[COVER]
STATE STREET RESEARCH
INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT
April 30, 1998
WHAT'S INSIDE
Investment Update
About the Fund,
economy and markets
Fund Information
Facts and figures
Plus, Complete Portfolio Holdings
and Financial Statements
DALBAR
HONORS COMMITMENT TO:
INVESTORS
1997
For Excellence
in
Shareholder Service
STATE STREET RESEARCH FUNDS
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
INVESTMENT ENVIRONMENT
The Economy
[bullet] The last quarter of 1997 and the first quarter of 1998 were periods of
solid economic growth for most areas of the developed world. The
notable exception was Japan, whose economic woes have continued for
the past eight years. Economic problems in the emerging markets of
Southeast Asia worsened throughout the period.
[bullet] Interest rates remain low around the world. In most European
countries, interest rates have come down in anticipation of the
introduction of a new currency in 1999. In Japan, rates have sunk to
all-time lows.
[bullet] Favorable political and economic factors have stimulated a wave of
merger and acquisitions in Europe. Restructuring, downsizing and
privatization have all picked up.
The Markets
[bullet] The Morgan Stanley EAFE Index, a common measure of foreign stock
market performance, gained 15.44% for the six-month period.(1) The
heavy representation of Japan in the index pulled performance down and
masked spectacular performance in individual markets such as Finland,
Ireland, Portugal and Spain--all of which produced returns two to
three times the index.
[bullet] In general, foreign bond markets outperformed U.S. bond markets as
interest rates came down faster outside the United States.
THE FUND
Over the past six months
[bullet] For the six months ended April 30, 1998, International Equity Fund's
Class A shares generated a total return of 14.65% (does not reflect
sales charge).(2) This result slightly lagged the Morgan Stanley EAFE
Index (see above). It also fell short of the average international
fund, which gained 16.25%, according to Lipper Analytical Services.
[bullet] A decision to overweight investments in continental Europe, especially
financial stocks, as well as health care stocks in the United Kingdom,
and to underweight Japan helped performance, particularly in early
1998.
[bullet] The Fund's investments in Japanese cyclical stocks and below-average
investments in Germany were a drag on performance. Our expectation for
modest improvement in the Japanese economy did not occur.
Current Strategy
[bullet] We continue to favor European markets over Asia as interest rates
converge in anticipation of the introduction of the new, common
currency in 1999. The Fund has emphasized stocks that could benefit
from a broadening of European economic recovery.
[bullet] Profits were taken from some of the portfolio's strongest
performers--in Spain, Italy and Portugal. The proceeds were reinvested
in Germany, where rising consumer confidence will likely underpin
economic recovery.
[bullet] We reduced our investment in Japanese cyclicals and invested some of
the proceeds in blue chip exporters with more potential earnings
growth. The Fund remains very underweighted in Japan, reflecting the
government's lack of positive economic action.
April 30, 1998
(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)14.30% for Class B shares; 14.30% for Class C shares; 14.93% for Class S
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. "S" shares, offered without a sales charge, are
available only through certain employee benefit plans and special programs.
(4)Performance reflects maximum 4.5% "A" share front-end sales charge or 5% "B"
share or 1% "C" share contingent deferred sales charges, where applicable.
(5)Before November 1, 1997, Class C shares were designated Class D and Class S
shares were designated Class C.
Please note that the discussion throughout this shareholder report is dated as
indicated and, because of possible changes in viewpoint, data and transactions,
should not be relied upon as being current thereafter.
- --------------------------------------------------------------------------------
FUND INFORMATION (all data are for periods ended April 30, 1998, expect where
noted)
- --------------------------------------------------------------------------------
Average Annual Total Return
for periods ended 3/31/98
(at maximum applicable sales charge)(3),(4),(5)
<TABLE>
<CAPTION>
- --------------------------------------------------
Life of Fund
(since 1/22/92) 5 Years 1 Year
- --------------------------------------------------
<S> <C> <C> <C>
Class A 7.47% 7.87% 6.55%
- --------------------------------------------------
Class B 7.73% 7.90% 5.67%
- --------------------------------------------------
Class C 7.73% 8.19% 9.67%
- --------------------------------------------------
Class S 8.46% 9.11% 11.78%
- --------------------------------------------------
</TABLE>
Average Annual Total Return
(does not reflect sales charge)(3),(5)
<TABLE>
<CAPTION>
- --------------------------------------------------
Life of Fund
(since 1/22/92) 5 Years 1 Year
- --------------------------------------------------
<S> <C> <C> <C>
Class A 8.31% 6.89% 14.29%
- --------------------------------------------------
Class B 7.79% 6.24% 13.43%
- --------------------------------------------------
Class C 7.79% 6.24% 13.56%
- --------------------------------------------------
Class S 8.52% 7.14% 14.57%
- --------------------------------------------------
</TABLE>
Top 10 Holdings
(by percentage of net assets)
<TABLE>
<S> <C> <C>
1 Allianz Holdings Germany 1.5%
2 Nippon Tel & Tel Japan 1.5%
3 Glaxo Wellcome United Kingdom 1.5%
4 Novartis Switzerland 1.4%
5 British Petroleum United Kingdom 1.3%
6 HSBC Holdings United Kingdom 1.3%
7 Lloyds TSB Group United Kingdom 1.2%
8 British Telecom United Kingdom 1.2%
9 Roche Holdings Switzerland 1.1%
10 Royal Dutch Petroleum Netherlands 1.1%
</TABLE>
These securities represent an aggregate of 13.1% 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 chart]
<TABLE>
<S> <C>
United Kingdom 22.5%
Japan 12.8%
France 10.9%
Germany 9.6%
Italy 6.9%
Total: 62.7%
</TABLE>
Performance results for the Fund are increased by the voluntary reduction of
Fund fees and expenses; without subsidization, performance would have been
lower.
