STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Investment Update
Investment Environment
The Economy
(bullet) The early recovery of the U.S. economy helped the U.S. dollar to
strengthen against most major currencies over the past six months. A
stronger dollar is usually a negative for U.S. investors in an
international fund, because it makes securities denominated in other
currencies decline in value.
(bullet) The economies of Continental Europe (Germany, France, etc.) remained
sluggish, leaving central banks there additional room to reduce
interest rates. Although Japan's economy has been slow to recover,
its low rates are unlikely to continue indefinitely.
The Markets
(bullet) Overseas stock markets rebounded from 1995's mixed performance. For
the six months ended April 30, 1996, the Morgan Stanley EAFE Index,
which is a commonly used indicator of international stock market
performance, provided a total return of +13.21%.(1)
(bullet) Large-capitalization growth stocks, particularly those linked to the
U.S. markets, were the best international performers.
(bullet) After strong gains in late 1995, Japan's stock market has hovered
within a fairly narrow range.
The Fund
Over the past six months
(bullet) For the six months ended April 30, 1996, International Equity Fund's
Class A shares provided a total return of +6.64% (does not reflect
sales charge).(2) The average total return for 318 funds in Lipper
Analytical Services' International Funds category was +11.95% (does
not reflect sales charge).
(bullet) Performance was hindered by the Fund's traditional focus on value
stocks, which did not perform as well as pure growth stocks. In
addition, the Fund was invested in industries linked to worldwide
economic growth, such as raw materials and manufacturing, which
underperformed.
(bullet) The recovery of the U.S. dollar, particularly against the Japanese
yen and German mark, also hurt performance.
(bullet) The fund increased holdings in Continental Europe, which offered
greater value, and reduced positions in UK stocks because of market
uncertainty surrounding the upcoming elections.
Current Strategy
(bullet) The Fund's manager is paying close attention to Japan, our largest
country position, where the market has seen strong gains. Export,
financial and building stocks continue to look attractive.
(bullet) In Continental Europe, the Fund is moving away from German stocks,
which are more fully valued, and toward French stocks, particularly
in the financial sector.
(bullet) The Fund is rebuilding positions in Northeast Asia, including Korea
and Taiwan, following poor performance in those markets in 1995. The
Fund views Southeast Asia more cautiously, as valuations are quite
high.
(1) The Morgan Stanley Europe, Australia, Far East Index is a commonly used
measure of international stock market performance. The index is unmanaged and
does not take sales charges into account. Direct investment in the index is
not possible; results are for illustrative purposes only.
(2) +6.29% for Class B shares; +6.82% for Class C shares; +6.29% for Class D
shares.
(3) All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Shares of the Fund had no class
designations until March 1, 1994, when designations were assigned based on
the pricing and 12b-1 fees applicable to shares sold thereafter. Performance
for a class include periods prior to the adoption of class designations.
Performance prior to March 1, 1994, does not reflect annual 12b-1 fees of
.25% for "A" shares and 1% for "B" and "D" shares, which will reduce
subsequent performance. Performance reflects maximum 4.5% "A" share
front-end, or 5% "B" share or 1% "D" share contingent deferred sales charges.
"C" shares, offered without a sales charge, are available only to certain
employee benefit plans and large institutions.
(4) Performance results for the Fund are increased by the adviser's voluntary
reduction of fees and expenses related to the Fund. The first figure reflects
expense reduction; the second shows what results would have been without
subsidization.
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 April 30, 1996, except where
otherwise noted)
Average Annual Total Returns for periods
ended April 30, 1996
(at maximum applicable sales charge)3,4
<TABLE>
<CAPTION>
Life of Fund
(since 1/22/92) 1 year
- -------- --------------- --------------
<S> <C> <C>
Class A +9.15%/+8.16% -0.19%/-0.81%
- -------- ------------- ------------
Class B +9.57%/+8.56% -1.41%/-2.06%
- -------- ------------- ------------
Class C +10.50%/+9.49% +4.70%/+4.05%
- -------- ------------- ------------
Class D +9.92%/+8.92% +2.70%/+2.05%
</TABLE>
SEC Average Annual Compound Rates of
Return for periods ended March 31, 1996
(at maximum applicable sales charge)3,4
<TABLE>
<CAPTION>
Life of Fund
(since 1/22/92) 1 year
- -------- --------------- --------------
<S> <C> <C>
Class A +8.91%/+7.92% +1.07%/+0.44%
- -------- ------------- ------------
Class B +9.36%/+8.35% +0.01%/-0.66%
- -------- ------------- ------------
Class C +10.30%/+9.28% +6.13%/+5.47%
- -------- ------------- ------------
Class D +9.69%/+8.69% +4.01%/+3.35%
</TABLE>
10 Largest Positions
(by percentage of net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 NEC Japan 2.0%
2 Avocet Ventures Canada 1.9%
3 Mitsubishi Bank Japan 1.6%
4 Waverley Mining United Kingdom 1.5%
5 Mitsui Japan 1.5%
6 Tokio Marine & Fire Japan 1.3%
7 Sumitomo Realty Japan 1.1%
8 Emtech Canada 1.0%
9 Epicore Networks Canada 1.0%
10 Canon Japan 0.9%
</TABLE>
These securities represent an aggregate of 13.8% 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.
5 Largest Country Positions
(by percentage of net assets)
[BAR GRAPH]
Japan 15.1%
United Kingdom 11.6%
Canada 8.5%
Germany 6.9%
France 6.2%
Total: 48.3%
Because of active management, there is no guar-
antee that the Fund currently invests, or will con-
tinue to invest in the countries listed in this table.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Investment Portfolio
April 30, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- --------------------------------------- ------- -------------
<S> <C> <C>
Common Stocks 67.3%
Argentina 0.2%
Buenos Aires Embotelladora SA ADR 11,700 $ 185,737
-------------
Australia 3.4%
Coles Myer Ltd. 90,000 325,216
Foster's Brewing Group Ltd. 240,000 439,277
ISR Group Ltd.* 560,425 387,411
MIM Holdings Ltd. 435,000 642,419
QBE Insurance Group Ltd. 90,200 473,320
Santos Ltd. 155,000 552,789
WMC Ltd. 105,000 765,436
-------------
3,585,868
-------------
Austria 1.4%
Bohler Uddeholm AG* 3,000 244,961
Creditanstalt Bank AG 3,040 206,714
Flughafen Wien AG 2,500 175,337
OMV Handels AG 6,000 596,377
VA Stahl AG* 7,500 248,026
-------------
1,471,415
-------------
Canada 8.5%
Advanced Material Resources Ltd.* 1,090,000 672,494
Akiko Gold Resources Ltd.* 545,500 356,588
Avocet Ventures Inc.* 637,500 2,036,816
Epicore Networks Inc.* 450,000 1,014,690
Isleinvest Ltd.* 95,821 615,816
Kemgas International Ltd.* 200,000 348,145
McCarthy Corp. PLC 440,000 387,808
