[LOGO] STATE STREET RESEARCH
Investment Trust
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Annual Report to Shareholders
December 31, 1999
- -----------------
In this Report Technology's
- ----------------- Long Rise --
Can it Continue?
[PHOTO]
plus
Prosperity Propels U.S. Toward Record
Technology -- What Is It?
Fund Portfolio and Financials
<PAGE>
Contents
2 12 Month Review
A look at the fund and its market environment over the past 12 months
6 Performance in Perspective
The most recent performance in the context of the fund's track record
8 The Fund in Detail
Portfolio holdings, financials and notes
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From the Chairman
What will you remember about the 1990s? A string of good years for the stock
market? The Y2K phenomenon? A generation from now, most of the events that made
headlines during the decade are likely to pale compared to the birth of the
Internet and new communications technologies.
[PHOTO]
Ralph F. Verni
And just as technology was the driving force behind the U.S. econ-omy and the
stock market last year, it also figured strongly in the gains of State Street
Research Investment Trust. As you read this annual report, we hope you'll come
away with a better understanding of our perspective on technology and where we
see opportunities for the years ahead.
Technology has changed our world, but some things don't change: our emphasis on
fundamental research and our commitment to helping you reach your long-term
goals. As always, thank you for investing with State Street Research.
Sincerely,
/s/ Ralph F. Verni
Ralph F. Verni
Chairman, State Street Research
December 31, 1999
[GRAPHIC]
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12 Month Review Management's Discussion of Fund Performance Part 1
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How State Street Research
Investment Trust Performed
1999 was a good year for State Street Research Investment Trust. The fund
returned 19.75%(1), significantly higher than its old peer group, the Lipper
Growth & Income Funds Average(2), which rose 13.76% for the year ended December
31, 1999. The fund's new Lipper category, the Large-Cap Core Funds Average(2),
returned 22.30% for the same period. Its performance was just short of the S&P
500, which gained 21.03%.(3)
Reasons for the Fund's Performance
Technology stocks drove the performance of the market during the year and
accounted for much of Investment Trust's gains. The fund was well-represented in
technology's strong performers, such as EMC and Cisco Systems. Amgen and
Genentech, leaders in biotechnology, helped to contribute to the fund's positive
year-end returns.
Our investments in media and advertising companies also generated attractive
gains. As a group, media companies were helped by a robust U.S. economy and
higher corporate spending on advertising.
The financial sector was hurt as rising interest rates brought prices down on
many financial stocks. The fund's investment in insurance stocks were a drag on
performance. However, we zeroed in on Citigroup and American Express, which did
well despite an unfavorable environment.
Outlook
Our outlook going forward is positive. As the U.S. economy undergoes dynamic,
rapid change, we believe we must be more aggressive to keep pace with an
evolving market. However, our core philosophy has not changed. We will continue
to focus on high quality companies that have strong franchises and are leaders
in their respective markets.
More Management's Discussion of Fund Performance on pages 6 and 7. |_|
Class A Shares(1)
[GRAPHIC]
19.75%
"Our goal will be
to target new,
exciting areas of
the market."
[PHOTO]
John Wilson
Portfolio Manager,
State Street Research
Investment Trust
S&P 500(1)
[GRAPHIC]
21.03%
Because financial markets and mutual fund strategies are constantly evolving,
it's possible that the fund's holdings, market stance, outlook for various
industries or securities and other matters discussed in this report have changed
since this information was prepared. Portfolio changes should not be considered
recommendations for action by individual investors.
2 State Street Research Investment Trust
<PAGE>
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[GRAPHIC] The Fund at a Glance as of 12/31/99
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State Street Research Investment Trust focuses on long-term growth
of capital.
CBS
The network generated strong results across all business lines. That, plus
expectations that its pending merger with Viacom could create a powerful
combined media franchise, raised the stock price.
[GRAPHIC]
Hits
&
Misses
[GRAPHIC]
Ace Ltd.
This Bermuda-based insurance company was hurt by overall weakness in financial
stocks plus fundamental weakness in the specialty insurance sector.
However, we continue to own it. Its business prospects remain strong and any
improvement in insurance pricing could lift the stock.
Total Net Assets: $3.4 billion
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Top 10 Holdings
Issuer/Security % of fund assets
1 General Electric 3.7%
2 Citigroup 3.3%
3 Microsoft 3.2%
4 CBS 3.1%
5 Cisco Systems 2.8%
6 MCI WorldCom 2.6%
7 Colgate-Palmolive 2.3%
8 Teradyne 2.3%
9 Honeywell International 2.2%
10 Intel 2.2%
Total 27.7%
See page 11 for more detail.
Performance: Class A
Year ended 12/31/99: 19.75(1)
Fund average annual total return as of 12/31/99(4),(5)
1 Year 5 Years 10 Years
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12.87% 24.74% 15.71%
S&P 500(3) as of 12/31/99
1 Year 5 Years 10 Years
- ----------------------------------------------------
21.03% 28.54% 18.19%
Top 5 Industries
% of fund assets
[The following tables were represented as bar charts in the printed material.]
1998 1999
Telecommunications 8.1% Multi-Sector
Companies 9.1%
Drugs &
Biotechnology 7.8% Drugs &
Biotechnology 8.2%
Miscellaneous
Financial 7.4% Communications,
Media &
Drugs & Grocery Entertainment 7.4%
Store Chains 6.3%
Miscellaneous
Multi-Sector Financial 7.4%
Companies 6.2%
Computer
Technology 6.1%
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Ticker Symbols
State Street Research Investment Trust
Class A: SITAX Class B(1): SITPX Class B: SITBX Class C: SITDX
Class S: STSTX
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(1) Does not reflect sales charge.
(2) The Lipper Growth & Income Funds Average and the Lipper Large-Cap Core
Funds Average represent competitive groups of mutual funds maintained by
Lipper Inc., an independent provider of mutual fund data. In September
1999, Lipper introduced a new portfolio-based classification system for
all open-end U.S. diversified equity funds.
(3) The S&P 500 (officially the "Standard and Poor's 500 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.
(4) At maximum applicable sales charge.
(5) Keep in mind that past performance is no guarantee of future results. The
fund's share price and return will fluctuate and you may have a gain or
loss when you sell your shares.
3
<PAGE>
[GRAPHIC] The Way We Think
Technology's
Long Rise--
Can it Continue?
[GRAPHIC]
It led the stock market with dazzling gains. It gave birth to dot-com fever and
day-trading in the space of the same year. It's changed the way we work, the way
we play, the way we live. When you talk about technology, it's hard to find
enough superlatives to describe its impact.
Yet, technology is no overnight sensation. For more than 25 years, it has been
the driving force behind the economies and investment markets of the U.S. and
most industrialized nations. From main-frame computers in the 1970s, to personal
computers and software in the 1980s, to wireless communications and the Internet
in the 1990s, technology has ruled.
Beyond Big
But something happened in 1997. What seemed like a strong, powerful trend took a
turn that no one could have predicted. "In December 1997, technology accounted
for just under 14% of the S&P 500. At the end of 1999, it accounted for 30%,"
says John Wilson, portfolio manager of State Street Research Investment Trust.
According to Wilson, technology's dominance was pervasive in 1999:
o Thirteen of the stock market's fifteen top-performing, large-company
stocks were technology-related. A similar pattern existed among
small-company stocks -- many of which hardly qualified as "small" by the
time the year was over.
o The technology-laden Nasdaq rose an impressive 85.59% compared to a gain
of 21.03% for the S&P 500.
