As filed with the Securities and Exchange Commission
on March 25, 1997
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. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 23 [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
Executive 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 April 22, 1997 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, 1996, was filed by the Registrant on
or about February 25, 1997.
<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 Financial Statements]
Fund Performance
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--April 22, 1997
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
28, 1997, the Investment Manager had assets of approximately $42.4 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 April 22,
1997, 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
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 ............................ 19
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
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class C Class D
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ............... 4.5% None None None
Maximum Deferred Sales Charge (as a
percentage of net asset value at time of
purchase or redemption, whichever is lower) None(2) 5% None 1%
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price) ...... None None None None
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 .................................... 0.31% 0.31% 0.31% 0.31%
12b-1 Fees .......................................... 0.25% 1.00% None 1.00%
Other Expenses ....................................... 0.19% 0.19% 0.19% 0.19%
------- ----- ----- -----
Total Trust Operating Expenses ..................... 0.75% 1.50% 0.50% 1.50%
======= ===== ===== =====
</TABLE>
- ------------
(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 Class A, Class B or Class D shares 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 Year 3 Years 5 Years 10 Years
--------- ---------- ---------- ----------
Class A shares ......... $52 $68 $ 85 $134
Class B shares (1) ...... $65 $77 $102 $159
Class C shares ............ $ 5 $16 $ 28 $ 63
Class D shares ......... $25 $47 $ 82 $179
You would pay the following expenses on the same investment, assuming no
redemption:
1 Year 3 Years 5 Years 10 Years
--------- ---------- ---------- ----------
Class B shares (1) ...... $15 $47 $82 $159
Class D shares ......... $15 $47 $82 $179
- ------------
(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, 1996; 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.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------
February 17,
1993
(Commencement
Year ended of Share Class
December 31 Designations) to
---------------------------------------- December 31,
1996* 1995* 1994 1993
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $9.16 $7.74 $8.69 $8.75
Net investment income ............ .12 .14 .11 .10
Net realized and unrealized gain
(loss) on investments ............ 1.80 2.39 (.44) .81
Dividends from net investment
income ........................... (.13) (.13) (.12) (.13)
Distributions from net realized
gains ........................... (1.87) (.98) (.50) (.84)
Distributions in excess of net
realized gains .................. (.01) -- -- --
--------- --------- --------- --------
Net asset value, end of year ...... $9.07 $9.16 $7.74 $8.69
========= ========= ========= ========
Total return ..................... 21.03%+ 32.85%+ (3.84)%+ 10.53%++
Net assets at end of
year (000s) ..................... $223,868 $135,676 $92,137 $75,259
Ratio of operating expenses to
average net assets ............... 0.75% 0.78% 0.89% 0.75%[dbldag]
Ratio of net investment income
to average net assets ............ 1.17% 1.54% 1.26% 1.27%[dbldag]
Portfolio turnover rate ......... 73.51% 39.21% 33.08% 43.57%
Average commission rate@ ......... $0.05 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------
March 15,
1993
(Commencement
Year ended of Share Class
December 31 Designations) to
---------------------------------------- December 31,
1996* 1995* 1994 1993
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $9.13 $7.72 $8.66 $9.15
Net investment income ............ .04 .07 .06 .06
Net realized and unrealized gain
(loss) on investments ............ 1.80 2.38 (.44) .39
Dividends from net investment
income ........................... (.06) (.06) (.06) (.10)
Distributions from net realized
gains ........................... (1.87) (.98) (.50) (.84)
Distributions in excess of net
realized gains .................. (.01) -- -- --
--------- --------- --------- --------
Net asset value, end of year ...... $9.03 $9.13 $7.72 $8.66
========= ========= ========= ========
Total return ..................... 20.15%+ 31.86%+ (4.43)%+ 4.95%++
Net assets at end of
year (000s) ..................... $315,766 $183,446 $113,301 $73,110
Ratio of operating expenses to
average net assets ............... 1.50% 1.53% 1.64% 1.51%[dbldag]
Ratio of net investment income
to average net assets ............ 0.41% 0.79% 0.51% 0.48%[dbldag]
Portfolio turnover rate ......... 73.51% 39.21% 33.08% 43.57%
Average commission rate@ ......... $0.05 -- -- --
</TABLE>
- ----------
[dbldag] 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.
@ Average commission rate per share paid for security trades for fiscal years
beginning on or after January 1, 1996.
4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
Year ended December 31
-----------------------------------------------------
1996* 1995* 1994 1993
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $9.18 $7.76 $8.70 $8.80
Net investment income ............ .14 .16 .13 .15
Net realized and unrealized gain
(loss) on investments ............ 1.82 2.39 (.43) .74
Dividends from net investment
income ........................... (.15) (.15) (.14) (.15)
Distributions from net realized
gains ........................... (1.87) (.98) (.50) (.84)
Distributions in excess of net
realized gains .................. (.01) -- -- --
Net asset value, end of year ...... $9.11 $9.18 $7.76 $8.70
========= ========= ========= =========
Total return ..................... 21.48%+ 33.07%+ (3.47)%+ 10.20%+
Net assets at end of
year (000s) ..................... $780,627 $738,649 $627,551 $729,536
Ratio of operating expenses
to average net assets ............ 0.50% 0.54% 0.65% 0.49%
Ratio of net investment income
to average net assets ............ 1.44% 1.81% 1.54% 1.63%
Portfolio turnover rate ......... 73.51% 39.21% 33.08% 43.57%
Average commission rate@ ......... $0.05 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class C
Year ended December 31
-----------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
----------- ------------ -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.04 $7.67 $8.65 $7.24 $7.30 $7.54
Net investment income ............ .16 .19 .22 .26 .21 .21
Net realized and unrealized gain
(loss) on investments ............ .40 1.96 (.31) 2.05 .54 .34
Dividends from net investment
income ........................... (.16) (.20) (.23) (.26) (.21) (.23)
Distributions from net realized
gains ........................... (.64) (.58) (.66) (.64) (.60) (.56)
Distributions in excess of net
realized gains .................. -- -- -- -- -- --
Net asset value, end of year ...... $8.80 $9.04 $7.67 $8.65 $7.24 $7.30
======== ========= ========= ========= ========= =========
Total return ..................... 6.28%+ 28.08%+ (0.95)%+ 32.14%+ 10.24%+ 6.88%+
Net assets at end of
year (000s) ..................... $726,671 $657,762 $519,475 $575,114 $486,385 $493,088
Ratio of operating expenses
to average net assets ............ 0.51% 0.50% 0.50% 0.47% 0.51% 0.46%
Ratio of net investment income
to average net assets ............ 1.92% 2.24% 2.64% 3.09% 2.71% 2.26%
Portfolio turnover rate ......... 23.99% 16.28% 10.07% 12.35% 15.39% 3.65%
Average commission rate@ ......... -- -- -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class D
---------------------------------------------------------------
March 15,
1993
(Commencement
Year ended of Share Class
December 31 Designations) to
---------------------------------- December 31,
1996* 1995* 1994 1993
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ........................... $9.15 $7.74 $8.68 $9.15
Net investment income ....................................... .04 .07 .05 .06
Net realized and unrealized gain (loss) on investments ...... 1.79 2.38 (.43) .40
Dividends from net investment income ........................ (.05) (.06) (.06) (.09)
Distributions from net realized capital gains ............... (1.87) (.98) (.50) (.84)
Distributions in excess of net realized gains ............... (.01) -- -- --
Net asset value, end of year ................................. $9.05 $9.15 $7.74 $8.68
========= ========= ========= ========
Total return ................................................ 20.09%+ 31.75%+ (4.45)%+ 5.10%++
Net assets at end of year (000s) ........................... $25,658 $16,841 $11,707 $9,729
Ratio of operating expenses to average net assets ............ 1.50% 1.53% 1.64% 1.51%[dbldag]
Ratio of net investment income to average net assets ......... 0.42% 0.79% 0.51% 0.51%[dbldag]
Portfolio turnover rate .................................... 73.51% 39.21% 33.08% 43.57%
Average commision rate@ .................................... $0.05 -- -- --
</TABLE>
- ----------
[dbldag] 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.
@ Average commission rate per share paid for security trades for fiscal years
beginning on or after January 1, 1996.
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 within the AAA, AA, A or BBB major rating
categories by Standard & Poor's Corporation ("S&P") or Aaa, Aa, A or Baa
categories 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 within the Baa category 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 331/3% 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 and Others
Shares of the Trust are continuously offered through securities dealers,
financial institutions and others (collectively referred to herein as securities
dealers or 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 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 1-800-562-0032 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 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 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, 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 any applies to any
4.5% depending on shares redeemed shares redeemed
amount of within first five within one year
investment years following following their
their purchase; no purchase
contingent deferred
sales charge after
five years
On investments of
$1 million or more,
no initial sales
charge; but
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
Selling 0.50% retained by
Dealer Distributor
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 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 Distributor may also compensate those dealers with clients who maintain
their investments in the Trust over a period of years. 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 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%
See
$1 million following
and above 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 may pay the authorized 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, unless the above commission is waived
by the dealer, 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. 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
13
<PAGE>
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 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, minimum investments by various groups of eligible
persons 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 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
Redemption During Of Net Asset Value
- -------------------------------- ----------------------------
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
14
<PAGE>
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 401(a)(9) of the Internal
Revenue Code for retirement accounts or plans (e.g., age 701/2 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 and establish other conditions for employee
benefit plans.
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.
In general, Class C shares are only available for new investments by
certain large institutions, and employee benefit plans which acquire shares
through programs or products sponsored by Metropolitan Life Insurance Company
("Metropolitan") and/or its affiliates, for which Class C shares have been
designated. Information on the availability of Class C shares and further
conditions and limitations is available from the Distributor.
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 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.
15
<PAGE>
Net Asset Value
The Trust's per share net asset values are determined Monday through Friday as
of the close of the New 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 dealers
(including 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 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 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
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charge plus interest at the prime rate plus 1% on unpaid amounts thereof (less
any contingent deferred 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
1-800-562-0032 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
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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 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.
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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 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
neces-
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sary 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 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 indirectly, 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 1-800-562-0032. 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
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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 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 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
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 dividends and
distributions are directed 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,
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may be applicable to street name or master accounts, that may be adopted from
time to time.
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
1-800-562-0032. 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 1-617-357-7800 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 1-800-562-0032
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 John T. Wilson. Mr. Wilson has managed the Trust
since July 1996. His principal occupation currently is Vice President of State
Street Research & Management Company. During the past five years he has also
served as an analyst and portfolio manager at Phoenix Home Life Mutual Insurance
Company and, from 1995 to 1996, as a Vice President of Phoenix Investment
Counsel, Inc.
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.
The Investment Manager has a Code of Ethics governing personal securities
transactions of certain of its employees; see the Statement of Additional
Information.
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Dividends and Distributions; Taxes
The Trust has 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, 1996, approximately 30% 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, Business 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
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total return ("standard total return") for shares of the Trust is computed by
determining the average annual compounded rate of return for a designated
historical period as applied to a hypothetical $1,000 initial investment, which
is redeemed in total at the end of such period. In making the calculation, all
dividends and distributions are assumed to be reinvested, and all recurring
expenses, including management and distribution fees, are recognized. The
calculation also reflects the highest applicable initial or contingent deferred
sales charge, determined as of the assumed date of initial investment or the
assumed date of redemption, as the case may be. 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 do 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]
[State Street Research logo]
State Street Research
Investment Trust
April 22, 1997
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
INDEPEDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
SS-701D-597IBS CONTROL NUMBER: 3790-970428(0598)SSR-LD
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
a Series of
STATE STREET RESEARCH MASTER INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
April 22, 1997
TABLE OF CONTENTS
Page
----
Additional Investment Policies and Restrictions............ 2
Additional Information Concerning Certain
Investment Techniques.................................... 4
Debt Instruments and Permitted Cash Investments............ 14
Trustees and Officers...................................... 20
Investment Advisory Services............................... 23
Purchase and Redemption of Shares.......................... 25
Net Asset Value............................................ 27
Portfolio Transactions..................................... 28
Certain Tax Matters........................................ 32
Distribution of Shares of the Trust........................ 35
Calculation of Performance Data............................ 39
Custodian.................................................. 44
Independent Accountants.................................... 44
Financial Statements....................................... 44
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 April 22, 1997, 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: 12850-960501(0797)SSR-LD SS-879D-597
<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
[as a matter of interpretation, which is not part of the fundamental
policy, this restriction does not apply to the extent that, in
connection with the disposition of the Trust's securities, the Trust
may be deemed to be an underwriter under certain federal securities
laws];
(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;
(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
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programs and in securities indexed to the price of oil, gas or other
minerals);
(14) not to purchase securities for its portfolio issued by another
investment company except by a purchase in the open market involving
no more than customary brokers' commissions or to complete a merger,
consolidation or other acquisition of assets; and
(15) not to purchase or retain any securities of an issuer if, to the
knowledge of the 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.
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 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
(3) 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.
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
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"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 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.
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<PAGE>
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 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
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<PAGE>
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.
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
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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.
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
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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.
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.
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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 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
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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.
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
11
<PAGE>
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 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
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<PAGE>
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.
Industry Classifications
In determining how much of the portfolio is invested in a given
industry, the following industry classifications are currently used. Securities
issued or guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities or mixed-ownership Government corporations or
sponsored enterprises (including repurchase agreements involving U.S. Government
securities to the extent excludable under relevant regulatory interpretations)
are excluded. Securities issued by foreign governments are also excluded.
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 and credit card receivables. "Asset-backed--Mortgages" includes
private pools of nongovernment backed mortgages.
13
<PAGE>
<TABLE>
<CAPTION>
Basic Industries Consumer Staple Science & Technology
- ---------------- --------------- --------------------
<S> <C> <C>
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 Lending Financial Service
Asset-backed--Mortgages Insurance
Asset-backed--Credit
Card Receivables
</TABLE>
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.
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
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<PAGE>
corporations as described herein. The U.S. Government securities in which the
Trust invests include, among others:
o direct obligations of the U.S. Treasury, i.e., Treasury bills,
notes, certificates and bonds;
o 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
o 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 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
15
<PAGE>
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 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
16
<PAGE>
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 within the "A" major rating category by Standard & Poor's
Corporation ("S&P") or with the "Prime" category 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 within the "A" category by S&P or
by Moody's. The money market investments in corporate 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 within the "A" category by S&P or
"Prime" category 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
17
<PAGE>
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
rating categories 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 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:
18
<PAGE>
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
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 major rating category.
19
<PAGE>
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 58. 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
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 70. 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 70. His principal occupation
is Associate of Saltonstall & Co., a private investment firm.
During the past five years he has also served as Partner of that firm.
*+Gerard P. Maus, One Financial Center, Boston, MA 02111, serves as
Treasurer of the Master Trust. He is 46. 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,
serves as Secretary and General Counsel of the Master Trust. He is 41. His
principal occupation is Executive Vice President, General Counsel and Secretary
of State Street Research & Management Company. During the past five years he has
also served as Senior Vice President of State Street Research & Management
Company and 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 22.
20
<PAGE>
+Dean O. Morton, 3200 Hillview Avenue, Palo Alto, CA 94304, serves as
Trustee of the Master Trust. He is 65. 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 72. 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 58. 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 59. 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 54. 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. and until February 1996,
prior positions as President and Chief Executive Officer.
*+Dudley F. Wade, One Financial Center, Boston, MA 02111, serves as
Vice President of the Master Trust. He is 78. 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 72. 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.
- ----------
* or + See footnotes on page 22.
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<PAGE>
*+James M. Weiss, One Financial Center, Boston, MA 02111, serves as
Vice President of the Master Trust. He is 50. His principal occupation is Senior
Vice President of State Street Research & Management Company. During the past
five years he has also served as President and Chief Investment Officer of IDS
Equity Advisors and as Senior Vice President of Stein, Roe & Farnham.
*+John T. Wilson, One Financial Center, Boston, MA 02111, serves as
Vice President of the Master Trust. He is 33. His principal occupation is Vice
President of State Street Research & Management Company. During the past five
years he has also served as an analyst and portfolio manager at Phoenix Home
Life Mutual Insurance Company and, from 1995 to 1996, as a Vice President of
Phoenix Investment Counsel, Inc.
As of February 28, 1997, the Trustees and principal officers of the
Master Trust owned as a group less than 1% of the outstanding Class A shares of
the Trust and approximately 1.7% 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 February 28, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc.
("Merrill Lynch"), One Liberty Plaza, 165 Broadway, New York, New York 10080,
was the record owner of approximately 8.3% and 44.6% 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 Research 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.
22
<PAGE>
The Trustees were compensated as follows:
Total
Compensation
Aggregate From Master Trust
Name of Compensation and Complex Paid
Trustee From Master Trust(a) to Trustees (b)
------- -------------------- -----------------
Edward M. Lamont $4,000 $ 59,375
Robert A. Lawrence $4,000 $ 92,125
Dean O. Morton $4,200 $ 96,125
Thomas L. Phillips $4,000 $ 59,375
Toby Rosenblatt $4,000 $ 59,375
Michael S. Scott Morton $4,400 $100,325
Ralph F. Verni $ 0 $ 0
Jeptha H. Wade $4,200 $ 63,375
(a) For the Trust's fiscal year ended December 31, 1996.
(b) Includes compensation on behalf of 31 funds representing all series of
investment companies for which the Investment Manager serves as the
primary investment adviser, series of Metropolitan Series Fund, Inc. for
which the Investment Manager serves as sub-investment adviser, and series
of State Street Research Portfolios, Inc., for which State Street
Research Investment Services, Inc. serves as distributor. "Total
Compensation from Master Trust and Complex Paid to Trustees" is for the
12 months ended December 31, 1996. 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").
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
23
<PAGE>
Investment Manager for the fiscal years ended December 31, 1996, 1995 and 1994
were $3,866,070, $3,158,324 and $2,940,754, 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, 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
24
<PAGE>
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 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
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<PAGE>
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.
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 eligible
employees), service arrangements, or similar factors; insurance companies;
investment companies; endowment funds of nonprofit organizations with
26
<PAGE>
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.
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
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<PAGE>
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 with the use of such pricing services as may be deemed appropriate or
methodologies approved by the Trustees.
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, 1995 and 1996 were 39.21% and 73.51%, respectively. The Investment Manager
believes the portfolio turnover rate was significantly higher for the fiscal
year ended December 31, 1996 compared to the previous fiscal year due to
increased market volatility and the Investment Manager's efforts to take
advantage of the resulting opportunities to purchase certain securities at
attractive prices and to sell certain securities in order to realize gains.
Brokerage Allocation
The Investment Manager's policy is to seek for its clients, including
the Trust, what in the Investment Manager's judgment
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<PAGE>
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 modeling; portfolio evaluation services; and data
relating to the relative performance of accounts.
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In the case of the Trust and other registered investment companies
advised by the Investment Manager, such services may include data relating to
performance, expenses and fees of such investment companies and other investment
companies; this information is used by the Trustees or directors of such
investment companies to fulfill their responsibility to oversee the quality of
the Investment Manager's advisory services and to review the fees and other
provisions contained in the advisory contracts between the investment companies
and the Investment Manager. The Investment Manger considers these investment
company services only in connection with transactions on behalf of its
investment company clients and not its other clients.
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 in less than ten
percent of the outstanding equity of one such third party which is engaged in
the development and licensing of trading systems which include portfolio
analysis and modeling and other research and investment decision-making
capabilities. The Investment Manager may allocate brokerage to broker-dealers
who in turn pay this third party for the portion of the third party's trading
system provided to the Company which is estimated by the Company to provide
appropriate assistance in the investment decision-making process. Because of its
minority interest in the third party, the Investment Manager could be said to
benefit indirectly from such brokerage allocation of the research-related
systems portion provided to the Investment Manager.
