<PAGE>
STATE STREET RESEARCH
INVESTMENT TRUST
ANNUAL REPORT
December 31, 1997
WHAT'S INSIDE
From the Chairman
An exciting year to be an investor
Portfolio Manager's Review
A focus on quality
aids performance
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
[Graphic Omitted]
For Excellence
in
Shareholder Service
<PAGE>
FROM THE CHAIRMAN
[Photo of Ralph J. Verni]
DEAR SHAREHOLDER:
In the past 12 months, both stock and bond investors have reaped the rewards of
a very favorable financial environment. The nation's economy continued to expand
at a moderate, but healthy pace. Inflation and interest rates remain low.
Employment is high, personal income has increased and Americans are the most
confident they have been in nearly 30 years. Even severe economic problems in
Southeast Asia, which brought stocks down sharply in October, failed to dampen
investor enthusiasm for very long. However, it reminded us that stock markets
can go down as well as up.
STOCKS
Although the U.S. stock market lost ground in October, it posted an
unprecedented third consecutive year gain of 20%+. For the 12 months ended
December 31, 1997, the S&P 500, a broad measure of common stock performance, was
up 33.35%.(1) The stocks of large, established consumer companies led the market
during the first half of the year. However, investors began to seek out less
expensive small- and medium- sized companies in the third quarter. The turmoil
in Asia was enough to unsettle investors, and once again they sought out large
blue chip companies late in the year.
Outside the U.S., Southeast Asian stock markets, which began to show signs of
weakness late in the summer, took a beating in October and continued to struggle
as the year ended. In Japan, stocks were held back by a weak economy and high-
profile bankruptcies among financial companies. In Europe and Great Britain,
business was upbeat, but stock returns were generally disappointing to American
investors because of exchange rates.
BONDS
Bonds lagged stocks for most of the year but positive economic news and low
interest rates ignited a bond market rally late in the year. In fact, the Lehman
Brothers Aggregate Bond Index, a common benchmark for bond market performance,
actually outperformed the S&P 500, 2.94%(1) versus 2.87% in the fourth quarter.
LOOKING FORWARD
While the environment for financial assets has been clouded by concerns that the
turmoil in Southeast Asia could extend to the U.S., our outlook for both stocks
and bonds remains relatively positive for 1998. It may not be realistic to
expect stocks to deliver another year of double digit returns. However,
inflation remains low, and there are few reasons for the Federal Reserve to
raise interest rates. The big question is whether companies can continue to
increase their profits. Even slower profit growth may dampen investor
enthusiasm.
In closing, I'd like to remind you of our extended call-in hours for tax time.
Starting March 1 and continuing through April 15, 1998, Service Center
representatives will be available from 8:00 a.m. until 8:00 p.m., and on
Saturdays from 10:00 a.m. until 2:00 p.m. Call them with your account and tax-
related questions during these extended hours.
Thank you for investing in State Street Research.
Sincerely,
/s/Ralph F. Verni
Ralph F. Verni
Chairman
December 31, 1997
PLEASE NOTE THAT THE DISCUSSION
THROUGHOUT THIS SHAREHOLDER REPORT IS
DATED AS INDICATED AND, BECAUSE OF
POSSIBLE CHANGES IN VIEWPOINT, DATA
AND TRANSACTIONS, SHOULD NOT BE RELIED
UPON AS BEING CURRENT THEREAFTER.
(1) The Standard & Poor's 500 Composite Index (S&P 500) is a market-value
weighted index composed of 500 widely traded common stocks. The Lehman Brothers
Aggregate Bond Index is a market- value weighted index of fixed-rate debt
issues, including U.S. treasury, agency, and corporate bond issues, and
mortgage-backed securities. The indices are unmanaged and do not take sales
charges into consideration. Direct investment in the indices is not possible;
results are for illustrative purposes only.
(2) +27.80% for Class B shares; +27.93% for Class C shares; +29.08% for Class S
shares.
(3) Investment results are based on an assumed $10,000 investment at "A" share
maximum sales charge of 4.5%; thus, the net amount invested was $9,550. Also
assumes reinvestment of capital gain distributions and income dividends. No
adjustment has been made for income taxes payable by shareholders on income
dividends or capital gain distributions.
(4) 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. "S" shares, offered without a sales
charge, are available through certain employee benefit plans and special
programs.
(5) Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges where applicable.
(6) Before November 1, 1997, Class C shares were designated Class D and Class S
shares were designated Class C.
- -------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1997)
- -------------------------------------------------------------------------------
TOTAL VALUE OF $10,000 INVESTED ON DECEMBER 31, 1987(3)
(Class A shares, at maximum applicable sales charge)
[PLOT POINTS TO COME]
SEC AVERAGE ANNUAL COMPOUND
Rates of Return
(at maximum applicable sales charge)(4)(5)(6)
- -------------------------------------------------------------------
10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------
Class A +15.18% +15.91% +23.11%
- -------------------------------------------------------------------
Class B +15.31% +15.96% +22.80%
- -------------------------------------------------------------------
Class C +15.32% +16.19% +26.93%
- -------------------------------------------------------------------
Class S +15.86% +17.29% +29.08%
- -------------------------------------------------------------------
<PAGE>
AVERAGE ANNUAL RETURNS
(do not reflect sales charge)(4)(6)
- -------------------------------------------------------------------
10 YEARS 5 YEARS 1 YEAR
- -------------------------------------------------------------------
Class A +15.71% +16.98% +28.91%
- -------------------------------------------------------------------
Class B +15.31% +16.18% +27.80%
- -------------------------------------------------------------------
Class C +15.32% +16.19% +27.93%
- -------------------------------------------------------------------
Class S +15.86% +17.29% +29.08%
- -------------------------------------------------------------------
TOP 5 EQUITY INDUSTRIES
(by percentage of net assets)
RETAIL TRADE 10.5%
BANK 9.3%
DRUGS 7.6%
OIL 7.5%
INSURANCE 6.9%
<PAGE>
PORTFOLIO MANAGER'S REVIEW
A focus on quality aids performance
[Picture Omitted
John Wilson]
Portfolio Manager
We spoke with John Wilson, portfolio manager of State Street Research Investment
Trust, about the year ended December 31, 1997 and his views on the period ahead.