Prosperity Propels U.S. Toward Record
Although the pace of economic growth slowed somewhat from 1998 to 1999,
America's gross domestic product grew at a rate faster than the Federal Reserve
Board considers comfortable to control inflation. As a result, it raised
interest rates three times in the second half of the year, leaving the federal
funds rate at 5.5% and the discount rate at 5.0% -- both up 3/4% or 75 basis
points.
Consumers Keep it Up Higher interest rates did not, however, seem to slow the
American consumer. Households continued to spend more on homes, autos and retail
goods; although the rate of growth slowed as the year came to an end. Now, the
U.S. economy is closing in on an economic record: If positive growth continues
through the first two months of 2000, the current expansion will outdistance the
longest expansion of economic growth in the 20th century, which lasted 106
months and occurred between February 1961 and December 1969.
Inflationary Pressures Pick Up That said, inflationary pressures have also
picked up. Soaring energy prices pushed inflation up to 2.6%, compared to 1.6%
one year ago, as measured by the Consumer Price Index. If you leave energy out
of the mix, inflation shows a more modest increase to 2.2%. Yet, despite rising
inflation and a cautious Fed policy, the U.S. stock market continued to rise
while bonds stumbled in reaction to higher rates, inflation fears and Y2K
uncertainty.
The U.S. Economic Expansion:
Strong and Long
Length,
Expansion Dates in months
- ---------------------------------------------------
Current March 1991- 105
Dec. 1999
Previous Record Feb. 1961- 106
Dec. 1969
Average n.a. 35
- ---------------------------------------------------
Source: U.S. Department of Commerce
4 State Street Research Investment Trust
<PAGE>
If you dissect the S&P 500, you'll find that S&P 500 technology issues rose
74.6% while non-tech issues eked out 4.5% -- lower than the average yield on a
money market mutual fund.
o Nine of the best-performing IPOs (Initial Public Offerings) in 1999 were
technology companies while non-technology IPOs struggled.
o Of 234 companies that made 1999 filings to go public in 2000, more than
half are technology firms.
Far More Volatile
Behind the big gains for the year -- and for the past several decades -- is a
heightened volatility that often challenges investors to check their appetite
for risk. Internet stocks, for example, lost momentum in the spring and some of
the hottest performers came down as much as 50%. But the sector surged again
late in the summer. In fact, more than half of the Nasdaq's strong gains came in
the last quarter of the year.
Overall volatility for the Nasdaq set a record in 1999: The index fluctuated at
least 2% on more than half of the trading days of the year -- ten times the
number of days that saw that dimension of volatility in the first half of the
decade.
But Not Unprecedented
Market observers with a sense of the past point out that this is not the first
time one sector has dominated the U.S. stock market -- and the economy. To some,
the run-up is reminiscent of the high-flying days of railroad stocks in the
1920s or utility stocks in the 1950s. However, the closest comparison in recent
memory is with the energy boom in the 1970s. In the years following a global
energy crisis, the price of crude oil shot up to more than $30 a barrel and the
market capitalization of companies such as Exxon Mobil and Atlantic Richfield
swelled. "A lot of people thought that if oil could command $30/barrel, why not
$50?" says Wilson.
The energy sector, which accounted for just under 14% of the S&P 500 in 1978,
shot past 27% where it peaked in mid-1980 before falling to around 12% in 1983.
(Today energy accounts for 4.8% of the S&P 500.)
Technology Ahead
Does that mean technology is due for a fall? "In the near term, anything can
happen," says Wilson. "Technology has had a spectacular run, and we have
weighted the exposure of State Street Research Investment Trust to match the
market." Wilson sees the possibility of industry consolidation, which could
create volatility for the sector. That said, Wilson sees many opportunities
ahead. "Technology's impact on the economy is still in its infancy. We think
some fabulous blue chip companies are destined to emerge from this cycle. We
continue to look for companies with the potential for strong earnings growth,
who can control their own destinies." This is a better strategy than trying to
predict the market, says Wilson -- and good advice for individual investors, as
well.
[The following table was represented as a line chart in the printed material.]
Technology Takes Over
Technology as a % of the S&P 500
Dec. 95 12
Dec. 96 14
Dec. 97 13.7
Dec. 98 16.5
Dec. 99 30
Source: Standard & Poor's.
A Closer Look [GRAPHIC]
Technology -
What Is It?
[GRAPHIC]
Headlines are full of stories about Internet and wireless start-ups, but there's
a lot more to this sector than these leading edge technologies. More than half
the revenues attributed to the broad sector known as technology comes from
companies that make the essential component for electronic circuitry called
semiconductors. Some of the most important technology companies make switches,
routers, and fiber optic cables that facilitate the distribution of data.
Biotechnology marries technology, pharmaceuticals and health care into a segment
of the market that could alter life expectancy the way computers and software
have boosted productivity.
A Repeat Performance
In a very real sense, technology has been the leading market sector during most
periods of rapid change. The railroads? Sure, they were a means of
transportation, but technology made them possible. Automobiles? Same thing. Even
the proliferation of chemicals that introduced new materials into our way of
life -- plastics, laminates, and synthetic fibers, to name a few -- are ours,
thanks to technology.
What's changed most over the decades, however, is the speed at which old
technologies are replaced by new ones. Today, it is the Internet. But tomorrow,
who knows? For investors, that is both the excitement and the challenge.
5
<PAGE>
[GRAPHIC]
Performance in Perspective Management's Discussion of Fund Performance Part 2
Performance Figures as of December 31, 1999
These two pages focus on the fund's long-term track record. While a mutual
fund's past performance is never a guarantee of future results, long-term
returns can serve as an important context for evaluating recent
performance.Three ways of measuring long-term performance are cumulative
returns, average annual returns and the change in dollar value over time of a
given investment. Information about these measures follows, while the share
class boxes contain the results of these measures for each share class.
Cumulative Total Return
This represents the total percentage you would have earned or lost if you had
invested a lump sum in the fund and left it there until the end of the period
indicated. Performance would be lower if sales charges were reflected.
Average Annual Total Return
Average annual total return percentage is the rate you would have had to earn
during each year of a given time period -- say, five years -- in order to end up
with the fund's actual cumulative return for those five years. In reality, of
course, fund performance varies from year to year. Because of this, a fund's
actual performance for a given year may be higher or lower than an average
annual performance figure.
$10,000 Over Ten Years
This example is similar to cumulative total return, but uses dollars rather than
percentages, and assumes that the lump sum you invested was $10,000. It also
compares fund performance to the performance of a market index.
- --------------------------------------------------------------------------------
Class A Front Load
- -------
o Initial sales charge of 5.75% or less, with lower sales charges for larger
investments (see a prospectus for details)
o Lower annual expenses than Class B(1) or Class C shares because of lower
service (12b-1) fee of 0.25%
Cumulative Total Return Life of Fund
(does not reflect 1 Year 5 Years 10 Years (7/29/24)
sales charge) -----------------------------------------------
19.75% 220.47% 356.67% 1,355,467.45%
Average Annual Total Return Life of Fund
(at maximum applicable 1 Year 5 Years 10 Years (7/29/24)
sales charge) -----------------------------------------------
12.87% 24.74% 15.71% 13.34%
$10,000 Over Ten Years
[The following table was represented as a line chart in the printed material.]
Class A S&P 500
89 9425 10000
90 9335 9689
91 11957 12635
92 12708 13596
93 13966 14963
94 13431 15160
95 17842 20850
96 21593 25634
97 27836 34183
98 35942 43959
99 43041 53205
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B(1) Back Load for accounts opened after 1/1/99
- ----------
o No initial sales charge
o Deferred sales charge of 5% or less on shares you sell within six years
o Annual distribution/service (12b-1) fee of 1.00%
o Automatic conversion to Class A shares after eight years, reducing future
annual expenses
Cumulative Total Return Life of Fund
(does not reflect 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
18.91% 208.83% 335.19% 1,291,725.61%
Average Annual Total Return Life of Fund
(at maximum applicable 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
13.91% 25.13% 15.84% 13.36%
$10,000 Over Ten Years
[The following table was represented as a line chart in the printed material.]
