[front cover]
STATE STREET RESEARCH
INTERNATIONAL FIXED INCOME FUND
SEMIANNUAL REPORT
April 30, 1997
- -----------------------------------
WHAT'S INSIDE
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Complete Portfolio Holdings
and Financial Statements
[DALBAR box logo]
DALBAR KEY HONORS
COMMITMENT TO:
INVESTORS
1996
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
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INVESTMENT PORTFOLIO
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April 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED INCOME SECURITIES 85.6%
Australia 4.2%
Government of Australia, Australian Dollar
7.50% ............................................. 1,500,000 7/15/2005 $ 1,153,443
-----------
Austria 2.2% Pound Sterling
Oest Kontrollbank, 9.25% .............................. 350,000 7/15/2002 604,842
-----------
Belgium 1.4% Belgian Franc
Kingdom of Belgium, 9.00% ........................... 12,000,000 6/27/2001 390,680
-----------
Canada 4.0% Canadian Dollar
Government of Canada, 7.00% ........................... 1,500,000 12/01/2006 1,101,968
-----------
Denmark 5.5% Danish Krone
Kingdom of Denmark, 9.00% ........................... 3,000,000 11/15/2000 514,543
Kingdom of Denmark, 8.00% ........................... 6,000,000 11/15/2001 1,008,694
-----------
1,523,237
France 13.1% Japanese Yen
Credit Local de France, 6.00% ........................ 100,000,000 10/31/2001 932,564
Credit Foncier de France, Deutsche Mark
7.25% ............................................. 1,500,000 2/24/2003 938,474
French Franc
Government of France, 8.50% ........................... 4,500,000 11/25/2002 902,699
Government of France, 6.75% ........................... 4,500,000 10/25/2003 836,854
-----------
3,610,591
-----------
Germany 18.8%
Bayerische Landesbank Pound Sterling
Girozentrale, 7.88% ................................. 750,000 12/07/2006 1,211,001
Federal Republic of Germany, Deutsche Mark
6.50% ............................................. 1,500,000 7/15/2003 924,616
KFW International Finance,
6.25% ............................................. 2,000,000 10/15/2003 1,211,456
LKB Baden Wurttemb, 6.63% ........................... 1,500,000 8/20/2003 922,451
Sudwest Landesbank, 6.75% ........................... 1,500,000 8/26/2003 932,629
-----------
5,202,153
-----------
Italy 5.6% Italian Lira
Republic of Italy, 10.50% ........................... 1,000,000,000 4/01/2005 681,297
Republic of Italy, 9.50% .............................. 1,400,000,000 2/01/1999 853,406
-----------
1,534,703
-----------
Japan 5.5%
Tokyo Electric Power Co. Inc., Pound Sterling
11.00% ............................................. 200,000 6/05/2001 360,616
Asian Development Bank, Japanese Yen
5.63% ............................................. 100,000,000 2/18/2002 929,117
Japan Development Bank,
6.50% ............................................. 23,000,000 9/20/2001 218,906
-----------
1,508,639
-----------
- ---------------------------------------------------------------------------------------------------------
Principal Maturity Value
Amount Date (Note 1)
- ---------------------------------------------------------------------------------------------------------
Netherlands 5.6%
Government of Netherlands, Dutch Guilder
6.50% ............................................. 2,800,000 4/15/2003 $ 1,539,907
-----------
Spain 2.3% Spanish Peseta
Government of Spain, 8.00% ........................... 85,000,000 5/30/2004 630,502
-----------
Sweden 1.1% Swedish Krona
Kingdom of Sweden, 13.00% ........................... 2,000,000 6/15/2001 318,215
-----------
United Kingdom 6.3%
United Kingdom Treasury Pound Sterling
6.75% ............................................. 1,100,000 11/26/2004 1,727,663
-----------
Supranational 10.0%
European Investment Bank, Japanese Yen
6.63% ............................................. 100,000,000 3/15/2000 907,945
Inter-American Development
Bank, 6.75% ....................................... 100,000,000 2/20/2001 941,427
European Economic Community, Deutsche Mark
6.50% ............................................. 1,500,000 3/10/2000 921,151
-----------
2,770,523
-----------
Total Fixed Income Securities and Investments
(Cost $23,435,242)--85.6% ........................... 23,617,066
Cash and Other Assets, Less Liabilities--14.4% ...... 3,964,027
-----------
Net Assets--100.0% ................................. $27,581,093
===========
Federal Income Tax Information:
At April 30, 1997 the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $23,435,242 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost ....................................... $ 949,031
-----------
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value .......................................... (767,207)
-----------
$ 181,824
===========
</TABLE>
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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.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
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STATEMENT OF ASSETS AND LIABILITIES
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April 30, 1997
Assets
Investments, at value (Cost $23,435,242) (Note 1)...... $23,617,066
Foreign currency, at value (Cost $1,914,899) ......... 1,765,047
Cash ................................................ 1,793,327
Interest receivable ................................. 684,327
Receivable from Distributor (Note 3) .................. 26,671
Foreign tax receivable .............................. 10,281
Other assets .......................................... 7,319
-----------
27,904,038
Liabilities
Payable for fund shares redeemed ..................... 106,386
Accrued directors' fees (Note 2) ..................... 43,095
Accrued transfer agent and shareholder services
(Note 2) .......................................... 32,818
Accrued management fee (Note 2) ..................... 17,279
Accrued distribution and service fees (Note 5) ...... 3,410
Other accrued expenses .............................. 119,957
-----------
322,945
-----------
$27,581,093
===========
Net Assets
Net Assets consist of:
Undistributed net investment income .................. $ 377,642
Unrealized depreciation of investments
and foreign currency .............................. (7,285)
Accumulated net realized loss on investments
and foreign currency .............................. (498,776)
Shares of beneficial interest ........................ 27,709,512
-----------
$27,581,093
===========
Net Asset Value and redemption price per share of
Class A shares ($1,539,295 [dividedby] 201,519 shares
of beneficial interest).............................. $7.64
=====
Maximum Offering Price per share of Class A shares
($7.64 [dividedby] .955) ........................... $8.00
=====
Net Asset Value and offering price per share of Class
B shares ($2,981,141 [dividedby] 391,700 shares of
beneficial interest)* .............................. $7.61
=====
Net Asset Value, offering price and redemption price
per share of Class C shares ($22,436,442 [dividedby]
2,932,602 shares of beneficial interest) ............ $7.65
=====
Net Asset Value and offering price per share of Class
D shares ($624,215 [dividedby] 82,045 shares of
beneficial interest)* ............................... $7.61
=====
- --------------------------------------------------------------------------------
*Redemption price per share for Class B and Class D is equal to net asset value
less any applicable contingent deferred sales charge.