The Investment Manager regularly reviews and evaluates the services
furnished by broker-dealers. Among other measures, the Investment Manager's
investment management personnel seek to evaluate the quality of research and
other services received, and the results of this effort are made available to
the equity trading department which sometimes uses this information as a
consideration in the selection of brokers to execute portfolio transactions.
Some services furnished by broker-dealers 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 the
Investment Manager pays for that proportion directly from its own funds. 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.
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<PAGE>
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.
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, the Investment Manager 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, 1994, 1995 and 1996, amounted to approximately
$697,000, $815,000 and $2,015,000, respectively. The Investment Manager believes
the amount of brokerage commissions paid by the Trust during the fiscal year
ended December 31, 1996 was significantly higher than during the previous fiscal
year because of increased market volatility and the Investment Manager's efforts
to take advantage of the resulting opportunities to purchase certain securities
at attractive prices and to sell certain securities in order to realize gains.
During and at the end of its most recent fiscal year, the Trust held in its
portfolio no securities 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
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<PAGE>
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,
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
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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 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
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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.
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.
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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 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. For the fiscal years ended December 31, 1994, 1995 and 1996, total
sales charges on Class A shares paid to the Distributor amounted to $1,138,191,
$1,155,661 and $2,411,055, respectively, of which $133,340, $140,645 and
$292,754, 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
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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 based on the aggregate of such sales. 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 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:
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<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
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 $2,118,301 $0 $1,015,016 $0 $1,004,851
Class B $329,954 $4,092,738 $688,624 $1,815,979 $172,481 $2,076,146
Class D $6,250 $77,583 $5,125 $40,514 $593 $50,402
</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) 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 or servicing 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
37
<PAGE>
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 or
servicing 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, 1996, 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:
Class A Class B Class D
Advertising $ 1,821 $ 46,040 $ 3,977
Printing and mailing
of prospectuses to
other than current
shareholders 484 12,243 1,058
Compensation to
dealers 435,894 2,163,218 185,600
Compensation to
sales personnel 5,944 148,331 14,286
Interest 0 0 0
Carrying or other
financing charges 0 0 0
Other expenses:
marketing; general: 3,015 76,120 6,652
--------- ---------- --------
Total fees $447,158 $2,445,952 $211,573
======== ========== ========
38
<PAGE>
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.
39
<PAGE>
The performance data reflects Rule 12b-1 fees and, where applicable,
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 standard total return of each class of the Trust's shares was as
follows:
Ten Years Five Years One Year
Ended Ended Ended
December 31, 1996 December 31, 1996 December 31, 1996
----------------- ----------------- -----------------
Class A 13.04% 11.52% 15.58%
Class B 13.27% 11.71% 15.21%
Class C 13.70% 12.82% 21.48%
Class D 13.27% 11.96% 19.10%
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:
40
<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 highest
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, after
recognition of all recurring charges, 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:
YIELD = 2[(a-b + 1)6 -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
41
<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.
42
<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,
1996, without taking sales charges into account, were as follows:
Class A 9.56%
Class B 9.21%
Class C 9.75%
Class D 9.08%
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.
43
<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, 1996.
44
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- - -----------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- - -----------------------------------------------------------------------------
December 31, 1996
---------------------------------------------------------------------
Value
Shares (Note 1)
---------------------------------------------------------------------
COMMON STOCKS 98.8%
Basic Industries 16.7%
Chemical 8.2%
E.I. Du Pont De Nemours & Co. 312,600 $ 29,501,625
Monsanto Co. 786,600 30,579,075
Rhone-Poulenc SA ADR 601,100 20,362,262
Rohm & Haas Co. 370,000 30,201,250
---------------
110,644,212
---------------
Electrical Equipment 2.6%
General Electric Co. 358,800 35,476,350
---------------
Forest Product 0.6%
James River Corp. 225,200 7,459,750
---------------
Machinery 1.6%
Case Corp. 395,400 21,549,300
---------------
Metal & Mining 2.8%
Aluminum Company of America 268,300 17,104,125
Reynolds Metals Co. 369,100 20,808,013
---------------
37,912,138
---------------
Railroad 0.9%
Canadian National Railway Co. 322,900 12,270,200
---------------
Total Basic Industries 225,311,950
---------------
Consumer Cyclical 14.5%
Automotive 2.3%
General Motors Corp. 243,500 13,575,125
Magna International, Inc. Cl. A 329,000 18,341,750
---------------
31,916,875
---------------
Hotel & Restaurant 1.5%
Hilton Hotels Corp. 359,400 9,389,325
Mirage Resorts Inc.* 503,900 10,896,838
---------------
20,286,163
---------------
Recreation 3.6%
Harley Davidson Inc. 197,800 9,296,600
Mattel Inc. 117,300 3,255,075
Time Warner Inc. 375,900 14,096,250
<PAGE>
Walt Disney Co. 313,332 21,815,740
---------------
48,463,665
---------------
Retail Trade 7.1%
Gucci Group NV* 139,300 8,897,788
Home Depot Inc. 543,100 27,222,887
J.C. Penney Inc. 139,800 6,815,250
Kroger Co.* 351,200 16,330,800
Retail Trade (cont'd)
Rite Aid Corp. 264,300 $ 10,505,925
Sears Roebuck & Co. 275,600 12,712,050
Toys R Us Inc.* 424,000 12,720,000
---------------
95,204,700
---------------
Total Consumer Cyclical 195,871,403
---------------
Consumer Staple 24.3%
Business Service 2.3%
HBO & Co. 187,500 11,132,813
Interpublic Group of Companies, Inc. 413,900 19,660,250
---------------
30,793,063
---------------
Drug 5.0%
American Home Products Corp. 201,000 11,783,625
Amgen Inc.* 120,400 6,546,750
Eli Lilly & Co. 213,456 15,582,288
Novartis AG ADR* 406,397 23,199,402
Pfizer Inc. 120,900 10,019,588
---------------
67,131,653
---------------
Food & Beverage 3.8%
Anheuser-Busch Companies, Inc. 691,500 27,660,000
Coca-Cola Co. 438,300 23,065,538
---------------
50,725,538
---------------
Hospital Supply 7.3%
Aetna Inc. 143,600 11,488,000
Baxter International Inc. 612,900 25,128,900
Columbia/HCA Healthcare Corp. 534,450 21,778,837
Guidant Corp. 246,600 14,056,200
Johnson & Johnson 533,700 26,551,575
---------------
99,003,512
---------------
Personal Care 3.9%
Avon Products Inc. 292,700 16,720,487
Gillette Co. 231,800 18,022,450
Procter & Gamble Co. 164,000 17,630,000
---------------
52,372,937
---------------
Tobacco 2.0%
Philip Morris Companies, Inc. 235,800 26,556,975
---------------
Total Consumer Staple 326,583,678
---------------
<PAGE>
Energy 9.8%
Oil 7.1%
Burlington Resources Inc. 466,100 23,479,788
Exxon Corp. 149,400 14,641,200
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
---------------------------------------------------------------------
Value
Shares (Note 1)
---------------------------------------------------------------------
Oil (cont'd)
Oryx Energy Co. 262,100 $ 6,486,975
Shell Transport & Trading PLC 283,500 29,023,312
Total SA Cl. B ADR 557,608 22,443,722
---------------
96,074,997
---------------
Oil Service 2.7%
Schlumberger Ltd. 362,012 36,155,949
---------------
Total Energy 132,230,946
Finance 13.4%
Bank 7.8%
BankAmerica Corp. 376,000 37,506,000
Chase Manhattan Corp. 481,100 42,938,175
NationsBank Corp. 246,600 24,105,150
---------------
104,549,325
---------------
Insurance 5.6%
Ace Ltd. 399,800 24,037,975
American General Corp. 423,642 17,316,367
General Re Corp. 13,900 2,192,725
Saint Paul Companies, Inc. 254,300 14,908,337
Travelers Group Inc. 368,600 16,725,225
---------------
75,180,629
---------------
Total Finance 179,729,954
---------------
Science & Technology 19.2%
Aerospace 1.0%
Raytheon Co. 272,800 13,128,500
---------------
Computer Software & Service 4.2%
Cisco Systems Inc.* 427,500 27,199,687
Electronic Data Systems Corp. 384,500 16,629,625
First Data Corp. 339,950 12,408,175
---------------
<PAGE>
56,237,487
---------------
Electronic Components 2.3%
Intel Corp.* 121,300 15,882,719
Texas Instruments Inc. 232,600 14,828,250
---------------
30,710,969
---------------
Electronic Equipment 6.2%
L.M. Ericsson Telephone Co. ADR Cl. B* 590,140 17,814,851
Lucent Technologies Inc.* 467,900 21,640,375
Motorola Inc. 127,300 7,813,038
Perkin-Elmer Corp. 375,600 22,113,450
Teradyne Inc.* 600,800 14,644,500
---------------
84,026,214
---------------
Office Equipment 5.5%
Compaq Computer Corp.* 253,600 $ 18,829,800
Diebold Inc. 301,700 18,969,387
Hewlett-Packard Co. 264,000 13,266,000
International Business Machines Corp. 150,800 22,770,800
---------------
73,835,987
---------------
Total Science & Technology 257,939,157
---------------
Utility 0.9%
Electric 0.9%
FPL Group Inc. 252,000 11,592,000
---------------
Total Utility 11,592,000
---------------
Total Common Stocks (Cost $926,604,034) 1,329,259,088
---------------
- - -----------------------------------------------------------------------------
Principal Maturity
Amount Date
- - -----------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS 3.9%
American Express Credit Corp.,
5.90% $13,601,000 1/02/1997 13,601,000
American Express Credit Corp.,
6.55% 11,157,000 1/02/1997 11,157,000
Chevron Oil Finance Co., 6.15% 3,125,000 1/02/1997 3,125,000
Ford Motor Credit Co., 5.72% 20,000,000 1/02/1997 20,000,000
Ford Motor Credit Co., 5.90% 4,742,000 1/02/1997 4,742,000
---------------
Total Short-Term Obligations (Cost $52,625,000) 52,625,000
---------------
Total Investments (Cost $979,229,034)--102.7% 1,381,884,088
Cash and Other Assets, Less Liabilities--(2.7%) (35,964,013)
---------------
Net Assets--100.0% $1,345,920,075
===============
Federal Income Tax Information:
At December 31, 1996, the net unrealized appreciation of
investments based on cost for Federal income tax purposes
<PAGE>
of $976,227,873 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $ 410,133,394
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (4,477,179)
---------------
$ 405,656,215
===============
* Nonincome-producing securities.
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------------------------------------------------
December 31, 1996
Assets
Investments, at value (Cost $979,229,034) (Note 1) $1,381,884,088
Cash 21
Receivable for securities sold 34,740,340
Receivable for fund shares sold 8,884,960
Dividends and interest receivable 1,523,456
Other assets 17,640
---------------
1,427,050,505
Liabilities
Capital gains distribution payable 75,716,954
Dividends payable 3,059,683
Accrued management fee (Note 2) 1,071,270
Accrued transfer agent and shareholder services (Note 2) 499,898
Accrued distribution and service fees (Note 4) 327,406
Payable for fund shares redeemed 253,602
Accrued trustees' fee (Note 2) 9,185
Other accrued expenses 192,432
---------------
81,130,430
---------------
Net Assets $1,345,920,075
===============
Net Assets consist of:
Unrealized appreciation of investments $ 402,655,054
Shares of beneficial interest 943,265,021
---------------
$1,345,920,075
===============
Net Asset Value and redemption price per share of Class A
shares ($223,868,253 / 24,671,409 shares of beneficial
interest) $9.07
=====
Maximum Offering Price per share of Class A shares ($9.07
/ .955) $9.50
=====
<PAGE>
Net Asset Value and offering price per share of Class B
shares ($315,766,393 / 34,972,059 shares of beneficial
interest)* $9.03
=====
Net Asset Value, offering price and redemption price per
share of Class C shares ($780,627,471 / 85,721,290
shares of beneficial interest) $9.11
=====
Net Asset Value and offering price per share of Class D
shares ($25,657,958 / 2,833,901 shares of beneficial
interest)* $9.05
=====
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
- - -----------------------------------------------------------------------------
STATEMENT OF OPERATION
- - -----------------------------------------------------------------------------
For the year ended December 31, 1996
Investment Income
Dividends, net of foreign taxes of $292,432 $ 20,824,118
Interest 2,939,668
---------------
23,763,786
Expenses
Management fee (Note 2) 3,866,070
Transfer agent and shareholder services (Note 2) 1,613,046
Reports to shareholders 232,532
Custodian fee 224,676
Service fee--Class A (Note 4) 447,158
Distribution and service fees--Class B (Note 4) 2,445,952
Distribution and service fees--Class D (Note 4) 211,573
Registration fees 135,260
Trustees' fees (Note 2) 29,826
Audit fee 29,779
Legal fees 2,279
Miscellaneous 57,885
---------------
9,296,036
---------------
Net investment income 14,467,750
---------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments (Notes 1 and 3) 240,753,684
Net unrealized depreciation of investments (18,848,278)
---------------
Net gain on investments 221,905,406
---------------
Net increase in net assets resulting from operations $236,373,156
===============
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- - -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - -----------------------------------------------------------------------------
Year ended December 31
-------------------------------
1996 1995
- - ----------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 14,467,750 $ 15,680,523
Net realized gain on
investments* 240,753,684 107,441,660
Net unrealized appreciation
(depreciation) of investments (18,848,278) 151,473,174
--------------- ---------------
Net increase resulting from
operations 236,373,156 274,595,357
--------------- ---------------
Dividends from net investment
income:
Class A (2,367,239) (1,619,460)
Class B (1,492,489) (1,064,520)
Class C (11,670,468) (11,601,780)
Class D (139,420) (97,145)
--------------- ---------------
(15,669,616) (14,382,905)
--------------- ---------------
Distributions from net
realized gains:
Class A (38,241,853) (13,126,874)
Class B (54,345,452) (17,847,503)
Class C (144,043,972) (74,984,305)
Class D (4,419,675) (1,639,766)
--------------- ---------------
(241,050,952) (107,598,448)
--------------- ---------------
Distributions in excess of net
realized gains:
Class A (151,663) --
Class B (215,528) --
Class C (571,263) --
Class D (17,528) --
--------------- ---------------
(955,982) --
--------------- ---------------
Net increase from fund share
transactions (Note 5) 292,610,905 77,302,381
--------------- ---------------
Total increase in net assets 271,307,511 229,916,385
Net Assets
Beginning of year 1,074,612,564 844,696,179
--------------- ---------------
End of year (including
undistributed net investment
income of $0 and $1,207,644,
respectively) $1,345,920,075 $1,074,612,564
=============== ===============
*Net realized gain for Federal
income tax purposes (Note 1) $ 241,083,322 $ 107,598,448
=============== ===============
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- - -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
December 31, 1996
Note 1
State Street Research Investment Trust (the "Trust"), is a series of State
Street Research 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 4.50% 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 ongoing 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
<PAGE>
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.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- - -----------------------------------------------------------------------------
NOTES (cont'd)
- - -----------------------------------------------------------------------------
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. For the year
ended December 31, 1996, the Fund has designated as long-term $225,077,488 of
the distributions from net realized gains.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles. The difference is 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. During the year
ended December 31, 1996, the fees pursuant to such agreement amounted to
$3,866,070.
State Street Research Shareholder Services, a division of State Street
<PAGE>
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, 1996 the amount of such shareholder servicing and account
maintenance expenses was $402,641.
The fees of the Trustees not currently affiliated with the Adviser amounted
to $29,826 during the year ended December 31, 1996.
Note 3
For the year ended December 31, 1996, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$930,677,454 and $881,140,877, 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
for personal services and/or the maintenance or servicing of shareholder
accounts, to reimburse securities dealers for distribution and marketing
services, to furnish ongoing assistance to investors and to defray a portion
of its distribution and marketing expenses. For the year ended December 31,
1996, fees pursuant to such plan amounted to $447,158, $2,445,952 and
$211,573 for Class A, Class B and Class D shares, respectively.
The Trust has been informed that the Distributor and MetLife Securities,
Inc., a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $292,754 and $1,834,870, respectively, on sales of Class A shares
of the Trust during the year ended December 31, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $3,065,517 on sales of Class
B shares, and that the Distributor collected contingent deferred sales
charges of $329,954 and $6,250 on redemptions of Class B and Class D shares,
respectively, during the same period.
7
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
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, 1996, the Adviser owned one share of each of Class A, Class B
and Class D of the Trust.
