<PAGE>
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STATE STREET RESEARCH
- -------------------------------------------------------------------------------
INVESTMENT TRUST
----------------
ANNUAL REPORT
December 31, 1998
--------------------
WHAT'S INSIDE
--------------------
FROM THE CHAIRMAN
Financial markets delivered
strong gains in 1998
PORTFOLIO MANAGER'S REVIEW
Large-cap growth stocks fueled
strong stock market gains
FUND INFORMATION
Facts and figures
PLUS, COMPLETE PORTFOLIO HOLDINGS
AND FINANCIAL STATEMENTS
- ----------------------
DALBAR
HONORS COMMITMENT TO:
INVESTORS
1998
- ----------------------
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
FROM THE CHAIRMAN
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THIS IS THE 75TH ANNUAL REPORT OF STATE STREET RESEARCH INVESTMENT TRUST. THE
FUND WILL CELEBRATE ITS ANNIVERSARY ON JULY 29, 1999 -- COMMEMORATING THE
FOUNDING OF ONE OF THE FIRST MUTUAL FUND FAMILIES IN THE UNITED STATES AND THE
WORLD.
- -------------------------------------------------------------------------------
[Photo of Ralph F. Verni]
DEAR SHAREHOLDER:
In 1998, financial markets in the United States and most developed foreign
nations delivered strong gains. The U.S. economy boosted personal income
and kept unemployment low. Yet growth was moderate enough to hold inflation
down to a mere 1.5% for the year. During the summer, the collapse of
Russia's currency sent waves through the world's markets, but a fast-acting
Federal Reserve Board helped stem a crisis. Currencies continued to slump
in many emerging markets. In some, devaluation threatened, with Brazil in
the hot seat at year-end.
STOCKS
A steep U.S. stock market correction late in the summer was short-lived.
Despite signs of slower profit growth, the market staged a comeback in the
fourth quarter. Technology stocks and large company growth stocks were the
strongest performers, led by Internet stocks which delivered surprising
gains. The S&P 500 was up by more than 20% for an unprecedented fourth
consecutive year.(1) However, gains were concentrated in a narrow band of
stocks. The average stock on the New York Stock Exchange actually lost
ground for the year. And the stocks of small and medium-sized companies
continued to lag despite a fourth-quarter comeback.
BONDS
Bonds benefited from the Federal Reserve Board's three quick interest rate
cuts in autumn. The yield on the bellwether 30-year U.S. Treasury bond fell
below 5.0%, then rose slightly at year-end. Not surprisingly, U.S. Treasury
bonds led fixed income market performance for the year. Most other segments
of the bond market delivered attractive single-digit gains. High-yield
bonds disappointed investors, gaining only 0.6% as measured by the First
Boston High Yield Index.
INTERNATIONAL
Foreign markets delivered mixed returns in 1998. In Europe, expectations
for the new common currency, the euro, ran high. Although this helped
European markets, they did better in the first half of the year than in the
second. Most emerging markets were hurt by currencies that continued to
slump against the dollar, or by fears of devaluation, which materialized in
Russia, then threatened in Brazil. Japan showed some willingness to address
its lingering economic problems. But the modest gains attributed to
Japanese stocks owned by U.S. investors were primarily the result of a
weaker dollar.
OUTLOOK AND OPPORTUNITIES
As investors, you may be asking where the opportunities are in a stock
market that has soared for the better part of a decade and a bond market
where interest rates are at or near historic lows. My reply: in
diversification -- and in markets that have been beaten down, such as small
and mid-cap stocks, high-yield bonds, and foreign markets. But every
investor has individual goals. Now is a good time to consult your financial
professional. And as always, thank you for your confidence in State Street
Research funds.
Sincerely,
/s/ Ralph F. Verni
Ralph F. Verni
Chairman
December 31, 1998
(1) The S&P 500 (officially the "Standard and Poor's 500 Composite Stock Price
Index") is an unmanaged index of 500 U.S. stocks. The index does not take
transaction charges into consideration. It is not possible to invest
directly in the index.
(2) 28.26% for Class B shares; 28.15% for Class C shares; 29.51% for Class S
shares.
(3) Keep in mind that past performance is no guarantee of future results. The
Fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of
capital gain distributions and income dividends at net asset value.
Performance reflects a maximum 4.5% Class A share front-end sales charge, or
5% Class B share or 1% Class C share contingent deferred sales charge, where
applicable.
(4) Class S shares, offered without a sales charge, are available through
certain employee benefit plans and special programs.
(5) The fund's returns include performance before the creation of share classes.
If this performance reflected the share classes' current 12b-1 fees, the
fund's returns may have been lower.
(6) During the periods prior to 1990 that shares of the Fund were not available
to the public, the Fund was not subject to the cash inflows and higher
redemptions and expenses that have occurred during the Fund's current
continuous public offering.
PLEASE NOTE THAT THE DISCUSSION THROUGHOUT THIS SHAREHOLDER REPORT IS DATED AS
INDICATED AND, BECAUSE OF POSSIBLE CHANGES IN VIEWPOINT, DATA AND TRANSACTIONS,
SHOULD NOT BE RELIED UPON AS BEING CURRENT THEREAFTER.