Class B1 S&P 500
89 10000 10000
90 9905 9689
91 12686 12635
92 13483 13596
93 14745 14963
94 14092 15160
95 18582 20850
96 22327 25634
97 28534 34183
98 36598 43959
99 43519 53205
- --------------------------------------------------------------------------------
6 State Street Research Investment Trust
<PAGE>
- --------------------------------------------------------------------------------
Class B Back Load for accounts opened before 1/1/99
- -------
o No initial sales charge
o Deferred sales charge of 5% or less on shares you sell within five years
o Annual distribution/service (12b-1) fee of 1.00% (effective August 1999,
this fee was voluntarily reduced to 0.63%)
o Automatic conversion to Class A shares after eight years, reducing future
annual expenses
Cumulative Total Return Life of Fund
(does not reflect 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
18.99% 209.04% 335.50% 1,292,630.28%
Average Annual Total Return Life of Fund
(at maximum applicable 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
13.99% 25.15% 15.85% 13.36%
$10,000 Over Ten Years
[The following table was represented as a line chart in the printed material.]
Class B S&P 500
89 10000 10000
90 9905 9689
91 12686 12635
92 13483 13596
93 14745 14963
94 14092 15160
95 18582 20850
96 22327 25634
97 28534 34183
98 36598 43959
99 43550 53205
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Level Load
- -------
o No initial sales charge
o Deferred sales charge of 1%, paid if you sell shares within one year of
purchase
o Lower deferred sales charge than Class B(1) shares
o Annual distribution/service (12b-1) fee of 1.00%
o No conversion to Class A shares after eight years, so annual expenses do
not decrease
Cumulative Total Return Life of Fund
(does not reflect 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
18.85% 208.27% 334.92% 1,290,922.39%
Average Annual Total Return Life of Fund
(at maximum applicable 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
17.85% 25.25% 15.84% 13.36%
$10,000 Over Ten Years
[The following table was represented as a line chart in the printed material.]
Class C S&P 500
89 10000 10000
90 9905 9689
91 12686 12635
92 13483 13596
93 14766 14963
94 14109 15160
95 18589 20850
96 22322 25634
97 28556 34183
98 36594 43959
99 43492 53205
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class S Special Programs
- -------
o Available through certain retirement accounts, advisory accounts of the
investment manager and other programs that usually involve special
conditions and separate fees (see a prospectus for details)
o No sales charges of any kind
o No distribution/service (12b-1) fees; annual expenses are lower than for
other share classes
Cumulative Total Return Life of Fund
(does not reflect 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
20.01% 224.33% 365.18% 1,380,721.89%
Average Annual Total Return Life of Fund
(at maximum applicable 1 Year 5 Years 10 Years (7/29/24)
sales charge) ------------------------------------------------
20.01% 26.53% 16.62% 13.46%
$10,000 Over Ten Years
[The following table was represented as a line chart in the printed material.]
Class S S&P 500
89 10000 10000
90 9905 9689
91 12686 12635
92 13483 13596
93 14859 14963
94 14343 15160
95 19086 20850
96 23186 25634
97 29928 34183
98 38760 43959
99 46518 53205
- --------------------------------------------------------------------------------
A Closer Look [GRAPHIC]
12b-1 fees
12b-1 fees are named after the SEC rule that permits them.
The fund pays 12b-1 fees to cover service and distribution costs. The fees cover
personal services and the maintenance of shareholder accounts.
The fees also cover selling and marketing expenditures for the sale of fund
shares.
The fund pays 12b-1 fees out of its assets, so shareholders see them as an
indirect charge rather than a direct charge.
All of the performance figures on these pages assume reinvestment of dividends
and distributions.
The average annual total returns for the fund also include the effects of any
fees and sales charges that would apply for each share class.
The S&P 500 (officially, the "Standard & Poor's 500 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.
Keep in mind that past performance is no guarantee of future results. The fund's
share price and return will fluctuate and you may have a gain or loss when you
sell your shares.
Class B(1) was introduced January 1, 1999.
7
<PAGE>
[GRAPHIC]
- ------------------
The Fund in Detail
- --------
The following pages describe the fund in detail as of the date of this report.
They provide a "snapshot" of the fund's holdings at one moment in time (the
report date), describe the financial dimensions of its operations for the past
fiscal year and give a summary of operations on a per share basis for the past
five fiscal years. There's also an overview of the fund and its business
structure, as well as information on the accounting policies the fund uses in
arriving at the figures it presents here.
[PHOTO]
Together, the words and numbers in this section offer a comprehensive picture of
the fund and its recent activities. In fact, the text and notes on pages 9 to 22
are an integral part of the financial statements, which wouldn't be complete
without them.
For more information about the fund's strategies, risks and expenses, check the
fund's prospectus; you'll need to read it before making any investments. The
prospectus also has more details on the fund's share classes and its policies
for shareholder accounts. To get a copy of any State Street Research prospectus,
see the back cover of this report.
Keep in mind that in annual reports, the portfolio holdings and financial
statements are audited, while in semiannual reports they are unaudited.
8 State Street Research Investment Trust
<PAGE>
About the Fund
- --------------------------------------------------------------------------------
Business structure
State Street Research Investment Trust is a mutual fund. A mutual fund allows
shareholders to pool their assets for investment in a portfolio of securities.
This fund is a series of State Street Research Master Investment Trust, a
Massachusetts business trust and is an open-end management investment company.
Four entities administer the fund's main business functions:
o The board of trustees oversee the fund with its shareholders' interests in
mind and have ultimate responsibility for the fund's activities (see
inside back cover for trustee information).
o The investment manager, State Street Research & Management Company, is
responsible for the fund's investment and business activities and receives
the management fee as compensation.
o The distributor, State Street Research Investment Services, Inc., sells
shares of the fund, handles investor inquiries and transaction orders and
provides other shareholder services.
o The custodian, State Street Bank and Trust Company, holds fund securities,
provides data on their market value and handles related services.
The investment manager and the distributor are subsidiaries of Metropolitan Life
Insurance Company, better known as MetLife. State Street Bank and Trust Company
is not affiliated with MetLife (the similarity between its name and the names of
the investment manager and distributor is coincidental). A majority of the
trustees consists of people who are not affiliated with MetLife or any of its
subsidiaries. The distributor pays a portion of its fees to MetLife for services
it provides, including maintaining the accounts of some investors who hold
shares through their firm's employee benefit plans and other sponsored
arrangements.
Goal and strategy
The fund seeks to provide long-term growth of capital and secondarily, long-term
growth of income. In managing its portfolio, the fund generally attempts to
identify the industries that over the long term will grow faster than the
economy as a whole.
Share classes
The fund generally offers four share classes, each with its own sales charge and
expense structure. The fund also offers an additional class of shares (Class B)
but only to current Class B shareholders through reinvestment of dividends and
distributions or through exchanges from existing Class B accounts of other State
Street Research funds.
The text and notes are an integral part of the financial statements.
9
<PAGE>
The Fund's Accounting Policies
- --------------------------------------------------------------------------------
In keeping with accounting principles generally accepted in the United States,
the fund has used the following policies in preparing the portfolio holdings and
financial statements in this report:
The fund values all portfolio securities as of the date of this report (or, if
that day wasn't a business day, then the most recent business day). The fund
uses the following methods for determining the values of various types of
securities:
o Listed securities -- The fund uses the price of the last sale on a
national securities exchange that was quoted before the close of the
New York Stock Exchange.
o Over-the-counter securities -- The fund uses the closing prices
quoted on the Nasdaq system. If a security hasn't traded that day,
or if it is not quoted on the Nasdaq system, the value is set at
halfway between the closing bid and asked quotations.
o Securities maturing within sixty days -- The fund adjusts the value
of these securities daily, moving them closer to the amount due on
maturity as the maturity date approaches.
