As filed with the Securities and Exchange Commission
on April 26, 1996
Securities Act of 1933 File No. 33-32729
Investment Company Act of 1940 File No. 811-84
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 22 [X]
_______________________________
STATE STREET RESEARCH MASTER INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
Including Area Code (617) 357-1200
Francis J. McNamara, III
Senior Vice President, Secretary & General Counsel
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Copy to:
Thomas J. Kelly
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
<PAGE>
It is proposed that this filing will become effective under
Rule 485:
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On May 1, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _________ pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _________ pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
________________________________
The Registrant hereby declares that, pursuant to Rule 24f-2 promulgated
under the Investment Company Act of 1940, as amended, it has registered an
indefinite number of Class A shares, Class B shares, Class C shares and Class D
shares of beneficial interest, par value $.001 per share, in the State Street
Research Investment Trust series of the Registrant. A Rule 24f-2 Notice for the
most recent fiscal year ended December 31, 1995, was filed by the Registrant on
February 26, 1996.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Part A
FORM N-1A ITEM NO. CAPTION OR LOCATION IN
PROSPECTUS
1. Cover Page Same
2. Synopsis Table of Expenses
3. Condensed Financial
Information Financial Highlights;
Calculation of
Performance Data
4. General Description of The Trust's
Registrant Investments; Other
Investment Practices;
Limiting Investment
Risk; The Trust and its
Shares
5. Management of the Management of the
Trust Trust; Purchase of
Shares
5A.Management's [To be included in
Discussion of Annual Reports to
Fund Performance Shareholders]
6. Capital Stock and Shareholder Services;
Other Securities The Trust and its
Shares; Management of
the Trust; Dividends
and Distributions;
Taxes
7. Purchase of Securities Purchase of Shares;
Being Offered Shareholder Services
8. Redemption or Redemption of Shares;
Repurchase Shareholder Services
9. Legal Proceedings Not Applicable
(i)
<PAGE>
Part B
FORM N-1A ITEM NO. CAPTION OR LOCATION IN
STATEMENT OF ADDITIONAL
INFORMATION
10. Cover Page Same
11. Table of Contents Same
12. General Information Not Applicable
and History
13. Investment Objectives Additional Investment
and Policies Policies and
Restrictions;
Additional Information
Concerning Investment
Techniques; Debt
Instruments and
Permitted Cash
Investments; Portfolio
Transactions
14. Management of the Trustees and Officers
Registrant
15. Control Persons and Trustees and Officers
Principal Holders of
Securities
16. Investment Advisory Investment Advisory
and Other Services Services; Custodian;
Independent
Accountants;
Distribution of Shares
of the Trust
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Not Applicable
Other Securities (Description in
Prospectus)
19. Purchase, Redemption Purchase and Redemption
and Pricing of of Shares; Net Asset
Securities Being Value
Offered
(ii)
<PAGE>
FORM N-1A ITEM NO. CAPTION OR LOCATION IN
STATEMENT OF ADDITIONAL
INFORMATION
20. Tax Status Certain Tax Matters
21. Underwriters Distribution of Shares
of the Trust
22. Calculation of Calculation of
Performance Data Performance Data
23. Financial Statements Financial Statements
(iii)
<PAGE>
STATE STREET RESEARCH
INVESTMENT TRUST
Prospectus-May 1, 1996
The investment objective of State Street Research Investment Trust is to
provide long-term growth of capital and, secondarily, long-term growth of
income. In seeking to achieve its investment objective, State Street Research
Investment Trust invests primarily in common stocks, or securities
convertible into common stocks, that have long-term growth potential.
State Street Research Investment Trust is the successor to State Street
Investment Corporation (collectively the "Trust") which was established in
1924 as one of the nation's first mutual funds. The Trust is a diversified
series of State Street Research Master Investment Trust (the "Master Trust"),
an open-end management investment company. State Street Research & Management
Company (the "Investment Manager") serves as investment adviser to the Trust.
As of February 29, 1996, the Investment Manager had assets of approximately
$31.1 billion under management. State Street Research Investment Services,
Inc. serves as distributor (the "Distributor") for the Trust.
Shareholders may have their shares redeemed directly by the Trust at net
asset value plus the applicable contingent deferred sales charge, if any;
redemptions processed through securities dealers may be subject to processing
charges.
There are risks in any investment program, including the risk of changing
economic and market conditions, and there is no assurance that the Trust will
achieve its investment objective. The net asset value of the Trust's shares
fluctuates as market conditions change.
This Prospectus sets forth concisely the information a prospective investor
ought to know about the Trust before investing. It should be retained for
future reference. A Statement of Additional Information about the Trust dated
May 1, 1996, has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus. It is available at no
charge upon request to the Trust at the address indicated on the back cover
or by calling 1-800-562-0032.
The Trust offers four classes of shares which may be purchased at the next
determined net asset value per share plus, in the case of all classes except
Class C shares, a sales charge which, at the election of the investor, may be
imposed (i) at the time of purchase (the Class A shares) or (ii) on a
deferred basis (the Class B and Class D shares).
Class A shares are subject to (i) an initial sales charge of up to 4.5% and
(ii) an annual service fee of 0.25% of the average daily net asset value of
the Class A shares.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Table of Contents Page
Table of Expenses ........................................................ 2
Financial Highlights ..................................................... 4
The Trust's Investments .................................................. 6
Other Investment Practices ............................................... 6
Limiting Investment Risk ................................................. 8
Purchase of Shares ....................................................... 9
Redemption of Shares ..................................................... 17
Shareholder Services ..................................................... 18
The Trust and its Shares ................................................. 23
Management of the Trust .................................................. 24
Dividends and Distributions; Taxes ....................................... 25
Calculation of Performance Data .......................................... 25
<PAGE>
Class B shares are subject to (i) a contingent deferred sales charge
(declining from 5% to 2%), which will be imposed on most redemptions made
within five years of purchase, and (ii) annual distribution and service fees
of 1% of the average daily net asset value of such shares. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after purchase. No contingent deferred sales charge
applies after the fifth year following the purchase of Class B shares.
Class C shares are offered only 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 (i) a contingent deferred sales charge of 1% if
redeemed within one year following purchase and (ii) annual distribution and
service fees of 1% of the average daily net asset value of such shares.
Table of Expenses
Class A Class B Class C Class D
---------- ---------- ---------- ------------
Shareholder
Transaction
Expenses (1)
Maximum Sales
Charge Imposed on
Purchases (as a
percentage of
offering price) 4.5% None None None
Maximum Sales
Charge Imposed on
Reinvested
Dividends (as a
percentage of
offering price) None None None None
Deferred Sales
Charge (as a
percentage of
original
purchase price or
redemption
proceeds, as
applicable) None (2) 5% None 1%
Redemption Fees
(as a percentage
of amount
redeemed, if
applicable) None None None None
Exchange Fee None None None None
Annual Trust
Operating Expenses
(as a percentage
of average net
assets)
Management Fees 0.32% 0.32% 0.32% 0.32%
12b-1 Fees 0.25% 1.00% None 1.00%
Other Expenses 0.22% 0.22% 0.22% 0.22%
-------- -------- -------- --------
Total Trust
Operating
Expenses 0.79% 1.54% 0.54% 1.54%
======== ======== ======== ========
(1) Reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge declines
thereafter and no contingent deferred sales charge is imposed after the
fifth year. Class D shares are subject to a 1% contingent deferred sales
charge on any portion of the purchase redeemed within one year of the
sale. Long-term investors in a class of shares with a distribution fee
may, over a period of years, pay more than the economic equivalent of the
maximum sales charge permissible under applicable rules. See "Purchase of
Shares."
(2) Purchases of Class A shares of $1 million or more are not subject to a
sales charge. If such shares are redeemed within 12 months of purchase, a
contingent deferred sales charge of 1% will be applied to the redemption.
See "Purchase of Shares."
2
<PAGE>
Example:
You would pay the following expenses on a $1,000 investment including, for
Class A shares, the maximum applicable initial sales charge, and assuming (1)
5% annual return and (2) redemption of the entire investment at the end of
each time period:
1 3 5
Year Years Years 10 Years
----- ------ ------ ---------
Class A shares $53 $69 $ 87 $138
Class B shares (1) $66 $79 $104 $163
Class C shares $ 6 $17 $ 30 $ 68
Class D shares $26 $49 $ 84 $183
You would pay the following expenses on the same investment, assuming no
redemption:
1 3 5
Year Years Years 10 Years
----- ------ ------ ---------
Class B shares (1) $16 $49 $84 $163
Class D shares $16 $49 $84 $183
(1) Ten-year figures assume conversion of Class B shares to Class A shares at
the end of eight years.
The example should not be considered as a representation of past or future
return or expenses. Actual return or expenses may be greater or less than
shown.
The purpose of the table above is to assist the investor in understanding
the various costs and expenses that an investor will bear directly or
indirectly. The percentage expense levels shown in the table are based on
experience with expenses during the fiscal year ended December 31, 1995;
actual expense levels for the current fiscal year and future years may vary
from the amounts shown. The table does not reflect charges for optional
services elected by certain shareholders, such as the $7.50 fee for
remittance of redemption proceeds by wire. For further information on sales
charges, see "Purchase of Shares--Alternative Purchase Program"; for further
information on 12b-1 fees, see "Purchase of Shares--Distribution Plan." The
management fee is based on a percentage of net assets and decreases as the
amount of net assets under management increases. The applicable percentage
ranges from 1/2 of 1% on the first $200,000,000 of net assets to 1/4 of 1% on
the net assets over $500,000,000. For further information on management fees,
see "Management of the Trust."
3
<PAGE>
Financial Highlights
The data set forth below has been examined by Coopers & Lybrand L.L.P.,
independent accountants, and their report thereon for the latest five years
is included in the Statement of Additional Information. For further
information about the performance of the Trust, see "Financial Statements" in
the Statement of Additional Information.
Class C
Year ended December 31
-----------------------------------------------------
1995* 1994 1993 1992 1991
------- ------- ------- ------- ---------
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%
1990 1989 1988 1987 1986
------- ------- ------- ------- ---------
Net asset value,
beginning of year $8.65 $7.24 $7.30 $7.54 $7.61
Net investment
income .22 .26 .21 .21 .22
Net realized and
unrealized gain
(loss) on
investments (.31) 2.05 .54 .34 .69
Dividends from net
investment income (.23) (.26) (.21) (.23) (.23)
Distributions from
realized capital
gains (.66) (.64) (.60) (.56) (.75)
----- ----- ----- ----- -------
Net asset value, end
of year $7.67 $8.65 $7.24 $7.30 $7.54
===== ===== ===== ===== =======
Total return (0.95)%+ 32.14%+ 10.24%+ 6.88%+ 11.71%+
Net assets at end of
year (000s) $519,475 $575,114 $486,385 $493,088 $514,047
Ratio of operating
expenses
to average net
assets 0.50% 0.47% 0.51% 0.46% 0.49%
Ratio of net
investment income
to average net
assets 2.64% 3.09% 2.71% 2.26% 2.57%
Portfolio turnover
rate 10.07% 12.35% 15.39% 3.65% 10.06%
Class A
-----------------------------------
February 17,
1993
(Commencement
of Share
Class
Designations)
Year ended to
December 31 December 31,
1995* 1994 1993
------- ------- -------------
Net asset value,
beginning of year $ 7.74 $ 8.69 $ 8.75
Net investment income .14 .11 .10
Net realized and
unrealized gain
(loss) on
investments 2.39 (.44) .81
Dividends from net
investment income (.13) (.12) (.13)
Distributions from
realized capital
gains (.98) (.50) (.84)
----- ----- -----------
Net asset value, end
of year $ 9.16 $ 7.74 $ 8.69
===== ===== ===========
Total return 32.85%+ (3.84)%+ 10.53%+++
Net assets at end of
year (000s) $135,676 $92,137 $75,259
Ratio of operating
expenses to average
net assets 0.78% 0.89% 0.75%++
Ratio of net
investment income to
average net assets 1.54% 1.26% 1.27%++
Portfolio turnover
rate 39.21% 33.08% 43.57%
Class B
-----------------------------------
March 15,
1993
(Commencement
of Share
Class
Designations)
Year ended to
December 31 December 31,
1995* 1994 1993
------- ------- -------------
Net asset value,
beginning of year $7.72 $8.66 $9.15
Net investment income .07 .06 .06
Net realized and
unrealized gain (loss)
on investments 2.38 (.44) .39
Dividends from net
investment income (.06) (.06) (.10)
Distributions from
realized capital gains (.98) (.50) (.84)
----- ----- -----------
Net asset value, end of
year $9.13 $7.72 $8.66
===== ===== ===========
Total return 31.86%+ (4.43)%+ 4.95%+++
Net assets at end of
year (000s) $183,446 $113,301 $73,110
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% 0.48%++
Portfolio turnover rate 39.21% 33.08% 43.57%
++ Annualized
* 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.
4
<PAGE>
Class D
----------------------------------
March 15,
1993
(Commencement
of Share
Class
Designations)
Year ended to
December 31 December 31,
--------------- --------------
1995* 1994 1993
--------------- --------------
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%
++ Annualized
* 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.
5
<PAGE>
The Trust's Investments
The Trust's investment objective is to provide long-term growth of capital
and, secondarily, long-term growth of income. The investment objective is a
fundamental policy that may not be changed without approval of the Trust's
shareholders.
Under normal circumstances at least 65% of the Trust's net assets will be
invested in common stocks, or securities (preferred stock, bonds and
debentures) convertible into common stocks, or which carry the right to
acquire equities (warrants), which have long-term growth potential.
In seeking to achieve its investment objective, the Trust invests in a
diversified portfolio of companies in a broad range of industries whose
earnings and/or assets are expected to grow at a rate above the average for
the Standard & Poor's 500 Stock Index (the "S&P 500") over the long term.
Consequently, the Investment Manager seeks to identify those industries
offering the greatest possibilities for profitable expansion and, within such
industries, those companies that appear most capable of sustained growth. The
Trust also invests in securities of companies believed by the Investment
Manager to be selling below their intrinsic values or in securities of
cyclical companies believed by the Investment Manager to be at low points in
their cycles. Although the Trust's investments are not limited to companies
of any particular size, a majority of the securities in which the Trust
invests are listed on a national securities exchange. The Trust may invest
without limitation in securities of non-U.S. issuers. For further
information, see "Other Investment Practices."
Although for the past ten years over 85% of the Trust's portfolio has been
invested as described above and the Trust does not presently anticipate any
significant change in the percentage of the portfolio so invested, the Trust
reserves the right to invest at any time up to 35% of its net assets in other
equity securities and debt securities, consisting of U.S. Government
securities issued by the U.S. Treasury or by U.S. Government agencies or
instrumentalities, and corporate debt securities of varying maturities. The
Trust will generally purchase debt securities that are considered investment
grade securities (i.e., rated at the time of purchase AAA, AA, A or BBB by
Standard & Poor's Corporation ("S&P") or Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's")), or securities that are not rated but
considered by the Investment Manager to be of equivalent investment quality.
Securities rated Baa by Moody's lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Other Investment Practices
Foreign Investments
The Trust reserves the right to invest without limitation in securities of
non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). Under current
policy, however, the Trust limits such investments, including ADRs and EDRs,
to a maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company, which
evidence ownership of underlying securities issued by a foreign corporation
or other entity. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs in registered form are designed for
use in U.S. securities markets and EDRs are designed for use in European
securities markets. The underlying securities are not always denominated in
the same currency as the ADRs or EDRs. Although investment in the form of
ADRs or EDRs facilitates trading in foreign securities, it does not mitigate
all the risks associated with investing in foreign securities.
ADRs are available through facilities which may be either "sponsored" or
"unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the
foreign issuer is not involved, and the ADR holders pay the fees of the
depository. Sponsored ADRs are generally more advantageous to the ADR holders
and the issuer than are unsponsored ADRs. More and higher fees are generally
charged in an unsponsored program
6
<PAGE>
compared to a sponsored facility. Only sponsored ADRs may be listed on the
New York or American Stock Exchanges. Unsponsored ADRs may prove to be more
risky due to (a) the additional costs involved to the Trust; (b) the relative
illiquidity of the issue in U.S. markets; and (c) the possibility of higher
trading costs in the over-the-counter market as opposed to exchange-based
trading. The Trust will take these and other risk considerations into account
before making an investment in an unsponsored ADR.
The risks associated with investments in foreign securities include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future political and economic developments, including the risks
of nationalization or expropriation, the possible imposition of currency
exchange blockages, higher operating expenses, foreign withholding and other
taxes which may reduce investment return, reduced availability of public
information concerning issuers, the difficulty in obtaining and enforcing a
judgment against a foreign issuer and the fact that foreign issuers are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to domestic issuers. Moreover, securities of many foreign
issuers may be less liquid and their prices more volatile than those of
securities of comparable domestic issuers. Investments in foreign securities
also involve the additional cost of converting foreign currency into U.S.
dollars.
It is anticipated that most of the foreign investments of the Trust will
consist of securities of issuers in countries with developed economies.
However, the Trust may also invest in the securities of issuers in countries
with less developed economies as deemed appropriate by the Investment
Manager, although the Trust does not presently expect to invest more than 5%
of its total assets in issuers in such less developed countries. Such
countries include countries that have an emerging stock market that trades a
small number of securities; countries with low- to middle-income economies;
and/or countries with economies that are based on only a few industries.
Eastern European countries are considered to have less developed capital
markets. Some of the risks set forth above may be heightened for investments
in those countries.
For further information regarding foreign investments, see the Statement of
Additional Information.
Currency Transactions
In order to protect against the effect of uncertain future exchange rates on
securities denominated in foreign currencies, the Trust may engage in
currency exchange transactions either on a spot (i.e., cash) basis at the
rate prevailing in the currency exchange market or by entering into forward
contracts to purchase or sell currencies. Although such contracts tend to
minimize the risk of loss resulting from a correctly predicted decline in
value of hedged currency, they tend to limit any potential gain that might
result should the value of such currency increase. In entering a forward
currency transaction, the Trust is dependent upon the creditworthiness and
good faith of the counterparty. The Trust attempts to reduce the risks of
nonperformance by the counterparty by dealing only with established,
reputable institutions with which the Investment Manager has done substantial
business in the past. For further information, see the Statement of
Additional Information.
Other Investment Considerations
To aid in achieving its investment objective, the Trust may, subject to
certain limitations, buy and sell options, futures contracts and options on
futures contracts on securities and securities indices and purchase
securities on a "when-issued" or forward commitment basis. The Trust may not
establish a position in a commodity futures contract or purchase or sell a
commodity option contract for other than bona fide hedging purposes if
immediately thereafter the sum of the amount of initial margin deposits and
premiums required to establish such positions for such nonhedging purposes
would exceed 5% of the market value of the Trust's net assets; similar
policies apply to options which are not commodities. The Trust's positions in
futures and options may be closed out only on an exchange or in a market
which provides liquidity, and there can be no assurance that a liquid market
will exist. The Trust may enter various forms of swap arrangements which have
simul-
7
<PAGE>
taneously the characteristics of a security and a futures contract, although
the Trust does not presently expect to invest more than 5% of its total
assets in such items. These swap arrangements include interest rate swaps,
currency swaps and index swaps. See the Statement of Additional Information.
The Trust may enter into repurchase agreements involving U.S. Government
securities. Repurchase agreements could involve certain risks in the event of
default or insolvency of the other party, including possible delays or
restrictions upon the Trust's ability to dispose of the underlying
securities. See the Statement of Additional Information.
The Trust may lend portfolio securities with a value of up to 33-1/3% of its
total assets. The Trust will receive cash or cash equivalents (e.g., U.S.
Government obligations) as collateral in an amount equal to at least 100% of
the current market value of the loaned securities plus accrued interest.
Collateral received by the Trust will generally be held in the form tendered,
although cash may be invested in securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, irrevocable stand-by letters
of credit issued by a bank, or any combination thereof. The investing of cash
collateral received from loaning portfolio securities involves leverage which
magnifies the potential for gain or loss on monies invested and, therefore,
results in an increase in the volatility of the Trust's outstanding
securities. Such loans may be terminated at any time.
The Trust will retain most rights of ownership including rights to dividends,
interest or other distributions on the loaned securities. Voting rights pass
with the lending, although the Trust may call loans to vote proxies if
desired. Should the borrower of the securities fail financially, there is a
risk of delay in recovery of the securities or loss of rights in the
collateral. Loans are made only to borrowers which are deemed by the
Investment Manager to be of good financial standing.
Limiting Investment Risk
In seeking to lessen investment risk, the Trust operates under certain
fundamental investment restrictions.
Under the fundamental investment restrictions the Trust may not (a) purchase
for its portfolio a security of any one issuer (other than the United States
or its instrumentalities) if such purchase at the time would cause more than
5% of the total assets of the Trust (taken at market value) to be invested in
the securities of such issuer; (b) purchase for its portfolio a security of
any one issuer if such purchase at the time thereof would cause more than 10%
of any class of securities of such issuer to be held by the Trust; (c)
purchase securities of certain issuers that have a record of less than three
years' continuous operation if such purchase would cause more than 5% of the
Trust's total assets to be invested in the securities of such issuers,
subject to a number of exceptions; or (d) make any investment that would
cause more than 25% of its total assets, taken at market value, to be
invested in any one industry.
The foregoing fundamental investment restrictions may not be changed except
by vote of the holders of a majority of the outstanding voting securities of
the Trust. The vote of a majority of the outstanding voting securities of the
Trust means the vote (a) of 67 per centum or more of the voting securities
present at a meeting, if the holders of more than 50 per centum of the
outstanding voting securities of the Trust are present or represented by
proxy; or (b) of more than 50 per centum of the outstanding voting securities
of the Trust, whichever is less.
For further information on the above and other investment restrictions,
including nonfundamental investment restrictions that may be changed without
a shareholder vote, see the Statement of Additional Information.
The Trust may hold up to 100% of its assets in cash or certain short-term
securities for temporary defensive purposes. The Trust will adopt a temporary
defensive position when, in the opinion of the Investment Manager, such a
position is more likely to provide protection against adverse market
conditions than adherence to the Trust's other investment policies. The types
of short-term instruments in which the Trust may invest for such purposes
are, as more fully described in the Statement of Additional Information:
securities issued or guaranteed by the U.S. Government or its agencies or
8
<PAGE>
instrumentalities (U.S. Treasury bills, notes, bonds, Government National
Mortgage Association certificates), custodial receipts, certificates of
deposit, time deposits and bankers' acceptances of certain qualified
financial institutions and corporate commercial paper rated at least "A" by
S&P or "Prime" by Moody's (or, if not rated, issued by companies having an
outstanding long-term unsecured debt issue rated at least "A" by S&P or
Moody's). See the Statement of Additional Information.
Portfolio Turnover
The Trust reserves full freedom with respect to portfolio turnover. In
periods when there are rapid changes in economic conditions or security price
levels or when investment strategy is changed significantly, portfolio
turnover may be significantly higher than during times of economic and market
price stability or when investment strategy remains relatively constant. A
high rate of portfolio turnover will result in increased transaction costs
for the Trust and may also result in an increase in the realization of
short-term capital gains.
*****************************************************************************
Information on the Purchase of Shares, Redemption of Shares and Shareholder
Services is set forth below on pages 9 to 23.
*****************************************************************************
The Trust is available for investment by many kinds of investors including
participants investing through 401(k) or other retirement plan sponsors,
employees investing through savings plans sponsored by employers, Individual
Retirement Accounts ("IRAs"), trusts, corporations, individuals, etc. The
applicability of the general information and administrative procedures set
forth below accordingly will vary depending on the investor and the
recordkeeping system established for a shareholder's investment in the Trust.
Participants in 401(k) and other plans should first consult with the
appropriate person at their employer or refer to the plan materials before
following any of the procedures below. For more information or assistance,
anyone may call 1-800-562-0032.
*****************************************************************************
Purchase of Shares
Methods of Purchase
Through Dealers
Shares of the Trust are continuously offered through securities dealers who
have entered into sales agreements with the Distributor. Purchases through
dealers are confirmed at the offering price, which is the net asset value
plus the applicable sales charge, next determined after the order is duly
received by State Street Research Shareholder Services ("Shareholder
Services"), a division of State Street Research Investment Services, Inc.,
from the dealer. ("Duly received" for purposes herein means in accordance
with the conditions of the applicable method of purchase as described below.)
The dealer is responsible for transmitting the order promptly to Shareholder
Services in order to permit the investor to obtain the current price. See
"Purchase of Shares--Net Asset Value" herein.
By Mail
Initial investments in the Trust may be made by mailing or delivering to the
investor's securities dealer a completed Application (accompanying this
Prospectus), together with a check for the total purchase price payable to
the Trust. The dealer must forward the Application and check in accordance
with the instructions on the Application.
Additional shares may be purchased by mailing to Shareholder Services a check
payable to the Trust in the amount of the total purchase price together with
any one of the following: (i) an Application; (ii) the stub from the
shareholder's account statement; or (iii) a letter setting forth the name of
the Trust, the class of shares and the account name and number. Shareholder
Services will deliver the purchase order to the transfer agent and dividend
paying agent, State Street Bank and Trust Company (the "Transfer Agent").
If the check is not honored for its full amount, the purchaser could be
subject to additional charges to cover collection costs and any investment
loss, and the purchase may be cancelled.
9
<PAGE>
By Wire
An investor may purchase shares by wiring Federal Funds of not less than
$5,000 to State Street Bank and Trust Company, which also serves as the
Master Trust's custodian (the "Custodian"), as set forth below. Prior to
making an investment by wire, an investor must notify Shareholder Services at
1-800-521-6548 and obtain a control number and instructions. Following such
notification, Federal Funds should be wired through the Federal Reserve
System to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA
BNF = State Street Research Investment Trust
and class of shares (A, B, C or D)
AC = 99029761
OBI = Shareholder Name
Shareholder Account Number
Control #K (assigned by State Street Research Shareholder Services)
In order for a wire investment to be processed on the same day (i) the
investor must notify Shareholder Services of his or her intention to make
such investment by 12 noon Boston time on the day of his or her investment;
and (ii) the wire must be received by 4 P.M. Boston time that same day.
An investor making an initial investment by wire must promptly complete the
Application accompanying this Prospectus and deliver it to his or her
securities dealer, who should forward it as required. No redemptions will be
effected until the Application has been duly processed.
The Trust may in its discretion discontinue, suspend or change the practice
of accepting orders by any of the methods described above. Orders for the
purchase of shares are subject to acceptance by the Trust. The Trust reserves
the right to suspend the sale of shares, or reject any purchase order,
including orders in connection with exchanges, for any reason.
Minimum Investment
Class of Shares
----------------------------------------
A B C D
------- ------- ----- ---------
Minimum Initial Investment
By Wire $5,000 $5,000 (a) $5,000
IRAs $2,000 $2,000 (a) $2,000
By Investamatic $1,000 $1,000 (a) $1,000
All other $2,500 $2,500 (a) $2,500
Minimum Subsequent
Investment
By Wire $5,000 $5,000 (a) $5,000
IRAs $50 $50 (a) $50
By Investamatic $50 $50 (a) $50
All other $50 $50 (a) $50
(a) Special conditions apply; contact the Distributor.
The Trust reserves the right to vary the minimums for initial or subsequent
investments as in the case of, for example, exchanges and investments under
various employee benefit plans, sponsored arrangements involving group
solicitations of the members of an organization, or other investment plans
for reinvestment of dividends and distributions or for periodic investments
(e.g., Investamatic Check Program).
Alternative Purchase Program
General
Alternative classes of shares permit investors to select a purchase program
which they believe will be the most advantageous for them, given the amount
of their purchase, the length of time they anticipate holding Trust shares or
the flexibility they desire in this regard, and other relevant circumstances.
Investors will be able to determine whether in their particular circumstances
it is more advantageous to incur an initial sales charge and not be subject
to certain ongoing charges or to have their entire initial purchase price
invested in the Trust with the investment being subject thereafter to ongoing
service fees and distribution fees.
As described in greater detail below, securities dealers are paid differing
amounts of commission and other compensation depending on which class of
shares they sell.
10
<PAGE>
The major differences among the various classes of shares are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
---------------------- --------------------- -------- ----------------------
<S> <C> <C> <C> <C>
Sales Charges Initial sales charge Contingent deferred None Contingent deferred
at time of sales charge of 5% sales charge of 1%
investment of up to to 2% applies to applies to any
4.5% depending on any shares redeemed shares redeemed
amount of investment within first five within one year
years following following their
On investments of $1 their purchase; no purchase
million or more, no contingent deferred
initial sales sales charge after
charge; but five years
contingent deferred
sales charge of 1%
applies to any
shares redeemed
within one year
following their
purchase
Distribution Fee None 0.75% for first None 0.75% each year
eight years; Class
B shares convert
automatically to
Class A shares
after eight years
Service Fee 0.25% each year 0.25% each year None 0.25% each year
Initial Above described 4% None 1%
Commission initial sales charge
Received by less 0.25% to 0.50%
Selling retained by
Securities Distributor
Dealer
On investments of $1
million or more,
0.25% to 1% paid to
dealer by
Distributor
</TABLE>
11
<PAGE>
In deciding which class of shares to purchase, the investor should consider
the amount of the investment, the length of time the investment is expected
to be held, and the ongoing service fee and distribution fee, among other
factors.
Class A shares are sold at net asset value plus an initial sales charge of up
to 4.5% of the public offering price. Because of the sales charge, not all of
an investor's purchase amount is invested unless the purchase equals
$1,000,000 or more. Class B shareholders pay no initial sales charge, but a
contingent deferred sales charge of up to 5% generally applies to shares
redeemed within five years of purchase. Class D shareholders also pay no
initial sales charge, but a contingent deferred sales charge of 1% generally
applies to redemptions made within one year of purchase. For Class B and
Class D shareholders, therefore, the entire purchase amount is immediately
invested in the Trust.
An investor who qualifies for a significantly reduced initial sales charge,
or a complete waiver of the sales charge on investments of $1,000,000 or
more, on the purchase of Class A shares might elect that option to take
advantage of the lower ongoing service and distribution fees that
characterize Class A shares compared with Class B or Class D shares.
Class A, Class B and Class D shares are assessed an annual service fee of
0.25% of average daily net assets. In addition, Class B shares are assessed
an annual distribution fee of 0.75% of daily net assets for an eight-year
period following the date of purchase and are then automatically converted to
Class A shares. Class D shares are assessed an annual distribution fee of
0.75% of daily net assets for as long as the shares are held. The prospective
investor should consider these fees plus the initial or contingent deferred
sales charges in estimating the costs of investing in the various classes of
the Trust's shares.
Only certain employee benefit plans and large institutions may make
investments in Class C shares.
Some of the service and distribution fees are allocated to dealers (see
"Distribution Plan" below). In addition, the Distributor will, at its
expense, provide additional cash and noncash incentives to securities dealers
that sell shares. Such incentives may be extended only to those dealers that
have sold or may sell significant amounts of shares and/or meet other
conditions established by the Distributor; for example, the Distributor may
sponsor special promotions to develop particular distribution channels or to
reach certain investor groups. The incentives may include merchandise and
trips to and attendance at sales seminars at resorts.
Class A Shares -- Initial Sales Charges
Sales Charges
The purchase price of a Class A share of the Trust is the Trust's per share
net asset value next determined after the purchase order is duly received, as
defined herein, plus a sales charge which varies depending on the dollar
amount of the shares purchased as set forth in the table below. A major
portion of this sales charge is reallowed by the Distributor to the
securities dealer responsible for the sale.
Sales
Sales Charge
Charge Paid
Paid By By Dealer
Dollar Investor Investor Concession
Amount of As % of As % of As % of
Purchase Purchase Net Asset Purchase
Transaction Price Value Price
Less than $100,000 4.50% 4.71% 4.00%
$100,000 or above but
less than $250,000 3.50% 3.63% 3.00%
$250,000 or above but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or above but
less than $1 million 2.00% 2.04% 1.75%
$1 million See
and above following
0% 0% discussion
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
a commission based on the aggregate of such sales as follows:
12
<PAGE>
Amount of Sale Commission
- ---------------------------- -----------
(a) $1 million to $3 million 1.00%
(b) Next $2 million 0.50%
(c) Amount over $5 million 0.25%
On such sales of $1,000,000 or more, the investor is subject to a 1%
contingent deferred sales charge on any portion of the purchase redeemed
within one year of the sale. However, such redeemed shares will not be
subject to the contingent deferred sales charge to the extent that their
value represents (1) capital appreciation or (2) reinvestment of dividends or
capital gains distributions. In addition, the contingent deferred sales
charge will be waived for certain other redemptions as described under
"Contingent Deferred Sales Charge Waivers" below (as otherwise applicable to
Class B shares).
