<PAGE>
As filed with the Securities and Exchange Commission on September 20, 1996
Registration No. 811-8612
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No. 2
[X]
(Check appropriate box or boxes)
----------------------
MARTIN CURRIE BUSINESS TRUST
(Exact name of registrant as specified in charter)
Saltire Court, 20 Castle Terrace,
Edinburgh, Scotland EH1 2ES
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (011-44-131) 229-5252
<TABLE>
<CAPTION>
Name and address
of agent for service: Copy to: Copy to:
- -------------------- ------- -------
<S> <C> <C>
Julian M. C. Livingston Steven Johnson J.B. Kittredge, Esq.
Martin Currie, Inc. Martin Currie Investor Ropes & Gray
Saltire Court Services, Inc. One International Place
20 Castle Terrace 53 Forest Avenue Boston, MA 02110
Edinburgh Old Greenwich, CT 06870
Scotland EH1 2ES
</TABLE>
-------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 2 to the Registration Statement has been filed by the
Registrant pursuant to Section 8(b) of the Investment Company Act of 1940, as
amended. However, beneficial interests in the Registrant have not been and will
not be registered under the Securities Act of 1933, as amended (the "1933 Act"),
since such interests have been and will continue to be issued and sold solely in
private transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by individuals or entities which are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This Amendment No. 2 to the
Registration Statement does not constitute an offer to sell or the solicitation
of an offer to buy any beneficial interests in the Registrant.
2
<PAGE>
Part A. INFORMATION REQUIRED IN A PROSPECTUS
------------------------------------
Item 1. Cover Page
----------
Not applicable. See Paragraph 4 of General Instruction F.
Item 2. Synopsis
--------
Not applicable. See Paragraph 4 of General Instruction F.
Item 3. Condensed Financial Information
-------------------------------
Not applicable. See Paragraph 4 of General Instruction F.
Item 4. General Description of Registrant
---------------------------------
See the Cover Page and the sections entitled "Description of the
Trust and Ownership of Shares;" "Investment Objectives and Policies;"
and "More Information About the Funds' Investments" in the Private
Placement Memorandum attached as Appendix A to this Part A (the
"Private Placement Memorandum").
Item 5. Management of the Fund
----------------------
See the sections entitled "Summary of Expenses;" "Management of the
Trust" and "Administrator; Custodian; Transfer and Dividend Paying
Agent" in the Private Placement Memorandum.
Item 5A. Management's Discussion of Fund Performance
Not applicable. See Paragraph 4 of General Instruction F.
Item 6. Capital Stock and Other Securities
----------------------------------
See the Cover Page and the sections entitled "Description of the
Trust and Ownership of Shares;" "Management of the Trust;"
"Redemption of Shares;" "Shareholder Inquiries;" "Distributions;" and
"Taxes" in the Private Placement Memorandum.
3
<PAGE>
Item 7. Purchase of Securities Being Offered
------------------------------------
See the section entitled "Purchase of Shares;" "Distribution and
Servicing Plans;" and "Determination of Net Asset Value" in the
Private Placement Memorandum.
Item 8. Redemption or Repurchase
------------------------
See the section entitled "Redemption of Shares" in the Private
Placement Memorandum.
Item 9. Pending Legal Proceedings
-------------------------
Not applicable.
4
<PAGE>
Appendix A to Part A
MARTIN CURRIE BUSINESS TRUST
c/o Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
011-44-131-229-5252
PRIVATE PLACEMENT MEMORANDUM
September 20, 1996
Martin Currie Business Trust (the "Trust") is an open-end, diversified
management investment company consisting of six series (each a "Fund") offering
portfolios with different objectives and strategies.
MCBT Global Growth Fund (the "Global Growth Fund") seeks capital appreciation
through investments in a global portfolio.
MCBT Opportunistic EAFE Fund (the "Opportunistic EAFE Fund") seeks capital
appreciation through investments in an international portfolio. Under normal
conditions, the Fund will not invest in securities of issuers located in Canada
or the United States or its territories.
MCBT Global Emerging Markets Fund (the "Global Emerging Markets Fund") seeks
capital appreciation through investment in equity securities of issuers located
in countries with emerging markets and developing economies.
MCBT Japan Small Companies Fund (the "Japan Small Companies Fund") seeks
capital appreciation through investment primarily in equity securities of
issuers located in Japan with relatively small equity capitalization, which may
include companies without wide market recognition.
MCBT Emerging Americas Fund (the "Emerging Americas Fund") seeks capital
appreciation through investment primarily in equity securities of issuers
located in countries of the Western Hemisphere with emerging markets and
developing economies.
MCBT Emerging Asia Fund (the "Emerging Asia Fund") seeks capital appreciation
through investment primarily in the equity securities of issuers located in
Asian countries with emerging markets and developing economies.
<PAGE>
Shares of each Fund may be purchased directly from the Trust in cash or in
kind by means of exchanging securities which are eligible for purchase by the
relevant Fund. There is a purchase premium in the case of cash investments.
Shares of any Fund may be redeemed in cash or in-kind. There is a redemption
fee in the case of cash redemptions. All purchase premiums and redemption fees
are paid to and retained by the relevant Fund and are intended to offset
brokerage and transaction costs arising in connection with the purchase or
redemption. The purchase premium and redemption fee may be waived by the
Manager, however, if the brokerage and transaction costs in connection with the
purchase or redemption are minimal or in other circumstances in the Manager's
discretion. See "Purchase of Shares" and "Redemption of Shares" in this
Memorandum. The minimum investment in any Fund must be worth at least
$1,000,000; subsequent investments in any Fund must be worth at least $100,000.
The Manager may, in its discretion, permit smaller initial or subsequent
investments and may choose not to accept any investment for any or no reason.
An exchange of securities for shares of a Fund to effect an in-kind purchase of
the Fund's shares will generally be a taxable transaction for an exchanging
shareholder subject to U.S. federal income tax.
The Fund's manager is Martin Currie, Inc. (the "Manager").
This Private Placement Memorandum concisely describes the information that
investors should know before investing. Please read it carefully and keep it
for future reference.
A Statement of Additional Information (the "Statement") dated September 20,
1996 is available free of charge by contacting the Transfer Agent, State Street
Bank & Trust Company, Transfer Agent Operations, P.O. Box 1978, Boston, MA
02105, fax 617-985-9626 by 5:00 p.m. (New York time) on any business day. The
Statement, which contains more detailed information about the Trust and the
Funds is incorporated by reference into this Memorandum.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
TRANSFERRED OR RESOLD UNLESS SO REGISTERED OR EXEMPT THEREFROM. HOWEVER, THE
SECURITIES ARE REDEEMABLE AS DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM. IN
CERTAIN CASES INVESTORS MAY BE REDEEMED "IN KIND" AND RECEIVE PORTFOLIO
-2-
<PAGE>
SECURITIES HELD BY THE FUND IN LIEU OF CASH UPON REDEMPTION. IN SUCH CASE, AN
INVESTOR WILL INCUR COSTS WHEN THE INVESTOR SELLS THE SECURITIES DISTRIBUTED.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY
INFORMATION WITH RESPECT TO THE SHARES EXCEPT SUCH INFORMATION AS IS CONTAINED
IN THIS MEMORANDUM AND IN THE STATEMENT OF ADDITIONAL INFORMATION OR IN OTHER
MATERIALS APPROVED BY THE TRUST. NO SALES MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN MATTERS
DISCUSSED HEREIN SINCE THE DATE HEREOF.
FOR RESIDENTS OF NEW HAMPSHIRE, IN ACCORDANCE WITH NEW HAMPSHIRE UNIFORM
SECURITIES ACT SECTION 421-B:20:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE DIRECTOR OF THE OFFICE OF SECURITIES REGULATION
THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE DIRECTOR OF THE OFFICE OF
SECURITIES REGULATION HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION.
IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
-3-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF EXPENSES...........................................................5
INVESTMENT OBJECTIVES AND POLICIES ...........................................7
The Global Growth Fund.................................................7
The Opportunistic EAFE Fund............................................8
The Global Emerging Markets Fund.......................................9
The Japan Small Companies Fund........................................11
The Emerging Americas Fund............................................12
The Emerging Asia Fund................................................13
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS................................14
PURCHASE OF SHARES...........................................................24
REDEMPTION OF SHARES.........................................................26
DISTRIBUTION AND SERVICING PLANS.............................................28
DETERMINATION OF NET ASSET VALUE.............................................28
DISTRIBUTIONS................................................................28
TAXES........................................................................29
MANAGEMENT OF THE TRUST......................................................30
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES.............................31
ADMINISTRATOR; CUSTODIAN; TRANSFER AND DIVIDEND PAYING AGENT.................32
INDEPENDENT ACCOUNTANTS......................................................32
LEGAL COUNSEL................................................................33
SHAREHOLDER INQUIRIES........................................................33
</TABLE>
-4-
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the various
expenses that an investor in a Fund will bear directly or indirectly. Except as
otherwise noted, the information is based on annualized expenses for the Funds'
second fiscal year ended April 30, 1996. The information below should not be
considered a representation of future expenses, as actual expenses may be
greater or less than those shown. Also, the assumed 5% annual return in the
examples should not be considered a representation of investment performance as
actual performance will depend upon actual investment results of securities held
in the particular Fund's portfolio.
<TABLE>
<CAPTION>
Global
Emerging
Global Opportunistic Markets
Growth Fund EAFE Fund Fund/(3)/
------------ -------------- ----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Purchase Premium 0.75% 0.75% 1.00%
(as a percentage
of amount purchased)/(1)/
Redemption Fee (as a percentage 0.75 0.75 1.00
of amount redeemed)/(1)/
ANNUAL FUND OPERATING EXPENSES:
(after waiver) (as a percentage
of average net assets)
Management Fees/(2)/ 0.43 0.65 0.00
Other Expenses/(2)/ 0.57 0.35 1.50
Total Operating Expenses/(2)/ 1.00 1.00 1.50
EXAMPLES:
You would pay the following expenses
on a $1,000 investment assuming a
5% annual return and (1) redemption
at the end of each time period:
One Year $ 25 $ 25 $ 36
Three Years 48 48 68
(2) assuming no redemption:
One Year $ 18 $ 18 $ 25
Three Years 39 39 57
</TABLE>
The foregoing examples assume the payment of both a purchase premium and a
redemption fee even though such purchase premium and redemption fee may not be
applicable (see "Purchase of Shares" and "Redemption of Shares" below).
- ------------------
(1) Purchase premiums and redemption fees are paid to the relevant Fund, apply
only to cash purchases and redemptions and may be waived or reduced in
certain cases. See "Purchase of Shares" and "Redemption of Shares."
(2) The Manager has agreed to temporarily waive a portion of its fee under the
Management Contract and to bear certain expenses of each Fund in order to
limit Total Operating Expenses for such Fund to the percentages of net
assets shown above. In the absence of such voluntary waivers, which may be
discontinued at any time, the management fee for the Global Growth Fund and
the Opportunistic EAFE Fund would be 0.70% and for the Global Emerging
Markets Fund would be 1.00% and Total Operating Expenses would have been
1.27% for the Global Growth Fund, 1.05% for the Opportunistic EAFE Fund and
2.50% for the Global Emerging Markets Fund.
(3) The information for the Global Emerging Markets Fund is based on estimated
annualized expenses for the Fund's first fiscal year which has not yet
commenced.
-5-
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the various
expenses that an investor in a Fund will bear directly or indirectly. Except as
otherwise noted, the information is based on annualized expenses for the Funds'
second fiscal year ended April 30, 1996. The information below should not be
considered a representation of future expenses, as actual expenses may be
greater or less than those shown. Also, the assumed 5% annual return in the
examples should not be considered a representation of investment performance as
actual performance will depend upon actual investment results of securities held
in the particular Fund's portfolio.
<TABLE>
<CAPTION>
Japan
Small Emerging Emerging
Companies Americas Asia
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Purchase Premium 1.00% 1.75% 1.75%
(as a percentage
of amount purchased)/(1)/
Redemption Fee (as a percentage 1.00 1.75 1.75
of amount redeemed)/(1)/
ANNUAL FUND OPERATING EXPENSES:
(after waiver) (as a percentage
of average net assets)
Management Fees 1.00/(2)/ 1.25/(3)/ 1.25/(3)/
Other Expenses 0.37/(2)/ 0.45/(3)/ 0.68/(3)/
Total Operating Expenses 1.37/(2)/ 1.70/(3)/ 1.93/(3)/
EXAMPLES:
You would pay the following expenses
on a $1,000 investment assuming a
5% annual return and (1) redemption
at the end of each time period:
One Year $ 34 $ 53 $ 55
Three Years 64 90 97
(2) assuming no redemption:
One Year $ 24 $ 35 $ 37
Three Years 53 71 78
</TABLE>
The foregoing examples assume the payment of both a purchase premium and a
redemption fee even though such purchase premium and redemption fee may not be
applicable (see "Purchase of Shares" and "Redemption of Shares" below).
- ------------------
(1) Purchase premiums and redemption fees are paid to the relevant Fund, apply
only to cash purchases and redemptions and may be waived or reduced in
certain cases. See "Purchase of Shares" and "Redemption of Shares."
(2) The Manager has agreed, if necessary, to temporarily waive a portion of its
fee under the Management Contract and to bear certain expenses of the Japan
Small Companies Fund in order to limit Total Operating Expenses to no more
than 1.50%.
(3) The Manager is permitted under its Management Contract with respect to the
Emerging Americas and Emerging Asia Funds to collect a Management Fee of up
to 1.50% of the average net assets of each of the Funds. However, the
Manager has voluntarily agreed to waive a portion of its fee in order to
limit Total Operating Expenses to no more than 2.00%.
-6-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Trust currently consists of six Funds offering investors a range of
foreign and international investment choices. Each Fund has its own investment
objective and policies designed to meet its specific goals. No Fund, nor the
Trust as a whole, is intended or is appropriate as a complete investment program
and the Trust and the Funds should be considered as only part of an overall
investment strategy. Because all of the Funds will be invested substantially in
foreign issuers and many of the Funds will be invested in issuers located in
developing countries with emerging markets and/or in issuers with relatively
modest capitalization that are subject to unique risks, the Funds generally
present greater risks than most U.S. mutual funds. An investor should pay
particular attention to the risks of the Funds' investments described below,
under "More Information About The Funds' Investments," and in the Statement.
Unless otherwise noted, the investment objectives and policies described
below are non-fundamental and may be changed by the without shareholder
approval.
The Global Growth Fund
- ----------------------
The investment objective of the Global Growth Fund is capital appreciation
through investments in a global portfolio. Current income will not be a
consideration. The Global Growth Fund will normally invest primarily in equity
securities which, in addition to common stocks, may include convertible bonds,
convertible preferred stocks, warrants, rights or other securities convertible
into common stock.
The Global Growth Fund will invest in securities traded in foreign and
domestic securities markets with particular consideration given to securities
principally traded in North American, Japanese, European, Pacific and Australian
securities markets. Although the Global Growth Fund will normally be invested in
securities of issuers located in at least three different countries, there are
no prescribed limits on geographic asset distribution and the Global Growth Fund
has the authority to invest in securities traded in any securities market of any
country in the world, including over-the-counter markets. The Fund may also
invest in foreign issuers by way of Depositary Receipts, such as American
Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and European
Depositary Receipts (EDRs) that are listed on markets in industrialized
countries or traded in the international equity markets. See "Depositary
Receipts" under "More Information About the Funds' Investments" below. The
responsibility for allocating the Global Growth Fund's assets among the various
securities markets of the world is borne by the Manager. In making these
allocations, the Manager will consider such factors as the condition and growth
potential of the various economies and securities markets, currency and taxation
considerations and other pertinent financial, legal, social, national and
political factors. Under certain adverse investment conditions, the Global
Growth Fund may restrict the number of securities markets in which its assets
will be invested, although under normal market circumstances at least 65% of the
Global Growth Fund's
-7-
<PAGE>
investments will involve securities of issuers located in at least three
different countries, which may include the United States.
When the Manager believes that conditions in overseas securities markets
warrant investing more heavily in the United States for temporary defensive
purposes, the Global Growth Fund may invest a substantial portion of its assets
in securities (including equity securities) principally traded in the United
States; provided, however, that the Fund's weighting of investments in U.S.
equity securities will not exceed the U.S. weighting in the Morgan Stanley
Capital International World Index (the "MSCI World Index") by more than 20%.
The MSCI World Index is an index of securities traded in the world markets
weighted by relative market capitalization. Also for defensive purposes, the
Global Growth Fund may invest some or all of its assets in debt instruments as
described below under "More Information About the Funds' Investments--Temporary
Defensive Strategies."
The Global Growth Fund will not limit its investments to any particular type
or size of company. It may invest in companies whose earnings are believed by
the Manager to be in a relatively strong growth trend, or in companies in which
significant further growth is not anticipated but whose market value per share
is thought by the Manager to be undervalued. It may invest in small and
relatively less well-known companies, which may have more restricted product
lines or more limited financial resources than larger, more established
companies and may be more severely affected by economic downturns or other
adverse developments. Trading volume of these companies' securities may also be
low and their values volatile.
Generally, the securities markets of different nations are expected by the
Manager to move relatively independently of one another, because business cycles
and other economic or political events that influence one country's securities
markets may have little effect on the securities markets of other countries. By
investing in a global portfolio, the Global Growth Fund seeks to reduce the
risks associated with investing in the economy of only one country and with
investing in foreign securities generally. See "More Information About the
Funds' Investments -- Special Consideration of Foreign Investments" below.
For a description of additional investment techniques that may be utilized by
the Global Growth Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
The Opportunistic EAFE Fund
- ----------------------------
The investment objective of the Opportunistic EAFE Fund is capital
appreciation through investments in an international portfolio of equity
securities. Current income will not be a consideration. Under normal conditions,
the Fund will not invest in securities of issuers located in Canada or the
United States or its territories. Equity securities, in addition to common
stocks, may include convertible bonds, convertible
-8-
<PAGE>
preferred stocks, warrants, rights or other securities convertible into common
stock.
