[State Street Logo]
State Street Research
Investment Trust
Annual Report
December 31, 1995
[Graphic of man walking up hill, towards the stars, at night]
What's Inside
From the Chairman:
1995: An outstanding
year for investors
Portfolio Manager's Review:
The best returns in
over a decade
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
<PAGE>
From the Chairman
[Photo of Ralph F. Verni]
To Our Shareholders:
We have reluctantly bid farewell to 1995, an outstanding year for most of our
investors. Stocks and bonds achieved their best results in many years. 1995
offered a uniquely positive combination of moderate economic growth, low
inflation, falling interest rates, and strong corporate profits.
Looking ahead
We are cautiously optimistic about 1996. There are several positive signs.
Inflation and interest rates remain low and the economy may be able to
sustain modest growth. On January 31, the Federal Reserve lowered short-term
interest rates by one-quarter point. This was the Fed's second interest-rate
cut in less than two months.
Benefits of professional management
1996 may be a year in which the benefits of professional management will be
more evident than ever. It can be reassuring to know that an experienced
portfolio manager is working on your behalf, paying close attention to market
conditions and economic indicators. We appreciate your trust.
Top-rated service
We work extremely hard to provide the highest-quality service to
shareholders. Recently, State Street Research received two prestigious awards
from Dalbar, an organization that rates mutual fund companies for their
service. We were one of only seven firms to receive the Dalbar Quality Tested
Service Seal, which recognizes leaders in all key service areas. Dalbar also
awarded us Dalbar Key Honors, recognizing our service quality in written and
telephone communications to shareholders.
Best wishes for a successful 1996.
Sincerely,
[Signature of Ralph F. Verni]
Ralph F. Verni
Chairman
January 31, 1996
(1)+31.86% for Class B shares; +33.07% for Class C shares; +31.75% for Class
D shares.
(2)Investment results are based on an assumed $10,000 investment at "A" share
maximum sales charge of 4.5%; thus, the net amount invested was $9,550. Also
assumes reinvestment of capital gain distributions and income dividends. No
adjustment has been made for income taxes payable by shareholders on income
dividends or capital gain distributions.
(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 Trust 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.
During the periods prior to 1990 that shares of the Trust were not offered to
the general public, the Trust was not subject to the cash inflows or higher
redemptions or expenses that have occurred since 1990, when the Trust
commenced a continuous public offering. Performance for a class includes
periods prior to the adoption of class designations. "C" shares, offered
without a sales charge, are available only to certain employee benefit plans
and institutions. Performance prior to class designations in 1993 does not
reflect annual 12b-1 fees of .25% for "A" shares and 1% for "B" and "D"
shares, which will reduce subsequent performance.
(4)Performance reflects up to maximum 4.5% front-end or 5% contingent
deferred sales charges.
(5) Cumulative total returns are not annualized, nor do they reflect sales
charges, which, if reflected, would reduce performance.
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 December 31, 1995)
Total value of $10,000 invested on
January 1, 1986(2)
(Class A shares, at maximum applicable sales charge)
[Tabular representation of Mountain chart]
1/86 9550
12/86 10668
12/87 11402
12/88 12569
12/89 16609
12/90 16451
12/91 21071
12/92 22395
12/93 24613
12/94 23668
12/95 31442
SEC Average Annual Compound Rates of Return
(at maximum applicable sales charge)3,4
<TABLE>
<CAPTION>
- ------------------------------------------------
10 years 5 years 1 year
<S> <C> <C> <C>
- ------------------------------------------------
Class A +12.14% +12.79% +26.87%
- ------------------------------------------------
Class B +12.45% +13.17% +26.86%
- ------------------------------------------------
Class C +12.75% +14.02% +33.07%
- ------------------------------------------------
Class D +12.45% +13.42% +30.75%
- ------------------------------------------------
</TABLE>
Cumulative Total Returns
(do not reflect sales charge)3,5
<TABLE>
<CAPTION>
- ------------------------------------------------
10 years 5 years 1 year
<S> <C> <C> <C>
- ------------------------------------------------
Class A +229.24% +91.13% +32.85%
- ------------------------------------------------
Class B +223.18% +87.61% +31.86%
- ------------------------------------------------
Class C +231.95% +92.70% +33.07%
- ------------------------------------------------
Class D +223.30% +87.68% +31.75%
- ------------------------------------------------
</TABLE>
Top 5 Equity Industries
(by percentage of net assets)
[Tabular representation of bar chart]
Chemicals 8.3%
Office equipment 7.9%
Retail 6.2%
Oil 6.2%
Telephone 5.9%
Total: 34.5%
<PAGE>
Portfolio Manager's Review
[Photo of Peter C. Bennett]
Peter C. Bennett
Portfolio Manager
Peter Bennett resumed portfolio management responsibilities in October 1995
after the untimely death of portfolio manager Steven P. Somes. Peter managed
or co-managed the Trust from November 1988 through April 1995 and has 31
years of investment experience.