The fund accounts for each purchase and sale of portfolio securities on the
trade date. In calculating realized gains or losses, the fund takes as its cost
basis the identified cost of securities sold.
The fund records investment income from portfolio securities as follows:
o Interest -- The fund accrues interest daily as it earns it.
o Cash dividends -- The fund accrues these on the ex-dividend date.
The fund may seek additional income by lending portfolio securities to qualified
institutions. The fund will receive cash or securities as collateral in the
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 or losses. If the
borrower fails to return the securities and the collateral has declined in
value, the fund could lose money. The fund accounts for income from the lending
of its securities by including it in interest income.
The fund distributes its net earnings to its shareholders. The fund calculates
these distributions using federal income tax regulations. As a result, they may
be different than if the fund used generally accepted accounting principles. The
fund distributes its earnings on the following schedule:
o Dividends from net investment income -- The fund ordinarily declares
and pays these annually, if any.
o Net realized capital gains -- The fund distributes these annually,
if any, and may make an additional distribution if tax regulations
make it necessary.
If the fund has no earnings to distribute, it won't make a distribution.
The fund does not intend to pay federal income tax. This is because it has
elected to be exempt from taxes under Subchapter M of the Internal Revenue Code,
in part because it makes distributions as described above.
The fund has used certain estimates and assumptions in preparing this report.
Although they are necessary in order to follow generally accepted accounting
principles, these estimates and assumptions affect several key areas, including
the reported amounts of assets and liabilities and income and expenses. Actual
results could differ from those estimates.
The fund's securities and investment practices carry certain risks.
The text and notes are an integral part of the financial statements.
10 State Street Research Investment Trust
<PAGE>
Portfolio Holdings December 31, 1999
- --------------------------------------------------------------------------------
The listings that begin on this page detail the fund's investment holdings as of
the report date. We have grouped the holdings by asset class and by smaller
sub-groups as well. For example, we have grouped this fund's stocks by sector of
the economy, and then by specific industry within each sector.
The solid colored circles (1) show the fund's ten largest holdings, with the
number in the circle showing where the holding ranks in the top ten.
- --------------------------------------------------------------------------------
Notes about specific elements of the financials are called out in boxes such as
this.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Key to symbols
* Denotes a security which has not paid a dividend during the last year.
o Denotes an American Depositary Receipt, a form of ownership of foreign
securities that is traded in the United States and denominated in U.S.
dollars.
-------------------------------------------------------------------------
Market
Issuer Shares Value
-------------------------------------------------------------------------
Common Stocks 97.3% of net assets
Automobiles & Transportation
0.9% of net assets
-------------------------------------------------------------------------
Miscellaneous Transportation 0.9%
-------------------------------------------------------------------------
Harley-Davidson Inc. 498,700 $31,947,969
--------------
-------------------------------------------------------------------------
Total Automobiles & Transportation 31,947,969
--------------
Consumer Discretionary 15.7% of net assets
-------------------------------------------------------------------------
Advertising Agencies 1.8%
-------------------------------------------------------------------------
Interpublic Group of Companies, Inc. 1,056,900 60,969,919
--------------
Commercial Services 1.0%
-------------------------------------------------------------------------
America Online Inc.* 437,600 33,011,450
--------------
Communications, Media & Entertainment 7.4%
-------------------------------------------------------------------------
(4) CBS Corp.* 1,672,400 106,929,075
TV/Radio Broadcasting Network
-------------------------------------------------------------------------
Time Warner Inc. 853,600 61,832,650
-------------------------------------------------------------------------
Viacom Inc. Cl. B* 884,800 53,475,100
-------------------------------------------------------------------------
Walt Disney Co. 1,083,896 31,703,958
--------------
-------------------------------------------------------------------------
253,940,783
--------------
Consumer Electronics 0.3%
-------------------------------------------------------------------------
Doubleclick Inc.* 48,500 12,273,531
--------------
Retail 5.2%
-------------------------------------------------------------------------
Best Buy Company Inc.* 761,700 38,227,819
-------------------------------------------------------------------------
Dayton Hudson Corp. 445,000 32,679,687
-------------------------------------------------------------------------
Home Depot Inc. 292,650 20,064,816
-------------------------------------------------------------------------
Staples Inc.* 1,858,300 38,559,725
-------------------------------------------------------------------------
Wal-Mart Stores, Inc. 693,200 47,917,450
--------------
-------------------------------------------------------------------------
177,449,497
--------------
-------------------------------------------------------------------------
Total Consumer Discretionary 537,645,180
--------------
Consumer Staples 6.4% of net assets
-------------------------------------------------------------------------
Beverages 1.9%
-------------------------------------------------------------------------
Anheuser-Busch Companies, Inc. 571,300 40,490,888
-------------------------------------------------------------------------
Coca-Cola Co. 282,200 16,438,150
-------------------------------------------------------------------------
Coca-Cola Enterprises Inc. 333,800 6,717,725
--------------
-------------------------------------------------------------------------
63,646,763
--------------
Drug & Grocery Store Chains 1.3%
-------------------------------------------------------------------------
CVS Corp. 1,093,900 43,687,631
--------------
The text and notes are an integral part of the financial statements.