- -------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended December 31, 1998)
- -------------------------------------------------------------------------------
TOTAL VALUE OF $10,000 INVESTED ON DECEMBER 31, 1988(3)
(Class A shares, at maximum applicable sales charge)
VALUE OF
ACCOUNT AT
DATE YEAR END
---- --------
12/31/88 $ 9,550
12/31/89 12,620
12/31/90 12,499
12/31/91 16,009
12/31/92 17,015
12/31/93 18,700
12/31/94 17,983
12/31/95 23,890
12/31/96 28,913
12/31/97 37,271
12/31/98 48,125
AVERAGE ANNUAL TOTAL RETURN
(at maximum applicable sales
charge)(3)(4)(5)(6)
- ------------------------------------------------------------------------------
LIFE OF FUND
(since 7/29/24) 10 YEARS 5 YEARS 1 YEAR
- ------------------------------------------------------------------------------
Class A 13.28% 17.01% 19.70% 23.31%
- ------------------------------------------------------------------------------
Class B 13.29% 17.07% 19.75% 23.26%
- ------------------------------------------------------------------------------
Class C 13.29% 17.07% 19.90% 27.15%
- ------------------------------------------------------------------------------
Class S 13.38% 17.75% 21.14% 29.51%
- ------------------------------------------------------------------------------
The performance data shown above do not reflect an increase in the maximum
Class A sales charge from 4.5% to 5.75%, effective as of 1/1/99. At the new,
higher Class A sales charge, the performance would have been lower. Assuming
the increased sales charge was in effect, performance would have been as
follows:
LIFE OF FUND
(since 7/29/24) 10 Years 5 Years 1 Year
- ------------------------------------------------------------------------------
Class A 13.28% 16.86% 19.39% 21.70%
<PAGE>
PORTFOLIO MANAGER'S REVIEW
Investment Trust: Large-cap growth stocks fueled strong stock market gains
[Photo of John Wilson]
John Wilson
Portfolio Manager
We spoke with John Wilson, portfolio manager of State Street Research Investment
Trust, about the year ended December 31, 1998 and his views on the period ahead.
Q: HOW DID THE FUND PERFORM LAST YEAR?
A: It was a very strong year for the Fund. Class A shares gained 29.12%, [does
not reflect sales charge](2) for the 12 months ended December 31, 1998. The Fund
significantly outperformed the Lipper average growth and income fund, which
gained 15.61%. And, it outperformed the S&P 500, a broad measure of common stock
performance, which gained 28.60% over the same period.
Q: WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE?
A: Our focus on large-cap growth stocks paid off as growth stocks, in general,
outperformed value stocks by a wide margin. Also, the Fund's emphasis on
companies with strong market leadership positions in their industries was
beneficial. These were the companies most favored by investors during the year,
given their strong earnings growth.
Q: HOW DID THE FUND REACT TO THE VOLATILITY THAT BROUGHT THE MARKET DOWN SHARPLY
LATE LAST SUMMER?
A: Not surprisingly, the Fund's volatility was in line with the market as a
whole. The Fund has been positioned somewhat cautiously during the summer.
During the market's weakness, we were able to purchase additional shares of
financial and technology stocks at attractive prices. This helped in the fourth
quarter.
Q: WHICH INVESTMENTS HELPED THE FUND THE MOST?
A: The Fund's investments in technology, telecommunications, financial services
and retail stocks were among the strongest performers. Companies such as Cisco
Systems, Lucent Technologies, and MCI WorldCom, in the technology sector, are
all examples of companies taking advantage of rapid growth in either voice or
data networking. In the financial services area, some stocks were hurt in the
third quarter, but rebounded nicely. One example is Chase Manhattan Bank, which
experienced an impressive recovery in many of its capital markets businesses.
The Fund also benefited from strong holdings in the supermarket and drug store
industries. These include CVS, Rite Aid, and Safeway.
Q: WERE THERE ANY DISAPPOINTMENTS?
A: Although the Fund had relatively modest exposure to basic materials stocks,
investments in DuPont and in Rohm & Haas, both chemical companies,
underperformed the market. Earnings proved disappointing because of difficult
global economic conditions. The Fund's investments in defensive sectors such as
utilities and energy underperformed. However, three interest rate cuts by the
Federal Reserve Board in the last half of the year renewed confidence in the
economy and could provide lift for these sectors in 1999.
Q: WHAT IS YOUR OUTLOOK FOR THE PERIOD AHEAD?
A: The long-term prospects for the U.S. economy remain bright. Although the
market has risen significantly, we still see investment opportunities with both
short- and long-term potential. That said, the Fund is not immune to adverse
changes in economic trends should they occur. We continue to seek out
investments in companies that are posed to benefit from a low inflationary
environment. We will continue to invest our shareholders' funds in companies
with strong growth prospects at reasonable stock prices.
December 31, 1998
- -------------------------------------------------------------------------------
TOP 10 STOCK POSITIONS
(by percentage of net assets)
(1) MCI WORLDCOM Telecommunications services 3.4%
(2) GENERAL ELECTRIC Diversified manufacturer 3.1%
(3) TYCO INTERNATIONAL Diversified manufacturer 3.1%
(4) IBM Computer systems 2.4%
(5) INTEL Semiconductors 2.4%
(6) BANKAMERICA Money center banks 2.4%
(7) XEROX Copiers 2.2%
(8) FEDERAL NATIONAL MORTGAGE Home mortgage funds 2.2%
(9) BRISTOL-MYERS SQUIBB Pharmaceuticals 2.2%
(10) CHASE MANHATTAN Banking 2.1%
These securities represent an aggregate of 25.5% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
TOP 5 INDUSTRIES
(by percentage of net assets)
RETAIL TRADE 10.1%
RECREATION 8.1%
TELEPHONE 6.3%
INSURANCE 6.2%
OFFICE EQUIPMENT 6.2%
Total: 36.9%
BEST AND WORST CONTRIBUTORS TO PERFORMANCE
(January 1, 1998 through December 31, 1998)
BEST /\
- -------------------------------------------------------------------------------
MCI WORLDCOM
Rapid growth in telecommunications.