Investment Trust rewarded investors in 1995 by turning in its best
performance in more than ten years. For the 12 months ended December 31,
1995, Class A shares of the Trust offered a total return of +32.85% (does not
reflect sales charge).(1) The Trust outperformed the +30.82% average return
for the 438 funds in Lipper Analytical Services' Growth and Income Funds
category over the same time period (does not reflect sales charges).
Market trends helped performance
Although the overall stock market had an outstanding year, some industries
and sectors were clearly the leaders. Because of the Trust's emphasis on
growth and quality, we were well positioned for the exceptional performance
of quality stocks throughout the year. The Trust also benefited from
significant positions in technology and financial services, which performed
very well. The Trust was underweighted in energy and utilities stocks, which
did not perform as well. Overall, we were concerned about the economy
throughout the year and looked for individual stocks that could perform well
independent of the economy.
Technology holdings
The Trust's performance was helped by our overweighted position in technology
stocks and by good timing on our part. We sold a portion of our tech holdings
in September, when the rally was peaking. We took profits and, after a market
correction lowered prices in the technology sector, replaced some of our
technology holdings.
Chemicals
We targeted chemical companies that offer specific opportunities based on
their mix of businesses and products. One example is Monsanto, the Trust's
third-largest holding. This chemical producer is a leader in agricultural
products and has benefited from a strong agricultural market.
Office equipment
Office equipment is another area in which our holdings focus on individual
opportunities. Most of our stocks in this category are veteran players that
are experiencing positive turnarounds under new managements. Hewlett- Packard
is the largest holding in the category and one of the Trust's top holdings.
Retail
Despite the Trust's strong overall performance, its retail position had a
disappointing year. Many retailers experienced weak sales, as consumers were
more price sensitive and cautious. The Trust's largest retail holding is Home
Depot, which is also one of our top ten holdings overall. In 1995, bad
weather and falling prices for building materials hurt the stock's price.
However, we held on to the stock because of the company's dominant position
in its industry.
Looking ahead
We believe Investment Trust is well positioned for the coming year. Signs
indicate slower economic growth and a market in which quality and predictable
earnings growth will be important. In such an environment, we think the Trust
will benefit from our focus on careful stock selection as well as its quality
portfolio.
December 31, 1995
Top 10 Stock Positions
(by percentage of net assets)
1 General Electric Electrical equipment leader 2.7%
2 Philip Morris Tobacco giant 2.7%
3 Monsanto Chemical company 2.6%
4 Chemical Banking Large U.S bank 2.3%
5 Federal National Mortgage Mortgage repurchaser 2.3%
6 Abbott Labs Hospital supply company 2.3%
7 Boeing Leading aircraft manufacturer 2.2%
8 Hewlett-Packard Electronics company 2.2%
9 Home Depot Building materials retailer 2.2%
10 Ciba-Geigy Chemical company 2.2%
These securities represent an aggregate of 23.7% of net assets. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the
text above.
Best and Worst Contributors to Performance
(January 1, 1995 through December 31, 1995)
Best [up arrow graphic]
Hewlett-Packard
Strong earnings growth helped this electronics stalwart.
Philip Morris
Profited from strong cash flow.
Federal National Mortgage
Falling interest rates benefited this mortgage repurchaser.
Worst [down arrow graphic]
Grupo Televisa
Weak Mexican stock market hurt this quality broadcasting company.
Toys 'R Us
Sales were down for this giant toy retailer.
YPF SA
Argentine oil company hit hard by weak Latin American stock market.