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Value
Shares (Note 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 93.3%
Australia 2.7%
Broken Hill Proprietary Co. Ltd. ................... 18,200 $ 178,064
Commonwealth Bank of Australia ..................... 12,200 146,497
Foster's Brewing Group Ltd. ........................ 139,600 304,121
GIO Australia Holdings Ltd. ........................ 47,600 136,607
Mayne Nickless Ltd. ................................ 65,700 354,907
National Australia Bank ............................ 12,400 176,316
QBE Insurance Group Ltd. ........................... 45,900 210,766
Rio Tinto Ltd. ..................................... 12,950 179,593
----------
1,686,871
----------
Austria 1.0%
Bank Austria AG Pfd. ............................... 5,200 404,337
EVN Energie-Versorgung AG .......................... 1,560 230,420
----------
634,757
----------
Belgium 1.3%
Delhaize-Le Lion SA ................................ 2,930 194,024
GPE Bruxelles ...................................... 1,690 337,561
Kredietbank ........................................ 495 279,289
----------
810,874
----------
Bermuda 0.0%
Isleinvest Ltd.*+ .................................. 95,821 7,036
----------
Canada 0.7%
Advanced Material Resources Ltd.* .................. 133,000 260,428
Ashurst Technology Ltd.*+ .......................... 250,000 20,980
Kemgas Ltd.* ....................................... 200,000 152,453
----------
433,861
----------
Denmark 1.1%
Danisco ............................................ 2,930 184,111
ISS International Service Systems SA Cl. B ......... 4,760 257,367
Unidanmark SA Cl. A ................................ 2,670 224,348
----------
665,826
----------
Finland 0.3%
Huhtamaki Oy ....................................... 3,000 173,503
----------
France 10.9%
Accor .............................................. 1,580 430,813
Alcatel Alsthom .................................... 2,475 459,096
ASS Generale de France ............................. 5,200 328,731
Cap Gemini ......................................... 4,050 526,210
Casino Guich Perr .................................. 2,190 146,826
Cie de St. Gobain .................................. 2,100 350,058
Danone ............................................. 660 155,914
Eaux Cie Generale .................................. 2,790 518,919
Elf Aquitaine SA ................................... 2,525 331,430
Financiere Paribas Cl. A ........................... 3,525 375,312
France Telecom ..................................... 3,145 $ 171,246
Lafarge SA ......................................... 3,575 337,814
Lafarge SA New ..................................... 312 28,651
Rhone-Poulenc SA Cl. A ............................. 5,945 290,871
Sanofi SA .......................................... 3,335 404,461
Schneider SA ....................................... 5,480 410,248
Seita .............................................. 5,720 256,929
Societe Generale ................................... 1,000 208,285
Strafor Facom ...................................... 1,700 155,548
Total SA Cl. B ..................................... 3,770 448,436
Valeo SA ........................................... 3,830 381,025
----------
6,716,823
----------
Germany 7.5%
Allianz Holdings AG ................................ 3,010 925,870
Bayer Motoren Werk AG .............................. 238 262,595
Commerzbank AG ..................................... 4,200 161,957
Daimler-Benz AG .................................... 2,900 283,124
Deutsche Bank AG ................................... 4,950 380,928
Deutsche Pfandbrief AG ............................. 4,870 375,857
Deutsche Telekom AG ................................ 9,700 245,399
Lufthansa AG ....................................... 11,920 283,628
MAN AG ............................................. 658 222,566
Mannesmann AG ...................................... 300 238,054
Metro AG ........................................... 4,290 211,805
RWE AG ............................................. 5,985 304,494
Tarkett Sommer AG .................................. 4,750 164,108
Thyssen AG ......................................... 1,256 287,098
Veba AG ............................................ 4,550 300,705
----------
4,648,188
----------
Hong Kong 1.5%
Beijing Enterprises Holdings Ltd. Cl. H ............ 54,200 116,153
China Resources Enterprise Ltd. .................... 67,000 115,040
China Telecom* ..................................... 78,000 148,025
Johnson Electric Holdings Ltd. ..................... 43,000 145,720
Shanghai Industrial Holdings Ltd. .................. 38,000 130,248
Television Broadcasts Ltd. ......................... 57,000 145,701
Vtech Holdings Ltd. ................................ 39,000 136,948
----------
937,835
----------
Italy 6.9%
Aeroporti Di Roma SPA .............................. 18,300 256,211
Arn Mondadori Edit ................................. 31,250 352,926
Assicuraziono Generali SPA ......................... 12,813 385,544
Banca Commerciale Italiana SPA ..................... 53,350 269,860
Banca di Roma SPA* ................................. 312,500 576,008
Credito Italiano SPA ............................... 125,000 656,985