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended April 30, 1997
Investment Income
Interest, net of foreign taxes of $10,579 ............... $ 823,685
4 4Expenses
Management fee (Note 2) ................................. 113,820
Custodian fee .......................................... 58,773
Transfer agent and shareholder services (Note 2) ......... 38,734
Registration fees ....................................... 32,269
Audit fee ................................................ 20,720
Reports to shareholders ................................. 12,415
Service fee-Class A (Note 5) ........................... 2,641
Distribution and service fees-Class B (Note 5) ......... 17,866
Distribution and service fees-Class D (Note 5) ......... 6,215
Legal fees ............................................. 7,783
Directors' fees (Note 2) ................................. 7,421
Miscellaneous .......................................... 5,701
------------
324,358
Expenses borne by the Distributor (Note 3) ............... (69,801)
------------
254,557
------------
Net investment income .................................... 569,128
------------
Realized and Unrealized Loss on Investments
and Foreign Currency
Net realized loss on investments (Notes 1 and 4) ......... (150,292)
Net realized loss on foreign currency (Note 1) ......... (348,962)
------------
Total net realized loss ................................. (499,254)
------------
Net unrealized depreciation of investments ............... (2,314,485)
Net unrealized depreciation of foreign currency ......... (94,075)
------------
Total net unrealized depreciation ..................... (2,408,560)
------------
Net loss on investments and foreign currency ............ (2,907,814)
------------
Net decrease in net assets resulting from operations ..... $ (2,338,686)
============
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
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STATEMENT OF CHANGES IN NET ASSETS
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Six months ended Year ended
April 30, 1997 October 31, 1996
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Increase (Decrease) in Net Assets
Operations:
Net investment income ............ $ 569,128 $ 1,089,696
Net realized gain (loss) on
investments and foreign
currency* ..................... (499,254) 321,172
Net unrealized depreciation of
investments and foreign
currency ........................ (2,408,560) (946,914)
----------- -----------
Net increase (decrease)
resulting from operations ...... (2,338,686) 463,954
----------- -----------
Dividends from net
investment income:
Class A ........................ (36,769) (113,884)
Class B ........................ (42,180) (143,579)
Class C ........................ (389,745) (1,216,944)
Class D ........................ (16,497) (59,902)
----------- -----------
(485,191) (1,534,309)
----------- -----------
Distributions from net realized
gains:
Class A ........................ (19,198) (14,778)
Class B ........................ (34,108) (20,669)
Class C ........................ (210,488) (155,630)
Class D ........................ (13,166) (7,956)
----------- -----------
(276,960) (199,033)
----------- -----------
Net increase (decrease) from
fund share transactions
(Note 7) ........................ (2,798,715) 4,103,576
----------- -----------
Total increase (decrease) in
net assets ..................... (5,899,552) 2,834,188
Net Assets
Beginning of period ............... 33,480,645 30,646,457
----------- -----------
End of period (including
undistributed net
investment income of
$377,642 and $293,705,
respectively) .................. $27,581,093 $33,480,645
=========== ===========
* Net realized gain for
Federal income tax purposes
(Note 1) ....................... $ 875 $ 279,451
=========== ===========
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NOTES TO FINANCIAL STATEMENTS
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April 30, 1997
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 is authorized to issue four classes of shares. Shares of the Fund are
currently available only to existing shareholders. Class A shares are subject
to an initial sales charge of up to 4.50% and an annual service fee 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
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
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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 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 between both
funds in the Portfolios.
D. Dividends
Dividends from net investment income, if any, 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 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 finan- cial 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 & Management Company (the "Investment
Manager"), 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"), an affiliate of the Investment Manager and 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,
1997, the Fund paid the Investment Manager $113,820 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 State Street Research
Investment Services, Inc., the Fund's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, 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, 1997, the amount of such expenses was $11,917.
The fees of the Directors not currently affiliated with the Investment Manager
amounted to $7,421 during the six months ended April 30, 1997.
Note 3
The Distributor and its 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, 1997, the amount of such expenses assumed
by the Distributor and its affiliates was $69,801.
Note 4
For the six months ended April 30, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $1,263,370 and $4,299,384,
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, 1997,
fees pursuant to such plan amounted to $2,641, $17,866 and $6,215 for Class A,
Class B and Class D shares, respectively.
4
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STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
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NOTES (cont'd)
- --------------------------------------------------------------------------------
Note 5 (cont'd)
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $30 and $218, respectively, on sales of Class A shares of the Fund
during the six months ended April 30, 1997, and that MetLife Securities, Inc.
earned commissions aggregating $229 on sales of Class B shares, and that the
Distributor collected contingent deferred sales charges of $2,263 and $1,040 on
redemptions of Class B and Class D shares, respectively, during the same
period.
Note 6
At a meeting held on May 30, 1997, the shareholders approved a merger of the
Fund into State Street Research Government Income Fund. The closing date for
the merger will be on or about June 20, 1997.
Note 7
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, 1997, Metropolitan owned 2,769,170
Class C shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
Six months ended Year ended
April 30, 1997 October 31, 1996
--------------------------------- ---------------------------------
Class A Shares Amount Shares Amount
- ----------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold ................................. 18,445 $ 146,635 239,978 $ 2,018,281
Issued upon reinvestment of:
Distributions from net realized gains ...... 2,268 18,847 1,644 14,223
Dividends from net investment income ......... 3,896 32,803 10,609 89,660
Shares repurchased ........................... (155,221) (1,258,159) (159,405) (1,342,020)
--------- ------------ --------- -----------
Net increase (decrease) ..................... (130,612) $ (1,059,874) 92,826 $ 780,144
========= ============ ========= ===========
Class B Shares Amount Shares Amount
- ----------------------------------------------- --------------- --------------- --------------- ---------------
Shares sold ................................. 13,075 $ 106,694 332,479 $ 2,810,842
Issued upon reinvestment of:
Distributions from net realized gains ...... 2,963 24,564 2,095 18,040
Dividends from net investment income ......... 2,926 24,516 11,765 99,331
Shares repurchased ........................... (105,768) (833,131) (192,808) (1,619,138)
--------- ------------ --------- -----------
Net increase (decrease) ..................... (86,804) $ (677,357) 153,531 $ 1,309,075
========= ============ ========= ===========
Class C Shares Amount Shares Amount
- ----------------------------------------------- --------------- --------------- --------------- ---------------
Shares sold ................................. 18,932 $ 151,279 356,166 $ 3,010,729
Issued upon reinvestment of:
Distributions from net realized gains ...... 25,190 209,329 17,927 154,527
Dividends from net investment income ...... 2,503 21,066 11,325 96,005