2
<PAGE>
State Street Research Investment Trust
Investment Portfolio
December 31, 1995
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- -------------------------------------------------- ------ -------------
Common Stocks 96.1%
<S> <C> <C>
Basic Industries 13.8%
Chemical 8.3%
Ciba-Geigy AG ADR 535,600 $ 23,566,400
E.I. du Pont de Nemours & Co. 274,900 19,208,638
Monsanto Co. 225,200 27,587,000
Rohm & Haas Co. 287,000 18,475,625
-----------
88,837,663
-----------
Electrical Equipment 2.7%
General Electric Co. 400,000 28,800,000
-----------
Forest Product 0.6%
Georgia-Pacific Corp. 101,500 6,965,437
-----------
Machinery 1.1%
Caterpillar, Inc. 82,000 4,817,500
Fluor Corp. 110,000 7,260,000
-----------
12,077,500
-----------
Metal & Mining 1.1%
Nucor Corp. 199,500 11,396,438
-----------
Total Basic Industries 148,077,038
-----------
Consumer Cyclical 16.2%
Automotive 1.3%
Chrysler Corp. 74,000 4,097,750
General Motors Corp. 90,000 4,758,750
Magna International, Inc. Cl. A 124,300 5,375,975
-----------
14,232,475
-----------
Building 1.0%
Owens-Corning Fiberglas Corp.* 234,800 10,536,650
-----------
Hotel & Restaurant 2.3%
Darden Restaurants, Inc. 441,224 5,239,535
Harrah's Entertainment, Inc. 488,200 11,838,850
Mirage Resorts, Inc.* 206,350 7,119,075
-----------
24,197,460
-----------
Recreation 5.4%
Capital Cities/ABC, Inc. 100,000 12,337,500
Comcast Corp. Cl. A Special 467,650 8,505,384
Walt Disney Co. 258,300 15,239,700
Mattel, Inc. 477,312 14,677,344
Tele-Communications, Inc. Cl. A* 274,100 5,447,738
Tele-Communications, Inc. Liberty Media Group Cl.
A* 68,525 1,841,609
-----------
58,049,275
-----------
Retail Trade 6.2%
Home Depot, Inc. 492,800 $ 23,592,800
J.C. Penney, Inc. 309,800 14,754,225
Tandy Corp. 113,000 4,689,500
Toys 'R Us, Inc.* 290,363 6,315,395
Wal-Mart Stores, Inc. 778,000 17,407,750
-----------
66,759,670
-----------
Total Consumer Cyclical 173,775,530
-----------
Consumer Staple 21.5%
Business Service 2.1%
Interpublic Group of Companies, Inc. 520,200 22,563,675
-----------
Drug 4.0%
American Home Products Corp. 123,000 11,931,000
Eli Lilly & Co. 166,356 9,357,525
Merck & Co., Inc. 329,500 21,664,625
-----------
42,953,150
-----------
Food & Beverage 4.3%
Anheuser-Busch, Inc. 320,900 21,460,187
General Mills, Inc. 220,224 12,717,936
PepsiCo., Inc. 220,700 12,331,613
-----------
46,509,736
-----------
Hospital Supply 5.2%
Abbott Laboratories 584,592 24,406,716
Columbia/HCA Healthcare Corp. 212,200 10,769,150
United Healthcare Corp. 317,200 20,776,600
-----------
55,952,466
-----------
Personal Care 3.2%
Gillette Co. 231,800 12,082,575
Procter & Gamble Co. 270,300 22,434,900
-----------
34,517,475
-----------
Tobacco 2.7%
Philip Morris Companies, Inc. 317,000 28,688,500
-----------
Total Consumer Staple 231,185,002
-----------
Energy 7.8%
Oil 6.2%
Exxon Corp. 264,400 21,185,050
Mobil Corp. 26,300 2,945,600
Phillips Petroleum Co. 457,900 15,625,838
Shell Transport & Trading PLC 200,000 16,275,000
Total Cl. B ADR 296,934 10,095,756
-----------
66,127,244
-----------
Oil Service 1.6%
Schlumberger Ltd. 251,512 17,417,206
-----------
Total Energy 83,544,450
-----------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Value
Shares (Note 1)
- -------------------------------------------------- ------ -------------
Finance 10.1%
Bank 4.0%
BankAmerica Corp. 282,000 $ 18,259,500
Chemical Banking Corp. 417,500 24,528,125
-----------
42,787,625
-----------
Financial Service 2.2%
Federal National Mortgage Association 197,200 24,477,450
-----------
Insurance 3.9%
American General Corp. 423,642 14,774,515
General Re Corp. 100,603 15,593,465
Travelers Group, Inc. 184,300 11,587,862
-----------
41,955,842
-----------
Total Finance 109,220,917
-----------
Science & Technology 19.7%
Aerospace 2.2%
Boeing Co. 304,100 23,833,838
-----------
Computer Software & Service 5.4%
Cisco Systems, Inc.* 147,500 11,007,187
First Data Corp. 244,475 16,349,266
General Motors Corp. Cl. E 258,700 13,452,400
Microsoft Corp.* 200,000 17,550,000
-----------
58,358,853
-----------
Electronic Components 0.9%
Intel Corp. 166,300 9,437,525
-----------
Electronic Equipment 3.3%
L.M. Ericsson Telephone Co. Cl. B ADR 560,840 10,936,380
General Motors Corp Cl. H 250,200 12,291,075
Perkin-Elmer Corp. 315,600 11,913,900
-----------
35,141,355
-----------
Office Equipment 7.9%
Diebold, Inc. 253,800 14,054,175
Digital Equipment Corp.* 100,000 6,412,500