ENI SPA ............................................ 64,000 429,774
Italcementi ........................................ 14,700 159,336
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Value
Shares (Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Italy (cont'd)
La Rinascente SPA ............................ 38,942 $ 390,222
Montedison SPA ............................... 281,500 355,183
Telecom Italia SPA ........................... 58,350 436,468
----------
4,268,517
----------
Japan 12.8%
Ajinomoto Co. ................................ 18,000 144,582
Amada Co. Ltd. ............................... 37,000 149,577
Bank of Tokyo Mitsubishi Ltd. ................ 12,000 148,617
Dai-Ichi Kangyo Bank Ltd. .................... 22,000 149,448
Gunze Ltd. ................................... 59,000 131,517
Hitachi Ltd. ................................. 40,000 286,837
Hosiden Corp* ................................ 23,000 298,753
Industrial Bank of Japan ..................... 22,000 149,615
Izumiya Co. Ltd. ............................. 43,000 227,444
Kirin Brewery Co. Ltd. ....................... 17,000 148,368
Kyocera Corp. ................................ 11,300 592,580
Matsushita Electric Industrial Co. Ltd. ...... 22,000 352,426
Mitsubishi Estate Co. Ltd. ................... 17,000 164,425
Mitsubishi Paper Mills Ltd. .................. 64,000 122,351
NEC Corp. .................................... 28,000 315,249
Nintendo Co. Ltd. ............................ 3,200 293,547
Nippon Telegraph & Telephone Corp. ........... 105 920,357
Nissan Fire & Marine Insurance ............... 63,000 228,502
Nomura Securities ............................ 36,000 439,323
Pioneer Electronic ........................... 18,000 295,149
Ricoh Co ..................................... 24,000 248,632
Secom Co. .................................... 3,000 176,817
Shimano Inc. ................................. 12,000 265,679
Shionogi & Co. Ltd. .......................... 54,000 292,973
Shiseido Co .................................. 16,000 210,972
Sumitomo Bank Ltd. ........................... 14,000 132,235
Tokyo Electric Power ......................... 13,000 249,018
Tokyo Nissan Auto Sales Co. Ltd.* ............ 16,000 38,809
Tokyo Steel Manufacturing .................... 35,100 154,627
Tomy Co. Ltd. ................................ 16,000 203,113
Towa Corp .................................... 8,400 237,389
Toyo Ink Manufacturing Co. ................... 62,000 135,862
----------
7,904,793
----------
Korea 0.5%
LG Electronics Inc. GDR[dbldag] .............. 84,680 187,143
Samsung Electronics Ltd. GDR[dbldag] ......... 12,400 140,988
----------
328,131
----------
Mexico 0.9%
Cemex SA de CV ADR ........................... 14,900 176,914
Grupo Televisa SA de CV ADR .................. 4,700 192,700
Grupo Carso SA de CV Cl. A ................... 24,400 153,651
----------
523,265
----------
Netherlands 4.9%
Akzo Nobel NV ................................ 1,568 $ 319,018
Benckiser NC Cl. B* .......................... 6,300 367,690
Heineken NV .................................. 930 215,731
ING Groep NV ................................. 7,858 510,745
Koninklijke KNP BT NV ........................ 6,575 180,641
Koninklijke PTT .............................. 5,700 294,579
Philips Electronics NV ....................... 2,600 229,097
Royal Dutch Petroleum Co. .................... 12,480 688,837
Vendex International NV ...................... 3,800 243,790
----------
3,050,128
----------
Norway 0.5%
Fred Olsen Energy ASA* ....................... 9,000 160,530
Schibsted ASA ................................ 8,000 152,349
----------
312,879
----------
Portugal 1.4%
Banco Commercial Portugues SA ................ 7,850 275,209
Banco Commercial Portugues SA Cert. .......... 1,601 56,129
Cimpor-Cimentos de Portugal SA ............... 5,000 184,914
Electricidade de Portugal SA ................. 8,000 208,752
Portugal Telecom SA .......................... 2,800 150,465
----------
875,469
----------
Singapore 1.2%
City Development Ltd. ........................ 35,000 151,501
Development Bank of Singapore Ltd. ........... 32,000 212,322
Development Bank of Singapore Ltd. Cl. A ..... 6,900 44,910
Singapore Technologies Engineering* .......... 352,886 303,270
----------
712,003
----------
Spain 4.7%
ACS Actividades SA* .......................... 5,620 184,504
Autopistas Concesionaria ..................... 8,575 138,506
Banco Bilbao Vizcaya SA ...................... 5,900 303,716
Banco Central Hispano Americano .............. 9,000 299,606
Corporacion Financiera Reunida SA* ........... 25,400 286,021
Endesa SA .................................... 11,560 280,841
Fomento de Construcciones y Contratas SA ..... 5,305 270,997
Tabacalera SA Cl. A .......................... 16,700 359,659
Telefonica de Espagna ........................ 10,480 437,642
Vallehermoso SA .............................. 4,200 162,705
Viscofan Envoltura Celulosi .................. 3,700 150,624
----------
2,874,821
----------
Sweden 3.5%
Autoliv AB ADR ............................... 9,480 287,755
Electrolux AB Cl. B .......................... 4,000 371,997
L.M. Ericsson Telephone Co. Cl. B ............ 6,335 333,852