Class A shares of the Trust that are purchased without a sales charge may be
exchanged for Class A shares of certain other Eligible Funds, as described
below, without the imposition of a contingent deferred sales charge, although
contingent deferred sales charges may apply upon a subsequent redemption
within one year of the Class A shares which are acquired through such
exchange. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case
may be, on the amount realized on redemption. The amount of any contingent
deferred sales charge will be paid to the Distributor.
Reduced Sales Charges
The reduced sales charges set forth in the table above are applicable to
purchases made at any one time by any "person," as defined in the Statement
of Additional Information, of $100,000 or more of Class A shares of the Trust
or a combination of "Eligible Funds." "Eligible Funds" include the Trust and
other funds so designated by the Distributor from time to time. Class B,
Class C and Class D shares may also be included in the combination under
certain circumstances. Securities dealers should call Shareholder Services
for details concerning the other Eligible Funds and any persons who may
qualify for reduced sales charges and related information. See the Statement
of Additional Information.
Letter of Intent
Any investor who provides a Letter of Intent may qualify for a reduced sales
charge on purchases of no less than an aggregate of $100,000 of Class A
shares of the Trust and any other Eligible Funds within a 13-month period.
Class B, Class C and Class D shares may also be included in the combination
under certain circumstances. Additional information on a Letter of Intent is
available from dealers, or from the Distributor, and also appears in the
Statement of Additional Information.
Right of Accumulation
Investors may purchase Class A shares of the Trust or a combination of shares
of the Trust and other Eligible Funds at reduced sales charges pursuant to a
Right of Accumulation. Under the Right of Accumulation, the sales charge is
determined by combining the current purchase with the value of the Class A
shares of other Eligible Funds held at the time of purchase. Class B, Class C
and Class D shares may also be included in the combination under certain
circumstances. See the Statement of Additional Information and call
Shareholder Services for details concerning the Right of Accumulation.
Other Programs
Class A shares of the Trust may be sold at a reduced sales charge or without
a sales charge pursuant to certain sponsored arrangements, which include
programs under which a company, employee benefit plan or other organization
makes recommendations to, or permits group solicitation of, its employees,
members or participants, except any organization created primarily for the
purpose of obtaining shares of the Trust at a reduced sales charge or without
a sales charge. Sales without a sales charge, or with a reduced sales charge,
may also be made through brokers, financial planners, institutions, and
others, under managed fee-based programs (e.g., "wrap fee" or similar
programs) which meet certain requirements established from time to time by
the Distributor. Information on such arrangements and further conditions and
limitations is available from the Distributor.
In addition, no sales charge is imposed in connection with the sale of Class
A shares of the Trust to the following entities and persons: (A) the
Investment Manager, the Distributor, or any affiliated entities, including
any direct or indirect parent companies and other subsidiaries of such
parents (collectively "Affiliated Companies"); (B) employees, officers, sales
representatives or current or retired directors or
13
<PAGE>
trustees of the Affiliated Companies or any investment company managed by any
of the Affiliated Companies, any relatives of any such individuals whose
relationship is directly verified by such individuals to the Distributor, or
any beneficial account for such relatives or individuals; and (C) employees,
officers, sales representatives or directors of dealers and other entities
with a selling agreement with the Distributor to sell shares of any
aforementioned investment company, any spouse or child of such person, or any
beneficial account for any of them. The purchase must be made for investment
and the shares purchased may not be resold except through redemption. This
purchase program is subject to such administrative policies, regarding the
qualification of purchasers and any other matters, as may be adopted by the
Distributor from time to time.
Class B Shares -- Contingent Deferred Sales Charges
Contingent Deferred Sales Charges
The public offering price of Class B shares is the net asset value per share
next determined after the purchase order is duly received, as defined herein.
No sales charge is imposed at the time of purchase; thus the full amount of
the investor's purchase payment will be invested in the Trust. However, a
contingent deferred sales charge may be imposed upon redemptions of Class B
shares as described below.
The Distributor will pay securities dealers at the time of sale a 4%
commission for selling Class B shares. The proceeds of the contingent
deferred sales charge and the distribution fee are used to offset
distribution expenses and thereby permit the sale of Class B shares without
an initial sales charge.
Class B shares that are redeemed within a five-year period after their
purchase will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents (1) capital appreciation of
Trust assets or (2) reinvestment of dividends or capital gains distributions.
The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the net asset value of such shares at the time of
redemption or at the time of purchase, whichever is lower, by the applicable
percentage shown in the table below:
Contingent Deferred Sales
Charge As A Percentage
Of Net Asset Value
Redemption During At Redemption
- -------------------------- ---------------------------
1st Year Since Purchase 5%
2nd Year Since Purchase 4
3rd Year Since Purchase 3
4th Year Since Purchase 3
5th Year Since Purchase 2
6th Year Since Purchase
and Thereafter None
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption of Class B shares is made first
of those shares having the greatest capital appreciation, next of shares
representing reinvestment of dividends and capital gains distributions and
finally of remaining shares held by the shareholder for the longest period of
time. The holding period for purposes of applying a contingent deferred sales
charge on Class B shares of the Trust acquired through an exchange from
another Eligible Fund will be measured from the date that such shares were
initially acquired in the other Eligible Funds, and Class B shares being
redeemed will be considered to represent, as applicable, capital appreciation
or dividend and capital gains distribution reinvestments in such other
Eligible Fund. These determinations will result in any contingent deferred
sales charge being imposed at the lowest possible rate. For federal income
tax purposes, the amount of the contingent deferred sales charge will reduce
the gain or increase the loss, as the case may be, on the amount realized on
redemption. The amount of any contingent deferred sales charge will be paid
to the Distributor.
Contingent Deferred Sales Charge Waivers
The contingent deferred sales charge does not apply to exchanges, or to
redemptions under a systematic withdrawal plan which meets certain
conditions. In addition, the contingent deferred sales charge will be waived
for: (i) redemptions made within one year of the death or total disability,
as defined by the Social Security Administration, of all shareholders of an
account; (ii) redemptions made after attainment of a specific age in an
amount which represents the minimum distribution required at such age under
Section
14
<PAGE>
401(a)(9) of the Internal Revenue Code for retirement accounts or plans
(e.g., age 70-1/2 for IRAs and Section 403(b) plans), calculated solely on
the basis of assets invested in the Trust or other Eligible Funds; and (iii)
a redemption resulting from a tax-free return of an excess contribution to an
IRA. (The foregoing waivers do not apply to a tax-free rollover or transfer
of assets out of the Trust.) The Trust may modify or terminate the waivers at
any time; for example, the Trust may limit the application of multiple
waivers.
Conversion of Class B Shares to Class A Shares
A shareholder's Class B shares, including all shares received as dividends or
distributions with respect to such shares, will automatically convert to
Class A shares of the Trust at the end of eight years following the issuance
of such Class B shares; consequently, they will no longer be subject to the
higher expenses borne by Class B shares. The conversion rate will be
determined on the basis of the relative per-share net asset values of the two
classes and may result in a shareholder receiving either a greater or fewer
number of Class A shares than the Class B shares so converted. As noted
above, holding periods for Class B shares received in exchange for Class B
shares of other Eligible Funds will be counted toward the eight-year period.
Class C Shares--Institutional; No Sales Charge
The purchase price of a Class C share of the Trust is the Trust's per share
net asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase or
redemption. The Trust will receive the full amount of the investor's purchase
payment.
Class C shares are only available for new investments by certain employee
benefit plans and large institutions. See the Statement of Additional
Information. Information on the availability of Class C shares and further
conditions and limitations with respect thereto is available from the
Distributor. An employee benefit plan or endowment fund eligible to invest in
Class C shares should first consult with its dealer before investing in any
other class of shares, to obtain information on the higher sales charges and
service and distribution fees applicable to such other classes of shares.
Shares held prior to February 17, 1993 are deemed to be Class C shares, but
shareholders thereof may not acquire additional Class C shares except through
reinvestment of dividends and distributions. Class C shares may have also
been issued directly or through exchanges to those shareholders of the Trust
or other Eligible Funds who previously held shares not subject to any future
sales charge or service fees or distribution fees.
Class D Shares--Spread Sales Charges
The purchase price of a Class D share of the Trust is the Trust's per share
net asset value next determined after the purchase order is duly received, as
defined herein. No sales charge is imposed at the time of purchase; thus the
full amount of the investor's purchase payment will be invested in the Trust.
Class D shares are subject to a 1% contingent deferred sales charge on any
portion of the purchase redeemed within one year of the sale. The contingent
deferred sales charge will be 1% of the lesser of the net asset value of the
shares at the time of purchase or at the time of redemption. The Distributor
pays securities dealers a 1% commission for selling Class D shares at the
time of purchase. The proceeds of the contingent deferred sales charge and
the distribution fee are used to offset distribution expenses and thereby
permit the sale of Class D shares without an initial sales charge.
Class D shares that are redeemed within one year after purchase will not be
subject to the contingent deferred sales charge to the extent that the value
of such shares represents (1) capital appreciation of Trust assets or (2)
reinvestment of dividends or capital gains distributions. In addition, the
contingent deferred sales charge will be waived for certain other redemptions
as described under "Contingent Deferred Sales Charge Waivers" above (as
otherwise applicable to Class B shares). For federal income tax purposes, the
amount of the contingent deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any contingent deferred sales charge will be paid to the
Distributor.
Net Asset Value
The Trust's per share net asset values are determined Monday through Friday
as of the close of the New
15
<PAGE>
York Stock Exchange (the "NYSE") exclusive of days on which the NYSE is
closed. The NYSE ordinarily closes at 4 P.M. New York City time. Assets held
by the Trust are valued on the basis of the last reported sale price or
quotations as of the close of business on the valuation date, except that
securities and assets for which market quotations are not readily available
are valued as determined in good faith by or under the authority of the
Trustees of the Master Trust. In determining the value of certain assets for
which market quotations are not readily available, the Trust may use one or
more pricing services. The pricing services utilize information with respect
to market transactions, quotations from dealers and various relationships
among securities in determining value and may provide prices determined as of
times prior to the close of the NYSE. The Trustees have authorized the use of
the amortized cost method to value short-term debt instruments issued with a
maturity of one year or less and having a remaining maturity of 60 days or
less when the value obtained reflects fair value. Further information with
respect to the valuation of the Trust's assets is included in the Statement
of Additional Information.
Distribution Plan
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Distribution Plan") in accordance with the regulations under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under the provisions of the
Distribution Plan, the Trust makes payments to the Distributor based on an
annual percentage of the average daily value of the net assets of each class
of shares as follows:
Class Service Fee Distribution Fee
- -------- ------------ -------------------
A 0.25% None
B 0.25% 0.75%
C None None
D 0.25% 0.75%
Some or all of the service fees are used to pay or reimburse securities
dealers (including securities dealers that are affiliates of the Distributor)
or others for personal services and/or the maintenance or servicing of
shareholder accounts. A portion of any initial commission paid to dealers for
the sale of shares of the Trust represents payment for personal services
and/or the maintenance of shareholder accounts by such dealers. Dealers who
have sold Class A shares are eligible for further reimbursement commencing as
of the time of such sale. Dealers who have sold Class B and Class D shares
are eligible for further reimbursement after the first year during which such
shares have been held of record by such dealer as nominee for its clients (or
by such clients directly). Any service fees received by the Distributor and
not allocated to dealers may be applied by the Distributor in reduction of
expenses incurred by it directly for personal services and the maintenance or
servicing of shareholder accounts.
The distribution fees are used primarily to offset initial and ongoing
commissions paid to securities dealers for selling such shares. Any
distribution fees received by the Distributor and not allocated to dealers
may be applied by the Distributor in connection with sales or marketing
efforts, including special promotional fees and cash and noncash incentives
based upon sales by securities dealers.
The Distributor provides distribution services on behalf of other funds
having distribution plans and receives similar payments from, and incurs
similar expenses on behalf of, such other funds. When expenses of the
Distributor cannot be identified as relating to a specific fund, the
Distributor allocates expenses among the funds in a manner deemed fair and
equitable to each fund.
Commissions and other cash and noncash incentives and payments to dealers, to
the extent payable out of the general profits, revenues or other sources of
the Distributor (including the advisory fees paid by the Trust), have also
been authorized pursuant to the Distribution Plan.
A rule of the National Association of Securities Dealers, Inc. ("NASD")
limits the annual expenditures which the Trust may incur under the
Distribution Plan to 1%, of which 0.75% may be used to pay distribution
expenses and 0.25% may be used to pay shareholder service fees. The NASD rule
also limits the aggregate amount which the Trust may pay for such
distribution costs to 6.25% of gross share sales of a class since the
inception of any asset-based sales charge plus interest at the prime rate
plus 1% on unpaid amounts thereof (less any contingent deferred
16
<PAGE>
sales charges). Such limitation does not apply to shareholder service fees.
Payments to the Distributor or to dealers funded under the Distribution Plan
may be discontinued at any time by the Trustees of the Master Trust.
Redemption of Shares
Shareholders may redeem all or any portion of their accounts on any day the
NYSE is open for business. Redemptions will be effective at the applicable
net asset value per share next determined (see "Purchase of Shares--Net Asset
Value" herein) after receipt of the redemption request, in accordance with
the requirements described below, by Shareholder Services and delivery of the
request by Shareholder Services to the Transfer Agent. To allow time for the
clearance of checks used for the purchase of any shares which are tendered
for redemption shortly after purchase, the remittance of the redemption
proceeds for such shares could be delayed for 15 days or more after the
purchase. Shareholders who anticipate a potential need for immediate access
to their investments should, therefore, purchase shares by wire. Except as
noted, redemption proceeds from the Trust are normally remitted within seven
days after receipt of the redemption request by the Trust and any necessary
documents in good order.
Methods of Redemption
Request By Mail
A shareholder may request redemption of shares, with proceeds to be mailed to
the shareholder or wired to a predesignated bank account (see "Proceeds By
Wire" below) by sending to State Street Research Shareholder Services, P.O.
Box 8408, Boston, Massachusetts 02266-8408: (1) a written request for
redemption signed by the registered owner(s) of the shares, exactly as the
account is registered; (2) an endorsed stock power in good order with respect
to the shares or, if issued, the share certificates for the shares endorsed
for transfer or accompanied by an endorsed stock power; (3) any required
signature guarantees (see "Redemption of Shares--Signature Guarantees"
below); and (4) any additional documents which may be required for redemption
in the case of corporations, trustees, etc., such as certified copies of
corporate resolutions, governing instruments, powers of attorney, and the
like. The Transfer Agent will not process requests for redemption until it
has received all necessary documents in good order. A shareholder will be
notified promptly if a redemption request cannot be accepted. Shareholders
having any questions about the requirements for redemption should call
Shareholder Services toll-free at 1-800-562-0032.
Request By Telephone
Shareholders may request redemption by telephone with proceeds to be
transmitted by check or by wire (see "Proceeds By Wire" below). A shareholder
can request a redemption for $50,000 or less to be transmitted by check. Such
check for the proceeds will be made payable to the shareholder of record and
will be mailed to the address of record. There is no fee for this service. It
is not available for shares held in certificate form or if the address of
record has been changed within 30 days of the redemption request. The Trust
may revoke or suspend the telephone redemption privilege at any time and
without notice. See "Shareholder Services--Telephone Services" for a
discussion of the conditions and risks associated with Telephone Privileges.
Proceeds By Wire
Upon a shareholder's written request or by telephone if the shareholder has
Telephone Privileges (see "Shareholder Services--Telephone Services" herein),
the Master Trust's custodian will wire redemption proceeds to the
shareholder's predesignated bank account. To make the request, the
shareholder should call 1-800-521-6548 prior to 4 P.M. Boston time. A $7.50
charge against the shareholder's account will be imposed for each wire
redemption. This charge is subject to change without notice. The
shareholder's bank may also impose a charge for receiving wires of redemption
proceeds. The minimum redemption by wire is $5,000.
Request to Dealer to Repurchase
For the convenience of shareholders, the Trust has authorized the Distributor
as its agent to accept orders from dealers by wire or telephone for the
repurchase of shares by the Distributor from the dealer. The Trust may revoke
or suspend this authorization at any time. The repurchase price is the net
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asset value for the applicable shares next determined following the time at
which the shares are offered for repurchase by the dealer to the Distributor.
The dealer is responsible for promptly transmitting a shareholder's order to
the Distributor. Payment of the repurchase proceeds is made to the dealer who
placed the order promptly upon delivery of certificates for shares in proper
form for transfer or, for Open Accounts, upon the receipt of a stock power
with signatures guaranteed as described below, and, if required, any
supporting documents. Neither the Trust nor the Distributor imposes any
charge upon such a repurchase. However, a dealer may impose a charge as agent
for a shareholder in the repurchase of his or her shares.
The Trust has reserved the right to change, modify or terminate the services
described above at any time.
Additional Information
Because of the relatively high cost of maintaining small shareholder
accounts, the Trust reserves the right to involuntarily redeem at its option
any shareholder account which remains below $1,500 for a period of 60 days
after notice is mailed to the applicable shareholder, or to impose a
maintenance fee on such account after 60 days' notice. Such involuntary
redemptions will be subject to applicable sales charges, if any. The Trust
may increase such minimum account value above such amount in the future after
notice to affected shareholders. Involuntarily redeemed shares will be priced
at the net asset value on the date fixed for redemption by the Trust, and the
proceeds of the redemption will be mailed promptly to the affected
shareholder at the address of record. Currently, the maintenance fee is $18
annually, which is paid to the Transfer Agent. The fee does not apply to
certain retirement accounts or if the shareholder has more than an aggregate
$50,000 in the Trust and other Eligible Funds combined. Imposition of a
maintenance fee on a small account could, over time, exhaust the assets of
such account.
To cover the cost of additional compliance administration, a $20 fee will be
charged against any shareholder account that has been determined to be
subject to escheat under applicable state laws.
The Trust may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for more than seven days, except that (a) it
may elect to suspend the redemption of shares or postpone the date of payment
of redemption proceeds: (1) during any period that the NYSE is closed (other
than customary weekend and holiday closings) or trading on the NYSE is
restricted; (2) during any period in which an emergency exists as a result of
which disposal of portfolio securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the Trust's net asset values;
or (3) during such other periods as the Securities and Exchange Commission
may by order permit for the protection of investors; and (b) the payment of
redemption proceeds may be postponed as otherwise provided under "Redemption
of Shares" herein.
Signature Guarantees
To protect shareholder accounts, the Transfer Agent, the Trust, the
Investment Manager and the Distributor from possible fraud, signature
guarantees are required for certain redemptions. Signature guarantees help
the Transfer Agent determine that the person who has authorized a redemption
from the account is, in fact, the shareholder. Signature guarantees are
required for, among other things: (1) written requests for redemptions for
more than $50,000; (2) written requests for redemptions for any amount if the
proceeds are transmitted to other than the current address of record
(unchanged in the past 30 days); (3) written requests for redemptions for any
amount submitted by corporations and certain fiduciaries and other
intermediaries; and (4) requests to transfer the registration of shares to
another owner. Signatures must be guaranteed by a bank, a member firm of a
national stock exchange, or other eligible guarantor institution. The
Transfer Agent will not accept guarantees (or notarizations) from notaries
public. The above requirements may be waived in certain instances. Please
contact Shareholder Services at 1-800-562-0032 for specific requirements
relating to your account.
Shareholder Services
The Open Account System
Under the Open Account System full and fractional shares of the Trust owned
by shareholders are credited to their accounts by the Transfer Agent, State
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Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110. Certificates representing Class B or Class D shares will not be
issued, while certificates representing Class A or Class C shares will only
be issued if specifically requested in writing and, in any case, will only be
issued for full shares, with any fractional shares to be carried on the
shareholder's account. Shareholders will receive periodic statements of
transactions in their account.
The Trust's Open Account System provides the following options:
1. Additional purchases of shares of the Trust may be made through dealers,
by wire or by mailing a check payable to the Trust, to Shareholder
Services under the terms set forth above under "Purchase of Shares."
2. The following methods of receiving dividends from investment income and
distributions from capital gains are available:
(a) All income dividends and capital gains distributions reinvested in
additional shares of the Trust.
(b) All income dividends in cash; all capital gains distributions
reinvested in additional shares of the Trust.
(c) All income dividends and capital gains distributions in cash.
(d) All income dividends and capital gains distributions invested in any
one available Eligible Fund designated by the shareholder as described
below. See "Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application
accompanying the initial investment. If no selection is indicated on the
Application, the account will automatically be coded for reinvestment of all
dividends and distributions in additional shares of the same class of the
Trust. Selections may be changed at any time by telephone or written notice
to Shareholder Services. Dividends and distributions are reinvested at net
asset value without a sales charge.
Exchange Privilege
Shareholders of the Trust may exchange their shares for available shares with
corresponding characteristics of any of the other Eligible Funds at any time
on the basis of the relative net asset values of the respective shares to be
exchanged, subject to compliance with applicable securities laws.
Shareholders of any other Eligible Fund may similarly exchange their shares
for Trust shares with corresponding characteristics. Prior to making an
exchange, shareholders should obtain the Prospectus of the Eligible Fund into
which they are exchanging. Under the Direct Program, subject to certain
conditions, shareholders may make arrangements for regular exchanges from the
Trust into other Eligible Funds. To effect an exchange, Class A, Class B and
Class D shares may be redeemed without the payment of any contingent deferred
sales charge that might otherwise be due upon an ordinary redemption of such
shares. The State Street Research Money Market Fund issues Class E shares
which are sold without any sales charge. Exchanges of State Street Research
Money Market Fund Class E shares into Class A shares of the Trust or any
other Eligible Fund are subject to the initial sales charge or contingent
deferred sales charge applicable to an initial investment in such Class A
shares, unless a prior Class A sales charge has been paid directly or
indirectly with respect to the shares redeemed. For purposes of computing the
contingent deferred sales charge that may be payable upon disposition of the
acquired Class A, Class B and Class D shares, the holding period of the
redeemed shares is "tacked" to the holding period of the acquired shares. The
period any Class E shares are held is not tacked to the holding period of any
acquired shares. No exchange transaction fee is currently imposed on any
exchange.
Shares of the Trust may also be acquired or redeemed in exchange for shares
of the Summit Cash Reserves Fund ("Summit Cash Reserves") by customers of
Merrill Lynch, Pierce, Fenner & Smith Incorporated (subject to completion of
steps necessary to implement the program). The Trust and Summit Cash Reserves
are related mutual funds for purposes of investment and investor services.
Upon the acquisition of shares of Summit Cash Reserves by exchange for
redeemed shares of the Trust, (a) no
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sales charge is imposed by Summit Cash Reserves, (b) no contingent deferred
sales charge is imposed by the Trust on the Trust shares redeemed, and (c)
any applicable holding period of the Trust shares redeemed is "tolled," that
is, the holding period clock stops running pending further transactions. Upon
the acquisition of shares of the Trust by exchange for redeemed shares of
Summit Cash Reserves, (a) the acquisition of Class A shares shall be subject
to the initial sales charges or contingent deferred sales charges applicable
to an initial investment in such Class A shares, unless a prior Class A sales
charge has been paid directly or indirectly with respect to the Summit Cash
Reserve shares redeemed, and (b) the acquisition of Class B or Class D shares
of the Trust shall restart any holding period previously tolled, or shall be
subject to the contingent deferred sales charge applicable to an initial
investment in such shares.
For the convenience of its shareholders who have Telephone Privileges, the
Trust permits exchanges by telephone request from either the shareholder or
his or her dealer. Shares may be exchanged by telephone provided that the
registration of the two accounts is the same. The toll-free number for
exchanges is 1-800-521-6548. See "Telephone Services" herein for a discussion
of conditions and risks associated with Telephone Privileges.
The exchange privilege may be exercised only in those states where shares of
the relevant other Eligible Fund may legally be sold. For tax purposes, each
exchange actually represents the sale of shares of one fund and the purchase
of shares of another. Accordingly, exchanges may produce a capital gain or
loss for tax purposes. The exchange privilege may be terminated or suspended
or its terms changed at any time, subject, if required under applicable
regulations, to 60 days' prior notice. New accounts established for
investments upon exchange from an existing account in another fund will have
the same Telephone Privileges as the existing account, unless Shareholder
Services is instructed otherwise. Related administrative policies and
procedures may also be adopted with regard to a series of exchanges, street
name accounts, sponsored arrangements and other matters.
The exchange privilege is not designed for use in connection with short-term
trading or market timing strategies. To protect the interests of
shareholders, the Trust reserves the right to temporarily or permanently
terminate the exchange privilege for any person who makes more than six
exchanges out of or into the Trust per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, may be aggregated for purposes of the six exchange
limit. Notwithstanding the six exchange limit, the Trust reserves the right
to refuse exchanges by any person or group if, in the Investment Manager's
judgment, the Trust would be unable to invest effectively in accordance with
its investment objective and policies, or would otherwise potentially be
adversely affected. Exchanges may be restricted or refused if the Trust
receives or anticipates simultaneous orders affecting significant portions of
the Trust's assets. In particular, a pattern of exchanges that coincides with
a "market timing" strategy may be disruptive to the Trust. The Trust may
impose these restrictions at any time. The exchange limit may be modified for
accounts in certain institutional retirement plans because of plan exchange
limits, Department of Labor regulations or administrative and other
considerations. Subject to the foregoing, if an exchange request in good
order is received by Shareholder Services and delivered by Shareholder
Services to the Transfer Agent by 12 noon Boston time on any business day,
the exchange usually will occur that day. For further information regarding
the exchange privilege, shareholders should contact Shareholder Services.
Reinvestment Privilege
A shareholder of the Trust who has redeemed shares or had shares repurchased
at his or her request may reinvest all or any portion of the proceeds (plus
that amount necessary to acquire a fractional share to round off his or her
reinvestment to full shares) in shares, of the same class as the shares
redeemed, of the Trust or any other Eligible Fund at net asset value and
without subjecting the reinvestment to an initial sales charge, provided such
reinvestment is made within 120 calendar days after a redemption or
repurchase. Upon such reinvestment, the shareholder will be credited with any
contingent deferred sales
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charge previously charged with respect to the amount reinvested. The
redemption of shares is, for federal income tax purposes, a sale on which the
shareholder may realize a gain or a loss. If a redemption at a loss is
followed by a reinvestment within 30 days, the transaction may be a "wash
sale" resulting in a denial of the loss for federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject to
any applicable minimum account standards imposed by the fund into which the
reinvestment is made. Shares are sold to a reinvesting shareholder at the net
asset value thereof next determined following timely receipt by Shareholder
Services of such shareholder's written purchase request and delivery of the
request by Shareholder Services to the Transfer Agent. A shareholder may
exercise this reinvestment privilege only once per 12-month period with
respect to his or her shares of the Trust. No charge is imposed by the Trust
for such reinvestments; however, dealers may charge fees in connection with
the reinvestment privilege. The reinvestment privilege may be exercised with
respect to an Eligible Fund only in those states where shares of the relevant
other Eligible Fund may legally be sold.
Investment Plans
The Investamatic Check Program is available to Class A, Class B and Class D
shareholders. Under this Program, shareholders may make regular investments
by authorizing withdrawals from their bank accounts each month or quarter on
the Application available from Shareholder Services.
The Distributor also offers IRAs and tax-sheltered retirement plans,
including prototype and other employee benefit plans for employees, sole
proprietors, partnerships and corporations. Details of these investment plans
and their availability may be obtained from securities dealers or from
Shareholder Services.
Systematic Withdrawal Plan
A shareholder who owns noncertificated Class A or Class C shares with a value
of $5,000 or more, or Class B or Class D shares with a value of $10,000 or
more, may elect by participating in the Trust's Systematic Withdrawal Plan to
have periodic checks issued for specified amounts. These amounts may not be
less than certain minimums, depending on the class of shares held. The Plan
provides that all income dividends and capital gains distributions of the
Trust shall be credited to participating shareholders in additional shares of
the Trust. Thus, the withdrawal amounts paid can only be realized by
redeeming shares of the Trust under the Plan. To the extent such amounts paid
exceed dividends and distributions from the Trust, a shareholder's investment
will decrease and may eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales charges,
no such charges will be imposed on withdrawals of up to 8% annually of either
(a) the value, at the time the Plan is initiated, of the shares then in the
account or (b) the value, at the time of a withdrawal, of the same number of
shares as in the account when the Plan was initiated, whichever is higher.
Expenses of the Plan are borne by the Trust. A participating shareholder may
withdraw from the Plan and the Trust may terminate the Plan at any time on
written notice. Purchase of additional shares while a shareholder is
receiving payments under a Plan is ordinarily disadvantageous because of
duplicative sales charges. For this reason, a shareholder may not participate
in the Investamatic Check Program and the Systematic Withdrawal Plan at the
same time.
Dividend Allocation Plan
The Dividend Allocation Plan allows shareholders to elect to have all of
their dividends and any other distributions from the Trust or any Eligible
Fund automatically invested at net asset value in one other such Eligible
Fund designated by the shareholder, provided the account into which the
investment is made is initially funded with the requisite minimum amount. The
number of shares purchased will be determined as of the dividend payment
date. The Dividend Allocation Plan is subject to state securities law
requirements, to suspension at any time, and to such policies, limitations
and restrictions, as, for instance, may be applicable to street name or
master accounts, that may be adopted from time to time.
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Automatic Bank Connection
A shareholder may elect, by participating in the Trust's Automatic Bank
Connection ("ABC"), to have dividends and other distributions, including
Systematic Withdrawal Plan payments, automatically deposited in the
shareholder's bank account by electronic funds transfer. Some contingent
deferred sales charges may apply. See "Systematic Withdrawal Plan" herein.
Reports
Reports for the Trust will be sent to shareholders of record at least
semiannually. These reports will include a list of the securities owned by
the Trust as well as the Trust's financial statements.
Telephone Services
The following telephone privileges ("Telephone Privileges") can be used:
(1) the privilege allowing the shareholder to make telephone redemptions for
amounts up to $50,000 to be mailed to the shareholder's address of record
is available automatically;
(2) the privilege allowing the shareholder or his or her dealer to make
telephone exchanges is available automatically;
(3) the privilege allowing the shareholder to make telephone redemptions for
amounts over $5,000, to be remitted by wire to the shareholder's
predesignated bank account, is available by election on the Application
accompanying this Prospectus. A current shareholder who did not
previously request such telephone wire privilege on his or her original
Application may request the privilege by completing a Telephone
Redemption-by-Wire Form which may be obtained by calling 1-800-562-0032.
The Telephone Redemption-by-Wire Form requires a signature guarantee; and
(4) the privilege allowing the shareholder to make telephone purchases or
redemptions transmitted via the Automated Clearing House system into or
from the shareholder's predesignated bank account, is available upon
completion of the requisite initial documentation. For details and forms,
call 1-800-562-0032. The documentation requires a signature guarantee.
A shareholder may decline the automatic Telephone Privileges set forth in (1)
and (2) above by so indicating on the Application accompanying this
Prospectus.
A shareholder may discontinue any Telephone Privilege at any time by advising
Shareholder Services that the shareholder wishes to discontinue the use of
such privileges in the future.
Unless such Telephone Privileges are declined, a shareholder is deemed to
authorize Shareholder Services and the Transfer Agent to: (1) act upon the
telephone instructions of any person purporting to be the shareholder to
redeem, or purporting to be the shareholder or the shareholder's dealer to
exchange, shares from any account; and (2) honor any written instructions for
a change of address regardless of whether such request is accompanied by a
signature guarantee. All telephone calls will be recorded. None of the Trust,
the other Eligible Funds, the Transfer Agent, the Investment Manager or the
Distributor will be liable for any loss, expense or cost arising out of any
request, including any fraudulent or unauthorized requests. Shareholders
assume the risk to the full extent of their accounts that telephone requests
may be unauthorized. Reasonable procedures will be followed to confirm that
instructions communicated by telephone are genuine. The shareholder will not
be liable for any losses arising from unauthorized or fraudulent instructions
if such procedures are not followed.
Shareholders may redeem or exchange shares by calling toll free
1-800-521-6548. Although it is unlikely, during periods of extraordinary
market conditions, a shareholder may have difficulty in reaching Shareholder
Services at such telephone number. In that event, the shareholder should
contact Shareholder Services at 1-800-562-0032, 1-617-357-7805 or otherwise
at its main office at One Financial Center, Boston, Massachusetts 02111-2690.
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Shareholder Account Inquiries:
Please call 1-800-562-0032
Call this number for assistance in answering general questions on your
account, including account balance, available shareholder services, statement
information and performance of the Trust. Account inquiries may also be made
in writing to State Street Research Shareholder Services, P.O. Box 8408,
Boston, Massachusetts 02266-8408. A fee of up to $10 will be charged against
an account for providing additional account transcripts or photocopies of
paid redemption checks or for researching records in response to special
requests.