Shares repurchased ........................... (48,769) (393,667) (232,104) (1,931,942)
--------- ------------ --------- -----------
Net increase (decrease) ..................... (2,144) $ (11,993) 153,314 $ 1,329,319
========= ============ ========= ===========
Class D Shares Amount Shares Amount
- ----------------------------------------------- --------------- --------------- --------------- ---------------
Shares sold ................................. 3,406 $ 28,754 189,105 $ 1,599,158
Issued upon reinvestment of:
Distributions from net realized gains ...... 1,559 12,940 889 7,646
Dividends from net investment income ...... 1,618 13,585 4,851 40,579
Shares repurchased ........................... (139,133) (1,104,770) (113,909) (962,345)
--------- ------------ --------- -----------
Net increase (decrease) ..................... (132,550) $ (1,049,491) 80,936 $ 685,038
========= ============ ========= ===========
</TABLE>
5
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------
Year ended October 31
Six months ended ----------------------------------------------------
April 30, 1997*** 1996*** 1995*** 1994**
----------------------- ------------ ------------ --------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.45 $ 8.80 $ 8.31 $ 7.99
------- ------- ------- -------
Net investment income* 0.15 0.27 0.40 0.30
Net realized and unrealized gain
(loss) on investments and
foreign currency (0.77) (0.16) 0.72 0.27
------- ------- ------- -------
Total from investment operations (0.62) 0.11 1.12 0.57
------- ------- ------- -------
Dividends from net investment income (0.12) (0.40) (0.59) (0.25)
Distributions from net realized gains (0.07) (0.06) (0.04) --
------- ------- ------- -------
Total distributions (0.19) (0.46) (0.63) (0.25)
------- ------- ------- -------
Net asset value, end of period $ 7.64 $ 8.45 $ 8.80 $ 8.31
======= ======= ======= =======
Total return (7.49)%++ 1.31%+ 14.26%+ 7.33%++
Net assets at end of period (000s) $ 1,539 $ 2,807 $ 2,106 $ 1,079
Ratio of operating expenses to
average net assets* 1.75%+++ 1.75% 1.74% 1.69%+++
Ratio of net investment income to
average net assets* 3.68%+++ 3.25% 4.71% 5.79%+++
Portfolio turnover rate 4.86% 45.84% 23.31% 38.84%
* Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3) $ 0.02 $ 0.05 $ 0.06 $ 0.01
<CAPTION>
Class B
-------------------------------------------------------------------------------
Year ended October 31
Six months ended ----------------------------------------------------
April 30, 1997*** 1996*** 1995*** 1994**
-------------------------- ------------ ------------ --------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.42 $ 8.77 $ 8.28 $ 7.99
------- ------- ------- -------
Net investment income* 0.12 0.21 0.34 0.27
Net realized and unrealized gain
(loss) on investments and
foreign currency (0.77) (0.16) 0.72 0.26
------- ------- ------- -------
Total from investment operations (0.65) 0.05 1.06 0.53
------- ------- ------- -------
Dividends from net investment income (0.09) (0.34) (0.53) (0.24)
Distributions from net realized gains (0.07) (0.06) (0.04) --
------- ------- ------- -------
Total distributions (0.16) (0.40) (0.57) (0.24)
------- ------- ------- -------
Net asset value, end of period $ 7.61 $ 8.42 $ 8.77 $ 8.28
======= ======= ======= =======
Total return (7.86)%++ 0.61%+ 13.53%+ 6.73%++
Net assets at end of period (000s) $ 2,981 $ 4,028 $ 2,851 $ 1,439
Ratio of operating expenses to
average net assets* 2.50%+++ 2.50% 2.49% 2.43%+++
Ratio of net investment income to
average net assets* 2.93%+++ 2.50% 3.94% 5.06%+++
Portfolio turnover rate 4.86% 45.84% 23.31% 38.84%
* Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3) $ 0.02 $ 0.05 $ 0.06 $ 0.02
</TABLE>
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------------
Six months Year ended October 31
ended ----------------------------------------------------------------
April 30, 1997*** 1996*** 1995*** 1994 1993 1992****
----------------- --------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.46 $ 8.81 $ 8.32 $ 8.24 $ 7.85 $ 7.40
------- ------- ------- ------- ------- -------
Net investment income* 0.16 0.30 0.44 0.14 0.41 0.32
Net realized and unrealized gain
(loss) on investments and
foreign currency (0.77) (0.17) 0.70 0.46 0.34 0.13
------- ------- ------- ------- ------- -------
Total from investment operations (0.61) 0.13 1.14 0.60 0.75 0.45
------- ------- ------- ------- ------- -------
Dividends from net investment income (0.13) (0.42) (0.61) (0.49) (0.36) --
Distributions from net realized gains (0.07) (0.06) (0.04 (0.03) -- --
------- ------- ------- ------- ------- -------
Total distributions (0.20) (0.48) (0.65) (0.52) (0.36) --
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 7.65 $ 8.46 $ 8.81 $ 8.32 $ 8.24 $ 7.85
======= ======= ======= ======== ======== =======
Total return (7.35)%++ 1.54%+ 14.51%+ 7.72%+ 9.98%+ 6.08%++
Net assets at end of period (000s) $22,436 $24,840 $24,516 $ 23,319 $ 24,965 $22,299
Ratio of operating expenses to
average net assets* 1.50%+++ 1.50% 1.49% 1.47% 1.50% 1.50%+++
Ratio of net investment income to
average net assets* 3.92%+++ 3.50% 5.14% 5.62% 5.48% 5.63%+++
Portfolio turnover rate 4.86% 45.84% 23.31 38.84% 20.44% 56.31%
* Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3) $ 0.02 $ 0.05 $ 0.06 $ 0.03 $ 0.03 $ 0.04
</TABLE>
<TABLE>
<CAPTION>
Class D
------------------------------------------------------------
Six months
ended Year ended October 31
April 30, --------------------------------------
1997*** 1996*** 1995*** 1994**
----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.41 $ 8.78 $ 8.29 $ 7.99
------ ------- ------- -------
Net investment income* 0.12 0.21 0.34 0.27
Net realized and unrealized gain
(loss) on investments and
foreign currency (0.76) (0.17) 0.72 0.26
------ ------- ------- -------
Total from investment operations (0.64) 0.04 1.06 0.53
------ ------- ------- -------
Dividends from net investment income (0.09) (0.35) (0.53) (0.23)
Distributions from net realized gains (0.07) (0.06) (0.04) --
------ ------- ------- -------
Total distributions (0.16) (0.41) (0.57) (0.23)
------ ------- ------- -------
Net asset value, end of period $ 7.61 $ 8.41 $ 8.78 $ 8.29
======= ======= ======= =======
Total return (7.79)%++ 0.39%+ 13.49%+ 6.81%++
Net assets at end of period (000s) $ 624 $ 1,806 $ 1,173 $ 536
Ratio of operating expenses to
average net assets* 2.50%+++ 2.50% 2.49% 2.45%+++
Ratio of net investment income to
average net assets* 2.95%+++ 2.50% 3.94% 4.98%+++
Portfolio turnover rate 4.86% 45.84% 23.31% 38.84%
* Reflects voluntary assumption of
fees or expenses per share in
each period (Note 3) $ 0.02 $ 0.05 $ 0.06 $ 0.01
</TABLE>
- --------------------------------------------------------------------------------
** March 1, 1994 (commencement of share class designations) to October 31,
1994.
*** Per-share figures have been calculated using the average shares method.
**** January 22, 1992 (commencement of operations) to October 31, 1992.
+++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor 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 Distributor and its affiliates had
not voluntarily assumed a portion of the Fund's expenses.
6
<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 liabilities, including
the investment portfolio, of State Street Research International Fixed Income
Fund (a series of State Street Research Portfolios, Inc.), as of April 30, 1997,
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, 1996 and the financial highlights for the six months ended
April 30, 1997 and for each of the years in the five year period ended October
31, 1996. 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, 1997, 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, 1997, 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 6, 1997
7
<PAGE>
[back cover]
State Street Research International Fixed Income Fund [indicia]
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Randolph, 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
[State Street Research Logo]
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 award recognizes 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: 3979-970620(0798)SSR-LD IF-816D-697IBS
<PAGE>
[front cover]
STATE STREET RESEARCH
INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT
April 30, 1997
- -----------------------------------
WHAT'S INSIDE
- -----------------------------------
Investment Update
About the Fund,
economy and markets
Fund Information
Facts and Figures
Plus, Complete Portfolio Holdings
and Financial Statements
[DALBAR box logo]
DALBAR KEY HONORS
COMMITMENT TO:
INVESTORS
1996
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
The Economy
[bullet] Continental European economies showed signs of an upturn featuring
corporate earnings surprises and a continuation of the restructuring
trend.