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Value
Shares (Note 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
Sweden (cont'd)
Skandia Foersaekrings AB ........................ 5,174 $ 360,215
Skanska AB Cl. B ................................ 3,100 144,549
Stora Kopparbergs Cl. A ......................... 9,000 154,030
Svenska Handelsbanken AB Cl. A .................. 6,050 274,290
Volvo AB Cl. B .................................. 7,900 230,612
-----------
2,157,300
-----------
Switzerland 6.7%
Adecco SA ....................................... 410 178,974
CS Holding AG ................................... 1,424 313,176
Holderbank Financiere Glarus AG ................. 197 208,488
Nestle SA ....................................... 350 678,774
Novartis AG ..................................... 533 880,933
Roche Holdings AG ............................... 69 699,197
Schindler Holdings AG ........................... 119 192,319
Schweiz Bankverein AG ........................... 1,339 464,924
Schweiz Ruckversicher AG ........................ 124 273,535
Zurich Versicherung AG .......................... 423 257,662
-----------
4,147,982
-----------
United Kingdom 22.3%
Abbey National PLC .............................. 12,850 241,380
Barclays PLC .................................... 14,000 403,957
BAT Industries PLC .............................. 30,200 284,908
BG PLC .......................................... 78,500 419,526
BPB PLC ......................................... 31,100 211,725
British Aerospace PLC ........................... 12,825 428,618
British Petroleum Co. PLC ....................... 51,900 820,384
British Telecom PLC ............................. 67,650 734,962
BTR PLC ......................................... 65,000 216,092
Cable & Wireless PLC ............................ 25,580 293,095
Cadbury Schweppes ............................... 15,700 228,999
Compass Group PLC ............................... 12,400 214,674
Diageo .......................................... 46,000 547,843
General Electric PLC ............................ 45,000 372,594
Glaxo Wellcome PLC .............................. 32,400 915,903
HSBC Holdings PLC ............................... 25,350 800,143
Kingfisher PLC .................................. 9,050 164,398
Legal & General Group PLC ....................... 21,700 260,254
Lloyds TSB Group PLC ............................ 49,950 748,202
Logica PLC ...................................... 10,535 278,954
Marks & Spencer PLC ............................. 26,200 249,144
National Power PLC .............................. 26,900 262,099
Pearson PLC ..................................... 15,625 244,894
Provident Financial PLC ......................... 16,451 274,901
Prudential Corp. PLC ............................ 17,150 242,977
Rio Tinto Ltd. .................................. 14,400 206,786
Royal Sun Alliance PLC .......................... 21,600 241,350
Scot & Newcastle PLC ............................ 15,200 $ 230,097
SmithKline Beecham PLC .......................... 53,400 636,867
Somerfield PLC .................................. 46,200 261,457
Tesco PLC ....................................... 19,700 184,532
TI Group PLC .................................... 28,500 255,998
Unilever PLC .................................... 40,400 430,466
United Utilities PLC ............................ 15,250 212,232
Vodafone Group PLC .............................. 43,770 479,552
W.H. Smith Group PLC ............................ 41,700 388,865
Zeneca Group PLC ................................ 8,480 365,393
-----------
13,754,221
-----------
Total Common Stocks (Cost $47,814,326) .................... 57,625,083
-----------
EQUITY-RELATED SECURITIES 2.3%
Allianz AG Rts. ................................. 92 28,043
GEA AG Pfd. ..................................... 610 246,780
Henkel AG Pfd. .................................. 2,650 206,737
Prosieben Media AG Pfd. ......................... 4,100 211,334
SAP AG Pfd. ..................................... 850 423,923
Samsung Electronics Rts. ........................ 986 8,381
Telefonica de Espagna Rts. ...................... 11,000 8,595
Upton & Southern Holdings PLC Cv. Pfd.* ......... 115,207 154,165
Wella AG Pfd. ................................... 180 163,997
-----------
Total Equity-Related Securities (Cost $1,210,758) ......... 1,451,955
-----------
Total Investments (Cost $49,025,084)--95.6% ............... 59,077,038
Cash and Other Assets, Less Liabilities--4.4% ............. 2,705,389
-----------
Net Assets--100.0% ........................................ $61,782,427
===========
Federal Income Tax Information:
At April 30, 1998, the net unrealized appreciation of
investments based on cost for Federal income tax
purposes of $49,279,070 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost ........................................... $12,507,858
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value .............................................. (2,709,890)
-----------
$ 9,797,968
===========
</TABLE>
- --------------------------------------------------------------------------------
* 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.