TYCO INTERNATIONAL
Earnings growth; management performance.
SAFEWAY
Consolidation of supermarkets.
WORST \/
- -------------------------------------------------------------------------------
SEAGULL ENERGY
Decline in oil prices.
BANKAMERICA
Earnings shortfalls.
ORYX ENERGY
Decline in oil prices.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
December 31, 1998
- -------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- -------------------------------------------------------------------------------
COMMON STOCKS 97.7%
BASIC INDUSTRIES 10.5%
CHEMICAL 2.1%
E.I. Du Pont De Nemours & Co. .............. 339,700 $ 18,025,331
Monsanto Co. ............................... 82,900 3,937,750
Rohm & Haas Co. ............................ 1,083,100 32,628,388
--------------
54,591,469
--------------
ELECTRICAL EQUIPMENT 3.1%
General Electric Co. ....................... 798,700 81,517,319
--------------
FOREST PRODUCT 1.0%
Fort James Corp. ........................... 661,500 26,460,000
--------------
MACHINERY 4.3%
Black & Decker Corp. ....................... 548,000 30,722,250
Tyco International Ltd. .................... 1,055,200 79,601,650
--------------
110,323,900
--------------
Total Basic Industries ..................... 272,892,688
--------------
CONSUMER CYCLICAL 22.3%
AUTOMOTIVE 1.6%
General Motors Corp. ....................... 294,300 21,060,844
Renault SA ................................. 446,000 20,022,536
--------------
41,083,380
--------------
HOTEL & RESTAURANT 2.5%
McDonald's Corp. ........................... 621,100 47,591,788
Mirage Resorts Inc.* ....................... 1,103,500 16,483,531
--------------
64,075,319
--------------
RECREATION 8.1%
CBS Corp. .................................. 1,099,400 36,005,350
Fox Entertainment Group Inc.* .............. 741,600 18,679,050
MediaOne Group Inc.* ....................... 965,300 45,369,100
News Corp. Ltd. ADR ........................ 835,800 22,096,463
Time Warner Inc. ........................... 702,600 43,605,112
Viacom Inc. Cl. B* ......................... 568,700 42,083,800
Walt Disney Co. ............................ 121,896 3,656,880
--------------
211,495,755
--------------
RETAIL TRADE 10.1%
Cendant Corp.* ............................. 801,300 15,274,781
CVS Corp. .................................. 925,700 50,913,500
Dayton Hudson Corp. ........................ 503,600 27,320,300
Home Depot Inc. ............................ 406,100 24,848,244
Kroger Co.* ................................ 604,000 36,542,000
Rite Aid Corp. ............................. 660,100 32,716,206
Safeway Inc.* .............................. 706,800 43,070,625
Wal-Mart Stores, Inc. ...................... 406,300 33,088,056
--------------
263,773,712
--------------
Total Consumer Cyclical .................... 580,428,166
--------------
CONSUMER STAPLE 17.7%
BUSINESS SERVICE 1.6%
Interpublic Group of Companies, Inc. ....... 359,650 28,682,087
Waste Management Inc. ...................... 296,800 13,838,300
--------------
42,520,387
--------------
DRUG 5.0%
American Home Products Corp. ............... 402,000 22,637,625
Bristol-Myers Squibb Co. ................... 426,400 57,057,650
Pfizer Inc. ................................ 99,200 12,443,400
SmithKline Beecham PLC ..................... 294,700 20,481,650
Warner-Lambert Co. ......................... 239,400 17,999,887
--------------
130,620,212
--------------
FOOD & BEVERAGE 4.2%
Coca-Cola Enterprises Inc. ................. 672,600 24,045,450
H.J. Heinz Co. ............................. 555,600 31,460,850
PepsiCo Inc. ............................... 476,900 19,523,094
Sara Lee Corp. ............................. 1,224,000 34,501,500
--------------
109,530,894
--------------
HOSPITAL SUPPLY 3.7%
Baxter International Inc. .................. 477,900 30,734,944
Guidant Corp. .............................. 222,800 24,563,700
Johnson & Johnson .......................... 487,600 40,897,450
--------------
96,196,094
--------------
PERSONAL CARE 1.5%
Procter & Gamble Co. ....................... 418,200 38,186,888
--------------
TOBACCO 1.7%
Philip Morris Companies, Inc. .............. 842,500 45,073,750
--------------
Total Consumer Staple ...................... 462,128,225
--------------
ENERGY 5.7%
OIL 5.5%
Amoco Corp. ................................ 399,700 24,131,887
Conoco Inc. Cl. A* ......................... 954,000 19,914,750
Exxon Corp. ................................ 615,800 45,030,375
Seagull Energy Corp.* ...................... 809,800 5,111,863
Shell Transport & Trading PLC .............. 323,700 12,037,594
Total SA Cl. B ADR ......................... 766,208 38,118,848
--------------
144,345,317
--------------
OIL SERVICE 0.2%
Schlumberger Ltd. .......................... 86,524 3,990,919