Shareholder Telephone Transactions:
Please call 1-800-521-6548
Call this number for assistance in purchasing shares by wire and for
telephone redemptions or telephone exchange transactions. Shareholder
Services will require some form of personal identification prior to acting
upon instructions received by telephone. Written confirmation of each
transaction will be provided.
The Trust and its Shares
The Trust was organized in February 1989 as a series of State Street Research
Master Investment Trust, a Massachusetts business trust. The Trustees have
authorized shares of the Trust to be issued in four classes: Class A, Class
B, Class C and Class D shares. The Trust is the successor to State Street
Investment Corporation, whose assets, liabilities and business were acquired
by the Trust in May 1989. State Street Investment Corporation was organized
in 1924, and registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as an open-end management investment company
upon the adoption of said Act. The Master Trust became the successor
registrant in May 1989. The fiscal year end of the Trust is December 31.
Except for those differences between the classes of shares described below
and elsewhere in the Prospectus, each share of the Trust has equal dividend,
redemption and liquidation rights with other shares of the Trust and when
issued is fully paid and nonassessable. In the future, certain classes may be
redesignated, for administrative purposes only, to conform to standard class
designations and common usage of terms which may develop in the mutual fund
industry. For example, Class C shares may be redesignated as Class Y shares
and Class D shares may be redesignated as Class C shares. Any redesignation
would not affect any substantive rights respecting the shares.
Each share of each class of shares represents an identical legal interest in
the same portfolio of investments of the Trust, has the same rights and is
identical in all respects, except that Class B and Class D shares bear the
expenses of the deferred sales arrangement and any expenses (including the
higher service and distribution fees) resulting from such sales arrangement,
and certain other incremental expenses related to a class. Each class will
have exclusive voting rights with respect to provisions of the Rule 12b-1
distribution plan pursuant to which the service and distribution fees, if
any, are paid. Although the legal rights of holders of each class of shares
are identical, it is likely that the different expenses borne by each class
will result in different net asset values and dividends. The different
classes of shares of the Trust also have different exchange privileges.
The rights of holders of shares may be modified by the Trustees at any time,
so long as such modifications do not have a material adverse effect on the
rights of any shareholder. On any matter submitted to the shareholders, the
holder of each Trust share is entitled to one vote per share (with
proportionate voting for fractional shares) regardless of the relative net
asset value thereof.
Under the Master Trust Agreement of the Master Trust, no annual or regular
meeting of shareholders is required. Thus, there will ordinarily be no
shareholder meetings unless required by the 1940 Act. Except as otherwise
provided under said Act, the Board of Trustees will be a self-perpetuating
body until fewer than two thirds of the Trustees serving as such are Trustees
who were elected by shareholders of the Master Trust. In the event less than
a majority of the Trustees serving as such were elected by shareholders of
the Master Trust, a meeting of shareholders will be called to elect Trustees.
Under the Master Trust Agreement, any Trustee may be removed by vote of two
thirds of the outstanding Master Trust shares; holders of 10% or more of the
outstanding shares of the Master Trust can
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require that the Trustees call a meeting of shareholders for purposes of
voting on the removal of one or more Trustees. In connection with such
meetings called by shareholders, shareholders will be assisted in shareholder
communications to the extent required by applicable law.
Under Massachusetts law, the shareholders of the Master Trust could, under
certain circumstances, be held personally liable for the obligations of the
Master Trust. However, the Master Trust Agreement of the Master Trust
disclaims shareholder liability for acts or obligations of the Master Trust
and provides for indemnification for all losses and expenses of any
shareholder of the Trust held personally liable for the obligations of the
Master Trust. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
Trust would be unable to meet its obligations. The Investment Manager
believes that, in view of the above, the risk of personal liability to
shareholders is remote.
Management of the Trust
Under the provisions of the Master Trust Agreement and the laws of
Massachusetts, primary responsibility for the management and supervision of
the Trust rests with the Trustees.
The Trust's investment manager is State Street Research & Management Company.
The Investment Manager is charged with the overall responsibility for
managing the investments and business affairs of the Trust, subject to the
authority of the Board of Trustees.
State Street Research Investment Trust is the successor to State Street
Investment Corporation created in 1924 by Paul Cabot, Richard Saltonstall and
Richard Paine. Their investment management philosophy emphasized
comprehensive fundamental research and analysis, including meetings with the
management of companies under consideration for investment. After the
formation of State Street Investment Corporation, the three men founded State
Street Research & Management Company, as investment adviser to the Trust. The
Investment Manager's portfolio management group has extensive investment
industry experience managing equity and debt securities. In managing debt
securities, if any, for a portfolio, the Investment Manager may consider
yield curve positioning, sector rotation and duration, among other factors.
The Investment Manager and the Distributor are indirect wholly-owned
subsidiaries of Metropolitan Life Insurance Company and both are located at
One Financial Center, Boston, Massachusetts 02111-2690.
Under the Investment Advisory Contract between the Master Trust and the
Investment Manager, the Trust pays a quarterly advisory fee to the Investment
Manager. The advisory fee is computed as a percentage of the average of the
values of the net assets of the Trust as determined at the close of each
business day during the quarter at the following annual rates: 1/2 of 1% of
the first $200,000,000 of such assets; 3/8 of 1% of the next $100,000,000 of
such assets; 3/10 of 1% of the next $200,000,000 of such assets; and 1/4 of
1% of the average market value of such assets in excess of $500,000,000.
The Investment Advisory Contract provides that the Investment Manager shall
furnish the Trust with suitable office space and facilities and such
management, investment advisory, statistical and research facilities and
services as may be required from time to time by the Trust. The Investment
Manager compensates Trustees of the Trust if such persons are employees or
affiliates of the Investment Manager or its affiliates.
The Trust is managed by Peter C. Bennett. Mr. Bennett has managed the Trust
since October 1995, and previously managed or co-managed the Trust from
November 1988 through April 1995. His principal occupation currently is
Executive Vice President and Director of State Street Research & Management
Company. Mr. Bennett also serves as Chief Investment Officer-Equity and is a
member of the Management Committee of the Investment Manager. During the past
five years he has also served as Senior Vice President and Vice President of
State Street Research & Management Company.
Subject to the policy of seeking best overall price and execution, sales of
shares of the Trust may be considered by the Investment Manager in the
selection of broker or dealer firms for the Trust's portfolio transactions.
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The Investment Manager has a Code of Ethics governing personal securities
transactions of certain of its employees; see the Statement of Additional
Information.
Dividends and Distributions; Taxes
The Trust qualified and elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code for its most recent
fiscal year and intends to qualify as such in future fiscal years, although
it cannot give complete assurance that it will do so. As long as it so
qualifies and satisfies certain distribution requirements, it will not be
subject to federal income tax on its taxable income (including capital gains,
if any) distributed to its shareholders. Consequently, the Trust intends to
distribute annually to its shareholders substantially all of its net
investment income and any capital gain net income (capital gains net of
capital losses).
The Trust declares dividends from net investment income quarterly and pays
such dividends, if any, four times each year. Distributions of capital gain
net income will generally be made on an annual basis or as otherwise required
for compliance with applicable tax regulations. Both dividends from net
investment income and distributions of capital gain net income will be
declared and paid to shareholders in additional shares of the Trust at net
asset value (except in the case of shareholders who elect a different
available distribution method). The Trust will provide its shareholders of
record with annual information on a timely basis concerning the federal tax
status of dividends and distributions during the preceding calendar year.
Dividends paid by the Trust from taxable net investment income and
distributions of net short-term capital gains, whether paid in cash or
reinvested in additional shares, will be taxable for federal income tax
purposes to shareholders as ordinary income, and a portion may be eligible
for the 70% dividends-received deduction for corporations. The percentage of
the Trust's dividends eligible for such tax treatment may be less than 100%
to the extent that less than 100% of the Trust's gross income may be from
qualifying dividends of domestic corporations. Distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
losses) which are designated as capital gains distributions, whether paid in
cash or reinvested in additional shares, will be taxable for federal income
tax purposes to shareholders as long-term capital gains, regardless of how
long shareholders have held their shares, and are not eligible for the
dividends-received deduction. If shares of the Trust which are sold at a loss
have been held six months or less, the loss will be considered as a long-term
capital loss to the extent of any capital gains distributions received.
As of December 31, 1995, approximately 39% of the net asset value per share
of the Trust consisted of net unrealized appreciation on portfolio assets. In
the event that the Trust realizes some or all of such appreciation and
distributes any net gain to shareholders, such distribution will reduce the
net asset value of the shares held by, and will be taxable to, shareholders.
Dividends and other distributions and proceeds of redemptions of Trust shares
paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if the Transfer Agent is not provided with the
shareholder's correct taxpayer identification number and certification that
the shareholder is not subject to such backup withholding.
The foregoing discussion relates only to generally applicable federal income
tax provisions in effect as of the date of this Prospectus. Therefore,
prospective shareholders are urged to consult their own tax advisers
regarding tax matters, including state and local tax consequences.
Calculation of Performance Data
From time to time, in advertisements or in communications to shareholders or
prospective investors, the Trust may compare the performance of its Class A,
Class B, Class C and Class D shares to that of other mutual funds with
similar investment objectives, to certificates of deposit and/or to other
financial alternatives. The Trust may also compare the performance of such
classes to appropriate indices such as Standard & Poor's 500 Index, Consumer
Price Index and Dow Jones Industrial Average and/or to appropriate rankings
or averages such as those compiled by Lipper Analytical Services, Inc. for
the Growth and Income category and the Long-Term Taxable Funds category or to
those compiled by Morningstar, Inc., Money Magazine, Busi-
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ness Week, Forbes Magazine, Fortune Magazine, The Wall Street Journal,
Investor's Daily or Wiesenberger Mutual Funds Investment Report.
Total return and yield are computed separately for each class of shares of
the Trust. The average annual total return ("standard total return") for
shares of the Trust is computed by determining the average annual compounded
rate of return for a designated period that, if applied to a hypothetical
$1,000 initial investment (less the maximum initial or contingent deferred
sales charge, if applicable), would produce the redeemable value of that
investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. Standard
total return may be accompanied by nonstandard total return information
computed in the same manner, but for differing periods and with or without
annualizing the total return or taking sales charges into account.
Yield, for each of the Trust's Class A, Class B, Class C and Class D shares,
is computed by dividing the net investment income, after recognition of all
recurring charges, per share of each class earned during the most recent
month or other specified 30-day period by the applicable maximum offering
price per share of each class on the last day of such period and annualizing
the result.
The standard total return and yield results take sales charges into account,
if applicable, but do not take into account recurring and nonrecurring
charges for optional services which only certain shareholders elect and which
involve nominal fees, such as the $7.50 fee for remittance of redemption
proceeds by wire. Where sales charges are not applicable and therefore not
taken into account in the calculation of standard total return and yield, the
result will be increased.
The Trust's distribution rate is calculated by dividing the distributions for
the latest 12 months by the current maximum offering price per share. The
distribution rate is not computed in the same manner as the above described
yield, and therefore can be significantly different from it. In its
supplemental sales literature, the Trust may quote its distribution rate
together with the above described standard total return and yield
information. The use of such distribution rates would be subject to an
appropriate explanation of how the components of the distribution rate differ
from the above described yield.
During the period 1945 through April 1990, and in certain years prior, shares
of the Trust were not offered to the general public and the Trust was not
subject to the cash inflows and higher level of redemptions or expenses that
could occur during a period when shares are continuously offered to the
public. In May 1990, the Trust commenced a continuous public offering.
Performance information may be useful in evaluating the Trust and for
providing a basis for comparison with other financial alternatives. Because
the performance of the Trust changes in response to fluctuations in economic
and market conditions, interest rates and Trust expenses, among other things,
no performance quotation should be considered a representation as to the
Trust's performance for any future period. In addition, the net asset value
of shares of the Trust will fluctuate so that shares of the Trust, when
redeemed, may be worth more or less than their original cost. Neither an
investment in the Trust nor its performance is insured or guaranteed; such
lack of insurance or guarantees should accordingly be given appropriate
consideration when comparing the Trust to financial alternatives which have
such features.
Shares of the Trust had no class designations until February 17, 1993, when
Class A and Class C designations were assigned, and March 15, 1993, when
Class B and Class D designations were assigned, based on the pricing and Rule
12b-1 fees applicable to shares sold thereafter. Performance data for a
specified class includes periods prior to the adoption of class designations.
Performance data for periods prior to February 17, 1993 will not reflect
additional Rule 12b-1 Distribution Plan fees, if any, of up to 1% per year
depending on the class of shares, which will adversely affect performance
results for periods after such date. Performance data or rankings for a given
class of shares should be interpreted carefully by investors who hold or may
invest in a different class of shares.
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[COVER]
[logo] STATE STREET RESEARCH
State Street Research
Investment Trust
May 1, 1996
P R O S P E C T U S
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
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
SS-701D-596IBS CONTROL NUMBER: 3126-960424(0597)SSR-LD
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
a Series of
STATE STREET RESEARCH MASTER INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
TABLE OF CONTENTS
Page
Additional Investment Policies and Restrictions 2
Additional Information Concerning Certain
Investment Techniques 5
Debt Instruments and Permitted Cash Investments 15
Trustees and Officers 21
Investment Advisory Services 24
Purchase and Redemption of Shares 26
Net Asset Value 28
Portfolio Transactions 29
Certain Tax Matters 31
Distribution of Shares of the Trust 34
Calculation of Performance Data 38
Custodian 43
Independent Accountants 43
Financial Statements 43
The following Statement of Additional Information is not a Prospectus.
It should be read in conjunction with the Prospectus of State Street Research
Investment Trust (the "Trust") dated May 1, 1996, which may be obtained without
charge from the offices of State Street Research Master Investment Trust (the
"Master Trust") or State Street Research Investment Services, Inc. (the
"Distributor"), One Financial Center, Boston, Massachusetts 02111-2690.
CONTROL NUMBER: 1285O-950510(0696)SSR-LD SS-879D-596
<PAGE>
ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS
As set forth in part under "The Trust's Investment Objective" and
"Limiting Investment Risk" in the Trust's Prospectus, the Trust has adopted
certain investment restrictions.
All of the Trust's fundamental investment restrictions are set forth
below. These fundamental investment restrictions may not be changed except by
the affirmative vote of a majority of the Trust's outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). (Under the 1940 Act, a "vote of the majority of the outstanding
voting securities" means the vote, at a meeting of security holders duly
called, (i) of 67% or more of the voting securities present at a meeting if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy or (ii) of more than 50% of the outstanding voting
securities, whichever is less.) Under these restrictions, it is the Trust's
policy:
(1) not to purchase for its portfolio a security of any one issuer
(other than the United States or its instrumentalities) if such
purchase at the time would cause more than 5% of the total assets
of the Trust (taken at market value) to be invested in the
securities of such issuer;
(2) not to purchase for its portfolio a security of any one issuer if
such purchase at the time thereof would cause more than 10% of any
class of securities of such issuer to be held by the Trust;
(3) not to purchase securities of any issuer that has a record of less
than three years' continuous operation if such purchase would cause
more than 5% of the Trust's total assets (taken at market value) to
be invested in the securities of such issuers, provided that any
such three year period may include the operation of any predecessor
company, partnership, or individual enterprise if the issuer whose
securities are to be purchased came into existence as a result of a
merger, consolidation, reorganization, or the purchase of
substantially all the assets of such predecessor;
(4) not to make any investment that would cause more than 25% of the
Trust's total assets, taken at market value, to be invested in any
one industry;
(5) not to issue senior securities other than in connection with the
borrowing of money as permitted under sub-paragraph (10) of this
paragraph;
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(6) not to underwrite or participate in the marketing of securities of
other issuers although the Trust may, acting alone or in syndicates
or groups, purchase or otherwise acquire securities of other
issuers for, investment, either from issuers or from persons in a
control relationship with the issuers or from underwriters of such
securities;
(7) not to make any investment in real property, although the Trust may
purchase and sell other interests in real estate, including
securities which are secured by real estate, or securities of
companies which own or invest or deal in real estate;
(8) not to invest in commodities or commodity contracts except for
futures and options on futures with respect to securities and
securities indices;
(9) not to make loans to individuals, but it is also the Trust's policy
to purchase, when deemed advisable, portions of issues of bonds,
debentures or other securities issued by persons other than the
Trust, which purchases may or may not be made upon the original
issue of the securities;
(10) not to borrow money except on an unsecured basis and then only up
to an amount equal to 10% of its net assets (see "Additional
Information Concerning Certain Investment Techniques -- Other
Techniques" herein);
(11) not to purchase securities for its portfolio on margin, except that
this shall not prevent such short term credits as are necessary for
the clearance of transactions, and except that the Trust may use
escrow or custodian receipts or letters, margin or safekeeping
accounts, or enter into similar industry arrangements in connection
with trading futures and options;
(12) not to make a short sale of any securities, or purchase or write
puts, calls, straddles or spreads except in connection with options
on securities and securities indices and options on futures with
respect to securities and securities indices; and
(13) not to invest directly as a joint venturer or general partner in
oil, gas or other mineral exploration or development joint ventures
or general partnerships (provided that the Trust may invest in
securities issued by companies which invest in or sponsor such
programs and in securities indexed to the price of oil, gas or
other minerals).
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The following investment restrictions may be changed by a vote of a
majority of the Trustees. Under these restrictions it is the Trust's policy:
(1) not to invest more than 10% of its total assets in illiquid
securities, which may include, to the extent any are not readily
marketable under the circumstances, securities restricted as to
resale (limited to 5% of total assets), repurchase agreements
extending for more than seven days, and options not listed and
traded on any national exchange;
(2) not to acquire any security issued by any other investment company
(the "acquired company") if immediately after such acquisition the
Trust and all companies controlled by the Trust, if any, would own
in the aggregate (i) more than 3% of the outstanding voting stock
of the acquired company, (ii) securities issued by the acquired
company having an aggregate value in excess of 5% of the Trust's
total assets or (iii) securities issued by the acquired company and
all other investment companies (other than Treasury stock of the
Trust) having an aggregate value in excess of 10% of the Trust's
total assets, except to complete a merger, consolidation or other
acquisition of assets;*
(3) not to purchase or retain any securities of an issuer if, to the
knowledge of Trust, those of its officers and Trustees and those
officers and Directors of its investment adviser who individually
own more than 1/2 of 1% of the securities of such issuer, when
combined, own more than 5% of such issuer taken at market;
(4) not to invest in warrants, valued at the lower of cost or market,
more than 5% of the value of its total assets (warrants initially
attached to securities and acquired by the Trust upon original
issuance thereof shall be deemed to be without value), provided
that warrants that are not listed on the New York or American Stock
Exchange may not exceed 2% of the value of the Trust's net assets;
and
(5) not to make investments for the purpose of exercising control or
management of other companies although the Trust may from time to
time present its views on various matters to the management of
companies in which it holds an investment.
*In connection with clause (2), the Trust has undertaken with a state
securities authority that, for so long as its shares are required to be
registered in such state and such investment restriction remains in effect,
the Trust will not acquire any security issued by another investment company,
except by purchase in the open market involving only customary brokers'
commissions,
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<PAGE>
or except when the securities are acquired as dividends or distributions or when
the purchase is part of a plan of merger, consolidation, reorganization or
acquisition.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES
Among other investments described below, the Trust may buy and sell
options, futures contracts, and options on futures contracts with respect to
securities, securities indices, and currencies, and may enter into closing
transactions with respect to each of the foregoing, and invest in other
derivatives, under circumstances in which such instruments and techniques are
expected by State Street Research & Management Company (the "Investment
Manager") to aid in achieving the investment objective of the Trust. The
Trust on occasion may also purchase instruments with characteristics of both
futures and securities (e.g., debt instruments with interest and principal
payments determined by reference to the value of a commodity or a currency at
a future time) and which, therefore, possess the risks of both futures and
securities investments.
Futures Contracts
Futures contracts are publicly traded contracts to buy or sell
underlying assets, such as certain securities, currencies, or an index of
securities, at a future time at a specified price. A contract to buy
establishes a "long" position while a contract to sell establishes a "short"
position.
The purchase of a futures contract on securities or an index of
securities normally enables a buyer to participate in the market movement of
the underlying asset or index after paying a transaction charge and posting
margin in an amount equal to a small percentage of the value of the underlying
asset or index. The Trust will initially be required to deposit with the
Master Trust's custodian or the broker effecting the futures transaction an
amount of "initial margin" in cash or U.S. Treasury obligations.
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin
is like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on
a daily basis as the price of the underlying asset fluctuates. This process
is known as "marking to market." For example, when the Trust has taken a long
position in a futures contract and the value of the underlying asset has
risen, that position will have increased in value and the Trust will receive
from the broker a maintenance margin payment equal to the increase in value of
the underlying asset. Conversely, when the Trust has taken a long position in
a futures contract and the value of the underlying
5
<PAGE>
instrument has declined, the position would be less valuable, and the Trust
would be required to make a maintenance margin payment to the broker.
At any time prior to expiration of the futures contract, the Trust may
elect to close the position by taking an opposite position which will
terminate the Trust's position in the futures contract. A final determination
of maintenance margin is then made, additional cash is required to be paid by
or released to the Trust, and the Trust realizes a loss or a gain. While
futures contracts with respect to securities do provide for the delivery and
acceptance of such securities, delivery and acceptance are seldom made.
Futures contracts will be executed primarily (a) to establish a short
position, and thus protect the Trust from experiencing the full impact of an
expected decline in market value of portfolio holdings without requiring the
sale of holdings, or (b) to establish a long position, and thus to participate
in an expected rise in market value of securities which the Trust intends to
purchase. Subject to the limitations described below, the Trust may also
enter into futures contracts for purposes of enhancing return. In
transactions establishing a long position in a futures contract, money market
instruments equal to the face value of the futures contract will be identified
by the Trust to the Master Trust's custodian for maintenance in a separate
account to insure that the use of such futures contracts is unleveraged.
Similarly, a representative portfolio of securities having a value equal to
the aggregate face value of the futures contract will be identified with
respect to each short position. The Trust will employ any other appropriate
method of cover which is consistent with applicable regulatory and exchange
requirements.
Options on Securities
The Trust may use options on securities to implement its investment
strategy. A call option on a security, for example, gives the purchaser of
the option the right to buy, and the writer the obligation to sell, the
underlying asset at the exercise price during the option period. Conversely,
a put option on a security gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying asset at the exercise price
during the option period.
Purchased options have defined risk, i.e., the premium paid for the
option, no matter how adversely the price of the underlying security moves,
while affording an opportunity for gain corresponding to the increase or
decrease in the value of the optioned asset.
Written options have varying degrees of risk. An uncovered written call
option theoretically carries unlimited risk, as the market price of the
underlying asset could rise far above the
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<PAGE>
exercise price before its expiration. This risk is tempered when the call option
is covered, i.e., when the option writer owns the underlying asset. In this
case, the writer runs the risk of the lost opportunity to participate in the
appreciation in value of the asset rather than the risk of an out-of-pocket
loss. A written put option has defined risk, i.e., the difference between the
agreed-upon price that the Trust must pay to the buyer upon exercise of the put
and the value, which could be zero, of the asset at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
his obligation to deliver the underlying asset in the case of a call option,
or to pay for the underlying asset in the case of a put option, a covered
writer is required to deposit in escrow the underlying security or other asset
in accordance with the rules of the applicable clearing corporation and
exchanges.
Options on Securities Indices
The Trust may engage in transactions in call and put options on
securities indices. For example, the Trust may purchase put options on
indices of securities in anticipation of or during a market decline to attempt
to offset the decrease in market value of its securities that might otherwise
result.
Put options on indices of securities are similar to put options on the
securities themselves except that the delivery requirements are different.
Instead of giving the right to make delivery of a security at a specified
price, a put option on an index of securities gives the holder the right to
receive an amount of cash upon exercise of the option if the value of the
underlying index has fallen below the exercise price. The amount of cash
received will be equal to the difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple. As with options on securities, the Trust may offset its
position in index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
A securities index assigns relative values to the securities included in
the index and the index options are based on a broad market index. Although
there are at present few available options on indices of fixed income
securities, other than tax-exempt securities, or futures and related options
based on such indices, such instruments may become available in the future.
In connection with the use of such options the Trust may cover its position by
identifying a representative portfolio of securities having a value equal to
the aggregate face value of the option position taken. However, the Trust may
employ any appropriate method to cover its positions that is consistent with
applicable regulatory and exchange requirements.
7
<PAGE>
Options on Futures Contracts
An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period
of the option.
Options Strategy
A basic option strategy for protecting the Trust against a decline in
securities prices could involve (a) the purchase of a put -- thus "locking in"
the selling price of the underlying securities or securities indices -- or (b)
the writing of a call on securities or securities indices held by the Trust --
thereby generating income (the premium paid by the buyer) by giving the holder
of such call the option to buy the underlying asset at a fixed price. The
premium will offset, in whole or in part, a decline in portfolio value;
however, if prices of the relevant securities or securities indices rose
instead of falling, the call might be exercised, thereby resulting in a
potential loss of appreciation in the underlying securities or securities
indices.
A basic option strategy when a rise in securities prices is anticipated
is the purchase of a call -- thus "locking in" the purchase price of the
underlying security or other asset. In transactions involving the purchase of
call options by the Trust, money market instruments equal to the aggregate
exercise price of the options will be identified by the Trust to the Master
Trust's custodian to insure that the use of such investments is unleveraged.
The Trust may write options in connection with buy-and-write
transactions; that is, the Trust may purchase a security and concurrently
write a call option against that security. If the call option is exercised in
such a transaction, the Trust's maximum gain will be the premium received by
it for writing the option, adjusted upward or downward by the difference
between the Trust's purchase price of the security and the exercise price of
the option. If the option is not exercised and the price of the underlying
security declines, the amount of such decline will be offset in part, or
entirely, by the premium received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Trust's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, the Trust's return will be the premium
received from writing the put option minus the amount by which the market
price of the security is below the exercise price.
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Limitations and Risks of Options and Futures Activity
The Trust will engage in transactions in futures contracts or options
only as a hedge against changes resulting from market conditions which produce
changes in the values of its securities or the securities which it intends to
purchase (e.g., to replace portfolio securities which will mature in the near
future) or, subject to the limitations described below, to enhance return.
The Trust will not purchase any futures contract or purchase any call option
if, immediately thereafter, more than one third of the Trust's net assets
would be represented by long futures contracts or call options. The Trust
will not write a covered call or put option if, immediately thereafter, the
aggregate value of the assets (securities in the case of written calls and
cash or cash equivalents in the case of written puts) underlying all such
options, determined as of the dates such options were written, would exceed
25% of the Trust's net assets. In addition, the Trust may not establish a
position in a commodity futures contract or purchase or sell a commodity
option contract for other than bona fide hedging purposes if immediately
thereafter the sum of the amount of initial margin deposits and premiums
required to establish such positions for such nonhedging purposes would exceed
5% of the market value of the Trust's net assets.
Although effective hedging can generally capture the bulk of a desired
risk adjustment, no hedge is completely effective. The Trust's ability to
hedge effectively through transactions in futures and options depends on the
degree to which price movements in its holdings correlate with price movements
of the futures and options.
Some positions in futures and options may be closed out only on an
exchange which provides a secondary market therefor. There can be no
assurance that a liquid secondary market will exist for any particular futures
contract or option at any specific time. Thus, it may not be possible to
close such an option or futures position prior to maturity. The inability to
close options and futures positions also could have an adverse impact on the
Trust's ability to effectively hedge its securities and might in some cases
require the Trust to deposit cash to meet applicable margin requirements. The
Trust will enter into an option or futures position only if it appears to be a
liquid investment.
Foreign Investments
To the extent the Trust invests in securities of issuers in less
developed countries or emerging foreign markets, it will be subject to a
variety of additional risks, including risks associated with political
instability, economies based on relatively few industries, lesser market
liquidity, high rates of inflation, significant price volatility of portfolio
holdings and high levels of external debt in the relevant country.
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Although the Trust may invest in securities denominated in foreign
currencies, the Trust values its securities and other assets in U.S. dollars.
As a result, the net asset value of the Trust's shares may fluctuate with U.S.
dollar exchange rates as well as with price changes of the Trust's securities
in the various local markets and currencies. Thus, an increase in the value
of the U.S. dollar compared to the currencies in which the Trust makes its
investments could reduce the effect of increases and magnify the effect of
decreases in the prices of the Trust's securities in their local markets.
Conversely, a decrease in the value of the U.S. dollar will have the opposite
effect of magnifying the effect of increases and reducing the effect of
decreases in the prices of the Trust's securities in the local markets.
Currency Transactions
The Trust's dealings in forward currency exchange contracts will be
limited to hedging involving either specific transactions or aggregate
portfolio positions. A forward currency contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are not commodities
and are entered into in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
Although spot and forward contracts will be used primarily to protect the
Trust from adverse currency movements, they also involve the risk that
anticipated currency movements will not be accurately predicted, which may
result in losses to the Trust. This method of protecting the value of the
Trust's portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange that can be achieved at some future
point in time. Although such contracts tend to minimize the risk of loss due
to a decline in the value of hedged currency, they tend to limit any potential
gain that might result should the value of such currency increase.
Repurchase Agreements
The Trust may enter into repurchase agreements. Repurchase agreements
occur when the Trust acquires a security and the seller, which may be either
(i) a primary dealer in U.S. Government securities or (ii) an FDIC-insured
bank having gross assets in excess of $500 million, simultaneously commits to
repurchase it at an agreed-upon price on an agreed-upon date within a
specified number of days (usually not more than seven) from the date of
purchase. The repurchase price reflects the purchase price plus an agreed-
upon market rate of interest which is unrelated to the coupon rate or maturity
of the acquired security. The Trust will only enter into repurchase
agreements involving U.S. Government securities. Repurchase agreements
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could involve certain risks in the event of default or insolvency of the other
party, including possible delays or restrictions upon the Trust's ability to
dispose of the underlying securities. Repurchase agreements will be limited to
30% of the Trust's total assets, except that repurchase agreements extending for
more than seven days and other illiquid securities will be limited to 10% of the
Trust's total assets.
Reverse Repurchase Agreements
The Trust may enter into reverse repurchase agreements. However, the
Trust has no present intention of engaging in reverse repurchase agreements in
excess of 5% of the Trust's total assets. In a reverse repurchase agreement
the Trust transfers possession of a portfolio instrument to another person,
such as a financial institution, broker or dealer, in return for a percentage
of the instrument's market value in cash, and agrees that on a stipulated date
in the future the Trust will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed-upon rate. The ability
to use reverse repurchase agreements may enable, but does not ensure the
ability of, the Trust to avoid selling portfolio instruments at a time when a
sale may be deemed to be disadvantageous.
When effecting reverse repurchase agreements, assets of the Trust in a
dollar amount sufficient to make payment of the obligations to be purchased
are segregated on the Trust's records at the trade date and maintained until
the transaction is settled.
When-Issued Securities
The Trust may purchase "when-issued" equity securities, which are traded
on a price basis prior to actual issuance. Such purchases will be made only
to achieve the Trust's investment objective and not for leverage. The when-
issued trading period generally lasts from a few days to months, or over a
year or more; during this period dividends on equity securities are not
payable. No income accrues to the Trust prior to the time it takes delivery.
A frequent form of when-issued trading occurs when corporate securities to be
created by a merger of companies are traded prior to the actual consummation
of the merger. Such transactions may involve a risk of loss if the value of
the securities falls below the price committed to prior to the actual
issuance. The Master Trust's custodian will establish a segregated account
for the Trust when it purchases securities on a when-issued basis consisting
of cash or liquid securities equal to the amount of the when-issued
commitments. Securities transactions involving delayed deliveries or forward
commitments are frequently characterized as when-issued transactions and are
similarly treated by the Trust.
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Rule 144A Securities
Subject to the limitations on illiquid and restricted securities noted
above, the Trust may buy or sell restricted securities in accordance with Rule
144A under the Securities Act of 1933 ("Rule 144A Securities"). Securities
may be resold pursuant to Rule 144A under certain circumstances only to
qualified institutional buyers as defined in the rule, and the markets and
trading practices for such securities are relatively new and still developing;
depending on the development of such markets, such Rule 144A Securities may be
deemed to be liquid as determined by or in accordance with methods adopted by
the Trustees. Under such methods the following factors are considered, among
others: the frequency of trades and quotes for the security, the number of
dealers and potential purchasers in the market, marketmaking activity, and the
nature of the security and marketplace trades. Investments in Rule 144A
Securities could have the effect of increasing the level of the Trust's
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing such securities. Also, the Trust may be
adversely impacted by the subjective valuation of such securities in the
absence of an active market for them.