[dbldag] Security restricted as to public resale. At April 30, 1998, 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, 1998 were $403,096 and $328,131 (0.53% 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, 1998
<TABLE>
<S> <C>
Assets
Investments, at value (Cost $49,025,084) (Note 1) .................... $59,077,038
Foreign currency, at value (Cost $1,373,221) ......................... 1,376,663
Cash ................................................................. 872,782
Receivable for fund shares sold ...................................... 1,820,961
Receivable for securities sold ....................................... 610,008
Dividends and interest receivable .................................... 199,572
Foreign tax receivable ............................................... 82,903
Receivable from Distributor (Note 3) ................................. 82,007
Other assets ......................................................... 27,803
-----------
64,149,737
Liabilities
Payable for securities purchased ..................................... 1,537,298
Payable for fund shares redeemed ..................................... 304,410
Accrued transfer agent and shareholder services
(Note 2) ........................................................... 114,088
Accrued directors' fees (Note 2) ..................................... 51,254
Accrued management fee (Note 2) ...................................... 47,908
Accrued distribution and service fees (Note 5) ....................... 24,094
Other accrued expenses ............................................... 288,258
-----------
2,367,310
-----------
Net Assets $61,782,427
===========
Net Assets consist of:
Unrealized appreciation of investments and foreign
currency .......................................................... $10,051,434
Accumulated net realized loss on investments and
foreign currency .................................................. (1,639,935)
Paid-in capital ..................................................... 53,370,928
-----------
$61,782,427
===========
Net Asset Value and redemption price per share of
Class A shares ($16,644,118 [divided by] 1,540,638 shares) ......... $10.80
======
Maximum Offering Price per share of Class A shares
($10.80 [divided by] .955) ......................................... $11.31
======
Net Asset Value and offering price per share of Class
B shares ($23,286,606 [divided by] 2,224,105 shares)* .............. $10.47
======
Net Asset Value and offering price per share of Class
C shares ($2,184,868 [divided by] 208,756 shares)* ................. $10.47
======
Net Asset Value, offering price and redemption price
per share of Class S shares
($19,666,835 [divided by] 1,799,610 shares) ........................ $10.93
======
</TABLE>
- -------------------------------------------------------------------------------
* Redemption price per share for Class B and Class C is equal to net
asset value less any applicable contingent deferred sales charge.