Hewlett-Packard Co. 282,000 23,617,500
International Business Machines Corp. 228,000 20,919,000
Xerox Corp. 144,900 19,851,300
-----------
84,854,475
-----------
Total Science & Technology 211,626,046
-----------
Utility 7.0%
Electric 1.1%
FPL Group, Inc. 252,000 $ 11,686,500
-----------
Telephone 5.9%
AT&T Corp. 349,150 22,607,462
AirTouch Communications, Inc.* 534,800 15,108,100
SBC Communications, Inc. 380,000 21,850,000
Tele Danmark Cl. B ADR 148,100 4,091,262
-----------
63,656,824
-----------
Total Utility 75,343,324
-----------
Total Common Stocks (Cost $612,899,099) 1,032,772,307
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity
Amount Date
- ----------------------- ---------- --------- --------------
<S> <C> <C> <C>
CONVERTIBLE BONDS 2.3%
Equitable Company, Inc.
Cv. Sub. Deb., 6.125% $13,500,000 12/15/2024 15,187,500
Price Co. Cv. Sub.
Deb., 5.50% 5,060,000 2/28/2012 4,794,350
Time Warner, Inc. Cv.
Sub. Deb., 8.75% 4,879,950 1/10/2015 5,062,948
------------
Total Convertible Bonds (Cost $23,414,674) 25,044,798
------------
COMMERCIAL PAPER 5.6%
Ford Motor Credit Co.,
5.80% 19,858,000 1/02/1996 19,858,000
Ford Motor Credit Co.,
5.77% 1,879,000 1/02/1996 1,879,000
General Electric
Capital Corp., 5.55% 3,075,000 1/03/1996 3,075,000
Household Finance
Corp., 5.65% 10,000,000 1/02/1996 10,000,000
Household Finance
Corp., 5.90% 22,680,000 1/05/1996 22,680,000
Philip Morris Cos.,
5.73% 2,000,000 1/04/1996 1,999,045
------------
Total Commercial Paper (Cost $59,491,045) 59,491,045
------------
Total Investments (Cost $695,804,818)--104.0% 1,117,308,150
Cash and Other Assets, Less Liabilities--(4.0)% (42,695,586)
------------
Net Assets--100.0% $1,074,612,564
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
State Street Research Investment Trust
Investment Portfolio (cont'd)
<TABLE>
<CAPTION>
<S> <C>
Federal Income Tax Information:
At December 31, 1995, the net unrealized
appreciation of investments based on cost
for Federal income tax purposes of
$692,474,035 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an
excess of value over tax cost $425,555,315
Aggregate gross unrealized depreciation for
all investments in which there is an
excess of tax cost over value (721,200)
-----------
$424,834,115
===========
</TABLE>
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $695,804,818) (Note 1) $1,117,308,150
Cash 1,164
Receivable for fund shares sold 3,579,961
Dividends and interest receivable 1,754,357
Receivable for securities sold 1,154,250
Other assets 23,854
-----------
1,123,821,736
Liabilities
Dividends payable 44,785,650
Payable for securities purchased 2,608,365
Accrued management fee (Note 2) 851,561
Payable for fund shares redeemed 367,952
Accrued transfer agent and shareholder services
(Note 2) 310,371
Accrued distribution and service fees (Note 4) 184,415
Accrued trustees' fee (Note 2) 8,459
Other accrued expenses 92,399
-----------
49,209,172
-----------
Net Assets $1,074,612,564
===========
Net Assets consist of:
Undistributed net investment income $ 1,207,644
Unrealized appreciation of investments 421,503,332
Distribution in excess of net realized gains (4,636)
Shares of beneficial interest (Note 5) 651,906,224
-----------
$1,074,612,564
===========
Net Asset Value and redemption price per share of
Class A shares ($135,676,215 / 14,813,437 shares
of beneficial interest) $9.16
===========
Maximum Offering Price per share of Class A shares
($9.16 / .955) $9.59
===========
Net Asset Value and offering price per share of
Class B shares ($183,446,481 / 20,101,433 shares
of beneficial interest)* $9.13
===========
Net Asset Value, offering price and redemption
price per share of Class C shares ($738,649,145
/ 80,436,549 shares of beneficial interest) $9.18
===========
Net Asset Value and offering price per share of
Class D shares ($16,840,723 / 1,840,599 shares
of beneficial interest)* $9.15
===========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
State Street Research Investment Trust
Statement of Operations
For the year ended December 31, 1995
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $136,320 $ 18,726,915
Interest 4,051,871
----------
22,778,786
Expenses
Management fee (Note 2) 3,158,324
Transfer agent and shareholder services (Note 2) 1,599,386
Custodian fee 172,856
Service fee--Class A (Note 4) 278,186
Distribution and service fees--Class B (Note 4) 1,456,996