Q: HOW DID THE TRUST PERFORM LAST YEAR?
A: It was a good year for the Trust. Class A shares gained 28.91% [without sales
charge](2) for the 12 months ended December 31, 1997. The Trust outperformed the
average growth and income fund, which gained 27.14%, according to Lipper
Analytical Services. However, it fell short of the S&P 500 Index, a broad
measure of common stock performance, which gained 33.35% over the same period.
Q: WHAT ACCOUNTED FOR THE TRUST'S STRONG PERFORMANCE?
A: A combination of factors. Better-than-expected earnings drove up prices on
many of the Trust's largest stock positions, such as BankAmerica and General
Electric. The Trust's bias for high quality stocks benefitted it during a very
volatile market climate in 1997. Strong Trust areas included pharmaceuticals,
consumer staples and technology. Concern over Asia caused us to cut back on
technology investments and add to utilities, both of which helped performance.
We took profits and managed to avoid some of the downdraft that occurred as a
result of weakness in Southeast Asia. Finally, we owned a good selection of
financial stocks, which performed well as interest rates declined throughout
1997.
Q: WERE THERE ANY DISAPPOINTMENTS ALONG THE WAY?
A: The fourth quarter was a challenge as investors wrestled with the
implications of the Asian crisis. Although we reduced our exposure to energy
stocks, which was a favorable move, we tended to own some of the more volatile
energy stocks such as Oryx, which hurt performance. And although we added
utility investments, we remained underweighted to the index. This sector
performed well as investors sought refuge from Southeast Asian earnings concerns
in the fourth quarter.
Q: WHAT DOES IT MEAN TO BE OVERWEIGHTED OR UNDERWEIGHTED?
A: It means that the portfolio owns a relatively larger or smaller percentage of
an industry group than is represented in the index used for comparing
performance. For example, if utility stocks account for 10% of the S&P 500
Index, and we own 8%, we are underweighted.
Q: WHEN YOU REDUCED THE TRUST'S TECHNOLOGY INVESTMENTS, WHERE DID YOU REINVEST
THE PROCEEDS?
A: We bought a lot of high-quality stocks in businesses with relatively reliable
revenues. For example, we invested in retail drugstores such as CVS and Rite
Aid. We also bought stock in food retailers like Safeway and added to
pharmaceuticals, including Warner-Lambert. Both groups performed well last year,
and we have confidence in their potential as we face the mature stages of this
business cycle.
Q: WHAT IS YOUR OUTLOOK FOR THE TRUST?
A: I believe the environment is more volatile than it has been in some time.
Overall profit growth is slowing down, and the situation in Southeast Asia adds
another layer of complexity. As a result, we will continue to focus on
high-quality stocks where we have a relatively high level of confidence about
profitability. We will continue to look for companies with strong market
presence and strong competitive advantage. Because we think investors may
continue to put a premium on consistency and stability, we're inclined to
emphasize the same in the portfolio. You might say, "Boring is beautiful."
December 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Stock Positions
(by percentage of net assets)
1 GENERAL ELECTRIC Electrical equipment 3.2%
2 TYCO Diversified manufacturer 3.0%
3 E.I. DU PONT DE NEMOURS Chemical company 2.4%
4 BANKAMERICA National Bank 2.3%
5 ROHM & HAAS Chemical company 2.2%
6 PHILIP MORRIS Consumer products 2.1%
7 ACE Insurance 2.0%
8 TIME WARNER Media and entertainment 2.0%
9 BANC ONE Banking 1.9%
10 BELL ATLANTIC Telecommunications 1.9%
These securities represent an aggregate of 23.0% of the portfolio. Because of
active management, there is no guarantee that the Trust currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
BEST AND WORST CONTRIBUTORS TO PERFORMANCE
(January 1, 1997 through December 31, 1997)
BEST /\
- -------------------------------------------------------------------------------
SCHLUMBERGER
Strong demand for oil field services through the third quarter.
COMPAQ COMPUTER
Strong PC demand leading to rising earnings estimate.
BANKAMERICA
Strong earnings growth and prospectus.
WORST \/
- -------------------------------------------------------------------------------
COLUMBIA/HCA
Concerns over government investigations.
PACIFICARE
Reduced earnings outlook.