Nelson Gold Corp Ltd.* 365,000 556,280
Princess Resources Ltd.* 630,000 198,972
Tan Range Exploration Corp. Cl. A* 922,000 826,177
Turbo Genset Inc. Cl. A 500,000 231,362
TVI Pacific, Inc.* 253,600 437,723
United Reef Ltd.* 1,000,000 426,001
Xavier Mines Ltd.* 856,000 880,206
-------------
8,989,078
-------------
China 0.2%
Shanghai Lujiazui Finance and Trade
Zone Development Co. Ltd.* 370,000 218,300
-------------
Finland 0.2%
Cultor Oy* 6,000 262,832
-------------
France 6.2%
AXA 4,571 272,358
Canal Plus 1,500 367,489
Cie Bancaire SA 4,500 497,242
Cie De Suez SA 4,000 165,728
France (cont'd)
Credit Comm France 13,800 $691,402
Elf Aquitaine SA 2,500 185,922
Eramet SLN 3,500 267,131
Havas SA 2,000 166,115
Lagardere Groupe 15,000 402,612
Lyonnaise Des Eaux SA 5,500 552,395
Pechiney International NV* 11,110 523,519
Promodes 1,250 359,216
Rhone Poulenc SA 8,000 191,969
Seita 5,000 192,550
Thomson CSF 6,250 166,425
Total SA 10,000 678,665
Union Assurance 2,000 243,058
Usinor Sacilor* 25,000 386,792
Valeo SA 5,000 277,504
-------------
6,588,092
-------------
Germany 6.9%
Bankgesell Berlin AG 1,000 205,435
BASF AG 1,000 273,042
Bayer AG 1,500 483,049
Bayer Motoren Werk AG 750 404,909
CKAG Colonia Konzern AG 400 274,348
Daimler-Benz AG 1,550 848,961
Degussa AG 450 161,964
Deutsche Bank AG* 7,000 335,482
Gildemeister AG* 3,125 195,963
Henkel KGAA AG 1,000 383,435
Linde AG 700 427,984
Lufthansa AG* 3,150 499,588
Mannesmann AG 900 307,466
Metallgesellschaft AG* 5,000 93,997
RWE AG* 12,500 486,642
Schwarz Pharma AG* 4,000 244,301
Siemens AG 1,000 547,586
Thyssen AG* 1,500 271,899
Veba AG 10,000 497,093
Volkswagen AG 1,000 345,222
-------------
7,288,366
-------------
Ghana 0.4%
Ashanti Goldfields Ltd. ADR 20,000 437,500
-------------
Hong Kong 1.9%
Cathay Pacific Airways 165,000 287,958
China Merchants China Direct 375,000 227,846
China North Industries* 265,000 176,888
Consolidated Electric Power 120,000 198,565
Hong Kong Telecomm 235,000 448,096
Johnson Electric Holdings Ltd. 201,000 454,722
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Investment Portfolio (con'd)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
- --------------------------------------- ------- -----------
<S> <C> <C>
Hong Kong (cont'd)
South China Morning Post 320,000 $217,181
-----------
2,011,256
-----------
Hungary 0.2%
Mol Magyar Olaj-es Gazipari GDR* 20,000 215,000
-----------
Ireland 0.3%Investment Portfolio
(cont'd)
Kish Resources PLC* 5,000,000 150,534
World Fluids PLC* 3,521,073 145,762
-----------
296,296
-----------
Israel 0.5%
Koors Industries Ltd.* 30,000 562,500
-----------
Italy 1.4%
Edison 85,500 490,996
ENI SPA* 150,000 648,207
Italgas* 100,000 345,711
-----------
1,484,914
-----------
Japan 15.1%
Anritsu Corp. 45,000 662,492
Aoki Corp.* 189,000 791,377
Canon Inc. 50,000 994,216
Eiwa Corp. 33,000 353,329
Japan Wool Textile 32,000 351,800
Kandenko Co. 72,600 992,476
Keyence Corp. 5,000 659,624
Meitec Corp. 35,000 772,908
Misawa Homes Co. Ltd. 79,000 728,789
Mitsui & Co. 165,000 1,572,630
Mitsukoshi 80,000 887,147
MOS Food Services 600 15,487
Nintendo Co. Ltd. 10,000 772,430
Nippon Hodo Co. 15,000 266,718
Nippon Shinpan Co. Ltd. 110,000 821,280
Pioneer Electronic 21,000 469,767
Prospect Japan Fund* 100,000 987,500
Prospect Japan Fund Cl. C 75,000 759,375
Sumitomo Realty & Development Co. Ltd. 150,000 1,207,399
Takashimaya Co. 15,000 245,208
Tokio Marine & Fire Insurance Co. Ltd. 100,000 1,376,607
Tokyo Nissan Auto Sales Co. Ltd.* 45,000 320,491
-----------
16,009,050
-----------
Korea 0.2%
Yukong GDR* 19,500 204,750
-----------
Malaysia 1.0%
Magnum Corp. BHD 165,000 285,886
Tenaga Nasional BHD 90,000 382,625
UMW Holdings BHD 121,000 397,947
-----------
1,066,458
-----------
Mexico 0.1%
Fondo Opcion S.A. de C.V.* 115,000 $ 89,771
-----------
Netherlands 2.1%
ABN Amro Holdings NV 12,500 647,067
ASM Lithography HL* 4,850 216,247
Elsevier NV 25,000 376,423
Gist Brocades NV 7,500 230,231
Gucci Group NV 4,000 217,500
Hagemeyer* 5,000 342,282
Royal Dutch Petroleum Co. 1,750 249,300
-----------
2,279,050
-----------
New Zealand 0.2%
Corporate Investments Ltd.* 730,000 245,724
-----------
Panama 0.3%
Banco Latinoamericano de
Exportaciones SA Cl. E 5,000 276,875
-----------
Poland 0.2%
Bank Gdanski SA GDR* 20,000 210,000
-----------
Singapore 0.4%
Keppel Corp. 22,000 198,748
Malayan Credit 90,000 185,019
-----------
383,767
South Africa 0.6%
Kloof Gold Mining Ltd. 57,280 680,200
Western Area Gold Mining Ltd. ADR 317 4,537
-----------
684,737
-----------
Spain 1.0%
Banco Bilbao Vizcaya 4,000 152,044
Banco Santander SA 3,838 178,322
Centros Com Pryca 7,500 173,054
Empresa Nacionale Electricidad 5,000 314,072
Iberdola SA 20,250 198,202
-----------
1,015,694
-----------
Sweden 1.5%
L.M. Ericsson Telephone Co.* 20,000 405,509
Sandvik AB 15,000 330,674
Scania AB Series A 15,000 415,831
Skandia Foersaekrings AB 20,000 457,119
-----------
1,609,133
-----------
Switzerland 1.1%
BBC Brown Boveri AG 250 301,224
Ciba-Geigy AG 500 580,300
Elektrowatt AG 750 294,177
-----------
1,175,701
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -------------
<S> <C> <C>
Taiwan 0.2%
President Enterprises Corp. GDR* 15,000 $191,250
-------------
United Kingdom 11.6%
Alexon Group PLC* 280,000 505,796
Alpha Omikron* 1,875,000 479,828
Anglo-Eastern Plantations PLC 150,000 281,123
Arjo Wiggins Appleton PLC 100,000 274,725
Ascot Holdings PLC* 125,000 656,706
Bank of Ireland 65,000 469,667
Barclays 32,000 355,020
British Biotech PLC* 20,000 880,626
British Petroleum Co. PLC 55,000 496,350
British Telecom PLC 100,000 548,698
BTR PLC 79,000 380,551
Cable & Wireless 50,000 392,519
Celsis International* 157,372 284,279
Euro Sales Finance PLC* 163,560 295,457
Glaxo Wellcome PLC 50,000 606,277
Grand Metropolitan PLC 95,000 624,944
Guangdong Development Fund Ltd. 250,000 170,000
Inn Business Group PLC 591,055 476,011
Marks & Spencer PLC 60,000 400,572
National Westminster Bank PLC 40,000 368,809
Sainsbury PLC 50,000 275,478
Tarmac PLC 200,000 392,895
Unilever NV 30,000 549,149
Upton & Southern Holdings PLC Cum Cv.* 115,207 164,755
Upton & Southern Holdings PLC* 7,500,000 338,702
Waverley Mining Finance PLC* 1,214,480 1,636,248
-------------
12,305,185
-------------
Total Common Stocks (Cost $64,984,910) 71,344,299
-------------
Equity-Related Securities 2.3%
Amoy Properties Cv. Cum Pfd. 690,000 604,613
Baltic Republics Fund Units* 5,000 580,000
Emtech Ltd. Units* 1,600,000 1,057,657
Gold Mines of Australia Wts.* 302,447 28,510
MIM Holdings Rts.* 87,000 6,834
Nishio Rent All Co. Wts.* 320 152,000
Upton & Southern Holdings PLC Wts.* 750,000 14,113
-------------
Total Equity-Related Securities (Cost $2,927,652) 2,443,727
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
- ------------------------------ --------- ------- -----------
<S> <C> <C> <C>
CONVERTIBLE BONDS 6.1%
Aokam Perdana BHD Cv. Bond, U.S. Dollar
3.50% 320,000 6/13/2004 $261,600
Mitsubishi Bank Cv. Bond,
3.50% 1,650,000 3/31/2004 1,726,313
NTS Steel Group Cv. Bond,
4.00% 690,000 12/16/2008 353,625
S Megga International Cv.