Share transactions were as follows:
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------------------
1996 1995
-------------------------------------------------------------
Class A Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 8,496,436 $ 85,083,629 4,201,602 $ 38,277,703
Issued upon reinvestment of:
Distributions from net realized gains 4,105,073 37,233,009 1,381,863 12,657,868
Dividends from net investment income 238,083 2,245,230 137,038 1,344,573
Shares redeemed (2,981,620) (29,917,407) (2,806,953) (24,998,577)
-------------- --------------- -------------- ---------------
Net increase 9,857,972 $ 94,644,461 2,913,550 $ 27,281,567
============== =============== ============== ===============
Class B Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
Shares sold 11,730,491 $117,507,067 5,971,626 $ 54,108,058
Issued upon reinvestment of:
Distributions from net realized gains 5,847,959 52,807,070 1,883,350 17,194,984
Dividends from net investment income 153,378 1,415,675 95,588 906,920
Shares redeemed (2,861,202) (28,467,433) (2,523,352) (22,537,142)
-------------- --------------- -------------- ---------------
Net increase 14,870,626 $143,262,379 5,427,212 $ 49,672,820
============== =============== ============== ===============
Class C Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
Shares sold 1,551,667 $ 15,248,056 1,267,679 $ 11,473,904
Issued upon reinvestment of:
Distributions from net realized gains 8,570,372 78,065,167 4,060,874 37,278,822
Dividends from net investment income 468,693 4,537,303 701,086 6,244,388
<PAGE>
Shares redeemed (5,305,991) (52,618,228) (6,464,579) (57,645,171)
-------------- --------------- -------------- ---------------
Net increase (decrease) 5,284,741 $ 45,232,298 (434,940) $ (2,648,057)
============== =============== ============== ===============
Class D Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
Shares sold 910,947 $ 9,099,923 500,160 $ 4,432,731
Issued upon reinvestment of:
Distributions from net realized gains 466,008 4,217,370 168,699 1,543,548
Dividends from net investment income 13,599 126,917 8,708 81,712
Shares redeemed (397,252) (3,972,443) (349,866) (3,061,940)
-------------- --------------- -------------- ---------------
Net increase 993,302 $ 9,471,767 327,701 $ 2,996,051
============== =============== ============== ===============
</TABLE>
8
<PAGE>
State Street Research Investment Trust
Financial Highlights
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A
----------------------------------------------
Year ended December 31
----------------------------------------------
1996*** 1995*** 1994 1993*
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.16 $ 7.74 $ 8.69 $ 8.75
Net investment income 0.12 0.14 0.11 0.10
Net realized and unrealized gain
(loss) on investments 1.80 2.39 (0.44) 0.81
Dividends from net investment income (0.13) (0.13) (0.12) (0.13)
Distributions from net realized gains (1.87) (0.98) (0.50) (0.84)
Distributions in excess of net
realized gains (0.01) -- -- --
----------- ----------- ----------------------
Net asset value, end of year $ 9.07 $ 9.16 $ 7.74 $ 8.69
=========== =========== ======================
<PAGE>
Total return 21.03%+ 32.85%+ (3.84)%+ 10.53%+++
Net assets at end of year (000s) $223,868 $135,676 $92,137 $75,259
Ratio of operating expenses to
average net assets 0.75% 0.78% 0.89% 0.75%++
Ratio of net investment income to
average net assets 1.17% 1.54% 1.26% 1.27%++
Portfolio turnover rate 73.51% 39.21% 33.08% 43.57%
Average commission rate@ $ 0.05 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------
Year ended December 31
---------------------------------------------
1996*** 1995*** 1994 1993**
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.13 $ 7.72 $ 8.66 $ 9.15
Net investment income 0.04 0.07 0.06 0.06
Net realized and unrealized gain
(loss) on investments 1.80 2.38 (0.44) 0.39
Dividends from net investment income (0.06) (0.06) (0.06) (0.10)
Distributions from net realized gains (1.87) (0.98) (0.50) (0.84)
Distributions in excess of net
realized gains (0.01) -- -- --
----------- ----------- ---------------------
Net asset value, end of year $ 9.03 $ 9.13 $ 7.72 $ 8.66
=========== =========== =====================
Total return 20.15%+ 31.86%+ (4.43)%+ 4.95%+++
Net assets at end of year (000s) $315,766 $183,446 $113,301 $73,110
Ratio of operating expenses to
average net assets 1.50% 1.53% 1.64% 1.51%++
Ratio of net investment income to
average net assets 0.41% 0.79% 0.51% 0.48%++
Portfolio turnover rate 73.51% 39.21% 33.08% 43.57%
Average commission rate@ $ 0.05 -- -- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
---------------------------------------------------------- ----------
Year ended
December
Year ended December 31 31
---------------------------------------------------------- ----------
1996*** 1995*** 1994 1993 1992 1996***
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.18 $ 7.76 $ 8.70 $ 8.80 $ 9.04 $ 9.15
Net investment income 0.14 0.16 0.13 0.15 0.16 0.04
Net realized and unrealized gain
(loss) on investments 1.82 2.39 (0.43) 0.74 0.40 1.79
Dividends from net investment income (0.15) (0.15) (0.14) (0.15) (0.16) (0.05)
Distributions from net realized gains (1.87) (0.98) (0.50) (0.84) (0.64) (1.87)
Distributions in excess of net
realized gains (0.01) -- -- -- -- (0.01)
----------- ----------- ---------------------- ----------- ----------
Net asset value, end of year $ 9.11 $ 9.18 $ 7.76 $ 8.70 $ 8.80 $ 9.05
=========== =========== ====================== =========== ==========
Total return 21.48%+ 33.07%+ (3.47)%+ 10.20%+ 6.28%+ 20.09%+
Net assets at end of year (000s) $780,627 $738,649 $627,551 $729,536 $726,671 $25,658
Ratio of operating expenses to
average net assets 0.50% 0.54% 0.65% 0.49% 0.51% 1.50%
Ratio of net investment income to
average net assets 1.44% 1.81% 1.54% 1.63% 1.92% 0.42%
Portfolio turnover rate 73.51% 39.21% 33.08% 43.57% 23.99% 73.51%
Average commission rate@ $ 0.05 -- -- -- -- $ 0.05
</TABLE>
Class D
--------------------------------
1995*** 1994 1993**
----------------------------------------------------------------------
Net asset value, beginning of year $ 7.74 $ 8.68 $ 9.15
Net investment income 0.07 0.05 0.06
Net realized and unrealized gain
(loss) on investments 2.38 (0.43) 0.40
Dividends from net investment income (0.06) (0.06) (0.09)
Distributions from net realized gains (0.98) (0.50) (0.84)
Distributions in excess of net
realized gains -- -- --
--------- ----------- ----------
Net asset value, end of year $ 9.15 $ 7.74 $ 8.68
========= =========== ==========
Total return 31.75%+ (4.45)%+ 5.10%+++
<PAGE>
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%
Average commission rate@ -- -- --
++ 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.
@ For fiscal years beginning on or after January 1, 1996, the Fund is
required to disclose its average commission rate per share paid for
security trades.
9
<PAGE>
- - -----------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- - -----------------------------------------------------------------------------
To the Trustees of State Street Research Master Investment Trust
and Shareholders of State Street Research Investment Trust:
We have audited the accompanying statement of assets and liabilities of State
Street Research Investment Trust, including the schedule of portfolio
investments, as of December 31, 1996, 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, 1996 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, 1996, the results
of operations for the year then ended, the changes in its net assets for
<PAGE>
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.
/s/Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 7, 1997
10
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- - -----------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- - -----------------------------------------------------------------------------
Investment Trust had a good year in 1996, in line with generally strong
performance in U.S. equity markets. For the 12 months ended December 31,
1996, the Trust outperformed the average return for Lipper Analytical
Services' Growth and Income Funds category.
The stocks of large-capitalization, high-quality companies generally turned
in the best results in 1996, a trend that benefited the Trust, with its
strategy of investing in companies that have strong positions in their
industries. Restructuring in the energy industry combined with generally
higher commodity prices to help the Trust's energy holdings.
Investment Trust's overweighting in the finance and science and technology
sectors helped performance throughout the year. The Trust's management
maintained an overweighting in science and technology stocks, many of which
performed well during the year.
Both the utilities and consumer cyclicals sectors were disappointing in 1996.
Exposure to utilities was minimal, but the Trust's overweighting in retail
detracted from performance.
December 31, 1996
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. Performance for a class may include
periods prior to the adoption of class designations in 1993, which resulted
in new or increased 12b-1 fees of up to 1% per class thereafter and which
will reduce subsequent performance. 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 and higher redemptions and expenses that have
occurred during the Trust's current continuous public offering. "C" shares,
offered without a sales charge, are available only to certain employee
benefit plans and large institutions. Performance reflects maximum 4.5% "A"
share front-end sales charge or 5% "B" share or 1% "D" share contingent
deferred sales charges where applicable. 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.
<PAGE>
Change In Value of $10,000
Based On The S&P 500 Compared
to Change In Value Of $10,000
Invested In Investment Trust
[DESCRIPTION OF CLASS A LINE CHART]
Class A Shares
Average Annual Total Return
- - ------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- - ------------------------------------------------------------------------------
+15.58% +11.52% +13.04%
- - ------------------------------------------------------------------------------
Investment Trust S & P 500
12/86 9550 10000
12/87 10207 10525
12/88 11252 12268
12/89 14869 16149
12/90 14727 15647
12/91 18863 20403
12/92 20048 21956
12/93 22034 24164
12/94 21188 24481
12/95 28148 33670
12/96 34066 41396
[DESCRIPTION OF CLASS B LINE CHART]
Class B Shares
Average Annual Total Return
- - ------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- - ------------------------------------------------------------------------------
+15.21% +11.71% +13.27%
- - ------------------------------------------------------------------------------
Investment Trust S & P 500
12/86 910000 10000
12/87 110688 10525
12/88 111782 12268
12/89 115570 16149
12/90 115421 15647
12/91 119752 20403
12/92 220993 21956
12/93 222957 24164
12/94 221941 24481
12/95 228932 33670
12/96 334762 41396
<PAGE>
[DESCRIPTION OF CLASS C LINE CHART]
Class C Shares
Average Annual Total Return
- - ------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- - ------------------------------------------------------------------------------
+21.48% +12.82% +13.70%
- - ------------------------------------------------------------------------------
Investment Trust S & P 500
12/86 10000 10000
12/87 10688 10525
12/88 11782 12268
12/89 15570 16149
12/90 15421 15647
12/91 19752 20403
12/92 20993 21956
12/93 23135 24164
12/94 22331 24481
12/95 29717 33670
12/96 36100 41396
[DESCRIPTION OF CLASS D LINE CHART]
Class D Shares
Average Annual Total Return
- - ------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- - ------------------------------------------------------------------------------
+19.10% +11.96% +13.27%
- - ------------------------------------------------------------------------------
Investment Trust S & P 500
12/86 110000 10000
12/87 110688 10525
12/88 111782 12268
12/89 115570 16149
12/90 115421 15647
12/91 119752 20403
12/92 220993 21956
12/93 222990 24164
12/94 221967 24481
12/95 228942 33670
12/96 334755 41396
11
<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, 1987 through
December 31, 1996.
(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, 1996 (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, 1996 and December 31, 1995)
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 (x)
(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) Plan Materials
(15) Plan of Distribution Pursuant to Rule 12b-1 (vii)
(16) Calculation of Performance Data (ii)
(17) First Amended and Restated Multiple Class Expense
Allocation Plan
(18)(a) Powers of Attorney (x)
(18)(b) Certificate of Board Resolution Respecting Powers of
Attorney (x)
C-2
<PAGE>
(19) Application Forms
(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
x Post-Effective Amendment April 26, 1996
No. 8
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 1/31/97)
-------------- --------------------
Shares of Beneficial
Interest
Class A 20,748
Class B 19,632
Class C 18,745
Class D 881
Item 27. Indemnification
Under Article VI of the Registrant's First Amended and Restated Master Trust
Agreement, as further amended ("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
Arpiarian, Tanya None
Vice President
Bangs, Linda L. 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 Financial Trust Boston, MA
President 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
Vice President State Street Research Income Trust Boston, MA
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
Bochman, Kathleen None
Vice President
Bray, Michael J. Employee Merrill Lynch & Co. Boston, MA
Vice President
Brown, Susan H. None
Vice President
Buffum, Andrea Project Manager BankBoston Boston, MA
Vice President (until 12/96)
Managing Director State Street Global Advisors Boston, MA
(until 12/95)
Burbank, John F. None
Senior Vice President
(Vice President until
7/96)
Cabrera, Jesus A. Vice President First Chicago Investment Management Co. Chicago, IL
Vice President (until 5/96)
Vice President State Street Research Capital Trust Boston, MA
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 Boston, MA
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 Portfolio Manager Montgomery Asset Management San Francisco, CA
Vice President (until 11/96)
Vice President State Street Research & Management Company Boston, MA
(until 4/96)
Vice President State Street Research Capital Trust Boston, MA
Carstens, Linda C. None
Vice President
Clifford, Jr., Paul J. Vice President State Street Research Tax-Exempt Trust Boston, MA
Vice President
D'Vari, Ronald None
Vice President
DeVeuve, Donald None
Vice President
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. None
Senior Vice
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
Feliciano, Rosalina 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
Vice President State Street Research Securities Trust Boston, MA
Govoni, Electra None
Vice President
C-7
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Granger, Allison None
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
Treasurer and Director North Conway Institute Boston, MA
Hanson, Phyllis None
Vice President
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 and Chairman Vincent Memorial Hospital Boston, MA
of the Board
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) Assistant Treasurer State Street Research Energy, Inc. Boston, MA
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 Money Market 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
President Vice President State Street Research Growth Trust Boston, MA
Member Harvard Business School Association Cambridge, MA
Member National Alumni Council, Boston University Boston, MA
Koski, Karen None
Vice President
Langholm, Knut None
Vice President
Leary, Eileen M. None
Vice President
McNamara, III, Francis J. Senior Vice President, Clerk State Street Research Investment Services, Inc. Boston, MA
Executive Vice and General Counsel
President, Secretary and General Counsel State Street Research Master Investment Trust Boston, MA
Secretary and Secretary and General Counsel State Street Research Capital Trust Boston, MA
General Counsel Secretary and General Counsel State Street Research Exchange Trust Boston, MA
(Senior Vice President Secretary and General Counsel State Street Research Growth Trust Boston, MA
until 7/96) 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
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.
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
Senior Vice President
(Vice President
until 7/96)
Moore, Jr., Thomas P. Vice President State Street Research Capital Trust Boston, MA
Senior Vice (until 11/96)
President Vice President State Street Research Exchange Trust Boston, MA
(until 2/97)
Vice President State Street Research Growth Trust Boston, MA
(until 2/97)
Vice President State Street Research Master Investment Trust Boston, MA
(until 2/97)
Vice President State Street Research Equity Trust Boston, MA
Vice President State Street Research Energy, Inc. Boston, MA
Director Hibernia Savings Bank Quincy, MA
Governor on the Association for Investment Management
Board of Governors and Research Charlottesville, VA
Mulligan, JoAnne C. Vice President State Street Research Money Market Trust Boston, MA
Senior Vice President
(Vice President
until 7/96)
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
- ---- ---------- ------------ -----------------------
Paddon, Steven W. Employee Metropolitan Life Insurance Company New York, NY
Vice President (until 10/96)
Pannell, James C. None
Vice President
Peters, Kim M. Vice President State Street Research Securities Trust Boston, MA
Senior Vice President
Ragsdale, E.K. Easton None
Senior Vice President
(Vice President
until 7/96)
Rawlins, Jeffrey A. None
Senior Vice President
(Vice President
until 7/96)
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
Saperstone, Paul None
Vice President
C-11
<PAGE>
Principal business
Name Connection Organization address of organization
- ---- ---------- ------------ -----------------------
Schrage, Michael None
Vice President
Schultz, David C. Director and Treasurer Mafraq Hospital Association Mafraq, Jordan
Executive Vice Member Association of Investment
President Management Sales Executives Atlanta, GA
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
Strelow, Dan R. None
Senior Vice President
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
President, Chief Executive SSRM Holdings, Inc. Boston, MA
Officer and Director
Director CML Group, Inc. Boston, MA
Director Colgate University Hamilton, NY
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. Vice President State Street Research Equity Trust Boston, MA
Senior Vice 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 Capital Trust Boston, MA
Chief Investment Officer IDS Equity Advisors Minneapolis, MN
(until 12/95)
Westvold, Vice President State Street Research Securities Trust Boston, MA
Elizabeth McCombs
Senior Vice President
(Vice President
until 7/96)
Wilson, John T. Vice President State Street Research Equity Trust Boston, MA
Vice President Vice President State Street Research Master Investment Trust Boston, MA
Vice President Phoenix Investment Counsel, Inc. Hartford, CT
(until 6/96)
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
</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
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
Gregory R. McMahan Senior Vice None
One Financial Center President
Boston, MA 02111
Francis J. McNamara, III Senior Vice Secretary
One Financial Center President, General
Boston, MA 02111 Counsel and Clerk
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 Assistant General Secretary
Boston, MA 02111 Counsel and Assistant
Clerk
Linda Grasso Vice President None
One Financial Center
Boston, MA 02111
Robert M. Gunville Vice President None
One Financial Center
Boston, MA 02111
Frederick H. Jamieson Vice President None
One Financial Center and Assistant
Boston, MA 02111 Treasurer
Susan V. Martin Vice President None
One Financial Center
Boston, MA 02111
Amy L. Simmons Vice President Assistant
One Financial Center Secretary
Boston, MA 02111
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. 9 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 March, 1997.
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
<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, incorporated by reference
from Post-Effective Amendment No. 8 filed April 26, 1996.
<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. 9 [X]
and/or
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 23 [X]
___________________
STATE STREET RESEARCH MASTER INVESTMENT TRUST
(Exact Name of Registrant as Specified in
Master Trust Agreement)
_____________________
EXHIBITS
<PAGE>
INDEX TO EXHIBITS
(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): Plan Materials
(17) First Amended and Restated Multiple Class Expense Allocation
Plan
(19) Application Forms
(27) Financial Data Schedules
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 if the
2
<PAGE>
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.
3
<PAGE>
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.
<PAGE>
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 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. Eligibility of Fee-Based Program
We reserve the right to establish basic eligibility requirements from
time to time for the sale of Fund shares under your programs, relating to the
minimum aggregate amount of your clients' assets invested in the Funds,
management fees you charge on such assets, regulatory requirements, and/or
similar matters. 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, (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) use reasonable efforts to motivate
your representatives to recommend suitable Funds for clients of the Fee-Based
Program, and (iv) 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.
<PAGE>
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.
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: _______________________________
Name:
Title:
Accepted:
__________________________________
Name of Dealer
By: __________________________________
Name:
Title:
EXHIBIT (11)
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. 9 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 7, 1997 on our audit of the financial statements and financial
highlights of State Street Research Investment Trust for the fiscal year ended
December 31, 1996. 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
March 21, 1997
Exhibit (14)(b)
[FRONT COVER]
[State Street Research logo]
Your Window of Opportunity
State Street Research 403(b)
[Graphic: 3 windows, one slightly open]
Inside
---------------------------------------------
State Street Research Makes It Easy page 1
Use a 403(b) Before An IRA page 3
403(b) Tax Savings page 4
The State Street Research Advantage page 5
How to Open An Account page 9
<PAGE>
RETIREMENT PLANNING TAKES TIME
A comfortable retirement is the number one reason most people invest. And,
today, successful retirement planning is more important than ever. Not only are
we retiring earlier, but we're living longer. That means your retirement nest
egg needs to last for 20 or 30 years.
Fortunately, the key to success in retirement planning isn't necessarily how
much you invest. It's giving your money time to grow and making the right
choices with your investments. This is why it pays to have a dedicated
investment representative who understands your investment goals and can help you
take advantage of investment opportunities.
STATE STREET RESEARCH 403(B) MAKES IT EASY
A 403(b) plan is your window of opportunity. It allows you to take personal
control of your retirement, deciding what to invest in, how much and when. The
State Street Research 403(b) account offers you distinct advantages:
[bullet] Tax benefits. You enjoy pre-tax contributions
and tax-deferred investing.
[bullet] A convenient loan privilege that lets you borrow against your
403(b) account.
[bullet] Convenience. Your contributions are made by
payroll deduction. [Graphic:
Window]
[bullet] The cost advantages of State Street Research
mutual funds.
[bullet] A wide range of investment options--stock funds, bond funds,
international and money market funds.
[bullet] The investment expertise of State Street Research--the result of
managing mutual funds for more than 70 years.
1
<PAGE>
IT PAYS TO START EARLY
It stands to reason that the more you invest, the more money you may have when
you retire. But one of the wonders of investing is how time, and the power of
compounding, can make your money grow faster. Consider the examples below.
[LINE CHARTS]
Chart 1 Chart 2
Year $(in thousands) Year $(in thousands)
1 5,406 1 5,406
2 10,812 2 10,812
3 16,650 3 16,650
4 22,956 4 22,956
5 29,766 5 29,766
6 37,120 6 37,120
7 45,064 7 45,064
8 53,642 8 53,642
9 62,907 9 62,907
10 72,913 10 72,913
11 83,720 11 83,720
12 95,391 12 95,391
13 107,996 13 107,996
14 121,610 14 121,610
15 136,312 15 136,312
16 152,191 16 152,191
17 169,340 17 169,340
18 187,861 18 187,861
19 207,863 ` 19 207,863
20 229,068 20 229,068
21 247,393
22 267,185
23 288,560
24 311,644
25 336,576
26 363,502
27 392,582
28 423,989
29 457,908
30 494,541
31 534,104
32 576,832
33 622,979
34 672,817
35 726,642
Linda Late began putting money away for retirement when she was 45. After 20
years of investing $400 each month--a total of $96,000--she accumulated $229,068
at age 65.
Ellen Early got a head start on her retirement planning, beginning at age 30.
She also invested $400 per month for 20 years, and then let her investment grow
for fifteen more years. After 35 years, her account grew to $726,643.
Ellen Early invested the same amount as Linda Late, yet had more than $497,000
extra to make her retirement a success. The real difference was the added time
her investment had to grow, and that's why it pays to start early.
These charts illustrate the growth of $400 monthly investments at an 8% annual
rate of return. Results 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. All distributions are reinvested; sales charges are not
reflected.