BRITISH STEEL
Steel outlook weak due to Asian situation.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------------------
COMMON STOCKS 94.9%
BASIC INDUSTRIES 14.6%
CHEMICAL 5.0%
<S> <C> <C>
E.I. Du Pont De Nemours & Co. ............................. 749,800 $ 45,034,862
Monsanto Co. .............................................. 175,400 7,366,800
Rohm & Haas Co. ........................................... 425,200 40,712,900
-------------
93,114,562
-------------
ELECTRICAL EQUIPMENT 3.2%
General Electric Co. ...................................... 798,700 58,604,613
-------------
FOREST PRODUCT 2.5%
Fort James Corp. .......................................... 482,800 18,467,100
IKON Office Solutions Inc. ................................ 306,300 8,614,688
Weyerhaeuser Co. .......................................... 382,200 18,751,687
-------------
45,833,475
-------------
MACHINERY 3.0%
Tyco International Ltd. ................................... 1,227,600 55,318,725
-------------
METAL & MINING 0.9%
British Steel PLC ADR ..................................... 695,600 14,911,925
Ispat International NV Cl. A* ............................. 98,400 2,127,900
-------------
17,039,825
-------------
Total Basic Industries .................................... 269,911,200
-------------
CONSUMER CYCLICAL 18.4%
AUTOMOTIVE 1.9%
General Motors Corp. ...................................... 294,300 17,841,937
Renault SA* ............................................... 622,100 17,507,305
-------------
35,349,242
-------------
RECREATION 6.0%
CBS Corp. ................................................. 574,200 16,903,013
Time Warner Inc. .......................................... 585,200 36,282,400
US West Inc.* ............................................. 1,024,800 29,591,100
Viacom Inc. Cl. B* ........................................ 213,500 8,846,906
Walt Disney Co. ........................................... 185,532 18,379,264
-------------
110,002,683
-------------
RETAIL TRADE 10.5%
Cendant Corp.* ............................................ 318,891 10,961,891
CVS Corp. ................................................. 421,200 26,983,125
Dayton Hudson Corp. ....................................... 392,900 26,520,750
Home Depot Inc. ........................................... 337,600 19,876,200
Kroger Co.* ............................................... 876,000 32,357,250
Rite Aid Corp. ............................................ 487,600 28,616,025
Safeway Inc.* ............................................. 381,300 24,117,225
Toys "R" Us Inc.* ......................................... 784,600 24,665,862
-------------
194,098,328
-------------
Total Consumer Cyclical ................................... 339,450,253
-------------
CONSUMER STAPLE 19.6%
BUSINESS SERVICE 2.4%
Browning-Ferris Industries Inc. ........................... 362,200 13,401,400
HBO & Co. ................................................. 204,200 9,801,600
Interpublic Group of Companies, Inc. ...................... 428,850 21,362,091
-------------
44,565,091
-------------
DRUG 7.6%
American Home Products Corp. .............................. 201,000 15,376,500
Bristol-Myers Squibb Co. .................................. 368,800 34,897,700
Eli Lilly & Co. ........................................... 83,712 5,828,448
Novartis AG ADR ........................................... 255,797 20,782,227
Pfizer Inc. ............................................... 280,700 20,929,694
Schering-Plough Corp. ..................................... 280,800 17,444,700
Warner-Lambert Co. ........................................ 208,700 25,878,800
-------------
141,138,069
-------------
FOOD & BEVERAGE 3.3%
Coca-Cola Co. ............................................. 187,000 12,458,875
General Mills Inc. ........................................ 276,100 19,775,662
H.J. Heinz Co. ............................................ 555,600 28,231,425
-------------
60,465,962
-------------
HOSPITAL SUPPLY 2.0%
Boston Scientific Corp.* .................................. 167,500 7,684,063
Guidant Corp. ............................................. 124,000 7,719,000
Johnson & Johnson ......................................... 318,300 20,968,012
-------------
36,371,075
-------------
PERSONAL CARE 2.2%
Gillette Co. .............................................. 214,100 21,503,669
Procter & Gamble Co. ...................................... 242,800 19,378,475
-------------
40,882,144
-------------
TOBACCO 2.1%
Philip Morris Companies, Inc. ............................. 841,900 38,148,594
-------------
Total Consumer Staple ..................................... 361,570,935
-------------
ENERGY 8.2%
OIL 7.6%
ENI SPA ADR ............................................... 170,800 9,746,275
Exxon Corp. ............................................... 264,700 16,196,331
Oryx Energy Co.* .......................................... 605,200 15,432,600
Seagull Energy Corp.* ..................................... 809,800 16,702,125
Shell Transport & Trading PLC ............................. 724,200 31,683,750
Total SA Cl. B ADR ........................................ 557,608 30,947,244
Unocal Corp. .............................................. 479,200 18,598,950
-------------
139,307,275
-------------
OIL SERVICE 0.6%
Schlumberger Ltd. ......................................... 144,724 11,650,282
-------------
Total Energy .............................................. 150,957,557
-------------
FINANCE 16.2%
BANK 9.3%
Banc One Corp. ............................................ 647,600 35,172,775
BankAmerica Corp. ......................................... 576,000 42,048,000
Chase Manhattan Corp. ..................................... 158,300 17,333,850
H.F. Ahmanson & Co. ....................................... 501,700 33,582,544
NationsBank Corp. ......................................... 483,700 29,415,006
Washington Mutual Inc. .................................... 206,000 13,145,375
-------------
170,697,550
-------------
INSURANCE 6.9%
Ace Ltd. .................................................. 376,200 36,303,300
American General Corp. .................................... 423,642 22,903,146
General Re Corp. .......................................... 112,200 23,786,400
Saint Paul Companies, Inc. ................................ 194,100 15,928,331
Travelers Group Inc. ...................................... 544,200 29,318,775
-------------
128,239,952
-------------
Total Finance ............................................. 298,937,502
-------------
SCIENCE & TECHNOLOGY 12.0%
AEROSPACE 2.4%
Boeing Co. ................................................ 531,200 $ 25,995,600
Raytheon Co. Cl. A ........................................ 18,768 925,473
Raytheon Co. Cl. B ........................................ 350,800 17,715,400
-------------
44,636,473
-------------
COMPUTER SOFTWARE & SERVICE 2.0%
Cisco Systems Inc.* ....................................... 294,000 16,390,500
Microsoft Corp.* .......................................... 160,600 20,757,550
-------------
37,148,050
-------------
ELECTRONIC COMPONENTS 1.4%
Analog Devices Inc.* ...................................... 203,300 5,628,869
Intel Corp. ............................................... 167,200 11,745,800
Texas Instruments Inc. .................................... 168,000 7,560,000
-------------
24,934,669
-------------
ELECTRONIC EQUIPMENT 2.0%
L.M. Ericsson Telephone Co. ADR Cl. B ..................... 276,640 10,322,130