Bond, 2.50% 280,000 4/01/2002 214,200
Siam Syntech Construction Cv.
Bond, 4.50% 425,000 2/25/2002 217,813
Japanese Yen
Hankyu Corp. Cv. Bond, 1.25% 90,000,000 9/30/1998 879,738
Kawasaki Heavy Industries Cv.
Bond, 0.50% 60,000,000 9/30/1998 686,870
Swiss Franc
NEC Corp. Cv. Bond, 1.00% 2,100,000 3/31/1999 2,160,720
Total Convertible Bonds (Cost $6,009,433) 6,500,879
-----------
SHORT-TERM OBLIGATIONS 7.4%
Japanese Yen
Time Deposit, 0.40% 400,000,000 5/01/1996 3,823,909
U.S. Dollar
Time Deposit, 5.25% 4,000,000 5/02/1996 4,000,000
-----------
Total Short-term Obligations (Cost $7,753,930) 7,823,909
-----------
Total Investments (Cost $81,675,925)--83.1% 88,112,814
Cash and Other Assets, Less Liabilities--16.9% 17,878,686
-----------
Net Assets--100.0% $105,991,500
===========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Federal Income Tax Information:
At April 30, 1996, the net unrealized appreciation of
investments based on cost for Federal income tax purposes
of $81,725,571 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over tax
cost $9,531,484
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost over
value (3,144,241)
----------
$6,387,243
==========
</TABLE>
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global
Depositary Receipt, respectively, representing ownership of foreign
securities.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities
April 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $81,675,925) (Note 1) $88,112,814
Foreign currency, at value (Cost $15,954,077) 16,040,555
Cash 1,663,987
Receivable for fund shares sold 373,788
Receivable for securities sold 223,858
Dividends and interest receivable 178,352
Foreign tax receivable 88,233
Receivable from investment manager (Note 3) 44,976
Deferred organization costs and other assets (Note 1) 11,604
-----------
106,738,167
Liabilities
Accrued transfer agent and shareholder services (Note 2) 164,387
Payable for fund shares redeemed 147,622
Accrued management fee (Note 2) 81,862
Payable for securities purchased 58,787
Accrued distribution and service fees (Note 5) 42,130
Accrued directors' fees (Note 2) 26,801
Other accrued expenses 225,078
-----------
746,667
-----------
Net Assets $105,991,500
===========
Net Assets consist of:
Unrealized appreciation of investments and
foreign currency $6,522,246
Accumulated net realized loss on investments and
foreign currency (2,293,259)
Shares of beneficial interest 101,762,513
-----------
$105,991,500
===========
Net Asset Value and redemption price per share of Class A
shares ($27,141,216 / 2,724,022 shares of beneficial
interest) $9.96
===========
Maximum Offering Price per share of Class A shares
($9.96 / .955) $10.43
===========
Net Asset Value and offering price per share of
Class B shares ($36,811,531 / 3,755,112 shares of
beneficial interest)* $9.80
===========
Net Asset Value, offering price and redemption price per
share of Class C shares ($33,474,487 / 3,337,548 shares
of beneficial interest) $10.03
===========
Net Asset Value and offering price per share of
Class D shares ($8,564,266 / 874,213 shares of
beneficial interest)* $9.80
===========
</TABLE>
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
Statement of Operations
For the six months ended April 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $48,396 $361,604
Statement of Operations
For the year ended April 30, 1996Interest, net of foreign
taxes of $65 164,876
----------
526,480
Expenses
Management fee (Note 2) 461,276
Transfer agent and shareholder services (Note 2) 299,750
Custodian fee 157,250
Registration fees 67,000
Reports to shareholders 65,625
Service fee--Class A (Note 5) 30,485
Distribution and service fees--Class B (Note 5) 161,749
Distribution and service fees--Class D (Note 5) 34,772
Audit fee 12,250
Amortization of organization costs (Note 1) 8,630
Directors' fees (Note 2) 7,875
Legal fees 6,000
Miscellaneous 3,506
----------
1,316,168
Expenses borne by the investment manager (Note 3) (287,999)
----------
1,028,169
----------
Net investment loss (501,689)
----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Net realized loss on investments (Notes 1 and 4) (1,488,560)
Net realized loss on foreign currency (Note 1) (167,012)
----------
Total net realized loss (1,655,572)
----------
Net unrealized appreciation of investments 7,706,947
Net unrealized appreciation of foreign currency 633,467
----------
Total net unrealized appreciation 8,340,414
----------
Net gain on investments and foreign currency 6,684,842
----------
Net increase in net assets resulting from operations $6,183,153
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
April 30, 1996
<TABLE>
<CAPTION>
Six months
ended Year ended
April 30, October 31,
1996 1995
- ----------------------------------- ------------ --------------
Increase (Decrease) in Net Assets
<S> <C> <C>
Operations:
Net investment loss $(501,689) $(794,085)
Net realized loss on investments
and foreign currency* (1,655,572) (441,233)
Net unrealized appreciation
(depreciation) of investments
and foreign currency 8,340,414 (9,361,750)
---------- ------------
Net increase (decrease) resulting
from operations 6,183,153 (10,597,068)
---------- ------------
Distribution from net realized
gains:
Class A -- (1,132,506)
Class B -- (1,086,016)
Class C -- (2,059,288)
Class D -- (138,131)
---------- ------------
-- (4,415,941)
---------- ------------
Net increase from fund share
transactions (Note 6) 10,139,643 6,433,624
---------- ------------
Total increase (decrease) in net
assets 16,322,796 (8,579,385)
Net Assets
Beginning of period 89,668,704 98,248,089
---------- ------------
End of period $105,991,500 $89,668,704
* Net realized loss for Federal
income tax purposes (Note 1) $(1,488,560) $(588,041)
========== ============
</TABLE>
Notes to Financial Statements
April 30, 1996
Note 1
State Street Research International Equity Fund (the "Fund"), is a
diversified series of State Street Research Portfolios, Inc. ("Portfolios"),
which was organized as a Maryland corporation in April, 1991 and is
registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund commenced operations in
January, 1992. Portfolios consists presently of two separate funds: State
Street Research International Equity Fund and State Street Research
International Fixed Income Fund.
The investment objective of the fund is to achieve long-term growth of
capital by investing primarily in common stocks and equity-related securities
of non-U.S. companies. Non-U.S. companies for these purposes are companies
domiciled outside the United States.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and annual service fees of 0.25% of
average daily net assets. Class B shares are subject to a contingent deferred
sales charge on certain redemptions made within five years of purchase and
pay annual distribution and service fees of 1.00%. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after the issuance of the Class B shares. Class C
shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees. Class D shares are subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class D shares also pay annual distribution and service fees of 1.00%. The
Fund'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 Directors
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by
the Fund in preparing its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. Investment Valuation
Securities traded on domestic stock exchanges are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the mean between closing bid and asked prices.
Securities traded on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system are valued at the last reported sales price. Each
security traded primarily on non-domestic securities exchanges is generally
valued at the preceding closing value of such security on the exchange where
it is primarily traded. A security that is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security by the Board of Directors or its delegates.
If no closing price is available, then such security is valued at the mean
between the last current bid and asked prices or by using the last available
closing price. Domestic securities traded in the over-the-counter market are
valued at the mean
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Notes (cont'd)
between the bid and asked prices or yield equivalent as obtained from two or
more dealers that make markets in the securities. All non-U.S. securities
traded in the over-the-counter market are valued at the last sale quote or
the last closing bid price, if there is no active trading in a particular
security for a given day. Portfolio securities traded both in the
over-the-counter market and on a securities exchange are valued according to
the broadest and most representative market. Securities for which market
quotations are not readily available are valued as determined in good faith
by or under the authority of the Directors. Short-term securities maturing
within sixty days are valued at amortized cost. Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange rate.