Swap Arrangements
The Trust may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates or indices,
including purchase of caps, floors and collars as described below. In an
interest rate swap the Trust could agree for a specified period to pay a bank
or investment banker the floating rate of interest on a so-called notional
principal amount (i.e. an assumed figure selected by the parties for this
purpose) in exchange for agreement by the bank or investment banker to pay the
Trust a fixed rate of interest on the notional principal amount. In a
currency swap the Trust would agree with the other party to exchange cash
flows based on the relative differences in values of a notional amount of two
(or more) currencies; in an index swap, the Trust would agree to exchange cash
flows on a notional amount based on changes in the values of the selected
indices. Purchase of a cap entitles the purchaser to receive payments from
the seller on a notional amount to the extent that the selected index exceeds
an agreed upon interest rate or amount whereas purchase of a floor entitles
the purchaser to receive such payments to the extent the selected index falls
below an agreed-upon interest rate or amount. A collar combines a cap and a
floor.
Most swaps entered into by the Trust will be on a net basis; for
example, in an interest rate swap, amounts generated by application of the
fixed rate and the floating rate to the notional principal amount would first
offset one another, with the Trust either receiving or paying the difference
between such amounts. In order to be in a position to meet any obligations
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resulting from swaps, the Trust will set up a segregated custodial account to
hold appropriate liquid assets, including cash; for swaps entered into on a
net basis, assets will be segregated having a daily net asset value equal to
any excess of the Trust's accrued obligations over the accrued obligations of
the other party, while for swaps on other than a net basis assets will be
segregated having a value equal to the total amount of the Trust's
obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a part of the Trust's portfolio.
However, the Trust may enter into such arrangements for income purposes to the
extent permitted by the CFTC for entities which are not commodity pool
operators, such as the Trust. In entering a swap arrangement, the Trust is
dependent upon the creditworthiness and good faith of the counterparty. The
Trust attempts to reduce the risks of nonperformance by the counterparty by
dealing only with established, reputable institutions. The swap market is
still relatively new and emerging; positions in swap arrangements may become
illiquid to the extent that nonstandard arrangements with one counterparty are
not readily transferable to another counterparty or if a market for the
transfer of swap positions does not develop. The use of interest rate swaps
is a highly specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio securities
transactions. If the Investment Manager is incorrect in its forecasts of
market values, interest rates and other applicable factors, the investment
performance of the Trust would diminish compared with what it would have been
if these investment techniques were not used. Moreover, even if the
Investment Manager is correct in its forecasts, there is a risk that the swap
position may correlate imperfectly with the price of the asset or liability
being hedged.
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Industry Classifications
In determining how much of the Fund's portfolio is invested in a given
industry, the industry classifications set forth below, grouped by sectors,
are currently used. Companies engaged in the business of financing will be
classified according to the industries of the parent companies or industries
that otherwise most affect such financing companies. Issuers of asset-backed
pools will be classified as separate industries based on the nature of the
underlying assets, such as mortgages, credit card receivables, etc.
Basic Industries Consumer Staple Science & Technology
- ---------------- --------------- --------------------
Chemical Business Service Aerospace
Diversified Container Computer Software &
Electrical Equipment Drug Service
Forest Products Food & Beverage Electronic Components
Machinery Hospital Supply Electronic Equipment
Metal & Mining Personal Care Office Equipment
Railroad Printing & Publishing
Truckers Tobacco
Utility Energy Consumer Cyclical
- ------- ------ -----------------
Electric Oil Refining & Marketing Airline
Gas Oil Production Automotive
Gas Transmission Oil Service Building
Telephone Hotel & Restaurant
Photography
Other Finance Recreation
- ----- ------- Retail Trade
Trust Certificates-- Bank Textile & Apparel
Government Related Financial Service
Lending Insurance
Asset-backed--Mortgages
Asset-backed--Credit
Card Receivables
Other Investment Limitations
Although the Trust is permitted to borrow up to 10% of its net assets,
the Trust has no present intention to engage in any borrowing except for
temporary purposes and has no intention to borrow for leverage purposes. For
purposes of this restriction, reverse repurchase agreements shall constitute
borrowings subject to the 10% limitation on all borrowing. The Trust will not
purchase any securities for its portfolio while outstanding borrowings exceed
5% of the Trust's net assets; any borrowing in excess of 5% of its total
assets would be from banks.
The Trust is permitted to invest in other investment companies up to
certain limits. However, the Trust has no present intention of investing more
than 5% of its total assets in the aggregate in any other investment
companies. Such investments may involve the payment of duplicative management
or other fees. To mitigate such duplication, however, the
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Investment Manager has agreed to waive up to the full amount of its investment
advisory fee with respect to investments, if any, in other open-end investment
companies.
The Trust has undertaken with a state securities authority that it will
not purchase real estate limited partnerships or make investments in oil, gas
or mineral leases for so long as Trust shares are offered in that state.
DEBT INSTRUMENTS AND
PERMITTED CASH INVESTMENTS
As indicated in the Trust's Prospectus, the Trust may invest in long-
term and short-term debt securities. The Trust may invest in cash and short-
term securities for temporary defensive purposes when, in the opinion of the
Investment Manager, such a position is more likely to provide protection
against unfavorable market conditions than adherence to other investment
policies. Certain money market instruments in which the Trust may invest in
such circumstances are described below.
U.S. Government and Related Securities. U.S. Government securities are
securities which are issued or guaranteed as to principal or interest by the
U.S. Government, a U.S. Government agency or instrumentality, or certain
mixed-ownership Government corporations as described herein. The U.S.
Government securities in which the Trust invests include, among others:
(bullet) direct obligations of the U.S. Treasury, i.e., Treasury bills, notes,
certificates and bonds;
(bullet) obligations of U.S. Government agencies or instrumentalities such as
the Federal Home Loan Banks, the Federal Farm Credit Banks, the Federal
National Mortgage Association, the Government National Mortgage
Association and the Federal Home Loan Mortgage Corporation; and
(bullet) obligations of mixed-ownership Government corporations such as
Resolution Funding Corporation.
U.S. Government securities which the Trust may buy are backed in a
variety of ways by the U.S. Government, its agencies or instrumentalities.
Some of these obligations, such as Government National Mortgage Association
mortgage-backed securities, are backed by the full faith and credit of the
U.S. Treasury. Other obligations, such as those of the Federal National
Mortgage Association, are backed by the discretionary authority of the U.S.
Government to purchase certain obligations of agencies or instrumentalities,
although the U.S. Government has no legal obligation to do so. Obligations
such as those of the Federal Home Loan Banks, the Federal Farm Credit Bank,
the Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation are backed by the credit of the agency or
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<PAGE>
instrumentality issuing the obligations. Certain obligations of Resolution
Funding Corporation, a mixed-ownership Government corporation, are backed with
respect to interest payments by the U.S. Treasury, and with respect to principal
payments by U.S. Treasury obligations held in a segregated account with a
Federal Reserve Bank. Except for certain mortgage-related securities, the Trust
will only invest in obligations issued by mixed-ownership Government
corporations where such securities are guaranteed as to payment of principal or
interest by the U.S. Government or a U.S. Government agency or instrumentality,
and any unguaranteed principal or interest is otherwise supported by U.S.
Government obligations held in a segregated account.
U.S. Government securities may be acquired by the Trust in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually
numbered and separately issued by the U.S. Treasury at the request of
depository financial institutions, which then trade the component parts
independently. Obligations of Resolution Funding Corporation are similarly
divided into principal and interest components and maintained as such on the
book entry records of the Federal Reserve Banks.
In addition, the Trust may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks
and brokerage firms. Such notes and bonds are held in custody by a bank on
behalf of the owners of the receipts. These custodial receipts are known by
various names, including "Treasury Receipts" ("TRs"), "Treasury Investment
Growth Receipts" ("TIGRs") and "Certificates of Accrual on Treasury Securities
("CATS"), and may not be deemed U.S. Government securities.
The Trust may also invest from time to time in collective investment
vehicles, the assets of which consist principally of U.S. Government
securities or other assets substantially collateralized or supported by such
securities, such as Government trust certificates.
Bank Money Investments. Bank money investments include but are not
limited to certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are generally short-term (i.e., less than one year),
interest-bearing negotiable certificates issued by commercial banks or savings
and loan associations against funds deposited in the issuing institution. A
banker's acceptance is a time draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods). A banker's acceptance may
be obtained from
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a domestic or foreign bank, including a U.S. branch or agency of a foreign bank,
which unconditionally guarantees to pay the draft at its face amount on the
maturity date. Most acceptances have maturities of six months or less and are
traded in secondary markets prior to maturity. Time deposits are nonnegotiable
deposits for a fixed period of time at a stated interest rate. The Trust will
not invest in any such bank money investment unless the investment is issued by
a U.S. bank that is a member of the Federal Deposit Insurance Corporation
("FDIC"), including any foreign branch thereof, a U.S. branch or agency of a
foreign bank, a foreign branch of a foreign bank, or a savings bank or savings
and loan association that is a member of the FDIC and which at the date of
investment has capital, surplus and undivided profits (as of the date of its
most recently published financial statements) in excess of $50 million. The
Trust will not invest in time deposits maturing in more than seven days and will
not invest more than 10% of its total assets in time deposits maturing in two to
seven days.
U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and
regulated either federally or under state law. U.S. federal branches or
agencies of foreign banks are chartered and regulated by the Comptroller of
the Currency, while state branches and agencies are chartered and regulated by
authorities of the respective states or the District of Columbia. U.S.
branches of foreign banks may accept deposits and thus are eligible for FDIC
insurance; however, not all such branches elect FDIC insurance. Unlike U.S.
branches of foreign banks, U.S. agencies of foreign banks may not accept
deposits and thus are not eligible for FDIC insurance. Both branches and
agencies can maintain credit balances, which are funds received by the office
incidental to or arising out of the exercise of their banking powers and can
exercise other commercial functions, such as lending activities.
Short-Term Corporate Debt Instruments. Short-term corporate debt
instruments include commercial paper to finance short-term credit needs (i.e.,
short-term, unsecured promissory notes) issued by corporations including but
not limited to (a) domestic or foreign bank holding companies or (b) their
subsidiaries or affiliates where the debt instrument is guaranteed by the bank
holding company or an affiliated bank or where the bank holding company or the
affiliated bank is unconditionally liable for the debt instrument. Commercial
paper is usually sold on a discounted basis and has a maturity at the time of
issuance not exceeding nine months.
Commercial Paper Ratings. Commercial paper investments at the time of
purchase will be rated A by Standard & Poor's Corporation ("S&P") or Prime by
Moody's Investor's Service, Inc. ("Moody's"), or, if not rated, issued by
companies having an outstanding long-term unsecured debt issue rated at least
A by S&P or by Moody's. The money market investments in corporate
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<PAGE>
bonds and debentures (which must have maturities at the date of settlement of
one year or less) must be rated at the time of purchase at least A by S&P or by
Moody's.
Commercial paper rated A (highest quality) by S&P is issued by entities
which have liquidity ratios which are adequate to meet cash requirements.
Long-term senior debt is rated A or better, although in some cases BBB credits
may be allowed. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. The relative strength
or weakness of the above factors determines whether the issuer's commercial
paper is rated A-1, A-2 or A-3. (Those A-1 issues determined to possess
overwhelming safety characteristics are denoted with a plus (+) sign: A-1+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is
rated Prime-1, Prime-2 or Prime-3.
Rating Categories of Debt Securities
Set forth below is a description of S&P corporate bond and debenture
ratings for securities which are deemed to be investment grade:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it
18
<PAGE>
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
Plus (+) or Minus (-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
S&P may attach the "r" symbol to derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to noncredit risks created by the terms of the
obligation, such as securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only (IO) and principal only (PO) mortgage securities.
Set forth below is a description of Moody's corporate bond and debenture
ratings for securities which are deemed to be investment grade:
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally know as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger then in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
19
<PAGE>
characteristics and in fact have speculative characteristics as well.
In the event applicable rating agencies lower the ratings of debt
instruments held by the Trust, resulting in a material decline in the overall
quality of the Trust's portfolio, the situation will be reviewed and necessary
action, if any, will be taken, including changes in the composition of the
portfolio.
1, 2, or 3: The ratings from Aa through Baa may be modified by the
addition of a numeral indicating a bond's rank within its category.
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TRUSTEES AND OFFICERS
The Trustees and principal officers of the Master Trust, their
addresses, and their principal occupations and positions with certain affiliates
of the Investment Manager are set forth below.
*+Peter C. Bennett, One Financial Center, Boston, MA 02111, serves as
Vice President of the Master Trust. He is 57. His principal occupation is
Executive Vice President and Director of State Street Research & Management
Company. During the past five years he has also served as Senior Vice President
and Vice President of State Street Research & Management Company. Mr. Bennett's
other principal business affiliation is Director, State Street Research
Investment Services, Inc.
+Edward M. Lamont, Box 1234, Moores Hill Road, Syosset, NY 11791, serves
as Trustee of the Master Trust. He is 69. He is engaged principally in private
investments and civic affairs, and is an author of business history. Previously,
he was with Morgan Guaranty Trust Company of New York.
+Robert A. Lawrence, Saltonstall & Co., 50 Congress Street, Boston, MA
02109, serves as Trustee of the Master Trust. He is 69. His principal occupation
during the past five years has been Partner, Saltonstall & Co., a private
investment firm.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Master Trust. He is 45. His principal occupation is Executive
Vice President, Treasurer, Chief Financial Officer and Director of State Street
Research & Management Company. During the past five years he has also served as
Executive Vice President and Chief Financial Officer of New England Investment
Companies and Senior Vice President and Vice President of New England Mutual
Life Insurance Company. Mr. Maus's other principal business affiliations include
Executive Vice President, Treasurer, Chief Financial Officer and Director of
State Street Research Investment Services, Inc.
*+Francis J. McNamara, III, One Financial Center, Boston, MA 02111, has
served as Secretary and General Counsel of the Master Trust since May 1995. He
is 40. His principal occupation is Senior Vice President, Secretary and General
Counsel of State Street Research & Management Company. During the past five
years he has also served as Senior Vice President, General Counsel and Assistant
Secretary of The Boston Company, Inc., Boston Safe Deposit and Trust Company and
The Boston Company Advisors, Inc. Mr. McNamara's other principal business
affiliations include Senior Vice President, Clerk and General Counsel of State
Street Research Investment Services, Inc.
- ----------------------
* or + See footnotes on page 23.
21
<PAGE>
*+Thomas P. Moore, Jr., One Financial Center, Boston, MA 02111, serves
as Vice President of the Master Trust. He is 57. His principal occupation is
Senior Vice President of State Street Research & Management Company. During
the past five years he has also served as Vice President of State Street
Research & Management Company.
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Master Trust. He is 64. He is retired, having served during
the past five years, until October 1992, as Executive Vice President, Chief
Operating Officer and Director, Hewlett-Packard Company.
+Thomas L. Phillips, 141 Spring Street, Lexington, MA 02173, serves as
Trustee of the Master Trust. He is 71. He is retired and was formerly
Chairman of the Board and Chief Executive Officer of Raytheon Company, of
which he remains a Director.
+Toby Rosenblatt, 3409 Pacific Avenue, San Francisco, CA 94118, serves
as Trustee of the Master Trust. He is 57. His principal occupations during
the past five years have been President of The Glen Ellen Company, a private
investment company, and Vice President of Founders Investments Ltd.
+Michael S. Scott Morton, Massachusetts Institute of Technology, 77
Massachusetts Avenue, Cambridge, MA 02139, serves as Trustee of the Master
Trust. He is 58. His principal occupation during the past five years has
been Jay W. Forrester Professor of Management at Sloan School of Management,
Massachusetts Institute of Technology.
*+Ralph F. Verni, One Financial Center, Boston, MA 02111, serves as
Chairman of the Board, President, Chief Executive Officer and Trustee of the
Master Trust. He is 53. His principal occupation is Chairman of the Board,
President, Chief Executive Officer and Director of State Street Research &
Management Company. During the past five years he also served as President
and Chief Executive Officer of New England Investment Companies and Chief
Investment Officer and Director of New England Mutual Life Insurance Company.
Mr. Verni's other principal business affiliations include Chairman of the Board
and Director of State Street Research Investment Services, Inc.
- ----------------
* or + See footnotes on page 23.
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<PAGE>
*+Dudley F. Wade, One Financial Center, Boston, MA 02111, serves as Vice
President of the Master Trust. He is 77. His principal occupation during the
past five years has been Senior Vice President of State Street Research &
Management Company.
+Jeptha H. Wade, 251 Old Billerica Road, Bedford, MA 01730, serves as
Trustee of the Master Trust. He is 71. He is retired and was formerly Of
Counsel for the law firm Choate, Hall & Stewart. He was a partner of that
firm from 1960 to 1987.
As of March 31, 1996, the Trustees and officers of the Master Trust
owned as a group less than 1% of the outstanding Class A shares of the Trust
and approximately 2.2% of the outstanding Class C shares of the Trust. They
owned none of the Trust's outstanding Class B or Class D shares.
As of March 31, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.
("Merrill Lynch"), One Liberty Plaza, 165 Broadway, New York, New York 10080,
was the record owner of approximately 8.9% and 43.7% of the Trust's
outstanding Class B and Class D shares, respectively, as to which shares the
Trust believes Merrill Lynch disclaims beneficial ownership.
- ----------------------
* These Trustees and/or officers are or may be deemed to be "interested
persons" of the Master Trust under the 1940 Act because of their affiliations
with the Trust's investment adviser.
+ Serves as a Trustee and/or officer of one or more of the following
investment companies, each of which has an advisory or distribution
relationship with the Investment Manager or its affiliates: State Street
Research Equity Trust, State Street Research Financial Trust, State Street
Research Income Trust, State Street Research Money Market Trust, State Street
Research Tax-Exempt Trust, State Street Research Capital Trust, State Street
ResPearch Exchange Trust, State Street Research Growth Trust, State Street
Research Master Investment Trust, State Street Research Securities Trust,
State Street Research Portfolios, Inc. and Metropolitan Series Fund, Inc.
23
<PAGE>
During the fiscal year ended December 31, 1995, the Trustees were
compensated as follows:
Total
Compensation
Aggregate From Master Trust
Name of Compensation and Complex Paid
Trustee From Master Trust to Trustees (a)
Edward M. Lamont $4,300 $ 63,510
Robert A. Lawrence $4,300 $ 91,685
Dean O. Morton $4,900 $103,085
Thomas L. Phillips $4,100 $ 67,185
Toby Rosenblatt $4,300 $ 63,510
Michael S. Scott Morton $5,300 $109,035
Ralph F. Verni $ 0 $ 0
Jeptha H. Wade $4,600 $ 76,285
(a) Includes compensation from Metropolitan Series Fund, Inc., for which the
Investment Manager serves as sub-adviser, State Street Research Portfolios,
Inc., for which State Street Research Investment Services, Inc. serves as
distributor, and all investment companies for which the Investment Manager
serves as primary investment adviser, comprising a total of 29 series. The
Master Trust does not provide any pension or retirement benefits for the
Trustees.
INVESTMENT ADVISORY SERVICES
State Street Research & Management Company, the Investment Manager, a
Delaware corporation, with offices at One Financial Center, Boston,
Massachusetts 02111-2690, acts as investment adviser to the Trust. The
Advisory Contract provides that the Investment Manager shall furnish the Trust
with an investment program, suitable office space and facilities and such
investment advisory, research and administrative services as may be required
from time to time. The Investment Manager compensates all executive and
clerical personnel and Trustees of the Master Trust if such persons are
employees of the Investment Manager or its affiliates. The Investment Manager
is an indirect wholly-owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan").
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<PAGE>
The advisory fee payable monthly by the Trust to the Investment Manager
is computed as a percentage of the average of the value of the net assets of
the Trust, as determined at the close of the New York Stock Exchange (the
"NYSE") on each day the NYSE is open for trading, at the annual rates set
forth in the Prospectus. The total dollar amounts paid by the Trust to the
Investment Manager for the fiscal years ended December 31, 1995, 1994 and 1993
were $3,158,324, $2,940,754, and $2,805,215, respectively.
The Advisory Contract provides that in the event that the total expenses
incurred by the Trust in any fiscal year, excluding interest, taxes, brokerage
commissions, and extraordinary litigation costs, but including payments to the
Investment Manager, shall exceed 1% of the average value of the net assets
(computed without deducting amounts borrowed for investment purposes) of the
Trust during said fiscal year, based upon computations of such value made as
of the close of business on each business day during such fiscal year, then
the Investment Manager shall reimburse the Trust for such excess expenses by
making a payment to the Trust in the amount of such excess expenses within 30
days following the close of such fiscal year.
The Advisory Contract further provides that it shall remain in effect
from year to year only so long as (1) such continuance is specifically
approved at least annually by either (A) the Board of Trustees of the Master
Trust, or (B) "vote of a majority of the outstanding voting securities" (as
defined in Section 2(a)(42) of the 1940 Act) of the Trust, and (2) the terms
of the Advisory Contract are approved at least annually by the vote of a
majority of the Trustees of the Master Trust, who are not parties to the
Advisory Contract or "interested persons" of any such party (as such terms are
used in Section 15(c) of the 1940 Act), cast in person at a meeting called for
the purpose of voting on such approval.
The Advisory Contract may be terminated at any time without the payment
of any penalty by vote of the Board of Trustees of the Master Trust or by
"vote of a majority of the outstanding voting securities" (as defined in
Section 2(a)(42) of the 1940 Act) of the Trust, or by the Investment Manager,
in each case upon sixty calendar days' prior written notice to the other party
to the Advisory Contract.
Under a Shareholders' Administrative Services Agreement between the
Master Trust and the Distributor, the Distributor provides shareholders'
administrative services, such as responding to inquiries and instructions from
investors respecting the purchase and redemption of shares of the Trust, and
is entitled to reimbursements of its costs for providing such services. Under
certain arrangements for Metropolitan to provide subadministration services,
Metropolitan may receive a fee for the maintenance of certain share ownership
records for participants in sponsored arrangements, employee benefit plans,
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<PAGE>
and similar programs or plans, through or under which the Trust's shares may
be purchased.
Under the Code of Ethics of the Investment Manager, its employees in
Boston, where investment management operations are conducted, are only
permitted to engage in personal securities transactions in accordance with
certain conditions relating to an employee's position, the identity of the
security, the timing of the transaction, and similar factors. Such employees
must report their personal securities transactions quarterly and supply broker
confirmations of such transactions to the Investment Manager.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Trust are distributed by the Distributor. The Trust
offers four classes of shares which may be purchased at the next determined
net asset value per share plus, in the case of all classes except Class C
shares, a sales charge which, at the election of the investor, may be imposed
(i) at the time of purchase (the Class A shares) or (ii) on a deferred basis
(the Class B and Class D shares). General information on how to buy shares of
the Trust, as well as sales charges involved, are set forth under "Purchase of
Shares" in the Prospectus. The following supplements that information.
Public Offering Price. The public offering price for each class of
shares of the Trust is based on their net asset value determined as of the
close of the NYSE on the day the purchase order is received by State Street
Research Shareholder Services provided that the order is received prior to the
close of the NYSE on that day; otherwise the net asset value used is that
determined as of the close of the NYSE on the next day it is open for
unrestricted trading. When a purchase order is placed through a dealer, that
dealer is responsible for transmitting the order promptly to State Street
Research Shareholder Services in order to permit the investor to obtain the
current price. Any loss suffered by an investor which results from a dealer's
failure to transmit an order promptly is a matter for settlement between the
investor and the dealer.
Reduced Sales Charges. For purposes of determining whether a purchase
of Class A shares qualifies for reduced sales charges, the term "person"
includes: (i) an individual, or an individual combining with his or her
spouse and their children and purchasing for his, her or their own account;
(ii) a "company" as defined in Section 2(a)(8) of the 1940 Act; (iii) a
trustee or other fiduciary purchasing for a single trust estate or single
fiduciary account (including a pension, profit sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal
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Revenue Code); (iv) a tax-exempt organization under Section 501(c)(3) or (13) of
the Internal Revenue Code; and (v) an employee benefit plan of a single employer
or of affiliated employers.
Investors may purchase Class A shares of the Trust at reduced sales
charges by executing a Letter of Intent to purchase no less than an aggregate
of $100,000 of the Trust or any combination of Class A shares of "Eligible
Funds" as designated by the Distributor within a 13-month period. The sales
charge applicable to each purchase made pursuant to a Letter of Intent will be
that which would apply if the total dollar amount set forth in the Letter of
Intent were being bought in a single transaction. Purchases made within a 90-
day period prior to the execution of a Letter of Intent may be included
therein; in such case the date of the earliest of such purchases marks the
commencement of the 13-month period.
An investor may include toward completion of a Letter of Intent the
value (at the current public offering price) of all of his or her Class A
shares of the Trust and of any of the other Class A shares of Eligible Funds
held of record as of the date of his or her Letter of Intent, plus the value
(at the current offering price) as of such date of all of such shares held by
any "person" described herein as eligible to join with the investor in a
single purchase. Class B, Class C and Class D shares may also be included in
the combination under certain circumstances.
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 5% of the specified amount will, however, be
taken from the initial purchase (or, if necessary, subsequent purchases) and
held in escrow in the investor's account as collateral against the higher
sales charge which would apply if the total purchase is not completed within
the allotted time. The escrowed shares will be released when the Letter of
Intent is completed or, if it is not completed, when the balance of the higher
sales charge is, upon notice, remitted by the investor. All dividends and
capital gains distributions with respect to the escrowed shares will be
credited to the investor's account.
Investors may purchase Class A shares of the Trust or a combination of
Eligible Funds at reduced sales charges pursuant to a Right of Accumulation.
The applicable sales charge under the right is determined on the amount
arrived at by combining the dollar amount of the purchase with the value (at
the current public offering price) of all Class A shares of the Trust and
Class A shares of the other Eligible Funds owned as of the purchase date by
the investor plus the value (at the current public offering price) of all such
shares owned as of such date by any "person" described herein as eligible to
join with the investor in a single purchase. Class B, Class C and Class D
shares may also be included in the combination under certain circumstances.
Investors must submit sufficient information to show that they qualify for the
Right of Accumulation.
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<PAGE>
Class C Shares. Class C shares are currently available to certain
employee benefit plans such as qualified retirement plans, which meet criteria
relating to number of participants (currently a minimum of 100 employees),
service arrangements, or similar factors; insurance companies; investment
companies; endowment funds of nonprofit organizations with substantial
minimum assets (currently a minimum of $10,000,000); and other similar
institutional investors.
Reorganizations. In the event of mergers or reorganizations with other
public or private collective investment entities, including investment
companies as defined in the 1940 Act, the Trust may issue its shares at net
asset value (or more) to such entities or to their security holders.
Redemptions. The Trust reserves the right to pay redemptions in kind
with portfolio securities in lieu of cash. In accordance with its election
pursuant to Rule 18f-1 under the 1940 Act, the Trust may limit the amount of
redemption proceeds paid in cash. Although it has no present intention to do so,
the Trust may, under unusual circumstances, limit redemptions in cash with
respect to each shareholder during any ninety-day period to the lesser of (i)
$250,000 or (ii) 1% of the net asset value of the Trust at the beginning of such
period. In connection with any redemptions paid in kind with portfolio
securities, brokerage and other costs may be incurred by the redeeming
shareholder in the sale of the securities received.
NET ASSET VALUE
The net asset values of the shares of the Trust are determined once
daily as of the close of the NYSE, ordinarily 4 P.M. New York City time,
Monday through Friday, on each day during which the NYSE is open for
unrestricted trading. The NYSE is currently closed for New Year's Day,
Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The net asset value per share of the Trust is computed by dividing the
sum of the market value of the securities held by the Trust plus any cash or
other assets minus all liabilities by the total number of outstanding shares
of the Trust at such time. Any expenses, except for extraordinary or
nonrecurring expenses, borne by the Trust, including the investment management
fee payable to the Investment Manager, are accrued daily.
In determining the values of the portfolio assets as provided below, the
Trustees may utilize one or more pricing services in lieu of market quotations
for certain securities which are not readily available on a daily basis. Such
services may provide prices determined of times prior to the close of the
NYSE.
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<PAGE>
In general, securities are valued as follows. Securities which are
listed or traded on the NYSE are valued at the price of the last quoted sale
on the respective exchange for that day. Securities which are listed or
traded on a national securities exchange or exchanges, but not on the New York
or American Stock Exchange, are valued at the price of the last quoted sale on
the exchange for that day prior to the close of the NYSE. Securities not
listed on any national securities exchange which are traded "over the counter"
and for which quotations are available on the National Association of
Securities Dealers' NASDAQ System, or other system, are valued at the closing
price supplied through such system for that day at the close of the NYSE.
Other securities are, in general, valued at the mean of the bid and asked
quotations last quoted prior to the close of the NYSE if there are market
quotations readily available, or in the absence of such market quotations,
then at the fair value thereof as determined by or under authority of the
Trustees of the Master Trust utilizing such pricing services as may be deemed
appropriate. Securities deemed restricted as to resale are valued at the fair
value thereof as determined by or in accordance with methods adopted by the
Trustees of the Master Trust.
Short-term debt instruments issued with a maturity of one year or less
which have a remaining maturity of 60 days or less are valued using the
amortized cost method, provided that during any period in which more than 25%
of the Fund's total assets is invested in short-term debt securities the
current market value of such securities will be used in calculating net asset
value per share in lieu of the amortized cost method. The amortized cost
method is used when the value obtained is fair value. Under the amortized
cost method of valuation, the security is initially valued at cost on the date
of purchase (or in the case of short-term debt instruments purchased with more
than 60 days remaining to maturity, the market value on the 61st day prior to
maturity), and thereafter a constant amortization to maturity of any discount
or premium is assumed regardless of the impact of fluctuating interest rates
on the market value of the security.
PORTFOLIO TRANSACTIONS
Portfolio Turnover
The Trust's portfolio turnover rate is determined by dividing the lesser
of securities purchases or sales for a year by the monthly average value of
securities held by the Trust (excluding, for purposes of this determination,
securities the maturities of which as of the time of their acquisition were
one year or less). The portfolio turnover rates for the fiscal years ended
December 31, 1994 and 1995 were 33.08% and 39.21%, respectively.
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<PAGE>
Brokerage Allocation
The Investment Manager's policy is to seek for its clients, including the Trust,
what in the Investment Manager's judgment will be the best overall execution of
purchase or sale orders and the most favorable net prices in securities
transactions consistent with its judgment as to the business qualifications of
the various broker or dealer firms with whom the Investment Manager may do
business, and the Investment Manager may not necessarily choose the broker
offering the lowest available commission rate. Decisions with respect to the
market where the transaction is to be completed, to the form of transaction
(whether principal or agency), and to the allocation of orders among brokers or
dealers are made in accordance with this policy. In selecting brokers or dealers
to effect portfolio transactions, consideration is given to their proven
integrity and financial responsibility, their demonstrated execution experience
and capabilities both generally and with respect to particular markets or
securities, the competitiveness of their commission rates in agency transactions
(and their net prices in principal transactions), their willingness to commit
capital, and their clearance and settlement capability. The Investment Manager
makes every effort to keep informed of commission rate structures and prevalent
bid/ask spread characteristics of the markets and securities in which
transactions for the Trust occur. Against this background, the Investment
Manager evaluates the reasonableness of a commission or a net price with respect
to a particular transaction by considering such factors as difficulty of
execution or security positioning by the executing firm. The Investment Manager
may or may not solicit competitive bids based on its judgment of the expected
benefit or harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may also be
given to services other than execution services which certain of such firms have
provided in the past or may provide in the future. Negotiated commission rates
and prices, however, are based upon the Investment Manager's judgment of the
rate which reflects the execution requirements of the transaction without regard
to whether the broker provides services in addition to execution. Among such
other services are the supplying of supplemental investment research; general
economic, political and business information; analytical and statistical data;
relevant market information, quotation equipment and services; reports and
information about specific companies, industries and securities; purchase and
sale recommendations for stocks and bonds; portfolio strategy services;
historical statistical information; market data services providing information
on specific issues and prices; financial publications; proxy voting data and
analysis services; technical analysis of various aspects of the securities
markets, including technical charts; computer hardware used for brokerage and
research purposes; computer software and databases, including those used for
portfolio analysis and modelling; and portfolio evaluation services and relative
performance of accounts.
Certain nonexecution services provided by broker-dealers may in turn be
obtained by the broker-dealers from third parties who are paid for such services
by the broker-dealers. The Investment Manager has an investment of less than ten
percent of the outstanding equity of one such third party which provides
portfolio analysis and modelling and other research and investment
decision-making services integrated into a trading system developed and licensed
by the third party to others. The Investment Manager could be said to benefit
indirectly if in the future it allocates brokerage to a broker-dealer who in
turn pays this third party for services to be provided to the Investment
Manager.