Lucent Technologies Inc. .................................. 225,700 18,027,788
Teradyne Inc.* ............................................ 284,100 9,091,200
-------------
37,441,118
-------------
OFFICE EQUIPMENT 4.2%
Compaq Computer Corp. ..................................... 319,800 18,048,713
Hewlett-Packard Co. ....................................... 264,000 16,500,000
International Business Machines Corp. ..................... 216,900 22,679,606
Xerox Corp. ............................................... 269,000 19,855,562
-------------
77,083,881
-------------
Total Science & Technology ................................ 221,244,191
-------------
UTILITY 5.9%
ELECTRIC 2.4%
FPL Group Inc. ............................................ 321,100 19,005,106
Texas Utilities Co. ....................................... 631,200 26,234,250
-------------
45,239,356
-------------
TELEPHONE 3.5%
Bell Atlantic Corp. ....................................... 386,500 35,171,500
WorldCom Inc.* ............................................ 945,000 28,586,250
-------------
63,757,750
-------------
Total Utility ............................................. 108,997,106
-------------
Total Common Stocks (Cost $1,194,510,262) ................. 1,751,068,744
-------------
SHORT-TERM INVESTMENTS 4.0%
Navigator Securities Lending Prime Portfolio .............. 74,267,129 74,267,129
-------------
Total Short-Term Investments (Cost $74,267,129) ........... 74,267,129
-------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PRINCIPAL MATURITY VALUE
AMOUNT DATE (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 6.2%
<S> <C> <C> <C>
American Express Credit Corp., 5.83% ............ $ 11,279,000 1/06/1998 $ 11,279,000
American Express Credit Corp., 5.75% ............ 315,000 1/13/1998 315,000
Beneficial Corp., 5.86% ......................... 6,344,000 1/06/1998 6,344,000
Chevron USA Inc., 5.58% ......................... 24,000,000 1/14/1998 24,000,000
Commercial Credit Co., 5.95% .................... 5,773,000 1/09/1998 5,773,000
Deere & Co., 5.75% .............................. 9,685,000 1/13/1998 9,685,000
General Electric Capital Corp., 6.08% ........... 9,794,000 1/05/1998 9,794,000
Household Finance Corp., 6.10% .................. 31,742,000 1/09/1998 31,742,000
John Deere Capital Corp., 5.83% ................. 15,148,000 1/06/1998 15,148,000
----------------
Total Commercial Paper (Cost $114,080,000) ............................................ 114,080,000
----------------
Total Investments (Cost $1,382,857,391) - 105.1% ...................................... 1,939,415,873
Cash and Other Assets, Less Liabilities - (5.1%) ...................................... (93,523,239)
----------------
Net Assets - 100.0% ................................................................... $ 1,845,892,634
================
Federal Income Tax Information:
At December 31, 1997, the net unrealized appreciation of investments based on
cost for Federal income tax purposes of $1,381,382,083 was as follows: Aggregate
gross unrealized appreciation for all investments in which there is an excess
of value over tax cost ................................................................ $ 578,494,539
Aggregate gross unrealized depreciation for all investments in which there is an excess
of tax cost over value ................................................................ (20,460,749)
----------------
$ 558,033,790
================
- ------------------------------------------------------------------------------------------------------------------
* Non-income-producing securities.
ADR stands for American Depositary Receipt, representing ownership of foreign
securities.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1997
ASSETS
Investments, at value (Cost $1,382,857,391)
(Note 1) ............................................. $ 1,939,415,873
Cash .................................................. 159
Receivable for securities sold ........................ 6,386,223
Dividends and interest receivable ..................... 2,615,960
Receivable for fund shares sold ....................... 1,889,330
Other assets .......................................... 18,145
---------------
1,950,325,690
LIABILITIES
Payable for collateral received on securities loaned 74,267,129
Payable for securities purchased ...................... 20,184,613
Payable for fund shares redeemed ...................... 6,789,588
Accrued management fee (Note 2) ....................... 1,918,339
Accrued distribution and service fees (Note 4) ........ 585,075
Accrued transfer agent and shareholder services
(Note 2) ............................................ 449,888
Accrued trustees' fees (Note 2) ....................... 9,464
Other accrued expenses ................................ 228,960
---------------
104,433,056
---------------
Net Assets ............................................ $ 1,845,892,634
===============
Net Assets consist of:
Unrealized appreciation of investments .............. $ 556,558,482
Accumulated net realized gain ....................... 39,632,205
Paid-in capital ..................................... 1,249,701,947
---------------
$ 1,845,892,634
===============
Net Asset Value and redemption price per share
of Class A shares ($367,759,039/35,337,294 shares) ... $10.41
======
Maximum Offering Price per share of Class
shares ($10.41/.955) ................................. $10.90
======
Net Asset Value and offering price per share of
Class B shares ($558,567,869/54,006,968 shares)* .... $10.34
======
Net Asset Value and offering price per share
of Class C shares ($36,289,866/3,497,034 shares)* ... $10.38
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($883,275,860/84,512,635 shares) ..................... $10.45
======
- -----------------------------------------------------------------------
*Redemption price per share for Class B and Class C is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the year ended December 31, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends, net of foreign taxes of $429,595 ............................. $ 24,269,765
Interest (Note 1) ....................................................... 3,263,149
------------
27,532,914
EXPENSES
Management fee (Note 2) ................................................. 5,717,422
Transfer agent and shareholder services (Note 2) ........................ 1,961,540
Service fee - Class A (Note 4) .......................................... 756,224
Distribution and service fees - Class B (Note 4) ........................ 4,460,868
Distribution and service fees - Class C (Note 4) ........................ 320,933
Custodian fee ........................................................... 300,298
Reports to shareholders ................................................. 150,033
Registration fees ....................................................... 131,030
Trustees' fees (Note 2) ................................................. 30,714
Audit fee ............................................................... 27,223
Legal fees .............................................................. 10,551
Miscellaneous ........................................................... 54,103
------------
13,920,939
------------
Net investment income ................................................... 13,611,975
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments (Notes 1 and 3) ........................ 233,740,026