--------------
Total Energy ............................... 148,336,236
--------------
FINANCE 16.4%
BANK 5.5%
BankAmerica Corp. .......................... 1,020,509 61,358,104
Chase Manhattan Corp. ...................... 797,000 54,245,812
U.S. Bancorp ............................... 787,900 27,970,450
--------------
143,574,366
--------------
FINANCIAL SERVICE 4.7%
American Express Co. ....................... 199,200 20,368,200
Federal National Mortgage Association ...... 780,400 57,749,600
Household International Inc. ............... 660,800 26,184,200
Merrill Lynch & Company Inc. ............... 252,800 16,874,400
--------------
121,176,400
--------------
INSURANCE 6.2%
Ace Ltd. ................................... 1,128,600 38,866,162
American General Corp. ..................... 423,642 33,044,076
American International Group Inc. .......... 189,100 18,271,788
Citigroup, Inc. ............................ 764,000 37,818,000
UNUM Corp. ................................. 589,600 34,417,900
--------------
162,417,926
--------------
Total Finance .............................. 427,168,692
--------------
SCIENCE & TECHNOLOGY 15.1%
COMPUTER SOFTWARE & SERVICE 4.5%
Ascend Communications Inc.* ................ 300,400 19,751,300
Cadence Design Systems Inc.* ............... 679,800 20,224,050
Cisco Systems Inc.* ........................ 366,600 34,025,062
EMC Corp.* ................................. 156,400 13,294,000
Microsoft Corp.* ........................... 206,500 28,638,969
--------------
115,933,381
--------------
ELECTRONIC COMPONENTS 3.7%
Intel Corp. ................................ 535,000 63,430,937
Texas Instruments Inc. ..................... 391,100 33,463,494
--------------
96,894,431
--------------
ELECTRONIC EQUIPMENT 0.7%
Lucent Technologies Inc. ................... 171,100 18,821,000
--------------
OFFICE EQUIPMENT 6.2%
Compaq Computer Corp. ...................... 503,300 21,107,144
Hewlett-Packard Co. ........................ 264,000 18,034,500
International Business Machines Corp. ...... 344,600 63,664,850
Xerox Corp. ................................ 493,500 58,233,000
--------------
161,039,494
--------------
Total Science & Technology ................. 392,688,306
--------------
UTILITY 10.0%
ELECTRIC 2.6%
FPL Group Inc. ............................. 259,000 15,960,875
Texas Utilities Co. ........................ 701,800 32,765,287
Unicom Corp. ............................... 487,500 18,799,219
--------------
67,525,381
--------------
NATURAL GAS 1.1%
Enron Corp. ................................ 480,600 27,424,238
--------------
TELEPHONE 6.3%
AT&T Corp. ................................. 484,200 36,436,050
Bell Atlantic Corp. ........................ 430,300 22,805,900
MCI WorldCom Inc.* ......................... 1,232,700 88,446,225
Qwest Communications International Inc.* ... 336,400 16,820,000
--------------
164,508,175
--------------
Total Utility .............................. 259,457,794
--------------
Total Common Stocks (Cost $1,608,963,817) .. 2,543,100,107
--------------
SHORT-TERM INVESTMENTS 5.1%
State Street Navigator Securities Lending
Prime Portfolio .......................... 132,647,907 132,647,907
--------------
Total Short-Term Investments (Cost $132,647,907) .......... 132,647,907
--------------
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PRINCIPAL MATURITY VALUE
AMOUNT DATE (NOTE 1)
- -------------------------------------------------------------------------------
COMMERCIAL PAPER 2.5%
American Express Credit
Corp., 4.00% ........... $ 2,405,000 1/08/1999 $ 2,405,000
American Express Credit
Corp., 5.25% ........... 10,630,000 1/11/1999 10,630,000
CIT Group Holdings Inc.,
5.99% .................. 16,399,000 1/04/1999 16,399,000
General Electric Capital
Corp., 5.95% ........... 406,000 1/04/1999 406,000
General Electric Capital
Corp., 5.95% ........... 11,000,000 1/08/1999 11,000,000
Household Finance Corp.,
5.80% .................. 25,000,000 1/05/1999 25,000,000
--------------
Total Commercial Paper (Cost $65,840,000) .................. 65,840,000
--------------
Total Investments (Cost $1,807,451,724) - 105.3% ........... 2,741,588,014
Cash and Other Assets, Less Liabilities - (5.3%) ........... (137,068,078)
--------------
Net Assets - 100.0% ........................................ $2,604,519,936
==============
Federal Income Tax Information:
At December 31, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax purposes
of $1,809,461,818 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost ....... $ 957,269,528
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value ....... (25,143,332)
--------------
$ 932,126,196
- -------------------------------------------------------------------------------
* Non-income-producing securities.