The Opportunistic EAFE Fund pursues an "opportunistic" strategy relative to
the Morgan Stanley Capital International EAFE Index (the "MSCI EAFE Index"). The
MSCI EAFE Index is an index of the securities traded in Europe, Australasia and
the Far East, weighted by market capitalization. The strategy is opportunistic
because the Manager will typically invest more or less in securities traded in a
particular country than would be suggested by the weighting of that country's
market capitalization in the MSCI EAFE Index. In order to limit the investment
risks associated with such a strategy, the Manager will typically limit the Fund
to an exposure of no more than 20 percentage points above or below the current
level of the MSCI EAFE Index as it applies to each of the major investment
regions of Europe, Australasia and the Far East. The Opportunistic EAFE Fund has
no prescribed limits on geographic asset distribution and it has the authority
to invest in securities traded in any securities market of any country in the
world, including over-the-counter markets. In making the allocation of assets
among the securities markets, the Manager will consider such factors as it
considers appropriate, including the condition and growth potential of the
various economies and securities markets and the issuers located therein,
currency and taxation considerations and other pertinent financial, legal,
social, national and political factors which may have an effect upon the climate
for investing within such securities markets.
The Opportunistic EAFE Fund may also invest in foreign issuers by way of
ADRs, GDRs and EDRs. See "More Information About the Funds' Investments --
Depositary Receipts."
When the Manager believes that conditions in overseas securities markets
warrant investing in the United States for temporary defensive purposes, the
Opportunistic EAFE Fund may invest a portion of its assets in securities
(including equity securities) principally traded in the United States; provided,
however, that the Fund's weighting of investments in U.S. equity securities will
not exceed the U.S. weighting in the MSCI World Index by more than 20%. Also
for defensive purposes, the Opportunistic EAFE Fund may invest some or all of
its assets in debt instruments as described below under "More Information About
the Funds' Investments--Temporary Defensive Strategies."
For a description of additional investment techniques that may be utilized by
the Opportunistic EAFE Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
The Global Emerging Markets Fund
- --------------------------------
The principal investment objective of the Global Emerging Markets Fund is
capital appreciation through investment in equity securities of issuers located
in countries with emerging markets and developing economies. In the opinion of
the Manager, such countries are currently found in Asia, the Indian
subcontinent, Latin and Central America, the Middle and Near East, Eastern
-9-
<PAGE>
and Central Europe and Africa. A number of these markets are less accessible to
foreign investors due to their tax structures or limited liquidity making
investments by the Fund less feasible . However, many emerging markets have, in
recent years, liberalized access and more are expected to do so over the coming
few years if the present trend continues.
The Fund invests, under normal market conditions, at least 65% of its total
assets in securities of issuers located in countries with emerging markets. For
this purpose, emerging markets will include any countries (i) having an
"emerging stock market" as defined by the International Finance Corporation; or
(ii) with low- to middle-income economies according to the International Bank
for Reconstruction and Development (the World Bank); or (iii) where, in the
opinion of the Manager, the markets may not fully reflect the potential of the
developing economy. The countries which the Manager believes do not constitute
emerging markets are the United States, the United Kingdom, Ireland, France,
Germany, Italy, Japan, Canada, The Netherlands, Australia, Hong Kong, Malaysia,
New Zealand, Singapore, the Scandinavian countries and Spain.
The Fund may also invest up to 35% of its assets in issuers located in
countries with more established markets and economies not considered as emerging
as described above.
The Fund will invest primarily in equity securities listed on emerging stock
exchanges or in over-the-counter markets. Equity securities, in addition to
common stocks, include convertible bonds, convertible preferred stocks,
warrants, rights and other securities convertible into common stock. The Fund
may also make investments through ADRs, GDRs and EDRs. See "More Information
About the Funds' Investments -- Depositary Receipts."
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the Funds'
Investments -- Special Risks of Foreign Investments." These risks are
heightened and additional risks are present in countries with emerging markets
and developing economies. See "More Information About the Funds' Investments --
Risks of Emerging Markets."
For temporary defensive purposes, the Fund may invest some or all of its
assets in debt instruments and may invest up to 100% of its assets in securities
(including equity securities) principally traded in the United States. See
"More Information About the Funds' Investments -- Temporary Defensive
Strategies."
Generally, the securities markets of different nations are expected by the
Manager to move relatively independently of one another, because business cycles
and other economic or political events that influence one country's securities
markets may have little effect on the securities markets of other countries. By
investing in an international portfolio, the Global Emerging Markets Fund seeks
to reduce the risks associated with investing in the economy of only one country
and with investing in foreign securities
-10-
<PAGE>
generally. See "More Information About the Funds' Investments -- Special Risks
of Foreign Investments" below.
For a description of additional investment techniques that may be utilized by
the Global Emerging Markets Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
The Japan Small Companies Fund
- -------------------------------
The principal investment objective of the Japan Small Companies Fund is
capital appreciation through investment in equity securities of issuers located
in Japan with relatively small equity capitalization, which may include
companies without wide market recognition. Current income will not be a
consideration. Under normal market conditions, at least 65% of the Fund's assets
will be invested in issuers located in Japan with equity capitalization of less
than approximately U.S. $1.5 billion using current exchange rates.
The Japan Small Companies Fund will invest primarily in equity securities
which, in addition to common stocks, may include convertible bonds, convertible
preferred stocks, warrants, rights or other securities convertible into common
stock. The Fund will invest in securities traded in Japanese or other foreign
securities markets (including over-the-counter markets) and may also make
investments by way of ADRs, GDRs and EDRs if desirable issues are available.
See "More Information About the Funds' Investments -- Depositary Receipts."
Investment in foreign securities generally involves special risks. See "More
Information About the Funds' Investments -- Special Risks of Foreign
Investments," below. These risks are increased and additional risks are present
in the case of a fund such as the Japan Small Companies Fund which will invest
most of its assets in the issuers of a single foreign country. This means that
the Fund's performance will be directly affected by political, economic and
market conditions in Japan. In addition, since the Japanese economy is
dependent to a significant extent on foreign trade, the relationships between
Japan and its trading partners and between the yen and other currencies are
expected to have a significant impact on particular Japanese companies and on
the Japanese economy generally. The Fund is designed for investors who are
willing to accept the risks associated with changes in such conditions and
relationships.
The Japan Small Companies Fund is subject to special risks because all or a
substantial portion of the Fund's assets may be invested in securities of
companies with relatively low equity market capitalization. These may include
securities traded over-the-counter and securities of companies with limited
operating histories. Companies in which the Fund may invest may have more
restricted product lines or more limited financial resources than larger, more
established companies. For these and other reasons, they may be more severely
affected by economic downturns or other adverse developments than are larger,
-11-
<PAGE>
more established companies. Trading volume of these companies' securities may
also be low and their market values volatile.
For temporary defensive purposes, the Fund may invest some or all of its
assets in debt instruments and may invest up to 100% of its assets in securities
(including equity securities) principally traded in the United States. See
"More Information About the Funds' Investments -- Temporary Defensive
Strategies."
For a description of additional investment techniques that may be utilized by
the Japan Small Companies Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
The Emerging Americas Fund
--------------------------
The investment objective of the Emerging Americas Fund is capital
appreciation through investment in equity securities of issuers located in
countries of the Western Hemisphere with emerging markets and developing
economies. Such countries may include Argentina, The Bahamas, Bolivia, Brazil,
Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Paraguay, Uruguay and
Venezuela. In addition to investing in securities listed on the exchanges of
emerging American countries, the Fund may invest in securities listed on more
established securities markets and through ADRs, GDRs and EDRs. See "More
Information About the Funds' Investments -- Depositary Receipts." The Fund may
also invest in securities traded in over-the-counter markets.
Under normal conditions, the Emerging Americas Fund will be primarily
invested in equity securities. Such securities may, in addition to common
stocks, include convertible bonds, convertible preferred stocks, warrants rights
and other securities convertible into common stock. The Fund may also invest in
Brady Bonds, which are securities issued in various currencies (primarily the
dollar) that have been created through the exchange of existing commercial bank
loans to Latin American public and private entities for new bonds in connection
with debt restructurings under a debt restructuring plan announced by U.S.
Secretary of the Treasury Nicholas F. Brady (the "Brady Plan"). Brady Bonds may
be collateralized or uncollateralized and are traded in the over-the-counter
secondary market for Latin American debt instruments. Brady Bonds are neither
issued nor guaranteed by the U.S. Government. Additional information on Brady
Bonds is included in the Statement.
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the Funds'
Investments -- Special Risks of Foreign Investments." These risks are
heightened and additional risks are present in the case of investments in
emerging markets or countries with limited or developing capital markets such as
many of the Latin American countries in which the Fund will invest. See "More
Information About the Funds' Investments -- Risks of Emerging Markets."
For temporary defensive purposes, the Emerging Americas Fund may invest some
or all of its assets in debt instruments and may invest up to 100% of its
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assets in securities (including equity securities) principally traded in the
United States. See "More Information About the Funds' Investments --Temporary
Defensive Strategies."
For a description of additional investment techniques that may be utilized by
the Emerging Americas Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
The Emerging Asia Fund
- -----------------------
The investment objective of the Emerging Asia Fund is capital appreciation
through investments primarily in equity securities of issuers located in Asian
countries with emerging markets and developing economies. Such countries may
include the Peoples Republic of China, India, Indonesia, the Philippines, Sri
Lanka, Pakistan, Thailand, Vietnam, South Korea and Taiwan. The Fund may also
invest in other countries in the Pacific Basin when their markets become
sufficiently developed.
Under normal conditions, the Emerging Asia Fund will invest at least 65% of
its assets in equity securities of issuers located in emerging Asian countries.
Such securities may, in addition to common stocks, include, convertible bonds,
convertible preferred stocks, warrants, rights and other securities convertible
into common stocks. In addition to investing in securities listed on the
exchanges of emerging Asian countries, the Fund may invest in securities listed
on more established securities markets and through ADRs and EDRs. See "More
Information About the Funds' Investments -- Depositary Receipts." The Fund may
also invest in securities traded in over-the-counter markets.
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the Funds'
Investments -- Special Risks of Foreign Investments." These risks are
highlighted and additional risks are present in the case of investments in
emerging markets or countries with limited or developing capital markets such as
most of the Asian countries in which the Fund will invest. See "More
Information About the Funds' Investments -- Risks of Emerging Markets."
For temporary defensive purposes, the Emerging Asia Fund may invest some or
all of its assets in debt instruments and may invest up to 100% of its assets in
securities (including equity securities) principally traded in the United
States. See "More Information About the Funds' Investments --Temporary
Defensive Strategies."
For a description of additional investment techniques that may be utilized by
the Emerging Asia Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and the
Statement.
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MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
Location of Issuers. A number of the Funds' policies are determined
-------------------
by reference to whether an issuer is "located in" a particular country or group
of countries. In determining whether an issuer is "located in" a particular
country for those purposes, the Manager will consider a number of factors,
including: (i) whether the issuer's securities are principally traded in the
country's markets; (ii) where the issuer's principal offices or operations are
located; and (iii) the percentage of the issuer's revenues derived from goods or
services sold or manufactured in the country. No single factor will necessarily
be determinative nor must all be present for the Manager to determine that an
issuer is located in a particular country. The Manager may also consider other
factors in making this determination.
Investment Risks. An investment in any Fund involves risks similar
----------------
to those of investing in common stock or other equity securities directly.
Investment in a Fund's shares is, like investment in equity securities, more
volatile and risky than some other forms of investment. Just as with such
securities, the value of Fund shares may increase or decrease depending on
market, economic, political, regulatory and other conditions affecting the
Fund's portfolio. These types of risks may be greater with respect to
investments in securities of foreign issuers and may be heightened in the case
of emerging market securities. In addition, a Fund's investments will often be
denominated in foreign currencies, whose values continually change in relation
to the dollar. These varying relationships will also affect the value of a
Fund's shares.
Special Considerations of Foreign Investments. All of the Funds will
---------------------------------------------
invest extensively in foreign securities (i.e., those which are not listed on a
United States securities exchange). Investing in foreign securities involves
risks not typically found in investing in U.S. markets. These include risks of
adverse change in foreign economic, political, regulatory and other conditions,
and changes in currency exchange rates, exchange control regulations (including
currency blockage), expropriation of assets or nationalization, imposition of
withholding taxes on capital, dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to different, and often
less comprehensive, accounting, reporting and disclosure requirements than
domestic issuers. The securities of some foreign companies and foreign
securities markets are less liquid and at times more volatile than securities of
comparable U.S. companies and U.S. securities markets. Foreign brokerage
commissions and other fees are also generally higher than in the United States.
There are also special tax considerations which apply to securities of foreign
issuers and securities principally traded overseas. See "Taxes."
Risks of Emerging Markets. The risks of investing in foreign
-------------------------
securities may be heightened in the case of investments in emerging markets or
countries with limited or developing capital markets. Security prices in
emerging markets can be significantly more volatile than in the more developed
nations of the world, reflecting the greater uncertainties of investing in less
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established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, present the risk of
nationalization of business, restrictions on foreign ownership, or prohibitions
on repatriation of assets, and may have less protection for property rights than
more developed countries. Political change or instability may adversely affect
the economies and securities markets of such countries. Expropriation,
nationalization or other confiscation due to political change could result in a
Fund's loss of its entire investment in the country involved. The possibility or
reality of nationalization, expropriation or confiscatory taxation, currency
blockage, political changes, government regulation, political or social
instability or diplomatic developments could affect adversely the economies of
countries and the value of the Funds' investments in those countries. The
economies of individual countries may differ favorably or unfavorably and
significantly from the U.S. economy in such respects as growth of gross domestic
product ("GDP") or gross national product, rate of inflation, currency
depreciation, capital reinvestment, resource self-sufficiency, structural
unemployment and balance of payments position. The domestic economies of
emerging countries are generally not as diversified as those of the United
States and certain Western European countries. A significant portion of many of
such countries' national GDPs are represented by one commodity or groups of
commodities. World fluctuations in the prices of certain commodities may
significantly affect the economy involved. Such countries' economies may also be
dependent on international aid or development assistance, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Consequently, securities
of issuers located in countries with emerging markets may have limited
marketability and may be subject to more abrupt or erratic price movements.
Also, such local markets typically offer less regulatory protections for
investors.
As described above under "Investment Objectives and Policies," all of
the Funds may invest in issuers of emerging markets and several of the Funds may
invest primarily in such markets. Several of the Funds may concentrate their
investments in particular regions, such as in the emerging markets of Latin
America and the Pacific Basin. Such Funds will be subject to all of the general
risks described above as well as special risks (some of which are described
below) that may affect the region where the Fund invests.
Asia. The Emerging Asia Fund is susceptible to political and economic
factors affecting issuers in Pacific Basin countries. Although the Fund will not
focus its investments in Japanese companies, some Asian economies are directly
affected by Japanese capital investment in the region and by Japanese consumer
demands. Securities of issuers located in some Asian countries tend to have
volatile prices and may offer significant potential for loss as well as gain.
Further, certain companies in Asia may not have firmly established product
markets, may lack depth of management, or may be more vulnerable to political or
economic developments such as nationalization of their own
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<PAGE>
industries. However, many of the countries of the Pacific Basin are developing
both economically and politically. Such countries may have relatively unstable
governments, economies based on only a few commodities or industries, and
securities markets trading infrequently or in low volumes. Some Asian countries
restrict the extent to which foreigners may invest in their securities markets.
Taiwan, for example, permits foreign investment only through authorized
qualified foreign institutional investors ("QFII"). Recently, the Manager was
granted QFII status with its own investment quota enabling the Trust to purchase
Taiwanese investments through various sub-accounts. The Manager will not collect
charges or fees for the use of these facilities; however, the Funds' sub-
accounts will owe custodial or transaction fees relating to investments through
these facilities.
Latin America. Although there have been significant improvements in
recent years, the Latin American economies continue to experience significant
problems, including high inflation rates and high interest rates. Inflation and
rapid fluctuations in inflation rates have had and may continue to have very
negative effects on the economies and securities markets of certain Latin
American countries. The emergence of the Latin American economies and
securities markets will require continued economic and fiscal discipline which
has been lacking at times in the past, as well as stable political and social
conditions. There is no assurance that economic initiatives will be successful.
Recovery may also be influenced by international economic conditions,
particularly those in the United States, and by world prices for oil and other
commodities.
Currency Risks; Hedging Transactions. The Funds may invest without
------------------------------------
limitation in securities quoted or denominated in currencies other than the U.S.
dollar and may hold such currencies. As a result, fluctuations in currency
exchange rates and currency devaluations, if any, will affect the U.S. dollar
value of the Funds' portfolio securities as well as the net asset value of the
Funds' shares. The Funds may use various investment products to reduce certain
risks to the Funds of exposure to local currency movements. These products
include currency forward contracts, futures contracts and options thereon, and
options and "spot" transactions directly in foreign currencies. A Fund may, but
is not obligated to, attempt to hedge up to 75% of its foreign currency exposure
using such techniques. The Funds' ability to use these products may be limited
by market conditions, regulatory limits and tax considerations and there can be
no assurance that any of these products would succeed in reducing the risk to
the Fund of exposure to local currency movements. Movements in the prices or
values of these investment products may not correlate precisely with changes in
the value of the related currency. New financial products and risk management
techniques continue to be developed and the Funds may use these new investments
and techniques to the extent consistent with their investment objective and
policies. Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or prevent losses
if the prices of such securities decline. Such transactions also preclude the
opportunity for gain
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<PAGE>
if the value of the hedged currency should rise. Moreover, it may not be
possible for a Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
Forward Contracts: A forward contract is an obligation to purchase
-----------------
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers.
Currency Futures Contracts: The Funds may enter into financial
--------------------------
futures contracts for the purchase or sale for future delivery of foreign
currencies. A sale of a futures contract entails entering into a
contractual obligation to deliver the foreign currency called for by the
contract at a specified price on a specified date. A purchase of a futures
contract entails entering into a contractual obligation to acquire the
foreign currency called for by the contract at a specified price on a
specified date.
Currency futures contracts are traded only on commodity exchanges --
known as "contract markets" -- approved for such trading by the Commodity
Futures Trading Commission ("CFTC"), and must be executed through a futures
commission merchant, or brokerage firm, which is a member of the relevant
contract market.