11
<PAGE>
Portfolio Holdings December 31, 1999 CONTINUED
Market
Issuer Shares Value
-------------------------------------------------------------------------
Household Products 3.2%
-------------------------------------------------------------------------
(7) Colgate-Palmolive Co. 1,196,500 $77,772,500
Household Products
-------------------------------------------------------------------------
Procter & Gamble Co. 298,600 32,715,362
--------------
-------------------------------------------------------------------------
110,487,862
--------------
-------------------------------------------------------------------------
Total Consumer Staples 217,822,256
--------------
Financial Services 13.6% of net assets
-------------------------------------------------------------------------
Banks & Savings & Loan 2.1%
-------------------------------------------------------------------------
Chase Manhattan Corp. 947,300 73,593,369
--------------
Financial Data Processing Services & Systems 1.3%
-------------------------------------------------------------------------
First Data Corp. 875,000 43,148,438
--------------
Insurance 2.8%
-------------------------------------------------------------------------
Ace Ltd. 1,522,900 25,413,394
-------------------------------------------------------------------------
American International Group Inc. 652,700 70,573,187
--------------
-------------------------------------------------------------------------
95,986,581
--------------
Miscellaneous Financial 7.4%
-------------------------------------------------------------------------
American Express Co. 209,500 34,829,375
-------------------------------------------------------------------------
American General Corp. 531,342 40,315,574
-------------------------------------------------------------------------
(2) Citigroup, Inc. 2,000,850 111,172,228
Financial Services
-------------------------------------------------------------------------
Federal National Mortgage Association 220,100 13,742,494
-------------------------------------------------------------------------
Marsh & McLennan Companies, Inc. 153,500 14,688,031
-------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 257,500 36,758,125
--------------
-------------------------------------------------------------------------
251,505,827
--------------
-------------------------------------------------------------------------
Total Financial Services 464,234,215
--------------
Health Care 9.0% of net assets
-------------------------------------------------------------------------
Drugs & Biotechnology 8.2%
-------------------------------------------------------------------------
American Home Products Corp. 558,700 22,033,731
-------------------------------------------------------------------------
Amgen Inc.* 742,400 44,590,400
-------------------------------------------------------------------------
Baxter International Inc. 518,000 32,536,875
-------------------------------------------------------------------------
Biogen Inc.* 489,700 41,379,650
-------------------------------------------------------------------------
Bristol-Myers Squibb Co. 866,000 55,586,375
-------------------------------------------------------------------------
Genentech Inc.* 71,000 9,549,500
-------------------------------------------------------------------------
Johnson & Johnson 94,600 8,809,625
-------------------------------------------------------------------------
Pfizer Inc. 1,063,900 34,510,257
-------------------------------------------------------------------------
Warner-Lambert Co. 386,300 31,652,456
--------------
-------------------------------------------------------------------------
280,648,869
--------------
Hospital Supply 0.8%
-------------------------------------------------------------------------
Guidant Corp.* 588,700 27,668,900
--------------
-------------------------------------------------------------------------
Total Health Care 308,317,769
--------------
Integrated Oils 6.3% of net assets
-------------------------------------------------------------------------
Integrated Domestic 1.5%
-------------------------------------------------------------------------
Conoco Inc. Cl. B 2,090,500 $52,001,188
--------------
Integrated International 4.8%
-------------------------------------------------------------------------
BP Amoco PLC o 215,736 12,795,841
-------------------------------------------------------------------------
Exxon Mobil Corp. 427,600 34,448,525
-------------------------------------------------------------------------
Shell Transport & Trading PLC 887,200 43,694,600
-------------------------------------------------------------------------
Total Fina SA o 1,061,408 73,502,504
--------------
-------------------------------------------------------------------------
164,441,470
--------------
-------------------------------------------------------------------------
Total Integrated Oils 216,442,658
--------------
Materials & Processing 2.1% of net assets
-------------------------------------------------------------------------
Chemicals 2.1%
-------------------------------------------------------------------------
Dow Chemical Co. 539,700 72,117,413
--------------
-------------------------------------------------------------------------
Total Materials & Processing 72,117,413
--------------
Other 9.1% of net assets
-------------------------------------------------------------------------
Multi-Sector 9.1%
-------------------------------------------------------------------------
(1) General Electric Co. 827,100 127,993,725
Consumer & Industrial Products
-------------------------------------------------------------------------
(9) Honeywell International Inc.* 1,312,900 75,737,918
Aerospace/Defense
-------------------------------------------------------------------------
Seagram Ltd. 752,100 33,797,494
-------------------------------------------------------------------------
Tyco International Ltd. 1,887,000 73,357,125
--------------
-------------------------------------------------------------------------
Total Other 310,886,262
--------------
Other Energy 2.3% of net assets
-------------------------------------------------------------------------
Gas Pipelines 1.0%
-------------------------------------------------------------------------
Enron Corp. 783,800 34,781,125
--------------
Offshore Drilling 0.1%
-------------------------------------------------------------------------
Transocean Sedco Forex Inc.* 113,261 3,815,468
--------------
Oil & Gas Producers 0.2%
-------------------------------------------------------------------------
Ocean Energy Inc.* 1,058,500 8,203,375
--------------
Oil Well Equipment & Services 1.0%
-------------------------------------------------------------------------
Schlumberger Ltd. 585,024 32,907,600
--------------
-------------------------------------------------------------------------
Total Other Energy 79,707,568
--------------
The text and notes are an integral part of the financial statements.
12 State Street Research Investment Trust
<PAGE>
Market
Issuer Shares Value
-------------------------------------------------------------------------
Producer Durables 3.0% of net assets
-------------------------------------------------------------------------
Electrical Equipment & Components 0.7%
-------------------------------------------------------------------------
Nortel Networks Corp. 233,600 $23,593,600
--------------
Production Technology Equipment 2.3%
-------------------------------------------------------------------------
(8) Teradyne Inc.* 1,171,800 77,338,800
Electronic Measurement Instruments --------------
-------------------------------------------------------------------------
Total Producer Durables 100,932,400
--------------
Technology 23.0% of net assets
-------------------------------------------------------------------------
Communications Technology 5.3%
-------------------------------------------------------------------------
(5) Cisco Systems Inc.* 891,600 95,512,650
Computer Technology
-------------------------------------------------------------------------
Exodus Communications Inc.* 162,200 14,405,388
-------------------------------------------------------------------------
Lucent Technologies Inc. 468,100 35,019,731
-------------------------------------------------------------------------
Motorola Inc. 240,100 35,354,725
--------------
-------------------------------------------------------------------------
180,292,494
--------------
Computer Software 4.2%
-------------------------------------------------------------------------
(3) Microsoft Corp.* 945,100 110,340,425
Computer Software
-------------------------------------------------------------------------
Oracle Systems Corp.* 72,800 8,158,150
-------------------------------------------------------------------------
Veritas Software Co.* 181,300 25,948,562
--------------
-------------------------------------------------------------------------
144,447,137
--------------
Computer Technology 6.1%
-------------------------------------------------------------------------
Electronic Data Systems Corp. 929,100 62,191,631
-------------------------------------------------------------------------
EMC Corp.* 447,300 48,867,525
-------------------------------------------------------------------------
Gateway Inc.* 181,200 13,057,725
-------------------------------------------------------------------------
Hewlett-Packard Co. 264,000 30,079,500
-------------------------------------------------------------------------
International Business Machines Corp. 350,000 37,800,000
-------------------------------------------------------------------------
Sun Microsystems Inc.* 196,400 15,208,725
--------------
-------------------------------------------------------------------------
207,205,106
--------------
Electronics 3.3%
-------------------------------------------------------------------------
Nokia Corp. o 374,300 71,117,000
-------------------------------------------------------------------------
Solectron Corp.* 438,100 41,674,263
--------------
-------------------------------------------------------------------------
112,791,263
--------------
Electronics: Semi-Conductors/Components 4.1%
-------------------------------------------------------------------------
(10) Intel Corp. 906,300 74,599,819
Semiconductor & Components
-------------------------------------------------------------------------
Texas Instruments Inc. 680,300 65,904,062
--------------
-------------------------------------------------------------------------
140,503,881
--------------
-------------------------------------------------------------------------
Total Technology 785,239,881
--------------
Utilities 5.9% of net assets
-------------------------------------------------------------------------
Cable Television & Radio 1.1%
-------------------------------------------------------------------------
Comcast Corp. Cl. A 350,100 $17,701,931
-------------------------------------------------------------------------
MediaOne Group Inc.* 252,900 19,425,882
--------------
-------------------------------------------------------------------------
37,127,813
--------------
Electrical 0.2%
-------------------------------------------------------------------------
FPL Group Inc. 172,800 7,398,000
--------------
Telecommunications 4.6%
-------------------------------------------------------------------------
(6) MCI WorldCom Inc.* 1,655,100 87,823,744
Telecommunications Services
-------------------------------------------------------------------------
Nextel Communications Inc. Cl. A* 289,300 29,834,062
-------------------------------------------------------------------------
Qwest Communications
International Inc.* 714,800 30,736,400
-------------------------------------------------------------------------
Sprint Corp.* 77,200 7,913,000
--------------
-------------------------------------------------------------------------
156,307,206
--------------
Total Utilities 200,833,019
--------------
Total Common Stocks 3,326,126,590
--------------
-------------------------------------------------------------
The fund paid a total of $2,081,187,475 for these securities.
-------------------------------------------------------------
The text and notes are an integral part of the financial statements.
13
<PAGE>
Portfolio Holdings December 31, 1999 CONTINUED
<TABLE>
<CAPTION>
Market
Issuer Shares Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Investments 2.5% of net assets
- --------------------------------------------------------------------------------------------------------------------------
State Street Navigator Securities Lending Prime Portfolio 84,730,417 $84,730,417
--------------
- --------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments 84,730,417
--------------
-------------------------------------------------------
The fund paid a total of $84,730,417 for this security.