[bullet] Japan experienced slowing economic growth in the face of fiscal
tightening and concerns over meltdown of its financial system.
The Markets
[bullet] Overseas stock markets showed improvement but continued to
underperform U.S. stock markets. For the six months ended April 30,
1997, the Morgan Stanley EAFE Index, which is a commonly used
indicator of international stock market performance, provided a total
return of +1.57%. [1]
[bullet] Large-capitalization growth stocks, particularly those linked to the
U.S. markets, were the best international performers.
THE FUND
Over the past six months
[bullet] For the six months ending April 30, 1997, International Equity Fund's
Class A shares generated a total return of +2.49% (does not reflect
sales charge), outperforming the Morgan Stanley EAFE Index. [2]
[bullet] The Fund's primary performance driver was an overweighted position in
stocks of Continental Europe combined with an underweighting in
Japanese stocks.
[bullet] The Fund underperformed the average total return of 6.17% provided by
396 fund classes in Lipper Analytical Services' International Funds
category (does not reflect sales charge).
Current Strategy
[bullet] We are emphasizing positions in core markets of Germany and France
given our expectations for a successful drive toward EMU (European
Monetary Unit).
[bullet] We have increased allocation to Japan, believing negative sentiment
could shift and an economic pickup should lead to upward revisions in
corporate profit growth.
[bullet] We are regarding the Far East markets with caution with the exception
of Australia, where we remain significantly overweighted and continue
to see opportunities.
April 30, 1997
- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended April 30, 1997, except for SEC
average annual compound rates of return)
- --------------------------------------------------------------------------------
SEC Average Annual Compound Rates of Return for periods ended April 30, 1997
(at maximum applicable sales charge) [3,4,5]
- --------------------------------------------------------------------------------
Life of Fund
(since 1/22/92) 5 Years 1 Year
- --------------------------------------------------------------------------------
Class A +6.29%/+5.41% +8.75%/+7.92% -9.39%/-9.87%
- --------------------------------------------------------------------------------
Class B +6.46%/+5.56% +8.97%/+8.12% -10.53%/-11.03%
- --------------------------------------------------------------------------------
Class C +7.41%/+6.52% +9.96%/+9.12% -4.89%/-5.38%
- --------------------------------------------------------------------------------
Class D +6.73%/+5.84% +9.23%/+8.39% -6.86%/-7.36%
================================================================================
SEC Average Annual Compound Rates of Return for periods ended March 31, 1997
(at maximum applicable sales charge) [3,4,5]
- --------------------------------------------------------------------------------
Life of Fund
(since 1/22/92) 5 Years 1 Year
- --------------------------------------------------------------------------------
Class A +6.69%/+5.81% +9.04%/+8.18% -6.55%/-7.03%
- --------------------------------------------------------------------------------
Class B +6.88%/+5.97% +9.27%/+8.39% -7.76%/-8.27%
- --------------------------------------------------------------------------------
Class C +7.83%/+6.93% +10.25%/+9.38% -1.93%/-2.43%
- --------------------------------------------------------------------------------
Class D +7.17%/+6.27% +9.55%/+8.68% -3.77%/-4.29%
- --------------------------------------------------------------------------------
Top 10 Holdings
(by percentage of net assets)
1 Nomura Securities Japan 2.4%
2 Royal Dutch Petroleum Netherlands 1.9%
3 British Telecom United Kingdom 1.6%
4 Novartis Switzerland 1.6%
5 Dai-Ichi Kangyo Bank Japan 1.6%
6 Nippon Telegraph & Telephone Japan 1.6%
7 Glaxo Wellcome United Kingdom 1.6%
8 British Petroleum United Kingdom 1.5%
9 Nestle Switzerland 1.3%
10 Unilever United Kingdom 1.3%
These securities represent an aggregate of 16.4% of the portfolio. Because of
active management, there is no guarantee that the Fund currently invests, or
will continue to invest, in the securities listed in this table or in the text
above.
5 Largest Country Positions
(by percentage of net assets)
[BAR GRAPH]
Japan 28.1%
United Kingdom 16.1%
Germany 9.8%
France 9.6%
Australia 5.9%
Total: 69.5%
Because of active management, there is no guarantee that the Fund currently
invests, or will continue to invest, in the countries listed in this table.
[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 transactions into account. Direct investment in the index
is not possible; results are for illustrative purposes only.
[2] +2.10% for Class B shares; +2.69% for Class C shares; +2.10% 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. Performance for a class may include periods
prior to the adoption of class designations in 1994, which resulted in new or
increased 12b-1 fees of up to 1% per class thereafter and which will reduce
subsequent performance. "C" shares, offered without a sales charge, are
available only to certain employee benefit plans and large institutions.
[4] Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "D" share contingent deferred sales charges, where applicable.