Although futures contracts by their terms often call for actual
delivery or acceptance, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out a
futures contract sale is effected by purchasing a futures contract for the
same aggregate amount of the specific type of financial instrument or
commodity and the same delivery date. If the price of the initial sale of
the futures contract exceeds the price of the offsetting purchase, the
seller is paid the difference and realizes a gain. Conversely, if the price
of the offsetting purchase exceeds the price of the initial sale, the
seller realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the purchaser entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting
sale price, he realizes a loss.
The purchase or sale of a currency futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or U.S. Treasury bills generally not
exceeding 5% of the contract amount must be deposited with the broker. This
amount is known as initial margin. Subsequent payments to and from the
broker, known as variation margin, are made on a daily basis as the price
of the underlying futures contract fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
"marking to the market." At any time prior to the settlement date of the
futures contract, the position may be closed out by taking an opposite
position which will operate to
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<PAGE>
terminate the position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid to or
released by the broker, and the purchaser realizes a loss or gain. In
addition, a commission is paid on each completed purchase and sale
transaction.
Options on Currency Futures. Unlike a currency futures contract,
---------------------------
which requires the parties to buy and sell currency on a set date, an
option on a currency futures contract entitles its holder to decide on or
before a future date whether to enter into such a contract. If the holder
decides not to enter into the contract, the premium paid for the option is
lost. Since the value of the option is fixed at the point of sale, there
are no daily payments of cash by the holder of the option in the nature of
"variation" or "maintenance" margin payments to reflect the change in the
value of the underlying contract as there are by a purchaser or seller of a
currency futures contract.
The ability to establish and close out positions on options on futures
will be subject to the development and maintenance of a liquid secondary
market. It is not certain that this market will develop or be maintained.
A Fund will write (sell) only covered put and call options on currency
futures. This means that the Fund will provide for its obligations upon
exercise of the option by segregating sufficient cash or short-term
obligations or by holding an offsetting position in the option or
underlying currency future, or a combination of the foregoing. Set forth
below is a description of methods of providing cover that the Funds
currently expect to employ, subject to applicable exchange and regulatory
requirements. If other methods of providing appropriate cover are
developed, the Fund reserves the right to employ them to the extent
consistent with applicable regulatory and exchange requirements.
A Fund will, so long as it is obligated as the writer of a call option
on currency futures, own on a contract-for-contract basis an equal long
position in currency futures with the same delivery date or a call option
on currency futures with the difference, if any, between the market value
of the call written and the market value of the call or long currency
futures purchased maintained by the Fund in cash, Treasury bills, or other
high-grade short-term obligations in a segregated account with its
Custodian. If at the close of business on any day the market value of the
call purchased by a Fund falls below 100% of the market value of the call
written by the Fund, the Fund will so segregate an amount of cash, Treasury
bills or other high grade short-term obligations equal in value to the
difference.
In the case of put options on currency futures written by the Fund,
the Fund will hold the aggregate exercise price in cash, Treasury bills, or
other high grade short-term obligations in a segregated account with its
Custodian, or own put options on currency futures or short currency
futures, with the difference, if any, between the market
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<PAGE>
value of the put written and the market value of the puts purchased or the
currency futures sold maintained by the Fund in cash, Treasury bills or
other high grade short-term obligations in a segregated account with its
Custodian. If at the close of business on any day the market value of the
put options purchased or the currency futures sold by the Fund falls below
100% of the market value of the put options written by the Fund, the Fund
will so segregate an amount of cash, Treasury bills or other high grade
short-term obligations equal in value to the difference.
Options on Foreign Currencies: The Funds may purchase and write put
-----------------------------
options on foreign currencies traded on securities exchanges or boards of
trade (foreign and domestic) or over-the-counter. As in the case of other
kinds of options, the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium received,
and the Funds could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of
an option on a foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements
adverse to expected movements, it may forfeit the entire amount of the
premium plus related transaction costs. There is no specific percentage
limitation on the Funds' investments in options on foreign currencies. See
the Funds' Statement of Additional Information for further discussion of
the use, risks and costs of options on foreign currencies.
Limitations on the Use of Currency Futures Portfolio Strategies. The
---------------------------------------------------------------
Funds' ability to engage in currency futures strategies described above
will depend on the availability of liquid markets in such instruments.
Markets in futures with respect to currencies are relatively new and still
developing. It is impossible to predict the amount of trading interest that
may exist in various types of currency futures. Therefore no assurance can
be given that the Funds will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, the Funds'
ability to engage in such transactions may be limited by tax
considerations.
Risk Factors in Currency Forward and Futures Transactions. The Funds'
---------------------------------------------------------
investment in currency forward and futures contracts involves risk. Some of
that risk may be caused by an imperfect correlation between movements in
the price of the forward or futures contract and the price of the related
currency. The risk of imperfect correlation generally tends to diminish as
the maturity date of the forward or futures contract approaches.
Also, when a Fund purchases currency forward or futures contracts (or
options thereon) to hedge against a possible increase in the price of
currency in which is denominated the securities the Fund anticipates
purchasing, it is possible that the market may instead decline. If the Fund
does not then invest in such securities because of concern as to possible
further market decline or for other reasons, the Fund may
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<PAGE>
realize a loss on the forward or futures contract that is not offset by a
reduction in the price of the securities purchased.
The amount of risk a Fund assumes when it purchases an option on a
currency futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above,
the purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the value
of the option purchased. By writing a call option, the Fund limits its
opportunity to profit from any increase in the market value of the
underlying contract above the exercise price of the option. By writing a
put option, the Fund assumes the risk that it may be required to purchase
the underlying contract for an exercise price higher than its then current
market value, resulting in a potential loss unless the contract
subsequently appreciates in value.
The liquidity of a secondary market in a futures contract or related
option may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in
a futures contract price during a single trading day. Once the daily limit
has been reached in the contract, no trades may be entered into at a price
beyond the limit, thus preventing the liquidation of open futures
positions. Prices have in the past exceeded the daily limit on a number of
consecutive trading days.
Index Futures. To the extent opportunities are available, each Fund may
-------------
purchase futures contracts or options on futures contracts on various stock
indices ("Index Futures") for investment purposes. An Index Future is a contract
to buy an integral number of units of a stock index at a specified future date
at a price agreed upon when the contract is made. A unit is the value from time
to time of the relevant Index.
The Funds may invest in Index Futures while the Manager seeks favorable
terms from brokers to effect transactions in common stocks selected for
purchase. Each Fund may also invest in Index Futures when the Manager believes
that there are not enough attractive common stocks available to maintain the
standards of diversity and liquidity set for a Fund pending investment in such
stocks if and when they do become available. Through this use of Index Futures,
a Fund may maintain a portfolio with diversified risk without incurring the
substantial brokerage costs which may be associated with investment in multiple
issuers. This use may also permit a Fund to avoid potential market and liquidity
problems (e.g., driving up the price by purchasing additional shares of a
portfolio security or owning so much of a particular issuer's stock that the
sale of such stock depresses that stock's price) which may result from increases
in positions already held by a Fund.
As contrasted with purchases of a common stock, no price is paid or
received by a Fund upon the purchase of a futures contract. Upon entering into a
contract, a Fund will be required to deposit with its custodian in a segregated
account in the name of the futures broker a specified amount of cash or
securities. This is known by participants in the market as "initial
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<PAGE>
margin." The type of instruments that may be deposited as initial margin, and
the required amount of initial margin, will be determined by the futures
exchange on which Index Futures are traded before trading of Index Futures
commences. The nature of initial margin in futures transactions is different
from that of margin in securities transactions in that futures contract margin
does not involve the borrowing of funds by the customer to finance the
transactions. Rather, the initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from the
broker, will be made on a daily basis as the price of the particular Index
fluctuates, making the position in the futures contract more or less valuable, a
process known as "marking to the market."
A Fund may close out a futures contract purchase by entering into a futures
contract sale. This will operate to terminate the Fund's position in the futures
contract. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain.
A Fund's investment in Index Futures involves risk. Positions in Index
Futures may be closed out by a Fund only on the futures exchanges on which Index
Futures are then traded. There can be no assurance that a liquid market will
exist for any particular contract at any particular time. The liquidity of the
market in futures contracts could be adversely affected by "daily price
fluctuation limits" established by the relevant futures exchange which limit the
amount of fluctuation in the price of an Index Futures contract during a single
trading day. Once the daily limit has been reached in the contract, no trades
may be entered into in the price beyond the limit. In such events, it may not be
possible for a Fund to close its futures contract purchase, and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin. When a Fund has purchased a futures contract,
its risk is, however, limited to the amount of the contract. The futures market
may attract more speculators than does the securities market, because deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Increased participation by speculators in the futures
market may also cause price distortions. In addition, investment in Index
Futures involves the risk of an imperfect correlation between movement in the
relevant Index and the price of Index Futures. This lack of correlation may
result from investors closing out futures contracts in order to avoid additional
margin deposit requirements or from the fact that trading hours for Index
Futures may not correspond perfectly to hours of trading on the relevant foreign
exchanges. Before a United States entity may purchase or sell futures contracts
traded on foreign exchanges, the CFTC must approve the contract for purchase and
sale by U.S. persons. Those contracts may involve greater risks, including less
liquidity and less governmental supervision.
Depositary Receipts. Each Fund may invest in American Depositary Receipts
-------------------
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs) (collectively, "Depositary Receipts") if issues of such
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Depositary Receipts are available that are consistent with a Fund's investment
objective. Depositary Receipts generally evidence an ownership interest in a
corresponding security on deposit with a financial institution. Transactions in
Depositary Receipts usually do not settle in the same currency as the underlying
securities are denominated or traded. Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets and EDRs, in bearer form, are
designed for use in European securities markets. GDRs may be traded in any
public or private securities markets and may represent securities held by
institutions located anywhere in the world.
Investment Companies. Each of the Funds may invest up to 10% of its
--------------------
total assets through investment companies or other collective investment
vehicles designed to permit investments in a portfolio of securities listed in a
particular developing country or region, particularly in the case of countries
in which such an investment vehicle is the exclusive or main vehicle for foreign
portfolio investment. As a shareholder of these kinds of investment vehicles, a
Fund may indirectly bear fees which are in addition to the fees the Fund pays
its own service providers.
Section 17(a) of the Investment Company Act of 1940 (the "1940 Act")
prohibits most purchase and sale transactions between a registered investment
company and its affiliates (and their affiliates), including transactions
between separate series of a single investment company. Thus, the sale or
purchase of securities or other property to or from any series of the Trust by
an affiliate of such series (or an affiliate of such an affiliate) is
prohibited. This would include any other series of the Trust, and any other
investment company or account managed by Martin Currie, Inc. or an affiliate.
Rule 17a-7 under the 1940 Act provides an exemption for sales and purchases
among investment companies and other persons (or accounts) which are affiliated
solely by reason of having a common investment adviser (or affiliated investment
advisers), common board members and/or common officers, provided that certain
conditions (designed to ensure that the transaction is fair to the investment
company) are met. Rule 17a-7 requires that the trustees of an investment
company adopt procedures designed to ensure that any transactions subject to the
rule comply with the rule's conditions and that trustees review all transactions
effected pursuant to such procedures on a quarterly basis. The trustees of the
Trust approved such procedures governing transactions permitted by Rule 17a-7 on
June 6, 1994.
Temporary Defensive Strategies. For temporary defensive purposes,
------------------------------
each Fund may vary from its investment policy during periods in which conditions
in certain countries or securities markets or other economic or political
conditions warrant. Each Fund may reduce its position in securities relating to
its investment objective and may invest without limit in short-term debt
securities (for this purpose, securities with a remaining maturity of one year
or less) issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities") and U.S. dollar-denominated
money market instruments or foreign currency-denominated short-term debt
securities issued or guaranteed by a foreign government or any of its political
subdivisions, authorities, agencies or instrumentalities, which in each case are
rated BB or higher by Standard & Poor's Corporation ("S&P") or
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Baa or higher by Moody's Investors Service, Inc. ("Moody's") or, if not so
rated, deemed to be of equivalent quality by the Manager. Each Fund may also at
any time temporarily invest funds awaiting reinvestment or held as reserves for
dividends and other distributions to shareholders in any of the foregoing types
of securities as well as in repurchase agreements as described below under the
sub-caption "-Repurchase Agreements." Also for defensive purposes, each Fund
may invest its assets in securities (including equity securities) principally
traded in the United States; provided; however, that the Global Growth Fund's
-------- -------
weighting of investments in U.S. equity securities will not exceed the U.S.
weighting in the MSCI World Index by more than 20% and the Opportunistic EAFE
Fund's weighting of investments in U.S. equity securities will not exceed the
U.S. weighting in the MSCI EAFE Index by more than 20%.
Repurchase Agreements. As a means of earning income for periods as
---------------------
short as overnight, each Fund may enter into repurchase agreements with selected
banks and broker/dealers. Under a repurchase agreement, a Fund acquires
securities subject to the seller's agreement to repurchase at a specified time
and price. If the seller under a repurchase agreement becomes insolvent, a
Fund's right to dispose of the securities may be restricted. In the event of
the commencement of bankruptcy or insolvency proceedings with respect to the
seller of the security under a repurchase agreement, a Fund may encounter delay
and incur costs before being able to sell the security. Also, if a seller
defaults, the value of such securities may decline before a Fund is able to
dispose of them.
Illiquid Securities. Each Fund may invest up to 15% of its assets
-------------------
in "illiquid securities," that is, securities which the Fund may not readily
dispose of within 7 days at a price approximately the value used by the Fund for
purposes of calculating its net asset value. These securities include those
whose disposition is restricted by securities laws. Investment in illiquid
securities involves the risk that, because of the lack of consistent market
demand for such securities, a Fund may be forced to sell them at a
discount.
Portfolio Turnover. Portfolio turnover is not a limiting factor with
------------------
respect to investment decisions for the Funds. The portfolio turnover rates for
the Funds' last two fiscal years are set forth below:
<TABLE>
<CAPTION>
Portfolio Turnover Rates for
Years Ended April 30,
--------------------
Fund 1995 1996
---- ---- ----
<S> <C> <C>
Global Growth Fund 38 44
Opportunistic EAFE Fund 37% 39%
Global Emerging Markets Fund N/A N/A
Japan Small Companies Fund 37 33
Emerging Americas Fund 61 89
Emerging Asia Fund 65 0
</TABLE>
-23-
<PAGE>
In any particular year market conditions may well result in greater rates
than are presently anticipated. The rate of a Fund's turnover may vary
significantly from time to time depending on the volatility of economic and
market conditions. High portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by the relevant Fund.
PURCHASE OF SHARES
You may make an initial purchase of shares of any Fund by submitting a
completed subscription agreement (attached as Exhibit A) and payment to the
Trust in accordance with the instructions set forth in the subscription
agreement.
While purchases are permitted on any business day, the Trust encourages
investors to make purchases on the first day of a month as this will allow the
Trust to avoid the expense of determining a Fund's net asset value other than
once a month. See "Determination of Net Asset Value." In order for a purchase
order to be effective as of a particular day, the Fund must have accepted the
order and have received immediately available funds by time) on such day.
The minimum initial investment in each Fund must be worth at least
$1,000,000; subsequent investments must be worth at least $100,000. The Trust
reserves the right to waive these minimums in its sole discretion.
Shares of each Fund may be purchased by (i) giving cash, (ii) exchanging
securities on deposit with a custodian acceptable to the Manager or (iii) a
combination of such securities and cash. Purchase of shares of the Funds in
exchange for securities is subject in each case to the determination by the
Manager that the securities to be exchanged are acceptable for purchase by the
Fund. In all cases the Manager reserves the right to reject any particular
investment. In particular, and without limiting the generality of the foregoing,
the Manager may reject an investment if, in the opinion of the Manager, the size
of the investment and/or the transaction costs associated with the investment
are such that there would be a material discrepancy between the purchase premium
and the Fund's transaction expenses. Securities accepted by the Manager in
exchange for Fund shares will be valued in the same manner as the Fund's assets
as described below as of the time of the Fund's next determination of net asset
value after such acceptance. All dividends and subscription or other rights
which are reflected in the market price of accepted securities at the time of
valuation become the property of the Funds and must be delivered to the Funds
upon receipt by the investor from the issuer. A gain or loss for federal income
tax purposes would be realized upon the exchange by an investor that is subject
to federal income taxation, depending upon the investor's basis in the
securities tendered. A shareholder who wishes to purchase shares by exchanging
securities should obtain instructions by calling the Trust (Attention: Susan
Gillingham) at 011-44-131-229-5252 before 12:00 noon (New York time) on business
days.
-24-
<PAGE>
The purchase price of shares of a Fund is (i) the net asset value next
determined after a purchase order is received plus (ii), in the case of cash
investments, a purchase premium equal to the percentage of the amount invested
shown below provided, however, that the Manager will waive such premium on
-------- -------
behalf of the Trust if, in the view of the Manager, there are minimal brokerage
and transaction costs incurred in connection with the purchase. To the extent
that shares are purchased at a time when other shares of the same Fund are being
redeemed, the Manager will treat the purchase (up to the amount being
concurrently redeemed) as involving minimal brokerage and transaction costs and
will charge any purchase premium only with respect to the excess, if any, of the
amount of the purchase over the amount of the concurrent redemption. If there
is more than one purchase at the time of a concurrent redemption, each of the
purchasers will share, pro rata, in the reduction in purchase premium caused by
the concurrent redemption. There is no purchase premium on purchases in-kind or
on purchases effected through the reinvestment of dividends. All purchase
premiums are paid to and retained by the relevant Fund and are intended to cover
brokerage and other expenses of the Fund arising in connection with a cash
purchase. Absent any waiver, the following purchase premiums shall be
applicable to cash purchases:
<TABLE>
<CAPTION>
Fund Purchase Premium
---- ----------------
<S> <C>
The Global Growth Fund 0.75%
The Opportunistic EAFE Fund 0.75
The Global Emerging Markets Fund 1.00
The Japan Small Companies Fund 1.00
The Emerging Americas Fund 1.75
The Emerging Asia Fund 1.75
</TABLE>
The Manager will not approve the acceptance of securities in exchange for
Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to a Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the Fund's investment
policies and restrictions. No investor owning 5% or more of a Fund's shares may
purchase additional Fund shares by exchange of securities.