-------------------------------------------------------
<CAPTION>
Coupon Maturity Amount of
Rate Date Principal
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Paper 3.7% of net assets
- --------------------------------------------------------------------------------------------------------------------------
American Express Credit Corp. 5.80% 1/04/2000 $16,888,000 16,888,000
- --------------------------------------------------------------------------------------------------------------------------
American Express Credit Corp. 6.50% 1/04/2000 20,000,000 20,000,000
- --------------------------------------------------------------------------------------------------------------------------
American Express Credit Corp. 6.45% 1/05/2000 25,000,000 25,000,000
- --------------------------------------------------------------------------------------------------------------------------
CIT Group Holdings Inc. 4.50% 1/03/2000 15,194,000 15,194,000
- --------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co. 6.41% 1/07/2000 11,100,000 11,100,000
- --------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co. 5.45% 1/11/2000 14,067,000 14,067,000
- --------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co. 5.42% 1/20/2000 4,190,000 4,178,014
- --------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp. 6.60% 1/11/2000 20,000,000 20,000,000
--------------
- --------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper 126,427,014
--------------
-----------------------------------------------------------
The fund paid a total of $126,427,014 for these securities.
-----------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 0.0% of net assets
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
State Street Bank and Trust Co., dated 12/31/99,
repurchase proceeds $984,205, collateralized by
$995,000 U.S. Treasury Note, 6.25%, due 2/15/03,
market value $1,014,900 2.50% 1/03/2000 984,000 984,000
--------------
- --------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements 984,000
--------------
----------------------------------------------------
The fund paid a total of $984,000 for this security.
----------------------------------------------------
<CAPTION>
% of
Net Assets
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Summary of Portfolio Assets
- --------------------------------------------------------------------------------------------------------------------------
Investments 103.5% $3,538,268,021++
- --------------------------------------------------------------------------------------------------------------------------
Cash and Other Assets, Less Liabilities (3.5%) (118,295,466)
----- --------------
- --------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $3,419,972,555
===== ==============
-------------------------------------------------------------
++ The fund paid a total of $2,293,328,906 for this security.
-------------------------------------------------------------
</TABLE>
The text and notes are an integral part of the financial statements.
14 State Street Research Investment Trust
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information
At December 31, 1999, the net unrealized appreciation of investments based on
cost for Federal income tax purposes of $2,294,668,650 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 1,289,712,019
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (46,112,648)
---------------
$ 1,243,599,371
===============
- --------------------------------------------------------------------------------
The text and notes are an integral part of the financial statements.
15
<PAGE>
Statement of
Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
This is the fund's balance sheet as of the report date. It shows the fund's
total assets, its liabilities and, by subtraction, its net assets. It also shows
the share price for each share class as of the report date.
Assets
Investments, at market value $3,538,268,021
- --------------------------------------------------------------------------------
The fund paid a total of $2,293,328,906 for these securities.
- --------------------------------------------------------------------------------
Cash 5,343
Receivable for securities sold 9,196,949
Receivable for fund shares sold 3,335,537
Dividends and interest receivable 1,544,867
Other assets 18,175
--------------
3,552,368,892
Liabilities
Payable for collateral received on
securities loaned 84,730,417
Payable for securities purchased 38,087,893
Payable for fund shares redeemed 3,784,018
Accrued management fee 2,622,812
Accrued transfer agent and shareholder services 1,789,511
Accrued distribution and service fees 1,053,725
Accrued trustees' fee 20,572
Other accrued expenses 307,389
--------------
132,396,337
--------------
Net Assets $3,419,972,555
==============
Net Assets consist of:
Unrealized appreciation of investments $1,244,939,115
Accumulated net realized gain 88,456,082
Paid-in capital 2,086,577,358
--------------
$3,419,972,555
==============
- --------------------------------------------------------------------------------
Net Asset Value (NAV) of Each Share Class
Except where noted, the NAV is the offering and the redemption price for each
class.
Net Assets / Number of Shares = NAV
A $802,358,550 57,280,483 $14.01*
B(1) $298,302,542 21,636,707 $13.79**
B $1,070,607,690 77,581,610 $13.80**
C $90,976,665 6,578,975 $13.83**
S $1,157,727,108 82,103,071 $14.10
* Maximum offering price per share $14.86 ($14.01 / .9425)
** When you sell Class B(1), Class B or Class C shares, you receive the net
asset value minus deferred sales charge, if any.
- --------------------------------------------------------------------------------
The text and notes are an integral part of the financial statements.
16 State Street Research Investment Trust
<PAGE>
Statement of
Operations For the year ended December 31, 1999
- --------------------------------------------------------------------------------
This shows what the fund earned and lost over the report period, and what its
expenses were.
Investment Income
Dividends, net of foreign taxes $27,167,741
- --------------------------------------------------------------------------------
The fund paid foreign taxes of $715,347.
- --------------------------------------------------------------------------------
Interest 4,494,074
- --------------------------------------------------------------------------------
Includes $259,786 in income from the lending of portfolio securities. As of the
report date, the fund had a total of $82,944,009 of securities out on loan and
was holding a total of $84,730,417 in collateral related to those loans.
- --------------------------------------------------------------------------------
------------
31,661,815
Expenses
Management fee 14,152,289
- --------------------------------------------------------------------------------
The management fee is 0.55% of the first $500 million of average net assets,
annually, 0.50% of the next $500 million, and 0.45% of any amount over $1
billion.
- --------------------------------------------------------------------------------
Transfer agent and shareholder services 4,918,411
- --------------------------------------------------------------------------------
Includes a total of $1,749,242 paid to the distributor for the services it
provided and to MetLife for similar services it provided, including maintaining
the accounts of some investors who hold shares through that firm's employee
benefit plans and other sponsored arrangements.
- --------------------------------------------------------------------------------
Service fee-Class A 1,716,387
Distribution and service fees-Class B(1) 1,468,631
Distribution and service fees-Class B 8,566,424
Distribution and service fees-Class C 743,146
- --------------------------------------------------------------------------------
Payments made to the distributor under the fund's 12b-1 plans. The fees cover
personal services and the maintenance of shareholder accounts. The fees also
cover distribution and marketing expenditures for the sale of fund shares.
- --------------------------------------------------------------------------------
Custodian fee 459,475
Reports to shareholders 304,066
Registration fees 296,947
Audit fee 33,544
Trustees' fees 20,572
- --------------------------------------------------------------------------------
Paid only to trustees who aren't currently affiliated with the adviser (the fund
doesn't pay trustees fees to affiliated trustees).
- --------------------------------------------------------------------------------
Legal fees 3,689
Miscellaneous 79,239
------------
32,762,820
Fees paid indirectly (167,975)
- --------------------------------------------------------------------------------
Represents transfer agent credits earned from uninvested cash balances and
directed brokerage credits used to reduce the custodian fee.
- --------------------------------------------------------------------------------
------------
32,594,845
------------
Net investment loss (933,030)
------------
Realized and Unrealized Gain
on Investments
Net realized gain on investments 236,272,357
- --------------------------------------------------------------------------------
To earn this, the fund sold $2,067,851,194 of securities. During this same
period, the fund also bought $2,303,660,483 worth of securities. These figures
don't include short-term obligations or U.S. government securities.
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 310,802,825
------------
Net gain on investments 547,075,182
------------
Net increase in net assets resulting
from operations $546,142,152
============
The text and notes are an integral part of the financial statements.
17
<PAGE>
Statement of
Changes in Net Assets
- --------------------------------------------------------------------------------
This shows how the fund's size changed over the report period, including changes
that resulted from investment performance as well as those that resulted from
shareholders buying and selling fund shares.