How Investments Grow Over Time
Use this table as a guide in determining how your investments might grow. Choose
a number of years and an average annual rate of return. The table assumes a $100
monthly investment; but you can use it as a guide for nearly any amount. For
example, if you invest $200 (twice as much), just multiply the result in the
table by 2.
average annual rate of return
years 8% 10% 12%
5 $ 7,341 $ 7,717 $ 8,110
10 18,128 20,146 22,404
15 33,978 40,162 47,593
20 57,267 72,398 91,986
25 91,485 124,315 170,220
30 141,763 207,928 308,098
35 215,639 342,588 551,083
40 324,086 559,358 979,211
2
<PAGE>
THE BENEFITS OF 403(B)
A 403(b) retirement plan gives you the opportunity to save on taxes while you
invest. It is designed specifically for employees of public educational
institutions and certain tax-exempt organizations, such as hospitals and
colleges. The name "403(b)" refers to the part of the tax code that created the
plan.
A 403(b) is similar to the popular 401(k) plans available at many corporate
workplaces. Both allow you to invest by payroll deduction (before taxes), which
reduces the income taxes you pay. And both let your account grow free from taxes
until you withdraw money after age 59-1/2.
Why Use a State Street Research 403(b) BEFORE an IRA
For most investors, it's better to maximize contributions to a 403(b) plan
before contributing to an individual retirement account (IRA). Here's why:
- --------------------------------------------------------------------------------
State Street Research 403(b) IRA
- --------------------------------------------------------------------------------
Pre-tax contributions reduce
income taxes paid [checkmark] [checkmark](1)
- --------------------------------------------------------------------------------
Account is tax deferred until
money is withdrawn [checkmark] [checkmark]
- --------------------------------------------------------------------------------
You can invest by payroll deduction
[checkmark] [checkmark]
- --------------------------------------------------------------------------------
You can potentially invest up to
$9,500 maximum per year [checkmark]
- --------------------------------------------------------------------------------
You can take a loan against
your account [checkmark]
- --------------------------------------------------------------------------------
(1)In some cases, IRA contributions may be tax deductible.
3
<PAGE>
403(B) TAX SAVINGS
A 403(b) retirement plan helps you save on taxes in two ways. First, it reduces
your current taxable income because your contributions are made before taxes.
Pay Less Taxes Up Front
Saving with a 403(b) Plan Saving without a 403(b) Plan
- ---------------------------------- --------------------------------
Salary $50,000 Salary $50,000
403(b) savings $ 5,000 Non-403(b) savings $ 5,000
(pre-tax) (after tax)
Gross taxable income $45,000 Gross taxable income $50,000
Federal income taxes $ 7,815 Federal income taxes $ 9,215
(28% federal tax bracket) (28% federal tax bracket)
- ------------------------------------------------------------------------
Income after savings Income after savings
and taxes $37,185 and taxes $35,785
Pre-tax contributions mean you're currently taxed on less income, so your taxes
are lower!
Avoid Taxes While You Invest
Second, your 403(b) account is not taxed until you withdraw money, usually after
you reach age 59-1/2. Your account can grow tax deferred, which helps it to grow
faster! Taxes are paid when money is withdrawn from the 403(b) account.
The Advantages of Tax Deferral
(for monthly investments of $400)
[LINE CHART]
Taxable Line Tax-defered Line
Year Year
1 5,348 1 5,406
2 10,582 2 10,812
3 16,117 3 16,650
4 21,971 4 22,956
5 28,162 5 29,766
6 34,709 6 37,120
7 41,634 7 45,064
8 48,957 8 53,642
9 56,703 9 62,907
10 64,894 10 72,913
11 73,558 11 83,720
12 82,720 12 95,391
13 92,410 13 107,996
14 102,659 14 121,610
15 113,497 15 136,312
16 124,960 16 152,191
17 137,083 17 169,340
18 149,905 18 187,861
19 163,465 19 207,863
20 177,406 20 229,068
This chart illustrates general advantages of tax deferral. The chart shows
investments of $400 per month over a 20-year period. The taxable line reflects
annual taxes in the 28% tax bracket. Returns reflect hypothetical 8% annual
rates of return 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. All
distributions are reinvested; sales charges and deferred income taxes are not
reflected.
4
<PAGE>
THE MUTUAL FUND ADVANTAGE
State Street Research's mutual funds offer several advantages over other types
of investments or plans for 403(b) accounts.
Convenient loan privilege. If you have a short-term need for money, you can take
a loan against your account balance and pay the interest on the loan to your own
account.(2)
Wide range of investment options--stock, bond, international, and money market
funds. If your investment strategy changes, you can exchange your money from one
fund to another.(3)
Higher potential returns than fixed accounts. Investing in stock and bond mutual
funds can provide higher potential returns than fixed-rate investments. Of
course, the investment value and returns of mutual funds will fluctuate with
changes in market conditions.
Daily fund prices. Fund prices are reported daily in most newspapers, so it is
easy for you to keep track of your investment.
Flexible withdrawal options. When you are ready to retire, you have several
options for accessing your money.
[bullet] A lump-sum payment.
[bullet] A lump-sum payment made into another mutual fund account or
other investment.
[bullet] Regular monthly or quarterly payments from your account.
See page 7 for details on withdrawals.
(2)Subject to IRS penalty for non-repayment.
(3)The exchange privilege may be changed or discontinued at any time.
WHY STATE STREET RESEARCH
Since 1924, State Street Research has been respected by institutions and
knowledgeable individual investors. The firm has delivered exceptional results
to its clients:
[bullet] A history of selecting good stocks in both rising and falling markets.
State Street Research has successfully managed investor portfolios
throughout this century's best and worst market cycles since 1924.
[bullet] The choice of today's most demanding investors. Eight of the 10 largest
corporate pension plans and one of every four Fortune 100 companies is
a State Street Research client.
[bullet] Proprietary research. We built our reputation on the strength of our
in-house proprietary research.
[bullet] Institutional investment quality to individual investors. State Street
Research mutual fund investors receive the same distinctive portfolio
direction as our institutional clients.
[bullet] The important role of client service. State Street Research has been
recognized for providing quality shareholder service.
5
<PAGE>
RETIREMENT INVESTMENT STRATEGIES
To make it easier to develop a long-term plan,
State Street Research offers two special automatic investment strategies.
Direct Your Investment
Use our DIRECT strategy to invest gradually, moving money in pre-set amounts
from a conservative fund into a more aggressive fund.
HERE'S HOW IT WORKS:
[bullet] You transfer a lump-sum investment from an existing 403(b) plan into a
State Street Research mutual fund.(4)
[bullet] On a monthly or quarterly basis, money is "directed" from that fund
into another State Street Research fund that you select.
[bullet] You benefit from dollar cost averaging, which helps you invest in a
disciplined way whether the markets go up or down.(5)
DAP Your Dividends
Use DAP--Dividend Allocation Plan--to diversify dividends from a conservative
fund into a more aggressive fund.
HERE'S HOW IT WORKS:
[bullet] You make a lump-sum investment (plus any additional investments) in a
State Street Research mutual fund that pays regular dividend income.
[bullet] Your initial investment remains untouched, but the Fund's dividends are
transferred (or allocated) to another State Street Research fund that
you select.
[bullet] You benefit from diversification and dollar cost averaging.(5)
If you are interested in either of these automatic investing strategies, please
call 1-800-562-0032.
(4) Specific IRS rules apply to transfers. See the Transfer of 403(b) Assets
Form for more information.
(5) Dollar cost averaging will not assure that you will make a profit; neither
can it protect against losses in declining markets. Dollar cost averaging
involves continuous investment regardless of fluctuating prices, and
investors should consider their ability to purchase shares through high and
low markets.
What Has Performed Best Over the Long Term?
When investing for a long-term goal such as retirement, you may want to consider
stock funds for at least a portion of your investment. A longer time frame could
give you the time to ride out fluctuations in the market. Plus, you want your
investments to outpace inflation, and stocks have done that in the past 30
years.
[BAR CHART]
30 Years of Performance(6)
10.7% Large-company stocks
8.2% Long-term government bonds
6.9% U.S. Treasury bills
5.4% Inflation
(6) Source: Lipper Analytical Services, Johnson Charts
Average annual total returns for the years 1966-1995. All indices listed are
unmanaged and do not take sales charges into consideration. Direct investment in
the indices is not possible; results are for illustrative purposes only. Past
performance should not be considered indicative of the future performance of any
index or any available funds managed by State Street Research or its affiliates.
The Large-Company Stock data reflects the performance of the Standard & Poor's
500 Composite Index (S&P 500), which includes 500 widely traded common stocks
and is a commonly used measure of U.S. stock market performance. The Long-Term
Government Bond data are based on the performance of a one bond portfolio, which
includes a debt obligation issued by the U.S. Treasury with a 20-year maturity.
The U.S. Treasury Bill data are based on the performance of a one bill
portfolio, which includes a U.S. Treasury bill with a 30-day maturity. The
Consumer Price Index (CPI) is a measure of change in the prices of goods and
services as determined by the U.S. Bureau of Labor Statistics.
More information about stocks: Stocks are neither guaranteed nor tax advantaged.
The value of stocks will fluctuate, based on a variety of variables, including
market conditions.
More information about U.S. debt obligations: U.S. Treasury bonds and bills
offer a government guarantee as to the repayment of principal and/or interest if
held to maturity; income from these securities is tax exempt at the state and
local level. U.S. government agency securities are not direct obligations of the
U.S. government and, with some exceptions, are not guaranteed by the U.S.
government; many are exempt from state and local taxes.
6
<PAGE>
QUESTIONS AND ANSWERS
About Your 403(b) Account
Eligibility Who can have a 403(b) account?
Generally, employees of non-profit charitable, educational, scientific or
religious organizations, such as hospitals or colleges, may have a 403(b)
account. Also eligible are employees of state or local governments who are
employed by schools. Check with your employer to determine whether you qualify
for a 403(b) account.
Contributions
How do I make contributions to my 403(b) account?
Usually, you 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. Your employer may have a salary reduction agreement for you to
use. If not, a salary reduction agreement is attached.
What about fees? Is it expensive to open a 403(b) with State Street Research?
State Street Research offers some of the most competitive pricing for 403(b)s
that you'll find. You'll pay a $10 annual account administration (trustee) fee.
This $10 fee (per 403(b) plan) allows you to choose any number of our available
mutual funds. You pay per plan, not per fund. Remember though, sales charges may
also apply to the mutual funds that you invest in for your 403(b).
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 will be indexed for inflation. Employees of certain kinds of qualified
employers (for example, public schools, colleges, and hospitals) and
long-service employees (15 or more years of service) of such employers may have
different limits.
Your employer may be able to calculate your maximum contribution. If not, use
the attached worksheet. You may wish to consult an accountant or tax adviser to
confirm your maximum contribution, as penalties may apply if you exceed your
maximum.
Transfers
May I transfer all or part of my existing 403(b) to State Street Research? Yes.
Complete the attached Transfer of 403(b) Assets Form. Be sure to note the
requirements for a tax-free transfer described in the Form.
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 or reached age 59-1/2. Earlier withdrawals are permitted only if
you become disabled or suffer a financial hardship (as defined by IRS
regulations).
You must begin making withdrawals by April 1 of the year following the year when
you reach age 70-1/2 or retire from your employer (if later).
7
<PAGE>
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. Naming a beneficiary(ies) can have estate and tax-planning
implications, so consult a qualified professional. Any contingent deferred sales
charges (Class B shares) are waived if withdrawals are made within one year of
your death or disability.
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.
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 over 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?
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 except
minimum required withdrawals after age 70-1/2 or retirement from your employer
and withdrawals over a period of at least 10 years or over your life expectancy
(or that of you and your designated beneficiary(ies)).
Caution: Rollovers must meet technical IRS requirements that cannot be described
in detail here.
Important: The preceding questions and answers are general and are provided for
informative purposes only. Some rules are not covered. 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 or for advice on specific
matters such as contribution limits or rollover requirements. 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.
[Graphic: 3 diamond-shaped windows]
8
<PAGE>
How To Open 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 you are transferring your current 403(b) assets to State Street Research,
complete and sign the Transfer of 403(b) Assets Form.
3. Complete and sign the State Street Research 403(b) Account Application. Be
sure to complete the beneficiary and employer (even if you are retired)
sections of the Application.
4. If contributions to your 403(b) Account will be made by salary reduction, you
should fill out a salary reduction agreement and you and your employer should
sign it. A sample Salary Reduction Agreement is attached.
5. Mail the completed and signed Application (and the Transfer of 403(b) Assets
Form, if used) to State Street Research Shareholder Services.
9
<PAGE>
[The following 2 pages make up the Transfer of Assets form that is inserted in
the booklet]
[Tab on right edge of page: TRANSFER OF 403(b) ASSETS FORM]
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)
_______________________________________________________________________________
Maturity date (if applicable)
[ ] 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:
Please tell us which Fund(s) you have selected for your 403(b) investment
_______________________________________________________________________________
Fund name Account number %
_______________________________________________________________________________
Fund name Account number %
_______________________________________________________________________________
Fund name Account number %
By signing below, I acknowledge that I have received a current prospectus(es) of
the Fund(s) selected.
[State Street Research logo] 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). Also, amounts required to be
distributed to you under the minimum distribution rules of Code Section
403(b)(10) may not be transferred or rolled over. By signing this form, you are
certifying that this transfer will be a tax-free transaction under the preceding
two sentences.
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
Directions to Current
Custodian/Insurer
PLEASE DO NOT FILL OUT THE FOLLOWING PORTION OF THIS FORM
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 by Date
State Street Research Shareholder
Services on behalf of State Street Bank
and Trust Company, Custodian
<PAGE>
[The following 4 pages make up the Account Applicaiton form that is inserted
in the booklet]
[Tab on right edge of page: ACCOUNT APPLICATION]
-----------------------------------
Accompanying this form is a:
[ ] Transfer of 403(b) Assets Form
[ ] A check for a regular rollover
-----------------------------------
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
with Salary Reduction or Direct Rollover
Amount of investment accompanying this Application $___________________________
(Enclose a check for your contribution only if this is a regular rollover
403(b).)
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 relevant prospectus(es) for Fund details.
Name of Fund Class of Shares Percentage
A B D
[ ] [ ] [ ] %
____________________________________________________ ____________________
[ ] [ ] [ ] %
____________________________________________________ ____________________
[ ] [ ] [ ] %
____________________________________________________ ____________________
[ ] [ ] [ ] %
____________________________________________________ ____________________
[ ] [ ] [ ] %
____________________________________________________ ____________________
Total 100%
For information on the Direct or DAP(Dividend Allocation Plan) automatic
investing strategies, please call 1-800-562-0032.
[State Street Research logo]
<PAGE>
Who is the beneficiary of your State Street Research 403(b) Account?
1. Primary Beneficiary
_______________________________________________________________________________
Name Birth date
_______________________________________________________________________________
Relationship to you
_______________________________________________________________________________
Street
_______________________________________________________________________________
City State ZIP
_______________________________________________________________________________
Social Security #
2. Secondary Beneficiary
_______________________________________________________________________________
Name Birth date
_______________________________________________________________________________
Relationship to you
_______________________________________________________________________________
Street
_______________________________________________________________________________
City State ZIP
_______________________________________________________________________________
Social Security #
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. I am
liable for unauthorized telephone instructions unless reasonable procedures are
not used 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 Ihave
received the current prospectus of the Fund to be acquired. The account will
automatically have this privilege unless I expressly decline by providing my
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 per plan (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 IRSthat you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
The Internal Revenue Service does not require your consent to any provision of
this document other than certification required to avoid backup withholding.
_______________________________________________________________________________
Employee signature Date
<PAGE>
Signature Guarantee and Dealer Information
(Complete section (a) or (b) as applicable.)
The undersigned guarantees the signature and legal capacity of the
shareholder.
a. Signature Guarantee (fill out if your dealer does not complete section (b)
below)
__________________________________________________ _________________________
Name of Bank or Eligible Guarantor Street Address
__________________________________________________ _________________________
Authorized Signature of Bank or Eligible Guarantor City State ZIP
b. Dealer Information and Signature Guarantee (for Dealer use only)
______________________________ ______________________________________________
Dealer Name Branch Office Number
______________________________ ______________________________________________
Street Address of Home Office Address of Branch Office Serving Account
______________________________ ______________________________________________
City State ZIP City State ZIP
______________________________ ______________________________________________
Authorized Signature of Dealer Registered Representative's Name and Number
If this application is for an account introduced through the above-named Dealer,
the Dealer agrees to all applicable provisions in this application and in the
Prospectus(es), and represents that it has provided a current Prospectus for
each fund selected to the Applicant 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
shareholder's instructions and agrees to indemnify the Fund(s), any other
Eligible Funds, 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
the other Eligible Funds, and that it may lawfully sell shares of the designated
Fund(s) in the state designated as the Applicant'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
<PAGE>
[The following 2 pages make up the Salary Reduction Agreement form that is
inserted in the booklet]
[Tab on right edge of page: SALARY REDUCTION AGREEMENT]
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 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.
Fill in the dollar amount or percentage that you want to contribute in
section 2.
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.
[State Street Research logo] 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).
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.
Notwithstanding the preceding two paragraphs, the Employer may impose reasonable
restrictions on the frequency with which the Employee may terminate, reinstate
or modify this Agreement and the number of days of advance notice required. Any
termination, reinstatement or modification will relate only to compensation not
yet earned, and not to compensation already earned, by the Employee as of the
effective date of such termination, reinstatement or modification.
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., the State Street Research Funds, and
their affiliates and agents 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)
<PAGE>
[Tab on right edge of page: SALARY REDUCTION WORKSHEET]
State Street Research 403(b)
MAXIMUM SALARY REDUCTION WORKSHEET
If your Employer's benefits or personnel department or business office does not
calculate your 403(b) maximum, use this worksheet to compute the maximum amount
by which you can reduce your salary to make 403(b) contributions. This worksheet
covers the main 403(b) rules and limits, but does not cover certain exceptions
and special rules that might permit larger contributions than the main rules. 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 rules to determine your maximum. Be sure to consult a tax
adviser to help you apply the rules to your personal situation. This worksheet
and the questions and answers following it are not intended to be tax advice.
You are responsible for meeting the tax law limits on contributions to your
403(b) account.
In the example, a college teacher will earn $40,000 in 1996. She will have
worked for the college 15 years at the end of 1996. The college has previously
contributed $20,000 on her behalf to its 403(b) retirement plan. The college
will contribute 10% of her salary ($4,000) to its retirement plan for 1996. In
addition, the employee reduced her salary in prior years by a total of $10,000
for contribution to her 403(b) account. The example shows how much this employee
can reduce her salary for 1996. Use the spaces for your own calculations.
Step 1--Determine Your Exclusion Allowance
(example)(your calculations)
(a) Expected salary for the current year
before reduction for 403(b)
contributions. $40,000 ________
(b) Number of whole and fractional years of
service as of the end of the current
year. 15 ________
(c) Multiply (a) by (b) by .20. $120,000 ________
(d) Your salary reduction contributions and
employer contributions for you to a
403(b) plan or to a tax-qualified plan
in prior years. $30,000 ________
(e) Your employer's contributions 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 Your Section 415 Limitation*
(a) Multiply your expected current year
salary (before reduction for 403(b)
contributions) by .20. $8,000 ________
(b) Multiply your employer's expected
current year contributions for you to a
403(b) 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--Apply the $9,500 Limit*
Enter $9,500 (reduced by any salary
reduction contributions you make during the
same calendar year to other salary reduction
arrangements, such as a 401(k) plan). $9,500 ________
Step 4--Salary Reduction Agreement
Your maximum salary reduction amount is the smallest of the amounts determined
in Steps 1, 2 and 3. In the example, that amount was $4,800. Enter a salary
reduction agreement with your Employer, which reduces your compensation each pay
period so that the correct amount is contributed to your 403(b) account.