Upon acceptance of your order, the Trust opens an account for you, applies
the payment to the purchase of full and fractional Fund shares of beneficial
interest and mails a statement of the account confirming the transaction. After
an account has been established, you may send subsequent investments at any time
upon notification to the Trust and confirmation by the Trust (Attention: Susan
Gillingham) at tel. 011-44-131-229-5252, fax 011-44-131-228-5959.
-25-
<PAGE>
Purchases of shares in any Fund are limited to persons who are "accredited
investors" as defined in Regulation D under the Securities Act of 1933, as
amended, and who have completed and signed a subscription agreement in the form
attached hereto as Exhibit A. Each Fund reserves the right to reject any
purchase order for any reason which the Fund in its sole discretion deems
appropriate. Purchasers must be acquiring shares for their own account and for
investment purposes only. Each Fund reserves the right to suspend or change the
terms of the offering of its shares.
REDEMPTION OF SHARES
The securities offered hereby have not been registered under the Securities
Act of 1933, as amended, or the securities laws of any State and may not be
transferred or resold unless so registered or exempt therefrom. However, the
securities are redeemable.
You can redeem your shares by sending a written request by mail or by
telecopy to the Trust (c/o Martin Currie, Inc., Saltire Court, 20 Castle
Terrace, Edinburgh, Scotland EH1 2ES; Attention: Susan Gillingham; Telecopy #
011-44-131-228-5959 and to the Transfer Agent (State Street Bank and Trust
Company, Transfer Agent Operations, P.O. Box 1978, Boston, MA 02105; Telecopy #
617-985-9626). The request must include the name of the Fund, your account
number, the exact name(s) in which your shares are registered, and the number of
shares or the dollar amount to be redeemed. All owners of the shares must sign
the request in the exact names in which the shares are registered and should
indicate any special capacity in which they are signing (such as officers,
trustees or custodian or on behalf of a partnership, corporation or other
entity).
Shares of a Fund may be redeemed on any business day. However, the Trust
encourages investors to make redemptions on the first day of a month as this
will allow the Trust to avoid the expense of determining a Fund's net asset
value other than once a month. See "Determination of Net Asset Value."
The redemption price is (i) the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by the Trust in proper form, less (ii), in the case of cash
redemptions, a redemption fee equal to the percentage of the amount redeemed
indicated below. To the extent that shares are redeemed at a time when other
shares of the same Fund are being purchased, the Manager will treat the
redemption (up to the amount being concurrently purchased) as involving minimal
brokerage and transaction costs and will charge a redemption fee only with
respect to the excess, if any, of the amount of the redemption over the amount
of the concurrent purchase. If there is more than one redemption at the time of
a concurrent purchase, each of the redeeming shareholders will share, pro rata,
in the reduction in redemption fee caused by the concurrent purchase.
Redemption fees will be paid to and retained by the relevant Fund and are
intended to cover brokerage and other expenses of the Fund in
-26-
<PAGE>
connection with cash redemptions. In the absence of any waiver, the following
redemption fees will apply to cash redemptions:
<TABLE>
<CAPTION>
Fund Redemption Fee
---- --------------
<S> <C>
The Global Growth Fund 0.75%
The Opportunistic EAFE Fund 0.75
The Global Emerging Markets Fund 1.00
The Japan Small Companies Fund 1.00
The Emerging Asia Fund 1.75
The Emerging Americas Fund 1.75
</TABLE>
Shares of a Fund may be redeemed by the payment of the redemption price in
whole or in part by a distribution in kind of securities held by the Fund in
lieu of cash if the Manager determines, in its sole discretion, that it would be
detrimental to the best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash. Securities used to redeem Fund shares in
kind will be valued in accordance with the Funds' procedures for valuation
described under "Determination of Net Asset Value." Securities distributed by a
Fund in kind will be selected by the Manager in light of the Fund's objective
and will not generally represent a pro rata distribution of each security held
in the Fund's portfolio. Investors may incur brokerage charges on the sale of
any such securities so received in payment of redemptions.
Payment on redemption will be made as promptly as possible and normally
within seven days after the request for redemption is received by the Trust in
good order. If an investor purchased shares by check and the check was
deposited less than fifteen days prior to the redemption request, a Fund may
withhold redemption proceeds until that check has cleared. A redemption request
is in good order if it includes the exact name in which shares are registered
and the number of shares or the dollar amount of shares to be redeemed and if it
is signed exactly in accordance with the form of registration. Persons acting
in a fiduciary capacity, or on behalf of a corporation, partnership or trust,
must specify, in full, the capacity in which they are acting. Cash payments
will be made by transfer of Federal funds for payment into the investor's
account.
When opening an account with the Trust, shareholders will be required to
designate the account(s) to which funds may be transferred upon redemption.
Designation of additional accounts and any change in the accounts originally
designated must be made in writing with the signature guaranteed by any of the
following entities: U.S. banks, foreign banks having a U.S. correspondent bank,
credit unions, savings associations, U.S. registered dealers and brokers,
municipal securities dealers and brokers, government securities dealers and
brokers, national securities exchanges, registered securities associations and
clearing agencies.
The Trust may suspend the right of redemption and may postpone payment for
any Fund for more than seven days during an emergency which makes it
impracticable for a Fund to dispose of its securities or to fairly determine
-27-
<PAGE>
the value of the net assets of the Fund, or during any other period permitted by
the Securities and Exchange Commission for the protection of investors.
DISTRIBUTION AND SERVICING PLANS
The Trust has adopted a distribution and servicing plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 for each Fund (the "Plans"). The
Plans authorize the Manager to spend an amount of the advisory fees it collects
from each Fund up to 0.25% per annum of the average monthly net assets of the
Fund for activities or services primarily intended to result in the sale of
shares of the relevant Fund or for the provision of personal services to
shareholders of such Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of each Fund will be determined as of the
close of the business day in New York on any day on which an order for purchase
or redemption of a Fund's shares is received. While the Trust will accept
purchase or redemption orders on any day, shareholders are encouraged to submit
purchase and redemption orders on the last day of a month so as to permit the
Trust to avoid the expense of determining the net asset value of a Fund
especially for the purpose of accommodating the purchase or redemption. The net
asset value per share for a Fund is determined by dividing the total market
value of the Fund's portfolio investments and other assets, less any
liabilities, by the total outstanding shares of that Fund. Portfolio securities
listed on a securities exchange for which market quotations are available are
valued at the last quoted sale price on each business day, or, if there is no
such reported sale, at the mean of the most recent quoted bid and asked prices
unless the trustees, or persons acting on their behalf determine that such value
is not the fair value of such a security. Price information on listed securities
is generally taken from the closing price on the exchange where the security is
primarily traded. Unlisted securities for which market quotations are readily
available are valued at the mean of the most recent quoted bid and asked prices,
except that debt obligations with sixty days or less remaining until maturity
may be valued at their amortized cost. Other assets and securities for which no
quotations are readily available (or for which quotations are not believed by
the trustees to be reliable) are valued at fair value as determined in good
faith by the trustees of the Trust, or by persons acting pursuant to procedures
established by the trustees.
DISTRIBUTIONS
The Funds intend to pay out as dividends substantially all of their net
investment taxable income (which comes from dividends and any interest they
receive from investments and net realized short-term capital gains). For these
purposes and for federal income tax purposes, a portion of the premiums from
certain expired call or put options on currency futures written by a Fund, net
gains from certain closing purchase and sale transactions with respect to such
options and a portion of net gains from other options and
-28-
<PAGE>
futures transactions may be treated as short-term capital gain. The Funds also
intend to distribute substantially all of their net realized long-term capital
gains, if any, after giving effect to any available capital loss carryover.
Each Fund's policy is to declare and pay distributions of its dividend income
annually, although any Fund may do so more frequently as determined by the
trustees of the Trust. Each Fund's policy is to distribute net realized short-
term capital gains and net realized long-term gains annually although any Fund
may do so more frequently as determined by the trustees of the Trust to the
extent permitted by applicable regulations.
All dividends and/or distributions will be paid in shares of the relevant
Fund at net asset value unless the shareholder elects in the subscription
agreement to receive cash. There is no purchase premium on reinvested dividends
or distributions. Shareholders may make this election by marking the
appropriate box on the subscription agreement.
TAXES
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. So long as
a Fund qualifies, the Fund itself will not pay federal income tax on its
dividend, interest and certain other income, its net realized short-term gains
and its net realized long-term capital gains distributed to its shareholders.
Dividend distributions (i.e., distributions derived from interest, dividends
---
and certain other income, including in general short-term capital gains) will be
taxable to shareholders subject to income tax as ordinary income. Distributions
of any long-term capital gains are taxable as such to shareholders subject to
income tax, regardless of how long a shareholder may have owned shares in the
Fund. Distributions from the Fund will be taxed as described above whether
received in cash or in shares through reinvestment of dividends. A distribution
paid to shareholders by a Fund in January of a year is generally deemed to have
been received by shareholders on December 31 of the preceding year, if the
distribution was declared and payable to shareholders of record on a date in
October, November or December of that preceding year. A Fund's transactions in
foreign currencies and hedging activities will likely produce a difference
between its book income and taxable income. This difference may cause a portion
of a Fund's income distributions to constitute a return of capital for tax
purposes or require a Fund to make distributions exceeding book income to
qualify as a regulated investment company. The sale or redemption of shares of
Fund, including a redemption in-kind, is a taxable event to the selling or
redeeming shareholder.
The Trust will provide federal tax information annually, including
information about dividends and distributions paid during the preceding year.
Each Fund may make an election with the Internal Revenue Service for each
fiscal year which would allow shareholders who are U.S. citizens or U.S.
corporations to claim a foreign tax credit or deduction (but not both) on their
U.S. income tax return for foreign income taxes paid by the Fund. As a result,
income of a Fund from non-U.S. sources that is distributed to Fund
-29-
<PAGE>
shareholders would be treated as income from non-U.S. sources to the
shareholders. The amount of foreign income taxes paid by a Fund would be
treated as foreign taxes paid directly by Fund shareholders and, in addition,
this amount would be treated as additional income to Fund shareholders from non-
U.S. sources regardless of whether the Fund shareholder would be eligible to
claim a foreign tax credit or deduction. Investors should consult their tax
advisors for further information relating to the foreign tax credit and
deduction, which are subject to certain restrictions and limitations.
The foregoing is a general summary of the federal income tax consequences
for shareholders who are U.S. citizens or corporations. Fund shareholders who
are not U.S. citizens or which are foreign corporations may receive
substantially different tax treatment of distributions by the Funds.
Shareholders should consult their own tax advisors about the tax consequences of
an investment in a Fund in light of each shareholder's particular tax situation.
Shareholders should also consult their own tax advisors about consequences under
foreign, state, local or other applicable tax laws.
MANAGEMENT OF THE TRUST
Each Fund is advised and managed by Martin Currie, Inc., Saltire Court, 20
Castle Terrace, Edinburgh Scotland (the "Manager"). The Manager is a registered
investment adviser which, together with its affiliates, advises other mutual
funds, ERISA Group Trusts and other private accounts. The Manager is a wholly
owned subsidiary of Martin Currie Ltd. which is controlled by some of the
Executive Directors of the various subsidiaries of Martin Currie Ltd.
Investment decisions made by the Manager for the Funds are made by
committees organized for that purpose and no person or persons are primarily
responsible for making recommendations to such committees.
Under the Management Contract with the Trust on behalf of each Fund, the
Manager selects and reviews each Fund's investments and provides executive and
other personnel for the management of the Trust. Pursuant to the Trust's
Agreement and Declaration of Trust, the Board of Trustees supervises the affairs
of the Trust as conducted by the Manager. In the event that the Manager ceases
to be the manager of the Funds, the right of the Trust to use the identifying
name "Martin Currie" with respect to any Fund may be withdrawn.
Under the Management Contract, each Fund pays the Manager a quarterly
management fee at the following annual rate of the respective Fund's average net
assets:
-30-
<PAGE>
<TABLE>
Fund Management Fee
---- --------------
<S> <C> <C>
The Global Growth Fund 0.70%
The Opportunistic EAFE Fund 0.70
The Global Emerging Markets Fund 1.00
The Japan Small Companies Fund 1.00
The Emerging Americas Fund 1.50
The Emerging Asia Fund 1.50
</TABLE>
The Manager has agreed with the Trust to reduce its fee to each Fund until
further notice to the extent necessary to limit each Fund's annual expenses
(including the management fee but excluding brokerage commissions, transfer
taxes, and extraordinary expenses) to the percentage shown under "Summary of
Expenses" above. The Manager's fee for management of each Fund is higher than
that paid by most other mutual funds but is comparable to the management fees of
mutual funds with similar investment objectives.
The organizational expenses of the Funds as well as all other expenses
incurred in the operation of the Funds are borne by the relevant Fund, including
but not limited to brokerage commissions, transfer taxes and extraordinary
expenses in connection with its portfolio transactions, all applicable taxes,
the compensation of trustees who are not directors, officers or employees of the
Manager or its affiliates, interest charges, charges of custodians, auditing and
legal expenses.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is a diversified open-end series investment company organized as
a Massachusetts business trust under the laws of Massachusetts by an Agreement
and Declaration of Trust ("Declaration of Trust") dated May 20, 1994.
The Declaration of Trust permits the trustees to issue an unlimited number
of full and fractional shares of beneficial interest which are presently divided
into eight series, two of which are currently inactive. Each share of a series
represents an equal proportionate interest in that series with each other share.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares into various sub-series (or
"classes") of shares with such dividend preferences and other rights as the
trustees may designate. The trustees may also, without shareholder approval,
establish one or more additional separate portfolios for investments in the
Trust or merge two or more existing portfolios. Shareholders' investments in
such a portfolio would be evidenced by a separate series of shares.
Subject to the restrictions described under "Redemption of Shares," the
Trust's shares are freely transferable. Shareholders are entitled to dividends
as declared by the trustees, and, in liquidation of the relevant Fund's
portfolio, are entitled to receive the net assets of the portfolio. Shareholders
are entitled to vote at any meetings of shareholders. The Trust does not
generally hold annual meetings of shareholders and will do so only
-31-
<PAGE>
when required by law. Special meetings of shareholders may be called for
purposes such as electing or removing trustees, changing a fundamental
investment policy or approving an investment advisory agreement. In addition, a
special meeting of shareholders of the Fund will be held if, at any time, less
than a majority of the trustees then in office have been elected by shareholders
of the Fund.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust, may, however, be terminated at any time by vote of at least two-
thirds of the outstanding shares of the Trust. The Declaration of Trust further
provides that the trustees may also terminate the Trust or any Fund upon written
notice to the shareholders.
Because the Trust is organized as a Massachusetts business trust,
shareholders could, under certain circumstances, be held personally liable for
the obligations of the Trust. Massachusetts business trusts are voluntary
associations; therefore, a court might deem the Trust to be a partnership if
shareholders exercise significant control over the Trust's management. However,
the Trust's Agreement and Declaration of Trust explicitly limits shareholder
liability and provides shareholders with indemnification rights payable out of
Trust assets if shareholders were held liable for Trust obligations. Thus, the
risk of a shareholder incurring financial loss on account of that liability is
considered remote since it may arise only in very limited circumstances.
ADMINISTRATOR; CUSTODIAN; TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank & Trust Company, 225 Franklin Street, Boston, MA 02110
serves as the Trust's administrator, custodian and transfer and dividend paying
agent. Each Fund pays the Administrator a fee at the rate of 0.08% of such
Fund's average net assets up to $125 million, 0.06% of the next $125 million,
and 0.04% of those assets in excess of $250 million, subject to certain minimum
requirements, plus certain out of pocket costs. State Street Bank and Trust
Company also receives fees and compensation of expenses for certain custodian
and transfer agent services.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110 serves as the
Trust's independent public accountants.
-32-
<PAGE>
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110, is the Trust's
legal counsel.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust c/o Martin Currie, Inc.,
Saltire Court, 20 Castle Terrace, Edinburgh, Scotland, United Kingdom EH1 2ES
(Attention: Susan Gillingham), tel. 011-44-131-229-5252. Institutional investors
in the U.S. may contact Martin Currie Investor Services, Inc., an affiliate of
the Manager, 53 Forest Avenue, Old Greenwich, CT 06870, tel. 203-698-9031
(Attention: Steven Johnson).
-33-
<PAGE>
Exhibit A
---------
MARTIN CURRIE BUSINESS TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest
Amount of
Subscription
(US$)
MCBT Global Growth Fund -------------
MCBT Opportunistic EAFE Fund -------------
MCBT Global Emerging Markets Fund -------------
MCBT Japan Small Companies Fund -------------
MCBT Emerging Americas Fund -------------
MCBT Emerging Asia Fund -------------
Total Subscription Price $____________
SUBSCRIBER INFORMATION
Name of Subscriber:
_______________________________________________________________
(hereinafter "SUBSCRIBER")
Name for Registration
_______________________________________________________________
(if different from above)
Person Signing (if different):
_______________________________________________________________
Capacity (if applicable):
_______________________________________________________________
<PAGE>
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
BANK INFORMATION
Bank Name:
_______________________________________________________________
ABA Number:
_______________________________________________________________
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
Account Name:
_______________________________________________________________
Account Number:
_______________________________________________________________
-2-
<PAGE>
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the one
or more series (each a "Fund") of Martin Currie Business Trust (the
"Trust") indicated above and in the dollar amount(s) set forth above. Upon
completion of this Subscription Agreement, SUBSCRIBER should send this
agreement by telecopy and courier to:
Martin Currie Business Trust
c/o Martin Currie, Inc.
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
Attention: Susan Gillingham
----------
Telecopy: 011-44-131-228-5959
---------
After the Trust has reviewed the completed Subscription Agreement,
SUBSCRIBER will receive telephonic notice of the acceptance or non-
acceptance of the subscription. If the subscription is accepted by the
Trust, SUBSCRIBER agrees to wire immediately available funds in the
amounts indicated on the cover of this Subscription Agreement to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA # 011000028
BNF = AC-42306662 "Mutual Fund F/B/O
Martin Currie Business Trust"
OBI = "NAME OF FUND"
Shareholder Name
2. SUBSCRIBER agrees that, unless the Trust is otherwise specifically
notified, this subscription will be treated as a subscription for shares of
beneficial interest in the indicated Funds (the "Shares") to become
effective as of the first day of the month following the satisfaction of
all of the conditions specified in Section 3 of this Subscription
Agreement. Any funds received by the Trust before such date will be held
for investment on such first day of the month.