Years ended December 31
- --------------------------------------------------------------------------------
1998 1999
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment income
(loss) $10,333,698 $(933,030)
Net realized gain on
investments 170,998,002 236,272,357
Net unrealized appreciation
of investments 377,577,808 310,802,825
--------------------------------------
Net increase resulting
from operations 558,909,508 546,142,152
Dividends from net
investment income:
Class A (2,587,460) (109,725)
Class S (7,493,736) (301,841)
--------------------------------------
(10,081,196) (411,566)
--------------------------------------
Dividends in excess of
net investment income:
Class A -- (515,054)
Class S -- (1,837,421)
--------------------------------------
-- (2,352,475)
--------------------------------------
Distributions from net
realized gains:
Class A (39,822,904) (39,082,234)
Class B(1) -- (12,745,685)
Class B (65,309,613) (54,789,323)
Class C (3,824,821) (4,446,859)
Class S (76,915,562) (58,323,229)
--------------------------------------
(185,872,900) (169,387,330)
--------------------------------------
- --------------------------------------------------------------------------------
The fund has designated as long-term $155,399,067 of this amount.
- --------------------------------------------------------------------------------
Net increase from fund
share transactions+++ 395,671,890 441,461,838
--------------------------------------
Total increase in net assets 758,627,302 815,452,619
--------------------------------------
Net Assets
Beginning of year 1,845,892,634 2,604,519,936
--------------------------------------
End of year $2,604,519,936 $3,419,972,555
======================================
- --------------------------------------------------------------------------------
Includes undistributed net investment income of $411,566 and $0, respectively.
- --------------------------------------------------------------------------------
The text and notes are an integral part of the financial statements.
18 State Street Research Investment Trust
<PAGE>
- --------------------------------------------------------------------------------
+++ These transactions break down by share class as follows:
<TABLE>
<CAPTION>
Years ended December 31
-----------------------------------------------------------------------------------
1998 1999
-----------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 15,387,705 $179,548,411 30,350,365 $396,811,746*
Issued upon reinvestment of:
Distributions from net realized gains 3,305,725 38,989,534 2,885,362 38,137,344
Dividends from net investment income 208,775 2,431,646 45,976 589,185
Shares redeemed (7,738,830) (89,464,550) (22,501,889) (295,663,490)
-----------------------------------------------------------------------------------
Net increase 11,163,375 $131,505,041 10,779,814 $139,874,785
===================================================================================
<CAPTION>
Class B(1)(a) Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold -- -- 22,072,928 $285,348,870**
Issued upon reinvestment of
distribution from net realized gains -- -- 957,342 12,479,692
Shares redeemed -- -- (1,393,563) (18,427,158)***
-----------------------------------------------------------------------------------
Net increase -- -- 21,636,707 $279,401,404
===================================================================================
<CAPTION>
Class B Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 28,941,723 $335,668,941 9,428,216 $120,762,829**
Issued upon reinvestment of
distributions from net realized gains 5,418,219 63,334,450 4,061,837 52,887,655
Shares redeemed (11,279,857) (129,650,410) (12,995,496) (168,334,936)***
-----------------------------------------------------------------------------------
Net increase 23,080,085 $269,352,981 494,557 $5,315,548
===================================================================================
<CAPTION>
Class C Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,707,702 $19,923,326 2,912,519 $37,627,923**
Issued upon reinvestment of
distributions from net realized gains 306,530 3,595,984 314,928 4,114,905
Shares redeemed (1,015,775) (11,590,128) (1,143,963) (14,870,883)****
-----------------------------------------------------------------------------------
Net increase 998,457 $11,929,182 2,083,484 $26,871,945
===================================================================================
<CAPTION>
Class S Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,501,260 $29,464,708 3,450,979 $45,865,215
Issued upon reinvestment of:
Distributions from net realized gains 3,427,990 40,551,340 2,595,411 34,528,519
Dividends from net investment income 285,270 3,357,017 64,742 848,625
Shares redeemed (7,808,814) (90,488,379) (6,926,402) (91,244,203)
-----------------------------------------------------------------------------------
Net decrease (1,594,294) ($17,115,314) (815,270) ($10,001,844)
===================================================================================
</TABLE>
The trustees have the authority to issue an unlimited number of fund
shares, with a $.001 par value per share.
* Includes $1,045,099 and $2,580,868 in sales charges collected by the
distributor and MetLife.
** Like all broker-dealers, MetLife received commissions that were calculated
as a percentage of these sales but the commissions of $3,803,555, $252,424
and $1,714 for Class B(1), Class B and Class C were paid by the
distributor, not the fund.
*** Includes $362,586 and $1,687,842 in deferred sales charges collected by
the distributor for Class B(1) and Class B.
**** Includes $11,314 in deferred sales charges collected by the distributor.
(a) January 1, 1999 (commencement of share class) to December 31, 1999.
- --------------------------------------------------------------------------------
The text and notes are an integral part of the financial statements.
19
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
These provide a summary of each share class's financial performance for the past
five fiscal years.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------
Years ended December 31
Per Share Data 1995 (a) 1996 (a) 1997 (a) 1998 (a) 1999 (a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 7.74 9.16 9.07 10.41 12.36
------- ------- ------- ------- -------
Net investment income ($) 0.14 0.12 0.10 0.07 0.02
Net realized and unrealized gain
on investments ($) 2.39 1.80 2.54 2.89 2.37
------- ------- ------- ------- -------
Total from investment operations ($) 2.53 1.92 2.64 2.96 2.39
------- ------- ------- ------- -------
Dividends from net investment income ($) (0.13) (0.13) (0.10) (0.06) (0.00)
Dividends in excess of net investment income ($) -- -- -- -- (0.01)
Distributions from capital gains ($) (0.98) (1.87) (1.20) (0.95) (0.73)
Distribution in excess of capital gains ($) -- (0.01) -- -- --
------- ------- ------- ------- -------
Total distributions ($) (1.11) (2.01) (1.30) (1.01) (0.74)
------- ------- ------- ------- -------
Net asset value, end of year ($) 9.16 9.07 10.41 12.36 14.01
======= ======= ======= ======= =======
Total return (%)(b) 32.85 21.03 28.91 29.12 19.75
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 135,676 223,868 367,759 574,858 802,359
Expense ratio (%) 0.78 0.75 0.76 0.85 0.93
Expense ratio after expense reductions (%) 0.78 0.75 0.76 0.84 0.92
Ratio of net investment income to
average net assets (%) 1.54 1.17 0.90 0.63 0.14
Portfolio turnover rate (%) 39.21 73.51 75.21 66.32 71.45
</TABLE>
Class B(1)
----------------------
Year ended December 31
----------------------
Per Share Data 1999 (a)(c)
- --------------------------------------------------------------------------------
Net asset value, beginning of year ($) 12.25
-------
Net investment loss ($) (0.09)
Net realized and unrealized gain
on investments ($) 2.36
-------
Total from investment operations ($) 2.27
-------
Distributions from capital gains ($) (0.73)
-------
Total distributions ($) (0.73)
-------
Net asset value, end of year ($) 13.79
=======
Total return (%)(b) 18.91
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 298,303
Expense ratio (%) 1.68
Expense ratio after expense reductions (%) 1.67
Ratio of net investment loss to
average net assets (%) (0.68)
Portfolio turnover rate (%) 71.45
The text and notes are an integral part of the financial statements.