*See questions and answers for alternative ways to calculate the Section 415
limits and possible increases in the $9,500 limit.
[State Street Research logo]
<PAGE>
QUESTIONS AND ANSWERS
on calculating your maximum
1. What is the maximum annual contribution to my 403(b) account?
The maximum contribution you can exclude from your taxable income is the smaller
of your "403(b) exclusion allowance" (Questions 2 and 3) or your "415 limit"
(Question 4). Finally, your salary reduction contributions for a year cannot
exceed $9,500 (Question 5).
2. How do I compute my 403(b) "exclusion allowance"?
Follow these steps (see Step 1 of the worksheet) to compute your 403(b)
exclusion allowance.
(a) Take 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, and then multiply the results by .20.
(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, plus your
employer's expected contributions to a 403(b) retirement plan for
you for the current year.
(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.
For Step 1(d) of the worksheet, you need to know how much your employer has
contributed to a tax-qualified plan in prior years for you. If you cannot learn
this from your employer's benefits or personnel office, IRS regulations provide
a way to determine your employer's prior contributions. Consult your employer or
tax adviser for further information.
3. 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. (For additional information, see your
employer or your tax adviser). 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. 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 total less than a year.
4. What is my 415 limit?
Certain limits from Internal Revenue Code section 415 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 415 maximum.
Your 415 general limit is the smaller of (a) or (b) (see Step 2 of the
worksheet).
(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.)
There are three section 415 alternative limits, which 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, the alternatives do not apply
to you.
<PAGE>
Only one alternative may be used; in other words, if you elect to use one of the
alternatives in a year, you may not use either other alternative in any other
year. This means that choosing an alternative is an important decision.
The specific limits available under the different alternatives and the rules for
electing an alternative are complex. Consult your employer or your tax adviser
for additional information.
5. How does the $9,500 limit work?
Your salary reduction contributions for any calendar year are limited to $9,50 0
(indexed for future cost-of-living increases). 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 salary reduction
contributions, including your contributions to another 403(b) or 401(k) plan,
not to employer contributions to a 403(b) retirement plan for you.
An increased cap is available to certain employees who meet two requirements.
First, your employer must be one of the types listed in Answer 4 (eligibility
for 415 alternatives). Second, you must have 15 or more years of service with
your employer. If you qualify, consult your employer or tax adviser for more
information.
6. 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, 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.
7. 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 contributions?
The rules governing the limits for combinations of plans are very difficult and
can easily be violated unless you have expert professional guidance. This is
especially important if you "control" another employer (by owning a 50% or
greater interest), for example your own consulting business, which maintains a
plan covering you in addition to your employer's 403(b) plan.
<PAGE>
State Street Research 403(b)
ACCOUNT AGREEMENT [State Street Research logo]
Article 1: Introduction
1.1 Establishment of Account. This Agreement is intended to establish a 403(b)
Custodial Account meeting the requirements of Code Section 403(b)(7) and any
other applicable requirements of the Code or ERISA. This Agreement and the
Application will be interpreted and administered so as to carry out such intent.
The Application signed by the Employee and accepted by the Custodian (or its
agent) and this Agreement (which is incorporated by reference into the
Application), as either may be amended from time to time, are the legal
documents governing the Account.
1.2 Effective Date. This Agreement will become effective on the date on which
the Custodian accepts the Application signed by the Employee. Such acceptance
may be indicated in writing by the Custodian (or its agent) or by the
Custodian's opening the Account for the benefit of the Employee. The Account
will be opened on the date, coinciding with or after the date when this
Agreement is effective, when the Custodian receives and accepts a contribution
to the Account.
Article 2: Definition
2.1 Account or Employee's Account means the account established and maintained
by the Custodian under this Agreement for the benefit of the Employee.
2.2 Agreement means this State Street Research 403(b) Account Agreement, as it
may be amended from time to time.
2.3 Application means the State Street Research 403(b) Account Application
signed by the Employee as it may be amended from time to time.
2.4 Code means the Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute enacted in lieu thereof. Reference to any
provision of the Code includes reference to a similar provision in a successor
Statute.
2.5 Custodian means the Custodian named in the Application as Custodian, and any
party serving as successor Custodian in accordance with this Agreement.
2.6 Employee means the individual who is employed by the Employer and who signed
the Application.
The Employee must be an employee of an employer described in subsection 2.7(a),
or an employee of an employer described in subsection 2.7(b) who performs
services for an educational organization (as defined in Code Section
170(b)(1)(A)(ii)).
2.7 Employer means the Employer of the Employee. The Employer must be:
(a) an organization described in Code Section 501(c)(3) exempt from taxation
under Code Section 501(a), or
(b) a state, political subdivision of a state, or an agency or
instrumentality of a state or political subdivision of a state.
2.8 ERISA means the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
2.9 Fund or Funds means one or more mutual funds designated from time to time by
the Sponsor as available for investment by the Account under this Agreement,
provided however that shares of the Fund may legally be offered for sale in the
state where the Employee resides.
2.10 Sponsor means State Street Research Investment Services, Inc., or its
successor.
Article 3: Contributions To Account
3.1 Establishment of Account. The Custodian will open and maintain the Account
in the name of the Employee. The Employee's interest in the Account will be
nonforfeitable at all times.
3.2 Contributions to Account.
(a) Salary Reduction Contributions. The Employee and the Employer may enter
into a salary reduction agreement, and the Employer will contribute to
the Employee's Account all amounts by which the Employee's salary is
reduced under such salary reduction agreement. Any salary reduction
agreement between the Employer and the Employee will be effective only
as to amounts earned by the Employee after such agreement becomes
effective. A salary reduction agreement may not be retroactively revoked
or modified with respect to amounts already earned by the Employee.
Either the Employee or the Employer may terminate a salary reduction
agreement at the end of any payroll period, and such agreement will not
apply to compensation subsequently earned by the Employee. The Employee
may modify his salary reduction agreement at any time, but such
modification will be effective only with respect to amounts earned by
the Employee after the effective date of the modification.
Contributions on behalf of the Employee pursuant to a salary reduction
agreement for any calendar year may not exceed the amount specified in
Code Section 402(g).
(b) Employer Contributions. The Employer may make contributions to the
Account other than under a salary reduction agreement with the Employee.
(c) Transfers or Rollovers. The Employee may by appropriate instructions
direct a transfer or direct rollover to the Account from an existing
custodial account described in Code Section 403(b)(7) or any annuity
contract described in Code Section 403(b)(1). Transfers must be in cash.
The Custodian will accept cash rollover contributions from the Employee
provided such amounts constitute rollover amounts under Code Section
403(b)(8) or rollover contributions under Code Section
408(d)(3)(A)(iii).
Transfers or rollovers will be accepted only if the Employee verifies
that the 403(b) account or annuity from which the transfer or rollover
is being made does not contain withdrawal or distribution restrictions
that are more restrictive than those contained herein. The Employee will
be responsible for insuring such a transfer or rollover satisfies the
applicable provisions of the Code in order to be a tax-free transaction.
Article 4:Investment Of Contributions
4.1 Purchase of Shares. As soon as is practicable after the Custodian receives a
contribution under Section 3.2, it will invest such contribution in shares or
fractional shares of one or more Funds in accordance with the Employee's
investment instructions. The Account may be invested in the shares of more than
one Fund provided that any applicable minimum investment requirements are met.
The Employee's initial investment instructions for the investment of
contributions to his Account will be specified in the Application for the
Account, and such instructions will remain in effect until the Custodian
receives new instructions, in writing or (if permitted)by telephone or other
electronic means, acceptable to the Custodian. If any instructions received by
the Custodian are incomplete or ambiguous in the judgment of the Custodian, the
Custodian may continue to invest contributions to the Account in accordance with
the Employee's most recent investment instructions (if any) until such
incompleteness or ambiguity has been resolved to the Custodian's satisfaction;
alternatively, the Custodian may return any contributions received for the
Employee's Account or may hold such contributions in a money market fund or
uninvested until such incompleteness or ambiguity has been resolved. In either
event, the Custodian will have no liability for interest or for loss or changes
in investment values of Fund shares which occur.
<PAGE>
Any shares of a Fund held hereunder for the Employee's Account may be registered
in the name of the Custodian or its nominee and will be held in uncertificated
form.
4.2 Reports and Voting of Securities. The Custodian will deliver to the
Employee or, if applicable, his or her Beneficiary, all notices or reports to
shareholders, prospectuses, financial statements, proxies and proxy solicitation
materials received by it with respect to shares of a Fund held in the Employee's
Account. The Custodian will vote shares in accordance with the timely
instructions of the Employee (or, if applicable, Beneficiary) as expressed in a
proxy, if received. If no timely instructions are received from the Employee (or
Beneficiary), the Custodian may vote such shares in such manner as it deems
appropriate, including "present" or in accordance with the instructions of the
Sponsor (provided that the Custodian will not take any action with respect to
voting which would render it an "affiliated person" as defined in the Investment
Company Act of 1940, as amended).
4.3 Dividends. The Custodian will invest all dividends and capital gains or
other distributions received on the shares of a Fund held in the Account in
additional shares and fractional shares of that Fund.
4.4 Change of Investments. Subject to any minimum investment requirement
applicable to a Fund, an Employee (or his or her Beneficiary, if the Employee is
deceased) may at any time direct the Custodian to exchange all or a specified
portion of the shares of a Fund in the Employee's Account for shares and
fractional shares of one or more other Funds.
The Employee (or Beneficiary) shall give such directions, by written or (if
permitted) telephonic notice or other electronic means, acceptable to the
Custodian, and the Custodian will process such directions as soon as practicable
after receipt thereof. If any such exchange instructions are incomplete or
ambiguous in the judgment of the Custodian, the Custodian may refrain from
carrying out any exchange until such incompleteness or ambiguity has been
resolved to its satisfaction, without liability for any loss or change in
investment values which occur.
Any sales or redemption fee or other charge payable in connection with such
exchange will be paid from the Employee's Account.
Article 5: Withdrawals
5.1 Instructions to Custodian. The Custodian will process written directions
from the Employee to make withdrawals. However, the Employee must insure that
withdrawals directed by the Employee comply with the requirements of this
article. No withdrawals will be processed upon the death of the Employee unless
the Custodian has been notified in writing of the Employee's death, and the
Custodian has been provided with verification of such death and of the due
authority of the person requesting the withdrawal which is adequate in the
Custodian's opinion.
5.2 Withdrawals by Employee. The Employee may make withdrawals from his Account
at the time(s) directed by the Employee on a form filed with the Custodian,
subject to the provisions of this section.
(a) Events Permitting Withdrawal. No withdrawal may be made before the
earliest of:
(i) the date the Employee reaches age 59-1/2;
(ii) the date the Employee terminates service with the Employer for any
reason, including retirement;
(iii) the date the Employee becomes disabled; as used in this subsection
(iii), "disabled" means unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of
long-continued and indefinite duration; the Custodian may require the
Employee to furnish a certificate of a licensed physician stating that
the Employee is so disabled or may require the Employee to provide
satisfactory evidence that the Employee has been awarded Social
Security disability benefits before processing any withdrawals on
account of the Employee's disability; or
(iv) the date the Employee encounters financial hardship within the meaning
of Code Section 403(b)(7)(A)(ii); before processing a hardship
withdrawal, the Custodian may require the Employer to provide a
certificate of an independent person appointed by the Employer,
stating that the Employee has a financial hardship and the amount
needed to meet the financial hardship, or the Custodian may rely upon
the representations and statements of the Employee. Hardship
withdrawals are limited to the Employee's salary reduction
contributions (no earnings).
(b) Withdrawal of Excess Contributions or Deferrals. If for any taxable
year, contributions to the Employee's Account include an amount that
is an excess contribution under Code Section 4973, the Employee may
notify the Custodian to pay such amount (plus earnings) to the Em
ployee and the Custodian will process such withdrawal. Alternatively
the Employee may designate such amount as a contribution for a
subsequent taxable year.
If, on or before March 1 following the close of a calendar year, the Employee
notifies the Custodian in writing that an amount in the Account constitutes a
deferral (including salary reduction contributions) in excess of the limit set
forth in Code Section 402(g) (generally, $9,500, indexed as provided in such
Code section) and requests to withdraw such amount (plus earnings), the
Custodian will process such withdrawal and pay such amount (and any earnings
allocable to such amount) on or before the next following April 15.
(c) Required Start of Withdrawals. An Employee must begin taking
withdrawals from his Account no later than the April 1 of the year
following the year in which the Employee reaches age 70-1/2 or
(effective January 1, 1997), if later, the Employee's date of
retirement from the Employer, in accordance with the minimum
withdrawal rules applicable to 403(b) custodial accounts (compliance
with such rules is the responsibility of the Employee or Beneficiary).
5.3 Form of Distribution. The Employee may elect to receive the assets of his
Account in cash or in shares, in either or any combination of the following
forms (as directed by the Employee):
(a) a single sum;
(b) in monthly, quarterly or annual installment payments over a period
certain specified by the Employee, but not exceeding the life
expectancy of the Employee or the joint life and last survivor
expectancy of the Employee and his designated beneficiary or such
shorter period as is necessary to meet any applicable minimum
distribution requirement under Code Section 403(b)(10) and regulations
thereunder. The life expectancy of the Employee or the joint life and
last survivor expectancy of the Employee and his designated
beneficiary will be determined at the time of the first mandatory
distribution from the Account; life expectancies of the Employee and
his spouse will not be recalculated annually thereafter (unless the
Employee or spouse elects to recalculate--which election may be made
by calculating the amount of the required withdrawal using
recalculated life expectancies). Only life expectancies of the
Employee or spouse (not any other Beneficiary) may be recalculated.
Life expectancies will be determined in accordance with applicable
regulations. If the Employee elects to receive installments in
accordance with this subsection (b), the amount of any installment
will be calculated by dividing the value of the assets in the Account
by the number of installments remaining in the specified period
certain.
The Custodian will not be required to make any distributions, in the absence of
written instructions from the Employee. However, if the Employee does not make
an election specifying the form of payment within the prescribed time, the
Custodian may either assume that the Employee is satisfying all applicable
requirements through withdrawals from another 403(b) account or annuity, or may
distribute the assets of the Employee's Account to the Employee beginning as
soon as practicable thereafter in annual installments for ten years or, if
shorter, for the number of years in the Employee's life expectancy.
5.4 Distributions at the Employee's Death. At the Employee's death,
distributions will be made in the form elected by the Beneficiary unless the
Employee has specified the form of distribution. The Beneficiary must notify the
Custodian in writing of the Employee's death and provide such evidence of the
Employee's death as the Custodian requests. To the extent the Beneficiary may
elect the form of distribution, the Beneficiary must provide written notice to
the Custodian listing the date on which distribution will commence, and the
manner in which and the period over which distribution will be made. Any form of
distribution must comply with the following requirements, and it is the
responsibility of the Beneficiary (or other person directing distributions) to
insure that all distributions do so comply:
(a) Death While Receiving Withdrawals Under An Installment Program. If the
Employee had already begun taking withdrawals in a program of periodic
installments from the Account after the required beginning date, the
balance remaining in the Account at the time of the Employee's
<PAGE>
death must continue to be withdrawn at least as rapidly as under the
installment schedule in effect at the time of the Employee's death.
(b) Death Before Starting Required Installment Withdrawals.
(i) If the Employee dies before starting to take installment
withdrawals from the Account or before the required beginning
date, and the Employee's spouse is not the Beneficiary, the
Employee's Account must be withdrawn by the Beneficiary either (A)
within five years after the Employee's death, or (B) if the
Beneficiary was designated by the Employee and withdrawals by the
Beneficiary begin within one year after the Employee's death, in
substantially equal annual or more frequent installments over a
period not exceeding the life expectancy of the Beneficiary (as
determined as of the date of the Employee's death using applicable
regulations).
(ii) If the Employee dies before starting to take installment
withdrawals from the Account or before the required beginning
date, and the Em ployee's spouse is the Beneficiary, the
Employee's entire Account must be distributed to the Employee's
spouse either (A) within five years after the Employee's death, or
(B) in substantially equal annual or more frequent installments
over a period not longer than the spouse's life expectancy as
determined as of the time distribution is commenced (without
annual recalculation thereafter unless the spouse elects to
recalculate), using applicable regulations, provided that
withdrawals under this clause (B) must begin on or before the
later of the date on which the Employee would have attained age
70-1/2 or one year after the Employee's death.
5.5 Incompetent Recipient. If an amount is payable to a person known by the Cus
todian to be a minor or under a legal disability, the Custodian may, in its ab
solute discretion, pay all or any part of such amount to (a) a parent of such
person, (b) the guardian, committee or other legal representative, wherever
appointed, of such person, including a custodian for such person under a Uniform
Gifts to Minors Act or similar act, (c) any person having the control and
custody of such person, or (d) to such person directly.
5.6 Distributions Pursuant to Domestic Relations or Other Court Orders. Where
required by law, the Custodian will make payments pursuant to any "qualified
domestic relations order" (as defined in ERISA) or any other domestic relation s
or other order issued by a court having authority over the Account, where
applicable. The Employer will determine whether any domestic relations order m
eets the requirements of a qualified domestic order and will notify the
Custodian.
The Employee will direct the Custodian whether or not to contest or defend
against any such order and the Custodian will do so, provided that the Custodian
will have no responsibility to so contest or defend unless it has first been
indemnified to its satisfaction by the Employee against its costs, expenses
(including attorney's fees) and other liabilities arising therefrom.
5.7 Withdrawals Payable in Cash or in Shares. All withdrawals will be paid in
cash or in shares of one or more Funds, as designated in writing by the Employ
ee or Beneficiary. When required to pay a withdrawal in cash, the Custodian will
redeem sufficient shares of one or more Funds in the Employee's Account t o
provide the amount necessary; any such redemptions will be in accordance with
the Employee's instructions (or, in the absence of such instruction, in
proportion to the value of the shares of each Fund held in the Account). Payment
in shares will be carried out by reregistering the appropriate number of shares
in the name of the Employee.
5.8 Transfer of Account. At the written direction of the Employee, the Custod
ian will redeem a portion or all of the shares of one or more Funds in the
Employee's Account and will transfer the cash received, less any charges, to the
custodian or insurer of another custodial account or annuity contract esta
blished for the benefit of the Employee under Code Section 403(b) or to the
trustee or custodian of a rollover individual retirement account specified by
the Employee. Neither the Custodian nor the Sponsor will have any responsibili
ty to determine whether such other custodial account or annuity contract or
individual retirement account or annuity meets the requirements of Code Section
403(b) or 408 or whether the transfer or rollover will constitute a tax-free
transaction.
5.9 Loans. Loans may be made to Employees on the following basis:
(a) Upon receipt of a properly completed and signed written application and
promissory note payable to the Custodian from the Employee, the
Custodian may make a loan to the Employee from his or her Account. The
minimum loan will be $1,000, or such smaller amount as the Custodian may
specify in its rules and procedures for loans. In no event will the
total of any outstanding loan or loans to the Employee exceed the lesser
of $50,000 or 50% of the balance of his or her Account. The $50,000
limitation is reduced by the excess, if any, of the highest outstanding
balance of loans from the Account during the one-year period ending on
the day before the date of the current loan over the outstanding balance
of loans from the Account on the date of the current loan. All loans
will be secured by one-half of the Employee's Account balance. Interest
and principal repayments on the loan will be credited to the Employee's
Account and will be invested in shares and fractional shares of one or
more Funds in accordance with the Employee's investment instructions
under Section 4.1 in effect at the time each loan repayment is received
by the Custodian.