Net unrealized appreciation of investments .............................. 153,903,428
------------
Net gain on investments ................................................. 387,643,454
------------
Net increase in net assets resulting from operations .................... $401,255,429
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
------------------------------
1996 1997
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income .................. $ 14,467,750 $ 13,611,975
Net realized gain on investments ....... 240,753,684 233,740,026
Net unrealized appreciation
(depreciation) of investments ........ (18,848,278) 153,903,428
-------------- --------------
Net increase resulting from
operations ........................... 236,373,156 401,255,429
-------------- --------------
Dividends from net investment income:
Class A .............................. (2,367,239) (2,789,737)
Class B .............................. (1,492,489) (870,683)
Class C .............................. (139,420) (52,743)
Class S .............................. (11,670,468) (9,898,812)
-------------- --------------
(15,669,616) (13,611,975)
-------------- --------------
Distributions from net realized gains:
Class A .............................. (38,241,853) (37,498,390)
Class B .............................. (54,345,452) (56,883,383)
Class C .............................. (4,419,675) (3,712,939)
Class S .............................. (144,043,972) (96,107,440)
-------------- --------------
(241,050,952) (194,202,152)
-------------- --------------
Distribution in excess of net realized
gains:
Class A .............................. (151,663) --
Class B .............................. (215,528) --
Class C .............................. (17,528) --
Class S .............................. (571,263) --
-------------- --------------
(955,982) --
-------------- --------------
Net increase from fund share
transactions (Note 5) ................ 292,610,905 306,531,257
-------------- --------------
Total increase in net assets............ 271,307,511 499,972,559
Net Assets
Beginning of year ...................... 1,074,612,564 1,345,920,075
-------------- --------------
End of year ............................ $1,345,920,075 $1,845,892,634
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1997
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 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. Before November 1, 1997, Class C shares
were designated Class D and Class S shares were designated Class C. 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 subject to a contingent deferred sales charge of 1.00% on any
shares redeemed within one year of their purchase. Class C shares also pay
annual distribution and service fees of 1.00%. Class S shares are only offered
to certain retirement accounts, advisory accounts of State Street Research &
Management Company (the "Adviser"), an indirect wholly owned subsidiary of
Metropolitan Life Insurance Company ("Metropolitan"), and special programs. No
sales charge is imposed at the time of purchase or redemption of Class S shares.
Class S shares do not pay any distribution or service fees. 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 closing price supplied
through such system. In the absence of recorded sales and for those
over-the-counter securities not quoted on the NASDAQ system, valuations are at
the mean of the closing bid and asked quotations, except for securities that may
be restricted as to public resale, which are valued in accordance with methods
adopted by the Trustees. Security transactions are accounted for on the trade
date (date the order to buy or sell is executed), and dividends declared but not
received are accrued on the ex-dividend date. Interest income is determined on
the accrual basis. Realized gains and losses from security transactions are
reported on the basis of identified cost of securities delivered.
B. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary since the Trust has elected
to qualify under Subchapter M of the Internal Revenue Code and maintains a
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, unless
additional distributions are required for compliance with applicable tax
regulations. For the year ended December 31, 1997, the Trust has designated its
distributions from net realized gains as $87,537,185 from 20% rate gains and
$50,664,876 from 28% rate 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.
E. SECURITIES LENDING
The Trust may seek additional income by lending portfolio securities to
qualified institutions. The Trust will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. If the borrower fails to return the securities
and the value of the collateral has declined during the term of the loan, the
Trust will bear the loss. At December 31, 1997, the value of the securities
loaned and the value of collateral were $71,241,423 and $74,267,129,
respectively. During the year ended December 31, 1997, income from securities
lending amounted to $3,440 and is included in interest income.
NOTE 2
Prior to August 18, 1997, the Adviser received an annual fee equal to 0.50% of
the average net assets up to and including $200,000,000, 0.375% of the average
net assets in excess of $200,000,000 up to and including $300,000,000, 0.30% of
the average net assets in excess of $300,000,000 up to and including
$500,000,000, and 0.25% of the average net assets in excess of $500,000,000.
Effective August 18, 1997 and continuing for a period of one year, the
management fee is equal to 0.41% of average daily net assets on an annualized
basis. Beginning on August 18, 1998 and continuing thereafter, the management
fee will be equal to 0.55% annually on average net assets up to $500,000,000,
0.50% annually of the next $500,000,000 in average net assets, and 0.45%
annually of average net assets in excess of $1,000,000,000. 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, 1997, the fees pursuant to such agreement amounted to
$5,717,422.
State Street Research Service Center, a division of State Street Research
Investment Services, Inc., the Trust's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, provides
certain shareholder services to the 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, 1997, the amount of such shareholder servicing and account maintenance
expenses was $502,952.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$30,714 during the year ended December 31, 1997.
NOTE 3
For the year ended December 31, 1997, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$1,225,130,872 and $1,190,967,338, 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 C shares. In addition, the Trust pays
annual distribution fees of 0.75% of average daily net assets for Class B and
Class C shares. The Distributor uses such payments for personal service and/or
the maintenance or servicing of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing expenses.
For the year ended December 31, 1997, fees pursuant to such plan amounted to
$756,224, $4,460,868 and $320,933 for Class A, Class B and Class C 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 $382,856 and $2,313,586, respectively, on sales of Class A shares of
the Trust during the year ended December 31, 1997, and that MetLife Securities,
Inc. earned commissions aggregating $4,914,177 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $612,487 and
$3,122 on redemptions of Class B and Class C shares, respectively, during the
same period.