[5] Performance results
for the Fund are increased by the voluntary reduction of Fund fees and
expenses. 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.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
April 30, 1997
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.7%
Australia 5.6%
Amcor Ltd. .............................. 45,000 $ 296,046
Broken Hill Proprietary Co. Ltd. ...... 40,000 563,987
CRA Ltd.* .............................. 32,000 477,143
GIO Australia Holdings Ltd. ............ 140,000 414,879
Lend Lease Corp. ........................ 10,000 191,375
National Australia Bank ............... 35,000 479,022
News Corp. Ltd. ........................ 75,000 345,668
Normandy Mining Ltd.* .................. 150,000 183,654
North Ltd.* ........................... 115,000 405,634
Pasminco Ltd.* ........................ 115,000 218,826
Woolworths Ltd. ........................ 100,000 294,783
-----------
3,871,017
-----------
Austria 0.9%
Bohler Uddeholm AG* ..................... 3,000 216,458
EVN Energie-Versorgung AG ............... 1,500 185,553
VA Stahl AG* ........................... 5,950 234,923
-----------
636,934
-----------
Belgium 1.1%
GPE Bruxelles* ........................ 1,890 277,553
Kredietbank* ........................... 750 292,133
Societe Generale de Belgique* ......... 2,340 208,145
-----------
777,831
-----------
Bermuda 0.5%
Isleinvest Ltd.*+ ..................... 95,821 377,248
-----------
Canada 0.8%
Advanced Material Resources Ltd.* ...... 133,000 337,974
Kemgas Ltd.* ........................... 200,000 239,800
-----------
577,774
-----------
Channel Islands 0.2%
India Fund Cl. B+ ..................... 100,000 162,075
-----------
China 0.6%
Beijing Datang Power
Generation Co. Ltd. .................. 395,000 205,238
Guangshen Railway* ..................... 365,000 174,337
-----------
379,575
-----------
Croatia 0.6%
Pliva d.d. GDR*[dbldag] ............... 9,000 143,824
Zagrebacka Banka GDR* .................. 7,000 247,625
-----------
391,449
-----------
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
France 9.6%
Alcatel Alsthom* ........................ 4,400 $ 489,266
AXA* .................................... 9,000 553,739
Axime* ................................. 1,125 135,312
Cap Gemini* ........................... 5,150 311,921
Cie de Michelin Cl. B* .................. 6,000 335,235
Cie de St. Gobain* ..................... 1,600 214,375
Cie Financiere Paribas Cl. A* ......... 5,200 327,957
Credit Commerce France* ............... 6,000 266,255
Credit Local de Fractional* ............ 4,075 377,024
Danone* ................................. 3,200 466,033
Eaux Cie Generale* ..................... 3,500 487,535
Elf Aquitaine SA* ..................... 3,000 290,928
L'Air Liquide* ........................ 2,300 346,389
Lafarge* .............................. 6,000 393,524
Schneider SA* ........................ 7,000 394,586
Total SA Cl. B* ........................ 4,750 393,900
Union Assured Federales* ............... 2,500 297,696
Usinor Sacilor* ........................ 15,200 229,699
Valeo SA .............................. 5,000 308,404
-----------
6,619,778
-----------
Germany 9.5%
Adidas AG* .............................. 1,600 166,763
Allianz AG* ........................... 4,350 843,977
BASF AG* .............................. 17,575 677,913
Bayer AG* .............................. 7,650 304,357
Commerzbank AG* ........................ 17,750 476,087
Daimler-Benz AG* ........................ 8,275 614,485
Deutsche Bank AG* ..................... 4,000 211,110
Deutsche Telekom AG* .................. 13,500 292,950
MAN AG* ................................. 1,013 291,885
Metallgesellschaft AG* .................. 8,100 167,444
Siemens AG .............................. 13,075 708,185
Thyssen AG .............................. 2,445 532,964
Viag AG* .............................. 1,220 542,442
Volkswagen AG* ........................ 1,120 712,045
-----------
6,542,607
-----------
Hong Kong 1.8%
Hong Kong & China Gas Co. Ltd. ......... 222,000 352,495
Hutchison Whampoa* ..................... 30,000 222,681
Swire Pacific Ltd. Cl. A* ............... 40,000 308,526
Swire Pacific Ltd. Cl. B* ............... 50,000 66,482
Television Broadcasts Ltd.* ............ 65,000 266,830
-----------
1,217,014
-----------
Indonesia 0.3%
PT Indosat ADR* ........................ 6,300 173,250
-----------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
Ireland 0.1%
Peterhead Group PLC* ........................ 58,107 $ 58,875
-----------
Israel 0.2%
Koor Industries Ltd. ADR .................. 9,500 165,062
-----------
Italy 2.4%
Assic Generali* ........................... 12,500 209,164
Banca Popular di Milano* .................. 45,000 221,560
Credito Italiano* ........................... 235,000 329,405
Edison SPA* ................................. 32,500 172,354
ENI SPA* ................................. 60,000 304,525
Stet* ....................................... 85,000 401,872
-----------
1,638,880
-----------
Japan 28.1%
Alps Electric Co.* ........................ 35,000 408,083
Amada Co.* ................................. 36,000 269,146
Asahi Bank* ................................. 90,000 550,912
Bank of Tokyo* .............................. 40,000 633,395
Canon Inc. ................................. 15,000 355,694
Clarion Co.* .............................. 105,000 363,966
Dai Nippon Printing* ........................ 20,000 360,815
Dai-Ichi Kangyo Bank Ltd.* .................. 100,000 1,095,049
Denso Corp. ................................. 17,000 387,048
Fanuc* .................................... 10,000 341,119
Fujikura .................................... 65,000 485,445
Kao Corp.* ................................. 31,000 361,445
Kirin Brewery Co.* ........................ 50,000 433,293
Kubota Corp.* .............................. 115,000 530,902
Kumagai Gumi Co.* ........................... 120,000 160,712
Mitsubishi Chemical Corp.* .................. 105,000 353,212
Mitsubishi Estate Co. Ltd. .................. 60,000 756,293
Mitsubishi Heavy Industries Ltd.* ......... 50,000 330,090
Mitsui & Co. .............................. 49,000 374,058
Mitsui Engineering & Shipbuilding Co. Ltd.* 210,000 360,657
Nippon Telegraph & Telephone Corp.* ......... 155 1,092,882
Nissan Fire & Marine Insurance ............ 89,250 305,855
Nomura Securities ........................... 150,000 1,678,024
Ono Pharmaceutical ........................ 20,000 567,219
Rohm Co. .................................... 5,000 387,600
Secom Co.* ................................. 6,000 356,875
Sekisui Chemical ........................... 75,000 720,841
Sharp Corp.* .............................. 27,000 350,967
Showa Denko* .............................. 150,000 356,875
Sony Corp. ................................. 5,000 363,966
Sumitomo Electric Industries ............... 25,000 338,756
TDK Corp. ................................. 5,000 360,421
Teijin Ltd.* .............................. 100,000 404,144
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
Japan (cont'd)
Tokio Marine & Fire Insurance Co. Ltd. ...... 36,000 $ 351,676
Tokyo Nissan Auto Sales Co. Ltd.* ......... 23,000 72,478
Tokyo Steel Manufacturing* .................. 35,000 374,995
Toto* ....................................... 40,000 400,894
Toyo Seikan Kaisha* ........................ 20,000 367,117
Toyoda Automatic Loom Works* ............... 20,000 359,239
Yamanouchi Pharmaceutical Co.* ............ 17,000 362,942
Yasuda Trust & Banking* .................. 220,000 514,752
Yokogawa Electric* ........................ 55,000 385,197
-----------
19,385,049
-----------
Korea 0.5%
Korea Electric Power Corp. ADR* ............ 8,400 142,800
Samsung Electronics Ltd. GDR*[dbldag] ...... 10,000 233,700
-----------
376,500
-----------
Luxembourg 0.3%
Arbed SA* ................................. 2,000 204,040
-----------
Malaysia 0.5%
Commerce Asset Holdings BHD* ............... 25,000 149,355
Renong BHD* ................................. 150,000 205,512
-----------
354,867
-----------
Mexico 0.3%
Grupo Carso SA de CV* ..................... 30,000 173,284
-----------
Netherlands 6.2%
ABN Amro Holdings NV* ..................... 5,000 343,633
Ahold Kon NV* .............................. 5,000 341,323
Akzo Nobel NV* .............................. 2,500 322,076
Gucci Group NV* ........................... 5,600 388,500
ING Groep NV* .............................. 21,250 834,381
Kon Ptt* ................................. 12,000 426,218
Royal Dutch Petroleum Co.* .................. 7,200 1,286,783
Ver Ned Uitgevers ........................... 16,000 330,955
-----------
4,273,869
-----------
New Zealand 0.2%
Fletcher Challenge ........................ 55,000 154,419
-----------
Norway 0.6%
Storebrand ASA Series A* .................. 65,000 399,792
-----------
Panama 0.2%
Banco Latinoamericano de Exportaciones
SA Cl. E ................................. 3,500 160,563
-----------
Philippines 0.2%
Philippine Long Distance Telephone Co. ADR* 3,000 167,250
-----------
Poland 0.3%
Bank Gdanski SA GDR*++ ..................... 15,000 202,986
-----------
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
Russia 0.2%
Rao Gazprom ADR*++ ................................ 8,800 $ 137,280
-----------
Singapore 1.6%
Development Bank of Singapore Ltd.* ................ 25,000 297,064
Keppel Corp.* ..................................... 81,250 353,627
Parkway Holdings Ltd.* ............................ 50,000 203,799
United Overseas Bank Ltd.* ......................... 25,000 234,888
-----------
1,089,378
-----------
Spain 2.9%
Acerinox SA ........................................ 2,000 292,193
Banco Bilbao Vizcaya SA ............................ 5,950 400,451
Banco Popular Espagnol SA ......................... 1,264 268,007
Repsol SA ........................................ 7,250 303,974
Tabacalera SA Series A* ......................... 6,750 338,874
Telefonica de Espagna ............................ 15,040 385,245
-----------
1,988,744
-----------
Sweden 1.0%