3. SUBSCRIBER understands and agrees that this subscription for the Shares is
ineffective and that SUBSCRIBER will not become a shareholder of the Trust
until (i) SUBSCRIBER completes all applicable information requested in this
Subscription Agreement, (ii) SUBSCRIBER executes this Subscription
Agreement and delivers it to the Trust, (iii) the Trust accepts the
Subscription Agreement, which acceptance may be
-3-
<PAGE>
withheld in the Trust's sole discretion, and (iv) the Trust can and has
confirmed that the subscription amount has been received in the account
listed in Section 1 above.
4. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated September 20,
1996 (the "Placement Memorandum") relating to the offer for sale by the
Trust of the Shares and has had an opportunity to request a Statement of
Additional Information dated as of September 20, 1996 (the "SAI"), and has
reviewed the Placement Memorandum carefully prior to executing this
Subscription Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the
opportunity to ask questions of, and receive answers from, representatives
of the Trust concerning terms and conditions of the Offering and to obtain
any additional information necessary to verify the accuracy of the
information contained in the Placement Memorandum or the SAI. SUBSCRIBER
further acknowledges that no person is authorized to give any information
or to make any representation which is contrary to the information
contained in the Placement Memorandum or the SAI and that, if given or
made, any such contrary information or representation may not be relied
upon as having been authorized.
5. SUBSCRIBER understands and agrees that a purchase premium may be applicable
to this subscription for the Shares according to the terms described in the
Placement Memorandum, and that some of the funds paid under this Agreement
may be applied to such purchase premium.
6. SUBSCRIBER hereby elects:
[_] To reinvest all distributions of income and realized capital gains
from a Fund in additional shares of that Fund
or
--
[_] To receive all distributions of income and realized capital gains from
a Fund as cash when declared.
SUBSCRIBER understands and agrees that, unless otherwise indicated above,
SUBSCRIBER will be deemed to have elected to reinvest all distributions of
income and capital gains.
7. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that the
sale of the Shares to SUBSCRIBER complies with (or meets the requirements
of any applicable exemption from) the Securities Act of 1933, as amended
(the "1933 Act"), and applicable state securities laws.
-4-
<PAGE>
8. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this Subscription Agreement for its own account for investment only and not
with a view to any resale or distribution.
9. SUBSCRIBER represents that it (either alone or together with its purchaser
representative, whose identity has been disclosed to the Trust, if any) has
such knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of the investment represented by
the Trust and that SUBSCRIBER is able to bear the economic risk of this
investment including the risk of loss of the investment.
10. SUBSCRIBER understands that the Trust will offer the Shares only to
investors which qualify as "accredited investors" as defined in Regulation
D under the 1933 Act. SUBSCRIBER represents that it qualifies as an
"accredited investor" because SUBSCRIBER is described in the paragraph or
paragraphs indicated below: (check one or more).
[_] A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with his or her
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the
current year.
[_] A natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000 at the time of purchase of the
Shares.
[_] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D of the 1933 Act.
[_] An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Shares offered, with total assets in excess of $5,000,000.
[_] A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as amended.
[_] A bank as defined in Section 3(a)(2) of the 1933 Act, or savings and
loan association or other institution as defined in Section 3(a)(5)(A)
of the 1933 Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an
-5-
<PAGE>
insurance company as defined in Section 2(13) of the 1933 Act; an
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), or a business development company
as defined in Section 2(a)(48) of the 1940 Act; a Small Business
Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958; an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are accredited investors.
[_] A Trustee or Executive Officer of the Trust whose purchase exceeds
$1,000,000.
[_] An entity in which all of the equity owners are accredited investors
as defined above.
11. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is an
entity, its principal offices are located in) ________________.
(U.S. State)
12. SUBSCRIBER agrees to promptly notify the Trust of any development that
causes any of the representations made or information supplied in this
Subscription Agreement to be untrue at any time.
13. SUBSCRIBER understands that the Shares are not publicly traded and that
there will be no public market for the Shares upon completion of the
Offering.
14. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the 1933
Act and, in certain cases, of state securities laws, and that such
interests will be subject to transfer restrictions under the 1933 Act and
applicable state securities laws and, except to the extent that redemption
is permitted as described in the Placement Memorandum and the SAI, must be
held indefinitely unless subsequently registered under the 1933 Act and
applicable state securities laws or an exemption from such registration is
available. The undersigned further understands and agrees that the Trust is
under no obligation to register such Shares and that any exemptions are
extremely limited.
15. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained in
this Subscription Agreement, the
-6-
<PAGE>
Placement Memorandum, the SAI, the 1933 Act and any applicable state
securities laws.
16. SUBSCRIBER hereby agrees to be bound by all terms and conditions of this
Subscription Agreement.
17. This Subscription Agreement shall be governed by and construed under the
laws of The Commonwealth of Massachusetts and is intended to take effect as
an instrument under seal and shall be binding on SUBSCRIBER in accordance
with its terms.
-7-
<PAGE>
18. Please sign this Subscription Agreement exactly as you wish your Shares to
be registered. (The information supplied by you below should conform to
that given on the cover page).
Dated: __________, _____ Name of SUBSCRIBER:____________________
By:_______________________
Name of Person Signing if different
from SUBSCRIBER:______________________
(please print)
Capacity:______________________
(please print)
Accepted:
MARTIN CURRIE BUSINESS TRUST
By:___________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the trustees,
officers or shareholders of any Fund individually but are binding only upon the
assets and property belonging to the Funds.
-8-
<PAGE>
Part B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
-------------------------------------------------------------
Item 10. Cover Page
See the Cover Page of the Statement of Additional Information attached
as Appendix B to this Part B of the Registration Statement (the
"Statement of Additional Information").
Item 11. Table of Contents
See the Table of Contents of the Statement of Additional Information.
Item 12. General Information and History
-------------------------------
Not applicable.
Item 13. Investment Objectives and Policies
----------------------------------
See the section entitled "Investment Objectives, Policies and
Restrictions" in the Statement of Additional Information.
Item 14. Management of the Fund
----------------------
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 15. Control Persons and Principal Holders of Securities
---------------------------------------------------
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 16. Investment Advisory and Other Services
--------------------------------------
See the section entitled "Investment Advisory and Other Services" and
"Distribution and Servicing Plans" in the Statement of Additional
Information.
Item 17. Brokerage Allocation
--------------------
See the section entitled "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
-9-
<PAGE>
Item 18. Capital Stock and Other Securities
----------------------------------
See the Cover Page of the Private Placement Memorandum and the
sections entitled "Description of the Trust"; "Redemptions" and
"Income Dividends, Capital Gain Distributions and Tax Status" in the
Statement of Additional Information.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
------------------------------------------------------------
See the sections entitled "How to Buy Shares" "Redemptions" and "Net
Asset Value and Offering Price" in the Statement of Additional
Information.
Item 20. Tax Status
----------
See the section entitled "Income Dividends, Capital Gain Distributions
and Tax Status" in the Statement of Additional Information.
Item 21. Underwriters
------------
Not applicable.
Item 22. Calculation of Performance Data
-------------------------------
Not applicable.
Item 23. Financial Statements
--------------------
See the section entitled "Financial Statements" in the Statement of
Additional Information.
-10-
<PAGE>
Appendix B to Part B
MARTIN CURRIE BUSINESS TRUST
STATEMENT OF ADDITIONAL INFORMATION
September 20, 1996
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Martin Currie Business Trust
Private Placement Memorandum dated September 20, 1996, and should be read in
conjunction therewith. A copy of the Private Placement Memorandum may be
obtained from Martin Currie Business Trust, c/o Martin Currie, Inc., Saltire
Court, 20 Castle Terrace, Edinburgh, Scotland EH1 2ES.
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS................1
MANAGEMENT OF THE TRUST.........................................5
INVESTMENT ADVISORY AND OTHER SERVICES..........................9
DISTRIBUTION AND SERVICING PLANS...............................12
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................12
DESCRIPTION OF THE TRUST.......................................13
HOW TO BUY SHARES..............................................16
NET ASSET VALUE AND OFFERING PRICE.............................16
REDEMPTIONS....................................................17
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS....17
FINANCIAL STATEMENTS...........................................19
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
- --------------------------------------------------------------------------------
The investment objective and policies of each series ("Fund") of Martin
Currie Business Trust (the "Trust"), are summarized in the Private Placement
Memorandum under "Investment Objectives and Policies" and "More Information
About the Funds' Investments." The investment policies of each Fund set forth in
the Private Placement Memorandum and in this Statement of Additional Information
may be changed by the Trust's trustees, without shareholder approval except that
any policy explicitly identified as "fundamental" may not be changed without the
approval of the holders of a majority of the outstanding shares of the relevant
Fund (which means the lesser of (i) 67% of the shares of that Fund represented
at a meeting at which 50% of the outstanding shares are represented or (ii) more
than 50% of the outstanding shares).
In addition to its investment objective and policies set forth in the
Private Placement Memorandum, the following investment restrictions are policies
of each Fund (and those marked with an asterisk are fundamental policies of each
Fund):
Each Fund will not:
*(1) Act as underwriter of securities issued by other persons, except to
the extent that, in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under certain federal securities laws.
(2) Change its classification pursuant to Section 5(b) of the 1940 Act
from a "diversified" management investment company to a "non-diversified" one
without shareholder approval.
*(3) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower, nor borrow
any money except as a temporary measure for extraordinary or emergency purposes,
however, any sale coupled with an agreement to repurchase or any Fund's use of
reverse repurchase agreements and "dollar roll" arrangements shall not
constitute borrowing by such Fund for purposes of this restriction.
*(4) Purchase or sell real estate or interests in real estate, except that
the Fund may purchase and sell securities that are secured by real estate or
interests in real estate and may purchase securities issued by companies that
invest or deal in real estate.
*(5) Invest in commodities, except that the Fund may invest in financial
futures contracts and options thereon, and options on currencies.
<PAGE>
*(6) Make loans to others, except through the purchase of qualified debt
obligations, the entry into repurchase agreements and/or the making of loans of
portfolio securities consistent with the Fund's investment objectives and
policies.
*(7) Purchase any securities which would cause more than 25% of the value
of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the same
industry; provided that there shall be no limit on the purchase of U.S.
government securities, including securities issued by any agency or
instrumentality of the U.S. government, and related repurchase agreements. The
SEC takes the position that government securities of a single foreign country
(including agencies and instrumentalities of such government, to the extent such
obligations are backed by the assets and revenues of such government) are a
separate industry for these purposes.
*(8) Pledge, hypothecate, mortgage or otherwise encumber the Fund's assets
except to secure borrowings and as margin or collateral for financial futures,
swaps, and other negotiable transactions in the over-the-counter market.
The Trust understands that the staff of the SEC deems certain transactions
that a Fund may enter into to involve the issuance of a senior security unless
certain cash, U.S. government securities or other high grade debt instruments
are deposited in a segregated account or are otherwise covered. Such
transactions include: short sales, reverse repurchase agreements, forward
contracts, futures contracts and options thereon, options on securities and
currencies, dollar rolls, and swaps, caps, floors and collars.
Convertible Securities
- ----------------------
Convertible securities are fixed income securities that may be converted at
either a stated price or a stated rate into underlying shares of common stock.
Convertible securities have general characteristics similar to both fixed income
and equity securities. Although to a lesser extent than with fixed income
securities generally, the market value of convertible securities tends to
decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion feature, the
market value of convertible securities tends to vary with fluctuations in the
market value of the underlying common stocks and, therefore, also will react to
variations in the general market for equity securities.
Like fixed income securities, convertible securities are investments which
provide for a stable stream of income with generally higher yields than common
stocks. Of course, like all fixed income securities, there can be no assurance
of current income because the issuers of the convertible securities may default
on their obligations. Convertible securities, however, generally offer lower
interest or dividend yields than non-convertible securities of similar quality
because of the potential for capital appreciation. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion
-2-
<PAGE>
feature, which enables the holder to benefit from increases in the market
price of the underlying common stock. However, there can be no assurance of
capital appreciation because securities prices fluctuate.
Convertible securities generally are subordinated to other similar but non-
convertible securities of the same issuer, although convertible bonds enjoy
seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock of the same issuer. Because of the
subordination feature, however, convertible securities typically have lower
ratings than similar non-convertible securities.
Brady Bonds
- -----------
The Emerging Americas Fund may invest in Brady Bonds of countries that have
restructured or are in the process of restructuring their sovereign debt
pursuant to the Brady Plan. "Brady Bonds" are debt securities issued under the
framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external commercial bank indebtedness. In
restructuring its external debt under the Brady Plan framework, a debtor nation
negotiates with its existing bank lenders as well as multilateral institutions
such as the World Bank and the International Monetary Fund ("IMF"). The Brady
Plan framework, as it has developed, contemplates the exchange of commercial
bank debt for newly issued Brady Bonds. Brady Bonds may also be issued in
respect of new money being advanced by existing lenders in connection with the
debt restructuring. The World Bank and/or the IMF may support the restructuring
by providing funds pursuant to loan agreements or other arrangements which
enable the debtor nation to collateralize the new Brady Bonds or to repurchase
outstanding bank debt at a discount.
Brady Plan debt restructurings have been implemented to date in such
countries as Mexico, Brazil, Costa Rica, Venezuela, Uruguay, Nigeria, Argentina
and the Philippines. Investors should recognize that Brady Bonds have been
issued only recently and, accordingly, do not have a long payment history.
Agreements implemented under the Brady Plan to date are designed to achieve debt
and debt service reduction through specific options negotiated by a debtor
nation with its creditors. As a result, the financial packages offered by each
country differ. The types of options have included the exchange of outstanding
commercial bank debt for bonds issued at 100% of face value of such debt, which
carry a below-market stated rate of interest (generally known as par bonds),
bonds issued at a discount from the face value of such debt (generally known as
discount bonds), bonds bearing an interest rate which increases over time and
bonds issued in exchange for the advancement of new money by existing lenders.
Regardless of the stated face amount and stated interest rate of the various
types of Brady Bonds, the Fund will purchase Brady Bonds in secondary markets,
as described below, in which the price and yield to the investor reflect market
conditions at the time of purchase.
-3-
<PAGE>
Certain Brady Bonds have been collateralized as to principal due at
maturity by U.S. Treasury zero coupon bonds with a maturity equal to the final
maturity of such Brady Bonds. Collateral purchases are financed by the IMF, the
World Bank and the debtor nations' reserves. In the event of a default with
respect to collateralized Brady Bonds as a result of which the payment
obligations of the issuer are accelerated, the U.S. Treasury zero coupon
obligations held as collateral for the payment of principal will not be
distributed to investors, nor will such obligations be sold and the proceeds
distributed. The collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal the
principal payments which would have then been due on the Brady Bonds in the
normal course. In addition, interest payments on certain types of Brady Bonds
may be collateralized by cash or high grade securities in amounts that typically
represent between 12 and 18 months of interest accruals on these instruments
with the balance of the interest accruals being uncollateralized. Brady Bonds
are often viewed as having the following valuation components: (i) the
collateralized repayment of principal, if any, at final maturity, (ii) the
collateralized interest payments, if any, (iii) the uncollateralized interest
payments, and (iv) any uncollateralized repayment of principal at maturity
(these uncollateralized amounts constitute the "residual risk"). In light of
the residual risk of Brady Bonds and, among other factors, the history of
defaults with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as
speculative. The Fund may purchase Brady Bonds with no, or limited,
collateralization, and will be relying for payment of interest and (except in
the case of principal collateralized Brady Bonds) principal primarily on the
willingness and ability of the foreign government to make payment in accordance
with the terms of the Brady Bonds. Brady Bonds issued to date are purchased and
sold in secondary markets through U.S. securities dealers and other financial
institutions and are generally maintained through European transnational
securities depositories. Many of the Brady Bonds in which the Fund invests are
likely to be acquired at a discount.
Yankee Bonds
- ------------
The Funds may invest in U.S. dollar denominated bonds sold in the United
States by non-U.S. issuers ("Yankee bonds"). As compared with bonds issued in
the United States, such bond issues normally carry a higher interest rate but
are less actively traded.
Repurchase Agreements
- ---------------------
Each Fund may enter into repurchase agreements, by which the Fund purchases
a security and obtains a simultaneous commitment from the seller (a bank or, to
the extent permitted by the Investment Company Act of 1940 (the "1940 Act"), a
recognized securities dealer) to repurchase the security at an agreed upon price
and date (usually seven days or less from the date of original purchase). The
resale price is in excess of the purchase price and reflects an agreed upon
market rate unrelated to the coupon rate on the purchased security.
-4-
<PAGE>
Such transactions afford the Funds the opportunity to earn a return on
temporarily available cash at minimal market risk. While the underlying
security may be a bill, certificate of indebtedness, note or bond issued by an
agency, authority or instrumentality of the United States Government, the
obligation of the seller is not guaranteed by the U.S. Government and there is a
risk that the seller may fail to repurchase the underlying security. In such
event, the Fund would attempt to exercise rights with respect to the underlying
security, including possible disposition in the market. However, the Fund may
be subject to various delays and risks of loss, including (a) possible declines
in the value of the underlying security during the period while the Fund seeks
to enforce its rights thereto and (b) inability to enforce rights and the
expenses involved in attempted enforcement.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
- --------------------------------------------------------------------------------
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
C. JAMES P. DAWNAY* [49]-- Trustee and President. Director of Corporate
---------------------
Development at Martin Currie Ltd. since 1992. Formerly, Director of Mercury
Asset Management and Chairman of Mercury Fund Managers.
PATRICK R. WILMERDING [53] -- Trustee. 79 Milk Street, Room 907, Boston,
-------
MA 02109. Self-employed investment manager since 1993. Director of The
Providence Journal. Formerly, Director of Lenox Capital and Division Executive
of The First National Bank of Boston.
SIMON D. ECCLES [61]-- Trustee. 27 Chestnut Street, Boston, MA 02108.
-------
Chairman and Manager of Venturi Investment Trust.
W. STEWART COGHILL [58]-- Vice President and Treasurer. Director of
----------------------------
Finance and Administration of Martin Currie Ltd.