20 State Street Research Investment Trust
<PAGE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------
Years ended December 31
------------------------------------------------------------------------
Per Share Data 1995 (a) 1996 (a) 1997 (a) 1998 (a) 1999 (a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 7.72 9.13 9.03 10.34 12.25
------- ------- ------- ------- ---------
Net investment income (loss) ($) 0.07 0.04 0.02 (0.01) (0.06)
Net realized and unrealized gain
on investments ($) 2.38 1.80 2.51 2.87 2.34
------- ------- ------- ------- ---------
Total from investment operations ($) 2.45 1.84 2.53 2.86 2.28
------- ------- ------- ------- ---------
Dividends from net investment income ($) (0.06) (0.06) (0.02) -- --
Distributions from capital gains ($) (0.98) (1.87) (1.20) (0.95) (0.73)
Distribution in excess of capital gains ($) -- (0.01) -- -- --
------- ------- ------- ------- ---------
Total distributions ($) (1.04) (1.94) (1.22) (0.95) (0.73)
------- ------- ------- ------- ---------
Net asset value, end of year ($) 9.13 9.03 10.34 12.25 13.80
======= ======= ======= ======= =========
Total return (%)(b) 31.86 20.15 27.80 28.26 18.99
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 183,446 315,766 558,568 944,388 1,070,608
Expense ratio (%) 1.53 1.50 1.51 1.60 1.54
Expense ratio after expense reductions (%) 1.53 1.50 1.51 1.59 1.53
Ratio of net investment income (loss) to
average net assets (%) 0.79 0.41 0.15 (0.12) (0.46)
Portfolio turnover rate (%) 39.21 73.51 75.21 66.32 71.45
</TABLE>
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------
Years ended December 31
------------------------------------------------------------
Per Share Data 1995 (a) 1996 (a) 1997 (a) 1998 (a) 1999 (a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 7.74 9.15 9.05 10.38 12.29
------ ------ ------ ------ ------
Net investment income (loss) ($) 0.07 0.04 0.02 (0.01) (0.08)
Net realized and unrealized gain
on investments ($) 2.38 1.79 2.53 2.87 2.35
------ ------ ------ ------ ------
Total from investment operations ($) 2.45 1.83 2.55 2.86 2.27
------ ------ ------ ------ ------
Dividends from net investment income ($) (0.06) (0.05) (0.02) -- --
Distributions from capital gains ($) (0.98) (1.87) (1.20) (0.95) (0.73)
Distribution in excess of capital gains ($) -- (0.01) -- -- --
------ ------ ------ ------ ------
Total distributions ($) (1.04) (1.93) (1.22) (0.95) (0.73)
------ ------ ------ ------ ------
Net asset value, end of year ($) 9.15 9.05 10.38 12.29 13.83
====== ====== ====== ====== ======
Total return (%)(b) 31.75 20.09 27.93 28.15 18.85
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 16,841 25,658 36,290 55,263 90,977
Expense ratio (%) 1.53 1.50 1.51 1.60 1.68
Expense ratio after expense reductions (%) 1.53 1.50 1.51 1.59 1.67
Ratio of net investment income (loss) to
average net assets (%) 0.79 0.42 0.15 (0.13) (0.62)
Portfolio turnover rate (%) 39.21 73.51 75.21 66.32 71.45
</TABLE>
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charges.
(c) January 1, 1999 (commencement of share class) to December 31, 1999.
The text and notes are an integral part of the financial statements.
21
<PAGE>
Financial Highlights CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class S
-----------------------------------------------------------------
Years ended December 31
-----------------------------------------------------------------
Per Share Data 1995 (a) 1996 (a) 1997 (a) 1998 (a) 1999 (a)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ($) 7.76 9.18 9.11 10.45 12.42
------- ------- ------- --------- ---------
Net investment income ($) 0.16 0.14 0.12 0.10 0.05
Net realized and unrealized gain
on investments ($) 2.39 1.82 2.54 2.91 2.38
------- ------- ------- --------- ---------
Total from investment operations ($) 2.55 1.96 2.66 3.01 2.43
------- ------- ------- --------- ---------
Dividends from net investment income ($) (0.15) (0.15) (0.12) (0.09) (0.00)
Dividends in excess of net investment income ($) -- -- -- -- (0.02)
Distributions from capital gains ($) (0.98) (1.87) (1.20) (0.95) (0.73)
Distribution in excess of capital gains ($) -- (0.01) -- -- --
------- ------- ------- --------- ---------
Total distributions ($) (1.13) (2.03) (1.32) (1.04) (0.75)
------- ------- ------- --------- ---------
Net asset value, end of year ($) 9.18 9.11 10.45 12.42 14.10
======= ======= ======= ========= =========
Total return (%)(b) 33.07 21.48 29.08 29.51 20.01
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of year ($ thousands) 738,649 780,627 883,276 1,030,011 1,157,727
Expense ratio (%) 0.54 0.50 0.51 0.60 0.68
Expense ratio after expense reductions (%) 0.54 0.50 0.51 0.59 0.67
Ratio of net investment income to
average net assets (%) 1.81 1.44 1.17 0.88 0.39
Portfolio turnover rate (%) 39.21 73.51 75.21 66.32 71.45
</TABLE>
(a) Per-share figures have been calculated using the average shares method.
(b) Does not reflect any front-end or contingent deferred sales charges.
The text and notes are an integral part of the financial statements.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees of State Street Research
Master Investment Trust and the Shareholders of
State Street Research Investment Trust
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio holdings, 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, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States. 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 auditing standards generally accepted in the
United States, 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 2000
22 State Street Research Investment Trust
<PAGE>
Board of Trustees
Ralph F. Verni
Chairman of the Board, President,
Chief Executive Officer and Director,
State Street Research & Management Company
Bruce R. Bond
Former Chairman of the Board,
Chief Executive Officer and President,
PictureTel Corporation
Steve A. Garban
Former Senior Vice President
for Finance and Operations and Treasurer,
The Pennsylvania State University
Malcolm T. Hopkins
Former Vice Chairman of the Board
and Chief Financial Officer,
St. Regis Corp.
Dean O. Morton
Former Executive Vice President,
Chief Operating Officer and Director,
Hewlett-Packard Company
Susan M. Phillips
Dean, School of Business and Public Management,
George Washington University; former Member of
the Board of Governors of the Federal Reserve
System and Chairman and Commissioner of the
Commodity Futures Trading Commission
Toby Rosenblatt
President, Founders Investments Ltd.
President, The Glen Ellen Company
Michael S. Scott Morton
Jay W. Forrester Professor of Management,
Sloan School of Management,
Massachusetts Institute of Technology
23
<PAGE>
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shareholder newsletter, visit our Web site at www.ssrfunds.com
- --------------------------------------------------------------------------------
State Street Research
Family of Funds
- --------------------------------------------------------------------------------
Aggressive
Growth Funds
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State Street Research
- --------------------------------------------------------------------------------
FYI
o Maximize your savings for retirement! You can still contribute to your IRA
for tax year 1999 until April 15, 2000.
o Your tax questions are important to us. Until April 15, we offer extended
hours. Call us Monday through Friday, 8:00am - 8:00pm, or on Saturdays
from 10:00am - 2:00pm, EST.
---------------------------------------------
[GRAPHIC]
DALBAR
HONORS COMMITMENT TO:
FINANCIAL INTERMEDIARIES
1999
---------------------------------------------
for Excellence in Service
All tax information
available at
- -------------------
ssrfunds.com
- -------------------
just one-click away
----
TAX
INFO
----
- --------------------------------------------------------------------------------
This report must be accompanied or preceded by a current State Street Research
Investment Trust prospectus. When used after March 31, 2000, this report must be
accompanied by a current Quarterly Performance Update.
To obtain a prospectus on any State Street Research Fund call 1-800-562-0032.
The prospectus contains more complete information, including sales charges and
expenses. Please read the prospectus carefully before investing or sending
money.
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: (exp0201)SSR-LD IT-1220-0200