ADR stands for American Depositary Receipt, representing ownership of
foreign securities.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1998
ASSETS
Investments, at value (Cost $1,807,451,724) (Note 1) $2,741,588,014
Cash ............................................... 105,356
Receivable for fund shares sold .................... 5,567,006
Receivable for securities sold ..................... 2,670,378
Dividends and interest receivable .................. 2,489,067
Other assets ....................................... 280,611
--------------
2,752,700,432
LIABILITIES
Payable for collateral received on securities loaned 132,647,907
Payable for securities purchased ................... 6,825,607
Payable for fund shares redeemed ................... 3,564,005
Accrued management fee (Note 2) .................... 2,879,877
Accrued transfer agent and shareholder services
(Note 2) ......................................... 1,173,071
Accrued distribution and service fees (Note 4) ..... 940,731
Accrued trustees' fees (Note 2) .................... 33,397
Other accrued expenses ............................. 115,901
--------------
148,180,496
--------------
NET ASSETS ......................................... $2,604,519,936
==============
Net Assets consist of:
Undistributed net investment income .............. $ 411,566
Unrealized appreciation of investments ........... 934,136,290
Accumulated net realized gain .................... 24,578,091
Paid-in capital .................................. 1,645,393,989
--------------
$2,604,519,936
==============
Net Asset Value and redemption price per share
of Class A shares ($574,857,587/46,500,669 shares) $12.36
======
Maximum Offering Price per share of Class A shares
($12.36/.955) .................................... $12.94
======
Net Asset Value and offering price per share of
Class B shares ($944,387,659/77,087,053 shares)* $12.25
======
Net Asset Value and offering price per share of
Class C shares ($55,263,263/4,495,491 shares)* $12.29
======
Net Asset Value, offering price and redemption
price per share of Class S shares
($1,030,011,427/82,918,341 shares) ............... $12.42
======
- ------------------------------------------------------------------------------
*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>
STATE STREET RESEARCH INVESTMENT TRUST
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the year ended December 31, 1998
INVESTMENT INCOME
Dividends, net of foreign taxes of $133,440 .............. $ 26,953,248
Interest (Note 1) ........................................ 5,472,332
------------
32,425,580
EXPENSES
Management fee (Note 2) .................................. 9,708,952
Transfer agent and shareholder services (Note 2) ......... 2,650,339
Service fee - Class A (Note 4) ........................... 1,158,478
Distribution and service fees - Class B (Note 4) ......... 7,384,066
Distribution and service fees - Class C (Note 4) ......... 438,707
Custodian fee ............................................ 352,657
Registration fees ........................................ 231,028
Reports to shareholders .................................. 221,499
Miscellaneous ............................................ 40,957
Trustees' fees (Note 2) .................................. 38,632
Audit fee ................................................ 33,398
Legal fees ............................................... 32,059
------------
22,290,772
Fees paid indirectly (Note 2) ............................ (198,890)
------------
22,091,882
------------
Net investment income .................................... 10,333,698
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments (Notes 1 and 3) ......... 170,998,002
Net unrealized appreciation of investments ............... 377,577,808
------------
Net gain on investments .................................. 548,575,810
------------
Net increase in net assets resulting from operations ..... $558,909,508
============
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
---------------------------------------
1997 1998
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ................ $ 13,611,975 $ 10,333,698
Net realized gain on investments ..... 233,740,026 170,998,002
Net unrealized appreciation
of investments ..................... 153,903,428 377,577,808
------------- -------------
Net increase resulting from
operations ......................... 401,255,429 558,909,508
------------- -------------
Dividends from net investment income:
Class A ............................ (2,789,737) (2,587,460)
Class B ............................ (870,683) --
Class C ............................ (52,743) --
Class S ............................ (9,898,812) (7,493,736)
------------- -------------
(13,611,975) (10,081,196)
------------- -------------
Distributions from net realized gains:
Class A ............................ (37,498,390) (39,822,904)
Class B ............................ (56,883,383) (65,309,613)
Class C ............................ (3,712,939) (3,824,821)
Class S ............................ (96,107,440) (76,915,562)
------------- -------------
(194,202,152) (185,872,900)
------------- -------------
Net increase from fund share
transactions (Note 5) .............. 306,531,257 395,671,890
------------- -------------
Total increase in net assets.......... 499,972,559 758,627,302
NET ASSETS
Beginning of year .................... 1,345,920,075 1,845,892,634
------------- -------------
End of year (including undistributed
net investment income of $0 and
$411,566, respectively) ............ $1,845,892,634 $2,604,519,936
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Decempber 31, 1998
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. Until December 31, 1998 Class A
shares were subject to an initial sales charge of up to 4.50% and effective
January 1, 1999 became subject to an initial sales charge of up to 5.75%.
Class A shares 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. Effective January 1, 1999, the Trust began
offering Class B(1) shares which are subject to a contingent deferred sales
charge on certain redemptions made within six years. 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 the closing price supplied
through such system. In the absence of recorded sales and for those over-the-
counter securities not quoted on the NASDAQ system, valuations are at the mean
of the closing bid and asked quotations, except for securities that may be
restricted as to public resale, which are valued in accordance with methods
adopted by the Trustees. Security transactions are accounted for on the trade
date (date the order to buy or sell is executed), and dividends declared but
not received are accrued on the ex-dividend date. Interest income is
determined on the accrual basis. Realized gains and losses from security
transactions are reported on the basis of identified cost of securities
delivered.
B. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary since the Trust has elected
to qualify under Subchapter M of the Internal Revenue Code and 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, 1998, the Trust has designated as
long-term $185,727,496 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.
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. By reinvesting any cash
collateral it receives in these transactions, the Fund could realize
additional gains and losses. If the borrower fails to return the securities
and the value of the collateral has declined during the term of the loan, the
Trust will bear the loss. At December 31, 1998, the value of the securities
loaned and the value of collateral were $128,979,689 and $132,647,907,
respectively. During the year ended December 31, 1998, income from securities
lending amounted to $230,466 and is included in interest income.
NOTE 2
Prior to August 18, 1998, the Adviser earned monthly fees at an annual rate of
0.41% of the Trust's average daily net assets.
Effective August 18, 1998, the management fee is 0.55% of the first $500
million of net assets, annually, 0.50% of the next $500 million, and 0.45% of
any amount over $1 billion. 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, 1998,
the fees pursuant to such agreement amounted to $9,708,952.
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, 1998, the amount of such shareholder servicing and account
expenses was $1,030,766.
The Trust has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Trust's expense. During the year ended December 31, 1998, the
Trust's transfer agent fees were reduced by $198,890 under this arrangement.
The fees of the Trustees not currently affiliated with the Adviser amounted to
$38,632 during the year ended December 31, 1998.