ABB AB Series A .................................. 25,000 304,345
Skandia Foersaekrings AB ......................... 14,150 409,455
-----------
713,800
-----------
Switzerland 5.6%
Ciba Specialty Chemicals AG* ...................... 2,653 228,567
CS Holding AG* ..................................... 2,820 317,563
Holderbank Financiere Glarus AG* ................... 76 59,136
Nestle SA* ........................................ 745 904,654
Novartis AG ........................................ 853 1,123,754
Roche Holdings AG* ............................... 72 608,100
Schweiz Bankverein AG* ............................ 1,010 220,623
Sudelektra Holding* ............................... 180 151,414
Zurich Versicherun* ............................... 850 279,086
-----------
3,892,897
-----------
United Kingdom 15.8%
Arjo Wiggins Appleton PLC ......................... 100,000 298,217
Ascot Holdings PLC* ............................... 16,000 73,647
Ashurst Technology Ltd.+ ......................... 250,000 178,955
Bass PLC* ........................................ 25,000 322,528
BAT Industries PLC ............................... 81,000 681,345
BG PLC* ........................................... 119,000 343,306
BOC Group PLC ..................................... 25,000 382,800
British Biotech PLC* ............................... 59,000 232,366
British Petroleum Co. PLC ......................... 90,000 1,032,739
British Telecom PLC* ............................... 155,000 1,135,494
BTR PLC ........................................... 79,000 322,658
Cable & Wireless PLC* ............................ 45,000 346,526
- --------------------------------------------------------------------------------
Value
Shares (Note 1)
- --------------------------------------------------------------------------------
United Kingdom (cont'd)
Commercial Union PLC ............................... 26,000 $ 286,548
Euro Sales Finance PLC Cl. A+* ................... 163,560 331,362
Glaxo Wellcome PLC ............................... 55,000 1,081,280
Great University Stores PLC* ...................... 34,000 352,674
Guinness PLC* ..................................... 75,000 619,935
J. Sainsbury PLC .................................. 50,000 268,233
Lasmo PLC ........................................ 45,000 162,642
Marks & Spencer PLC* ............................... 45,000 356,645
National Westminster Bank PLC ...................... 28,000 331,280
Northern Foods PLC* ............................... 62,000 209,011
Rank Group PLC ..................................... 48,000 330,632
Rolls Royce PLC .................................. 55,000 216,613
Sun Life & Provincial Holdings PLC ................ 36,000 173,874
Unilever NV ........................................ 33,000 866,986
-----------
10,938,296
-----------
Total Common Stocks (Cost $64,918,412) ............. 68,202,383
-----------
EQUITY-RELATED SECURITIES 0.9%
General Property Trust Units ...................... 100,000 183,264
Daimler-Benz AG Rts.* ............................ 8,275 956
GEA AG Pfd.* ..................................... 700 238,480
Upton & Southern Holdings PLC Cv. Pfd. * .......... 115,207 187,655
-----------
Total Equity-Related Securities (Cost $620,154) .... 610,355
-----------
Total Investments (Cost $65,538,566)--99.6% ....... 68,812,738
Cash and Other Assets, Less Liabilities--0.4% .... 279,792
-----------
Net Assets--100.0% ............................... $69,092,530
===========
Federal Income Tax Information:
At April 30, 1997, the net unrealized appreciation
of investments based on cost for Federal income
tax purposes of $65,538,566 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an excess
of value over tax cost .......................... $ 6,123,632
Aggregate gross unrealized depreciation for
all investmentsin which there is an excess of (2,849,460)
tax cost over value ............................. -----------
$ 3,274,172
===========
- -------------------------------------
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global Depositary
Receipt, respectively, representing ownership of foreign securities.
+ Security determined to be illiquid by the Directors.
++ Security restricted as to public resale. At April 30, 1997, there
were no outstanding unrestricted securities of the same class as those
held. The total cost and market value of restricted securities at
April 30, 1997 were $661,808 and $717,790 (1.04% of net assets),
respectively.
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, 1997
Assets
Investments, at value (Cost $65,538,566) (Note 1) ... $68,812,738
Foreign currency, at value (Cost $2,536,420) ......... 2,525,377
Receivable for securities sold ..................... 3,798,606
Dividends and interest receivable .................. 229,273
Foreign tax receivable .............................. 115,207
Receivable from Distributor (Note 3) ............... 76,356
Receivable for fund shares sold ..................... 48,645
-----------
75,606,202
Liabilities
Payable for securities purchased ..................... 5,733,007
Accrued transfer agent and shareholder services
(Note 2) .......................................... 212,877
Payable for fund shares redeemed ..................... 93,739
Payable to custodian ................................. 76,084
Accrued management fee (Note 2) ..................... 56,959
Accrued directors' fees (Note 2) ..................... 45,308
Accrued distribution and service fees (Note 5) ...... 28,238
Other accrued expenses .............................. 267,460
-----------
6,513,672
-----------
Net Assets $69,092,530
===========
Net Assets consist of:
Unrealized appreciation of investments
and foreign currency .............................. $ 3,252,296
Accumulated net realized loss on investments
and foreign currency .............................. (3,388,496)
Shares of beneficial interest ..................... 69,228,730
-----------
$69,092,530
===========
Net Asset Value and redemption price per share of
Class A shares ($18,216,398 [dividedby] 1,927,565
shares of beneficial interest) .................... $9.45
=====
Maximum Offering Price per share of Class A shares
($9.45 [dividedby] .955) ........................... $9.90
=====
Net Asset Value and offering price per share of
Class B shares ($24,362,549 [dividedby] 2,640,018
shares of beneficial interest)* .................... $9.23
=====
Net Asset Value, offering price and redemption price
per share of Class C shares ($22,996,762 [dividedby]
2,411,598 shares of beneficial interest) ........... $9.54
=====
Net Asset Value and offering price per share of
Class D shares ($3,516,821 [dividedby] 381,292
shares of beneficial interest)* .................... $9.22
=====
- -------------------------------------
* 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, 1997
Investment Income
Dividends, net of foreign taxes of $71,402 ............ $ 472,064
Interest, net of foreign taxes of $48.................. 17,839
----------
489,903
Expenses
Management fee (Note 2) .............................. 349,709
Transfer agent and shareholder services (Note 2) ...... 208,231
Custodian fee ....................................... 154,709
Reports to shareholders .............................. 63,813
Audit fee ............................................. 22,330
Service fee-Class A (Note 5) ........................ 23,853
Distribution and service fees-Class B (Note 5) ...... 131,871
Distribution and service fees-Class D (Note 5) ...... 21,399
Directors' fees (Note 2) .............................. 7,743
Legal fees .......................................... 3,072
Amortization of organization costs (Note1) ............ 2,697
Registration fees .................................... 1,140
Miscellaneous ....................................... 9,571
----------
1,000,138
Expenses borne by the Distributor (Note 3) ............ (216,427)
----------
783,711
----------
Net investment loss ................................. (293,808)
----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized loss on investments (Notes 1 and 4) ...... (1,179,201)
Net realized loss on foreign currency (Note 1) ...... (101,248)
----------
Total net realized loss ........................... (1,280,449)
----------
Net unrealized appreciation of investments ............ 3,505,918
Net unrealized depreciation of foreign currency ...... (36,718)
----------
Total net unrealized appreciation .................. 3,469,200
----------
Net gain on investments and foreign currency ......... 2,188,751
----------
Net increase in net assets resulting from operations $1,894,943
==========
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, 1997
Six months ended Year ended
April 30, 1997 October 31, 1996
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment loss ............... $ (293,808) $ (592,238)
Net realized loss on investments
and foreign currency* ........... (1,280,449) (2,377,922)
Net unrealized appreciation of
investments and foreign
currency ........................ 3,469,200 1,601,264
------------ ------------
Net increase (decrease) resulting
from operations ................. 1,894,943 (1,368,896)
------------ ------------
Net decrease from fund share
transactions (Note 6) ......... (14,862,712) (6,239,509)
------------ ------------
Total decrease in net assets ...... (12,967,769) (7,608,405)
Net Assets
Beginning of period ............... 82,060,299 89,668,704
------------ ------------
End of period ..................... $ 69,092,530 $ 82,060,299
============ ============
* Net realized loss for Federal
income tax purposes (Note 1) ... $ (965,200) $ (1,469,788)
============ ============
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1997
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 an annual service fee 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
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
by using the last available closing price. Domestic securities traded in 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
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 between both funds in the Portfolios.