The Investment Manager regularly reviews and evaluates the services
furnished by broker-dealers. Some services may be used for research and
investment decision-making purposes, and also for marketing or administrative
purposes. Under these circumstances, the Investment Manager allocates the cost
of such services to determine the appropriate proportion of the cost which is
allocable to purposes other than research or investment decision-making and is
therefore paid directly by the Investment Manager. Some research and execution
services may benefit the Investment Manager's clients as a whole, while others
may benefit a specific segment of clients. Not all such services will
necessarily be used exclusively in connection with the accounts which pay the
commissions to the broker-dealer producing the services.
The Investment Manager has no fixed agreements or understandings with any
broker-dealer as to the amount of brokerage business which that firm may expect
to receive for services supplied to the Investment Manager or otherwise. There
may be, however, understandings with certain firms that in order for such firms
to be able to continuously supply certain services, they need to receive
allocation of a specified amount of brokerage business. These understandings are
honored to the extent possible in accordance with the policies set forth above.
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<PAGE>
It is not the Investment Manager's policy to intentionally pay a firm a
brokerage commission higher than that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services) provided. However, the Investment Manager is aware that this is an
area where differences of opinion as to fact and circumstances may exist, and in
such circumstances, if any, relies on the provisions of Section 28(e) of the
Securities Exchange Act of 1934, to the extent applicable.
Brokerage commissions paid by the Trust in secondary trading during the
fiscal years ended December 31, 1993, 1994 and 1995, amounted to approximately
$1,038,000, $697,000, and $815,000, respectively.
During and at the end of its most recent fiscal year, the Trust held in
its portfolio no security of any entity that might be deemed to be a regular
broker dealer of the Trust as defined under the 1940 Act.
In the case of the purchase of fixed income securities in underwriting
transactions, the Investment Manager follows any instructions received from its
clients as to the allocation of new issue discounts, selling concessions and
designations to brokers or dealers which provide the client with research,
performance evaluation, master trustee and other services. In the absence of
instructions from the client, the Investment Manager may make such allocations
to broker-dealers which have provided the Investment Manager with research and
brokerage services.
When more than one client of the Investment Manager is seeking to buy or
sell the same security, the sale or purchase is carried out in a manner which is
considered fair and equitable to all accounts. In allocating investments among
various clients (including in what sequence orders for trades are placed), the
Investment Manager will use its best business judgment and will take into
account such factors as the investment objectives of the clients, the amount of
investment funds available to each, the amount already committed for each client
to a specific investment and the relative risks of the investments, all in order
to provide on balance a fair and equitable result to each client over time.
Although sharing in large transactions may sometimes affect price or volume of
shares acquired or sold, overall it is believed there may be an advantage in
execution. The Investment Manager may follow the practice of grouping orders of
various clients for execution to get the benefit of lower prices or commission
rates. In certain cases where the aggregate order may be executed in a series of
transactions at various prices, the transactions are allocated as to amount and
price in a manner considered equitable to each so that each receives, to the
extent practicable, the average price of such transactions. Exceptions may be
made based on such factors as the size of the account and the size of the trade.
For example, the Investment Manager may not aggregate trades where it believes
that it is in the best interests of clients not to do so, including situations
where aggregation might result in a large number of small transactions with
consequent increased custodial and other transactional costs which may
disproportionately impact smaller accounts. Such disaggregation, depending on
the circumstances, may or may not result in such accounts receiving more or less
favorable execution relative to other clients.
CERTAIN TAX MATTERS
Federal Income Taxation of the Trust -- In General
The Trust intends to qualify and elect to be treated each taxable year
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), although it cannot give complete
assurance that it will do so. Accordingly, the Trust must, among other
things, (a) derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income (including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
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securities or currencies (the "90% test"); (b) derive less than 30% of its
gross income in each taxable year from the sale or other disposition of any of
the following held for less than three months (the "30% test"): (i) stocks or
securities; (ii) options, futures or forward contracts (other than options,
futures, or forward contracts on foreign currencies) or (iii) foreign
currencies (or options, futures, or forward contracts on foreign currencies)
but only if such currencies (or options, futures, or forward contracts) are
not directly related to the Trust's principal business of investing in stocks
or securities (or options and futures with respect to stocks or securities);
(c) satisfy certain diversification requirements; and (d) in order to be
entitled to utilize the dividends paid deduction, distribute annually at least
90% of its investment company taxable income (determined without regard to the
deduction for dividends paid).
The 30% test will limit the extent to which the Trust may sell
securities held for less than three months, write options which expire in less
than three months, and effect closing transactions with respect to call or put
options that have been written or purchased within the preceding three months.
(If the Trust purchases a put option for the purpose of hedging an underlying
portfolio security, the acquisition of the option is treated as a short sale
of the underlying security unless, for purposes only of the 30% test, the
option and the security are acquired on the same date.) Finally, as discussed
below, this requirement may also limit investments by the Trust in options on
stock indices, listed options on nonconvertible debt securities, futures
contracts, options on interest rate futures contracts and certain foreign
currency contracts.
If the Trust should fail to qualify as a regulated investment company in
any year, it would lose the beneficial tax treatment accorded regulated
investment companies under Subchapter M of the Code and all of its taxable
income would be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable to shareholders as ordinary income to the extent of the Trust's
current or accumulated earnings and profits. Also, the shareholders, if they
received a distribution in excess of current or accumulated earnings and
profits, would receive a return of capital that would reduce the basis of
their shares of the Trust.
The Trust will be liable for a nondeductible 4% excise tax on amounts
not distributed on a timely basis in accordance with a calendar year
distribution requirement. To avoid the tax, during each calendar year the
Trust must distribute an amount equal to at least 98% of the sum of its
ordinary income (not taking into account any capital gains or losses) for the
calendar year, and its capital gain net income for the 12-month period ending
on October 31 in addition to any undistributed portion of the
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respective balances from the prior year. The Trust intends to make sufficient
distributions to avoid this 4% excise tax.
Federal Income Taxation of the Trust's Investments
Original Issue Discount. For federal income tax purposes, debt
securities purchased by the Trust may be treated as having original issue
discount. Original issue discount represents interest for federal income tax
purposes and can generally be defined as the excess of the stated redemption
price at maturity of a debt obligation over the issue price. Original issue
discount is treated for federal income tax purposes as income earned by the
Trust, whether or not any income is actually received, and therefore is
subject to the distribution requirements of the Code. Generally, the amount
of original issue discount is determined on the basis of a constant yield to
maturity which takes into account the compounding of accrued interest. Under
section 1286 of the Code, an investment in a stripped bond or stripped coupon
may result in original issue discount.
Debt securities may be purchased by the Trust at a discount that exceeds
the original issue discount plus previously accrued original issue discount
remaining on the securities, if any, at the time the Trust purchases the
securities. This additional discount represents market discount for income
tax purposes. In the case of any debt security issued after July 18, 1984,
having a fixed maturity date of more than one year from the date of issue and
having market discount, the gain realized on disposition will be treated as
interest income to the extent it does not exceed the accrued market discount
on the security (unless the Trust elects to include such accrued market
discount in income in the tax year to which it is attributable). Generally,
market discount is accrued on a daily basis. The Trust may be required to
capitalize, rather than deduct currently, part or all of any direct interest
expense incurred to purchase or carry any debt security having market
discount, unless the Trust makes the election to include market discount
currently. Because the Trust must include original issue discount in income,
it will be more difficult for the Trust to make the distributions required for
the Trust to maintain its status as a regulated investment company under
Subchapter M of the Code and to avoid the 4% excise tax described above.
Options and Futures Transactions. Certain of the Trust's investments
may be subject to provisions of the Code that (i) require inclusion of
unrealized gains or losses in the Trust's income for purposes of the 90% test,
the 30% test, the excise tax and the distribution requirements applicable to
regulated investment companies; (ii) defer recognition of realized losses; and
(iii) characterize both realized and unrealized gain or loss as short-term or
long-term gain or loss. Such provisions generally apply to, among other
investments, options on debt securities, indices on securities and futures
contracts.
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<PAGE>
Federal Income Taxation of Shareholders
Dividends paid by the Trust may be eligible for the 70% dividends-
received deduction for corporations. The percentage of the Trust's dividends
eligible for such tax treatment may be less than 100% to the extent that less
than 100% of the Trust's gross income may be from qualifying dividends of
domestic corporations. Any dividend declared in October, November or December
and made payable to shareholders of record in any such month is treated as
received by such shareholders on December 31, provided that the Trust pays the
dividend during January of the following calendar year.
Distributions by the Trust can result in a reduction in the fair market
value of the Trust's shares. Should a distribution reduce the fair market
value below a shareholder's cost basis, such distribution nevertheless may be
taxable to the shareholder as ordinary income or long-term capital gain, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares just prior to a taxable distribution. The price
of shares purchased at that time includes the amount of any forthcoming
distribution. Those investors purchasing shares just prior to a taxable
distribution will then receive a return of investment upon distribution which
will nevertheless be taxable to them.
DISTRIBUTION OF SHARES OF THE TRUST
State Street Research Master Investment Trust is currently comprised of
one series, State Street Research Investment Trust. The Trustees have
authorized shares of the Trust to be issued in four classes: Class A, Class
B, Class C and Class D shares. The Trustees of the Master Trust have
authority to issue an unlimited number of shares of beneficial interest of
separate series, $.001 par value per share. A "series" is a separate pool of
assets of the Master Trust which is separately managed and has a different
investment objective and different investment policies from those of another
series. The Trustees have authority, without the necessity of a shareholder
vote, to create any number of new series or classes or to commence the public
offering of shares of any previously established series classes.
The Master Trust has entered into a Distribution Agreement with State
Street Research Investment Services, Inc., as Distributor, whereby the
Distributor acts as agent to sell and distribute shares of the Trust. Shares
of the Trust are sold through dealers who have entered into sales agreements
with the Distributor. The Distributor distributes shares of the Trust on a
continuous basis at an offering price which is based on the net asset value
per share of the Trust plus (subject to certain exceptions) a sales charge
which, at the election of the
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<PAGE>
investor, may be imposed (i) at the time of purchase (the Class A shares) or
(ii) on a deferred basis (the Class B and Class D shares). The Distributor may
reallow all or portions of such sales charges as concessions to dealers. Prior
to the adoption of multiple classes of shares during the fiscal year ended
December 31, 1993, sales charges amounted to $146,677 for the period January 1,
1993 through February 16, 1993, of which $16,662 was retained by the Distributor
after reallowance of concessions to dealers. Following the adoption of multiple
classes of shares, total sales charges on Class A shares paid to the Distributor
amounted to $2,812,994, of which $102,650 was retained by the Distributor after
reallowance of concessions to dealers. For the fiscal years ended December 31,
1994 and 1995, total sales charges on Class A shares paid to the Distributor
amounted to $1,138,191 and $1,155,661, respectively, of which $133,340 and
$140,645, respectively, was retained by the Distributor after reallowance of
concessions to dealers.
The differences in the price at which the Trust's Class A shares are
offered due to scheduled variations in sales charges, as described in the
Trust's Prospectus, result from cost savings inherent in economies of scale.
Management believes that the cost of sales efforts of the Distributor and
broker-dealers tends to decrease as the size of purchases increases, or does
not involve any incremental sales expenses as in the case of, for example,
exchanges, reinvestments or dividend investments at net asset value.
Similarly, no significant sales effort is necessary for sales of shares at net
asset value to certain Directors, Trustees, officers, employees, their
relatives and other persons directly or indirectly related to the Trust or
associated entities. Where shares of the Trust are offered at a reduced sales
charge or without a sales charge pursuant to sponsored arrangements and
managed fee-based programs, the amount of the sales charge reduction will
similarly reflect the anticipated reduction in sales expenses associated with
such arrangements. The reduction in sales expenses, and therefore the
reduction in sales charges, will vary depending on factors such as the size
and other characteristics of the organization or program, and the nature of
its membership or the participants. The Trust reserves the right to make
variations in, or eliminate, sales charges at any time or to revise the terms
of or to suspend or discontinue sales pursuant to sponsored arrangements at
any time.
On any sale of Class A shares to a single investor in the amount of
$1,000,000 or more, the Distributor will pay the authorized securities dealer
making such sale a commission on the shares sold as described in the
Prospectus. Such commission also is payable to authorized securities dealers
upon sales of Class A shares made pursuant to a Letter of Intent to purchase
shares having a net asset value of $1,000,000 or more. Shares sold with such
commissions payable are subject to a one-year contingent deferred sales charge
of 1% on any portion of such shares redeemed within one year following their
sale. After a particular purchase of Class A shares is made under the Letter
of
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Intent, the commission will be paid only in respect of that particular purchase
of shares. If the Letter of Intent is not completed, the commission paid will be
deducted from any discounts or commissions otherwise payable to such dealer in
respect of shares actually sold. If an investor is eligible to purchase shares
at net asset value on account of the Right of Accumulation, the commission will
be paid only in respect of the incremental purchase at net asset value.
For the periods shown below, the Distributor received contingent
deferred sales charges upon redemption of Class A, Class B and Class D shares
of the Trust and paid initial commissions to securities dealers for sales of
such shares as follows:
<TABLE>
<CAPTION>
March 15, 1993
(Commencement of
Fiscal Year Fiscal Year Share Class
Ended Ended Designations) to
December 31, 1995 December 31, 1994 December 31, 1993
Contingent Commissions Contingent Commissions Contingent Commissions
Deferred Paid to Deferred Paid to Deferred Paid to
Sales Charge Dealers Sales Charge Dealers Sales Charge Dealers
<S> <C> <C> <C> <C> <C> <C>
Class A $ 0 $1,015,016 $ 0 $1,004,851 $ 0 $2,710,344
Class B $688,724 $1,815,979 $172,481 $2,076,146 $34,351 $2,913,754
Class D $ 5,125 $ 40,514 $ 593 $ 50,402 $ 0 $ 95,711
</TABLE>
For information on the amount of distribution fees paid by the Trust to the
Distributor, see below.
The Trust has adopted a "Plan of Distribution Pursuant to Rule 12b-1"
(the "Distribution Plan") under which the Trust may engage, directly or
indirectly, in financing any activities primarily intended to result in the
sale of Class A, B and D shares, including, but not limited to, (1) the
payment of commissions and/or reimbursement to underwriters, securities
dealers and others engaged in the sale of shares, including payments to the
Distributor to be used to pay commissions and/or reimbursement to securities
dealers (which securities dealers may be affiliates of the Distributor)
engaged in the distribution and marketing of shares and furnishing ongoing
assistance to investors, (2) reimbursement of direct out-of-pocket
expenditures incurred by the Distributor in connection with the distribution
and marketing of shares and the servicing of investor accounts including
expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of Prospectuses of the Trust and
reports for recipients other than existing shareholders of the Trust, and
obtaining such information, analyses and reports with respect to marketing and
promotional activities and investor accounts as the Trust may, from time to
time, deem advisable, and (3)
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reimbursement of expenses incurred by the Distributor in connection with the
servicing of shareholder accounts including payments to securities dealers and
others in consideration of the provision of personal services to investors
and/or the maintenance of shareholder accounts and expenses associated with the
provision of personal services by the Distributor directly to investors. In
addition, the Distribution Plan is deemed to authorize the Distributor to make
payments out of its general profits, revenues or other sources to underwriters,
securities dealers and others in connection with sales of shares, to the extent,
if any, that such payments may be deemed to be within the scope of Rule 12b-1
under the 1940 Act.
The expenditures to be made pursuant to the Distribution Plan may not
exceed (i) with respect to Class A shares, an annual rate of 0.25% of the
average daily value of net assets represented by such Class A shares, and (ii)
with respect to Class B and Class D shares, an annual rate of 0.75% of the
average daily value of the net assets represented by such Class B or Class D
shares (as the case may be) to finance sales or promotion expenses and an
annual rate of 0.25% of the average daily value of the net assets represented
by such Class B or Class D shares (as the case may be) to make payments for
personal services and/or the maintenance of shareholder accounts. Proceeds
from the service fee will be used by the Distributor to compensate securities
dealers and others selling shares of the Trust for rendering service to
shareholders on an ongoing basis. Such amounts are based on the net asset
value of shares of the Trust held by such dealers as nominee for their
customers or which are owned directly by such customers for so long as such
shares are outstanding and the Distribution Plan remains in effect with
respect to the Trust. Any amounts received by the Distributor and not so
allocated may be applied by the Distributor as reimbursement for expenses
incurred in connection with the servicing of investor accounts. The
distribution and servicing expenses of a particular class will be borne solely
by that class.
During the fiscal year ended December 31, 1995, the Trust paid the
Distributor fees under the Distribution Plan and the Distributor used all of
such payments for expenses incurred on behalf of the Trust as follows:
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Class A Class B Class D
Advertising $ 1,543 $ 2,019 $ 4,327
Printing and mailing
of prospectuses to
other than current
shareholders 535 700 1,501
Compensation to
dealers 268,567 1,444,414 116,326
Compensation to
sales personnel 4,656 6,089 13,050
Interest 0 0 0
Carrying or other
financing charges 0 0 0
Other expenses:
marketing; general 2,885 3,774 8,089
Total fees $ 278,186 $1,456,996 $ 143,293
The Distributor may have also used additional resources of its own for further
expenses on behalf of the Trust.
No interested Trustee of the Master Trust has any direct or indirect
financial interest in the operation of the Distribution Plan or any related
agreements thereunder. The Distributor's interest in the Distribution Plan is
described above.
To the extent that the Glass-Steagall Act may be interpreted as
prohibiting banks and other depository institutions from being paid for
performing services under the Distribution Plan, the Trust will make
alternative arrangements for such services for shareholders who acquire shares
through such institutions.
CALCULATION OF PERFORMANCE DATA
The average annual total return ("standard total return") and yield of
the Class A, Class B, Class C and Class D shares of the Trust will be
calculated as set forth below. Total return and yield are computed separately
for each class of shares of the Trust. Performance data for a specified class
includes periods prior to the adoption of class designations. Shares of the
Trust had no class designations until February 17, 1993, when Class A and
Class C designations were assigned, and March 15, 1993, when Class B and Class
D designations were assigned based on the pricing and Rule 12b-1 fees
applicable to shares sold thereafter.
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The performance data reflects Rule 12b-1 fees and sales charges as set
forth below:
Rule 12b-1 Fees Sales Charges
---------------------------- -------------
Current
Class Amount Period
A 0.25% February 17, 1993 Maximum 4.5% sales
to present; fee charge reflected
will reduce
performance for
periods after
February 17, 1993
B 1.00% March 15, 1993 to 1-and 5-year periods
present; fee will reflect a 5% and a
reduce performance 2% contingent
for periods after deferred sales
March 15, 1993 charge, respectively
C 0.00% Since commencement None
of operations to
present
D 1.00% March 15, 1993 to 1-year period
present; fee will reflects a 1%
reduce performance contingent deferred
for periods after sales charge
March 15, 1993
Total Return
The Trust's average annual total returns of each class of shares were as
follows:
Ten Years Five Years One Year
Ended Ended Ended
December 31, 1995 December 31, 1995 December 31, 1995
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%
Standard total return is computed by determining the average annual
compounded rates of return over the designated periods that, if applied to the
initial amount invested, would produce the ending redeemable value in
accordance with the following formula:
39
<PAGE>
n
P(1+T) = ERV
Where: P = a hypothetical initial payment
of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the
end of the designated period
assuming a hypothetical $1,000
payment made at the beginning
of the designated period
The calculation is based on the further assumptions that the maximum
initial or contingent deferred sales charge applicable to the investment is
deducted, and that all dividends and distributions by the Trust are reinvested
at net asset value on the reinvestment dates during the periods. All accrued
expenses and recurring charges are also taken into account as described later
herein.
Yield
From time to time, the Trust may advertise its yield. If the Trust were
to advertise yield for each of its Class A, Class B, Class C and Class D
shares, such figures would be computed by dividing the net investment income
per share earned during a recent month or other specified 30-day period by the
applicable maximum offering price per share on the last day of the period and
annualizing the result in accordance with the following formula:
6
YIELD = 2[(a-b + 1) -1]
---
cd
Where: a = dividends and interest earned
during the period
b = expenses accrued for the period
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per
share on the last day of the period
To calculate interest earned (for purposes of "a" above) on debt
obligations, the Trust computes the yield to maturity of each obligation held
by the Trust based on the market value of the obligation (including actual
accrued interest) at the close
40
<PAGE>
of the last business day of the preceding period, or, with respect to
obligations purchased during the period, the purchase price (plus actual accrued
interest). The yield to maturity is then divided by 360 and the quotient is
multiplied by the market value of the obligation (including actual accrued
interest) to determine the interest income on the obligation for each day of the
period that the obligation is in the portfolio. Dividend income is recognized
daily based on published rates.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to
monthly payments of principal and interest ("paydowns"), the Trust accounts
for gain or loss attributable to actual monthly paydowns as a realized capital
gain or loss during the period. The Trust has elected not to amortize
discount or premium on such securities.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price.
Undeclared earned income is the net investment income which, at the end of the
base period, has not been declared as a dividend, but is reasonably expected
to be declared as a dividend shortly thereafter. The maximum offering price
includes a maximum sales charge of 4.5% with respect to Class A shares.
All accrued expenses are taken into account as described later herein.
Yield information is useful in reviewing the Trust's performance, but
because yields fluctuate, such information cannot necessarily be used to
compare an investment in the Trust's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders should
remember that yield is a function of the kind and quality of the instruments
in the Trust's portfolio, portfolio maturity and operating expenses and market
conditions.
Accrued Expenses
Accrued expenses include all recurring expenses that are charged to all
shareholder accounts in proportion to the length of the base period. The
standard total return and yield results take sales charges, if applicable,
into account, although the results do not take into account recurring and
nonrecurring charges for optional services which only certain shareholders
elect and which involve nominal fees, such as the $7.50 fee for wire orders.
41
<PAGE>
Nonstandardized Total Return
The Trust may provide the above described standard total return results
for Class A, Class B, Class C and Class D shares for periods which end no
earlier than the most recent calendar quarter end and which begin one, five
and ten years before. In addition, the Trust may provide nonstandardized
total return results for differing periods, such as for the period since the
Trust commenced operations in 1924, and/or without taking sales charges into
account. Such nonstandardized total return is computed as otherwise described
under "Total Return" except the result may or may not be annualized, and as
noted any applicable sales charge may not be taken into account and therefore
not deducted from the hypothetical initial payment of $1,000 or ending value.
For example, the Trust's nonstandardized total returns for the six months
ended December 31, 1995, without taking sales charges into account, were as
follows:
Class A 13.34%
Class B 12.98%
Class C 13.45%
Class D 12.93%
Distribution Rates
From time to time, the Trust may advertise its distribution rate. If
the Trust were to advertise a distribution rate for each of its Class A, Class
B, Class C and Class D shares, such figures would be calculated by dividing
the distributions for the latest 12 months by the maximum current offering
price per share. A distribution can include gross investment income from debt
obligations purchased at a premium and in effect include a portion of the
premium paid. A distribution can also include nonrecurring, gross short-term
capital gains without recognition of any unrealized capital losses. Further,
a distribution can include income from the sale of options by the Trust even
though such option income is not considered investment income under generally
accepted accounting principles.
Because a distribution can include such premiums, capital gains and
option income, the amount of the distribution may be susceptible to control by
the Investment Manager through transactions designed to increase the amount of
such items. Also, because the distribution rate is calculated in part by
dividing the latest distribution by the offering price, which is based on net
asset value plus any applicable sales charge, the distribution rate will
increase as the net asset value declines. A distribution rate can be greater
than the yield rate calculated as described above.
42
<PAGE>
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Master Trust's custodian. As custodian, State
Street Bank and Trust Company is responsible for, among other things,
safeguarding and controlling the Trust's cash and securities, handling the
receipt and delivery of securities and collecting interest and dividends on
the Trust's investments. State Street Bank and Trust Company is not an
affiliate of the Investment Manager or its affiliates.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as the Master Trust's independent accountants, providing
professional services including (1) audits of certain financial statements,
(2) assistance and consultation in connection with Securities and Exchange
Commission filings and (3) review of the annual income tax returns filed on
behalf of the Trust.
FINANCIAL STATEMENTS
In addition to the reports provided to holders of record on a semiannual
basis, other supplementary financial reports may be made available from time
to time and holders of record may request a copy of a current supplementary
report, if any, by calling State Street Research Shareholder Services.
The following financial statements are for the Trust's fiscal year ended
December 31, 1995.
43
<PAGE>
State Street Research Investment Trust
Investment Portfolio
December 31, 1995
Value
Shares (Note 1)
- -------------------------------------------------- ------ -------------
Common Stocks 96.1%
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.
44
<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
-----------
Principal Maturity
Amount Date
- ----------------------- ---------- --------- --------------
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
============
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
State Street Research Investment Trust
Investment Portfolio (cont'd)
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
===========
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
Statement of Assets and Liabilities
December 31, 1995
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
===========
* 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.
46
<PAGE>
State Street Research Investment Trust
Statement of Operations
For the year ended December 31, 1995
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
==========
Statement of Changes in Net Assets
Year ended December 31
----------------------------
1995 1994
- --------------------------- ----------- -------------
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
========= ===========
The accompanying notes are an integral part of the financial statements.
47
<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.
48
<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>
49
<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>
Class D
----------------------------------------
Year ended December 31
----------------------------------------
1995*** 1994 1993**
------------------------------ ---------- ---------- ------------
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%
++ 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.
50
<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
51
<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
52
<PAGE>
STATE STREET MASTER INVESTMENT TRUST
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements included in PART A (Prospectus) of this
Registration Statement:
Financial Highlights for State Street Research Investment
Trust for the fiscal years ended December 31, 1986 through
December 31, 1995.
(2) Financial Statements included in PART B (Statement of
Additional Information) of this Registration Statement for
State Street Investment Trust for the fiscal year ended
December 31, 1995 (except as provided below):
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets (fiscal years ended
December 31, 1995 and December 31, 1994)
Notes to Financial Statements
Report of Independent Accountants
Management's Discussion of Fund Performance
(b) Exhibits:
(1) First Amended and Restated Master Trust Agreement and
Amendment No. 1 to First Amended and Restated Master Trust
Agreement
(2)(a) By-Laws (i)
(2)(b) Amendment to By-Laws effective September 30, 1992 (v)
(4) Specimen Share Certificate (ii)
(5) Investment Advisory Contract (iii)
C-1
<PAGE>
(6)(a) Distribution Agreement with State Street Research
Investment Services, Inc. (formerly MetLife - State Street
Investment Services, Inc.) (iii)
(6)(b) Form of Selected Dealer Agreement and Form of Supplement
No. 1 to Selected Dealer Agreement
(6)(c) Form of Bank and Bank Affiliated Broker- Dealer Agreement
(ix)
(8)(a) Custodian Contract (iii)
(9) Agreement and Plan of Reorganization and Liquidation (iii)
(10) Opinion and Consent of Counsel (v)
(11) Consent of Independent Accountants
(14)(a) State Street Research IRA: Forms Booklet, Transfer of
Assets/Direct Rollover Form (ix)
(14)(b) State Street Research 403(b): Brochure, Maximum Salary
Reduction Worksheet, Account Application, Salary Reduction
Agreement and Transfer of 403(b) Assets Form
(15) Plan of Distribution Pursuant to Rule 12b-1 (vii)
(16) Calculation of Performance Data (ii)
(17) Multiple Class Expense Allocation Plan Adopted Pursuant to
Rule 18f-2
(18)(a) Powers of Attorney
(18)(b) Certificate of Board Resolution Respecting Powers of
Attorney
C-2
<PAGE>
(19) Application Forms (ix)
(27) Financial Data Schedules
_______________________
Filed as part of the Registration Statement as noted below
and incorporated herein by reference:
Footnote
Reference Registration/Amendment Date Filed
i Amendment No. 12 to April 28, 1989
Registration Statement
under Investment Company
Act of 1940
ii Registration Statement December 22, 1989
under Securities Act of
1933
iii Post-Effective Amendment April 30, 1991
No. 1
iv Post-Effective Amendment April 27, 1992
No. 2
v Post-Effective Amendment November 25, 1992
No. 3
vi Post-Effective Amendment January 22, 1993
No. 4
vii Post-Effective Amendment March 18, 1993
No. 5
viii Post-Effective Amendment April 29, 1994
No. 6
ix Post-Effective Amendment April 28, 1995
No. 7
C-3
<PAGE>
Item 25. Persons Controlled by or under Common Control
with Registrant
Inapplicable
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders (at 3/31/96)
-------------- --------------------
Shares of Beneficial
Interest
Class A 17,876
Class B 13,433
Class C 20,163
Class D 699
Item 27. Indemnification
Under Article VI of the Registrant's Master Trust Agreement
each of its Trustees and officers or persons serving in such
capacity with another entity at the request of the
Registrant ("Covered Person") shall be indemnified against
all liabilities, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants'
and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a
party or otherwise or with which such person may be or may
have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer,
director or trustee, except with respect to any matter as to
which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct
of such Covered Person's office (such conduct referred to
hereafter as "Disabling Conduct"). A determination that the
Covered Person is entitled to indemnification may be made by
(i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable
C-4
<PAGE>
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in
section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion.
Under the Distribution Agreement between the Registrant and
State Street Research Investment Services, Inc., the
Registrant's distributor, the Registrant has agreed to
indemnify and hold harmless State Street Research Investment
Services, Inc. and each person who has been, is, or may
hereafter be an officer, director, employee or agent of
State Street Research Investment Services, Inc. against any
loss, damage or expense reasonably incurred by any of them
in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of or
is based upon a violation of any of its convenants herein
contained or any untrue or alleged untrue statement of
material fact, or the omission or alleged omission to state
a material fact necessary to make the statements made not
misleading, in a Registration Statement or Prospectus of the
Registrant, or any amendment or supplement thereto, unless
such statement or omission was made in reliance upon written
information furnished by State Street Research Investment
Services, Inc.
Insofar as indemnification by the Registrant for liabilities
arising under the Securities Act of 1933 may be permitted to
trustees, officers, underwriters and controlling persons of
the Registrant, pursuant to Article VI of the Registrant's
Master Trust Agreement, or otherwise, the Registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against
public policy expressed in the Act and will be governed by
the final adjudication of such issue.
C-5
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
<S> <C> <C> <C>
State Street Investment Adviser Various investment Boston, MA
Research & advisory clients
Management
Company
Bangs, Linda L. None
Vice President
Barton, Michael E. None
Vice President
Bennett, Peter C. Vice President State Street Research Capital Trust Boston, MA
Director and Vice President State Street Research Exchange Trust Boston, MA
Executive Vice Vice President State Street Research Growth Trust Boston, MA
President Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust
Director State Street Research Investment Services, Inc Boston, MA
Director Boston Private Bank & Trust Co. Boston, MA
President and Director Christian Camps & Conferences, Inc. Boston, MA
Chairman and Trustee Gordon College Wenham, MA
Brown, Susan H. None
Vice President
Burbank, John F. None
Vice President
Canavan, Joseph W. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
C-6
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Carmen, Michael T. None
Vice President
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President Director Avalon, Inc. Boston, MA
DiFazio, Susan M.W. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Dillman, Thomas J Director of Research Bank of New York New York, NY
Senior Vice President (until 6/95)
Drake, Susan W. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President (until 2/96)
Duggan, Peter J. Vice President New England Mutual Life Insurance Company Boston, MA
Senior Vice (until 8/94)
President
Evans, Gordon Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President (Vice President until 3/96)
Federoff, Alex G. None
Vice President
Gardner, Michael D. Partner Prism Group Seattle, WA
Senior Vice President
(Vice President until
6/95)
Geer, Bartlett R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
C-7
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Glovsky, Charles S. Vice President State Street Research Capital Trust Boston, MA
Senior Vice President
Hamilton, Jr., William A. Treasurer and Director Ellis Memorial and Eldredge House Boston, MA
Senior Vice President Treasurer and Director Nautical and Aviation Publishing Company, Inc. Baltimore, MD
(Vice President Treasurer and Director North Conway Institute Boston, MA
until 8/93)
Haverty, Jr., Lawrence J. None
Senior Vice President
Heineke, George R. None
Vice President
Jackson, Jr., Trustee Certain trusts of related and
F. Gardner non-related individuals
Senior Vice President Trustee Vincent Memorial Hospital Boston, MA
Jamieson, Frederick H. Vice President and Asst. Treasurer State Street Research Investment Services, Inc. Boston, MA
Senior Vice President Vice President and Asst. Treasurer SSRM Holdings, Inc. Boston, MA
(Vice President Vice President and Controller MetLife Securities, Inc. New York, NY
until 6/95)
Kallis, John H. Vice President State Street Research Financial Trust Boston, MA
Senior Vice President Vice President State Street Research Income Trust Boston, MA
Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Trustee 705 Realty Trust Washington, D.C.