NOTE 5
The Trustees have the authority to issue an unlimited number of shares of
beneficial interest, $.001 par value per share.
Share transactions were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------------------------------
1996 1997
---------------------------------- ----------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 8,496,436 $ 85,083,629 11,892,218 $125,284,553
Issued upon reinvestment of:
Distributions from net
realized gains ............ 4,105,073 37,233,009 3,437,670 36,542,436
Dividends from net investment
income .................... 238,083 2,245,230 269,405 2,789,580
Shares redeemed ............... (2,981,620) (29,917,407) (4,933,408) (51,867,529)
---------- ------------- ---------- ------------
Net increase .................. 9,857,972 $ 94,644,461 10,665,885 $112,749,040
========== ============= ========== ============
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
Shares sold ................... 11,730,491 $ 117,507,067 19,674,761 $206,270,802
Issued upon reinvestment of:
Distributions from net
realized gains ............ 5,847,959 52,807,070 5,211,853 54,985,047
Dividends from net investment
income .................... 153,378 1,415,675 79,052 792,716
Shares redeemed ............... (2,861,202) (28,467,433) (5,930,757) (62,779,979)
---------- ------------- ---------- ------------
Net increase .................. 14,870,626 $143,262,379 19,034,909 $199,268,586
========== ============ ========== ============
CLASS C (FORMERLY CLASS D) SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
Shares sold ................... 910,947 $ 9,099,923 1,100,245 $ 11,484,215
Issued upon reinvestment of:
Distributions from net
realized gains ............ 466,008 4,217,370 334,491 3,539,567
Dividends from net investment
income .................... 13,599 126,917 3,760 37,536
Shares redeemed ............... (397,252) (3,972,443) (775,363) (8,173,619)
---------- ------------ ---------- ------------
Net increase .................. 993,302 $ 9,471,767 663,133 $ 6,887,699
========== ============ ========== ============
CLASS S (FORMERLY CLASS C) SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
Shares sold ................... 1,551,667 $ 15,248,056 1,718,321 $ 18,233,635
Issued upon reinvestment of:
Distributions from net
realized gains ............ 8,570,372 78,065,167 5,286,697 56,461,922
Dividends from net investment
income .................... 468,693 4,537,303 361,083 3,744,987
Shares redeemed ............... (5,305,991) (52,618,228) (8,574,756) (90,814,612)
---------- ------------ ---------- ------------
Net increase (decrease) ....... 5,284,741 $ 45,232,298 (1,208,655) $(12,374,068)
========== ============ ========== ============
</TABLE>
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Years ended December 31
------------------------------------------------------------------------------------
1993(2) 1994 1995(1) 1996(1) 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.75 8.69 7.74 9.16 9.07
----- ----- ----- ----- -----
Net investment income ($) 0.10 0.11 0.14 0.12 0.10
Net realized and unrealized gain (loss) on
investments ($) 0.81 (0.44) 2.39 1.80 2.54
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.91 (0.33) 2.53 1.92 2.64
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.13) (0.12) (0.13) (0.13) (0.10)
Distributions from net realized gains ($) (0.84) (0.50) (0.98) (1.87) (1.20)
Distribution in excess of net realized
gains ($) -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.97) (0.62) (1.11) (2.01) (1.30)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 8.69 7.74 9.16 9.07 10.41
===== ===== ===== ===== =====
Total return(4) (%) 10.53(5) (3.84) 32.85 21.03 28.91
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 75,259 92,137 135,676 223,868 367,759
Ratio of operating expenses to average net
assets (%) 0.75(6) 0.89 0.78 0.75 0.76
Ratio of net investment income to average
net assets (%) 1.27(6) 1.26 1.54 1.17 0.90
Portfolio turnover rate (%) 43.57 33.08 39.21 73.51 75.21
Average commission rate(7) ($) -- -- -- 0.0499 0.0515
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Years ended December 31
------------------------------------------------------------------------------------
1993(3) 1994 1995(1) 1996(1) 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 9.15 8.66 7.72 9.13 9.03
----- ----- ----- ----- -----
Net investment income ($) 0.06 0.06 0.07 0.04 0.02
Net realized and unrealized gain (loss) on
investments ($) 0.39 (0.44) 2.38 1.80 2.51
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.45 (0.38) 2.45 1.84 2.53
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.10) (0.06) (0.06) (0.06) (0.02)
Distributions from net realized gains ($) (0.84) (0.50) (0.98) (1.87) (1.20)
Distribution in excess of net realized
gains ($) -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.94) (0.56) (1.04) (1.94) (1.22)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 8.66 7.72 9.13 9.03 10.34
===== ===== ===== ===== =====
Total return(4) (%) 4.95(5) (4.43) 31.86 20.15 27.80
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 73,110 113,301 183,446 315,766 558,568
Ratio of operating expenses to average net
assets (%) 1.51(6) 1.64 1.53 1.50 1.51
Ratio of net investment income to average
net assets (%) 0.48(6) 0.51 0.79 0.41 0.15
Portfolio turnover rate (%) 43.57 33.08 39.21 73.51 75.21
Average commission rate(7) ($) -- -- -- 0.0499 0.0515
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)Per-share figures have been calculated using the average shares method.
(2)February 17, 1993 (commencement of share class designations) to December 31,
1993.
(3)March 15, 1993 (commencement of share class designations) to December
31, 1993.
(4)Does not reflect any front-end or contingent deferred sales charges.
(5)Not annualized.
(6)Annualized.
(7)Average commission rate per share paid by the Trust for security trades on
which commissions are charged beginning with the fiscal year ended December
31, 1996.