D. Dividends
Dividends from net investment income, if any, 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, 1996, the Fund had a capital
loss carryforward of $2,057,829 available, to the extent provided in
regulations, to offset future capital gains, if any, of which $588,041 and
$1,469,788 expires on October 31, 2003 and 2004, respectively.
F. Deferred Organization Costs
Certain costs incurred in the organization and registration of the Fund were
capitalized and 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 & Management Company (the "Investment
Manager"), 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"), an affiliate of the Investment Manager and 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,
1997, the Fund paid the Investment Manager $349,709 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 State Street Research
Investment Services, Inc., the Fund's principal underwriter (the
"Distributor"), an indirect wholly owned subsidiary of Metropolitan, 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, 1997, the amount of such expenses was $78,809.
The fees of the Directors not currently affiliated with the Investment Manager
amounted to $7,743 during the six months ended April 30, 1997.
Note 3
The Distributor and its 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, 1997, the amount of such expenses assumed
by the Distributor and its affiliates was $216,427.
Note 4
For the six months ended April 30, 1997, purchases and sales of securities,
exclusive of short-term obligations, aggregated $67,266,713 and $81,060,532,
respectively.
7
<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, 1997,
fees pursuant to such plan amounted to $23,853, $131,871 and $21,399 for Class
A, Class B and Class D shares, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $2,943 and $17,117, respectively, on sales of Class A shares of the
Fund during the six months ended April 30, 1997, and that MetLife Securities,
Inc. earned commissions aggregating $30,449 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $77,069 and
$742 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, 1997 October 31, 1996
--------------------------------- ----------------------------------
Class A Shares Amount Shares Amount
- -------------------------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold .................. 182,957 $ 1,728,260 1,219,188 $ 11,886,027
Shares repurchased ............ (544,754) (5,129,501) (1,339,064) (12,879,562)
--------- ------------ ----------- ------------
Net decrease .................. (361,797) $ (3,401,241) (119,876) $ (993,535)
========= ============ =========== ============
Class B Shares Amount Shares Amount
- -------------------------------- --------------- --------------- --------------- ----------------
Shares sold .................. 279,753 $ 2,589,692 1,649,800 $ 15,674,421
Shares repurchased ............ (844,800) (7,799,376) (1,439,371) (13,641,573)
--------- ------------ ----------- ------------
Net increase (decrease) ...... (565,047) $ (5,209,684) 210,429 $ 2,032,848
========= ============ =========== ============
Class C Shares Amount Shares Amount
- -------------------------------- --------------- --------------- --------------- ----------------
Shares sold .................. 436,870 $ 4,162,901 945,704 $ 9,234,435
Shares repurchased ............ (892,301) (8,493,584) (1,687,889) (16,384,857)
--------- ------------ ----------- ------------
Net decrease .................. (455,431) $ (4,330,683) (742,185) $ (7,150,422)
========= ============ =========== ============
Class D Shares Amount Shares Amount
- -------------------------------- --------------- --------------- --------------- ----------------
Shares sold .................. 68,503 $ 629,806 377,202 $ 3,629,056
Shares repurchased ............ (276,557) (2,550,910) (403,584) (3,757,456)
--------- ------------ ----------- ------------
Net decrease .................. (208,054) $ (1,921,104) (26,382) $ (128,400)
========= ============ =========== ============
</TABLE>
8
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
-----------------------------------------
Six months
ended Year ended October 31
April 30, ----------------------------------------
1997*** 1996*** 1995*** 1994**
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.22 $ 9.34 $ 10.98 $ 10.54
------- ------- ------- -------
Net investment loss* (0.03) (0.04) (0.08) (0.04)
Net realized and unrealized gain (loss)
on investments and foreign currency 0.26 (0.08) (1.04) 0.48
------- ------- ------- --------
Total from investment operations 0.23 (0.12) (1.12) 0.44
------- ------- ------- --------
Distribution from net realized gains -- -- (0.52) --
------- ------- ------- --------
Total distributions -- -- (0.52) --
------- ------- ------- --------
Net asset value, end of period $ 9.45 $ 9.22 $ 9.34 $ 10.98
======= ======= ======= =======
Total return 2.49%++ (1.28)%+ (10.38)%+ 4.17%++
Net assets at end of period (000s) $18,216 $21,116 $22,497 $22,579
Ratio of operating expenses to average net assets* 1.90%+++ 1.90% 1.90% 1.90%+++
Ratio of net investment loss to average net assets* (0.56)%+++ (0.37)% (0.82)% (0.87)%+++
Portfolio turnover rate 89.95% 132.36% 100.68% 80.60%
Average commission rate@ $0.0107 $0.0069 -- --
*Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) $ 0.03 $ 0.05 $ 0.06 $ 0.03
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------
Six months
ended Year ended October 31
April 30, --------------------------------------
1997*** 1996*** 1995*** 1994**
----------- -------- ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.04 $ 9.22 $ 10.93 $ 10.54
------- ------- -------- -------
Net investment loss* (0.06) (0.11) (0.15) (0.06)
Net realized and unrealized gain (loss) on
investments and foreign currency 0.25 (0.07) (1.04) 0.45
------- ------- -------- -------
Total from investment operations 0.19 (0.18) (1.19) 0.39
------- ------- -------- -------
Distribution from net realized gains -- -- (0.52) --
------- ------- -------- -------
Total distributions -- -- (0.52) --
------- ------- -------- -------
Net asset value, end of period $ 9.23 $ 9.04 $ 9.22 $ 0.93
======= ======= ======= ======
Total return 2.10%++ (1.95)%+ (11.09)%+ 3.70%++
Net assets at end of period (000s) $24,363 $28,971 $27,614 $18,904
Ratio of operating expenses to average net assets* 2.65%+++ 2.65% 2.65% 2.65%+++
Ratio of net investment loss to average net assets* (1.32)%+++ (1.13)% (1.54)% (1.61)%+++
Portfolio turnover rate 89.95% 132.36% 100.68% 80.60%
Average commission rate@ $0.0107 $0.0069 -- --
* Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) $ 0.03 $ 0.05 $ 0.06 $ 0.03
</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 Distributor 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 Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
@ For fiscal years beginning on or after November 1, 1995, the Fund is
required to disclose its average commission rate per share paid for
security trades.