J. GRANT WILSON [33]-- Vice President. Director and head of North American
--------------
Investment Team at Martin Currie Investment Management Ltd. Formerly a North
American fund manager at Gartmore Investments.
JULIAN M.C. LIVINGSTON [36]-- Clerk. Legal Executive and Compliance
-----
officer at Martin Currie Group since August 1992. Fixed Income Analyst at
Scottish Widows
- ---------------------------
* Trustees who are "interested persons" (as defined in the 1940 Act) of
the Trust or the Manager.
-5-
<PAGE>
Investment Management, Ltd. from May 1991 to August 1992. Attorney at
Linklaters & Paines prior to May 1991.
Previous positions during the past five years with Martin Currie are
omitted, if not materially different from the positions listed.
The address of each trustee and officer of the Trust affiliated with Martin
Currie is Saltire Court, 20 Castle Terrace, Edinburgh, Scotland EH1 2ES. The
Trust pays no compensation to its officers or to the trustees listed above who
are interested persons of the Trust. For the fiscal year ended April 30, 1996,
Simon Eules and Patrick Wilmerding were paid $8,000 and $9,000, respectively.
Currently, the Trust pays both Messrs. Eules and Wilmerding $10,000 per annum.
As of the date hereof, the trustees and officers as a group owned less
than 1% of the outstanding shares of each Fund.
The following table sets forth the name, address and percentage ownership
of the control persons and each other holder of 5% or more of a Fund's
outstanding securities as of July 31, 1996. Other than those shareholders noted
below, the Trust believes that no person or group owns, of record or
beneficially, 5% or more of the shares of any Fund. A holder is deemed to
control a Fund through possession of beneficial ownership, either directly or
indirectly, of more than 25% of the Fund's shares:
<TABLE>
<CAPTION>
Shareholder Address Percentage of Shares Held
----------- ------- -------------------------
<S> <C> <C>
Global Growth Fund
- ---------------------------
The Fresh Air Fund 1040 Avenue of the 33.7
Americas New York, NY
10018
The Walter and Elise One Lombard, Suite 305 66.3
Haas Fund San Francisco, CA 94111
Opportunistic EAFE Fund
- ---------------------------
Saint Lukes Health Care 101 Page Street 5.0
System New Bedford, MA 02740
API Retirement Income 1220 L Street NW 8.5
Plan Washington, D.C. 20005
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Shareholder Address Percentage of Shares Held
----------- ------- -------------------------
<S> <C> <C>
National Geographic 1145 17th Street NW 9.6
Society Washington, D.C. 20036
Georgia Tech 225 N Avenue, NW 6.0
Foundation Inc. Atlanta, GA 30332-0182
Comerica Bank as TTEE 2401 PGA BLVD 6.7
for The Henry Ford II Suite 198
STLMT TR # 1007871 Palm Beach Gardens, FL
33410
Lin Television Corp. 1 Richmond Square 5.9
Retirement Plan Providence, RI 02906
Medtronics Inc. 7000 Central Ave, N.E. 12.9
Minneapolis, MN 55432
Japan Small Companies Fund
- ---------------------------
CAAT Pension Plan Suite 902 7.0
50 Burnhamthorpe Road West
Mississauga
Canada
LICR Fund Inc. 1345 Avenue of the Americas 5.7
Room 3424
New York, NY
State Universities 1901 Fox Drive 9.3
Retirement System of P.O. Box 2710
Illinois Champaign, IL 61825-2710
Vought Aircraft Co. P.O. Box 655907 5.4
Employee Benefit Fund Dallas, TX 75265-5907
Pennsylvania Public P.O. Box 125 26.8
Schools Employee Harrisburg, PA 17108-0125
Retirement System
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Shareholder Address Percentage of Shares Held
----------- ------- -------------------------
<S> <C> <C>
Emerging Americas Fund
- ----------------------
State Universities 1901 Fox Drive 9.0
Retirement System Of P.O. Box 2710
Illinois Champaign, IL 61825-2710
Mayo Foundation 200 SW 1st Street 6.3
Pension Rochester, MN 55905
Mayo Foundation 200 SW 1st Street 6.3
General Fund Rochester, MN 55905
Maine State Retirement State House Station #46 5.3
System Augusta, ME 04333
Pennsylvania Public P.O. Box 125 26.5
Schools employee Harrisburg, Pa 17108-0125
Retirement Sysatem
CAAT Pension Plan Suite 902 6.7
50 Burnhamthorpe Road West
Mississauga
Canada
LICR Fund Inc. 1345 Avenue of the Americas 5.1
Room 3424
New York, NY
Emerging Asia Fund
- ------------------
Vought Aircraft Co. P.O. Box 655907
Employee Benefit Fund Dallas, Tx 75265-5907 5.1
LICR Fund Inc. 1345 Avenue of the Americas 5.8
Room 3424
New York, NY
State Universities 1901 Fox Drive 8.8
Retirement System of P.O. Box 2710
Illinios Champaign, Il 61825-2710
Mayo Foundation 200 SW 1st Street 5.3
Pension Fund Rochester, MN 55905
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Shareholder Address Percentage of Shares Held
---------- ------- -------------------------
<S> <C> <C>
Mayo Foundation 200 SW 1st Street 5.2
General Fund Rochester, MN 55905
Pennsylvania Public P.O. Box 125 25.5
Schools Employee Harrisburg, PA 17108-0125
Retirement System
CAAT Pension Plan Suite 902 8.4
50 Burnhamthorpe Road West
Mississauga
Canada
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER SERVICES
- --------------------------------------------------------------------------------
Advisory Agreements Martin Currie serves as the investment adviser of each
-------------------
Fund under a separate investment advisory agreement dated May 23, 1994 and
subsequently reapproved. Martin Currie is a wholly-owned subsidiary of Martin
Currie, Ltd. Under each investment advisory agreement, Martin Currie manages
the investment and reinvestment of the assets of the relevant Fund, subject to
supervision by the trustees of the Trust. Martin Currie furnishes, at its own
expense, all necessary office space, facilities and equipment, services of
executive and other personnel of the Fund and certain administrative services.
For these services, the investment advisory agreements provide that each Fund
shall pay Martin Currie a quarterly investment advisory fee as stated in the
Private Placement Memorandum.
Under each investment advisory agreement, if the total ordinary business
expenses of a Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Martin Currie shall pay such excess. Presently, none of the
Funds nor the Trust as a whole is subject to any such expense limitation,
however.
As described in the Private Placement Memorandum, Martin Currie has agreed
to certain voluntary arrangements to limit Fund expenses. These arrangements
may be modified or terminated by Martin Currie at any time.
-9-
<PAGE>
During each fiscal year from each Fund's commencement of operations to
April 30, 1996, Martin Currie received the following amount of investment
advisory fees from each Fund (before voluntary fee reductions and expense
assumptions) and bore the following amounts of fee reductions and expense
assumptions for each Fund:
<TABLE>
<CAPTION>
Fee Waivers and
Advisory Fees for Expense Limitations
Commencement fiscal year ending for fiscal year
Fund of Operations April 30, ending April 30,
---- ------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Global Growth Fund 6/15/94 $282,867 $224,290 $107,235 $ 81,381
Opportunistic EAFE Fund 7/1/94 655,301 213,097 51,287 113,102
Japan Small Companies Fund 8/15/94 603,494 147,123 0 32,425
Emerging Americas Fund 9/19/94 910,272 286,187 151,712 0
Emerging Asia Fund 3/24/95 1,216,136 47,587 202,689 27,339
Global Emerging Markets Fund N/A N/A N/A N/A N/A
</TABLE>
Each investment advisory agreement provides that it will continue in effect
for two years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the trustees of the Trust or by
vote of a majority of the outstanding voting securities of the relevant Fund and
(ii) by vote of a majority of the trustees who are not "interested persons" of
the Trust, as that term is defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval. Any amendment to an advisory
agreement must be approved by vote of a majority of the outstanding voting
securities of the relevant Fund and by vote of a majority of the trustees who
are not interested persons, cast in person at a meeting called for the purpose
of voting on such approval. Each investment advisory agreement may be terminated
without penalty by vote of the trustees or by vote of a majority of the
outstanding voting securities of the relevant Fund, upon sixty days' written
notice, or by Martin Currie upon sixty days' written notice, and each terminates
automatically in the event of its assignment.
Each advisory agreement provides that Martin Currie shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Martin Currie acts as investment adviser to other registered investment
companies and to numerous other corporate and fiduciary clients.
-10-
<PAGE>
Certain officers and trustees of the Trust also serve as officers,
directors and trustees of other investment companies and clients advised by
Martin Currie. The other investment companies and clients sometimes invest in
securities in which the Funds also invest. If a Fund and such other investment
companies or clients desire to buy or sell the same portfolio securities at the
same time, purchases and sales may be allocated, to the extent practicable, on a
pro rata basis in proportion to the amounts desired to be purchased or sold for
each. It is recognized that in some cases the practices described in this
paragraph could have a detrimental effect on the price or amount of the
securities which a Fund purchases or sells. In other cases, however, it is
believed that these practices may benefit the Funds. It is the opinion of the
trustees that the desirability of retaining Martin Currie as adviser for the
Funds outweighs the disadvantages, if any, which might result from these
practices.
Custodial Arrangements State Street Bank and Trust Company ("State Street
----------------------
Bank"), Boston, Massachusetts 02110, provides certain administrative services
to each Fund and serves as the Trust's custodian. As such, State Street Bank or
sub-custodians acting at its direction hold in safekeeping certificated
securities and cash belonging to the Funds and, in such capacity, are the
registered owners of securities held in book entry form belonging to the Funds.
Upon instruction, State Street Bank or such sub-custodians receive and deliver
cash and securities of the Funds in connection with Fund transactions and
collect all dividends and other distributions made with respect to Fund
portfolio securities.
With respect to securities obtained by the Trust through the Manager's
investment quota granted by authorities in Taiwan, such purchases will be made
through various sub-accounts, the custody of which will be maintained by the
Hong Kong and Shanghai Banking Corporation Limited, Taipei, acting on
instructions from State Street Bank relating to order confirmation and the
settlement of transactions.
Independent Accountants The Fund's independent accountants are Price
-----------------------
Waterhouse LLP, 160 Federal Street, Boston, Massachusetts. Price Waterhouse LLP
conducts an annual audit of the Trust's financial statements, assists in the
preparation of the Funds' federal and state income tax returns and consults with
the Funds as to matters of accounting and federal and state income taxation.
Affiliated Broker-Dealer Martin Currie Investor Services, Inc. was
------------------------
registered with the National Association of Securities Dealers, Inc. on April
23, 1996. The business of Martin Currie Investor Services, Inc. involves only
the solicitation of direct investments in mutual funds; Martin Currie Investor
Services, Inc. does not have custody of customer funds or securities.
-11-
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICING PLANS
- --------------------------------------------------------------------------------
The Trust has adopted a distribution and servicing plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 for each Fund (the "Plans").
The Plans authorize the Manager to spend an amount of the advisory fees it
collects from each Fund up to 0.25% per annum of the average monthly net assets
of the Fund for activities or services primarily intended to result in the sale
of shares of the relevant Fund or for the provision of personal services to
shareholders of such Fund.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
In placing orders for the purchase and sale of portfolio securities for
each Fund, Martin Currie always seeks the best price and execution.
Transactions in unlisted securities are carried out through broker-dealers who
make the primary market for such securities unless, in the judgment of Martin
Currie, a more favorable price can be obtained by carrying out such transactions
through other brokers or dealers.
Martin Currie selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Martin Currie will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time to
time and will evaluate the overall reasonableness of brokerage commissions paid
on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount of
the capital commitment by the broker in connection with the order, are taken
into account. The Funds may pay a broker a commission at a higher rate than
otherwise available for the same transaction in recognition of the value of
research services provided by the broker or in recognition of the value of any
other services provided by the broker.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Martin Currie believes will provide best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset
-12-
<PAGE>
allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Martin Currie's expenses. Such services may be
used by Martin Currie in servicing other client accounts and in some cases may
not be used with respect to the Funds. Receipt of services or products other
than research from brokers is not a factor in the selection of brokers.
The following table sets forth for each fiscal year from each Fund's
commencement of operations (shown below) through April 30, 1996 (1) the
aggregate dollar amount of brokerage commissions paid on portfolio transactions
during the period; (2) the dollar amount of transactions on which commissions
were paid during such period that were directed to brokers providing research
services ("directed transactions"); and (3) the dollar amount of commissions
paid on directed transactions during such period:
<TABLE>
<CAPTION>
(1) (2) (3)
Aggregate
Brokerage
Commissions Commissions
Commencement for fiscal year Directed on Directed
Fund of Operations ending April 30, Transactions Transactions
---- ------------- --------------- ------------ ------------
1996 1995
---- ----
<S> <C> <C> <C> <C> <C>
Global Growth Fund 6/15/94 $120,093 $122,012 N/A N/A
Opportunistic EAFE Fund 7/1/94 281,823 241,090 N/A N/A
Japan Small Companies Fund 8/15/94 293,649 207,329 N/A N/A
Emerging Americas Fund 9/19/94 229,996 127,468 N/A N/A
Emerging Asia Fund 3/24/95 1,195,696 166,481 N/A N/A
Global Emerging Markets Fund N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
DESCRIPTION OF THE TRUST
- --------------------------------------------------------------------------------
The Trust, registered with the SEC as a diversified open-end
management investment company, is organized as a Massachusetts business trust
under the laws of Massachusetts by an Agreement and Declaration of Trust (the
"Declaration of Trust") dated May 20, 1994.
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of each series. Each share of each Fund
represents an equal proportionate
-13-
<PAGE>
interest in such Fund with each other share of that Fund and is entitled to a
proportionate interest in the dividends and distributions from that Fund. The
shares of each Fund do not have any preemptive rights. Upon termination of any
Fund, whether pursuant to liquidation of the Trust or otherwise, shareholders of
that Fund are entitled to share pro rata in the net assets of that Fund
available for distribution to shareholders. The Declaration of Trust also
permits the trustees to charge shareholders directly for custodial, transfer
agency and servicing expenses.
The assets received by each Fund for the issue or sale of its shares
and all income, earnings, profits, losses and proceeds therefrom, subject only
to the rights of creditors, are allocated to, and constitute the underlying
assets of, that Fund. The underlying assets are segregated and are charged with
the expenses with respect to that Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular Fund are allocated by or under the
direction of the trustees in such manner as the trustees determine to be fair
and equitable. While the expenses of the Trust are allocated to the separate
books of account of each Fund, certain expenses may be legally chargeable
against the assets of all Funds.
The Declaration of Trust also permits the trustees, without
shareholder approval, to issue shares of the Trust in one or more series, and to
subdivide any series of shares into various classes of shares with such dividend
preferences and other rights as the trustees may designate. While the trustees
have no current intention to exercise this power, it is intended to allow them
to provide for an equitable allocation of the impact of any future regulatory
requirements which might affect various classes of shareholders differently, or
to permit shares of a series to be distributed through more than one
distribution channel, with the costs of the particular means of distribution (or
costs of related services) to be borne by the shareholders who purchase through
that means of distribution. The trustees may also, without shareholder
approval, establish one or more additional separate portfolios for investments
in the Trust or merge two or more existing portfolios. Shareholders'
investments in such an additional or merged portfolio would be evidenced by a
separate series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or any Fund, however, may be terminated at any time by vote of
at least two-thirds of the outstanding shares of each Fund affected. The
Declaration of Trust further provides that the trustees may also terminate the
Trust or any Fund upon written notice to the shareholders.
Voting Rights
- -------------
As summarized in the Private Placement Memorandum shareholders are
entitled to one vote for each full share held (with fractional votes for each
fractional share held) and may vote (to the extent provided in the Declaration
of Trust) in the election of trustees and the termination of the Trust and on
other matters submitted to the vote of shareholders.
-14-
<PAGE>
The Declaration of Trust provides that on any matter submitted to a
vote of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be affected by the vote, in which case a separate
vote of that series or sub-series shall also be required to decide the question.
Also, a separate vote shall be held whenever required by the 1940 Act or any
rule thereunder. Rule 18f-2 under the 1940 Act provides in effect that a class
shall be deemed to be affected by a matter unless it is clear that the interests
of each class in the matter are substantially identical or that the matter does
not affect any interest of such class. On matters affecting an individual
series, only shareholders of that series are entitled to vote. Consistent with
the current position of the SEC, shareholders of all series vote together,
irrespective of series, on the election of trustees and the selection of the
Trust's independent accountants, but shareholders of each series vote separately
on other matters requiring shareholder approval, such as certain changes in
fundamental investment policies of that series or the approval of the investment
advisory agreement relating to that series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold office
and may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust, (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value) and (iii) to issue shares of the Trust
in one or more series, and to subdivide any series of shares into various
classes of shares with such dividend preferences and other rights as the
trustees may designate.
-15-
<PAGE>
Shareholder and Trustee Liability
- ---------------------------------
Under Massachusetts law shareholders could, under certain circum-
stances, be held personally liable for the obligations of the Fund of which
they are shareholders. However, the Declaration of Trust disclaims share-
holder liability for acts or obligations of each Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees. The Declaration of Trust
provides for indemnification out of Fund property for all loss and expense of
any shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the trustees will not
be liable for errors of judgment or mistakes of fact or law. However, nothing
in the Declaration of Trust protects a trustee against any liability to which
the trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. The By-Laws of the Trust provide for indemnification by
the Trust of the trustees and officers of the Trust except with respect to any
matter as to which any such person did not act in good faith in the reasonable
belief that such action was in or not opposed to the best interests of the
Trust. No officer or trustee may be indemnified against any liability to the
Trust or the Trust's shareholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The procedures for purchasing shares of the Funds are summarized in
the Private Placement Memorandum under "Purchase of Shares".