NOTE 3
For the year ended December 31, 1998, exclusive of short-term investments and
U.S. Government obligations, purchases and sales of securities aggregated
$1,643,259,308 and $1,399,613,709, 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 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, 1998,
fees pursuant to such plan amounted to $1,158,478, $7,384,066 and $438,707 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 $519,944 and $3,141,854, respectively, on sales of Class A shares
of the Trust during the year ended December 31, 1998, and that MetLife
Securities, Inc. earned commissions aggregating $7,364,030 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $1,147,614 and $4,282 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
----------------------------------------------------------------------
1997 1998
---------------------------------- ----------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 11,892,218 $125,284,553 15,387,705 $ 179,548,411
Issued upon reinvestment of:
Distributions from net
realized gains ............ 3,437,670 36,542,436 3,305,725 38,989,534
Dividends from net investment
income .................... 269,405 2,789,580 208,775 2,431,646
Shares redeemed ............... (4,933,408) (51,867,529) (7,738,830) (89,464,550)
---------- ------------ ---------- --------------
Net increase .................. 10,665,885 $112,749,040 11,163,375 $ 131,505,041
========== ============ ========== ==============
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 19,674,761 $206,270,802 28,941,723 $335,668,941
Issued upon reinvestment of:
Distributions from net
realized gains ............ 5,211,853 54,985,047 5,418,219 63,334,450
Dividend from net investment
income .................... 79,052 792,716 -- --
Shares redeemed ............... (5,930,757) (62,779,979) (11,279,857) (129,650,410)
---------- ------------ ---------- ------------
Net increase .................. 19,034,909 $199,268,586 23,080,085 $269,352,981
========== ============ ========== ============
<CAPTION>
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 1,100,245 $ 11,484,215 1,707,702 $ 19,923,326
Issued upon reinvestment of:
Distributions from net
realized gains ............ 334,491 3,539,567 306,530 3,595,984
Dividend from net investment
income .................... 3,760 37,536 -- --
Shares redeemed ............... (775,363) (8,173,619) (1,015,775) (11,590,128)
---------- ------------ ---------- ------------
Net increase .................. 663,133 $ 6,887,699 998,457 $ 11,929,182
========== ============ ========== ============
<CAPTION>
CLASS S SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................... 1,718,321 $ 18,233,635 2,501,260 $ 29,464,708
Issued upon reinvestment of:
Distributions from net
realized gains ............ 5,286,697 56,461,922 3,427,990 40,551,340
Dividends from net investment
income .................... 361,083 3,744,987 285,270 3,357,017
Shares redeemed ............... (8,574,756) (90,814,612) (7,808,814) (90,488,379)
---------- ------------ ---------- ------------
Net decrease .................. (1,208,655) $(12,374,068) (1,594,294) $(17,115,314)
========== ============ ========== ============
</TABLE>
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
------------------------------------------------------------------------------------
1994 1995(a) 1996(a) 1997(a) 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.69 7.74 9.16 9.07 10.41
----- ----- ----- ----- -----
Net investment income ($) 0.11 0.14 0.12 0.10 0.07
Net realized and unrealized gain (loss) on
investments ($) (0.44) 2.39 1.80 2.54 2.89
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) (0.33) 2.53 1.92 2.64 2.96
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.12) (0.13) (0.13) (0.10) (0.06)
Distributions from net realized gains ($) (0.50) (0.98) (1.87) (1.20) (0.95)
Distribution in excess of net realized
gains ($) -- -- (0.01) -- --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.62) (1.11) (2.01) (1.30) (1.01)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 7.74 9.16 9.07 10.41 12.36
===== ===== ===== ===== =====
Total return(b) (%) (3.84) 32.85 21.03 28.91 29.12
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 92,137 135,676 223,868 367,759 574,858
Ratio of operating expenses to average net
assets (%) 0.89 0.78 0.75 0.76 0.85
Ratio of net investment income to average
net assets (%) 1.26 1.54 1.17 0.90 0.63
Portfolio turnover rate (%) 33.08 39.21 73.51 75.21 66.32
<CAPTION>
CLASS B
-------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
------------------------------------------------------------------------------------
1994 1995(a) 1996(a) 1997(a) 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.66 7.72 9.13 9.03 10.34
----- ----- ----- ----- -----
Net investment income (loss) ($) 0.06 0.07 0.04 0.02 (0.01)
Net realized and unrealized gain (loss) on
investments ($) (0.44) 2.38 1.80 2.51 2.87
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) (0.38) 2.45 1.84 2.53 2.86
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.06) (0.06) (0.06) (0.02) --
Distributions from net realized gains ($) (0.50) (0.98) (1.87) (1.20) (0.95)
Distribution in excess of net realized
gains ($) -- -- (0.01) -- --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.56) (1.04) (1.94) (1.22) (0.95)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 7.72 9.13 9.03 10.34 12.25
===== ===== ===== ===== =====
Total return(b) (%) (4.43) 31.86 20.15 27.80 28.26
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 113,301 183,446 315,766 558,568 944,388
Ratio of operating expenses to average net
assets (%) 1.64 1.53 1.50 1.51 1.60
Ratio of net investment income (loss) to
average net assets (%) 0.51 0.79 0.41 0.15 (0.12)
Portfolio turnover rate (%) 33.08 39.21 73.51 75.21 66.32
- -----------------------------------------------------------------------------------------------------------------------------------
(a)Per-share figures have been calculated using the average shares method.
(b)Does not reflect any front-end or contingent deferred sales charges.