Distribution and service fees--Class D (Note 4) 143,293
Reports to shareholders 121,966
Registration fees 51,220
Audit fee 35,940
Trustees' fees (Note 2) 31,831
Legal fees 2,475
Miscellaneous 45,790
----------
7,098,263
----------
Net investment income 15,680,523
----------
Realized and Unrealized Gain on Investments
Net realized gain on investments (Notes 1 and 3) 107,441,660
Net unrealized appreciation of investments 151,473,174
----------
Net gain on investments 258,914,834
----------
Net increase in net assets resulting from operations $274,595,357
==========
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
1995 1994
- --------------------------- ----------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 15,680,523 $ 12,228,203
Net realized gain on
investments* 107,441,660 49,707,504
Net unrealized appreciation
(depreciation) of
investments 151,473,174 (94,920,371)
--------- -----------
Net increase (decrease)
resulting from operations 274,595,357 (32,984,664)
--------- -----------
Dividends from net investment income:
Class A (1,619,460) (1,272,332)
Class B (1,064,520) (750,337)
Class C (11,601,780) (11,201,630)
Class D (97,145) (80,517)
--------- -----------
(14,382,905) (13,304,816)
--------- -----------
Distributions from net realized gains:
Class A (13,126,874) (5,538,217)
Class B (17,847,503) (6,856,781)
Class C (74,984,305) (38,926,766)
Class D (1,639,766) (710,178)
--------- -----------
(107,598,448) (52,031,942)
--------- -----------
Net increase from fund
share transactions (Note
5) 77,302,381 55,383,109
--------- -----------
Total increase (decrease)
in net assets 229,916,385 (42,938,313)
Net Assets
Beginning of year 844,696,179 887,634,492
--------- -----------
End of year (including
undistributed
(overdistributed) net
investment income of
$1,207,644 and $(89,974),
respectively) $1,074,612,564 $844,696,179
========= ===========
* Net realized gain for
Federal income tax
purposes (Note 1) $ 107,598,448 $ 52,031,942
========= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
State Street Research Investment Trust
Notes to Financial Statements
December 31, 1995
Note 1
State Street Research Investment Trust, formerly State Street Investment
Trust (the "Trust"), is a series of State Street Research Master Investment
Trust, formerly State Street Master Investment Trust (the "Master Trust"),
which is a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company. The Trust was organized in February, 1989 as a successor to State
Street Investment Corporation, a Massachusetts corporation. The Trust is
presently the only series of the Master Trust.
The investment objective of the Trust is to provide long-term growth of
capital and, secondarily, long-term growth of income. In seeking to achieve
its investment objective, the Trust invests primarily in common stocks, or
securities convertible into common stocks, that have long-term growth
potential.
The Trust offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.5% and pay a service fee equal to 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 on- going
expenses) at the end of eight years after the issuance of the Class B shares.
Class C shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees. Class D shares are subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class D shares also pay annual distribution and service fees of 1.00%. The
Trust'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 Trust in preparing its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. Investments in Securities
Values for listed securities represent the last sale on national securities
exchanges quoted prior to the close of the New York Stock Exchange.
Over-the-counter securities quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system are valued at the closing price
supplied through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are
at the mean of the closing bid and asked quotations, except for securities
that may be restricted as to public resale, which are valued in accordance
with methods adopted by the Trustees. Security transactions are accounted for
on the trade date (date the order to buy or sell is executed), and dividends
declared but not received are accrued on the ex-dividend date. Interest
income is determined on the accrual basis. Realized gains and losses from
security transactions are reported on the basis of identified cost of
securities delivered.