- --------------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
- --------------------------------------------------------------------------------
The net asset value of the shares of each Fund is determined by
dividing that Fund's total net assets (the excess of its assets over its
liabilities) by the total number of shares of the Fund outstanding and rounding
to the nearest cent. Such determination is made monthly and as of the close of
regular trading on the New York Stock Exchange on any day on which an order for
purchase or redemption of a Fund's shares is received that the Exchange is open
for unrestricted trading. Equity securities listed on an established securities
exchange or on the NASDAQ National Market System are normally valued at their
last sale price on the exchange where
-16-
<PAGE>
primarily traded or, if there is no reported sale during the day, and in the
case of over the counter securities not so listed, at the mean between the last
bid and asked price. Other securities for which current market quotations are
not readily available (including restricted securities, if any) and all other
assets are taken at fair value as determined in good faith by the trustees,
although the actual calculations may be made by persons acting pursuant to the
direction of the trustees or by pricing services.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of regular trading on the
New York Stock Exchange. Occasionally, events affecting the value of foreign
fixed income securities and of equity securities of non-U.S. issuers not traded
on a U.S. exchange may occur between the completion of substantial trading of
such securities for the day and the close of regular trading on the New York
Stock Exchange, which events will not be reflected in the computation of a
Fund's net asset value. If events materially affecting the value of any Fund's
portfolio securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or in accordance with
procedures approved by the trustees.
- --------------------------------------------------------------------------------
REDEMPTIONS
- --------------------------------------------------------------------------------
The procedures for redemption of Fund shares are summarized in the
Private Placement Memorandum under "How to Redeem Shares."
- --------------------------------------------------------------------------------
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
As described in the Private Placement Memorandum under
"Distributions," it is the policy of each Fund to pay its shareholders, as
dividends, substantially all net investment income and to distribute annually
all net realized capital gains, if any, after offsetting any capital loss
carryovers.
Income dividends and capital gain distributions are payable in full
and fractional shares of the particular Fund based upon the net asset value
determined as of the close of regular trading on the New York Stock Exchange on
the record date for each dividend or distribution. Shareholders, however, may
elect to receive their distributions in cash. The election may be made at any
time by submitting a written request directly to the Trust. In order for a
change to be in effect for any dividend or distribution, it must be received by
the Trust on or before the record date for such dividend or distribution.
-17-
<PAGE>
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Code. To the extent it qualifies for
treatment as a regulated investment company, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gain distributions.
Non-tax-exempt shareholders of each Fund will be subject to federal
income taxes on distributions made by the Fund whether received in cash or
additional shares of the Fund. Distributions by each Fund of net income and
short-term capital gains, if any, will be taxable to shareholders as ordinary
income. Distributions of long-term capital gains, if any, will be taxable to
shareholders as long-term capital gains, without regard to how long a
shareholder has held shares of the Fund.
Dividends and distributions on Fund shares received shortly after
their purchase are subject to federal income taxes, notwithstanding that such
payments are effectively a return of capital to the purchasing shareholder.
Redemptions and exchanges of each Fund's shares are taxable events
and, accordingly, shareholders may realize gains and losses on these
transactions. If shares have been held for more than one year, gain or loss
realized will be long-term capital gain or loss, provided the shareholder holds
the shares as a capital asset. However, if a shareholder sells Fund shares at a
loss within six months after purchasing the shares, the loss will be treated as
a long-term capital loss to the extent of any long-term capital gain
distributions received by the shareholder. Furthermore, no loss will be allowed
on the sale of Fund shares to the extent the shareholder acquired other shares
of the same Fund within 30 days prior to the sale of the loss shares or 30 days
after such sale.
The Fund is generally required to withhold and remit to the U.S.
Treasury 31% of all dividends from net investment income and capital gain
distributions, whether distributed in cash or reinvested in shares of the Fund,
paid or credited to any shareholder account for which an incorrect or no
taxpayer identification number has been provided or where the Fund is notified
that the shareholder has underreported income in the past (or the shareholder
fails to certify that he is not subject to such withholding). In addition, the
Fund will generally be required to withhold and remit to the U.S. Treasury 31%
of the amount of the proceeds of any redemption of Fund shares from a
shareholder account for which an incorrect or no taxpayer identification number
has been provided.
A Fund's transactions in options, futures contracts, hedging
transactions, forward contracts, straddles and foreign currencies will be
subject to special tax rules (including mark-to-market, straddle, wash-sale and
short-sale rules), the effect of which may be to accelerate income to the Fund,
defer losses to the Fund, cause adjustments in the holding periods of the
-18-
<PAGE>
Fund's securities and convert short-term capital losses into long-term capital
losses. These rules could therefore affect the amount, timing and character of
distributions to shareholders.
The Fund may be subject to foreign withholding taxes on income and
gains derived from foreign investments. Such taxes would reduce the yield on
the Fund's investments, but, as discussed in the Private Placement Memorandum,
may be taken as either a deduction or a credit by U.S. citizens and
corporations.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax
law. Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of each Fund for the fiscal year ended
April 30,1996 included in this Statement of Additional Information (see
"Financial Statements" below) have been included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
-19-
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
COMMON STOCK, WARRANTS AND EXCHANGEABLE NOTES - 98.8%
EUROPE - 27.9%
AUSTRIA - 0.3%
Flughafen Wien * 2,600 $ 182,350
----------
TOTAL AUSTRIA - (Cost $102,224) 182,350
----------
BELGIUM - 0.5%
Kredietbank 900 257,306
----------
TOTAL BELGIUM - (Cost $229,559) 257,306
----------
FRANCE - 4.2%
AXA 8,709 518,916
Elf Aquitaine 2,717 202,060
Imetal 1,300 203,522
L'Oreal 1,700 525,380
Peugeot 1,300 181,635
Schneider * 6,740 314,077
Seita 7,300 281,122
----------
TOTAL FRANCE - (Cost $1,963,787) 2,226,712
----------
GERMANY - 3.3%
Deutsche Bank 5,700 273,178
Hoechst 1,100 370,475
Mannesmann 1,500 512,444
Veba 11,900 591,541
----------
TOTAL GERMANY - (Cost $1,471,936) 1,747,638
----------
ITALY - 1.4%
La Rinascente 43,000 297,587
Telecom Italia Mobile * 194,000 428,489
----------
TOTAL ITALY - (Cost $407,404) 726,076
----------
LUXEMBOURG - 0.1%
Millicom International Cellular * 800 37,800
----------
TOTAL LUXEMBOURG - (Cost $23,138) 37,800
----------
NETHERLANDS - 2.6%
Elsevier 38,500 579,691
Internationale Nederlanden 7,140 551,282
Polygram 3,800 226,204
----------
TOTAL NETHERLANDS - (Cost $880,052) 1,357,177
----------
SPAIN - 1.5%
Banco Santander 7,000 325,236
Centros Comerciales Continente * 10,318 227,126
Repsol Petroleo 6,500 238,384
----------
TOTAL SPAIN - (Cost $733,805) 790,746
----------
SWEDEN - 1.2%
Ericsson L.M. Telephone, Cl B 19,952 404,536
</TABLE>
See notes to financial statements.
F-1
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
EUROPE - Continued
SWEDEN - Continued
Stora Kopparberg 19,500 $ 263,101
----------
TOTAL SWEDEN - (Cost $671,817) 667,637
----------
SWITZERLAND - 3.0%
Ciba - Geigy 350 406,210
Nestle 510 567,260
Roche Holdings 40 314,594
Zurich Versicherungs 1,050 293,452
----------
TOTAL SWITZERLAND - (Cost $1,423,241) 1,581,516
----------
UNITED KINGDOM - 9.8%
Argyll 53,000 264,880
Barratt Development 71,000 288,040
British Telecommunications 42,000 230,453
BTR, warrants, 1995/1996 * 84,000 77,766
Cable & Wireless 27,000 211,960
East Midlands Electricity 27,122 255,787
GKN 19,000 281,010
Glaxo Wellcome 31,000 375,892
Granada 25,000 309,913
Ladbroke 109,000 320,781
LASMO 54,017 156,123
Lloyds TSB 63,000 302,055
McKechnie 22,000 172,211
NFC 121,000 313,292
Reckitt & Colman 35,000 384,089
Shell Transport & Trading 24,000 316,664
Unilever 20,000 366,100
Wassall 45,000 202,544
Wolseley 48,000 338,522
----------
TOTAL UNITED KINGDOM - (Cost $4,716,079) 5,168,082
----------
TOTAL EUROPE - (Cost $12,623,042) 14,743,040
----------
LATIN AMERICA - 2.7%
ARGENTINA - 0.3%
Capex, GDR * 3,200 44,800
Companhia Naviera Perez Companc 10,536 65,541
YPF Sociedad Anonima, ADR 1,400 30,625
----------
TOTAL ARGENTINA - (Cost $130,549) 140,966
----------
BRAZIL - 1.2%
Centrais Eletricas Brasileiras, ADR 7,600 92,150
Companhia Energetica de Minas, ADR 3,500 90,983
Companhia Vale do Rio Doce, ADR 6,600 123,337
Rhodia - Ster, GDS * 5,176 42,781
Telebras, ADR 3,950 213,794
Usiminas, ADR 8,600 95,890
----------
TOTAL BRAZIL - (Cost $602,729) 658,935
----------
</TABLE>
See notes to financial statements.
F-2
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
LATIN AMERICA - Continued
CHILE - 0.3%
Madeco, ADR 2,300 $ 57,500
Maderas y Sinteticos Sociedad, ADR 3,400 53,975
Sociedad Quimica y Minera, ADR 850 45,475
----------
TOTAL CHILE - (Cost $169,657) 156,950
----------
COLOMBIA - 0.2%
Cementos Diamante, GDS (e) 5,700 114,000
----------
TOTAL COLOMBIA - (Cost $131,796) 114,000
----------
MEXICO - 0.6%
Corporacion Industrial Alfa, Cl A 3,700 54,031
Corporacion Industrial Sanluis 1,400 49,000
Empresas ICA Sociedad, ADR * 3,500 48,562
Grupo Carso, ADR * 4,500 68,625
Grupo Financiero Banamex Cl L * 660 1,356
Grupo Financiero Banamex, Cl B * 22,000 50,692
Kimberly Clarke, ADR 1,600 58,600
----------
TOTAL MEXICO - (Cost $198,660) 330,866
----------
PERU - 0.1%
Peru Real Estate, Cl B * 180,000 64,543
----------
TOTAL PERU - (Cost $81,818) 64,543
----------
TOTAL LATIN AMERICA - (Cost $1,315,209) 1,466,260
----------
NORTH AMERICA - 23.5%
UNITED STATES - 23.5%
Allied Signal 9,750 566,719
Archer - Daniels - Midland 26,171 493,978
Bristol - Myers - Squibb 7,300 600,425
Caremark International * 26,000 718,250
Colgate - Palmolive 8,300 635,987
Dean Witter, Discover 11,600 632,200
Dillard Department Store 13,600 545,700
Eastman Kodak 10,100 772,650
Freeport McMoran, Inc. 21,133 771,354
Freeport McMoran Copper & Gold, Cl A 13,736 434,401
Freeport McMoran Copper & Gold, Cl B 11,929 392,166
General Electric 8,600 666,500
Intel 7,650 518,288
Marsh & McLennan 6,700 629,800
Philip Morris 6,850 617,356
Schlumberger 6,800 600,100
Sears, Roebuck 9,500 473,813
Texaco 7,200 615,600
Union Pacific 9,100 619,937
Walt Disney 8,900 551,800
Westinghouse Electric 29,500 556,812
----------
TOTAL UNITED STATES - (Cost $9,344,640) 12,413,836
----------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
TOTAL NORTH AMERICA - (Cost $9,344,640) $ 12,413,836
------------
PACIFIC BASIN - 16.3%
AUSTRALIA - 2.4%
Broken Hill Proprietary 41,400 637,098
Highlands Gold * 23,000 1,807
M.I.M. Holdings 115,000 169,835
Qantas Airways 101,200 179,664
Western Mining 37,000 269,725
-----------
TOTAL AUSTRALIA - (Cost $1,144,961) 1,258,129
-----------
HONG KONG - 6.1%
Amoy Properties 400,000 449,874
China Light & Power 78,000 368,043
Hong Kong Telecommunications 232,800 443,901
HSBC Holdings 47,054 702,571
Hutchison Whampoa 99,000 614,311
Swire Pacific 74,500 635,641
-----------
TOTAL HONG KONG - (Cost $2,966,892) 3,214,341
-----------
MALAYSIA - 2.5%
AMMB Holdings 34,000 514,780
Edaran Otomobile Nasional 30,000 256,287
Resorts World 30,000 181,687
United Engineers * 51,000 349,777
-----------
TOTAL MALAYSIA - (Cost $1,121,941) 1,302,531
-----------
SINGAPORE - 2.3%
Development Bank of Singapore 42,000 531,797
First Capital 67,000 212,562
Jardine Matheson 56,284 450,272
-----------
TOTAL SINGAPORE - (Cost $1,124,785) 1,194,631
-----------
SOUTH KOREA - 0.5%
CITC Seoul Exel Trust, IDR * 7 (a) 69,650
Korea Preferred Fund * 22,000 220,660
-----------
TOTAL SOUTH KOREA - (Cost $307,000) 290,310
-----------
TAIWAN - 0.9%
Taiwan Opportunities Fund (b) * 58,500 505,440
-----------
TOTAL TAIWAN - (Cost $552,213) 505,440
-----------
THAILAND - 1.6%
Thai Military Bank 121,000 584,761
TPI Polene, alien shares 21,500 119,234
TPI Polene, local shares 24,500 134,901
-----------
TOTAL THAILAND - (Cost $815,203) 838,896
-----------
TOTAL PACIFIC BASIN - (Cost $8,032,995) 8,604,278
-----------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
OTHER AREAS - 2.0%
INDIA - 0.9%
Himalayan Fund * 29,031 $ 449,981
Himalayan Fund, warrants, 12/31/1996 * 3,406 1,294
----------
TOTAL INDIA - (Cost $506,643) 451,275
----------
NEW ZEALAND - 0.5%
Carter Holt Harvey 120,000 284,399
----------
TOTAL NEW ZEALAND - (Cost $277,501) 284,399
----------
SOUTH AFRICA - 0.6%
Barlow 4,900 56,429
Malbak 13,000 63,195
Safmarine & Rennie 21,000 63,195
Sasol 9,000 95,000
South African Breweries 2,100 60,885
----------
TOTAL SOUTH AFRICA - (Cost $325,861) 338,704
----------
TOTAL OTHER AREAS - (Cost $1,110,005) 1,074,378
----------
JAPAN - 26.4%
Amano 12,000 170,929
Asahi Chemical 56,000 425,601
Asahi Diamond 10,300 140,806
Canon 29,000 576,645
Daifuku 11,000 173,510
Daiwa Securities 21,000 323,216
DDI 51 438,306
Eiden Sakakiya 10,000 134,793
Hitachi 41,000 442,904
Hitachi Metals 29,000 379,810
Ito - Yokado 9,000 530,854
Itochu 74,000 563,816
Kamigumi 34,000 351,035
Kirin Beverage 8,000 113,188
Komori 6,000 159,457
Kyocera 8,000 602,648
Mabuchi Motor 3,000 184,695
Marui 14,000 309,163
MBL Int'l Finance (Bermuda), Exch.
GTD Notes, 3.000%, 11/30/2002 (c) $ 390,000 (c) 451,425
Mitsubishi Heavy Industries 90,000 803,594
Mitsui Fudosan 35,000 461,737
Nippon Express 52,000 541,848
Nitto Denko 14,000 226,184
Nomura Securities 24,000 523,111
Organo 10,000 110,893
Riso Kagaku 2,000 169,782
Rohm 11,000 700,349
Sekisui House, No 4 warrants, 1997 * 30 60,000
Shimachu 6,000 203,623
Shin - Etsu Chemical 17,850 390,770
Sony 8,000 520,052
</TABLE>
See notes to financial statements.
F-5
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
JAPAN - Continued
Sumitomo Electric 32,000 $ 458,869
Sumitomo Forestry 22,000 338,607
Sumitomo Trust & Banking 53,000 775,202
Taisho Pharmaceutical 5,000 109,459
Tokio Marine & Fire 38,000 523,111
Toyota Motor 25,000 571,196
----------
TOTAL JAPAN - (Cost $13,140,675) 13,961,188
----------
TOTAL COMMON STOCK, WARRANTS AND EXCHANGEABLE
NOTES - (Cost $45,566,566) + 52,262,980
----------
Principal
Amount
------
SHORT TERM INVESTMENT - 1.3%
State Street Bank and Trust repurchase
agreement, 4.75%, 5/1/1996 (d) $ 660,000 660,000
----------
TOTAL SHORT TERM INVESTMENT - (Cost $660,000) 660,000
----------
TOTAL INVESTMENTS - (Cost $46,226,566) - 100.1% 52,922,980
----------
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (0.1)% (35,054)
----------
NET ASSETS - 100.0% $52,887,926
==========
</TABLE>
* Non-income producing security.
(a) Reflected in units. 1 IDR Unit = 1000 shares.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Taiwan
Opportunities Fund.
(c) Reflected at par value and denominated in U.S. dollars.
(d) The repurchase agreement, dated 4/30/96, $660,087 due 5/1/96, is
collateralized by $680,000 United States Treasury Note, 5.875%, 4/30/98.
(e) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $114,000 or 0.2% of net
assets.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Aerospace 1.1%, Air
Travel 0.7%, Auto Parts 0.1%, Automobiles 1.9%, Banks 10.0%, Building and
Construction 0.7%, Chemicals 3.0%, Conglomerates 2.7%, Construction &
Mining Equipment 0.1%, Construction and Building Materials 2.5%,
Cosmetics & Toiletries 1.7%, Drugs & Health Care 2.8%, Electric Utilities
2.7%, Electrical Equipment 4.5%, Electronics 5.2%, Engineering 0.7%,
Financial Services 2.8%, Food & Beverages 2.8%, Forest Products 0.5%,
Hotels & Restaurants 0.6%, Household Products 3.4%, Industrial Machinery
4.0%, Insurance 3.8%, Investment Companies 2.4%, Leisure 2.4%, Liquor
0.1%, Metals 1.4%, Mining 4.1%, Oil & Gas 3.1%, Paper 0.6%, Petroleum
Services 1.3%, Photography 2.5%, Pollution Control 0.3%, Printing 0.3%,
Publishing 1.1%, Railroads & Equipment 1.2%, Real Estate 3.4%, Retail
Trade 5.6%, Semi-Conductor 0.2%, Steel 0.7%, Telecommunication 4.6%,
Textile 1.1%, Tobacco 1.7%, Transportation 2.4%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
IDR International Depositary Receipts.