</TABLE>
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
---------------------------------------------------------------------------------------
1994 1995(a) 1996(a) 1997(a) 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.68 7.74 9.15 9.05 10.38
----- ----- ----- ----- -----
Net investment income (loss) ($) 0.05 0.07 0.04 0.02 (0.01)
Net realized and unrealized gain (loss)
on investments ($) (0.43) 2.38 1.79 2.53 2.87
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) (0.38) 2.45 1.83 2.55 2.86
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.06) (0.06) (0.05) (0.02) --
Distributions from net realized gains ($) (0.50) (0.98) (1.87) (1.20) (0.95)
Distribution in excess of net realized
gains ($) -- -- (0.01) -- --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.56) (1.04) (1.93) (1.22) (0.95)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 7.74 9.15 9.05 10.38 12.29
===== ===== ===== ===== =====
Total return(b) (%) (4.45) 31.75 20.09 27.93 28.15
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 11,707 16,841 25,658 36,290 55,263
Ratio of operating expenses to average
net assets (%) 1.64 1.53 1.50 1.51 1.60
Ratio of net investment income (loss) to
average net assets (%) 0.51 0.79 0.42 0.15 (0.13)
Portfolio turnover rate (%) 33.08 39.21 73.51 75.21 66.32
<CAPTION>
CLASS S
----------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
---------------------------------------------------------------------------------------
1994 1995(a) 1996(a) 1997(a) 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR ($) 8.70 7.76 9.18 9.11 10.45
----- ----- ----- ----- -----
Net investment income ($) 0.13 0.16 0.14 0.12 0.10
Net realized and unrealized gain (loss)
on investments ($) (0.43) 2.39 1.82 2.54 2.91
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS ($) (0.30) 2.55 1.96 2.66 3.01
----- ----- ----- ----- -----
Dividends from net investment income ($) (0.14) (0.15) (0.15) (0.12) (0.09)
Distributions from net realized gains ($) (0.50) (0.98) (1.87) (1.20) (0.95)
Distribution in excess of net realized
gains ($) -- -- (0.01) -- --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS ($) (0.64) (1.13) (2.03) (1.32) (1.04)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR ($) 7.76 9.18 9.11 10.45 12.42
===== ===== ===== ===== =====
Total return(b) (%) (3.47) 33.07 21.48 29.08 29.51
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year ($ thousands) 627,551 738,649 780,627 883,276 1,030,011
Ratio of operating expenses to average
net assets (%) 0.65 0.54 0.50 0.51 0.60
Ratio of net investment income to average
net assets (%) 1.54 1.81 1.44 1.17 0.88
Portfolio turnover rate (%) 33.08 39.21 73.51 75.21 66.32
- -----------------------------------------------------------------------------------------------------------------------------------
(a)Per-share figures have been calculated using the average shares method.
(b)Does not reflect any front-end or contingent deferred sales charges.
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE TRUSTEES OF STATE STREET RESEARCH MASTER INVESTMENT TRUST
AND SHAREHOLDERS OF STATE STREET RESEARCH INVESTMENT TRUST:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of State Street Research Investment
Trust (a series of State Street Research Master Investment Trust, hereafter
referred to as the "Trust") at December 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 12, 1999
<PAGE>
STATE STREET RESEARCH INVESTMENT TRUST
- -------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- -------------------------------------------------------------------------------
State Street Research Investment Trust provided shareholders with strong
performance during the year. For the 12 months ended December 31, 1998 Class A
shares returned 29.12% [does not reflect sales charge]. The Fund outperformed
the Lipper average growth and income fund, which was up 15.61%, and
outperformed the S&P 500, which gained 28.60% for the same period.
The Fund currently focuses on large companies with market leadership as well
as income-producing securities that offer a potential cushion against stock
market volatility.
Investments in technology, telecommunications, financial services and retail
stocks drove the Fund's performance for the year. Although the Fund had
relatively low exposure to the basic materials sector, investments in chemical
stocks and defensive sectors, such as utilities, food and energy, were a drag
on performance. The Fund also benefited from overweighting the supermarket
industry and by targeting financial companies.