B. Federal Income Taxes
No provision for Federal income taxes is necessary since the Trust has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods. It is also the intention
of the Trust to distribute an amount sufficient to avoid imposition of any
Federal Excise Tax under Section 4982 of the Internal Revenue Code.
C. Dividends
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains are distributed annually.
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 due to the disposition of securities
that have different bases for financial reporting and tax purposes.
D. 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 a contract under which the Adviser
receives a quarterly fee equal to 1/8 of one percent of the average market
value of the net assets up to and including $200,000,000, 3/32 of one percent
of the average net assets in excess of $200,000,000 up to and including
$300,000,000, 3/40 of one percent of the average net assets in excess of
$300,000,000 up to and including $500,000,000, and 1/16 of one percent of the
average net assets in excess of $500,000,000. In consideration of these fees,
the Adviser furnishes the Trust with management, investment advisory,
statistical and research facilities and services. The Adviser also pays all
salaries, rent and certain other expenses of management. The fees of the
Trustees not currently affiliated with the Adviser amounted to $31,831 during
the year ended December 31, 1995.
State Street Research Shareholder Services, a division of State Street
Research Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the Trust such as responding to inquiries and
instructions from investors with respect to the purchase and redemption of
shares of the Trust. In addition, Metropolitan receives a fee for maintenance
of the accounts of certain shareholders who are participants in sponsored
arrangements, employee benefit plans and similar programs or plans, through
or under which shares of the Trust may be purchased. During the year ended
December 31, 1995, the amount of such shareholder servicing and account
maintenance expenses was $411,258.
7
<PAGE>
Note 3
For the year ended December 31, 1995, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$364,232,974 and $397,268,387, respectively.
Note 4
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Trust 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 D shares. In
addition, the Trust pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
to reimburse securities dealers for distribution and marketing services, to
furnish ongoing assistance to investors and to defray a portion of its
distribution and marketing expenses. For the year ended December 31, 1995,
fees pursuant to such plan amounted to $278,186, $1,456,996 and $143,293 for
Class A, Class B and Class D, respectively.
The Trust has been informed that the Distributor and MetLife Securities,
Inc., a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $140,645 and $832,499, respectively, on sales of Class A shares
of the Trust during the year ended December 31, 1995, and that MetLife
Securities, Inc. earned commissions aggregating $1,154,932 on sales of Class
B shares, and that the Distributor collected contingent deferred sales
charges of $688,624 and $5,125 on redemptions of Class B and Class D shares,
respectively, during the same period.
Note 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
At December 31, 1995, the Adviser owned one share of each of Class A, Class B
and Class D of the Trust.
Share transactions were as follows:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------------------
1995 1994
------------------------- ----------------------------
Class A Shares Amount Shares Amount
- ------------------------------------- ---------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Shares sold 4,201,602 $ 38,277,703 5,058,036 $ 43,158,666
Issued upon reinvestment of:
Distributions from net realized
gains 1,381,863 12,657,868 689,290 5,332,960
Dividends from net investment income 137,038 1,344,573 148,378 1,198,639
Shares redeemed (2,806,953) (24,998,577) (2,660,200) (22,577,181)
-------- --------- -------- ------------
Net increase 2,913,550 $ 27,281,567 3,235,504 $ 27,113,084
======== ========= ======== ============
Class B Shares Amount Shares Amount
- ------------------------------------- -------- --------- -------- ------------
Shares sold 5,971,626 $ 54,108,058 7,020,541 $ 59,229,510
Issued upon reinvestment of:
Distributions from net realized
gains 1,883,350 17,194,984 790,804 6,423,523
Dividends from net investment income 95,588 906,920 86,049 686,769
Shares redeemed (2,523,352) (22,537,142) (1,661,453) (14,012,746)
-------- --------- -------- ------------