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the six months ended April 30, 1998
<TABLE>
<S> <C>
Investment Income
Dividends, net of foreign taxes of $64,124 ............... $ 417,533
Interest (Note 1) ........................................ 16,178
----------
433,711
Expenses
Management fee (Note 2) .................................. 274,415
Custodian fee ............................................ 154,731
Transfer agent and shareholder services (Note 2) ......... 134,491
Reports to shareholders .................................. 52,786
Audit fee ................................................ 24,559
Service fee-Class A (Note 5) ............................. 19,457
Distribution and service fees-Class B (Note 5) ........... 103,287
Distribution and service fees-Class C (Note 5) ........... 11,004
Registration fees ........................................ 10,411
Legal fees ............................................... 8,455
Directors' fees (Note 2) ................................. 5,022
Miscellaneous ............................................ 3,055
----------
801,673
Expenses borne by the Distributor (Note 3) ............... (191,309)
----------
610,364
----------
Net investment loss ...................................... (176,653)
----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net realized gain on investments (Notes 1 and 4) ......... 107,965
Net realized loss on foreign currency (Note 1) ........... (113,845)
----------
Total net realized loss ................................. (5,880)
----------
Net unrealized appreciation of investments ............... 8,182,180
Net unrealized depreciation of foreign currency .......... (20,121)
----------
Total net unrealized appreciation ....................... 8,162,059
----------
Net gain on investments and foreign currency ............. 8,156,179
----------
Net increase in net assets resulting from operations ..... $7,979,526
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Six months ended
October 31, 1997 April 30, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment loss .................. $ (307,109) $ (176,653)
Net realized gain (loss) on
investments and foreign
currency ........................... 245,752 (5,880)
Net unrealized appreciation of
investments and foreign
currency ........................... 2,106,279 8,162,059
----------- -----------
Net increase resulting from
operations ......................... 2,044,922 7,979,526
----------- -----------
Net decrease from fund share
transactions (Note 6) .............. (22,146,754) (8,155,566)
----------- -----------
Total decrease in net assets ......... (20,101,832) (176,040)
Net Assets
Beginning of period .................. 82,060,299 61,958,467
----------- -----------
End of period ........................ $61,958,467 $61,782,427
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1998
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. The Fund is
presently the only active series of Portfolios, although the Directors have the
authority to create an unlimited number of series.
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. Before November 1, 1997, Class C shares
were designated Class D and Class S shares were designated Class C. Class A
shares are subject to an initial sales charge of up to 4.50% and 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 subject to a contingent deferred sales charge of 1.00% on
any shares redeemed within one year of their purchase. Class C shares also pay
annual distribution and service fees of 1.00%. Class S shares are only offered
through certain retirement accounts, advisory accounts of State Street Research
& Management Company (the "Investment Manager"), an indirect wholly owned
subsidiary of Metropolitan Life Insurance Company ("Metropolitan"), and special
programs. No sales charge is imposed at the time of purchase or redemption of
Class S shares. Class S shares do not pay any distribution or service fees. The
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 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
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
be the primary market for such security by the Board of Directors or its
delegates. If no closing price is available, then such security is valued at
the mean between the last current bid and asked prices or by using the last
available closing price. Domestic securities traded in the over-the-counter
market are valued at the mean 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.
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, 1997, the Fund had a capital
loss carryforward of $1,280,650 available, to the extent provided in
regulations, to offset future capital gains, if any, which expires on October
31, 2004.
F. 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.
G. Securities Lending
The Fund may seek additional income by lending portfolio securities to
qualified institutions. The Fund will receive cash or securities as collateral
in an amount equal to at least 100% of the current market value of any loaned
securities plus accrued interest. By reinvesting any cash collateral it
receives in these transactions, the Fund could realize additional gains and
losses. If the borrower fails to return the securities and the value of the
collateral has declined during the term of the loan, the Fund will bear the
loss. At April 30, 1998, the value of the securities loaned and the value of
collateral were $142,500 and $155,713, respectively. During the six months
ended April 30, 1998, income from securities lending amounted to $4,464 and is
included in interest income.
Note 2
The Fund and the Investment Manager 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 Manager Agreement with GFM International Investors, Inc. (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,
1998, the Fund paid the Investment Manager $274,415 in management fees. The
Fund has no responsibility for the payment of fees to the Sub-Investment
Manager.
State Street Research Service Center, 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, 1998, the amount of such expenses was $59,953.
The fees of the Directors not currently affiliated with the Investment Manager
amounted to $5,022 during the six months ended April 30, 1998.
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, 1998, the amount of such expenses assumed
by the Distributor and its affiliates was $191,309.