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered. Gains and losses that arise from
changes in exchange rates are not segregated from gains and losses that arise
from changes in market prices of investments.
C. Net Investment Income
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to
it, while indirect expenses are allocated among all funds in the Portfolios.
D. Dividends
Dividends from net investment income are declared and paid or reinvested
annually. Net realized capital gains, if any, are distributed annually,
unless additional distributions are required for compliance with applicable
tax regulations.
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 primarily due to differing
treatments for foreign currency transactions.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods. At October 31, 1995, the
Fund had a capital loss carryforward of $588,041 available, to the extent
provided in regulations, to offset future capital gains, if any, which
expires on October 31, 2003.
F. Deferred Organization Costs
Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.
G. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Fund and State Street Research Investment Services, Inc., the Fund's
investment manager and principal underwriter (the "Investment Manager" and
"Distributor"), a wholly-owned, indirect subsidiary of Metropolitan Life
Insurance Company ("Metropolitan"), have entered into an agreement under
which the Investment Manager receives monthly fees at an annual rate of 0.95%
of the Fund's average daily net assets. The Investment Manager has entered
into a Sub-Investment Management Agreement with GFM International Investors
Limited (the "Sub-Investment Manager"), a substantially wholly-owned,
indirect subsidiary of Metropolitan, pursuant to which the Sub-Investment
Manager has assumed the overall responsibility for managing the investments
of the Fund. During the six months ended April 30, 1996, the Fund paid the
Investment Manager $461,276 in management fees. The Fund has no
responsibility for the payment of fees to the Sub-Investment Manager.
State Street Research Shareholder Services, a division of the Distributor,
provides certain shareholder services to the Fund such as responding to
inquiries and instructions from investors with respect to the purchase and
redemption of shares of the Fund. 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 Fund may be purchased. During the
six months ended April 30, 1996, the amount of such expenses was $80,231.
The fees of the Directors not currently affiliated with the Investment
Manager amounted to $7,875 during the six months ended April 30, 1996.
Note 3
The Investment Manager or affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended April 30, 1996, the amount of such assumed
expenses was $287,999.
Note 4
For the six months ended April 30, 1996, purchases and sales of securities,
exclusive of short-term obligations, aggregated $51,803,506 and $52,073,308,
respectively.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Note 5
Portfolios 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 Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance or servicing of shareholder
accounts, to reimburse securities dealers for distribution and marketing
services, to furnish ongoing assistance to investors and to defray a portion
of its distribution and marketing expenses. For the six months ended April
30, 1996, fees pursuant to such plan amounted to $30,485, $161,749 and
$34,772 for Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly-owned subsidiary of Metropolitan, earned initial sales charges
aggregating $14,996 and $68,247, respectively, on sales of Class A shares of
the Fund during the six months ended April 30, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $119,134 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $87,901 and $4,283 on redemptions of Class B and Class D shares,
respectively, during the same period.
Note 6
The authorized capital stock of the Fund currently consists of 100,000,000
shares, $.01 par value per share. The Fund reserves the right to issue
additional classes of shares.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended Year ended
April 30, 1996 October 31, 1995
-------------------------- ---------------------------
Class A Shares Amount Shares Amount
- ----------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 934,328 $9,127,270 1,597,600 $15,459,854
Issued upon reinvestment of
distribution from net realized
gains -- -- 112,688 1,095,324
Shares repurchased (619,544) (6,031,732) (1,357,862) (12,966,664)
--------- --------- --------- -----------
Net increase 314,784 $3,095,538 352,426 $3,588,514
========= ========= ========= ===========
Class B Shares Amount Shares Amount
- ----------------------------------- --------- --------- --------- -----------
Shares sold 1,219,995 $11,600,438 1,891,639 $18,088,917
Issued upon reinvestment of
distribution from net realized
gains -- -- 108,264 1,045,778
Shares repurchased (459,519) (4,425,557) (734,821) (6,927,600)
--------- --------- --------- -----------
Net increase 760,476 $7,174,881 1,265,082 $12,207,095
========= ========= ========= ===========
Class C Shares Amount Shares Amount
- ----------------------------------- --------- --------- --------- -----------
Shares sold 577,971 $5,674,529 1,440,157 $13,962,911
Issued upon reinvestment of
distribution from net realized
gains -- -- 207,652 2,026,671
Shares repurchased (849,637) (8,312,007) (3,000,375) (29,391,886)
--------- --------- --------- -----------
Net decrease (271,666) $(2,637,478) (1,352,566) $(13,402,304)
========= ========= ========= ===========
Class D Shares Amount Shares Amount
- ----------------------------------- --------- --------- --------- -----------
Shares sold 321,846 $3,108,845 555,007 $ 5,321,534
Issued upon reinvestment of
distribution from net realized
gains -- -- 13,592 131,305
Shares repurchased (63,361) (602,143) (148,231) (1,412,520)
--------- --------- --------- -----------
Net increase 258,485 $2,506,702 420,368 $4,040,319
========= ========= ========= ===========
</TABLE>
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
Financial Highlights
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A Class B
----------------------------------- -------------------------------------
Six Year Six Year
months ended months ended
ended October ended October
April 30, 31, April 30, 31,
1996*** 1995*** 1994** 1996*** 1995*** 1994**
------------------------------ --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $9.34 $10.98 $10.54 $9.22 $10.93 $10.54
Net investment loss* (.04) (.08) (.04) (.07) (.15) (.06)
Net realized and unrealized
gain (loss) on investments .66 (1.04) .48 .65 (1.04) .45
Distributions from net
realized gains -- (.52) -- -- (.52) --
------- ------- ------- ------- ------- ---------
Net asset value, end of period $9.96 $9.34 $10.98 $9.80 $9.22 $10.93
======= ======= ======= ======= ======= =========
Total return 6.64%+++ (10.38)%+ 4.17%+++ 6.29%+++ (11.09)%+ 3.70%+++
Net assets at end of period
(000s) 27,141 $22,497 $22,579 $36,812 $27,614 $18,904
Ratio of operating expenses to
average net assets* 1.90%++ 1.90% 1.90%++ 2.65%++ 2.65% 2.65%++
Ratio of net investment loss
to average net assets* (0.81)%++ (0.82)% (0.87)%++ (1.56)%++ (1.54)% (1.61)%++
Portfolio turnover rate 67.68% 100.68% 80.60% 67.68% 100.68% 80.60%
Average commission rate $.0037 -- -- $.0037 -- --
*Reflects voluntary assumption
of fees or expenses per share
in each period (Note 3). $.03 $.06 $.03 $.03 $.06 $.03
</TABLE>
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------
January
22, 1992
(Commencement
Six of
months Operations)
ended Year ended October 31 to
April 30, ---------------------------------- October
1996*** 1995*** 1994 1993 31, 1992
------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $9.39 $11.01 $9.56 $6.50 $7.40
Net investment income (loss)* (.03) (.05) (.07) (.02) .04
Net realized and unrealized
gain (loss) on investments .67 (1.05) 2.09 3.17 (.94)
Dividends from net investment
income -- -- (.05) (.04) --
Distributions from net
realized gains -- (.52) (.52) (.05) --
------- ------- ------- ------- -------
Net asset value, end of period $10.03 $9.39 $11.01 $9.56 $6.50
======= ======= ======= ======= =======
Total return 6.82%+++ (10.16)%+ 22.73%+ 48.95%+ (12.16)%+++
Net assets at end of period
(000s) $33,474 $33,883 $54,631 $27,767 $10,418
Ratio of operating expenses to
average net assets* 1.65%++ 1.65% 1.65% 1.65% 1.65%++
Ratio of net investment income
(loss) to average net assets* (0.58)%++ (0.51)% (0.75)% (0.37)% 0.79%++
Portfolio turnover rate 67.68% 100.68% 80.60% 116.12% 77.83%
Average commission rate $.0037 -- -- -- --
*Reflects voluntary assumption
of fees or expenses per share
in each period (Note 3). $.03 $.06 $.05 $.08 $.10
</TABLE>
<TABLE>
<CAPTION>
Class D
-----------------------------------
Six Year
months ended
ended October
April 30, 31,
1996*** 1995*** 1994**
------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of
period $9.22 $10.93 $10.54
Net investment income (loss)* (.07) (.15) (.07)
Net realized and unrealized
gain (loss) on investments .65 (1.04) .46
Dividends from net investment
income -- -- --
Distributions from net
realized gains -- (.52) --
------- ------- -------
Net asset value, end of period $9.80 $9.22 $10.93
======= ======= =======
Total return 6.29%+++ (11.09)%+ 3.70%+++
Net assets at end of period
(000s) $8,564 $5,674 $2,134
Ratio of operating expenses to
average net assets* 2.65%++ 2.65% 2.65%++
Ratio of net investment income
(loss) to average net assets* (1.55)%++ (1.55)% (1.62)%++
Portfolio turnover rate 67.68% 100.68% 80.60%
Average commission rate $.0037 -- --
*Reflects voluntary assumption
of fees or expenses per share
in each period (Note 3). $.03 $.06 $.03
</TABLE>
** March 1, 1994 (commencement of share class designations) to October 31,
1994.