9
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------
Six months
ended Year ended October 31
April 30, ----------------------------------------------------------
1997*** 1996*** 1995*** 1994 1993 1992***
------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.29 $ 9.39 $ 11.01 $ 9.56 $ 6.50 $ 7.40
------- ------- ------- ------- ------- -------
Net investment income (loss)* (0.01) (0.02) (0.05) (0.07) (0.02) 0.04
Net realized and unrealized gain (loss)
on investments and foreign currency 0.26 (0.08) (1.05) 2.09 3.17 (0.94)
------- ------- ------- ------- ------- ---------
Total from investment operations 0.25 (0.10) (1.10) 2.02 3.15 (0.90)
------- ------- ------- ------- ------- ---------
Dividends from net investment income -- -- -- (0.05) (0.04) --
Distributions from net realized gains -- -- (0.52) (0.52) (0.05) --
------- ------- ------- ------- ------- ---------
Total distributions -- -- (0.52) (0.57) (0.09) --
------- ------- ------- ------- ------- ---------
Net asset value, end of period $ 9.54 $ 9.29 $ 9.39 $ 11.01 $ 9.56 $ 6.50
======= ======= ======= ======= ======= ========
Total return 2.69%++ (1.06)%+ (10.16)%+ 22.73%+ 48.95%+ (12.16)%++
Net assets at end of period (000s) $22,997 $26,649 $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% 1.65%+++
Ratio of net investment income (loss)
to average net assets* (0.31)%+++ (0.16)% (0.51)% (0.75)% (0.37)% 0.79%+++
Portfolio turnover rate 89.95% 132.36% 100.68% 80.60% 116.12% 77.83%
Average commission rate@ $0.0107 $0.0069 -- -- -- --
* Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) $ 0.03 $ 0.05 $ 0.06 $ 0.05 $ 0.08 $ 0.10
</TABLE>
<TABLE>
<CAPTION>
Class D
-----------------------------------------------------------------------
Six months Year ended October 31
ended -----------------------------------------
April 30, 1997*** 1996*** 1995*** 1994**
----------------- ---------- --------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.03 $ 9.22 $ 10.93 $ 10.54
------- ------- ------- -------
Net investment loss* (0.06) (0.11) (0.15) (0.07)
Net realized and unrealized gain (loss)
on investmentsand foreign currency 0.25 (0.08) (1.04) 0.46
------- ------- ------- -------
Total from investment operations 0.19 (0.19) (1.19) 0.39
------- ------- ------- -------
Distribution from net realized gains -- -- (0.52) --
------- ------- ------- -------
Total distributions -- -- (0.52) --
------- ------- ------- -------
Net asset value, end of period $ 9.22 $ 9.03 $ 9.22 $ 10.93
======= ====== ======== =======
Total return 2.10%++ (2.06)%+ (11.09)%+ 3.70%++
Net assets at end of period (000s) $ 3,517 $ 5,324 $5,674 $2,134
Ratio of operating expenses to average net assets* 2.65%+++ 2.65% 2.65% 2.65%+++
Ratio of net investment loss to average net assets* (1.36)%+++ (1.10)% (1.55)% (1.62)%+++
Portfolio turnover rate 89.95% 132.36% 100.68% 80.60%
Average commission rate@ $0.0107 $0.0069 -- --
* Reflects voluntary assumption of fees or expenses
per share in each period (Note 3) $ 0.03 $ 0.05 $ 0.06 $0.03
</TABLE>
- --------------------------------------------------------------------------------
** March 1, 1994 (commencement of share class designations) to October 31,
1994.
*** Per-share figures have been calculated using the average shares method.
**** January 22, 1992 (commencement of operations) to October 31, 1992.
+++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges. Total return would be lower if the Distributor 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 Distributor and its affiliates had not
voluntarily assumed a portion of the Fund's expenses.
@ For fiscal years beginning on or after November 1, 1995, the Fund is
required to disclose its average commission rate per share paid for
security trades.
10
<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, 1997, 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, 1996 and the financial highlights for the six months ended April 30, 1997
and for each of the years in the five year period ended October 31, 1996. 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, 1997, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, 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, 1997, 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 6, 1997
11
<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 Financial Center
Boston, MA 02111
Investment Manager
State Street Research &
Management Company
One Financial Center
Boston, MA 02111
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
Goodwin, Procter & Hoar LLP
LLPExchange Place
Boston, MA 02109
Independent Accountants
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
Officers
Ralph F. Verni
Chairman of the Board,
President and
Chief Executive Officer
Peter C. Bennett
Steven J. Brunnock
Justin T. Donegan
Simon H. Holdsworth
John H. Kallis
Rosamunde M. Price
Nicholas Sanjana
Thomas A. Shively
Ian R. Vose
James M. Weiss
Vice President
Gerard P. Maus
Treasurer
Robert G. Barrett
Joseph W. Canavan
Gerald R. Grace
Douglas A. Romich
Assistant Treasurer
Francis J. McNamara, III
Secretary and General Counsel
Darman A. Wing
Assistant Secretary and
Assistant General Counsel
Amy L. Simmons
Christopher P. Nicholas
Assistant Secretary
Directors
Ralph F. Verni
Chairman of the Board,
President, Chief Executive
Officer and Director,
State Street Research &
Management Company
Steve A. Garban
Retired; formerly 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.
Edward M. Lamont
Formerly in banking
(Morgan Guaranty Trust
Company of New York);
presently engaged in private investments and civic affairs
Robert A. Lawrence
Associate, Saltonstall & Co.
Dean O. Morton
Retired; formerly Executive Vice
President, Chief Operating
Officer and Director,
Hewlett-Packard Company
Toby Rosenblatt
President,
The Glen Ellen Company
Vice President,
Founders Investments Ltd.
Michael S. Scott Morton
Jay W. Forrester Professor of
Management, Sloan School of
Management, Massachusetts Institute of Technology
12
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[back cover]
State Street International Equity Fund [indicia]
One Financial Center Bulk Rate
Boston, MA 02111 U.S. Postage
PAID
Randolph, 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
[State Street Research Logo]
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 award recognizes 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: 3978-970620(0798)SSR-LD IEF-817D-697IBS