Note 4
For the six months ended April 30, 1998, purchases and sales of securities,
exclusive of short-term obligations, aggregated $47,466,336 and $54,737,473,
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 C shares. In addition,
the Fund pays annual distribution fees of 0.75% of average daily net assets for
Class B and Class C shares. The Distributor uses such payments for personal
services and/or the maintenance or servicing of shareholder accounts, to
compensate or 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,
1998, fees pursuant to such plan amounted to $19,457, $103,287 and $11,004 for
Class A, Class B and Class C 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 $2,564 and $15,760, respectively, on sales of Class A shares of the
Fund during the six months ended April 30, 1998, and that MetLife Securities,
Inc. earned commissions aggregating $27,515 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $38,908 and
$197 on redemptions of Class B and Class C 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>
Year ended Six months ended
October 31, 1997 April 30, 1998
-------------------------------- --------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ................ 394,891 $ 3,901,312 408,171 $ 4,199,787
Shares repurchased ......... (948,477) (9,228,795) (603,309) (6,140,163)
-------- ------------- -------- ------------
Net decrease ............... (553,586) $ (5,327,483) (195,138) $ (1,940,376)
======== ============= ======== ============
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
Shares sold ................ 618,239 $ 5,987,370 409,181 $ 3,988,610
Shares repurchased ......... (1,431,021) (13,575,005) (577,359) (5,415,342)
---------- ------------- -------- ------------
Net decrease ............... (812,782) $ (7,587,635) (168,178) $ (1,426,732)
========== ============= ======== ============
Class C (Formerly Class D) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
Shares sold ................ 105,782 $ 1,002,139 22,008 $ 214,840
Shares repurchased ......... (425,536) (4,046,600) (82,844) (792,575)
---------- ------------- -------- ------------
Net decrease ............... (319,754) $ (3,044,461) (60,836) $ (577,735)
========== ============= ======== ============
Class S (Formerly Class C) Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
Shares sold ................ 858,029 $ 8,508,109 518,907 $ 5,212,677
Shares repurchased ......... (1,493,530) (14,695,284) (950,825) (9,423,400)
---------- ------------- -------- ------------
Net decrease ............... (635,501) $ (6,187,175) (431,918) $ (4,210,723)
========== ============= ======== ============
</TABLE>
8
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------
Years ended October 31
-------------------------------------------------- Six months ended
1994(2) 1995(1) 1996(1) 1997(1) April 30, 1998(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 10.54 10.98 9.34 9.22 9.42
----- ----- ----- ----- -----
Net investment loss ($)* (0.04) (0.08) (0.04) (0.02) (0.02)
Net realized and
unrealized gain (loss)
on investments and
foreign currency ($) 0.48 (1.04) (0.08) 0.22 1.40
----- ----- ----- ----- -----
Total from investment
operations ($) 0.44 (1.12) (0.12) 0.20 1.38
----- ----- ----- ----- -----
Distribution from net
realized gains ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Total distributions ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Net asset value, end of
period ($) 10.98 9.34 9.22 9.42 10.80
===== ===== ===== ===== =====
Total return(3) (%) 4.17(4) (10.38) (1.28) 2.17 14.65(4)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 22,579 22,497 21,116 16,346 16,644
Ratio of operating expenses
to average net assets
(%)* 1.90(5) 1.90 1.90 1.90 1.90(5)
Ratio of net investment loss
to average net assets
(%)* (0.87)(5) (0.82) (0.37) (0.18) (0.39)(5)
Portfolio turnover rate (%) 80.60 100.68 132.36 174.69 81.24
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) 0.03 0.06 0.05 0.04 0.03
<CAPTION>
Class B
---------------------------------------------------------------------
Years ended October 31
-------------------------------------------------- Six months ended
1994(2) 1995(1) 1996(1) 1997(1) April 30, 1998(1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 10.54 10.93 9.22 9.04 9.16
----- ----- ----- ----- -----
Net investment loss ($)* (0.06) (0.15) (0.11) (0.09) (0.05)
Net realized and
unrealized gain (loss)
on investments and
foreign currency ($) 0.45 (1.04) (0.07) 0.21 1.36
----- ----- ----- ----- -----
Total from investment
operations ($) 0.39 (1.19) (0.18) 0.12 1.31
----- ----- ----- ----- -----
Distribution from net
realized gains ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Total distributions ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Net asset value, end of
period ($) 10.93 9.22 9.04 9.16 10.47
===== ===== ===== ===== =====
Total return(3) (%) 3.70(4) (11.09) (1.95) 1.33 14.30(4)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 18,904 27,614 28,971 21,914 23,287
Ratio of operating expenses
to average net assets
(%)* 2.65(5) 2.65 2.65 2.65 2.65(5)
Ratio of net investment loss
to average net assets
(%)* (1.61)(5) (1.54) (1.13) (0.94) (1.14)(5)
Portfolio turnover rate (%) 80.60 100.68 132.36 174.69 81.24
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) 0.03 0.06 0.05 0.04 0.03
</TABLE>
- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) March 1, 1994 (commencement of share class designations) to October 31,
1994.
(3) 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.
(4) Not annualized.
(5) Annualized.