*** Per-share figures have been calculated using the average shares method.
++ Annualized
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Investment Manager and its
affiliates had not voluntarily assumed a portion of the Fund's expenses.
+++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Investment Manager and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
9
<PAGE>
Independent Auditors' Report
To the Board of Directors of State Street
Research Portfolios, Inc. and the Shareholders of
State Street Research International Equity Fund
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of State Street Research International
Equity Fund (a series of State Street Research Portfolios, Inc.) as of April
30, 1996, and the related statement of operations for the six months then
ended, the statement of changes in net assets for the six months then ended
and the year ended October 31, 1995 and the financial highlights for the six
months ended April 30, 1996 and for each of the years in the four year period
ended October 31, 1995. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on the financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at April 30, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of State Street
Research International Equity Fund (a series of State Street Research
Portfolios, Inc.) at April 30, 1996, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
June 3, 1996
<PAGE>
State Street Research International Equity Fund
Fund Information, Officers and Directors of State Street Research Portfolios,
Inc.
Fund Information
State Street Research
International Equity Fund
One Madison Avenue
New York, NY 10010
Investment Manager
and Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Sub-Investment Manager
GFM International
Investors Limited
5 Upper St. Martins Lane
London, WC2H 9EA
England
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Sullivan & Worcester
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Independent Accountants
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
Officers
Jeffrey J. Hodgman President and
Chief Executive Officer
Gary Lineberry
Vice President
Albert Rosenthal
Vice President and
Chief Operating Officer
Elliot Reiter
Treasurer
Ronald Zito
Controller
Patricia S. Worthington
Secretary
Directors
Steve A. Garban
Retired; formerly Senior Vice President for Finance and
Operations and Treasurer, The Pennsylvania State University
Jeffrey J. Hodgman, Chairman
Senior Vice President, Metropolitan Life Insurance
Company
Malcolm T. Hopkins
Former Vice Chairman of the Board and Chief Financial Officer, St. Regis
Corp.
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive Vice
President, Chief Operating
Officer and Director,
Hewlett-Packard Company
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts Institute of Technology
John H. Tweedie
Executive Vice President,
Metropolitan Life Insurance Company
[COVER PAGE]
[LOGO] STATE STREET RESEARCH
<PAGE>
STATE STREET RESEARCH
INTERNATIONAL FIXED INCOME FUND
SEMIANNUAL REPORT
April 30, 1996
[ILLUSTRATION]
WHAT'S INSIDE
Investment Update:
About the Fund,
economy and markets
Fund Information:
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
[DALBAR LOGO]
For Excellence
in
Shareholder Service
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
INVESTMENT UPDATE
_____________________________________________________________________________
INVESTMENT ENVIRONMENT
The Economy
(bullet) The early recovery of the U.S. economy helped the U.S. dollar to
strengthen against most major currencies over the past six months.
(bullet) The economies of Continental Europe (Germany, France, etc.) remained
sluggish, leaving central banks there additional room to reduce
interest rates. Although Japan's economy has been slow to recover,
its low rates are unlikely to continue indefinitely.
The Markets
(bullet) Overseas bond markets provided mixed performance for the six months
ended April 30, 1996. The Salomon Brothers Non-U.S. Dollar World
Government Bond Index, which is a commonly used indicator of
international bond performance, provided a total return of
-0.18%.(1)
(bullet) The German and French bond markets performed solidly as a result of
slower economies and less restrictive monetary policy.
(bullet) In 1996, Spain, Italy, and Sweden's bond markets have provided the
best results, benefiting from lower European short-term interest
rates and moves toward a potential single European currency (EMU).
THE FUND
Over the past six months
(bullet) For the six months ended April 30, 1996, International Fixed Income
Fund's Class A shares provided a total return of -1.92% (does not
include sales charge).(2) The average total return for 163 funds in
Lipper Analytical Services' World Income Funds category was +3.99%
(does not include sales charge).
(bullet) Reflecting a cautious outlook for international bond markets, the
Fund moved toward a more defensive position, shortening maturities
and reducing exposure to high-yielding European markets.
(bullet) The U.S. dollar's recovery against the Japanese yen and German mark
hurt the Fund's performance. A stronger dollar is usually a negative
for U.S. investors in an international fund, because it causes
securities denominated in other currencies to decline in value.
Current strategy
(bullet) Because of expectations of recovering global economic activity, the
Fund is maintaining its defensive position, with a short average
maturity and nearly 30% in cash.
(bullet) The portfolio primarily holds high-quality securities issued by
foreign governments.
(bullet) Approximately one-half of the portfolio is invested in European
bonds, particularly in Germany and France, where there is still room
for lower interest rates.
(1)The Salomon Brothers Non-U.S. Dollar World Government Bond Index is a
commonly used measure of international bond market performance. The index is
unmanaged and does not take sales charges into account. Direct investment in
the index is not possible; results are for illustrative purposes only.
(2)-2.27% for Class B shares; -1.68% for Class C shares; -2.38% for Class D
shares.
(3)All returns represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment made in
the Fund will fluctuate and shares, when redeemed, may be worth more or less
than their original cost. All returns assume reinvestment of capital gain
distributions and income dividends. Shares of the Fund had no class
designations until March 1, 1994, when designations were assigned based on
the pricing and 12b-1 fees applicable to shares sold thereafter.
Performance for a class include periods prior to the adoption of class
designations. Performance prior to March 1, 1994, does not reflect annual
12b-1 fees of .25% for "A" shares and 1% for "B" and "D" shares, which will
reduce subsequent performance. Performance reflects maximum 4.5% "A" share
front-end, or 5% "B" share or 1% "D" share contingent deferred sales charges.
"C" shares, offered without a sales charge, are available only to certain
employee benefit plans and large institutions.
(4)Performance results for the Fund are increased by the adviser's voluntary
reduction of fees and expenses related to the Fund. The first figure reflects
expense reduction; the second shows what results would have been without
subsidization.
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 for periods ended April 30, 1996, except where otherwise noted)
_____________________________________________________________________________
Average Annual Total Returns
for periods ended April 30, 1996
(at maximum applicable sales charge)(3,4)
- -----------------------------------------------
Life of Fund
(since 1/22/92) 1 year
- -----------------------------------------------
Class A +7.13%/+6.58% -5.72%/-6.36%
- ------------------------------------------------
Class B +7.53%/+6.93% -6.68%/-7.35%
- ------------------------------------------------
Class C +8.45%/+7.86% -0.93%/-1.61%
- ------------------------------------------------
Class D +7.88%/+7.32% -2.99%/-3.66%
- ------------------------------------------------
SEC Average Annual Compound Rates of
Return for periods ended March 31, 1996
(at maximum applicable sales charge)(3,4)
- ------------------------------------------------
Life of Fund
(since 1/22/92) 1 year
- ------------------------------------------------
Class A +7.43%/+6.88% -3.55%/-4.21%
- ------------------------------------------------
Class B +7.87%/+7.27% -4.42%/-5.10%
- ------------------------------------------------
Class C +8.78%/+8.19% +1.34%/+0.65%
- ------------------------------------------------
Class D +8.22%/+7.67% -0.64%/-1.32%
- ------------------------------------------------
SEC Yield
- ------------------------------------------------
Class A 2.71%
- ------------------------------------------------
Class B 2.12%
- ------------------------------------------------
Class C 3.08%
- ------------------------------------------------
Class D 2.12%
- ------------------------------------------------
SEC yield is calculated according to Securities and Exchange Commission
requirements and is based on the net investment income produced for the 30
days ended April 30, 1996.