(b) All loans from the Employee's 403(b) Account will bear a reasonable rate
of interest; and the manner of determining such reasonable interest rate
may be specified in the Custodian's rules and procedures.
(c) If Section 12.2 is applicable, loans will be made available to all
Employees on a reasonably equivalent basis.
(d) Any loan or loans to an Employee from his or her 403(b) Account will be
repaid by the Employee over a specified period of time, in the form and
manner specified in the Note signed by the Employee, but in no event
over a longer period than five years from the date of borrowing. Any
loan must be amortized on a substantially level basis with payments not
less frequently than monthly. In the event the Employee does not repay
all or a portion of the principal amount on such loan within the time
prescribed, he or she will continue to be liable for any balance on the
loan not paid in addition to interest owed on principal payments not
made. Any default in the payment of principal or interest on a loan from
the Employee's account will reduce the amount available in such Account
for distribution to the Employee (or the Employee's beneficiary in the
event of the Employee's death). In addition, any default which is not
cured within the period of time provided in the Custodian's rules and
procedures will be treated as a taxable distribution to the Employee (or
beneficiary, if applicable).
(e) The Custodian may prescribe such rules and procedures as are deemed
proper in order to administer the provisions of this Section 5.9, and
reserves the right to charge an administration fee for processing and
maintaining such loans.
5.10 Direct Rollovers. Notwithstanding any provision of this Agreement to the
contrary that would otherwise limit a distributee's election under this section,
effective for distributions or withdrawals from the Employee's Account on or
after January 1, 1993, a distributee may elect (at the time and in the manner
specified by the Custodian) to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
For purposes of this section, the following terms have the meaning given.
(a) Eligible rollover distribution means any withdrawal or distribution of
all or any portion of the amount in the Employee's Account, except that
an eligible rollover distribution does not include: any withdrawal or
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
withdrawal or distribution to the extent such distribution is required
under Code Section 403(b)(10); and the portion (if any) of any
withdrawal or distribution that is not includable in gross income.
(b) Eligible retirement plan means an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), or an arrangement described in Code
Section 403(b), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(c) Distributee means the Employee. In addition, the Employee's surviving
spouse and the Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code
Section 4l4(p) (if applicable), are distributees with regard to the
interest of the spouse or former spouse.
(d) Direct rollover means a payment from the Employee's account to the
eligible retirement plan specified by the distributee.
Article 6: Custodian
6.1 Duties. The Custodian will perform the following duties related to the
administration of the Employee's Account:
(a) Receive contributions under Section 3.2 (or, if applicable, loan
repayments), invest such contributions (or repayments) in shares of one
or more Funds in accordance with the Employee's investment instructions,
and credit such shares to the Employee's Account;
(b) Maintain custody of the assets in the Account;
(c) Collect income and reinvest such income as provided in this Agreement;
(d) Execute orders for purchase, sale or exchange of shares of Funds in
accordance with the Employee's instructions and make settlements in
accordance with general practice;
(e) Maintain records of all transactions in the Account;
(f) Not less frequently than annually, provide the Employee appropriate
statements of the Account showing all transactions of the Account;
(g) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms, and other information as may be
required of it as Custodian;
(h) Perform such other duties and services as may be necessary under this
Agreement.
The Custodian may appoint one or more agents, attorneys or contractors,
including the Sponsor (or a contractor or affiliate of the Sponsor), to carry
out any of its duties hereunder.
6.2 Share Redemptions. If cash is needed to pay taxes, fees, or other expenses
properly chargeable to the Account or to make payments to the Employee or his
Beneficiary under Article 5, the Employee (or Beneficiary, if applicable) will
instruct the Custodian in writing (or, if applicable, by telephone or other
electronic means) which Fund should be redeemed or sold if the Account is
invested in more than one Fund. In the absence of such written instructions, the
Custodian will redeem shares of all Funds in the Account in proportion to the
value of the shares of each such Fund held in the Account.
6.3 Limitations on Liabilities and Duties.
(a) The Custodian will be fully protected in acting in accordance with and
in reliance upon any document, order or other direction believed by the
Custodian to be genuine and properly given. Conversely, the Custodian
will be fully protected in not acting in the absence of proper
instructions or when it believes that any document, order or other
direction either is not genuine or was not properly given.
(b) To the extent permitted by law, 30 days after providing to the Employee
any statement (whether required under Section 6.1(f), or otherwise), the
Custodian will be released and discharged from all liability to the
Employee and any other person as to the matters contained in such
statement unless the Employee files written objections with the
Custodian within such 30-day period.
(c) The Employee (or Beneficiary) will be solely responsible for his
investment directions and the selection of Fund(s). The Custodian and
the Sponsor will not be under any fiduciary duty to the Employee (or
Beneficiary) with respect to the selection of investments (or otherwise)
or be liable for any loss or diminution in value incurred on account of
a selected investment.
(d) Neither the Custodian nor the Sponsor will have any responsibility for
determining the proper amount of any contribution or for collecting any
contribution (or, if applicable, loan repayment) from the Employer or
the Employee. Neither will have any responsibility for determining
whether the amount of any contribution is within any applicable
limitation under the Code. The Employee will have sole responsibility
for the computation of the Employee's exclusion allowance under Code
Section 403(b)(2), the limitation(s) on contributions under Code Section
415(c), any election available to the Employee under Code Section 415,
any limit on elective deferrals (including salary reduction
contributions) under Code Section 402(g), and all matters relating to
any tax consequences with respect to contributions, earnings,
withdrawals, loans or loan repayments, transfers or rollovers to or from
the Account (whether on account of the amount or time thereof or
otherwise).
(e) Neither the Custodian nor the Sponsor will be responsible for
determining the propriety, amount or timing of any withdrawal by the
Employee (or Beneficiary); in particular, neither the Custodian nor the
Sponsor will be responsible for compliance with the minimum withdrawal
rules of Code Section 403(b)(10) and will be entitled to assume that the
Employee (or Beneficiary) is satisfying such requirements from another
403(b) arrangement if the Employee (or Beneficiary) does not comply with
such requirements by withdrawals from the Account.
(f) The Custodian will not be required to carry out any instructions not
given in accordance with this Agreement. Neither the Custodian nor the
Sponsor will be liable for loss of income, or for appreciation or
depreciation in share value resulting from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(g) The Custodian will have no responsibility to pay any withdrawal unless
directed by the Employee or Beneficiary and unless the Employee's or
Beneficiary's written withdrawal instructions state the reason for the
withdrawal and contain all signature guarantees and other documents
(including proof of any legal representative's authority) requested by
the Custodian.
(h) Neither the Custodian nor the Sponsor will have any liability to the
Employee or Beneficiary for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to pay a withdrawal when
requested.
(i) To the extent permitted by law, the Employee agrees to indemnify the
Custodian, Sponsor and Funds ("Indemnitees") and hold them harmless from
any and all liability whatsoever which may arise either (i) in
connection with this Agreement and the Employee's Account (except
liability arising from the gross negligence or willful misconduct of any
Indemnitee) or (ii) with respect to making or failing to pay any
withdrawal, other than for failure to make any distribution in
accordance with instructions therefor which are in full compliance with
this Agreement.
(j) The Custodian will not be obligated to commence or to defend a legal
action or proceeding in connection with this Agreement unless the
Custodian agrees to do so and is indemnified to its satisfaction.
(k) Neither the Employer nor the Sponsor will have any responsibility or
liability for any acts or omissions of the Custodian hereunder.
6.4 Compensation. The Custodian will receive the fees specified in its then c
urrent fee schedule. The Custodian may substitute a revised fee schedule from
time to time upon 30 days written notice to the Employee. The Custodian will be
entitled to such reasonable additional fees as it may from time to time
determine for services required of it in addition to those reflected in the fee
schedule.
6.5 Resignation and Removal. The Custodian may resign by giving at least 30 d
ays written notice to the Employee at his last known address as shown on the
Custodian's records. The Sponsor may remove the Custodian hereunder by giving at
least 30 days written notice to the Custodian and the Employee at his last known
address as shown on the records of the Custodian or Sponsor. In each case, the
Sponsor will designate a successor custodian which successor custodian accepts
such appointment. Any Custodian appointed hereunder must be a bank or other
person who meets the requirements of Code Section 401(f)(2). If the Sponsor
fails to appoint a successor custodian in accordance with the preceding two
sentences, the Custodian may do so, or will have the right to apply to a court
of competent jurisdiction for the appointment of a successor.
On the effective date of its resignation or removal, the incumbent Custodian
will transfer to the successor custodian the assets and records (or copies
thereof) of the Account; provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation, and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
<PAGE>
Article 7: Fees, Taxes, And Other Expenses
Any income or other taxes that may be levied or assessed upon the Account
(including any transfer taxes incurred in connection with the investment and
reinvestment of Account assets), expenses, fees and administrative costs
incurred by the Custodian in the performance of its duties (including fees for
legal services rendered to the Custodian), and the Custodian's compensation
under Section 6.4, will constitute a charge upon the assets of the Account. If
not paid by the Employee within 30 days after being billed therefor by the
Custodian, the Custodian will withdraw such fee, tax or expense from the Account
and may redeem sufficient shares of any Fund held in the Account to effect such
payment without liability for any loss incurred thereby.
Article 8: Protection Of Account
Except as specifically
permitted hereunder, no part of the Account will be used for purposes other than
for the exclusive benefit of the Employee. No right or benefit under this
Agreement will be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt at such
will be void. No right or benefit hereunder will be subject to the debts,
contracts, liabilities, engagements or torts of the person who is entitled to
such right or benefit, and no such right or benefit shall be subject to
attachment or legal process for or against such person. However, the Custodian
will carry out the requirements of any qualified domestic relations or other
court order relating to the Account.
Article 9: Beneficiary Designation
Each Employee may submit to the Custodian a signed written designation of bene
ficiary acceptable to the Custodian. Any such designation of beneficiary will be
effective when filed with the Custodian during the Employee's lifetime. Whether
or not fully dispositive of the Account, the most recently filed designation of
beneficiary accepted by the Custodian will revoke all previously filed
designations. Any amount payable as a result of the Employee's death that is not
disposed of by a designation of beneficiary, for any reason whatsoever, will be
paid to the Employee's estate. If a Beneficiary dies while receiving
distributions, the portion of the Account to which the Beneficiary would have
been entitled (had he or she survived) shall be paid to the Beneficiary's
beneficiary or beneficiaries (or to the Beneficiary's estate) in a lump sum
within 90 days after the Custodian receives notification and evidence acceptable
to it of the Beneficiary's death.
Article 10: Amendment
10.1 Amendment. The Sponsor may amend this Agreement in its entirety or any por
tion thereof. The Sponsor will provide copies of such amendment to the Employer
and/or Employee. Nothing in this Agreement will impose on the Sponsor an
affirmative obligation to amend the Agreement.
10.2 Limitations. No amendment will be made:
(a) Which would cause or permit any part of the Account to be diverted to
purposes other than for the exclusive benefit of the Employee (or
Beneficiary), or cause or permit any portion of such assets to revert to
or become the property of the Employer,
(b) Which would increase the duties or responsibilities of the Custodian
without its written consent, or
(c) Which would retroactively deprive any Employee of any benefit to which
he or she was entitled under the Agreement, unless such amendment is
necessary, in the opinion of counsel to the Sponsor, to conform the
Agreement to, or satisfy the conditions of, Code Section 403(b) or any
other applicable law.
Article 11: Termination
11.1 Automatic Termination on
Distribution. This Agreement will terminate when all the assets held in the
Account have been distributed or otherwise transferred out of the Account.
11.2 Termination on Disqualification. This Agreement will terminate if, after
notification by the Internal Revenue Service that the Employee's Account does
not qualify under Code Section 403(b)(7), the Sponsor does not make such
amendments as are necessary to so qualify the Account. On such termination of
this Agreement, the Custodian will distribute all assets in an Account to the
Employee or, in the event of the Employee's death, to the Beneficiary, subject
to the Custodian's right to reserve funds as provided in Section 6.5.
11.3 Survival of Indemnification. Notwithstanding Sections 11.1 and 11.2,
Section 6.3(i) will survive the termination of this Agreement.
Article 12: Miscellaneous
12.1 Applicable Law. This Agreement will be construed, administered and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
Any action concerning the Account or this Agreement must be brought in a state
or federal court located in such Commonwealth.
12.2 Employer Plan. In any instance where the Account is part of an employee
pension benefit plan within the meaning of Section 3(2) of ERISA (and
regulations thereunder) maintained by the Employer, the following provisions
will apply:
(a) The Employer will be the "plan administrator" within the meaning of
ERISA and will be responsible for compliance with the reporting and
disclosure and other responsibilities imposed on the plan administrator
under ERISA.
(b) If the Employee is married on the date that any distributions are made
from the Account to the Employee, such distribution will be made by
purchasing an annuity contract from an insurance company and
distributing such contract to the Employee; the form of payment under
such contract will meet the requirements of a joint and survivor annuity
under Section 205 of ERISA. However, the preceding sentence will not
apply if the Employee elects another form of payment permitted under
Section 5.3 of this Agreement and the Employee's spouse consents thereto
in writing. Notifications concerning such an election and consent by the
Employee's spouse will be in accordance with Section 205 of ERISA and
regulations thereunder.
If an Employee dies before the commencement of distributions to the Em
ployee from the Account, the Beneficiary will be the Employee's spouse
if the Employee is married, and the form of payment to the spouse will
be the purchase from an insurance company and delivery to the spouse of
an annuity contract providing for periodic payments to the spouse for
the spouse's lifetime. However, the Employee may designate a different
Beneficiary or the Employee or spouse may designate a different form of
payment provided that the notifications and procedures for spousal
consent under Section 205 of ERISA and regulations thereunder are
complied with.
No loan under Section 5.9 will be made from the Account in the case of a
married Employee unless the Employee's spouse consents to the loan.
(c) The plan administrator will determine whether any domestic relations
order purporting to award all or any portion of the Account to anyone
other than the Employee is a "qualified domestic relations order"within
the meaning of Section 206 of ERISA.
(d) The limitation provided in the third paragraph of Section 3.2(a) will be
applied taking into account salary reduction contributions on behalf of
the employee under all plans or arrangements maintained by the Employer.
(e) Contributions to an Employee's Account must be in accordance with the
plan document adopted by the Employer (which may be a separate plan
document, or may be this Agreement with such additional provisions
relating to eligibility, participation, contributions and other matters
as the Employer may adopt); the Employer will be responsible for the
plan's compliance with all applicable provisions (including those
relating to nondiscrimination) of the Code and ERISA.
12.3 Change of Address. The Employer or the Employee will notify the Custodian
in writing of any change of address within 30 days of such change.
12.4 Notice. Any notice from the Custodian or Sponsor to the Employee under this
Agreement will be effective when sent by U.S. mail to the address of the
Employer or Employee as then shown on the Custodian's or Sponsor's records. Any
notice to the Custodian under this Agreement will be by first class mail
addressed to its home office.
12.5 Successors. This Agreement will be binding upon and inure to the benefit of
the successors in interest of the parties hereto.
12.6 Separability. If any provision of this Agreement is held invalid or illegal
for any reason, such determination will not affect any remaining provisions of
this Agreement, but this Agreement will be construed and enforced as if such
invalid or illegal provision has never been included in this Agreement.
<PAGE>
[Graphic: Window slightly open]
<PAGE>
[State Street Research logo]
A MetLife Company
This brochure must be preceded or accompanied by the relevant fund
prospectus(es), which include(s) investment policies, sales charges and
expenses. Please read the prospectus(es) carefully before investing.
Control Number: 3494-961107(1297) SSR-LD 403B-447E-1096
#
EXHIBIT (17)
First Amended and Restated
Multiple Class Expense Allocation Plan
WHEREAS, State Street Research 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 (i) is authorized to 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) is or may be authorized to 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 such Series,
and Series of affiliated investment companies, have or may establish classes
thereof designated as "Class A," "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
<PAGE>
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
2
<PAGE>
class in relation to the net asset value of the Series or on the basis of the
Dividend Assets of that class in relation to the aggregate Dividend Assets of
the Series for periodic income distribution funds and daily income distributions
funds, respectively. "Dividend Assets" are defined as the net asset value of
those shares eligible to receive a dividend on the current day as set forth in
the Fund's prospectus. 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 multiple classes, if any, of the Initial Series as of May 5,
1995, 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, Class D, and 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 8, 1996
3
Exhibit (19)
[STATE STREET RESEARCH LOGO]
MUTUAL FUND ACCOUNT APPLICATION
Mail this application to State Street Research Shareholder Services,
P.O. Box 8408, Boston, MA 02266-8408
- --------------------------------------------------------------------------------
1 Type of Account (PLEASE PRINT FULL NAME(S) CONSISTENT WITH YOUR SIGNATURE(S)
IN SECTION 5.)
<TABLE>
<S> <C> <C>
[ ] Individual--complete (a) only [ ] Joint Tenant--complete (a & b) [ ] Gift to a Minor--complete (c) only
[ ] Trust(1)--complete (d) only [ ] Corporation(1)--complete (e) only [ ] Partnership/Other Entity--complete (e) only
</TABLE>
Note: If the investment is to be used for an Individual Retirement Account
(IRA), a separate IRA application must be used.
(1)Call 1-800-562-0032 for additional forms.
Individual or Joint Tenant
a _____________________________________________________________________________
Name of Investor Social Security Number
b _____________________________________________________________________________
Name(s) of Joint Tenant(s)
Gift to a Minor
as custodian for under the
c _____________________________________________________________________________
Name of Custodian (one only) Name of Minor (one only)
"Uniform Gifts to Minors Act"
- -------------------------------------------------------------------------------
Minor's State of Residence Minor's Social Security Number
Trust Account
d _____________________________________________________________________________
Trustee(s) Name(s)
- -------------------------------------------------------------------------------
Name and Date of Trust Agreement Tax Identification Number
Corporation, Partnership or Other Entity (Please include corporate resolution.)
e _____________________________________________________________________________
Name of Corporation or Other Entity
------------------------------------------------------------------------------
Type of Business (specify corporation, Tax Identification Number
partnership, estate, guardian, etc.)
-----------------------------------------------------------------------------
2 Your Mailing Address (PLEASE PRINT.)
( )
- -------------------------------------------------------------------------------
Street Address Home Telephone Number
( )
- -------------------------------------------------------------------------------
City State ZIP Business Telephone Number
Residency [ ] U.S. (State ______) [ ] Other_____________________________
Specify Country
- --------------------------------------------------------------------------------
3 Fund Selection(s) and Distribution Option(s) (Choose only one distribution
option per Fund; see Fund prospectus for minimum initial investment
requirements.)