Net increase 5,427,212 $ 49,672,820 6,235,941 $ 52,327,056
======== ========= ======== ============
Class C Shares Amount Shares Amount
- ------------------------------------- -------- --------- -------- ------------
Shares sold 1,267,679 $ 11,473,904 1,069,053 $ 9,148,062
Issued upon reinvestment of:
Distributions from net realized
gains 4,060,874 37,278,822 2,393,999 18,573,534
Dividends from net investment income 701,086 6,244,388 516,825 4,193,817
Shares redeemed (6,464,579) (57,645,171) (6,952,977) (59,288,131)
-------- --------- -------- ------------
Net decrease (434,940) $ (2,648,057) (2,973,100) $(27,372,718)
======== ========= ======== ============
Class D Shares Amount Shares Amount
- ------------------------------------- -------- --------- -------- ------------
Shares sold $
500,160 4,432,731 724,455 $ 6,158,619
Issued upon reinvestment of:
Distributions from net realized
gains 168,699 1,543,548 46,426 357,840
Dividends from net investment income 8,708 81,712 6,305 50,765
Shares redeemed (349,866) (3,061,940) (385,261) (3,251,537)
-------- --------- -------- ------------
Net increase 327,701 $ 2,996,051 391,925 $ 3,315,687
======== ========= ======== ============
</TABLE>
8
<PAGE>
State Street Research Investment Trust
Financial Highlights
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Class B
------------------------------ -------------------------------------
Year ended December 31 Year ended December 31
------------------------------ -------------------------------------
1995*** 1994 1993* 1995*** 1994 1993**
- ------------------------------- ------- ------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 7.74 $ 8.69 $ 8.75 $ 7.72 $ 8.66 $ 9.15
Net investment income .14 .11 .10 .07 .06 .06
Net realized and unrealized
gain (loss) on investments 2.39 (.44) .81 2.38 (.44) .39
Dividends from net investment
income (.13) (.12) (.13) (.06) (.06) (.10)
Distributions from realized
capital gains (.98) (.50) (.84) (.98) (.50) (.84)
----- ----- ------ -------- ------- --------
Net asset value, end of year $ 9.16 $ 7.74 $ 8.69 $ 9.13 $ 7.72 $ 8.66
===== ===== ====== ======== ======= ========
Total return 32.85%+ (3.84)%+ 10.53%+++ 31.86%+ (4.43)%+ 4.95%+++
Net assets at end of year
(000s) $135,676 $92,137 $75,259 $183,446 $113,301 $73,110
Ratio of operating expenses to
average net assets 0.78% 0.89% 0.75%++ 1.53% 1.64% 1.51%++
Ratio of net investment income
to average net assets 1.54% 1.26% 1.27%++ 0.79% 0.51% 0.48%++
Portfolio turnover rate 39.21% 33.08% 43.57% 39.21% 33.08% 43.57%
</TABLE>
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------
Year ended December 31
-------------------------------------------------------------------
1995*** 1994 1993 1992 1991
------------------------------ ---------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 7.76 $ 8.70 $ 8.80 $ 9.04 $ 7.67
Net investment income .16 .13 .15 .16 .19
Net realized and unrealized
gain (loss) on investments 2.39 (.43) .74 .40 1.96
Dividends from net investment
income (.15) (.14) (.15) (.16) (.20)
Distributions from realized
capital gains (.98) (.50) (.84) (.64) (.58)
-------- -------- -------- ------- ----------
Net asset value, end of year $ 9.18 $ 7.76 $ 8.70 $ 8.80 $ 9.04
======== ======== ======== ======= ==========
Total return 33.07%+ (3.47)%+ 10.20%+ 6.28%+ 28.08%+
Net assets at end of year
(000s) $738,649 $627,551 $729,536 $726,671 $657,762
Ratio of operating expenses to
average net assets 0.54% 0.65% 0.49% 0.51% 0.50%
Ratio of net investment income
to average net assets 1.81% 1.54% 1.63% 1.92% 2.24%
Portfolio turnover rate 39.21% 33.08% 43.57% 23.99% 16.28%
</TABLE>
<TABLE>
<CAPTION>
Class D
----------------------------------------
Year ended December 31
----------------------------------------
1995*** 1994 1993**
------------------------------ ---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of year $ 7.74 $ 8.68 $ 9.15
Net investment income .07 .05 .06
Net realized and unrealized
gain (loss) on investments 2.38 (.43) .40
Dividends from net investment
income (.06) (.06) (.09)
Distributions from realized
capital gains (.98) (.50) (.84)
-------- -------- ----------
Net asset value, end of year $ 9.15 $ 7.74 $ 8.68
======== ======== ==========
Total return 31.75%+ (4.45)%+ 5.10%+++
Net assets at end of year
(000s) $16,841 $11,707 $9,729
Ratio of operating expenses to
average net assets 1.53% 1.64% 1.51%++
Ratio of net investment income
to average net assets 0.79% 0.51% 0.51%++
Portfolio turnover rate 39.21% 33.08% 43.57%
</TABLE>
++ Annualized
* February 17, 1993 (commencement of share class designations) to December
31, 1993.
** March 15, 1993 (commencement of share class designations) to December 31,
1993.