Currency Allocation
(for entire portfolio by percentage of net assets)
[PIE CHART]
Cash and short-term obligations
(in various currencies) ..................30%
European Currencies ..................... 48%
German mark 19%
French franc 13%
Dutch guilder 4%
Belgian franc 3%
British pound 2%
Italian lira 2%
Spanish peseta 2%
Swedish krona 2%
Danish krone 1%
Japanese yen ............................. 17%
Canadian dollar ........................... 5%
Because of active management, there is no guarantee that the Fund currently
invests, or will continue to invest in the currencies shown.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
INVESTMENT PORTFOLIO
_____________________________________________________________________________
April 30, 1996
<TABLE>
<CAPTION>
Principal Maturity Value
Amount Date (Note 1)
<S> <C> <C> <C>
FIXED INCOME SECURITIES 69.6%
Austria 3.1% Japanese Yen
Republic of Austria, 5.00% 100,000,000 1/22/2001 $1,057,550
----------
Belgium 3.2% Belgian Franc
Kingdom of Belgium, 9.00% 30,000,000 6/27/2001 1,099,460
----------
Canada 4.6% Canadian Dollar
Government of Canada,
8.50% 2,000,000 4/01/2002 1,554,021
----------
Denmark 1.7% Danish Krone
Kingdom of Denmark, 9.00% 3,000,000 11/15/2000 568,180
----------
France 18.9% French Franc
Government of France,
8.50% 4,500,000 11/25/2002 992,308
Government of France,
6.75% 6,500,000 10/25/2003 1,305,535
Government of France,
6.75% 6,000,000 10/25/2004 1,200,464
Government of France,
8.50% 3,500,000 10/25/2008 789,947
Deutsche Mark
Credit Foncier de France,
7.25% 1,500,000 2/24/2003 1,002,842
Japanese Yen
Credit Local de France,
6.00% 100,000,000 10/31/2001 1,104,154
----------
6,395,250
----------
Germany 12.8% Deutsche Mark
Federal Republic of
Germany, 6.50% 1,500,000 7/15/2003 1,009,210
KFW International Finance,
6.25% 2,000,000 10/15/2003 1,320,099
LKB Baden Wurttemb, 6.625% 1,500,000 8/20/2003 1,004,311
Sudwest Landesbank, 6.75% 1,500,000 8/26/2003 1,008,328
----------
4,341,948
----------
Italy 2.0% Italian Lira
Republic of Italy, 10.50% 1,000,000,000 4/01/2005 672,919
----------
Japan 1.8% Japanese Yen
Japan Development Bank,
6.50% 23,000,000 9/20/2001 260,414
Pound Sterling
Tokyo Electric Power Co.
Inc., 11.00% 200,000 6/05/2001 338,891
----------
599,305
----------
Netherlands 3.8% Guilder
Government of Netherlands,
7.75% 2,000,000 3/01/2005 1,290,341
----------
Spain 1.9% Spanish Peseta
Government of Spain, 8.00% 85,000,000 5/30/2004 $629,147
----------
United Kingdom 1.0% Pound Sterling
British Gas PLC, 10.875% 200,000 3/26/2001 334,939
----------
Supranational 12.7%
Japanese Yen
European Investment Bank,
6.625% 100,000,000 3/15/2000 1,105,349
Inter-American Development
Bank, 6.75% 100,000,000 2/20/2001 1,129,248
International Bank for
Reconstruction &
Development, 4.50% 100,000,000 6/20/2000 1,039,028
Deutsche Mark
European Economic
Community, 6.50% 1,500,000 3/10/2000 1,032,236
----------
4,305,861
----------
Sweden 2.1%
Swedish Krona
Kingdom of Sweden, 13.00% 4,000,000 6/15/2001 721,930
----------
Total Fixed Income Securities (Cost $21,321,372) 23,570,851
----------
SHORT-TERM OBLIGATIONS 7.4%
U.S. Dollar
Time Deposit, 5.25% 2,500,000 5/02/1996 2,500,000
----------
Total Short-Term Obligations (Cost $2,500,000) 2,500,000
----------
Total Investments (Cost $23,821,372)--77.0% 26,070,851
Cash and Other Assets, Less Liabilities--23.0% 7,791,747
----------
Net Assets--100.0% $33,862,598
==========
Federal Income Tax Information:
At April 30, 1996, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $23,821,372 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $2,441,324
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value (191,845)
----------
$2,249,479
==========
</TABLE>
The principal amount of each security is stated in the currency in which the
security is denominated.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
STATEMENT OF ASSETS AND LIABILITIES
_____________________________________________________________________________
April 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Cost $23,821,372) (Note 1) $26,070,851
Foreign currency, at value (Cost $6,128,952) 6,000,312
Cash 1,106,432
Interest receivable 704,305
Receivable for fund shares sold 47,238
Foreign tax receivable 12,942
Receivable from investment manager (Note 3) 6,538
Deferred organization costs and other assets (Note 1) 38,561
-----------
33,987,179
Liabilities
Accrued directors' fees (Note 2) 24,411
Accrued management fee (Note 2) 20,620
Accrued transfer agent and shareholder services (Note 2) 9,799
Payable for fund shares redeemed 5,509
Accrued distribution and service fees (Note 5) 5,101
Other accrued expenses 59,141
-----------
124,581
-----------
Net Assets $33,862,598
===========
Net Assets consist of:
Undistributed net investment income $381,966
Unrealized appreciation of investments
and foreign currency 2,096,003
Accumulated net realized gain on investments
and foreign currency 118,258
Shares of beneficial interest 31,266,371
-----------
$33,862,598
===========
Net Asset Value and redemption price per share of
Class A shares ($2,435,958 / 291,594 shares of
beneficial interest) $8.35
=====
Maximum Offering Price per share of Class A shares
($8.35 / .955) $8.74
=====
Net Asset Value and offering price per share of
Class B shares ($4,017,810 / 482,648 shares of
beneficial interest)* $8.32
=====
Net Asset Value, offering price and redemption price
per share of Class C shares ($25,593,698 /
3,059,182 shares of beneficial interest) $8.37
=====
Net Asset Value and offering price per share of
Class D shares ($1,815,132 / 218,099 shares of
beneficial interest)* $8.32
=====
</TABLE>
- --------------------------------------------------------------------------
*Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
_____________________________________________________________________________
STATEMENT OF OPERATIONS
_____________________________________________________________________________
For the six months ended April 30, 1996
<TABLE>
<S> <C>
Investment Income
Interest, net of foreign taxes of $2,053 $785,752
Expenses
Management fee (Note 2) 119,303
Custodian fee 61,856
Transfer agent and shareholder services (Note 2) 56,208
Audit fee 23,416
Registration fees 13,500
Amortization of organization costs (Note 1) 8,601
Reports to shareholders 7,464
Directors' fees (Note 2) 3,034
Legal fees 7,826
Service fee--Class A (Note 5) 2,816
Distribution and service fees--Class B (Note 5) 17,329
Distribution and service fees--Class D (Note 5) 7,180
Miscellaneous 4,723
--------
333,256
Expenses borne by the investment manager (Note 3) (67,212)
--------
266,044
--------
Net investment income 519,708
--------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency
Net realized loss on investments (Notes 1 and 4) (170,229)
Net realized gain on foreign currency (Note 1) 290,501
--------
Total net realized gain 120,272
--------
Net unrealized depreciation of investments (886,336)
Net unrealized depreciation of foreign currency (365,850)
--------
Total net unrealized depreciation (1,252,186)
--------
Net loss on investments and foreign currency (1,131,914)
--------
Net decrease in net assets resulting from operations $(612,206)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
STATEMENT OF CHANGES IN NET ASSETS
_____________________________________________________________________________
<TABLE>
<CAPTION>
Six months
ended Year ended
April 30, October 31,
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $519,708 $1,405,292
Net realized gain on investments and
foreign currency* 120,272 684,995
Net unrealized appreciation
(depreciation) of investments
and foreign currency (1,252,186) 1,568,923
---------- ----------
Net increase (decrease) resulting
from operations (612,206) 3,659,210
---------- ----------
Dividends from net investment income:
Class A (59,200) (88,114)
Class B (71,389) (113,623)
Class C (675,548) (1,691,435)
Class D (28,202) (41,936)
---------- ----------
(834,339) (1,935,108)
---------- ----------
Distributions from net realized gains:
Class A (14,778) (5,975)
Class B (20,669) (8,086)
Class C (155,631) (123,136)
Class D (7,956) (2,986)
---------- ----------
(199,034) (140,183)
Net increase from fund share
transactions (Note 6) 4,861,720 2,690,071
---------- ----------
Total increase in net assets 3,216,141 4,273,990
Net Assets
Beginning of period 30,646,457 26,372,467
---------- ----------
End of period (including
undistributed net investment income
of $381,966 and $696,597,
respectively) $33,862,598 $30,646,457
========== ==========
*Net realized gain (loss) for Federal
income tax purposes (Note 1) $(170,229) $197,316
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
_____________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS
_____________________________________________________________________________
April 30, 1996
Note 1
State Street Research International Fixed Income Fund (the "Fund"), is a
diversified series of State Street Research Portfolios, Inc. ("Portfolios"),
which was organized as a Maryland corporation in April, 1991 and is
registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund commenced operations in
January, 1992. Portfolios consists presently of two separate funds: State
Street Research International Fixed Income Fund and State Street Research
International Equity Fund.
