutual fund as a gift? Call a service center representative at 1-87-SSR-FUNDS (1-877-773-8637), Monday through Friday, 8am-6pm eastern time, to learn more. [SEAL] FORM N-CSR(2 OF 3) ITEM 2 (CODE OF ETHICS): Not applicable to this filing. ITEM 3 (AUDIT COMMITTEE FINANCIAL EXPERT): Not applicable to this filing. ITEM 4 (PRINCIPAL ACCOUNTANT FEES AND SERVICES): Not applicable to this filing. ITEM 5 (RESERVED) ITEM 6 (RESERVED) ITEM 7 (DISCLOSURE OF PROXY VOTING POLICIES & PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES): Not applicable to this filing. ITEM 8 (RESERVED) ITEM 9 (CONTROLS AND PROCEDURES): SUB-ITEM 9a - The Principal Executive Officer and the Principal Financial Officer have concluded that the State Street Research Master Investment Trust disclosure controls and procedures (as defined in Rule 30-a2(c) under the Investment Company Act) provide reasonable assurances that material information relating to the State Street Research Master Investment Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. SUB-ITEM 9b - There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation referenced in (a)(i) above. ITEM 10 (EXHIBITS): SUB-ITEM 10a - Not applicable to this filing. SUB-ITEM 10b - Certification Exhibits are attached. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. State Street Research Financial Trust By: /s/ Richard S. Davis ------------------------------------------------------ Richard S. Davis, President, Chairman and Chief Executive Officer Principal Executive Officer Date October 30, 2003 ------------------------------------------------------ FORM N-CSR(3 OF 3) Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities, and on the dates indicated. By: /s/ Richard S. Davis ------------------------------------------------------ Richard S. Davis, President, Chairman and Chief Executive Officer Principal Executive Officer Date October 30, 2003 ------------------------ By: /s/ Douglas A. Romich ------------------------------------------------------ Douglas A. Romich, Treasurer Principal Financial Officer Date October 30, 2003 ------------------------ EX-99.CERT 3 a2120469zex-99_cert.txt EXHIBIT 99.CERT State Street Research Financial Trust Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Douglas A. Romich, certify that: 1. I have reviewed this report on Form N-CSR of State State Street Research Financial Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and changes in net assets of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2 (c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 30, 2003 /s/ Douglas A. Romich Douglas A. Romich Treasurer State Street Research Financial Trust Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Richard S. Davis, certify that: 1. I have reviewed this report on Form N-CSR of State Street Research Financial Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and changes in net assets of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2 (c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 30, 2003 /s/ Richard S. Davis Richard S. Davis President, Chairman and Chief Executive Officer EX-99.906CERT 4 a2120469zex-99_906cert.txt EXHIBIT 99.906 CERT State Street Research Financial Trust Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of the State Street Research Financial Trust, a Massachusetts business trust, (the "Trust"), does hereby certify that the Trust's report on Form N-CSR for the six months ended August 31, 2003 (the "N-CSR") fully complies with the requirements of Section 13 (a) or 15 (d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the N-CSR fairly presents, in all material respects, the financial condition and the results of operations of the Trust. This certification is provided solely pursuant to 18 U.S.C. 1350 and shall not be deemed a part of the N-CSR, the financial statements filed with the N-CSR or otherwise "filed" for any purpose. Date: October 30, 2003 /s/ Douglas A. Romich Douglas A. Romich Treasurer State Street Research Financial Trust Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of the State Street Research Financial Trust, a Massachusetts business trust, (the "Trust"), does hereby certify that the Trust's report on Form N-CSR for the six months ended August 31, 2003 (the "N-CSR") fully complies with the requirements of Section 13 (a) or 15 (d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the N-CSR fairly presents, in all material respects, the financial condition and the results of operations of the Trust. This certification is provided solely pursuant to 18 U.S.C. 1350 and shall not be deemed a part of the N-CSR, the financial statements filed with the N-CSR or otherwise "filed" for any purpose. Date: October 30, 2003 /s/ Richard S. Davis Richard S. Davis President, Chairman and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----