Director and President K&G Enterprises Washington, D.C.
Kasper, M. Katherine None
Vice President
C-8
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Kluiber, Rudolph K. Vice President State Street Research Capital Trust Boston, MA
Vice President
Kobrick, Frederick R. Vice President State Street Research Equity Trust Boston, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Member Harvard Business School Association Cambridge, MA
Member National Alumni Council, Boston University Boston, MA
Leary, Eileen M. None
Vice President
Lintz, Carol None
Vice President
McNamara, III, Francis J. Senior Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Senior Vice President, and General Counsel
Secretary and Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Capital Trust Boston, MA
Secretary and General Counsel State Street Research Exchange Trust Boston, MA
Secretary and General Counsel State Street Research Growth Trust Boston, MA
Secretary and General Counsel State Street Research Securities Trust Boston, MA
Secretary and General Counsel State Street Research Equity Trust Boston, MA
Secretary and General Counsel State Street Research Financial Trust Boston, MA
Secretary and General Counsel State Street Research Income Trust Boston, MA
Secretary and General Counsel State Street Research Money Market Trust Boston, MA
Secretary and General Counsel State Street Research Tax-Exempt Trust Boston, MA
Secretary and General Counsel SSRM Holdings, Inc. Boston, MA
Clerk and Director State Street Research Energy, Inc. Boston, MA
Senior Vice President, General The Boston Company, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General Boston Safe Deposit and Trust Company Boston, MA
Counsel and Assistant Secretary
(until 5/95)
Senior Vice President, General The Boston Company Advisors, Inc. Boston, MA
Counsel and Assistant Secretary
(until 5/95)
C-9
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Maus, Gerard P. Treasurer State Street Research Equity Trust Boston, MA
Director, Executive Treasurer State Street Research Financial Trust Boston, MA
Vice President Treasurer State Street Research Income Trust Boston, MA
and Treasurer Treasurer State Street Research Money Market Trust Boston, MA
Treasurer State Street Research Tax-Exempt Trust Boston, MA
Treasurer State Street Research Capital Trust Boston, MA
Treasurer State Street Research Exchange Trust Boston, MA
Treasurer State Street Research Growth Trust Boston, MA
Treasurer State Street Research Master Investment Trust Boston, MA
Treasurer State Street Research Securities Trust Boston, MA
Director, Executive Vice President, State Street Research Investment Services, Inc. Boston, MA
Treasurer and Chief Financial Officer
Director and Treasurer State Street Research Energy, Inc. Boston, MA
Director Metric Holdings, Inc. San Francisco, CA
Director Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Director GFM International Investors, Ltd. London, England
(until 11/94)
Treasurer and Chief Financial SSRM Holdings, Inc. Boston, MA
Officer
Treasurer MetLife Securities, Inc. New York, NY
Milder, Judith J. None
Senior Vice President
(Vice President
until 6/95)
Miller, Joan D. Senior Vice President State Street Research Investment Services, Inc. Boston, MA
Vice President
Moore, Jr., Thomas P. Director Hibernia Savings Bank Quincy, MA
Senior Vice Vice President State Street Research Capital Trust Boston, MA
President Vice President State Street Research Exchange Trust Boston, MA
Vice President State Street Research Growth Trust Boston, MA
Vice President State Street Research Master Investment Trust Boston, MA
Vice President State Street Research Equity Trust Boston, MA
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Vice President
Orr, Stephen C. Member Technology Analysts of Boston Boston, MA
Vice President Member Electro-Science Analysts (of NYC) New York, NY
C-10
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Pannell, James C. None
Vice President
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
(Vice President
until 7/94)
Pluckhahn, Charles W. None
Vice President
Ragsdale, Easton Senior Vice President Kidder, Peabody, & Co. Incorporated New York, NY
Vice President (until 12/94)
Rawlins, Jeffrey A. None
Vice President
Rice III, Daniel Joseph Vice President State Street Research Equity Trust Boston, MA
Senior Vice President
Richards, Scott None
Vice President
Romich, Douglas A. Assistant Treasurer State Street Research Equity Trust Boston, MA
Vice President Assistant Treasurer State Street Research Financial Trust Boston, MA
Assistant Treasurer State Street Research Income Trust Boston, MA
Assistant Treasurer State Street Research Money Market Trust Boston, MA
Assistant Treasurer State Street Research Tax-Exempt Trust Boston, MA
Assistant Treasurer State Street Research Capital Trust Boston, MA
Assistant Treasurer State Street Research Exchange Trust
Assistant Treasurer State Street Research Growth Trust Boston, MA
Assistant Treasurer State Street Research Master Investment Trust Boston, MA
Assistant Treasurer State Street Research Securities Trust Boston, MA
Assistant Controller State Street Research Portfolios, Inc. New York, NY
Row, III, Walter A. None
Vice President
C-11
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Schrage, Michael None
Vice President
Schultz, David C. Director (non-voting) Capital Trust, S.A. Luxembourg
Executive Vice Director Alex Brown Capital, Ltd. Hamilton, Bermuda
President
(Senior Vice President Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
until 12/94, Vice Member Association of Investment
President until Management Sales Executives Atlanta, GA
4/94) Member, Investment Committee Lexington Christian Academy Lexington, MA
Shaver, Jr. C. Troy President and Chief Executive State Street Research Investment Services, Inc. Boston, MA
Executive Vice Officer
President President and Chief Executive John Hancock Funds, Inc. Boston, MA
Officer (until 1/96)
Shean, William G. None
Vice President
Shively, Thomas A. Vice President State Street Research Financial Trust Boston, MA
Director and Vice President State Street Research Money Market Trust Boston, MA
Executive Vice Vice President State Street Research Tax-Exempt Trust
President Director State Street Research Investment Services, Inc Boston, MA
Vice President State Street Research Securities Trust Boston, MA
Shoemaker, Richard D. None
Senior Vice President
(Vice President
until 8/93)
Strelow, Dan R. None
Senior Vice President
Stuka, Paul U.S. Portfolio Consultant Teton Partners Boston, MA
Senior Vice President (until 4/95)
C-12
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Swanson, Amy McDermott None
Senior Vice President
Trebino, Anne M. Vice President SSRM Holdings, Inc. Boston, MA
Senior Vice President
(Vice President
until 6/95)
Verni, Ralph F. Chairman, President, Chief State Street Research Capital Trust Boston, MA
Chairman, President, Executive Officer and Trustee
Chief Executive Chairman, President, Chief State Street Research Exchange Trust Boston, MA
Officer and Executive Officer and Trustee
Director Chairman, President, Chief State Street Research Growth Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Master Investment Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Securities Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Equity Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Financial Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Income Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Money Market Trust Boston, MA
Executive Officer and Trustee
Chairman, President, Chief State Street Research Tax-Exempt Trust Boston, MA
Executive Officer and Trustee
Chairman and Director State Street Research Investment Services, Inc. Boston, MA
(President and Chief Executive
Officer until 2/96)
President and Director State Street Research Energy, Inc. Boston, MA
Chairman and Director Metric Holdings, Inc. San Francisco, CA
Director and Officer Certain wholly-owned subsidiaries
of Metric Holdings, Inc.
Chairman of the Board and Director MetLife Securities, Inc. New York, NY
Chairman and Director (until 11/94) GFM International Investors, Ltd. London, England
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
C-13
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wade, Dudley Vice President State Street Research Growth Trust Boston, MA
Freeman Vice President State Street Research Master Investment Trust Boston, MA
Senior Vice
President
Wallace, Julie K. None
Vice President
Ward, Geoffrey None
Senior Vice President
Weiss, James M. Chief Investment Officer IDS Equity Advisors Minneapolis, MN
Senior Vice President (until 12/95)
Westvold, President and Director Bondurant, Inc. Medfield, MA
Elizabeth McCombs (until 2/94)
Vice President
Wing, Darman A. Senior Vice President and State Street Research Investment Services, Inc. Boston, MA
Vice President, Asst. Clerk (Vice President
Assistant Secretary until 6/95)
and Assistant Assistant Secretary State Street Research Capital Trust Boston, MA
General Counsel Assistant Secretary State Street Research Exchange Trust Boston, MA
Assistant Secretary State Street Research Growth Trust Boston, MA
Assistant Secretary State Street Research Master Investment Trust Boston, MA
Assistant Secretary State Street Research Securities Trust Boston, MA
Assistant Secretary State Street Research Equity Trust Boston, MA
Assistant Secretary State Street Research Financial Trust Boston, MA
Assistant Secretary State Street Research Income Trust Boston, MA
Assistant Secretary State Street Research Money Market Trust Boston, MA
Assistant Secretary State Street Research Tax-Exempt Trust Boston, MA
Assistant Secretary SSRM Holdings, Inc. Boston, MA
Woodbury, Robert S. Employee Metropolitan Life Insurance Company New York, NY
Vice President
Woodworth, Jr., Kennard Vice President State Street Research Exchange Trust Boston, MA
Senior Vice Vice President State Street Research Growth Trust Boston, MA
President (until 2/96)
C-14
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Wu, Norman N. Partner Atlantic-Acton Realty Framingham, MA
Senior Vice President Director Bond Analysts Society of Boston Boston, MA
(Vice President
until 8/93)
Yogg, Michael Richard Vice President State Street Research Financial Trust Boston, MA
Senior Vice Vice President State Street Research Income Trust Boston, MA
President
</TABLE>
C-15
<PAGE>
Item 29. Principal Underwriters
(a) State Street Research Investment Services, Inc. serves as a
principal underwriter for Registrant, and also acts as principal
underwriter for State Street Research Equity Trust, State Street
Research Financial Trust, State Street Research Income Trust,
State Street Research Money Market Trust, State Street Research
Tax-Exempt Trust, State Street Research Growth Trust, State
Street Research Capital Trust, State Street Research Securities
Trust and State Street Research Portfolios, Inc.
(b) Directors and Officers of State Street Research Investment
Services, Inc. are as follows:
(1) (2) (3)
Positions Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Ralph F. Verni Chairman of Chairman of
One Financial Center the Board the Board,
Boston, MA 02111 and Director President,
Chief Executive
Officer and
Trustee
Peter C. Bennett Director Vice President
One Financial Center
Boston, MA 02111
Gerard P. Maus Executive Vice Treasurer
One Financial Center President,
Boston, MA 02111 Treasurer,
Chief Financial
Officer and Director
Thomas A. Shively Director None
One Financial Center
Boston, MA 02111
C. Troy Shaver, Jr. President and None
One Financial Center Chief Executive
Boston, MA 02111 Officer
George B. Trotta Executive Vice None
One Madison Avenue President
New York, NY 10010
Dennis C. Barghaan Senior Vice None
One Financial Center President
Boston, MA 02111
C-16
<PAGE>
(1) (2) (3)
Positions Positions
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Peter Borghi Senior Vice None
One Financial Center President
Boston, MA 02111
Paul V. Daly Senior Vice None
One Financial Center President
Boston, MA 02111
Susan M.W. DiFazio Senior Vice None
One Financial Center President
Boston, MA 02111
Gordon Evans Senior Vice None
One Financial Center President
Boston, MA 02111
Robert Haeusler Senior Vice None
One Financial Center President
Boston, MA 02111
Francis J. McNamara III Senior Vice Secretary
One Financial Center President and
Boston, MA 02111 Clerk
Gregory R. McMahan Senior Vice None
One Financial Center President
Boston, MA 02111
Joan D. Miller Senior Vice None
One Financial Center President
Boston, MA 02111
Richard P. Samartin Senior Vice None
One Financial Center President
Boston, MA 02111
Darman A. Wing Senior Vice President Assistant
One Financial Center and Assistant Secretary
Boston, MA 02111 Clerk
Linda Grasso Vice President None
One Financial Center
Boston, MA 02111
Frederick H. Jamieson Vice President None
One Financial Center and Assistant
Boston, MA 02111 Treasurer
C-17
<PAGE>
Item 30. Location of Accounts and Records
Gerard P. Maus
State Street Research & Management Company
One Financial Center
Boston, MA 02111
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the question of
removal of a Trustee or Trustees when requested to do so by
the holders of at least 10% of the Registrant's outstanding
shares and, in connection with such meeting, to comply with
the provisions of Section 16(c) of the Investment Company
Act of 1940 relating to shareholder communications.
(b) The Registrant has elected to include the
information required by Item 5A of Form N-1A in its annual
report to shareholders. The Registrant undertakes to
furnish each person to whom a prospectus is delivered with a
copy of the applicable fund's latest annual report to
shareholders upon request and without charge.
C-18
<PAGE>
NOTICE
A copy of the Declaration of Trust of the Registrant is
on file with the Secretary of State of the Commonwealth of
Massachusetts and notice is hereby given that the
obligations of the Registrant hereunder, and the
authorization, execution and delivery of this amendment to
the Registrant's Registration Statement, shall not be
binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Registrant as
individuals or personally, but shall bind only the property
of the Funds comprising the series of the Registrant, as
provided in the Declaration of Trust. Each Fund of the
Registrant shall be solely and exclusively responsible for
all of its direct or indirect debts, liabilities, and
obligations, and no other Fund shall be responsible for the
same.
C-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 8 to its Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized,
in the City of Boston and the Commonwealth of Massachusetts on
the 25th day of April, 1996.
STATE STREET RESEARCH
MASTER INVESTMENT TRUST
By: *
_______________________________________
Ralph F. Verni
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement has
been signed on the above date by the following persons in the
capacities indicated.
Signature Capacity
* Trustee, Chairman of
______________________________ the Board and Chief
Ralph F. Verni Executive Officer
(principal executive
officer)
* Treasurer (principal
______________________________ financial and
Gerard P. Maus accounting officer)
* Trustee
______________________________
Edward M. Lamont
* Trustee
______________________________
Robert A. Lawrence
* Trustee
______________________________
Dean O. Morton
C-20
<PAGE>
* Trustee
______________________________
Thomas L. Phillips
* Trustee
______________________________
Toby Rosenblatt
* Trustee
______________________________
Michael S. Scott Morton
* Trustee
______________________________
Jeptha H. Wade
*By: /s/ Francis J. McNamara, III
__________________________________________________
Francis J. McNamara, III,
Attorney-in-Fact under Powers of
Attorney dated April 25, 1996 filed herewith.
C-21
<PAGE>
1933 Act Registration No. 33-32729
1940 Act File No. 811-84
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 8 [X]
and/or
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 22 [X]
___________________
STATE STREET RESEARCH MASTER INVESTMENT TRUST
(Exact Name of Registrant as Specified in
Master Trust Agreement)
_____________________
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(1) First Amended and Restated Master
Trust Agreement and Amendment
No. 1 to First Amended and Restated
Master Trust Agreement
(6)(b) Form of Selected Dealer Agreement
and Form of Supplement No. 1 to
Selected Dealer Agreement
(11) Consent of Independent Accountants
(14)(b) State Street Research 403(b): Brochure,
Maximum Salary Reduction Worksheet,
Account Application, Salary Reduction
Agreement and Transfer of 403(b) Assets
Form
(17) Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-2
(18)(a) Powers of Attorney
(18)(b) Certificate of Board Resolution Respecting
Powers of Attorney
(27) Financial Data Schedules
STATE STREET MASTER INVESTMENT TRUST
(Formerly, State Street Investment Trust)
FIRST AMENDED AND RESTATED
MASTER TRUST AGREEMENT
The AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts on the
7th day of February 1989, by the Trustees thereunder, and by the holders of
shares of beneficial interest to be issued thereunder as therein provided, is
hereby amended and restated in its entirety this 5th day of February, 1993.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial interest
in separate series, each separate series to be a Sub-Trust hereunder, and to
issue classes of Shares of any Sub-Trust or divide Shares of any Sub-Trust into
two or more classes, all in accordance with the provisions hereinafter set
forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust or Sub-Trusts (as hereinafter
defined) created hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as State Street Master
Investment Trust and the Trustees shall conduct the business of the Trust under
that name or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
<PAGE>
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time;
(b) "Class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of Article
IV;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Declaration of Trust" shall mean this First Amended and Restated
Agreement and Declaration of Trust as amended or restated from time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust and each Sub-Trust of the Trust and/or any
class of any Sub-Trust (as the context may require) shall be divided from time
to time;
(h) "Sub-Trust" or "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article IV;
(i) "Trust" refers to the Massachusetts business trust established by this
Declaration of Trust, as amended from time to time, inclusive of each and every
Sub-Trust established hereunder; and
(j) "Trustees" refers to the Trustees of the Trust and of each Sub-Trust
hereunder named herein or elected in accordance with Article III.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
2
<PAGE>
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The Trustees hereof are Francis H. Burr, Martin Feldstein,
Edward M. Lamont, Robert A. Lawrence, Bill O. Mead, Dean O. Morton, Thomas L.
Phillips, William P. Rich, Toby Rosenblatt, Michael S. Scott Morton, Ralph F.
Verni and Jeptha H. Wade.
(b) Number. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase or decrease (to not less than two at any time
after the effective date of the Trust's Registration Statement on Form N-1A with
the Commission) the number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his term,
but the number of Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Election and Term. The Shareholders shall elect a Board of Trustees at
the first meeting of Shareholders following the initial public offering of
Shares. Each Trustee, whether named above or hereafter becoming a Trustee, shall
serve as a Trustee of the Trust and of each Sub-Trust hereunder during the
lifetime of this Trust and until its termination as hereinafter provided except
as such Trustee sooner dies, resigns or is removed. The Trustees may elect their
own successors, and may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies; provided, however, that the Shareholders shall have the right to
elect Trustees subsequent to the initial election contemplated by this Section
3.1(c) in the event there shall at any time be no Trustees in office or when and
to the extent otherwise required by Section 16(a) of the 1940 Act.
(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument and shall be effective as to the Trust and each Sub-Trust
hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any time:
(i) by written instrument, signed by at least two-thirds of the number of
Trustees in office immediately prior to such removal, specifying the date upon
which such removal will become effective; or (ii) by vote of
3
<PAGE>
Shareholders holding not less than two-thirds of the shares then outstanding,
cast in person or by proxy at any meeting called for the purpose. Any such
removal shall be effective as to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or after
the effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this Declaration of
Trust and the appointment is effective, the Trust estate shall vest in the new
Trustee, together with the continuing Trustees, without any further act or
conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or any Sub-Trust hereunder, or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his removal for cause, no person ceasing
to be a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any
4
<PAGE>
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not be bound or limited by present or future laws or customs with regard to
investment by trustees or fiduciaries, but shall have full authority and
absolute power and control over the assets of the Trust and the business of the
Trust to the same extent as if the Trustees were sole owners of the assets of
the Trust and the business in their own right, including such authority, power
and control to do all acts and things as they, in their uncontrolled discretion,
shall deem proper to accomplish the purposes of this Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may sue or be sued in the name of the Trust;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish Sub-Trusts, each such Sub-Trust to operate as a separate and
distinct investment medium and with separately defined investment objectives and
policies and distinct investment purposes; from time to time in accordance with
the provisions of Section 4.1 hereof establish classes of Shares of any Series
or Sub-Trust or divide the Shares of any Series or Sub-Trust into classes; they
may as they consider appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository or
custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or Shareholder servicing
agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or otherwise, and
set record dates or times for the determination of Shareholders or various of
them with respect to various matters; they may compensate or provide for the
compensation of the Trustees, officers, advisers, administrators, custodians,
other agents, consultants and employees of the Trust or the Trustees on such
terms as they deem appropriate; and in general they may delegate to any officer
of the Trust, to any committee of the Trustees and to any employee, adviser,
administrator,
5
<PAGE>
distributor, depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust such authority, powers, functions
and duties as they consider desirable or appropriate for the conduct of the
business and affairs of the Trust, including without implied limitation the
power and authority to act in the name of the Trust and any Sub-Trust and
of the Trustees, to sign documents and to act as attorney-in-fact for the
Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property, and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property in a
form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust of any Sub-Trust
or in the name of a custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments in acting through a committee,
6
<PAGE>
depository, voting trustee or otherwise, and in that connection to deposit any
security or debt instrument with, or transfer any security or debt instrument
to, any such committee, depository or trustee, and to delegate to them such
power and authority with relation to any security or debt instrument (whether or
not so deposited or transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge the
assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share
7
<PAGE>
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust; and
(n) Distribution Plans. To adopt on behalf of the Trust or any Sub-Trust a
plan of distribution and related agreements thereto pursuant to the terms of
Rule 12b-1 of the 1940 Act and to make payments from the assets of the Trust or
the relevant Sub-Trust or Sub- Trusts pursuant to said Rule 12b-1 plan.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees on
behalf of the Trust or any Sub-Trust may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least one-half of
the Trustees then in the office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office (or such larger or different number
as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other types of organizations, or individuals (a
"Contracting Party"), to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or on behalf
of the Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
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(b) Administration. Subject to the general supervision of the Trustees and
in conformity with any policies of the Trustees with respect to the operations
of the Trust and each Sub-Trust (including each class thereof), to supervise all
or any part of the operations of the Trust and each Sub-Trust, and to provide
all or any part of the administrative and clerical personnel, office space and
office equipment and services appropriate for the efficient administration and
operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to be principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agent. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof; and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or part of the accounting responsibilities,
whether with respect to the Trust's properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relating to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
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The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate
of any Contracting Party, or that the Contracting Party
or any parent or affiliate thereof is a Shareholder or
has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more
other corporations, trusts, associations, partnerships,
limited partnerships or other organizations, or have
other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
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connection with the Trust or any Sub-Trust and/or one or more classes of Shares
thereof, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository, custodian,
transfer agent, dividend disbursing agent, accounting agent, Shareholder
servicing agent, and such other agents, consultants and independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust for their
services as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all with par value $.001 per Share, but the
Trustees shall have the authority from time to time to issue Shares in one or
more Series (each of which Series of Shares shall be a separate and distinct
Sub-Trust of the Trust, including without limitation those Sub- Trusts
specifically established and designated in Section 4.2), as they deem necessary
or desirable. For all purposes under this Declaration of Trust or otherwise,
including, without implied limitation: (i) with respect to the rights of
creditors and (ii) for purposes of interpreting the relative rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
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requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
different dividend, liquidation, voting and other rights as the Trustees may
determine, and may establish and designate the specific classes of Shares of
each Sub-Trust. The fact that a Sub-Trust shall have initially been established
and designated without any specific establishment or designation of classes
(i.e., that all Shares of such Sub-Trust are initially of a single class), or
that a Sub-Trust shall have more than one established and designated class,
shall not limit the authority of the Trustees to establish and designate
separate classes, or one or more further classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof, provided that the establishment and
designation of such further separate classes would not adversely affect the
rights of the holders of the initial or previously established and designated
class or classes.
The number of authorized Shares and the number of Shares of each Sub-Trust
or class thereof that may be issued is unlimited, and the Trustees may issue
Shares of any Sub-Trust or class thereof for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in Section
5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of the Shares of such Sub-Trust or class,
(ii) upon the execution of an instrument in writing by an officer of the Trust
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pursuant to the vote of a majority of the Trustees, or (iii) as otherwise
provided in either such instrument. At any time that there are no Shares
outstanding of any particular Sub-Trust or class previously established and
designated the Trustees may by an instrument executed by a majority of their
number (or by an instrument executed by an officer of the Trust pursuant to a
vote of a majority of the Trustees) abolish that Sub-Trust or class thereof and
the establishment and designation thereof. Each instrument establishing and
designating any Sub-Trust shall have the status of an amendment to this
Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Sub-Trust (including any classes thereof) of the Trust to the same extent
as if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
Shares of any Sub-Trust (including any classes thereof) from any such person or
any such organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such Sub-Trust
(including any classes thereof) generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate further Sub-Trusts and classes, the Trustees hereby establish and
designate one Sub-Trust: the "State Street Investment Trust." The Shares of such
Sub-Trust and any Shares of any further Sub-Trusts that may from time to time be
established and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Sub-Trust at the time of establishing and
designating the same) have the following relative rights and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the Trust
for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Sub-Trust or class thereof and shall irrevocably
belong to that Sub- Trust (and be allocable to any classes thereof) for all
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived
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from any reinvestment of such proceeds, in whatever form the same may be,
together with any General Items (as hereinafter defined) allocated to that
Sub-Trust as provided in the following sentence, are herein referred to as
"assets belonging to" that Sub-Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Sub-Trust (collectively
"General Items"), the Trustees shall allocate such General Items to and among
any one or more of the Sub-Trusts established and designated from time to time
in such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to a particular Sub- Trust
shall belong to that Sub-Trust (and be allocable to any classes thereof). Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Sub- Trusts (including any classes thereof) for all
purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
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items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub- Trust or class, from such of
the income and capital gains, accrued or realized, from the assets belonging to
that Sub-Trust or in the case of a class, belonging to that Sub-Trust and
allocable to that class, as the Trustees may determine, after providing for
actual and accrued liabilities belonging to that Sub-Trust or class. All
dividends and distributions on Shares of a particular Sub-Trust or class thereof
shall be distributed pro rata to the holders of Shares of that Sub-Trust or
class in proportion to the number of Shares of that Sub-Trust or class held by
such holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a combination
thereof as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (h) of Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust and each class thereof that has been
established and designated shall be entitled to receive, when and as declared by
the Trustees, the excess of the assets belonging to that Sub-Trust, or in the
case of a class, belonging to that Sub-Trust and allocable to that class, over
the liabilities belonging to that Sub-Trust or class. The assets so
distributable to the Shareholders of any particular Sub-Trust or class thereof
shall be distributed among such Shareholders in proportion to the number of
Shares of that Sub- Trust or class thereof held by them and recorded on the
books of the Trust. The liquidation of any particular Sub-Trust or class thereof
may be authorized at any time by vote of a majority of the Trustees then in
office.
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(e) Voting. On each matter submitted to a vote of the Shareholders, each
holder of a Share of each Sub-Trust or class thereof shall be entitled to one
vote for each whole Share standing in his name on the books of the Trust,
irrespective of the series thereof, and all Shares of all series shall vote as a
single class ("Single Class Voting"); provided, however, that (a) as to any
other matter with respect to which a separate vote of one or more series or
class is required by the 1940 Act, such requirements as to a separate vote by
such series or class shall apply in lieu of Single Class Voting as described
above; and (b) as to any matter which affects the interests of one or more
particular series, only the holders of Shares of the one or more affected series
or class shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Shares of that Sub-Trust or class
thereof at a redemption price equal to the net asset value per Share of that
Sub-Trust or class thereof next determined in accordance with subsection (h) of
this Section 4.2 after the Shares are properly tendered for redemption, subject
to any contingent deferred sales charge in effect at the time of redemption.
Payment of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class thereof that
has been established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that failure to so redeem may have materially adverse consequences to the Trust
or any Sub-Trust or to the holders of the Shares of the Trust or any Sub-Trust
thereof or class thereof, or (b) upon such other
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conditions as may from time to time be determined by the Trustees and set forth
in the then current Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. Upon such redemption the holders of
the Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust shall
be (i) in the case of a Sub-Trust whose Shares are not divided into classes, the
quotient obtained by dividing the value of the net assets of that Sub-Trust
(being the value of the assets belonging to that Sub-Trust less the liabilities
belonging to that Sub-Trust) by the total number of Shares of that Sub-Trust
outstanding, and (ii) in the case of a class of Shares of a Sub-Trust whose
Shares are divided into classes, the quotient obtained by dividing the value of
the net assets of that Sub-Trust allocable to such class (being the value of the
assets belonging to that Sub-Trust allocable to such class less the liabilities
belonging to such class) by the total number of Shares of such class
outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of any
Sub-Trust at a designated constant dollar amount and in connection therewith may
adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust his
pro rata portion of the total number of Shares required to be cancelled in order
to permit the net asset value per Share of that Sub-Trust to be maintained,
after reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his investment in
any Sub-Trust with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence in the
event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
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(j) Equality. Except as provided herein or in the instrument designating
and establishing any class of Shares or any Sub-Trust, all Shares of each
particular Sub-Trust or class thereof shall represent an equal proportionate
interest in the assets belonging to that Sub-Trust, or in the case of a class,
belonging to that Sub-Trust and allocable to that class (subject to the
liabilities belonging to that Sub-Trust or class), and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or class or in any way
affecting the rights of Shares of any other Sub-Trust or class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if any such
fractional Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Sub-Trust or class, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in accordance
with such requirements and procedures as may be established by the Trustees.
(m) Class Differences. The relative rights and preferences of the classes
of any Sub-Trust may differ in such other respects as the Trustees may determine
to be appropriate in their sole discretion, provided that such differences are
set forth in the instrument establishing and designating such classes and
executed by a majority of the Trustees (or by an instrument executed by an
officer of the Trust pursuant to a vote of a majority of the Trustees).
Section 4.3 Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Sub-Trust and each
class thereof that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
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consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders and as to the
number of Shares of each Sub-Trust and class thereof held from time to time by
each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept investments
in the Trust and each Sub-Trust thereof from such persons and on such terms and
for such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no pre-emptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or take
any action in court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to demand
payment for their shares or to any other rights of dissenting Shareholders in
the event the Trust participates in any transaction which would give rise to
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appraisal or dissenters' rights by a Shareholder of a corporation organized
under Chapter 156B of the General Laws of the Commonwealth of Massachusetts, or
otherwise.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is as required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any Sub-Trust to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Sub-Trust thereof or the Shareholders (provided, however,
that a Shareholder of a particular Sub-Trust shall not be entitled to a
derivative or class action on behalf of any other Sub-Trust (or Shareholder of
any other Sub-Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the
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time, place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. The Trustees shall promptly
call and give notice of a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so in writing by
Shareholders holding not less than 10% of the Shares then outstanding. If the
Trustees shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at least 10%
of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 10% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a reasonable date and
time prior to the date of any meeting of Shareholders or other action as the
date and time of record for the determination of Shareholders entitled to vote
at such meeting or any adjournment thereof or to be treated as Shareholders of
record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by the
1940 Act or other applicable law, 30% of the Shares entitled to vote shall be a
quorum for the transaction of business at a Shareholders' meeting, but any
lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted, at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required or permitted by any provision of the 1940 Act or other applicable law
or by this Declaration of Trust or the ByLaws.
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Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more shareholders
of record who have been such for at least six months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded upon
the books of the Trust or Sub-Trust, as applicable; or (2) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (2) above,
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such
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opinion. The Trustees shall thereafter comply with any order entered by
the Commission and the requirements of the 1940 Act and the Securities Exchange
Act of 1934.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub- Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub- Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees shall be entitled to rely upon the books
of account of
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the Trust and upon written reports made to the Trustees by any officer appointed
by them, any independent public accountant, and (with respect to the subject
matter of the contract involved) any officer, partner or responsible employee of
a Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to be
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, said Sub-Trust (upon proper and timely
request by the Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of said Sub-Trust estate to be held harmless
from and indemnified against all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person")) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
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reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article VI and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees who are not a party to the proceeding, or an independent legal counsel
in a written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found entitled to
indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI,
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"Covered Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act [Shares of each
Sub-Trust voting separately by Sub-Trust]. Any Sub-Trust or class liquidated
pursuant to Section 4.2(d) or whose shares have been redeemed pursuant to
Section 4.2(g), may be terminated at any time by a majority of the Trustees then
in office, except that any such Sub-Trust or class which is the last remaining
Sub-Trust or class may only be so terminated by the Trustees with the favorable
vote of a majority of the outstanding voting securities, as defined in the 1940
Act, of such Sub-Trust or class.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or
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any combination thereof, and distribute the proceeds to the Shareholders.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust or class thereof) with such
transfer either (1) being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Sub-Trust the assets of which
are so transferred, or (2) not being made subject to, or not with the assumption
of, such liabilities; provided, however, that no assets belonging to any
particular Sub-Trust shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Sub-Trust. Following such transfer, the
Trustees shall distribute such cash, shares or other securities (taking into
account the differences among the classes of Shares of the Sub-Trust, if any,
and giving due effect to the assets and liabilities belonging to and any other
differences among the various Sub-Trusts the assets belonging to which have so
been transferred) among the Shareholders of the Sub-Trust the assets belonging
to which have been so transferred; and if all of the assets of the Trust have
been so transferred, the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of
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Massachusetts or any other state of the United States. Any such consolidation or
merger, other than the purchase or acquisition of assets of an investment
company or other collective investment entity which is not registered under the
1940 Act, shall require the affirmative vote of the holders of a majority of the
outstanding voting Shares, as defined in the 1940 Act, of each Sub-Trust
affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not have a material adverse effect on the rights of any
Shareholder with respect to which such amendment is or purports to be applicable
and so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority of the
then Trustees (or by an officer of the Trust pursuant to the vote of a majority
of such Trustees). Any amendment to this Declaration of Trust that does have a
material adverse effect on the rights of Shareholders may be adopted at any time
by an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to a vote of a majority of such Trustees) when
authorized to do so by the vote in accordance with subsection (e) of Section 4.2
of Shareholders holding a majority of the Shares entitled to vote. Subject to
the foregoing, any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed by a Trustee
or officer of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a copy
of the instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts as well as any other governmental
office where such filing may from time to time be required, but the failure to
make any such filing shall not impair the effectiveness of this instrument or
any such amendment. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any
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such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth.