The investment objective of the fund is to achieve the highest possible total
return, consisting of income and realized and unrealized capital gains,
consistent with prudent investment risk and preservation of capital, by
investing primarily in high quality debt securities of non-U.S. issuers.
The Fund offers four classes of shares. Class A shares are subject to an
initial sales charge of up to 4.50% and annual service fees of 0.25% of
average daily net assets. Class B shares are subject to a contingent deferred
sales charge on certain redemptions made within five years of purchase and
pay annual distribution and service fees of 1.00%. Class B shares
automatically convert into Class A shares (which pay lower ongoing expenses)
at the end of eight years after the issuance of the Class B shares. Class C
shares are only offered to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or
redemption of Class C shares. Class C shares do not pay any distribution or
service fees. Class D shares are subject to a contingent deferred sales
charge of 1.00% on any shares redeemed within one year of their purchase.
Class D shares also pay annual distribution and service fees of 1.00%. The
Fund'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 Directors
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by
the Fund in preparing its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
A. Investment Valuation
Securities traded on domestic stock exchanges are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the mean between closing bid and asked prices.
Securities traded on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system are valued at the last reported sales price. Each
security traded primarily on non-domestic securities exchanges is generally
valued at the preceding closing value of such security on the exchange where
it is primarily traded. A security that is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security by the Board of Directors or its delegates.
If no closing price is available, then such security is valued at the mean
between the last current bid and asked prices or by using the last available
closing price. Domestic securities traded in
4
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
NOTES cont'd)
_____________________________________________________________________________
the over-the-counter market are valued at the mean between the bid and asked
prices or yield equivalent as obtained from two or more dealers that make
markets in the securities. All non-U.S. securities traded in the
over-the-counter market are valued at the last sale quote or the last closing
bid price, if there is no active trading in a particular security for a given
day. Portfolio securities traded both in the over-the-counter market and on a
securities exchange are valued according to the broadest and most
representative market. Securities for which market quotations are not readily
available are valued as determined in good faith by or under the authority of
the Directors. Short-term securities maturing within sixty days are valued at
amortized cost. Securities quoted in foreign currencies are translated into
U.S. dollars at the current exchange rate.
B. Security Transactions
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Realized gains or losses are reported on the basis
of identified cost of securities delivered. Gains and losses that arise from
changes in exchange rates are not segregated from gains and losses that arise
from changes in market prices of investments.
C. Net Investment Income
Investment income is accrued daily as earned. The Fund is charged for
expenses directly attributable to it, while indirect expenses are allocated
among all funds in the Portfolios.
D. Dividends
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually,
unless additional distributions are required for compliance with applicable
tax regulations.
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 primarily due to differing
treatments for foreign currency transactions.
E. Federal Income Taxes
No provision for Federal income taxes is necessary because the Fund has
elected to qualify under Subchapter M of the Internal Revenue Code and its
policy is to distribute all of its taxable income, including net realized
capital gains, within the prescribed time periods.
F. Deferred Organization Costs
Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a
period of five years.
G. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2
The Fund and State Street Research Investment Services, Inc., the Fund's
investment manager and principal underwriter (the "Investment Manager" and
"Distributor"), a wholly owned indirect subsidiary of Metropolitan Life
Insurance Company ("Metropolitan"), have entered into an agreement under
which the Investment Manager receives monthly fees at an annual rate of 0.75%
of the Fund's average daily net assets. The Investment Manager has entered
into a Sub-Investment Management Agreement with GFM International Investors
Limited (the "Sub-Investment Manager"), a substantially wholly owned,
indirect subsidiary of Metropolitan, pursuant to which the Sub-Investment
Manager has assumed the overall responsibility for managing the investments
of the Fund. During the six months ended April 30, 1996, the Fund paid the
Investment Manager $119,303 in management fees. The Fund has no
responsibility for the payment of fees to the Sub-Investment Manager.
State Street Research Shareholder Services, a division of the Distributor,
provides certain shareholder services to the Fund such as responding to
inquiries and instructions from investors with respect to the purchase and
redemption of shares of the Fund. 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 Fund may be purchased. During the
six months ended April 30, 1996, the amount of such expenses was $10,477.
The fees of the Directors not currently affiliated with the Invest-
ment Manager amounted to $3,034 during the six months ended April 30, 1996.
Note 3
The Investment Manager or affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the six months ended April 30, 1996, the amount of such assumed
expenses was $67,212.
Note 4
For the six months ended April 30, 1996, purchases and sales of securities,
exclusive of short-term obligations, aggregated $4,674,120 and $3,235,300,
respectively.
Note 5
Portfolios 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 Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In
addition, the Fund pays annual distribution fees of 0.75% of average daily
net assets for Class B and Class D shares. The Distributor uses such payments
for personal services and/or the maintenance or servicing of shareholder
accounts, to reimburse securities dealers for distribution and marketing
services, to furnish ongoing assistance to investors and to defray a portion
of its distribution and marketing expenses. For the six months ended April
30, 1996, fees pursuant to such plan amounted to $2,816, $17,329 and $7,180
for Class A, Class B and Class D, respectively.
5
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
The Fund has been informed that the Distributor and MetLife Securities, Inc.,
a wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $2,374 and $5,601, respectively, on sales of Class A shares of
the Fund during the six months ended April 30, 1996, and that MetLife
Securities, Inc. earned commissions aggregating $8,053 on sales of Class B
shares, and that the Distributor collected contingent deferred sales charges
of $5,093 and $99 on redemptions of Class B and Class D, respectively, during
the same period.