<PAGE>
<TABLE>
<CAPTION>
Class C (Formerly Class D)
--------------------------------------------------------------------------------------
Years ended December 31
-------------------------------------------------------------------------------------
1993(3) 1994 1995(1) 1996(1) 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 9.15 8.68 7.74 9.15 9.05
----- ----- ----- ----- -----
Net investment income ($) 0.06 0.05 0.07 0.04 0.02
Net realized and unrealized gain (loss)
on investments ($) 0.40 (0.43) 2.38 1.79 2.53
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.46 (0.38) 2.45 1.83 2.55
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.09) (0.06) (0.06) (0.05) (0.02)
Distributions from net realized gains ($) (0.84) (0.50) (0.98) (1.87) (1.20)
Distribution in excess of net realized
gains ($) -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.93) (0.56) (1.04) (1.93) (1.22)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 8.68 7.74 9.15 9.05 10.38
===== ===== ===== ===== =====
Total return(4) (%) 5.10(5) (4.45) 31.75 20.09 27.93
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 9,729 11,707 16,841 25,658 36,290
Ratio of operating expenses to average net
assets (%) 1.51(6) 1.64 1.53 1.50 1.51
Ratio of net investment income to average
net assets (%) 0.51(6) 0.51 0.79 0.42 0.15
Portfolio turnover rate (%) 43.57 33.08 39.21 73.51 75.21
Average commission rate(7) ($) -- -- -- 0.0499 0.0515
<CAPTION>
Class S (Formerly Class C)
--------------------------------------------------------------------------------------
Years ended December 31
-------------------------------------------------------------------------------------
1993 1994 1995(1) 1996(1) 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.80 8.70 7.76 9.18 9.11
----- ----- ----- ----- -----
Net investment income ($) 0.15 0.13 0.16 0.14 0.12
Net realized and unrealized gain (loss)
on investments ($) 0.74 (0.43) 2.39 1.82 2.54
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) 0.89 (0.30) 2.55 1.96 2.66
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.15) (0.14) (0.15) (0.15) (0.12)
Distributions from net realized gains ($) (0.84) (0.50) (0.98) (1.87) (1.20)
Distribution in excess of net realized
gains ($) -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.99) (0.64) (1.13) (2.03) (1.32)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 8.70 7.76 9.18 9.11 10.45
===== ===== ===== ===== =====
Total return(4) (%) 10.20 (3.47) 33.07 21.48 29.08
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 729,536 627,551 738,649 780,627 883,276
Ratio of operating expenses to average net
assets (%) 0.49 0.65 0.54 0.50 0.51
Ratio of net investment income to average
net assets (%) 1.63 1.54 1.81 1.44 1.17
Portfolio turnover rate (%) 43.57 33.08 39.21 73.51 75.21
Average commission rate(7) ($) -- -- -- 0.0499 0.0515
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)Per-share figures have been calculated using the average shares method.
(2)February 17, 1993 (commencement of share class designations) to December 31,
1993.
(3)March 15, 1993 (commencement of share class designations) to December
31, 1993.
(4)Does not reflect any front-end or contingent deferred sales charges.
(5)Not annualized.
(6)Annualized.
(7)Average commission rate per share paid by the Trust for security trades on
which commissions are charged beginning with the fiscal year ended December
31, 1996.
<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, 1997, 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, 1997 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, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 9, 1998
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
Investment Trust provided shareholders with strong performance during the year.
For the 12 months ended December 31, 1997, Class A shares returned +28.91%
[without sales charge]. The Trust outperformed the average growth and income
fund, which was up 27.14%, according to Lipper Analytical Services. It lagged
the S&P 500, which gained 33.35% for the same period.
The core of the Trust's portfolio consists primarily of large companies with
global market leadership as well as income-producing securities that offer a
potential cushion against stock market volatility.
The Trust's investments in high quality global market leaders accounted for much
of its strong performance during the year. A reduction in the Trust's technology
holdings was well-timed. Profits were taken and the proceeds reinvested in
retail drug and food companies, selected for their relatively stable prospects
for revenues and earnings.
Stock selection in the energy sector and an underweighting in utilities stocks
resulted in a weak fourth quarter for the Trust. Looking ahead, the manager
continues to focus on companies with strong market presence and relatively
stable sales and earnings growth potential.
December 31, 1997
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 period 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. "S" shares, offered without a sales charge, are
available through certain employee benefit plans and special programs. Before
November 1, 1997, Class C shares were designated Class D, and Class S shares
were designated Class C. Performance reflects maximum 4.5% "A" share front-end
sales charge or 5% "B" share or 1% "C" share contingent deferred sales charges
where applicable. 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.