[ ] By Mail--Make check payable to "State Street Research" [ ] By Dealer
[ ] By Federal Funds Wire (Control #___________)
<TABLE>
<CAPTION>
Class Wire Order
Fund Name Designation(2) Amount Distribution Option by Dealer
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends & Dividends in Dividends & Dividend
Capital Gains Cash; Capital Capital Gains Allocation Confirmation
A B D Reinvested Gains Reinvested(3) in Cash Plan (DAP)(4) Number
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------- [ ] [ ] [ ] $------- [ ] [ ] [ ] [ ] -----------
- -------------- [ ] [ ] [ ] $------- [ ] [ ] [ ] [ ] -----------
- -------------- [ ] [ ] [ ] $------- [ ] [ ] [ ] [ ] -----------
- -------------- [ ] [ ] [ ] $------- [ ] [ ] [ ] [ ] -----------
</TABLE>
(2)All Money Market Fund investments will purchase Class E shares. Be sure to
designate share class for Money Market Fund DAP allocations.
(3)Does not apply to Money Market Fund.
(4)Dividend Allocation Plan: The Transfer Agent is authorized to invest all
dividends and distributions from ___________________________________________
Fund Name
in the following Eligible Fund: ____________________________________________
Fund Name Account Number
(Fund must meet (if existing
minimum investment account)
requirements)
Authorization of Dividend Allocation Plan constitutes an acknowledgment that the
shareholder has received the current prospectus of the Fund to be acquired.
Except for Money Market Fund Class E, DAP must be allocated to same class
designation.
<PAGE>
4 _____________________________________________________________________________
Reduced Sales Charges (Applies to Class A shares only)
[ ] Right of Accumulation (ROA): I apply for Right of Accumulation reduced sales
charges subject to the Transfer Agent's confirmation of the following holdings
of certain designated persons, e.g. family members, in the Eligible Funds:
- --------------------------------------------------------------------------------
Name on Account Account Number
- --------------------------------------------------------------------------------
Name on Account Account Number
[ ] Letter of Intent (LOI): Although I am not obligated to purchase and the
Funds are not obligated to sell, I intend to invest over a 13-month period
beginning___________, 19___ (purchase date not more than 90 days prior to this
letter) at least an aggregate of [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ]
$1,000,000 of Eligible Funds.
5 _____________________________________________________________________________
Your Signature (All registered shareholders must sign.)
I have received the current prospectus of the Fund and confirm that all the
information, instructions and agreements set forth hereon shall apply to the
account, and if applicable, shall also apply to any other fund account with
shares acquired upon exchange of shares of the Fund.
Under penalties of perjury, I certify that (1) the number shown on this form 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.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup withholding.
- --------------------------------------------------------------------------------
Signature of Shareholder (exactly as your name appears in Section 1) Date
- --------------------------------------------------------------------------------
Signature of Joint Tenant (if any) Date
6 _____________________________________________________________________________
Signature Guarantee and Dealer Information (Complete section (a) or (b) as
applicable.)
The undersigned guarantees the signature and legal capacity of the shareholder.
a. Signature Guarantee (fill out if your Dealer does not complete section below)
- --------------------------------- -------------------------------------------
Name of Bank or Street Address
Eligible Guarantor
- --------------------------------- -------------------------------------------
Authorized Signature of Bank City State ZIP
or Eligible Guarantor
b. Dealer Information and Signature Guarantee (for Dealer use only)
- --------------------------------- -------------------------------------------
Dealer Name Branch Office Number
- --------------------------------- -------------------------------------------
Street Address of Home Office Address of Branch Office Servicing Account
- --------------------------------- -------------------------------------------
City State ZIP City State ZIP
- --------------------------------- -------------------------------------------
Authorized Signature of Dealer Registered Representative's Name and Number
If this application is for an account introduced through the above-named Dealer,
the Dealer agrees to all applicable provisions in this application and in the
Prospectus, and represents that it has provided a current Prospectus to the
Applicant 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 shareholder's instructions and agrees to
indemnify the Fund, any other Eligible Funds, 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 and the Eligible Funds, and that it may lawfully sell shares
of the designated Fund(s) in the state designated as the Applicant's address of
record.
<PAGE>
Application for Optional Shareholder Services
Your Bank Account (You must complete this section if you request Section A, B, D
or E.)
Type of Bank Account: [ ] Checking [ ] NOW or Money Market
- --------------------------------------------------------------------------------
Account Title (print exactly as it Bank Routing Number
appears on bank records)
- --------------------------------------------------------------------------------
Bank Account Number Bank Name
- --------------------------------------------------------------------------------
Bank Address City State ZIP
- --------------------------------------------------------------------------------
Depositor's Signature(s) (exactly Date
as it appears on bank records)
- --------------------------------------------------------------------------------
Depositor's Address City State ZIP
You must attach a blank check marked "VOID."
A _____________________________________________________________________________
Telephone Redemption and Exchange Privileges (Service available only for shares
held on deposit with Transfer Agent)
None of the Transfer Agent, the Fund, any other Eligible 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.
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.)
Telephone Redemption By Shareholder Only
1. Proceeds to Shareholder's Address of Record. The Transfer Agent may effect
redemptions of shares from my account according to telephone instructions from
me, as set forth in the Prospectus, and send the proceeds to my address of
record. 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 REDEMPTION PRIVILEGE (to address of record).
____ (Initial here.)
2. Proceeds to Bank Designated by Shareholder. The Telephone Redemption
Privilege (to bank designated by shareholder) is not provided automatically;
please check the box below if you want this Privilege for the account. ATTACH A
BLANK CHECK MARKED "VOID" AND FILL OUT "YOUR BANK ACCOUNT" SECTION. The Transfer
Agent may effect redemptions of shares from my account according to telephone
instructions from me, as set forth in the Prospectus, and send the proceeds to
the bank named in "Your Bank Account."
[ ] (Check here.)
B _____________________________________________________________________________
Investamatic Check Program (YOU MUST ATTACH A BLANK CHECK MARKED "VOID.") I
hereby request and authorize the bank named in "Your Bank Account" section to
pay and charge checks drawn on, or debits against, my account initiated by and
payable to the order of the mutual fund transfer agent designated by the
Distributor. I agree that the named Bank's rights in respect to each such check
or debit shall be the same as if it were a check drawn on or debit against my
account authorized personally by me. This authority is to remain in effect until
revoked by me in writing, and until the named Bank actually receives such
notice, I agree that the named Bank shall be fully protected in honoring any
such check or debit authorization. I further agree that if any check or debit
authorization be dishonored, whether with or without cause and whether
intentionally or inadvertently, the named Bank shall be under no liability
whatsoever, unless the nonpayment is because of insufficient funds. I understand
that this Program may be revoked by the Transfer Agent or the Distributor
without prior notice if any check is not paid upon presentation, and that this
Program may be discontinued by the Distributor, the Transfer Agent or me upon
thirty (30) business days' notice prior to the due date of any deposit.
<TABLE>
<S> <C> <C> <C>
$
- ----------------------------------------------------------------------------------------------------
Fund Name Class Designation Amount ($50 minimum) Account Number
$
- ----------------------------------------------------------------------------------------------------
Fund Name Class Designation Amount ($50 minimum) Account Number
------------------------------------------------------------
Total Amount of Investment: $________ Account Registration (exactly as it appears on Fund records)
</TABLE>
<TABLE>
<S> <C> <C>
[ ] Monthly Investment Date: [ ] 5th or [ ] 20th If you do not choose a date, the
[ ] Quarterly Investment Date: [ ] 5th or [ ] 20th 5th will be chosen automatically.
</TABLE>
C _____________________________________________________________________________
Checkwriting Privilege
(Available for Class A shares and
Money Market Fund Class E shares only)
[ ] I request the checkwriting feature and have completed the signature card to
the right.
- --------------------------------------------------------------------------------
Account Number (if existing account)
- --------------------------------------------------------------------------------
Account Number (if existing account)
Signature Card Complete and sign this card and return it with your application
and investment. Do not detach.
<TABLE>
<CAPTION>
Check applicable Fund(s) TO: State Street Bank and Trust Company ("Bank")
<S> <C> <C> <C> <C>
[ ] Government Income ----------------------------------------------------------------------------
[ ] NY Tax-Free Name (please print)
[ ] Money Market, Class E
[ ] High Income ----------------------------------------------------------------------------
[ ] Tax-Exempt Name (please print)
[ ] Strategic Income
----------------------------------------------------------------------------
Address City State ZIP
----------------------------------------------------------------------------
Signature (exactly as it appears in the Application, including any capacity)
----------------------------------------------------------------------------
Signature (exactly as it appears in the Application, including any capacity)
----------------------------------------------------------------------------
Indicate the number of signatures required----------------------------------
----------------------------------------------------------------------------
Tax Identification Number
</TABLE>
Corporate and other accounts must include appropriate resolution forms. In
signing this signature card, the signator(s) signifies his/her or their
agreement to be subject to the rules and regulations of State Street Bank and
Trust Company pertaining thereto, as amended from time to time, and subject to
the conditions printed on the reverse side.
<PAGE>
D _____________________________________________________________________________
Automatic Bank Connection (ABC) Not available for retirement plan accounts. YOU
MUST ATTACH A BLANK CHECK MARKED "VOID."
[ ] I authorize the Transfer Agent to liquidate $________________ (minimum-$50)
from my fund account beginning the month of ________________ to provide
[ ] monthly, [ ] quarterly, [ ] semiannual or [ ] annual payments. I would like
the following payment to be deposited directly into the bank account named in
"Your Bank Account" section. (Choose only one.)
[ ] Income dividends only
[ ] Income dividends and capital gains
[ ] Systematic Withdrawal Plan payments (see below)
Specify Fund(s):
- --------------------------------------------------------------------------------
Fund Name Class Designation
- --------------------------------------------------------------------------------
Fund Name Class Designation
I hereby authorize the Fund and the Transfer Agent to effect the deposit of the
above indicated items by initiating credit entries to my account at the bank
named in "Your Bank Account" section. The named Bank shall not be responsible
for the correctness of the items, and the Transfer Agent is authorized to
correct and adjust any incorrect items to my bank account. This authorization
may be terminated at any time by written notification to the Fund, the Transfer
Agent and the Bank.
E _____________________________________________________________________________
Systematic Withdrawal Plan (SWP) Not available for retirement plan accounts. See
the prospectus for minimum account size and maximum withdrawal amounts. YOU MUST
ATTACH A BLANK CHECK MARKED "VOID."
[ ] I authorize the Transfer Agent to liquidate shares in and withdraw cash
(minimum-$50) from my fund account beginning the month of ________________ to
provide [ ] monthly, [ ] quarterly, [ ] semiannual or [ ] annual Systematic
Withdrawal Plan (SWP) payments in the amount of $________________ to [ ] me, [ ]
the bank named in "Your Bank Account" section, or[ ]the following payee. (Note:
If you authorize a SWP, you may not receive dividend or capital gain
distributions in cash.)
- --------------------------------------------------------------------------------
Name of Payee
- --------------------------------------------------------------------------------
Street Address City State ZIP
Specify Fund(s):
- --------------------------------------------------------------------------------
Fund Name Class Designation
- --------------------------------------------------------------------------------
Fund Name Class Designation
The payment of monies is authorized by the signature(s) on the reverse side.
If the shareholder's account with the Fund is joint, all checks drawn upon this
account must include the signatures of all persons named in the account, unless
the persons signing this card have indicated on the reverse side of this card
that the Bank is authorized to accept any one signature. Each person guarantees
the genuineness of the other's signature. Checks may not be for less than $500
or such other minimum or maximum amounts as may from time to time be established
by the Fund.
The Bank is hereby appointed agent by the person(s) signing this card (the
"Depositor(s)") and, as agent, is authorized and directed to present checks
drawn on this checking account to the Fund or its redemption agent as requests
to redeem shares of the Fund registered in the name of the Depositor(s) in the
amounts of such checks and to deposit the proceeds of such redemptions in this
checking account. The Bank shall be liable only for its own negligence.
Depositor(s) hereby authorize(s) the Fund or its redemption agent to honor
redemption requests presented in the above manner by the Bank. The Fund and its
redemption agent will not be liable for any loss, expense or cost arising out of
check redemptions. If shares of the Fund are purchased by check, redemption
proceeds will ordinarily be withheld until the Fund is reasonably assured that
payment has been collected on the check. The Bank has the right not to honor
checks in amounts exceeding the value of the depositor(s) shareholder account at
the time the check is presented for payment.
The Bank reserves the right to change, modify or terminate this checking account
at any time upon notification mailed to the address of record of the
Depositor(s).
SSR-543E-197
<PAGE>
[STATE STREET RESEARCH LOGO] [METLIFE SECURITIES LOGO]
Mutual Fund Account Application
Mail this application to MetLife Securities, Inc., P.O. Box 30421, Tampa, FL
33630
[ ] New Application [ ] Change--Account #_____________________
1 _____________________________________________________________________________
Type of Account (PLEASE PRINT FULL NAME(S) CONSISTENT WITH YOUR SIGNATURE(S) IN
SECTION 6.)
<TABLE>
<S> <C> <C>
[ ] Individual--complete (a) only [ ] Joint Tenant--complete (a & b) only [ ] Gift to a Minor--complete (c) only
[ ] Trust(1)--complete (d) only [ ] Corporation(1)--complete (e) only [ ] Partnership/Other Entity--complete (e) only
</TABLE>
Note: If the investment is to be used for an Individual Retirement Account
(IRA), a separate IRA application must be used.
(1)Call 1-800-638-8378 for additional forms.
Do you have any other mutual fund accounts with State Street Research?
[ ] Yes [ ] No
Individual or Joint Tenant
a _____________________________________________________________________________
Name of Investor Social Security Number
b _____________________________________________________________________________
Name(s) of Joint Tenant(s)
Gift to a Minor
as custodian for under the
- -------------------------------------------------------------------------------
Name of Custodian (one only) Name of Minor (one only)
"Uniform Gifts to Minors Act"
- -------------------------------------------------------------------------------
Minor's State of Residence Minor's Social Security Number
Trust Account
d _____________________________________________________________________________
Trustee(s) Name(s)
- -------------------------------------------------------------------------------
Name and Date of Trust Agreement Tax Identification Number
Corporation, Partnership or Other Entity (Please include corporate resolution.)
e _____________________________________________________________________________
Name of Corporation or Other Entity
-----------------------------------------------------------------------------
Type of Business (specify corporation, Tax Identification Number
partnership, estate, guardian, etc.)
2 _____________________________________________________________________________
Your Mailing Address (Please print.)
( )
- -------------------------------------------------------------------------------
Street Address Home Telephone Number
( )
- -------------------------------------------------------------------------------
City State ZIP Business Telephone Number
Residency [ ] U.S. (State _____) [ ] Other(2)________________________
Specify Country
(2)Call 1-800-638-8378 for additional forms.
3 _____________________________________________________________________________
Fund Selection(s) and Distribution Option(s) (Choose only one distribution
option per Fund; see Fund prospectus for minimum initial investment
requirements.)
[ ] By Mail--Make check payable to "State Street Research"
[ ] By Federal Funds Wire
<TABLE>
<CAPTION>
Class
Fund Name Designation(3) Amount Distribution Option
- ----------------------------------------------------------------------------------------------------------------------------
Dividends & Dividends in Dividends & Dividend
Capital Gains Cash; Capital Capital Gains Allocation
A B(4) Reinvested Gains Reinvested(5) in Cash Plan (DAP)6
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------- [ ] [ ] $------------ [ ] [ ] [ ] [ ]
- ---------------- [ ] [ ] $------------ [ ] [ ] [ ] [ ]
- ---------------- [ ] [ ] $------------ [ ] [ ] [ ] [ ]
- ---------------- [ ] [ ] $------------ [ ] [ ] [ ] [ ]
</TABLE>
(3)All Money Market Fund investments will purchase Class E shares. Be sure to
designate Class A or B shares for Money Market Fund DAP allocations.
(4)For purchase of Class B shares of more than $250,000, I hereby acknowledge
that I am aware of the reduced front-end sales charges available to me for
the purchase of Class A shares, and have chosen to purchase Class B shares. I
am aware that Class B shares have higher asset-based charges than Class A
shares for the first eight years.
(5)Does not apply to Money Market Fund.
(6)Dividend Allocation Plan: The Transfer Agent is authorized to invest all
dividends and distributions from ______________________
Fund Name
in the following Eligible Fund: _______________________________________________
Fund Name (Fund must Account Number
meet minimum investment (if existing
requirements) account)
Authorization of Dividend Allocation Plan constitutes an acknowledgment that the
shareholder has received the current prospectus of the Fund to be acquired.
Except for Money Market Fund Class E, DAP must be allocated to same class
designation.
<PAGE>
4 _____________________________________________________________________________
Reduced Sales Charges (Applies to Class A shares only)
[ ] Right of Accumulation (ROA): I apply for Right of Accumulation reduced sales
charges subject to the Transfer Agent's confirmation of the following holdings
of certain designated persons, e.g. family members, in the Eligible Funds:
- --------------------------------------------------------------------------------
Name of Account Account Number
- --------------------------------------------------------------------------------
Name of Account Account Number
[ ] Letter of Intent (LOI): Although I am not obligated to purchase and the
Funds are not obligated to sell, I intend to invest over a 13-month period
beginning ___________________, 19__ (purchase date not more than 90 days prior
to this letter) at least an aggregate of [ ] $100,000 [ ] $250,000 [ ] $500,000
[ ] $1,000,000 of Eligible Funds.
5 _____________________________________________________________________________
Optional Shareholder Services
Your Bank Account (You must complete this section if you request Section A, B, C
or D below.)
Type of Bank Account: [ ] Checking [ ] NOW or Money Market
- --------------------------------------------------------------------------------
Account Title (print exactly as it Bank Routing Number
appears on bank records)
- --------------------------------------------------------------------------------
Bank Account Number Bank Name
- --------------------------------------------------------------------------------
Bank Address City State ZIP
- --------------------------------------------------------------------------------
Depositor's Signature(s) (exactly as it Date
appears on bank records)
- --------------------------------------------------------------------------------
Depositor's Address City State ZIP
YOU MUST ATTACH A BLANK CHECK MARKED "VOID."
A _____________________________________________________________________________
Telephone Redemption and Exchange Privileges (Service available only for shares
held on deposit with Transfer Agent)
None of the Transfer Agent, the Fund, any other Eligible 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.
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.)
Telephone Redemption By Shareholder Only
1. Proceeds to Shareholder's Address of Record. The Transfer Agent may effect
redemptions of shares from my account according to telephone instructions from
me, as set forth in the Prospectus, and send the proceeds to my address of
record. 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 REDEMPTION PRIVILEGE (to address of record).
____ (Initial here.)
2. Proceeds to Bank Designated by Shareholder. The Telephone Redemption
Privilege (to bank designated by shareholder) is not provided automatically;
please check the box below if you want this Privilege for the account.
ATTACH A BLANK CHECK MARKED "VOID" AND FILL OUT "YOUR BANK ACCOUNT" SECTION.
The Transfer Agent may effect redemptions of shares from my account according to
telephone instructions from me, as set forth in the Prospectus, and send the
proceeds to the bank named in "Your Bank Account." [ ] (Check here.)
<PAGE>
B _____________________________________________________________________________
Investamatic Check Program (YOU MUST ATTACH A BLANK CHECK MARKED "VOID.")
I hereby request and authorize the bank named in "Your Bank Account" section to
pay and charge checks drawn on, or debits against, my account initiated by and
payable to the order of the mutual fund transfer agent designated by the
Distributor. I agree that the named Bank's rights in respect to each such check
or debit shall be the same as if it were a check drawn on or debit against my
account authorized personally by me. This authority is to remain in effect until
revoked by me in writing, and until the named Bank actually receives such
notice, I agree that the named Bank shall be fully protected in honoring any
such check or debit authorization. I further agree that if any check or debit
authorization be dishonored, whether with or without cause and whether
intentionally or inadvertently, the named Bank shall be under no liability
whatsoever, unless the nonpayment is because of insufficient funds. I understand
that this Program may be revoked by the Transfer Agent or the Distributor
without prior notice if any check is not paid upon presentation, and that this
Program may be discontinued by the Distributor, the Transfer Agent or me upon
thirty (30) business days' notice prior to the due date of any deposit.