***Per-share figures have been calculated using the average shares method.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
9
<PAGE>
Report of Independent Accountants
To the Trustees of State Street Research Master Investment Trust (formerly
State Street Master Investment Trust) and Shareholders of State Street Research
Investment Trust (formerly State Street Investment Trust):
We have audited the accompanying statement of assets and liabilities of State
Street Research Investment Trust, formerly State Street Investment Trust,
including the schedule of portfolio investments, as of December 31, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Street Research Investment Trust as of December 31, 1995, the results of
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 2, 1996
10
<PAGE>
State Street Research Investment Trust
Management's Discussion of Fund Performance
The stock market had a strong year, which helped the performance of State
Street Research Investment Trust. The Trust emphasizes growth and quality and
was well positioned for the strong performance of quality stocks. The Trust
also benefited from overweighted positions in technology and financial
services, which performed well. The Trust was underweighted in energy and
utilities stocks, which did not perform as well.
The Trust sold a portion of its technology holdings in September, took
profits, and replaced some of its tech holdings after a market correction
lowered prices in the sector.
The portfolio also targeted chemical and office equipment companies that
offer specific opportunities based on their mix of businesses and products.
Despite the Trust's strong overall performance, its retail position had a
disappointing year.
December 31, 1995
The Standard & Poor's 500 Composite Index (S&P 500) includes 500 widely
traded common stocks and is a commonly used measure of U.S. stock market
performance. The index is unmanaged and does not take sales charges into
consideration. Direct investment in the index is not possible; results are
for illustrative purposes only.
All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Trust 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. During the periods prior to 1990 that
shares of the Trust were not offered to the general public, the Trust was not
subject to the cash inflows or higher redemptions or expenses that have
occurred since 1990, when the Trust commenced a continuous public offering.
Performance for a class includes periods prior to the adoption of class
designations. Performance reflects up to maximum 4.5% front-end or 5%
contingent deferred sales charges. "C" shares, offered without a sales
charge, are available only to certain employee benefit plans and
institutions. Performance prior to class designations in 1993 does not
reflect annual 12b-1 fees of .25% for "A" shares and 1% for "B" and "D"
shares, which will reduce subsequent performance.
Comparison Of Change In Value Of A
$10,000 Investment In Investment Trust
and The S&P 500
[Tabular representation of line charts]
Class A Shares
Average Annual Total Return
1 Year 5 Years 10 Years
+26.87% +12.79% +12.14%
1/86 9550 10000
12/86 10668 11867
12/87 11402 12490
12/88 12569 14558
12/89 16609 19163
12/90 16451 18567
12/91 21071 24212
12/92 22395 26054
12/93 24613 28674
12/94 23668 29051
12/95 31442 39955
Class B Shares
Average Annual Total Return
1 Year 5 Years 10 Years
+26.86% +13.17% +12.45%
1/86 10000 10000
12/86 11171 11867
12/87 11939 12490
12/88 13162 14558
12/89 17392 19163
12/90 17226 18567
12/91 22064 24212
12/92 23450 26054
12/93 25644 28674
12/94 24509 29051
12/95 32318 39955
Class C Shares
Average Annual Total Return
1 Year 5 Years 10 Years
+33.07% +14.02% +12.75%
1/86 10000 10000
12/86 11171 11867
12/87 11939 12490
12/88 13162 14558
12/89 17392 19163
12/90 17226 18567
12/91 22064 24212
12/92 23450 26054
12/93 25843 28674
12/94 24945 29051
12/95 33195 39955
Class D Shares
Average Annual Total Return
1 Year 5 Years 10 Years
+30.75% +13.42% +12.45%
1/86 10000 10000
12/86 11171 11867
12/87 11939 12490
12/88 13162 14558
12/89 17392 19163
12/90 17226 18567
12/91 22064 24212
12/92 23450 26054
12/93 25682 28674
12/94 24538 29051
12/95 32330 39955
11
<PAGE>
State Street Research Investment Trust
Fund Information, Officers and Trustees of State Street Research Master
Investment Trust
Fund Information
State Street Research
Investment Trust
One Financial Center
Boston, MA 02111
Investment Adviser
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Vice President
Thomas P. Moore, Jr.
Vice President
Dudley F. Wade
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
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Partner, 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
12
<PAGE>
State Street Research Investment Trust
One Financial Center
Boston, MA 02111
Bulk rate
U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[State Street Logo]
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with prospective investors.
CONTROL NUMBER: 2970-960220(0397)SSR-LD
Cover Illustration by Dorothy Cullinan SS-396D-296