Note 6
The authorized capital stock of the Fund currently consists of 100,000,000
shares, $.01 par value per share. The Fund reserves the right to issue
additional classes of shares. At April 30, 1996, Metropolitan owned 2,745,384
Class C shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended Year ended
April 30, 1996 October 31, 1995
------------------------ -------------------------
Class A Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 144,285 $1,224,154 154,393 $1,349,055
Issued upon reinvestment of:
Distribution from net realized
gains 1,644 14,223 737 5,712
Dividends from net investment income 4,825 41,664 5,748 47,607
Shares repurchased (98,465) (834,897) (51,420) (442,983)
------- ------- ------- -------
Net increase 52,289 $445,144 109,458 $959,391
------- ------- ------- -------
------- ------- ------- -------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
Shares sold 258,026 $2,194,281 189,985 $1,645,022
Issued upon reinvestment of:
Distribution from net realized
gains 2,095 18,040 931 7,205
Dividends from net investment income 5,359 46,248 6,879 57,359
Shares repurchased (107,805) (913,505) (46,537) (393,423)
------- ------- ------- -------
Net increase 157,675 $1,345,064 151,258 $1,316,163
------- ------- ------- -------
------- ------- ------- -------
Class C Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------
Shares sold 297,935 $2,525,650 34,745 $311,510
Issued upon reinvestment of:
Distributions from net realized
gains 17,927 154,527 15,646 121,415
Dividends from net investment income 5,946 51,419 16,717 137,775
Shares repurchased (44,058) (374,559) (88,669) (760,263)
------- ------- ------- -------
Net increase (decrease) 277,750 $2,357,037 (21,561) $(189,563)
------- ------- ------- -------
------- ------- ------- -------
Class D Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
Shares sold 171,202 $1,451,518 73,243 $639,413
Issued upon reinvestment of:
Distribution from net realized
gains 889 7,646 385 2,985
Dividends from net investment income 1,202 10,380 894 7,531
Shares repurchased (88,853) (755,069) (5,482) (45,849)
------- ------- ------- -------
Net increase 84,440 $714,475 69,040 $604,080
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
6
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------- -------------------------------------------
Six months Six months
ended Year ended ended Year ended
April 30, October 31, April 30, October 31,
1996*** 1995*** 1994** 1996*** 1995*** 1994**
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.80 $8.31 $7.99 $8.77 $8.28 $7.99
Net investment income* .13 .40 .30 .10 .34 .27
Net realized and unrealized gain (loss)
on investments (.29) .72 .27 (.29) .72 .26
Dividends from net investment income (.23) (.59) (.25) (.20) (.53) (.24)
Distributions from net realized gains (.06) (.04) -- (.06) (.04) --
----- ------ ----- ------ ----- -----
Net asset value, end of period $8.35 $8.80 $8.31 $8.32 $8.77 $8.28
===== ===== ===== ===== ====== =====
Total return (1.92)%+++ 14.26%+ 7.33%+++ (2.27)%+++ 13.53%+ 6.73%+++
Net assets at end of period (000s) $2,436 $2,106 $1,079 $4,018 $2,851 $1,439
Ratio of operating expenses to average
net assets* 1.75%++ 1.74% 1.69%++ 2.50%++ 2.49% 2.43%++
Ratio of net investment income to average
net assets* 3.19%++ 4.71% 5.79%++ 2.44%++ 3.94% 5.06%++
Portfolio turnover rate 13.82% 23.31% 38.84% 13.82% 23.31% 38.84%
*Reflects voluntary assumption of fees or
expenses per share in each period
(Note 3). $.02 $.06 $.01 $.02 $.06 $.02
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
---------------------------------------------------------- ------------------------------------------------
January 22, 1992
Year ended October 31 (Commencement
Six months ended ---------------------- of Operations) to Six months ended Year ended
April 30, 1996*** 1995*** 1994 1993 October 31, 1992 April 30, 1996*** October 31, 1995*** 1994***
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.81 $8.32 $8.24 $7.85 $7.40 $8.78 $8.29 $7.99
Net investment income* .15 .44 .14 .41 .32 .10 .34 .27
Net realized and
unrealized gain (loss)
on investments (.29) .70 .46 .34 .13 (.30) .72 .26
Dividends from net
investment income (.24) (.61) (.49) (.36) -- (.20) (.53) (.23)
Distributions from
net realized gains (.06) (.04) (.03) -- -- (.06) (.04) --
----- ----- ----- ----- ----- ----- ------ -----
Net asset value,
end of period $8.37 $8.81 $8.32 $8.24 $7.85 $8.32 $8.78 $8.29
====== ====== ====== ====== ====== ===== ===== =====
Total return (1.68)%+++ 14.51%+ 7.72%+ 9.98%+ 6.08%+++ (2.38)%+++ 13.49%+ 6.81%+++
Net assets at end
of period (000s) $25,594 $24,516 $23,319 $24,965 $22,299 $1,815 $1,173 $536
Ratio of operating
expenses to average
net assets* 1.50%++ 1.49% 1.47% 1.50% 1.50%++ 2.50%++ 2.49% 2.45%++
Ratio of net investment
income to average
net assets* 3.44%++ 5.14% 5.62% 5.48% 5.63%++ 2.44%++ 3.94% 4.98%++
Portfolio turnover rate 13.82% 23.31% 38.84% 20.44% 56.31% 13.82% 23.31% 38.84%
*Reflects voluntary
assumption of fees
or expenses per share
in each period
(Note 3). $.02 $.06 $.03 $.03 $.04 $.02 $.06 $.01
</TABLE>
** March 1, 1994 (commencement of share class designations) to October 31,
1994.
***Per-share figures have been calculated using the average shares method.
++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Investment Manager and
its affiliates had not voluntarily assumed a portion of the Fund's
expenses.
+++Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges. Total
return would be lower if the Investment Manager and its affiliates had
not voluntarily assumed a portion of the Fund's expenses.
7
<PAGE>
_____________________________________________________________________________
INDEPENDENT AUDITORS' REPORT
_____________________________________________________________________________
To the Board of Directors of State Street
Research Portfolios, Inc. and the Shareholders of
State Street Research International Fixed Income Fund
We have audited the accompanying statement of assets and lia-
bilities, including the investment portfolio, of State Street Research
International Fixed Income Fund, (a series of State Street Research
Portfolios, Inc.), as of April 30, 1996, and the related statement of
operations for the six months then ended, the statement of changes in net
assets for the six months then ended and the year ended October 31, 1995 and
the financial highlights for the six months ended April 30, 1996 and for each
of the years in the four year period ended October 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on the financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at April 30, 1996, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of State Street
Research International Fixed Income Fund (a series of State Street Research
Portfolios, Inc.) at April 30, 1996, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
June 3, 1996
8
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
_____________________________________________________________________________
FUND INFORMATION, OFFICERS AND DIRECTORS OF
STATE STREET RESEARCH PORTFOLIOS, INC.
_____________________________________________________________________________
Fund Information
State Street Research
International Fixed
Income Fund
One Madison Avenue
New York, NY 10010
Investment Manager
and Distributor
State Street Research
Investment Services, Inc.
One Financial Center
Boston, MA 02111
Sub-Investment Manager
GFM International
Investors Limited
5 Upper St. Martins Lane
London, WC2H 9EA
England
Shareholder Services
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
1-800-562-0032
Custodian
State Street Bank and
Trust Company
225 Franklin Street
Boston, MA 02110
Legal Counsel
Sullivan & Worcester
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Independent Accountants
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
Officers
Jeffrey J. Hodgman
President and
Chief Executive Officer
Gary Lineberry
Vice President
Albert Rosenthal
Vice President and Chief
Operating Officer
Elliot Reiter
Treasurer
Ronald Zito
Controller
Patricia S. Worthington
Secretary
Directors
Steve A. Garban
Retired; formerly Senior Vice President for Finance and
Operations and Treasurer, The Pennsylvania State University
Jeffrey J. Hodgman, Chairman
Senior Vice President,
Metropolitan Life Insurance
Company
Malcolm T. Hopkins
Former Vice Chairman of the Board and Chief Financial Officer, St. Regis
Corp.
Robert A. Lawrence
Partner, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive
Vice President, Chief
Operating Officer and Director,
Hewlett-Packard Company
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School
of Management, Massachusetts Institute of Technology
John H. Tweedie
Executive Vice President,
Metropolitan Life Insurance
Company
9
<PAGE>
[BACK COVER PAGE]
State Street Research Investment Services [POSTAGE PERMIT]
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Brockton, MA
Permit No. 600
Questions? Comments?
Call us at 1-800-562-0032,
or write us at:
State Street Research
Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
[LOGO] STATE STREET RESEARCH
This report is prepared for the general information of current shareholders
only. It is not authorized for use as sales material with
prospective investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was
not industry-wide.
CONTROL NUMBER: 3192-960624(0797)SSR-LD IF-816D-696
Cover Illustration by Dorothy Cullinan