Reference herein to Massachusetts Business Corporation Law is not intended to
give the Trust, the Trustees, the Shareholders or any other person any right,
power, authority or responsibility applicable only to or in connection with an
entity organized in corporate form. The Trust shall be of the type referred to
in Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
IN WITNESS WHEREOF, the undersigned officer of the Trust hereby adopts the
foregoing on behalf of the Trust pursuant to authorization by the Trustees of
the Trust.
/s/Constantine Hutchins, Jr.
---------------------------
Constantine Hutchins, Jr.
Secretary
Principal office of the Trust: One Financial Center
Boston, MA 02111
DP-2473/d
CR.002
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STATE STREET MASTER INVESTMENT TRUST
Amendment No. 1 to First Amended and
Restated Master Trust Agreement
INSTRUMENT OF AMENDMENT
Pursuant to Article I, Section 1.1, Article IV, Sections 4.1
and 4.2 and Article VII, Section 7.3 of the First Amended and
Restated Master Trust Agreement of the State Street Master
Investment Trust (the "Trust") dated February 5, 1993 ("Master
Trust Agreement"), the Master Trust Agreement is hereby amended
to change the name of the Trust to State Street Research Master
Investment Trust and to change the name of a series of shares
under such Trust, currently a Sub-Trust designated as State
Street Investment Trust, to State Street Research Investment
Trust.
Pursuant to Article VII, Section 7.3 of the Master Trust
Agreement, the third sentence of the third paragraph of Article
IV, Section 4.1 of the Master Trust Agreement is hereby amended
to read as follows:
"The Trustees may classify or reclassify any
Shares of any Sub-Trust or class into one or
more Sub-Trusts or classes that may be
established and designated from time to time
provided, however, that no such
classification or reclassification shall
adversely affect the rights of any
Shareholder."
This Amendment shall be effective as of May 1, 1995.
IN WITNESS WHEREOF, the undersigned officer of the Trust
hereby adopts the foregoing on behalf of the Trust pursuant to
authorization by the Trustees of the Trust.
/s/ Constantine Hutchins, Jr.
------------------------------
Constantine Hutchins, Jr.
Secretary
Exhibit (6)(b)
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: __________
Dealer Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Attn:
---------------------------------------
Ladies and Gentlemen:
We have been appointed to serve as an agent and principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife - State Street trusts, the State
Street trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio
series shall be denoted individually as a "Fund" and collectively as the
"Funds", and the investment companies shall be denoted individually as an
"Investment Company" and collectively as the "Investment Companies" for purposes
of this Agreement.
We are hereby inviting you, as a selected dealer and subject to the terms
and conditions set forth below, to make available to your customers Shares of
the Funds. By your acceptance hereof, you agree that you shall exercise your
best efforts to find purchasers for the Shares, shall purchase Shares only from
us or from your customers, and shall act only as agent for your customers or
dealer for your own account, with no authority to act as agent for the Funds,
for us or for any other dealer in any respect.
1. Acceptance of Orders. Orders received from you will be accepted only at
the public offering price (as defined below in Section 2) applicable to each
order. You agree to place orders for Shares immediately upon the receipt of, and
in the same amount as, orders from your customers. We will not accept a
conditional order from you on any basis. All orders are subject to our receipt
of Shares from the Investment Company and to acceptance and confirmation of such
<PAGE>
orders by us and by the Investment Company. The procedures relating to the
handling of orders shall be subject to instructions which we shall provide from
time to time to you. We and the Investment Companies reserve the right in our
sole discretion to reject any order.
2. Public Offering Price and Sales Charge. The public offering price shall
be the net asset value per Share plus any sales charge payable upon the purchase
of Shares of such Fund or class thereof as described in the then current
prospectus applicable to such Shares, as amended and in effect from time to time
(the "Prospectus"). The public offering price may reflect scheduled variations
in, or the elimination of, the sales charge on sales of the Shares either
generally to the public or in connection with special purchase plans, as
described in the Prospectus and related Statement of Additional Information. You
agree that you will apply any scheduled variation in, or elimination of, the
sales charge uniformly to all offerees in the class specified in the Prospectus.
The sales charge applicable to any sale of Shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Shares accepted by us shall be as set forth in the applicable Prospectus and
related Statement of Additional Information. You agree that you will not combine
customer orders to reach breakpoints in commissions for any purpose unless
authorized by the Prospectus or by us in writing. All commissions and
concessions are subject to change without notice by us.
3. 12b-1 Plans.
(a) As consideration for your providing distribution and marketing
services in the promotion of the sale of Shares of certain Funds or classes
thereof which have adopted Distribution Plans pursuant to Rule 12b-1 under the
1940 Act, and for providing personal services to and/or the maintenance of the
accounts of, your customers who invest in and own such Shares, we shall pay you
such fee, if any, as is described in the applicable Prospectus and otherwise
established by us from time to time on Shares which are owned of record by your
firm as nominee for your customers or which are owned by those customers of your
firm whose records, as maintained by such Fund or its agent, designate your firm
as the customer's dealer of record. Any fee payable hereunder shall be computed
and accrued daily and for each month shall be based on average daily net asset
value of the relevant Shares which remain outstanding during such month. No such
fee will be paid to you with respect to Shares redeemed or repurchased by such
Fund within seven business days after the date of our confirmation of such
purchase. No such fee will be paid to you with respect to any of your customers
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if the amount of such fee based upon the value of such customer's Shares will be
less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect to
any Fund or class thereof in accordance with the provisions of Rule 12b-1 under
the 1940 Act or the rules of the National Association of Securities Dealers,
Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time to
time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Payment for Shares. Payment for Shares sold through you shall be made on
or before the settlement date specified in the applicable confirmation, at the
office of our clearing agent, and by your check payable to the order of such
Fund or, if applicable, by Federal Funds wire for credit to such Fund, in any
case in accordance with the procedures and conditions described in the
applicable Prospectus. Each Fund reserves the right to delay issuance or
transfer of Shares until such check has cleared. If such payment is not received
by us, we reserve the right, without notice, forthwith to cancel the sale.
Unless other instructions are received by us on or before the settlement date,
orders accepted by us may be placed in an Open Account in your name. If such
payment or instruments are not timely received by us, we may hold you
responsible for any expense or loss, including loss of profit, suffered by us or
by such Fund resulting from your failure to make payment as aforesaid.
5. Redemption and Repurchase of Shares. If any of the Shares sold through
you hereunder are redeemed by such Fund or repurchased by us as agent for such
Fund within seven business days after confirmation of the original purchase, it
is agreed that you shall forfeit your right to the entire dealer concession and
related commission, if any, received by you on such Shares. We will notify you
of any such repurchase or redemption within ten business days from the date
thereof and you shall forthwith refund to us the entire concession and
commission, if any, received by you on such sale. We agree, in the event of any
such repurchase or redemption, to refund to such Fund our share of the sales
charge retained by us, if any, and upon receipt from you of the refund of the
concession allowed to you, to pay such refund forthwith to such Fund.
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If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to us or a Fund, you
agree not to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
6. Manner of Offering.
(a) No person is authorized to make any representations concerning
Shares except those contained in the applicable Prospectus, in the related
Statement of Additional Information and in any then current sales literature or
other material issued by us supplemental to such Prospectus, which sales
literature or other material is used in conformity with applicable rules or
conditions. All offerings of Shares by you shall be subject to the conditions
set forth in the applicable Prospectus (including the condition relating to
minimum purchases) and to the terms and conditions herein set forth. We will
furnish additional copies of the Prospectuses and such sales literature and
other material issued by us in reasonable quantities upon request. You will
provide all customers with the applicable Prospectus prior to or at the time
such customer purchases Shares and will forward promptly to us any customer
request for a copy of the applicable Statement of Additional Information. Sales
and exchanges of Shares may only be made in those states and jurisdictions where
the Shares are registered or qualified for sale to the public. We agree to
advise you currently of the identity of those states and jurisdictions in which
the Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that we
may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
4
<PAGE>
7. NASD Matters. This Agreement is conditioned upon your representation and
warranty that you are a member of the NASD or, in the alternative, that you are
a foreign dealer not eligible for membership in the NASD. You and we agree to
abide by the Rules and Regulations of the NASD, including Rule 26 of its Rules
of Fair Practice, and all applicable federal, state, and foreign laws, rules and
regulations.
8. Rejection of Orders. We shall have the right to accept or reject orders
for the purchase of Shares of any Fund. It is understood that for the purposes
hereof no Share shall be considered to have been sold by you and no compensation
will be payable to you with respect to any subscription for Shares which is
rejected by us or an Investment Company. Any consideration which you may receive
in connection with a rejected purchase order will be returned promptly.
Confirmations of all accepted purchase orders will be transmitted by the
Transfer Agent for the applicable Fund or class thereof to the investor or to
you, if authorized.
9. Status of Soliciting Dealer. Nothing herein shall make you a partner
with us or render our relationship an association. You are responsible for your
own conduct, for the employment, control and conduct of your employees and
agents and for injury to such employees or agents or to others through such
employees or agents. You assume full responsibility for your employees and
agents under applicable laws and agree to pay all employer taxes relating
thereto.
10. No Liability. As distributor of the Shares, we shall have full
authority to take such action as we may deem advisable in respect of all matters
pertaining to the distribution of such Shares. We shall not be under any
liability to you, except for lack of good faith and for obligations expressly
assumed by us in this Agreement; provided, however, that nothing in this
sentence shall be deemed to relieve any of us from any liability imposed by the
Securities Act of 1933, as amended.
11. Term of Contract; Amendment; Termination. This Agreement shall become
effective on the date hereof. We and each Fund reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time, to change any sales charges, commissions, concessions and other fees
described in the applicable Prospectus or to suspend sales or withdraw the
offering of Shares of any Fund or class of Shares thereof entirely. You agree
that any order to purchase Shares placed by you after notice of any amendment to
this Agreement has been sent to you shall constitute your agreement to such
amendment.
5
<PAGE>
12. Miscellaneous. This Agreement supersedes any and all prior agreements
between us. All communications to us should be sent to the above address. Any
notice to you shall be duly given if mailed or telefacsimiled to you at the
address specified by you above. This Agreement shall be effective when accepted
by you below and shall be construed under the laws of the Commonwealth of
Massachusetts.
The following provision, as marked, applies to this agreement.
|_| This document constitutes an amendment to and restatement of the Selected
Dealer Agreement currently in effect between you and us.
|_| Please confirm your agreement hereto by signing and returning the enclosed
counterpart of this Agreement at once to: State Street Research Investment
Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us as of the date
indicated.
State Street Research
Investment Services, Inc.
(Distributor)
By:
-----------------------
ACCEPTED:
[ ]
(Selected Dealer)
By:
----------------------------
6
<PAGE>
SUPPLEMENT NO. 1 TO
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: _________________
Dealer Name: _____________________________________
Address: _____________________________________
_____________________________________
Attn: _____________________________________
Ladies and Gentlemen:
This Agreement amends and supplements the Selected Dealer Agreement
between you and us, as in effect from time to time (the "Selected Dealer
Agreement"). All of the terms and provisions of the Selected Dealer Agreement
remain in full force and effect, and this Agreement and the Selected Dealer
Agreement shall be construed and interpreted as one Agreement, provided that in
the event of any inconsistency between this Agreement and the Selected Dealer
Agreement, the terms and provisions of this Agreement shall control. Capitalized
terms used in this Agreement and not defined herein are used as defined in the
Selected Dealer Agreement.
We understand that you wish to use Shares of the Funds in managed
fee-based programs in which you participate (the "Fee-Based Program"), and that
you wish to afford investors participating in such programs the opportunity to
qualify for the ability to purchase shares of the Funds at net asset value. We
are willing to allow you to purchase Shares of the Funds for sale to investors
participating in the Fee-Based Program on such basis, subject to the terms and
conditions of this Agreement and the Selected Dealer Agreement.
1. Sale of Shares through Fee-Based Program
You may, in connection with the Fee-Based Program, sell shares of any
Funds made available by us, from time to time, at net asset value to investors
participating in a bona fide Fee-Based Program. You will receive no discount,
commission or other concession with respect to any
<PAGE>
such sale, but will be entitled to receive any service fees otherwise payable
with respect thereto to the extent provided from time to time in the applicable
Funds' Prospectuses and in the Dealer Agreement. We will, after consulting with
you, determine, from time to time, which Funds we will make available to you for
use in the Fee-Based Program. You agree that Shares will not be made available
through the Fee-Based Program for the sole purpose of enabling evasion of sales
charges.
2. Fees under Fee-Based Program
For any Fee-Based Program investor eligible to purchase Fund shares at
net asset value, the investor shall be subject to an annual fee of not more than
2.50% of such investor's average net assets included in the Fee-Based Program,
nor less than 0.50% of such assets. You shall send to us upon request from time
to time the then-current standard fee schedule for the applicable Fee-Based
Program and a copy of the applicable Schedule H to the Form ADV containing the
required disclosures relating to the Fee-Based Program, or any successor
required disclosures. Any brochures, written materials or advertising relating
to the Fee-Based Program may refer to the Funds as available at net asset value
if the fees and expenses of the Fee-Based Program are given at least equal
prominence. In connection with explaining the fees and expenses of the Fee-Based
Program, your representatives may describe to customers the option of purchasing
Fund shares through such Program at net asset value.
3. Undertakings
You will (i) provide us with continuous reasonable access to your
offices, representatives and mutual fund and Fee-Based Program sales support
personnel and to meetings, including national and regional sales conferences and
training programs, of your representatives and sales personnel, (ii) include
descriptions of all Funds offered through the Fee-Based Program in internal
sales materials and electronic information displays used in conjunction with the
Fee-Based Program, (iii) include our representatives on your internal sales
lines and conference calls on a regular basis, (iv) use reasonable efforts to
motivate your representatives to recommend suitable Funds for clients of the
Fee-Based Program, (v) provide us with sales information in reasonable
Fund-by-Fund detail, including identification of offices and representatives
that account for the most significant sales of shares of the Funds through the
Fee-Based Program, and (vi) include the Funds on any approved, preferred or
other similar list of mutual fund products offered through the Fee-Based
Program.
4. Customer Accounts
You may maintain with the Funds' shareholder servicing agent either (i)
one or more omnibus accounts solely for the participants in the applicable
Fee-Based Program or (ii) separate accounts for each participant in the
applicable Fee-Based Program. If one or more omnibus accounts are maintained,
you shall, among other things, be responsible for forwarding proxies, annual and
semi-annual reports and other materials to each beneficial owner in a timely
manner.
5. Applicable Law
This Agreement shall be governed by and construed and interpreted in
accordance with the internal laws of The Commonwealth of Massachusetts.
6. Disclaimer and Indemnity
We are not endorsing, recommending and are not otherwise involved in
providing any investment product of yours, including but not limited to any
Fee-Based Program. We are merely affording you the opportunity to use shares of
the Funds as an investment medium for the applicable Fee-Based Program. You
acknowledge and agree that you are solely responsible for any such Fee-Based
Program and you agree to indemnify, defend and hold harmless us, the Funds and
our and their affiliates, directors, trustees, officers, employees and agents
from and against any claims, losses, damages or costs (including attorneys'
fees) arising from or related to such Fee-Based Program, including without
limitation any brochures, written materials or advertising in any form that
refers to the Funds or the Fee-Based Program.
7. Miscellaneous
This Agreement is not exclusive and shall terminate automatically upon
termination of the Selected Dealer Agreement. We reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has been sent to you shall constitute your
agreement to such amendment.
<PAGE>
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: __________________________
Name:
Title:
Accepted:
__________________________________
Name of Dealer
By: __________________________________
Name:
Title:
CONSENT OF INDEPENDENT ACCOUNTS
To the Board of Trustees of
State Street Research Master Investment Trust:
We consent to the inclusion in Post-Effective Amendment No. 8 to the
Registration Statement of the State Street Research Master Investment Trust on
Form N-1A (Securities Act of 1933 File No. 33-32729) of our report dated
February 2, 1996 on our audit of the financial statements and financial
highlights of State Street Research Investment Trust for the year ended December
31, 1995. We also consent to the reference to our Firm under the captions
"Financial Highlights" and "Independent Accountants" in the Registration
Statement.
/s/ Coopers & Lybrand L.L.P.
_______________________________
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 25, 1996
Exhibit (14)(b)
[FRONT COVER]
[State Street Research Logo]
403(b)
Retirement--The Key Is Planning Now
As a working person, you have a decision to make--how to protect your current
earnings and provide for a comfortable retirement.
Social Security may not be adequate. Currently, average monthly benefits
are around $675.* And, as the retired population grows in proportion to
the number of workers paying into the fund, Social Security may become
less reliable. In fact, in many places, employees of state or local
governments do not participate in Social Security.
Taxable savings plans may not be adequate either. Both the money you set
aside and the interest it earns are taxed at current rates--just when
you're at peak income levels.
*Source: Social Security Administration.
A Good Way To Plan For Retirement
A State Street Research 403(b) Account is a good way for employees of
private tax-exempt organizations such as hospitals or colleges, and
employees of public schools or colleges, to build financial resources
for retirement. If you are such an employee, you should consider a
403(b) account.
The 403(b) Advantage--Lower Income Taxes
Contributions to your State Street Research 403(b) Account are not
subject to current federal income tax, within the limits allowed by the tax
laws. This reduces your current federal income tax liability and increases your
spendable income, compared to a taxable savings program. Many states
exclude 403(b) contributions from state income taxes as well.
This chart shows the benefits of saving with a 403(b) account. In each
instance, the employee plans to save 10% of income, or $5,000. This
example shows only federal income tax savings. You may also save on
state income taxes.
Saving Outside 403(b) Saving With 403(b)
Salary $50,000 Salary $50,000
Income Taxes 9,353 403(b) Savings 5,000
- ---------------------------- -------------------------------
After-Tax Income 40,647 Taxable income 45,000
Savings 5,000 Income Taxes 7,953
- ---------------------------- -------------------------------
Spendable Income $35,647 Spendable Income $37,047
With 403(b), you have $1,400 more in spendable income!
The 403(b) Advantage--Tax-Free Accumulation
The interest and other investment earnings accumulating in your 403(b)
account compound tax deferred until you begin making withdrawals from your
account. This can mean greater overall returns than with taxable
investments.
<PAGE>
------------------------ LINE CHART ------------------------------
Taxable vs. Tax-free Accumulation
The chart at right
illustrates what
happens when monthly investments of $125
grow at 7% and 5%
tax free for 10 years,
versus the same
taxable investments
growing at 7% and 5%
for 10 years in the 28%
tax bracket. All
distributions are
reinvested. Sales
charges, if any are
not reflected.
($ in Thousands)
$21,501 Tax deferred 7%
$19,413 Taxable 7%
$19,375 Tax deferred 5%
$18,018 Taxable 5%
The chart illustrates general advantages of tax-deferral. Returns are
hypothetical and are for illustrative purposes only; they are not
intended to imply or guarantee a rate of return on any mutual fund or
other investment.
----------------------------------------------------------------
State Street Research Mutual Funds
Your 403(b) contributions will be invested in the State Street Research
fund(s) of your choice. State Street Research offers a variety of mutual
funds, each managed to meet a specific investment objective, such as
growth or income.
Corporate Heritage
State Street Research has a history dating to 1924, with the founding of
the nation's second oldest mutual fund. Today the Company manages over
$27 billion in assets.
How To Get Started
The following questions and answers will give you important information
about your State Street Research 403(b) Account. Simply follow the
instructions on the back cover to set up your account.
Questions And Answers About Your
403(b) Account
Eligibility
Who can have a 403(b) account?
Only employees of an organization described in Section 501(c)(3) of the
Internal Revenue Code may have a 403(b) account. These include non-
profit charitable, educational, scientific or religious organizations,
such as hospitals or colleges. Also, an employee of a state or local
government who is employed by a school (for example, a local school
system or state college or university) can have a 403(b) account. Check
with your employer to determine whether you qualify for a 403(b)
account.
<PAGE>
What happens if I change employers?
If your new employer is a qualified employer, you may continue to
contribute to your 403(b) account after changing jobs. If your new
employer is not a qualified organization, you may no longer make
contributions to your 403(b) account, but your account will continue to
accumulate tax free until you begin making withdrawals. Contact
State Street Research Shareholder Services for additional information:
1-800-562-0032.
Contributions
How do I make contributions to my 403(b) account?
Usually, you would enter into a salary reduction agreement with your
employer that specifies the amount you want to contribute. Your
compensation will be reduced by this amount and the money will be
contributed by your employer to your 403(b) account. In some cases, your
employer may make contributions to your 403(b) account as a retirement
benefit for you.
Your employer may already have a salary reduction agreement for you to
use. If not, a form of salary reduction agreement is included in your
State Street Research 403(b) Package. Read the form for an explanation
of IRS restrictions on changing the amount of your salary reduction.
Maximum Contribution
How much can be contributed each year to my 403(b) account?
Determining your maximum 403(b) contribution is complex because several
different tax law limits apply depending on your individual situation.
For most employees, the maximum salary reduction contribution for a
calendar year will be the smaller of 20% of your compensation or $9,500.
In the future, the $9,500 limit may be indexed for inflation each year.
Employees of certain kinds of qualified employers (for example, public
schools and private tax-exempt schools, colleges, hospitals and home-
health agencies) can elect different limits in some situations. Also,
long-service employees (15 or more years of service) of such employers
may have increased limits.
Your employer's benefits or personnel department, or the business
office, may be available to calculate your maximum contribution. If not,
you may use the worksheet enclosed in your State Street Research 403(b)
Package. You may wish to consult an accountant or tax adviser to confirm
your maximum contribution.
What happens if I exceed the maximum for a year?
If you exceed the $9,500 limit for a year, you should request State
Street Research to return the excess contribution to you with earnings.
You should make your request no later than March 1 of the following
year.
<PAGE>
If your contributions for a year exceed any of the other limits, you
must include the excess in your income for federal income tax purposes.
In addition, you may have to pay a penalty tax equal to 6% of the
"excess contribution." The penalty tax also applies to excess
contribution amounts left over from prior years.
You can avoid paying the penalty tax if you withdraw the amount of the
excess from your account before the end of the year in which the excess
contribution was made.
Even if you have to pay the penalty tax in one year, you can avoid paying it in
later years by contributing less than your maximum for the later year; the
excess is reduced by the difference between the maximum and the actual
contribution.
Investments
What are my investment choices?
Contributions to your 403(b) account may be invested in one or more of
the eligible mutual funds distributed by State Street Research.
Also, you can exchange amounts from one fund to another. (You can even
choose telephone exchange privileges when completing your State Street
Research 403(b) Account Application.) There may be minimum investment
amounts for certain funds, or there may be sales charges. Such minimums
or charges are described in the prospectus(es).
Before investing, be sure to read the current prospectus(es) for the
funds in which you are interested so that you can be familiar with the
investment objectives and policies, and the sales charges or other
charges applicable to a Fund.
May I transfer my existing 403(b) to State Street Research?
Yes. Complete the Transfer of 403(b) Assets Form found in your State
Street Research 403(b) Package. Be sure to note the requirements for a
tax-free transfer described in the Form. Consult your personnel or
benefits department or your tax adviser for additional information.
What about an IRA?
You can have an IRA even though you are contributing to a 403(b)
account. Depending on your income level, contributions to an IRA may or
may not be deductible on your federal income tax return. For more
information about our IRAs, call State Street Research Shareholder
Services: 1-800-562-0032.
<PAGE>
Withdrawals From Your Account
When will I begin to receive retirement benefits from my account?
You choose when to make withdrawals from your 403(b) account. However,
withdrawals may not begin until you have retired or terminated
employment with your employer; reached age 59-1/2 (even though you are
still employed by your employer); or died. Earlier withdrawals are
permitted only if you become disabled or suffer a financial hardship
(as defined by IRS regulations). Consult your tax adviser, as tax
penalties may result. You may be requested to verify disability with a
doctor's certificate or a Social Security disability benefits award.
You may be asked to verify financial hardship by a certificate from an
independent person appointed by your employer, and financial hardship
withdrawals are limited to the amount of your salary reduction
contributions (no earnings or investment gains). You must begin making
withdrawals by April 1 of the year following the year when you reach
age 70-1/2. This is required even if you are still working.
Use the Withdrawal Form to notify State Street Research when you wish to
begin making withdrawals from your account.
How will the benefits be paid to me?
Benefits will be paid to you either in a lump-sum payment or in periodic
(monthly, quarterly, or annual) installments. Installment payments may
not extend beyond your life expectancy or the joint life expectancy of
you and your designated beneficiary.
Also, there are minimums on the amount of installments you must receive
after age 70-1/2. There are substantial penalty taxes (up to 50%) if you
do not make the minimum required withdrawals.
What happens to my account if I die?
Your account balance goes to the beneficiary(ies) you designate on the
403(b) application or on another written document you send to State
Street Research Shareholder Services. You can change your
beneficiary(ies) in writing. Naming a beneficiary(ies) can have estate
and tax-planning implications; consult a qualified professional.
Withdrawals by a beneficiary(ies) are also subject to rules relating to
when withdrawals must begin and minimums for installment withdrawals.
Taxes
How will I be taxed on withdrawals from my 403(b)?
Generally, amounts withdrawn from your account are taxed as ordinary
income in the year when received. In addition, with limited exceptions,
such as disability, amounts withdrawn before age 59-1/2 are subject to
an additional 10% penalty tax.
Special five-year averaging, applicable to lump-sum distributions from
certain retirement plans, does not apply to 403(b).
<PAGE>
Certain very large withdrawals (generally over $150,000 in a year--
counting all 403(b) and IRA withdrawals and distributions to you from
qualified retirement plans) may be subject to a 15% penalty tax.
There may be income tax withholding on the amounts you withdraw. If you
withdraw an amount from your State Street Research 403(b) Account that
is eligible for rollover (see next question), mandatory 20% federal
income tax withholding will apply unless the withdrawn amount is rolled
directly to another 403(b) arrangement or to an IRA. If the amount you
withdraw is not eligible for rollover to another 403(b) arrangement or
IRA, 10% withholding of federal income tax will apply unless you elect
no withholding on your Withdrawal Form.
Can I postpone federal income tax on a withdrawal from my 403(b)
account?
In certain situations, you can defer income taxes on withdrawals from
your 403(b) account if all or part of the withdrawal is rolled over to
another 403(b) account or into an IRA either directly by State Street
Research (direct rollover) or by you (regular rollover) within 60 days.
All withdrawals are eligible for rollover (either a direct rollover or a
regular rollover) except minimum required withdrawals after age 70-1/2
and withdrawals over a period of at least 10 years or over the life
expectancy of you (or you and your designated beneficiary).
Caution: Rollovers must meet technical IRS requirements that cannot be
described in detail here. Consult your employer or tax adviser for
assistance in carrying out a rollover.
If a withdrawal is eligible for rollover and if you do not elect a
direct rollover, the Custodian must withhold 20% of your withdrawal for
federal income taxes. The rollover and withholding rules also apply to
your surviving spouse if he or she receives a distribution from your
account upon your death.
Be certain to carefully read the notice on tax treatment and withholding
on withdrawals that accompanies the Withdrawal Form for more
information.
What about other taxes?
Contributions under a salary reduction agreement will be subject to
Social Security withholding if you are covered by Social Security.
State tax treatment varies from state to state. You should consult your
tax adviser with any questions on how a 403(b) account would affect your
state taxes.
IMPORTANT. The preceding questions and answers are general and are
provided for informative purposes only. Always consult your tax adviser
for advice on how the tax laws apply to you and how a State Street
Research 403(b) account will affect your tax situation. More information
is available in IRS Publication 571, Tax-Sheltered Annuity Plans for
Employees of Public Schools and Certain Tax-Exempt Organizations; this
publication is available from the IRS.
<PAGE>
How To Start Your State Street Research 403(b) Account
1. Carefully read the material describing the State Street Research
403(b) Account and the prospectus(es) for the fund(s) in which you plan
to invest. You may want to review the material with your accountant,
lawyer or other tax adviser because the rules under Section 403(b) are
complex and subject to change.
2. If contributions to your 403(b) Account will be made under a salary
reduction agreement, you should fill out, and you and your employer
should sign, a salary reduction agreement. If your employer does not
have a form of salary reduction agreement for use with employees, you
may use the sample Salary Reduction Agreement found in the State Street
Research 403(b) package.
3. Complete and sign the State Street Research 403(b) Account
Application. Be sure to complete the beneficiary section of the
Application.
4. If you are transferring your current 403(b) assets to State Street
Research, complete and sign the Transfer of Assets Form.
5. Mail the completed and signed Application (and the Transfer of Assets
Form, if used) to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Enclose a check in the amount of $10.00 payable to State Street Bank and
Trust Company, Custodian, to cover the first year's annual maintenance
fee for the account; otherwise the fee will be charged to your account.
There is a $10.00 annual maintenance fee for each calendar year (the fee
is not prorated for less than a full calendar year). We will forward the
necessary materials to the Custodian.
This brochure must be preceded or accompanied by the relevant fund
prospectus(es), which includes investment policies, sales charges and
expenses. Please read the prospectus(es) carefully before investing.
[State Street Research logo]
(C)1995 State Street Research Investment Services, Inc. Boston, MA 02111
Control Number: 2717-951025(1196)SSR-LD RP-923C-1095
<PAGE>
[BACK COVER]
(C)1995 State Street Research Investment Services, Inc., Boston, MA 02111
CONTROL NUMBER: 2713-951025(1196)SSR-LD RP-921C-1095
[FRONT COVER]
[State Street Research logo]
403(b)
Maximum Salary
Reduction Worksheet
Maximum Salary Reduction Worksheet
This worksheet will help you compute the maximum amount by which you can reduce
your salary without exceeding any of the limits. Before doing the calculations,
you may wish to check with your Employer's benefits or personnel department or
business office. Often these departments will calculate an employee's 403(b)
maximum.
If you use the worksheet to do your own calculation, read the
information following the worksheet first. After completing the
worksheet, you should consult your accountant, lawyer or other
professional tax adviser to verify your calculation or answer your
questions. The tax laws change often and individual situations can vary.
Also, certain exceptions and rules that apply only in relatively rare
situations are not covered by the worksheet. This worksheet and the
questions and answers following it are not intended to be tax advice,
and you are responsible for meeting the tax law limits
on contributions to your 403(b) account.
To help you, the example demonstrates a typical salary reduction situation and
the worksheet provides spaces for your own computations. This worksheet and the
questions and answers are designed to help you determine your maximum salary
reduction. If your employer will make contributions on your behalf as an
addition to your salary, or if you will contribute by foregoing an increase in
compensation, there are different formulas to determine your maximum. If this
situation applies to you, your Employer should be able to help you calculate the
limits that apply to you.
In the example, a college teacher will earn $40,000 in 1995. She will
have worked for the college 15 years at the end of 1995. The college has
previously contributed $20,000 on her behalf to its 403(b) retirement
plan ($18,000 of which was contributed in the most recent 10 years). The
college will contribute 10% of her salary ($4,000) to its retirement
plan for 1995. In addition, the employee reduced her salary in prior
years by a total of $10,000 for contribution to her 403(b) account. How
much can this employee reduce her salary for 1995?