December 31, 1998
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
- -----------------------------
23.31% 19.70% 17.01%
- -----------------------------
VALUE OF
VALUE OF ACCOUNT OF
ACCOUNT AT S&P 500 AT
DATE YEAR END YEAR END
- ---- -------- --------
12/31/88 $ 9,550 $10,000
12/31/89 12,620 13,163
12/31/90 12,499 12,754
12/31/91 16,009 16,631
12/31/92 17,015 17,896
12/31/93 18,700 19,696
12/31/94 17,983 19,955
12/31/95 23,890 27,445
12/31/96 28,913 33,742
12/31/97 37,271 44,995
12/31/98 48,125 57,864
CLASS B SHARES
- -----------------------------
Average Annual Total Return
- -----------------------------
1 Year 5 Years 10 Years
- -----------------------------
23.26% 19.75% 17.07%
- -----------------------------
VALUE OF
VALUE OF ACCOUNT OF
ACCOUNT AT S&P 500 AT
DATE YEAR END YEAR END
- ---- -------- --------
12/31/88 $10,000 $10,000
12/31/89 13,214 13,163
12/31/90 13,088 12,754
12/31/91 16,764 16,631
12/31/92 17,817 17,896
12/31/93 19,484 19,696
12/31/94 18,622 19,955
12/31/95 24,555 27,445
12/31/96 29,504 33,742
12/31/97 37,706 44,995
12/31/98 48,362 57,864
CLASS C SHARES
- -----------------------------
Average Annual Total Return
- -----------------------------
1 Year 5 Years 10 Years
- -----------------------------
27.15% 19.90% 17.07%
- -----------------------------
VALUE OF
VALUE OF ACCOUNT OF
ACCOUNT AT S&P 500 AT
DATE YEAR END YEAR END
- ---- -------- --------
12/31/88 $10,000 $10,000
12/31/89 13,214 13,163
12/31/90 13,088 12,754
12/31/91 16,764 16,631
12/31/92 17,817 17,896
12/31/93 19,513 19,696
12/31/94 18,644 19,955
12/31/95 24,564 27,445
12/31/96 29,497 33,742
12/31/97 37,735 44,995
12/31/98 48,357 57,864
CLASS S SHARES
- -----------------------------
Average Annual Total Return
- -----------------------------
1 Year 5 Years 10 Years
- -----------------------------
29.51% 21.14% 17.75%
- -----------------------------
VALUE OF
VALUE OF ACCOUNT OF
ACCOUNT AT S&P 500 AT
DATE YEAR END YEAR END
- ---- -------- --------
12/31/88 $10,000 $10,000
12/31/89 13,214 13,163
12/31/90 13,088 12,754
12/31/91 16,764 16,631
12/31/92 17,817 17,896
12/31/93 19,635 19,696
12/31/94 18,953 19,955
12/31/95 24,221 27,445
12/31/96 30,639 33,742
12/31/97 39,548 44,995
12/31/98 51,218 57,864
Keep in mind that past performance is no guarantee of future results. The
fund's share price, yield and return will fluctuate, and you may have a gain
or loss when you sell your shares. All returns assume reinvestment of capital
gain distributions and income dividends at net asset value. Performance
reflects a maximum 4.5% Class A share front-end sales charge, or 5% Class B
share or 1% Class C share contingent deferred sales charge, where applicable.
The fund's returns include performance before the creation of share classes.
If this performance reflected the share classes' current 12b-1 fees, the
fund's returns may have been lower. During the periods prior to 1990 that
shares of the Fund were not available to the public, the Fund was not subject
to the cash inflows and higher redemptions and expenses that have occurred
during the Fund's current continuous public offering. Class S shares, offered
without a sales charge, are available only through certain employee benefit
plans and special programs. The S&P 500 (officially the "Standard and Poor's
500 Composite Stock Price Index") is an unmanaged index of 500 U.S. stocks.
The index does not take sales charges into consideration. Direct investment in
the index is not possible; results are for illustrative purposes only.
The performance data shown above do not reflect an increase in the maximum
Class A sales charge from 4.5% to 5.75%, effective as of 1/1/99. At the new,
higher Class A sales charge, the performance would have been lower. Assuming
the increased sales charge was in effect, performance would have been as
follows:
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A 21.70% 19.39% 16.86%
<PAGE>
<TABLE>
<CAPTION>
STATE STREET RESEARCH INVESTMENT TRUST
- --------------------------------------------------------------------------------------------------------------
FUND INFORMATION, OFFICERS AND TRUSTEES OF
STATE STREET RESEARCH MASTER INVESTMENT TRUST
- --------------------------------------------------------------------------------------------------------------
FUND INFORMATION TRUSTEES
<S> <C> <C>
STATE STREET RESEARCH RALPH F. VERNI MICHAEL S. SCOTT MORTON
INVESTMENT TRUST Chairman of the Board, Jay W. Forrester Professor of
One Financial Center President, Chief Executive Management, Sloan School of
Boston, MA 02111 Officer and Director, Management, Massachusetts
State Street Research & Institute of Technology
INVESTMENT ADVISER Management Company
State Street Research &
Management Company BRUCE R. BOND OFFICERS
One Financial Center Chairman of the Board,
Boston, MA 02111 Chief Executive Officer and RALPH F. VERNI
President Chairman of the Board,
DISTRIBUTOR PictureTel Corporation President and
State Street Research Chief Executive Officer
Investment Services, Inc. STEVE A. GARBAN
One Financial Center Former Senior Vice President PETER C. BENNETT
Boston, MA 02111 for Finance and Operations and Vice President
Treasurer, The Pennsylvania
SHAREHOLDER SERVICES State University DUDLEY F. WADE
State Street Research Vice President
Service Center MALCOLM T. HOPKINS
P.O. Box 8408 Former Vice Chairman of the JAMES M. WEISS
Boston, MA 02266-8408 Board and Chief Financial Vice President
1-800-562-0032 Officer, St. Regis Corp.
JOHN T. WILSON
CUSTODIAN EDWARD M. LAMONT Vice President
State Street Bank and Formerly in banking
Trust Company (with an affiliate of GERARD P. MAUS
225 Franklin Street J.P. Morgan & Co. in New York); Treasurer
Boston, MA 02110 presently engaged in private
investments and civic affairs JOSEPH W. CANAVAN
INDEPENDENT ACCOUNTANTS Assistant Treasurer
PricewaterhouseCoopers LLP ROBERT A. LAWRENCE
One Post Office Square Former Partner, Saltonstall & Co. DOUGLAS A. ROMICH
Boston, MA 02109 Assistant Treasurer
DEAN O. MORTON
Former Executive Vice President FRANCIS J. MCNAMARA, III
Chief Operating Officer and Secretary and General Counsel
Director, Hewlett-Packard Company
DARMAN A. WING
SUSAN M. PHILLIPS Assistant Secretary and
Dean, School of Business and Assistant General Counsel
Public Management, George
Washington University; former AMY L. SIMMONS
Member of the Board of Governors Assistant Secretary
of the Federal Reserve System and
Chairman and Commissioner of
the Commodity Futures Trading
Commission
TOBY ROSENBLATT
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
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