$
- --------------------------------------------------------------------------------
Fund Name Class Designation Amount ($50 minimum) Account Number
$
- --------------------------------------------------------------------------------
Fund Name Class Designation Amount ($50 minimum) Account Number
-----------------------------------------
Total Amount of Investment: $______ Account Registration (exactly as it
appears on Fund records)
[ ] Monthly Investment Date: [ ] 5th or [ ] 20th If you do not choose a date,
the 5th will be chosen
automatically.
[ ] Quarterly Investment Date: [ ] 5th or [ ] 20th
C _____________________________________________________________________________
Automatic Bank Connection (ABC) Not available for retirement plan accounts.
YOU MUST ATTACH A BLANK CHECK MARKED "VOID."
[ ] I authorize the Transfer Agent to liquidate $ _________ (minimum-$50) from
my fund account beginning the month of _________ to provide [ ] monthly,
[ ] quarterly, [ ] semiannual or [ ] annual payments. I would like the following
payment to be deposited directly into the bank account named in "Your Bank
Account" section. (Choose only one.)
[ ] Income dividends only
[ ] Income dividends and capital gains
[ ] Systematic Withdrawal Plan payments (see below)
- --------------------------------------------------------------------------------
Fund Name Class Designation
- --------------------------------------------------------------------------------
Fund Name Class Designation
I hereby authorize the Fund and the Transfer Agent to effect the deposit of the
above indicated items by initiating credit entries to my account at the bank
named in "Your Bank Account" section. The named Bank shall not be responsible
for the correctness of the items, and the Transfer Agent is authorized to
correct and adjust any incorrect items to my bank account. This authorization
may be terminated at any time by written notification to the Fund, the Transfer
Agent and the Bank.
D _____________________________________________________________________________
Systematic Withdrawal Plan (SWP) Not available for retirement plan accounts.
See the prospectus for minimum account size and maximum withdrawal amounts.
YOU MUST ATTACH A BLANK CHECK MARKED "VOID."
[ ] I authorize the Transfer Agent to liquidate shares in and withdraw cash
(minimum-$50) from my fund account beginning the month of _____________ to
provide [ ] monthly, [ ] quarterly, [ ] semiannual or [ ] annual Systematic
Withdrawal Plan (SWP) payments in the amount of $_____________ to [ ] me, [ ]
the bank named in "Your Bank Account" section, or [ ] the following payee.
(Note: If you authorize a SWP, you may not receive dividend or capital gain
distributions in cash.)
- --------------------------------------------------------------------------------
Name of Payee
- --------------------------------------------------------------------------------
Street Address City State ZIP
- --------------------------------------------------------------------------------
Fund Name Class Designation
- --------------------------------------------------------------------------------
Fund Name Class Designation
E _____________________________________________________________________________
Checkwriting Privilege
(Available for Class A shares and Money Market Fund Class E shares only)
[ ] I request the checkwriting feature and have completed the signature card
below.
- --------------------------------------------------------------------------------
Account Number (if existing account)
- --------------------------------------------------------------------------------
Account Number (if existing account)
Signature Card Complete and sign this card and return it with your application
and investment. Do not detach.
<TABLE>
<CAPTION>
Check applicable Fund(s) TO: State Street Bank and Trust Company ("Bank")
<S> <C> <C> <C> <C>
[ ] Money Market, Class E ----------------------------------------------------------------------------
[ ] High Income Name (please print)
[ ] Tax-Exempt
[ ] Government Income ----------------------------------------------------------------------------
[ ] NY Tax-Free Name (please print)
[ ] Strategic Income
----------------------------------------------------------------------------
Address City State ZIP
----------------------------------------------------------------------------
Signature (exactly as it appears in the Application, including any capacity)
----------------------------------------------------------------------------
Signature (exactly as it appears in the Application, including any capacity)
Indicate the number of signatures required----------------------------------
----------------------------------------------------------------------------
Tax Identification Number
</TABLE>
Corporate and other accounts must include appropriate resolution forms. In
signing this signature card, the signator(s) signifies his/her or their
agreement to be subject to the rules and regulations of State Street Bank and
Trust Company pertaining thereto, as amended from time to time, and subject to
the conditions printed on the reverse side.
<PAGE>
6 _____________________________________________________________________________
Your Signature (All registered shareholders must sign.)
The undersigned confirms that all the information, instructions and agreements
set forth hereon shall apply to the account, and if applicable, shall also apply
to any other fund account with shares acquired upon exchange of shares of the
Fund.
Under penalties of perjury, I certify that (1) the number shown on this form 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.
1. Arbitration
(i) Arbitration is final and binding on the parties.
(ii) The parties are waiving their right to seek remedies in court, including
the right to jury trial.
(iii) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(iv) The arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(v) The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.
(vi) No person shall bring a putative or certified class action to arbitration,
nor seek to enforce any pre-dispute arbitration agreement against any
person who has initiated in court a putative class action; or who is a
member of a putative class who has not opted out of the class with respect
to any claims encompassed by the putative class action until (i) the class
certification is denied; or (ii) the class is decertified; or (iii) the
customer is excluded from the class by the court. Such forbearance to
enforce an agreement to arbitrate shall not constitute a waiver of any
rights under this agreement except to the extent stated herein.
2. MetLife Securities, Inc. (hereinafter "MSI") and the purchaser of the shares,
who is the signatory below (hereinafter the "Customer"), agree that any
controversy between MSI, its employees, directors, agents, officers or
affiliates and the Customer arising out of or relating to any transactions
between such parties shall be determined by arbitration. Any arbitration
pursuant to this agreement shall be conducted before, and under the rules of,
the National Association of Securities Dealers, Inc. Judgment upon the award of
the arbitrators may be entered in any federal or state court having
jurisdiction.
3. This agreement and any arbitration hereunder shall be governed and construed
in accordance with the laws of the State of New York, United States of America,
including New York procedural and substantive arbitration laws and rules,
without giving effect to conflicts of law principles. The predispute arbitration
agreement located immediately above is accepted and agreed to. I have also
received the current prospectus of the fund and have given a check in the amount
of $_______ on this, the ________ day of __________________ 19__
The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup withholding.
- ------------------------------- ----------------------------------------
Customer Signature (exactly as Registered Representative's Signature
your name appears in Section 1)
/s/Ralph F. Verni
- ------------------------------- ----------------------------------------
Customer Signature MetLife Securities, Inc.;
by: Ralph F. Verni,
Chairman of the Board
- -------------------------------
Capacity
7 _____________________________________________________________________________
Dealer Information and Signature Guarantee (For Dealer use only)
The Dealer agrees to all applicable provisions in this application and in the
Prospectus, guarantees the signature and legal capacity of the shareholder, and
represents that it has provided a current Prospectus to the Applicant 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 shareholder's instructions and information and agrees to
indemnify the Fund, any other Eligible Funds, the Investment Manager, the
Distributor, State Street Research Shareholder Services and the Transfer Agent
for any loss or liability from acting or relying upon such instructions and
information.
Signature(s) Guaranteed By
MetLife Securities, Inc.
- ------------------------------- --------------------------------------------
Dealer Name Branch Office Number
P.O. Box 30421
- ------------------------------- --------------------------------------------
Address of Home Office Address of Branch Office Servicing Account
Tampa, FL 33630
- ------------------------------- --------------------------------------------
City State ZIP City State ZIP
- ------------------------------- --------------------------------------------
Authorized Signature of Registered Representative's
Dealer - Tampa, FL Name and Number
- -------------------------------
Signature Guarantee
The payment of monies is authorized by the signature(s) on the reverse side.
If the shareholder's account with the Fund is joint, all checks drawn upon this
account must include the signatures of all persons named in the account, unless
the persons signing this card have indicated on the reverse side of this card
that the Bank is authorized to accept any one signature. Each person guarantees
the genuineness of the other's signature. Checks may not be for less than $500
or such other minimum or maximum amounts as may from time to time be established
by the Fund.
The Bank is hereby appointed agent by the person(s) signing this card (the
"Depositor(s)") and, as agent, is authorized and directed to present checks
drawn on this checking account to the Fund or its redemption agent as requests
to redeem shares of the Fund registered in the name of the Depositor(s) in the
amounts of such checks and to deposit the proceeds of such redemptions in this
checking account. The Bank shall be liable only for its own negligence.
Depositor(s) hereby authorize(s) the Fund or its redemption agent to honor
redemption requests presented in the above manner by the Bank. The Fund and its
redemption agent will not be liable for any loss, expense or cost arising out of
check redemptions. If shares of the Fund are purchased by check, redemption
proceeds will ordinarily be withheld until the Fund is reasonably assured that
payment has been collected on the check. The Bank has the right not to honor
checks in amounts exceeding the value of the depositor(s) shareholder account at
the time the check is presented for payment.
The Bank reserves the right to change, modify or terminate this checking account
at any time upon notification mailed to the address of record of the
Depositor(s).
The terms and conditions of the Distributor's currently effective Selected
Dealer Agreement are included by reference in this section. The Dealer
represents that it has a currently effective Selected Dealer Agreement with the
Distributor authorizing the Dealer to sell shares of the Fund and the Eligible
Funds, and that it may lawfully sell shares of the designated Fund(s) in the
state designated as the Applicant's address of record.
- -----------------------------------
DO NOT COMPLETE
MSI - Tampa
Dealer #____________ ST _________
Rep #______________________________
Rep Name___________________________
- -----------------------------------
CONTROL NUMBER: 3659-970115(0298)SSR-LD
ML-544E-197
<PAGE>
MetLife Securities, Inc. Customer Profile
1
- --------------------------------------------------------------------------------
Client's Name (or minor if U.G.M.A.) Age Social Security Number
- --------------------------------------------------------------------------------
Joint Tenant Name (if any, or Age Social Security Number
custodian if U.G.M.A.)
Occupation______________________________________ State of Residence_________
Name/Address of Employer________________________________________________________
________________________________________________________
Is client an associated person of a broker/dealer? [ ] Yes [ ] No
If yes, furnish name and address________________________________________________
2 Client's Estimated Annual Income (Not including income from this investment)
(N/A for UGMA, Trust, Partnership or Corp.)
[ ] $0-9,999 [ ] $20-39,999 [ ] $60-79,999 [ ] $100,000-199,999
[ ] $10-19,999 [ ] $40-59,999 [ ] $80-99,999 [ ] $200,000+
3 Savings and Investments (Exclusive of personal residence, home furnishings,
personal automobiles, and the amount of this investment) (N/A for UGMA, Trust,
Partnership or Corp.)
[ ] $0-9,999 [ ] $20-39,999 [ ] $60-79,999 [ ] $100,000-199,999
[ ] $400,000+ [ ] $10-19,999 [ ] $40-59,999 [ ] $80-99,999
[ ] $200,000-399,999
4 Net Worth (Assets minus liabilities exclusive of assets and liabilities
relating to personal residence, home furnishings and automobiles) (N/A for UGMA,
Trust, Partnership or Corp.)
[ ] $0-9,999 [ ] $20-39,999 [ ] $60-79,999 [ ] $100,000-199,999 [ ] $400,000+
[ ] $10-19,999 [ ] $40-59,999 [ ] $80-99,999 [ ] $200,000-399,999
5 Main Investment Objective (select one)
[ ] Aggressive Growth [ ] Growth & Income [ ] Tax Advantages
[ ] Growth [ ] Current Income
Secondary Investment Objective (optional)
[ ] Aggressive Growth [ ] Growth & Income [ ] Tax Advantages
[ ] Growth [ ] Current Income
6 Source of Funds for This Investment
[ ] CD (Certificate of Deposit) [ ] Savings [ ] Money Market Fund
[ ] Surrender Life/Annuity Contract [ ] Rollover/Transfer of Pension Assets
[ ] Another MetLife Policy, Account or Contract [ ] Discretionary Income
[ ] Loan [ ] Other_______________________
7 This account was: [ ] Solicited [ ] Unsolicited
8 Tax Status of These Funds: [ ] Qualified [ ] Non-Qualified
9 Prior Investment Experience: (complete all that apply) Stocks yrs.
Bonds yrs. Mutual Funds yrs. Margin yrs.
Limited Partnerships yrs. Options yrs. Other____ None
Investor Receipt and Arbitration Agreement
1. Arbitration
(i) Arbitration is final and binding on the parties.
(ii) The parties are waiving their right to seek remedies in court, including
the right to jury trial.
(iii) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(iv) The arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(v) The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.
(vi) No person shall bring a putative or certified class action to arbitration,
nor seek to enforce any pre-dispute arbitration agreement against any
person who has initiated in court a putative class action; or who is a
member of a putative class who has not opted out of the class with respect
to any claims encompassed by the putative class action until: (i) the
class certification is denied; or (ii) the class is decertified; or (iii)
the customer is excluded from the class by the court. Such forbearance to
enforce an agreement to arbitrate shall not constitute a waiver of any
rights under this agreement except to the extent stated herein.
2. MetLife Securities, Inc. (hereinafter "MSI") and the purchaser of the shares,
who is the signatory below (hereinafter the "Customer"), agree that any
controversy between MSI, its employees, directors, agents, officers or
affiliates and the Customer arising out of or relating to any transactions
between such parties shall be determined by arbitration. Any arbitration
pursuant to this agreement shall be conducted before, and under the rules of,
the National Association of Securities Dealers, Inc. Judgment upon the award of
the arbitrators may be entered in any federal or state court having
jurisdiction.
3. This agreement and any arbitration hereunder shall be governed and construed
in accordance with the laws of the State of New York, United States of America,
including New York procedural and substantive arbitration laws and rules,
without giving effect to conflicts of law principles.
The predispute arbitration agreement located immediately above is accepted and
agreed to. I have also received the current prospectus of the fund and have
given a check in the amount of $_______________ on this, the ____________ day of
______________________ 19__
- ----------------------------------- ------------------------------------------
Customer Signature (exactly as Registered Representative's Signature your name
appears in Section 1)
/s/ Ralph F. Verni
- ----------------------------------- ------------------------------------------
Customer Signature MetLife Securities, Inc.;
by: Ralph F. Verni, Chairman of the Board
- ----------------------------------- ------------------------------------------
Capacity
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000093755
<NAME> STATE STREET RESEARCH MASTER INVESTMENT TRUST
<SERIES>
<NUMBER> 011
<NAME> STATE STREET RESEARCH INVESTMENT TRUST CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 979,229,034
<INVESTMENTS-AT-VALUE> 1,381,884,088
<RECEIVABLES> 45,148,756
<ASSETS-OTHER> 17,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,427,050,505
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81,130,430
<TOTAL-LIABILITIES> 81,130,430
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 943,265,021
<SHARES-COMMON-STOCK> 24,671,409
<SHARES-COMMON-PRIOR> 14,813,437
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 402,655,054
<NET-ASSETS> 1,345,920,075
<DIVIDEND-INCOME> 20,824,118
<INTEREST-INCOME> 2,939,668
<OTHER-INCOME> 0
<EXPENSES-NET> 9,296,036
<NET-INVESTMENT-INCOME> 14,467,750
<REALIZED-GAINS-CURRENT> 240,753,684
<APPREC-INCREASE-CURRENT> (18,848,278)
<NET-CHANGE-FROM-OPS> 236,373,156
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,367,239)
<DISTRIBUTIONS-OF-GAINS> (38,241,853)
<DISTRIBUTIONS-OTHER> (151,663)
<NUMBER-OF-SHARES-SOLD> 8,496,436
<NUMBER-OF-SHARES-REDEEMED> (2,981,620)
<SHARES-REINVESTED> 4,343,156
<NET-CHANGE-IN-ASSETS> 271,307,511
<ACCUMULATED-NII-PRIOR> 1,207,644
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (4,636)
<GROSS-ADVISORY-FEES> 3,866,070
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,296,036
<AVERAGE-NET-ASSETS> 1,228,462,566
<PER-SHARE-NAV-BEGIN> 9.16
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 1.80
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> (1.87)
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 9.07
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000093755
<NAME> STATE STREET RESEARCH MASTER INVESTMENT TRUST
<SERIES>
<NUMBER> 012
<NAME> STATE STREET RESEARCH INVESTMENT TRUST CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 979,229,034
<INVESTMENTS-AT-VALUE> 1,381,884,088
<RECEIVABLES> 45,148,756
<ASSETS-OTHER> 17,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,427,050,505
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81,130,430
<TOTAL-LIABILITIES> 81,130,430
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 943,265,021
<SHARES-COMMON-STOCK> 34,972,059
<SHARES-COMMON-PRIOR> 20,101,433
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 402,655,054
<NET-ASSETS> 1,345,920,075
<DIVIDEND-INCOME> 20,824,118
<INTEREST-INCOME> 2,939,668
<OTHER-INCOME> 0
<EXPENSES-NET> 9,296,036
<NET-INVESTMENT-INCOME> 14,467,750
<REALIZED-GAINS-CURRENT> 240,753,684
<APPREC-INCREASE-CURRENT> (18,848,278)
<NET-CHANGE-FROM-OPS> 236,373,156
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,492,489)
<DISTRIBUTIONS-OF-GAINS> (54,345,452)
<DISTRIBUTIONS-OTHER> (215,528)
<NUMBER-OF-SHARES-SOLD> 11,730,491
<NUMBER-OF-SHARES-REDEEMED> (2,861,202)
<SHARES-REINVESTED> 6,001,337
<NET-CHANGE-IN-ASSETS> 271,307,511
<ACCUMULATED-NII-PRIOR> 1,207,644
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (4,636)
<GROSS-ADVISORY-FEES> 3,866,070
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,296,036
<AVERAGE-NET-ASSETS> 1,228,462,566
<PER-SHARE-NAV-BEGIN> 9.13
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 1.80
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (1.87)
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 9.03
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000093755
<NAME> STATE STREET RESEARCH MASTER INVESTMENT TRUST
<SERIES>
<NUMBER> 013
<NAME> STATE STREET RESEARCH INVESTMENT TRUST CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 979,229,034
<INVESTMENTS-AT-VALUE> 1,381,884,088
<RECEIVABLES> 45,148,756
<ASSETS-OTHER> 17,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,427,050,505
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81,130,430
<TOTAL-LIABILITIES> 81,130,430
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 943,265,021
<SHARES-COMMON-STOCK> 85,721,290
<SHARES-COMMON-PRIOR> 80,436,549
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 402,655,054
<NET-ASSETS> 1,345,920,075
<DIVIDEND-INCOME> 20,824,118
<INTEREST-INCOME> 2,939,668
<OTHER-INCOME> 0
<EXPENSES-NET> 9,296,036
<NET-INVESTMENT-INCOME> 14,467,750
<REALIZED-GAINS-CURRENT> 240,753,684
<APPREC-INCREASE-CURRENT> (18,848,278)
<NET-CHANGE-FROM-OPS> 236,373,156
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,670,468)
<DISTRIBUTIONS-OF-GAINS> (144,043,972)
<DISTRIBUTIONS-OTHER> (571,263)
<NUMBER-OF-SHARES-SOLD> 1,551,667
<NUMBER-OF-SHARES-REDEEMED> (5,305,991)
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<TABLE> <S> <C>
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<NAME> STATE STREET RESEARCH MASTER INVESTMENT TRUST
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<NAME> STATE STREET RESEARCH INVESTMENT TRUST CLASS D
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