9
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C (Formerly Class D)
--------------------------------------------------------------------
Years ended October 31
------------------------------------------------ Six months ended
1994(2) 1995(1) 1996(1) 1997(1) April 30, 1998(1)
---------------- ----------- --------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 10.54 10.93 9.22 9.03 9.16
----- ----- ----- ----- -----
Net investment income
(loss) ($)* (0.07) (0.15) (0.11) (0.09) (0.05)
Net realized and
unrealized gain (loss)
on investments and
foreign currency ($) 0.46 (1.04) (0.08) 0.22 1.36
----- ----- ----- ----- -----
Total from investment
operations ($) 0.39 (1.19) (0.19) 0.13 1.31
----- ----- ----- ----- -----
Dividends from net
investment income ($) -- -- -- -- --
Distributions from net
realized gains ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Total distributions ($) -- (0.52) -- -- --
----- ----- ----- ----- -----
Net asset value, end of
period ($) 10.93 9.22 9.03 9.16 10.47
===== ===== ===== ===== =====
Total return(3) (%) 3.70(4) (11.09) (2.06) 1.44 14.30(4)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 2,134 5,674 5,324 2,469 2,185
Ratio of operating expenses
to average net assets
(%)* 2.65(5) 2.65 2.65 2.65 2.65(5)
Ratio of net investment
income (loss) to average
net assets (%)* (1.62)(5) (1.55) (1.10) (0.97) (1.18)(5)
Portfolio turnover rate (%) 80.60 100.68 132.36 174.69 81.24
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) ($) 0.03 0.06 0.05 0.04 0.03
<CAPTION>
Class S (Formerly Class C)
--------------------------------------------------------------------------
Years ended October 31
------------------------------------------------------- Six months ended
1993 1994 1995(1) 1996(1) 1997(1) April 30, 1998(1)
---------- ---------- ----------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ($) 6.50 9.56 11.01 9.39 9.29 9.51
----- ----- ----- ----- ----- -----
Net investment income
(loss) ($)* (0.02) (0.07) (0.05) (0.02) 0.01 (0.01)
Net realized and
unrealized gain (loss)
on investments and
foreign currency ($) 3.17 2.09 (1.05) (0.08) 0.21 1.43
----- ----- ----- ----- ----- -----
Total from investment
operations ($) 3.15 2.02 (1.10) (0.10) 0.22 1.42
----- ----- ----- ----- ----- -----
Dividends from net
investment income ($) (0.04) (0.05) -- -- -- --
Distributions from net
realized gains ($) (0.05) (0.52) (0.52) -- -- --
----- ----- ----- ----- ----- -----
Total distributions ($) (0.09) (0.57) (0.52) -- -- --
----- ----- ----- ----- ----- -----
Net asset value, end of
period ($) 9.56 11.01 9.39 9.29 9.51 10.93
===== ===== ===== ===== ===== =====
Total return(3) (%) 48.95 22.73 (10.16) (1.06) 2.37 14.93(4)
Ratios/supplemental data:
Net assets at end of period
($ thousands) 27,767 54,631 33,883 26,649 21,230 19,667
Ratio of operating expenses
to average net assets
(%)* 1.65 1.65 1.65 1.65 1.65 1.65(5)
Ratio of net investment
income (loss) to average
net assets (%)* (0.37) (0.75) (0.51) (0.16) 0.06 (0.16)(5)
Portfolio turnover rate (%) 116.12 80.60 100.68 132.36 174.69 81.24
*Reflects voluntary
assumption of fees or
expenses per share in
each period (Note 3) ($) 0.08 0.05 0.06 0.05 0.04 0.03
</TABLE>
- --------------------------------------------------------------------------------
(1) Per-share figures have been calculated using the average shares method.
(2) March 1, 1994 (commencement of share class designations) to October 31,
1994.
(3) 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.
(4) Not annualized.
(5) Annualized.
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, 1998, 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, 1997 and the financial highlights for the six months ended April 30, 1998
and for each of the years in the five year period ended October 31, 1997. 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, 1998, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. 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, 1998, 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 5, 1998
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, Inc.
5 Upper St. Martins Lane
London, WC2H 9EA
England
Shareholder Services
State Street Research
Service Center
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
Exchange 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
Justin T. Donegan
John H. Kallis
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
(with an affiliate
of J.P. Morgan & Co.
in New York);
presently engaged in private
investments and civic affairs
Robert A. Lawrence
Formerly Partner, 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
<PAGE>
[blank]
<PAGE>
[blank]
<PAGE>
[BACK COVER]
State Street Research International Equity Fund
One Financial Center
Boston, MA 02111
[indicia]
Bulk Rate
U.S. Postage
PAID
Permit #6
Hartford, CT
Questions? Comments?
Call us at 1-800-562-0032 or
Write us at:
State Street Research
Service Center
P.O. Box 8408
Boston, MA 02266-8408
E-mail us at:
[email protected]
Internet site:
www.ssrfunds.com
[STATE STREET RESEARCH LOGO]
This report is prepared for the general information of current shareholders.
When used in the general solicitation of investors, this report must be
accompanied by a current State Street Research International Equity Fund
prospectus. When used after June 30, 1998, this report must be accompanied
by a current Quarterly Performance Update.
Portfolio changes should not be considered recommendations for action by
individual investors.
The Dalbar awards recognize quality shareholder service and should not be
considered a rating of fund performance. The survey included mutual fund
complexes that volunteered or were otherwise selected to participate and was not
industry-wide.
CONTROL NUMBER: 5000-980617(0799)SSR-LD IE-817D-0698