CHANGE IN VALUE OF $10,000
BASED ON THE S&P 500 COMPARED
TO CHANGE IN VALUE OF $10,000
INVESTED IN INVESTMENT TRUST
CLASS A SHARES
Average Annual Total Return
1 year 5 years 10 years
+23.11% +15.91% +15.18%
Investment Trust S&P 500
12/87 9,550 10,000
12/88 10,530 11,660
12/89 13,910 15,340
12/90 13,780 14,870
12/91 17,650 19,390
12/92 18,760 20,860
12/93 20,620 22,990
12/94 19,820 23,260
12/95 26,340 31,990
12/96 31,870 39,330
12/97 41,086 52,448
CLASS B SHARES
Average Annual Total Return
1 year 5 years 10 years
+22.80% +15.96% +15.31%
Investment Trust S&P 500
12/87 10,000 10,000
12/88 11,020 11,660
12/89 14,580 15,340
12/90 14,430 14,870
12/91 18,480 19,390
12/92 19,640 20,860
12/93 21,480 22,960
12/94 20,530 23,260
12/95 27,070 31,990
12/96 32,520 39,330
12/97 41,566 52,448
CLASS C SHARES
Average Annual Total Return
1 year 5 years 10 years
+26.93% +16.19% +15.32%
Investment Trust S&P 500
12/87 10,000 10,000
12/88 11,020 11,660
12/89 14,570 15,340
12/90 14,420 14,870
12/91 18,480 19,390
12/92 19,640 20,860
12/93 21,490 22,960
12/94 20,530 23,260
12/95 27,070 31,990
12/96 32,520 39,330
12/97 41,570 52,448
CLASS S SHARES
Average Annual Total Return
1 year 5 years 10 years
+29.08% +17.29% +15.86%
Investment Trust S&P 500
12/87 10,000 10,000
12/88 11,030 11,660
12/89 14,580 15,340
12/90 14,430 14,870
12/91 18,480 19,390
12/92 19,640 20,860
12/93 21,650 22,960
12/94 20,890 23,260
12/95 27,800 31,990
12/96 33,780 39,330
12/97 43,597 52,448
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------
REPORT ON SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the State Street Research Investment Trust
("Trust"), a series of State Street Research Master Investment Trust ("Master
Trust"), was convened on August 8, 1997 ("Meeting"). The results of the Meeting
are set forth below.
VOTES (MILLIONS OF SHARES)
--------------------------
FOR WITHHELD
--- --------
1. The following persons were elected as Trustees:
Steve A. Garban 87.8 5.0
Malcolm T. Hopkins 87.8 5.0
Edward M. Lamont 88.5 4.3
Robert A. Lawrence 88.6 4.3
Dean O. Morton 88.6 4.2
Thomas L. Phillips 88.6 4.2
Toby Rosenblatt 88.7 4.2
Michael S. Scott Morton 88.6 4.2
Ralph F. Verni 88.5 4.3
Jeptha H. Wade 88.6 4.3
VOTES (MILLIONS OF SHARES)
---------------------------
FOR AGAINST ABSTAIN
PROPOSAL --- ------- -------
2. The Trust's investment advisory contract was
amended to increase the management fee and to
make related changes ............................ 61.1 22.1 7.0
3. The Trust's fundamental policy on lending was
amended to clarify the permissibility of
securities lending .............................. 70.0 12.1 8.1
4. The Trust's fundamental policies regarding
diversification of investments were amended ..... 73.1 8.6 8.6
5. The selection of Coopers & Lybrand L.L.P. as
the Master Trust's independent accountants was
ratified ........................................ 85.6 1.3 6.0
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STATE STREET RESEARCH INVESTMENT TRUST
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FUND INFORMATION, OFFICERS AND TRUSTEES OF STATE STREET RESEARCH MASTER INVESTMENT TRUST
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Fund Information Officers Trustees
<S> <C> <C>
STATE STREET RESEARCH RALPH F. VERNI RALPH F. VERNI
INVESTMENT TRUST Chairman of the Board, Chairman of the Board,
One Financial Center President and President, Chief Executive
Boston, MA 02111 Chief Executive Officer Officer and Director,
State Street Research &
INVESTMENT ADVISER PETER C. BENNETT Management Company
State Street Research & Vice President
Management Company STEVE A. GARBAN
One Financial Center DUDLEY F. WADE Retired; formerly Senior Vice
Boston, MA 02111 Vice President President for Finance and
Operations and Treasurer, The
DISTRIBUTOR JAMES M. WEISS Pennsylvania State University
State Street Research Vice President
Investment Services, Inc. MALCOLM T. HOPKINS
One Financial Center JOHN T. WILSON Former Vice Chairman of the
Boston, MA 02111 Vice President Board and Chief Financial
Officer, St. Regis Corp.
SHAREHOLDER SERVICES GERARD P. MAUS
State Street Research Treasurer EDWARD M. LAMONT
Service Center Formerly in banking
P.O. Box 8408 JOSEPH W. CANAVAN (Morgan Guaranty Trust
Boston, MA 02266-8408 Assistant Treasurer Company of New York);
1-800-562-0032 presently engaged in private
DOUGLAS A. ROMICH investments and civic affairs
CUSTODIAN Assistant Treasurer
State Street Bank and ROBERT A. LAWRENCE
Trust Company FRANCIS J. MCNAMARA, III Associate, Saltonstall & Co.
225 Franklin Street Secretary and General Counsel
Boston, MA 02110 DEAN O. MORTON
DARMAN A. WING Retired; formerly Executive
LEGAL COUNSEL Assistant Secretary and Vice President, Chief
MINTZ, LEVIN, COHN, FERRIS, Assistant General Counsel Operating Officer and Director,
Mintz, Levin, Cohn, Ferris, Hewlett-Packard Company
Glovsky and Popeo, P.C. AMY L. SIMMONS
One Financial Center Assistant Secretary THOMAS L. PHILLIPS
Boston, MA 02111 Retired; formerly Chairman of
the Board and Chief Executive
INDEPENDENT ACCOUNTANTS Officer, Raytheon Company
Coopers & Lybrand L.L.P.
One Post Office Square TOBY ROSENBLATT
Boston, MA 02109 President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
MICHAEL S. SCOTT MORTON
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts
Institute of Technology
JEPTHA H. WADE
Retired; formerly Of Counsel,
Choate, Hall & Stewart
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STATE STREET RESEARCH INVESTMENT TRUST Bulk Rate
One Financial Center U.S. Postage
Boston, MA 02111 PAID
Randolph, MA
Permit No. 600
-----------------
QUESTIONS? COMMENTS?
Call us at 1-800-562-0032
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
[Graphic Omitted] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied or preceded by a current State Street Research Investment Trust
prospectus. When used after March 31, 1998, this report must be accompanied by a
current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 4101-970820(0998)SSR-LD IT-751D-298IBS