Step 1 - Determine the Exclusion Allowance
(example) (your computation)
(a) Enter your expected
salary for the current
year before reduction
for contributions to
your 403(b) account. $40,000 ___________________
(b) Enter your number
of years of service
(including whole
and fractional years)
as of the end of the
current year. 15 ____________________
(c) Multiply (a) by (b)
by .20. $120,000 ____________________
(d) Enter the amount of
your salary reduction
contributions and
employer contributions
for you to a 403(b)
retirement plan or to a
qualified retirement plan
in prior years. $ 30,000 _____________________
<PAGE>
(e) Enter amount of
contributions by
your employer
for you to a 403(b)
retirement plan for
the current year. $ 4,000 ______________________
(f) Subtract (d) and (e)
from (c). $ 86,000 ______________________
(g) Multiply your years
of service in (b) by .20
and add 1. 4 ______________________
(h) Divide (f) by (g) to
determine your
exclusion allowance
for the year. $ 21,500 ______________________
Step 2 - Determine the Section 415 General Limitation
(a) Multiply your expected
salary (before reduction
for contributions to your
403(b) account) for the
current year by .20. $ 8,000 ______________________
(b) Multiply amount of
your employer's
expected contributions
for you for the current
year to a 403(b) retire-
ment plan by .80. $ 3,200 ______________________
(c) Subtract (b) from
(a)to determine your
Section 415 general
limitation (but not
in excess of $30,000). $ 4,800 ______________________
Step 3 - Determine the Section 415 Alternatives
Alternative A
Available if employee
terminates service;
same as exclusion
allowance but based
on last ten years of
service with employer,
up to a maximum
of $30,000. $ 16,000 ______________________
Alternative B
(a) Enter the exclusion
allowance determined
in Step 1. $ 21,500 ______________________
(b) Add $3,200 to the Section
415 general limitation
determined in Step 2. $ 8,000 ______________________
(c) Enter $15,000. $ 15,000 $ 15,000
<PAGE>
(d) Your alternative B
limitation is the
smallest of (a),
(b) or (c). $ 8,000 ______________________
Alternative C
Enter the Section 415
general limitation
determined in Step 2. $ 4,800 ______________________
Step 4 - Apply the $9,500 Limit
(a) Enter $9,500. $ 9,500 $9,500
(b) If eligible (see Question 14
below), use the smallest
of the following:
(i) $ 3,000 $ 3,000 $3,000
(ii) $15,000 reduced
by increases to the
$9,500 limit you
used in prior years. $ 15,000 ______________________
(iii) $5,000 multiplied
times years of service,
reduced by all prior
salary reduction
contributions to a
403(b) account or
annuity or to a
401(k) plan. $ 65,000 $_____________________
(c) Add the amount
determined in (b)
to $9,500; this is
your limit for the
year under this step. $ 12,500 $_____________________
Step 5 - Determine the maximum salary reduction
(a) Enter your exclusion
allowance from step 1. $ 21,500 ______________________
(b) Enter your Section 415
general limitation
from step 2. $ 4,800 ______________________
(c) Enter the lesser
of (a) or (b). $ 4,800 ______________________
(d) Enter Alternative A
if applicable. $ 16,000* ______________________
(e) Enter Alternative B. $ 8,000 ______________________
(f) Enter Alternative C. $ 4,800 ______________________
(g) Enter the largest
of items (c), (d),
(e) or (f). $ 8,000* ______________________
<PAGE>
(h) Enter the $9,500
limit (Step 5(c)). $ 12,500 $_____________________
(i) Enter the smaller
of (g) or (h).
This is your maxi-
mum salary reduc-
tion for this year. $ 8,000 ______________________
*Alternative A is not available to the employee in the example because
she is not terminating employment.
For this employee, the Alternative B limit of $8,000 is the largest for
this year. Keep in mind that the alternative election, which appears
most advantageous in this year may not necessarily be the best for you
over the long run. See Questions 9 and 12.
Step 6 - Salary Reduction Agreement
Enter a salary reduction agreement with your Employer, which reduces
your compensation each pay period so that the correct amount is
contributed to your State Street Research 403(b) Account.
QUESTIONS AND ANSWERS ON
CALCULATING YOUR MAXIMUM
Maximum Contribution
1. What is the maximum annual contribution to my 403(b) account?
The maximum contribution you can exclude from your taxable income
(sometimes called your "maximum exclusion allowance"
or "MEA") is the smaller of your "403(b) exclusion allowance" (Questions
2-5) or your "415 limit" (Questions 6-12). Finally, your salary
reduction contributions for a year cannot exceed $9,500; this is
increased for certain employees (Questions 13 and 14).
Exclusion Allowance
2. How do I compute my "exclusion allowance"?
Use the following steps to compute your 403(b) exclusion allowance:
(a) Take 20 percent of your expected salary for the current
year (before reduction for your 403(b) contributions, but
after reduction for salary reduction contributions under a
cafeteria or flexible benefits plan or 401(k) plan if your
employer maintains such a plan).
(b) Multiply (a) by your number of years of service with your
current employer as of the end of the current year.
(c) Subtract the following total from (b):
(bullet) your total 403(b) salary reduction contributions
in previous years (which you excluded from your
income),
(bullet) your employer's contributions in previous years on
your behalf to a 403(b) retirement plan or to a
qualified retirement plan,
<PAGE>
(bullet) your employer's expected contributions to a 403(b)
retirement plan for you for the current year (see
Questions 15 and 16).
(d) Divide (c) by the sum of one plus 20 percent of your years
of service as of the end of the current year.
The resulting figure is the amount of your exclusion allowance for the
current year.
3. What if I do not know how much my employer has contributed in
previous years on my behalf to a retirement plan?
If you cannot learn this from the benefits or personnel office of your
employer, IRS regulations provide a method for determining the amount of
your employer's prior contributions. Consult your employer or tax
adviser for further information.
Years of Service
4. How do I determine my years of service?
Count one year of service for each full year you were a full-time
employee. Count a fraction of a year of service for years in which you
were a part-time employee or did not work a full year. Add your full and
fractional years of service together to determine your total years of
service. Only service with your current employer can be counted.
Part-time Fraction. For part-time work, the fraction is your work
schedule divided by the normal work schedule for a full-time employee
holding the same position. For example, if for a year you taught one
course for six hours per week, and a full-time teacher normally teaches
18 hours per week, your fraction would be one-third of a year.
Partial Year Fraction. If you were a full-time employee for part of the year,
the fraction is the number of weeks or months you worked divided by the number
of weeks or months in your employer's annual work period. For example, if you
taught full-time for four and one-half months and your employer's annual work
period is an academic year of nine months, your fraction would be one-half of a
year.
Part-time, Partial Year Fraction. If you were a part-time employee for
part of a year, calculate one fraction as though you were a part-time
employee for a full year and one fraction as though you were
a full-time employee for a part of a year. Then multiply the two
fractions together to obtain your fractional year of service. For
example, if you taught a course for six hours per week for one semester
at a school where full-time teachers taught 18 hours per week for two
semesters, your fractional year of service would be one-sixth (part-time
fraction of one-third times full-time for part-of-a-year fraction of
one-half).
5. What if I have less than one year of service?
Under the law, you may compute your exclusion allowance based on one
year of service even if you have worked for your employer for less than
a year or if your fractional years of service total less than a year.
<PAGE>
415 Limits
6. What are the 415 limits?
The 415 limits are from Section 415 of the Internal Revenue Code. The
415 limits apply even though your 403(b) exclusion allowance for the
year is greater. Section 415 has a general limit and certain
alternatives that may permit a larger maximum.
7. How do I compute the 415 general limit?
Your 415 general limit is the smaller of:
(a) 20 percent of your compensation for the year (before
reduction for contributions to your 403(b) account, but
after reduction for salary reduction contributions under
any cafeteria or flexible benefits plan or 401(k) plan your
employer maintains); this amount must be reduced by 80% of
your employer's contribution for the year to the 403(b)
retirement plan; or
(b) $30,000. (This $30,000 figure will eventually be indexed
for cost-of-living changes. However, the indexing will not
begin for some years depending on future inflation.)
415 Alternatives
8. What are the 415 alternatives?
In the past, many employees eligible for 403(b) did not enter into
salary reduction agreements because they expected to make large "catch-
up" contributions later. The 415 general limit might prevent those
employees from saving enough for their retirement years. To remedy this
situation, 415 provides certain alternatives.
These alternatives are available only to employees of an educational
organization, a hospital, a home health service agency, a health and
welfare service agency, or a church or association of churches. If you
do not work for such an employer, you can skip Questions 9 through 12.
9. How many alternatives are there?
Section 415 provides three alternatives:
Alternative A may be used only once, in the year you leave the
service of your employer. Under this alternative, the 415
percentage limitation (see Answer 7(a)) is disregarded and you
may calculate your 403(b) exclusion allowance using your years
of service with your employer up to a maximum of ten years. The
$30,000 limit still applies, however, even if your exclusion
allowance is higher.
In other words, under this alternative, you are limited to your
403(b) exclusion allowance based on a maximum of ten years of
service, or $30,000, whichever is less.
Alternative B is the smallest of:
(a) the amount of your 403(b) exclusion allowance;
(b) 20 percent of your compensation (before reduction for
contributions to your 403(b) account) plus $3,200;
(c) $15,000
<PAGE>
Alternative C is to disregard the 403(b) exclusion allowance
altogether. Under this alternative, contributions are subject
only to the 415 general limit described in Answer 7.
Finally, there is a separate alternative available only to an employee
of a church or association of churches: to replace the 415 general limit
with the limit of $10,000 per year (up to a cumulative total
of $40,000).
10. Are there any special rules for electing one of the alternatives?
Yes. You may elect only one of the three alternatives. If you elect one
of the alternatives, you may not elect either of the other
alternatives in any future year.
Alternative A (for the year of separation) may be elected only once. If
you elect this alternative in any year, you may not elect an
alternative at any time in the future.
If you elect an alternative, your election is irrevocable for that year.
However, you may elect either alternative B or C in one year,
choose not to use it in the following year, and then elect the same
alternative again in the third year.
11. How do l elect an alternative?
You elect an alternative simply by computing your income tax
liability in a manner consistent with the alternative.
12. Which alternative is best for me?
This depends upon your current compensation, expected future
compensation, years of service, expected future years of service,
expected ability to make future salary reduction contributions, and so
forth. An alternative which appears advantageous this year may restrict
contributions to your 403(b) account in later years. Only you can decide
which alternative is most advantageous to you.
The $9,500 Cap
13. Where did the $9,500 limit come from?
In the Tax Reform Act of 1986, Congress decided to limit salary
reduction contributions by employees. For 403(b), Congress chose a
$9,500 cap. This $9,500 cap applies as a maximum salary reduction
contribution even though your 403(b) exclusion allowance or 415 limit is
higher. This cap applies only to your salary reduction contributions,
not to employer contributions to a 403(b) retirement plan for you.
The $9,500 cap is indexed for future cost-of-living increases.
However, the cap will not increase for some years; exactly when depends
on future inflation rates.
14. Who qualifies for an increased $9,500 cap?
Congress realized that the $9,500 cap would affect employees who
expected to make "catch-up" contributions. Therefore, an increased cap
is available to some employees.
There are two requirements for an increased cap. First, your employer
must be one of the types listed in Answer 8. Second, you must have 15 or
more years of service with the employer. If you qualify, your $9,500 cap
is increased by the smallest of the following:
(a) $3,000;
<PAGE>
(b) $15,000 (reduced by all amounts by which your $9,500 cap
was increased in prior years under this special rule); or
(c) $5,000 multiplied by your number of years of service, minus
all previous salary reduction contributions under 403(b)
(or under any 401(k) plan in which you participated).
Additional Rules for an Employee with Another Retirement Program
15. If for the current year my employer or any other employer contributes to
another 403(b) account or annuity for me, must such contributions be added to my
salary reduction contributions when determining my maximum contribution?
Yes. To determine your 403(b) exclusion allowance, your 415 limit or one
of the alternatives (but not the $9,500 cap--only your salary reduction
contributions count against the $9,500 cap), your employer's current
contributions to a 403(b) plan or arrangement for you must be included.
(See the Worksheet for an example of this situation). If your employer
has a retirement plan, you should find out whether it is a 403(b) plan.
16. If for the current year my employer makes contributions for me to a
retirement plan that is "qualified" under section 401(a) of the Code,
must such contributions be counted when determining my maximum
contribution?
If this situation applies to you, you should consult your tax adviser.
The following is only a general summary of the rules governing
aggregation of contributions to your 403(b) account with contributions
to a qualified plan.
Contributions for you to a qualified plan during the current year by an
employer are not counted in determining your 403(b) exclusion allowance
this year.
However, for your 415 limit, the answer depends on whether you have
elected one of the 415 alternatives and on whether you
"control" your employer.
If you have not elected an alternative, or if you have elected
alternative A or B, you need not combine contributions to your 403(b)
account with contributions on your behalf to a qualified plan of the
same or any other employer unless you control the employer by owning a
50% or greater interest.
If you have elected alternative C (to disregard the exclusion allowance
entirely), you must count contributions to your 403(b) account with
contributions for you to a qualified retirement plan maintained by any employer
regardless of whether you "control" the employer.
<PAGE>
State Street Research 403(b)
Account Application
How to open your
State Street
Research 403(b)
Account
1. To open a State Street Research 403(b) Account, please complete
this side of the Application.
2. Your investment dealer must complete the dealer information
section of the Application.
What type of State
Street Research
403(b) are you
opening?
[ ] Regular 403(b) [ ] Transfer of Assets [ ] Regular Rollover
or Direct Rollover
Employee
information
Complete the following
information about
yourself. Your account
will be registered in
your name.
Name ___________________________________ Birth date______________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Social Security #________________________________________________________
Daytime telephone #______________________________________________________
Employer
information
Complete the following
information about your
Employer.
Name_____________________________________________________________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Name of contact person___________________Daytime telephone #_____________
Which Fund(s)
have you selected
for your 403(b)?
See the State Street
Research 403(b)
brochure and relevant
prospectus(es) for
Fund details.
Name of Fund Class of Shares Percentage
A B D
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
Total 100%
<PAGE>
Who is the
beneficiary of
your State Street
Research 403(b) Account?
1. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
2. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
Important
Naming a beneficiary(ies) can have estate and tax-planning implications.
Also, if you are married and live in a community property state (AZ, CA,
ID, LA, NM, NV, TX, or WA), you may need your spouse's consent to
designate someone else as beneficiary for more than half of your
Account. Consult your attorney, or other qualified professional, for
additional advice.
Keep a copy of this account application with your other important papers
(such as your will).
Telephone Exchange
The Telephone Exchange Privilege is available only for shares held on
deposit with the Transfer Agent. None of the Transfer Agent, any of the
Funds, State Street Research Shareholder Services, the Investment
Manager or the Distributor will be liable for any loss, injury, damage
or expense as a result of acting upon, and will not be responsible for
the authenticity of, any telephone instructions. I understand that all
telephone calls are tape recorded. My liability shall be subject to the
use of reasonable procedures to confirm that instructions communicated
by telephone are genuine.
<PAGE>
Telephone Exchange
by Shareholder
or Dealer
The Transfer Agent may effect exchanges for my account according
to telephone instructions from me or my Dealer as set forth in the
prospectus, and may register the shares of the Fund to be acquired
exactly the same as my existing account. Authorizing an exchange
constitutes an acknowledgment that the shareholder has received
the current prospectus of the Fund to be acquired. The account will
automatically have this privilege unless it is expressly declined by
providing your initials in the space below.
I DO NOT WANT THE TELEPHONE EXCHANGE PRIVILEGE.
___(Initial here.)
Sign here to
establish the
403(b) Account
I hereby establish a State Street Research 403(b) Account, the terms of
which are contained in this Application and the State Street Research
403(b) Agreement (which I have received and which is incorporated herein
by reference) and appoint State Street Bank and Trust Company as
Custodian. I direct that contributions to my 403(b) Account be invested
as specified above in this Application (until changed by me
in accordance with the Agreement), designate the individual(s) named
above as my beneficiary(ies) (unless I have filed a separate written
designation with the Custodian or its agent), acknowledge that I have
received a current prospectus(es) of the Fund(s) indicated above, and
acknowledge that there is a $10 annual maintenance fee (in addition
to any fees and charges described in the prospectus(es)).
Under penalties of perjury, I certify that (1) the number shown on this
Application is my correct taxpayer identification number (or I am
waiting for a number to be issued to me), and (2) I am not subject to
backup withholding because (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your
tax return.
Employee signature_____________________________Date___________________
<PAGE>
Dealer information
and signature
guarantee
Please have your
investment dealer
fill out this section.
Dealer firm__________________________________________________________
Home office address_________________City__________State______ZIP_____
Branch office address_______________City__________State______ZIP_____
Telephone #______________Branch #_____________Rep. #_________________
Authorized dealer signature__________________________________________
Investment Dealer's last name________________________________________
If this Application is for an account introduced through the
above-named Dealer, the Dealer further agrees to all applicable
provisions in this Application and in the prospectus(es) of the
Fund(s) selected by the Employee, represents that it has provided a
current prospectus(es) to the Employee and that the Application is
properly executed by a person authorized by the Dealer to guarantee
signatures. The Dealer warrants that this Application is completed in
accordance with the Employee's instructions and agrees to indemnify
the Funds(s), the Distributor, the Investment Manager, State Street
Research Shareholder Services and the Transfer Agent for any loss or
liability from acting or relying upon such instructions and
information. The terms and conditions of the Distributor's currently
effective Selected Dealer Agreement or sales agreement are included by
reference in this section. The Dealer represents that it has a
currently effective Selected Dealer Agreement or sales agreement with
the Distributor authorizing the Dealer to sell shares of the Fund(s),
and that it may lawfully sell shares of the designated Fund(s) in the
state designated as the Employee's address of record.
State Street Bank
and Trust Company,
Custodian
You are hereby authorized and appointed on behalf of the above-signed
dealer to execute purchase transactions in accordance with the terms and
conditions of this Application, and to confirm each purchase.
Acceptance by
the Custodian
This Account will be deemed to have been accepted by the Custodian,
State Street Bank and Trust Company, after all necessary forms, properly
completed, are received by State Street Research Shareholder
Services and delivered by Shareholder Services to the Transfer Agent.
Send completed application to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Control Number: 2709-951025(1196)SSR-LD RP-918C-1095
<PAGE>
State Street Research 403(b)
Salary Reduction Agreement
Parties
Complete the information
about the Employee and
the Employer.
Employee name______________________________________
Social Security #__________________________________
Employer name______________________________________
Check one box.
[ ] Original Agreement [ ] Modification
Agreements
Fill in the dollar amount
or percentage that you
want to contribute in
section 2.
The Employee and the Employer agree as follows:
1. The Employee has signed the State Street Research 403(b) Account
Application establishing the Account for the benefit of the
Employee. The Employee and the Employer are entering into this
salary reduction agreement ("this Agreement") to provide for
contributions to the Account.
2. The Employee requests, and the Employer agrees, to reduce the
compensation of the Employee by $______ or by ______% per pay
period, starting with the first pay period that begins after the
Employee and the Employer have signed this Agreement.
3. As soon as possible after each pay day, the Employer will transmit
the amount by which the Employee's compensation is reduced for that
pay period to the agent for the Custodian of the Employee's
Account, to be credited to the Employee's Account in accordance
with the State Street Research 403(b) Account Agreement. For
federal income tax purposes, such amounts are considered Employer
contributions to the Employee's Account.
Where to send
contributions.
Checks should be made payable to "State Street Bank and Trust Company,
Custodian, FBO __________________________ [insert name of Employee]
403(b) Account." Mail checks to State Street Research, P.O. Box
8408, Boston, MA 02266-8408.
OVER >
<PAGE>
4. This Agreement will be effective only with respect to compensation
not yet earned by the Employee, and not with respect to
compensation already earned by the Employee on the date this
Agreement is signed.
This Agreement is binding and irrevocable with respect to
compensation earned by the Employee while this Agreement is in
effect. The Employer or the Employee may terminate this Agreement
at any time with respect to compensation not yet earned by the
Employee at the date of termination, by giving written notice to
the other party. After termination, the Employee may reinstate this
Agreement (with the same or a different salary reduction amount);
however, the Employee may not reinstate this Agreement during the
same calendar year that the Employee (or Employer) terminated this
Agreement.
The Employee may modify the amount of salary reduction elected in
Paragraph 2 above at any time by giving the Employer signed
instructions specifying the new salary reduction amount. However,
the Employee may not modify this Agreement during the same calendar
year that the Employee originally signed this Agreement or in any
calendar year when the Employee has already modified this Agreement
once during such year.
5. Unless the Employer agrees to calculate the Employee's maximum
403(b) contribution, the Employer has no responsibility for
determining that the amount by which the Employee's compensation is
reduced, as set forth in Paragraph 2 above, does not exceed the
limitations applicable to the Employee under the Internal Revenue
Code. The Employee agrees to indemnify the Employer, State Street
Research Investment Services, Inc., and its affiliates for any and
all charges, expenses, taxes, interest or penalties imposed on the
Employer as a result of any reduction in compensation in excess of
such limitations.
Signatures
In witness whereof, the parties hereto have signed this Agreement
on______________________________, 19_______.
Employee Employer
(Signature)______________ (Name of employer)___________________________
By:_________________________________________
Signature and title of authorized official)
CONTROL NUMBER: 2711-951025(1196)SSR-LD RP-920C-1095
<PAGE>
State Street Research 403(b)
Transfer of 403(b) Assets Form
How to transfer
your existing
403(b) Account
to State Street
Research
(bullet) If you don't have a State Street Research 403(b) Account
yet, complete this transfer form and a State Street Research
403(b) Account Application.
(bullet) If you already have a State Street Research 403(b) Account,
just complete this transfer form.
(bullet) When completed, send this transfer form (and if necessary,
your 403(b) Account Application) to: State Street Research
Shareholder Services, P.O. Box 8408, Boston, MA 02266-8408.
Information
about you
Name______________________________Social Security #__________________
Telephone (day)___________________Telephone (night)__________________
Account number (If you already have a State Street Research 403(b)
Account)_____________________________________________________________
Where is your
403(b) Account
now?
Name of current Custodian/Insurer____________________________________
Address______________________________________________________________
City_____________________________State__________________ZIP__________
Account number_____________________Name of mutual fund or fund family
(if applicable)______________________________________________________
Please tell us
which Fund(s)
you have selected
for your 403(b)
investment
[ ] This is a new State Street Research 403(b) Account. My
investment choices are on my 403(b) Account Application.
[ ] I already have a State Street Research 403(b) Account. Please
invest the amount transferred as follows:
Fund name___________________________Account number____________ _____%
Fund name___________________________Account number____________ _____%
I acknowledge that I have received a current prospectus(es) of the
Fund(s) selected.
OVER >
<PAGE>
Please authorize
transfer of your
current 403(b)
Account to State
Street Research
To my current Custodian/Insurer: Please redeem
[ ] ALL or [ ] PART ($_________) of my current 403(b) and transfer
the proceeds in cash to my State Street Research 403(b) Account.
(For partial transfers, indicate which investments are to be liquidated.)
Your signature______________________________Date____________
Note: Under current IRS rulings, a transfer from another 403(b) account
to a State Street Research 403(b) Account will be a tax-free transaction
as long as the withdrawal restrictions under your existing 403(b) are
not more severe than those under the State Street Research 403(b)
account (see Section 5.2 of the State Street Research 403(b) Agreement).
By signing this form, you are certifying that this transfer will be a
tax-free transaction under the preceding sentence.
Signature
Guarantee
A signature guarantee may be required. Call your current Custodian/
Insurer for requirements.
Signature guaranteed by (name of bank or dealer firm)__________________
Signature and title of officer_________________________________________
PLEASE DO NOT FILL OUT THE FOLLOWING PORTION OF THIS FORM
Directions
to Current
Custodian/Insurer
Please liquidate and transfer on a fiduciary-to-fiduciary basis all or
part of the designated account as instructed above. Make check payable
to State Street Bank and Trust Company, Custodian.
Include the following account number and FBO on the check.
Account number________________________Name____________________________
Mail to: State Street Research Shareholder Services,
P.O. Box 8408, Boston, MA 02266-8408
Include a copy of this Transfer of 403(b) Assets Form with the check for
proper credit to the customer's account. State Street Research
Shareholder Services will deliver the items to Boston Financial Data
Services, Inc., which serves as Agent for the Custodian.
Successor
Custodian
State Street Bank and Trust Company will accept the transfer described
above once this form has been completed by you and the transfer has been
completed by your current 403(b) Custodian/Insurer.
______________________________________________________________________
Authorized signature of acceptance Date
by State Street Research Shareholder
Services on behalf of State Street Bank and Trust Company, Custodian
CONTROL NUMBER: 2707-951025(1196)SSR-LD RP-919C-1095
Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, State Street Research Master Investment Trust, an
unincorporated association of the type commonly known as a business trust
organized under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust is authorized to (i) issue shares of beneficial
interest ("Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets, and (ii) divide the Shares within each such series into two or more
classes;
WHEREAS, the Trust has established one or more portfolio series as of
the date hereof (such portfolios being referred to collectively herein as the
"Initial Series", such series, together with all other series subsequently
established by the Trust and made subject to this Plan, being referred to herein
individually as a "Series" and collectively as the "Series"), and four classes
thereof, and of series of affiliated investment companies, have been designated
as "Class A," "Class B," "Class C," and "Class D" shares, except for the MetLife
- - State Street Research Money Market Fund, which issues four classes thereof
designated as "Class B," "Class C," "Class D," and "Class E" shares);
WHEREAS, prior to the adoption of Rule 18f-3 by the Securities and
Exchange Commission the Trust received an Order from the Securities and Exchange
Commission under Section 6(c) of the Act for an exemption from Sections
2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c) and 22(d) of the Act and Rule
22c-1 thereunder to permit the Trust to issue multiple classes of shares
representing interests in the same portfolio of securities, assess a contingent
deferred sales charge ("CDSC") on certain redemptions of shares, and waive the
CDSC in certain cases; and
WHEREAS, the Trustees have determined to operate under Rule 18f-3 and
pursuant to such Rule the Board of Trustees as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the Act) (the "Qualified
Trustees"), having determined in the exercise of their reasonable business
judgment this Plan is in the best interest of each class of the Initial Series
individually and the Initial Series as a whole, have accordingly approved this
Plan.
NOW, THEREFORE, Trust hereby adopts this Plan in accordance with Rule
18f-3 under the Act, on the following terms and conditions:
1. Class Differences. Each class of Shares of each Initial Series shall
represent interests in the same portfolio of investments of Initial Series and
shall be identical in all respects, and except as otherwise set forth in this
Plan, shall differ solely with respect to: (i) arrangements for shareholder
services or the distribution of Shares, or both, as provided for in Sections 2
and 3 of this Plan; (ii) the exclusive right of a Class to vote on certain
matters relating to the Plan of Distribution Pursuant to Rule 12b-1 adopted by
the Trust with respect to such Class; (iii) such differences relating to
purchase minimums, sales charges and eligible investors as may be set forth in
the Prospectuses and Statement of Additional Information of the Initial Series,
as the same may be amended or supplemented from time to time (the "Prospectuses"
and "SAI"); (iv) the different exchange privileges of the classes of Shares; (v)
the fact that only certain classes will have a conversion feature; and (iv) the
designation of each Class of shares.
2. Differences in Distribution and Shareholder Services. Each Class of
Shares of the Initial Series shall have a different arrangement for shareholder
services or the distribution of Shares, or both, as follows:
Class A Shares shall be sold subject to a front-end sales charge as set
forth in the Prospectuses and SAI with respect to the applicable Initial Series.
Class A, Class B and Class D Shares shall be sold subject to a contingent
deferred sales charge as set forth in the Prospectuses and SAI with respect to
the applicable Initial Series. Class A, B and D Shares shall be subject to a
service fee of up to 0.25% of the nets assets of the Initial Series allocable to
such Class of Shares. Class B and D Shares shall also be subject to an annual
distribution fee of up to 0.75% of the nets assets of the Initial Series
allocable to such Class of Shares. Such service and distribution fees may be
used to finance activities in accordance with Rule 12b-1 under the Act and the
Plan of Distribution pursuant to Rule 12b-1 adopted by the Trust.
3. Allocation of Expenses. Expenses of the Series shall be allocated as
follows:
(a) Class Expenses. Expenses relating to different arrangements for
shareholder services or the distribution of Shares, or both, shall be allocated
to and paid by that class. A class may pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of a Series' assets, if such expenses are actually incurred in a
different amount by that class, or if the class receives services of a different
kind or to a different degree than other classes.
(b) Other Allocations. All expenses of the Series not allocated to a
particular class pursuant to Sections 2 and 3(a) of this Plan shall be allocated
to each class on the basis of the net asset value of that class in relation to
the net asset value of the Series. Notwithstanding the foregoing, the
underwriter, adviser, or other provider of services to a Series may waive or
reimburse the expenses of a specific class or classes to the extent permitted
under Rule 18f-3 under the Act; provided, however, that the Board shall monitor
the use of such waivers or reimbursements intended to differ by class.
4. Term and Termination.
(a) Initial Series. This Plan shall become effective with respect to the
Initial Series as of the date hereof, and shall continue in effect with respect
to each Class of Shares of the Initial Series (subject to Section 4(c) hereof)
until terminated in accordance with the provisions of Section 4(c) hereof.
(b) Additional Series or Classes. This Plan shall become effective with
respect to any class of the Initial Series other than Class A, Class B, Class C,
and Class D, and in the case of the MetLife - State Street Money Market Fund,
Class E, and with respect to each additional Series or class thereof established
by the Trust after the date hereof and made subject to this Plan, upon
commencement of operations thereof or as otherwise determined, and shall
continue in effect with respect to each such additional Series or class (subject
to Section 4(c) hereof) until terminated in accordance with the provisions of
Section 4(c) hereof. An addendum hereto setting forth such specific and
different terms of such additional series of classes shall be attached to this
Plan.
(c) Termination. This Plan may be terminated at any time with respect to
the Trust or any Series or class thereof, as the case may be, by vote of a
majority of both the Trustees of the Trust and the Qualified Trustees. The Plan
may remain in effect with respect to a Series or class thereof even if it has
been terminated in accordance with this Section 4(e) with respect to such Series
or class or one or more other Series of the Trust.
5. Amendments. Any material amendment to this Plan shall require the
affirmative vote of a majority of both the Trustees of the Trust and the
Qualified Trustees.
Dated: May 5, 1995
3
POWER OF ATTORNEY
We, the undersigned State Street Research Master Investment
Trust ("Trust"), a Massachusetts business trust, its trustees,
its principal executive officer and its principal financial and
accounting officer, hereby severally constitute and appoint
Francis J. McNamara III and Darman A. Wing, as our true and
lawful attorneys, with full power to each of them alone to sign
for us, in our names and in the capacities indicated below, any
Registration Statements and any and all amendments thereto of the
Trust filed with the Securities and Exchange Commission and
generally to do all such things in our names and in the indicated
capacities as are required to enable the Trust to comply with
provisions of the Securities Act of 1933, as amended, and/or the
Investment Company Act of 1940, as amended, and all requirements
and regulations of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they have been and may
be signed by our said attorneys to said Registration Statements,
and any and all amendments thereto.
IN WITNESS WHEREOF, we have hereunto set our hands, on
April 25, 1996.
SIGNATURES
STATE STREET RESEARCH MASTER INVESTMENT TRUST
By: /s/ Ralph F. Verni
__________________________________
Ralph F. Verni, Chief Executive
Officer and President
/s/ Ralph F. Verni /s/ Thomas L. Phillips
______________________________________ ______________________________________
Ralph F. Verni, Trustee and Thomas L. Phillips, Trustee
principal executive officer
/s/ Gerard P. Maus /s/ Toby Rosenblatt
______________________________________ ______________________________________
Gerard P. Maus, Principal financial Toby Rosenblatt, Trustee
and accounting officer
/s/ Edward M. Lamont /s/ Michael S. Scott Morton
______________________________________ ______________________________________
Edward M. Lamont, Trustee Michael S. Scott Morton, Trustee
/s/ Robert A. Lawrence /s/ Jeptha H. Wade
______________________________________ ______________________________________
Robert A. Lawrence, Trustee Jeptha H. Wade, Trustee
/s/ Dean O. Morton
______________________________________
Dean O. Morton, Trustee
Certificate of Resolution
I, the undersigned Darman A. Wing, hereby certify that
I am Assistant Secretary of State Street Research Master
Investment Trust (the "Master Trust"), a Massachusetts
business trust duly authorized and validly existing under
Massachusetts law, and that the following is a true, correct
and complete statement of a vote duly adopted by the
Trustees of said Master Trust on May 5, 1995:
"VOTED: That Francis J. McNamara, III and Darman A. Wing be, and each
hereby is, authorized and empowered, for and on behalf of the
Master Trust, its principal financial and accounting officer,
and in their name, to execute, and file a Power of Attorney
relating to, the Master Trust's Registration Statements under
the Investment Company Act of 1940 and/or the Securities Act of
1933, and amendments thereto, the execution and delivery of such
Power of Attorney, Registration Statements and amendments
thereto, to constitute conclusive proof of such authorization."
I further certify that said vote has not been amended
or revoked and that the same is now in full force and
effect.
IN WITNESS WHEREOF, I have hereunto set my hand on this
25th day of April, 1996.
/s/ Darman A. Wing
____________________________
Assistant Secretary
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