See notes to financial statements.
F-6
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost - $45,566,566) (Note B) $ 52,262,980
Investments in repurchase agreements, at cost and value (Note B) 660,000
------------
Total Investments 52,922,980
Cash 341
Foreign currency, at value (cost - $420,022) (Note B) 419,370
Receivable for investments sold 111,320
Receivable for foreign currency sold 9,724
Dividend and interest receivable 145,769
Foreign income tax reclaim receivable 35,795
Prepaid insurance expense 3,510
Deferred organization expenses (Note B) 7,956
------------
TOTAL ASSETS 53,656,765
------------
LIABILITIES
Payable for investments purchased 545,729
Payable for forward currency contracts (Note E) 96,546
Payable for foreign currency purchased 9,722
Management fee payable (Note C) 51,597
Administration fees payable (Note C) 4,595
Trustees fees payable (Note C) 1,236
Accrued foreign capital gains tax on investments (Note B) 6,829
Accrued expenses and other liabilities 52,585
------------
TOTAL LIABILITIES 768,839
------------
TOTAL NET ASSETS $ 52,887,926
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 45,722,001
Undistributed net investment income 528,223
Accumulated net realized gain on investment and foreign currency
transactions 41,065
Net unrealized appreciation on investment and foreign currency
transactions 6,596,637
------------
TOTAL NET ASSETS $ 52,887,926
------------
NET ASSET VALUE PER SHARE $ 11.89
($52,887,926 / 4,449,551 shares of beneficial interest) ------------
</TABLE>
See notes to financial statements.
F-7
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 68,990
Dividend income 1,009,321
Foreign taxes withheld (110,235)
------------
TOTAL INVESTMENT INCOME 968,076
------------
EXPENSES
Management fee (Note C) 282,867
Custodian fee 95,500
Administration fee (Note C) 60,500
Audit fee 39,400
Legal fees 4,459
Transfer agent fee 6,300
Trustees fees (Note C) 2,600
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 17,157
Fees and expenses waived by the investment manager (Note C) (107,235)
------------
TOTAL EXPENSES 404,096
------------
NET INVESTMENT INCOME 563,980
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments (net of foreign taxes of $24,164
on net realized gains) 553,937
Net realized gain on foreign currency transactions 1,129,132
Net increase in unrealized appreciation(depreciation) on:
Investments (net of accrual for foreign capital gains tax of
$6,829 on unrealized appreciation) 5,906,618
Foreign currency transactions (220,811)
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 7,368,876
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,932,856
------------
</TABLE>
See notes to financial statements.
F-8
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year June 15, 1994 *
Ended through
April 30, 1996 April 30, 1995
-------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of period $ 37,259,376 $ 0
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 563,980 295,769
Net realized gain(loss) on investment
transactions 553,937 (1,095,274)
Net realized gain on foreign currency
transactions 1,129,132 338,945
Net increase in unrealized
appreciation(depreciation) on:
Investments 5,906,618 782,967
Foreign currency transactions (220,811) 121,034
-------------- --------------
Net increase in net assets from operations 7,932,856 443,441
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (692,764) (149,783)
In excess of net investment income (63,581) 0
Net realized gains 0 (304,244)
-------------- --------------
Total distributions (756,345) (454,027)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 7,940,000 37,000,000
Reinvestment of dividends and distributions to
shareholders 452,039 269,962
Paid in capital from subscription fees 60,000 0
-------------- --------------
Total increase in net assets from capital share
transactions 8,452,039 37,269,962
-------------- --------------
NET INCREASE IN NET ASSETS 15,628,550 37,259,376
-------------- --------------
NET ASSETS at end of period (includes $ 52,887,926 $ 37,259,376
-------------- --------------
undistributed net investment income of
$528,223 and $159,777)
OTHER INFORMATION:
Capital share transactions:
Shares sold 679,794 3,700,000
Shares issued in reinvestment of distributions
to shareholders 41,548 28,209
-------------- --------------
Net share transactions 721,342 3,728,209
============== ==============
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
F-9
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year June 15, 1994*
Ended through
April 30, 1996 April 30, 1995
-------------- --------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.990 $ 10.000
Net investment income 0.279 0.079
Net realized and unrealized gain on
investment and foreign currency transactions 1.809 0.033
----------- -----------
Total from investment operations 2.088 0.112
----------- -----------
Less distributions:
Net investment income (0.186) (0.040)
In excess of net investment income (0.017) 0.000
Net realized gains 0.000 (0.082)
----------- -----------
Total distributions (0.203) (0.122)
----------- -----------
Paid in capital from subscription fees
(Note B) 0.015 0.000
----------- -----------
Net asset value, end of period $ 11.890 $ 9.990
=========== ===========
TOTAL INVESTMENT RETURN (1) 21.17% 1.18% (2)
- ----------------------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $52,887,926 $37,259,376
Operating expenses, net, to average net
assets (Note C) 1.00% 1.00% (3)
Operating expenses, gross, to average net
assets (Note C) 1.27% 1.25% (3)
Net investment income to average net assets 1.40% 0.94% (3)
Portfolio turnover rate 38% 44%
Average commission rate per share $ 0.0335(4) N/A
Per share amount of fees waived (Note C) $ 0.053 $ 0.022
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
See notes to financial statements.
F-10
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of April 30, 1996 the Global Emerging Markets Fund
had not commenced operations. The MCBT Global Growth Fund (the "Fund")
commenced investment operations on June 15, 1994. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Valuation of Investments - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where any such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
Repurchase Agreements - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
Investment Transactions - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
Investment Income - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend date.
Interest income, which includes accretion of original issue discount, is accrued
as earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
Foreign Currency Translations - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into a foreign currency exchange contract for the purchase or
sale, for a fixed amount of U.S. dollars, of an amount of the foreign currency
required to settle the security transaction.
F-11
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign Currency Translations (Continued) - The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund on each day and
the resulting net unrealized appreciation, depreciation and related net
receivable or payable amounts are determined by using forward currency exchange
rates supplied by a quotation service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. The effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the Statement
of Operations from the effects of changes in market prices of those securities,
but are included with the net realized and unrealized gain or loss on investment
securities.
Forward Currency Contracts - A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in
currency exchange rates. The Forward is marked-to-market daily and the change
in the market value is recorded by the Fund as an unrealized gain or loss. When
the Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. The Fund could be exposed to risk if a counterparty is unable to
meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
Currency Call and Put Options - When a Fund writes an option, the premium
received by the fund is presented in the Fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. Written options are valued at the last sale price or, in
the absence of a sale, the last offering price on the market on which it is
principally traded. If an option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the Fund purchases upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into
a closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
Expenses - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are split evenly among the affected
Funds, allocated on the basis of relative average net assets, or otherwise
allocated among the Funds as the Board of Trustees may direct or approve.
Certain costs incurred in connection with the organization of the Trust and each
Fund have been deferred and are being amortized on a straight line basis over a
five year period starting on each Fund's commencement of operations.
Distributions to Shareholders - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be paid in shares of the Fund
at the net asset value unless the shareholder elects in the subscription
agreement to receive cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for market discount, foreign currency transactions, losses
deferred due to wash sales, post October 31 losses and excise tax regulations.
Permanent book and tax differences relating to shareholder distributions will
result in reclassifications to paid-in-capital. Distributions are recorded on
the ex-dividend date.
F-12
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Purchases and Redemptions of Fund Shares - There is a purchase premium for cash
investments into the Fund of 0.75% of the amount invested and a redemption fee
on cash redemptions of 0.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to, and recorded as paid-in-capital to the Fund,
subject to being waived by Martin Currie. For the period ended April 30, 1996,
$60,000 was collected in purchase premiums.
Income Taxes - Each Fund of the Trust is treated as a separate entity for
federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts, if any, during the calendar year, the Funds will not be subject
to a federal excise tax.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
unrealized appreciation as such income and/or gains are earned.
The Fund intends to pass-through foreign taxes paid during the year to its
shareholders. During the year ended April 30, 1996 the Fund paid $141,228 in
taxes to various countries.
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
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
Other - The financial highlights for certain 1995 amounts has been restated to
conform with the presentation for the period ended April 30, 1996.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie, Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by the Executive Directors of the various subsidiaries of Martin
Currie Ltd. Under the Management Contract, the Fund pays the Investment Manager
a quarterly management fee at the annual rate of 0.70% of the average net
assets.
The Investment Manager has agreed with the Fund to reduce its fee until further
notice to the extent necessary to limit the Fund's annual expenses (including
the management fee but excluding brokerage commissions, transfer taxes, and
extraordinary expenses) to 1.00% of the Fund's average net assets on an
annualized basis. For the year ended April 30, 1996, the Investment Manager has
waived $107,235 of its fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive annual fees of
$20,000. Each Fund pays a pro-rata share based on its respective net assets.
F-13
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the year ended April 30, 1996 were
$23,347,371 and $14,966,972, respectively.
The identified cost of investments in securities and repurchase agreements owned
by the Fund for federal income tax purposes and their respective gross
unrealized appreciation and depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Identified Gross Unrealized Net Unrealized
Cost Appreciation (Depreciation) Appreciation
------------ ------------ -------------- --------------
<S> <C> <C> <C>
$ 46,534,435 $ 7,455,265 $ (1,066,720) $ 6,388,545
</TABLE>
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 1996, the outstanding forward exchange contracts, which
contractually obligate the Fund to deliver currencies at a specified date, were
as follows:
<TABLE>
<CAPTION>
U.S. $ Cost U.S.$ Net Unrealized
on Origination Current Appreciation
Currency Sold Settlement Date Date Value (Depreciation)
- ------------- --------------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Japanese Yen 5/14/96 $2,832,000 $2,870,034 $ (38,034)
Japanese Yen 5/14/96 2,388,000 2,417,806 (29,806)
Japanese Yen 5/14/96 396,000 402,331 (6,331)
Japanese Yen 5/14/96 1,209,000 1,231,375 (22,375)
---------- ---------- ----------
$6,825,000 $6,921,546 $ (96,546)
========== ========== ==========
</TABLE>
NOTE F - PRINCIPAL SHAREHOLDERS
As of April 30, 1996, 100% of the Fund's outstanding shares were held by two
shareholders, each holding in excess of 10% of the Fund's outstanding shares.
NOTE G - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political, regulatory
and other conditions, and changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments and capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting, reporting
and disclosure requirements than domestic issuers. The securities of some
foreign companies and foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
F-14
<PAGE>
Report of Independent Accountants
---------------------------------
To the Trustees and Shareholders of the
Martin Currie Business Trust - Global Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Global Growth Fund at April 30,
1996, the results of its operations, the changes in its net assets, and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and the financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 19, 1996
F-15
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
COMMON STOCK, WARRANTS AND EXCHANGEABLE NOTES - 97.0%
EUROPE - 35.6%
AUSTRIA - 0.5%
Flughafen Wien * 7,270 $ 509,879
---------------
TOTAL AUSTRIA - (Cost $315,208) 509,879
---------------
BELGIUM - 0.5%
Kredietbank 2,100 600,381
---------------
TOTAL BELGIUM - (Cost $522,065) 600,381
---------------
FRANCE - 5.2%
AXA 21,426 1,276,645
Elf Aquitaine 7,503 557,988
Imetal 3,250 508,805
L'Oreal 4,300 1,328,902
Peugeot 3,100 433,130
Schneider * 18,500 862,080
Seita 17,300 666,222
---------------
TOTAL FRANCE - (Cost $4,877,887) 5,633,772
---------------
GERMANY - 4.1%
Deutsche Bank 14,100 675,757
Hoechst 2,700 909,348
Mannesmann 3,800 1,298,191
Veba 31,000 1,540,989
---------------
TOTAL GERMANY - (Cost $3,736,683) 4,424,285
---------------
ITALY - 1.8%
La Rinascente 123,670 855,872
Telecom Italia Mobile * 495,000 1,093,310
---------------
TOTAL ITALY - (Cost $1,003,356) 1,949,182
---------------
LUXEMBOURG - 0.1%
Millicom International Cellular * 2,334 110,282
---------------
TOTAL LUXEMBOURG - (Cost $54,140) 110,282
---------------
NETHERLANDS - 3.3%
Elsevier 101,030 1,521,199
Internationale Nederlanden 18,791 1,450,860
Polygram 9,405 559,854
---------------
TOTAL NETHERLANDS - (Cost $2,465,862) 3,531,913
---------------
SPAIN - 1.8%
Banco Santander 17,480 812,160
Centros Comerciales Continente * 26,944 593,107
Repsol 16,180 593,394
---------------
TOTAL SPAIN - (Cost $1,887,596) 1,998,661
---------------
SWEDEN - 1.5%
Ericsson L.M. Telephone, Cl B 47,227 957,549
Stora Kopparberg, Cl A 50,600 682,715
---------------
TOTAL SWEDEN - (Cost $1,654,059) 1,640,264
---------------
</TABLE>
F-16
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
EUROPE - Continued
SWITZERLAND - 3.7%
Ciba - Geigy 1,000 $ 1,160,599
Nestle 1,280 1,423,711
Roche Holdings 90 707,837
Zurich Versicherung 2,590 723,848
---------------
TOTAL SWITZERLAND - (Cost $3,446,695) 4,015,995
---------------
UNITED KINGDOM - 13.1%
Argyll 154,000 769,652
Barratt Development 215,933 876,019
British Telecommunications 103,200 566,256
BTR, warrants, 1995/1996 * 281,689 260,784
Cable & Wireless 65,000 510,274
East Midlands Electricity 80,588 760,024
GKN 54,530 806,499
Glaxo Wellcome 79,260 961,071
Granada 76,435 947,527
Ladbroke 296,000 871,112
LASMO 88,419 255,554
Lloyds TSB 164,000 786,301
McKechnie 74,020 579,413
NFC 318,136 823,715
Reckitt & Colman 101,000 1,108,370
Shell Transport & Trading 69,000 910,410
Unilever 49,469 905,529
Wassall 113,250 509,736
Wolseley 135,426 955,097
---------------
TOTAL UNITED KINGDOM - (Cost $12,640,681) 14,163,343
---------------
TOTAL EUROPE - (Cost $32,604,232) 38,577,957
---------------
LATIN AMERICA - 3.7%
ARGENTINA - 0.4%
Capex, GDR * 9,934 139,076
Companhia Naviera Perez Companc 32,303 200,944
YPF Sociedad Anonima, ADR 4,186 91,569
---------------
TOTAL ARGENTINA - (Cost $305,524) 431,589
---------------
BRAZIL - 1.7%
Centrais Eletricas Brasileiras, ADR 19,800 240,075
Companhia Energetica de Minas, ADR 9,700 252,152
Companhia Vale do Rio Doce, ADR 17,760 331,890
Rhodia - Ster, GDS * 17,711 146,387
Telebras, ADR 10,780 583,467
Usiminas, ADR 23,800 265,370
---------------
TOTAL BRAZIL - (Cost $1,684,415) 1,819,341
---------------
CHILE - 0.4%
Madeco, ADR 6,388 159,700
Maderas y Sinteticos Sociedad, ADR 9,662 153,384
</TABLE>
See notes to financial statements.
F-17
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
LATIN AMERICA - Continued
CHILE - Continued
Sociedad Quimica y Minera, ADR 2,334 $ 124,869
---------------
TOTAL CHILE - (Cost $276,656) 437,953
---------------
COLOMBIA - 0.3%
Cementos Diamante, GDS (f) 14,800 296,000
---------------
TOTAL COLOMBIA - (Cost $327,400) 296,000
---------------
MEXICO - 0.8%
Corporacion Industrial Alfa, Cl A 10,000 146,030
Corporacion Industrial Sanluis 4,000 140,000
Empresas ICA Sociedad, ADR * 9,800 135,975
Grupo Carso, ADR * 12,000 183,000
Grupo Financiero Banamex, Cl B * 60,000 138,250
Grupo Financiero Banamex Cl L * 1,800 3,697
Kimberly Clarke, ADR 3,900 142,837
---------------
TOTAL MEXICO - (Cost $533,269) 889,789
---------------
PERU - 0.1%
Peru Real Estate, Cl B * 250,000 89,644
---------------
TOTAL PERU - (Cost $113,636) 89,644
---------------
TOTAL LATIN AMERICA - (Cost $3,240,900) 3,964,316
---------------
PACIFIC BASIN - 18.3%
AUSTRALIA - 2.8%
Broken Hill Proprietary 97,667 1,502,982
Highlands Gold (N/P) * 54,000 4,242
M.I.M. Holdings 270,000 398,743
Qantas Airways 253,800 450,580
Western Mining 90,000 656,088
---------------
TOTAL AUSTRALIA - (Cost $2,703,891) 3,012,635
---------------
HONG KONG - 6.1%
Amoy Properties 804,900 905,259
China Light & Power 152,000 717,213
Hong Kong Telecommunications 500,000 953,397
HSBC Holdings 91,164 1,361,184
Hutchison Whampoa 205,700 1,276,401
Swire Pacific, Cl A 161,925 1,381,559
---------------
TOTAL HONG KONG - (Cost $5,809,380) 6,595,013
---------------
MALAYSIA - 2.7%
AMMB Holdings 78,000 1,180,965
Edaran Otomobile Nasional 63,000 538,202
Resorts World 68,000 411,824
United Engineers * 120,000 823,006
---------------
TOTAL MALAYSIA - (Cost $2,588,746) 2,953,997
---------------
SINGAPORE - 3.1%
Development Bank of Singapore 87,800 1,111,708
</TABLE>
F-18
See notes to financial statements.
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
PACIFIC BASIN - Continued
SINGAPORE - Continued
First Capital 175,000 $ 555,200
Jardine Matheson 140,566 1,124,528
Singapore Press 26,600 503,315
---------------
TOTAL SINGAPORE - (Cost $3,048,833) 3,294,751
---------------
SOUTH KOREA - 0.4%
CITC Seoul Exel Trust, IDR * 18 (a) 179,100
Korea Preferred Fund * 29,000 290,870
---------------
TOTAL SOUTH KOREA - (Cost $508,200) 469,970
---------------
TAIWAN - 1.4%
Taiwan Opportunities Fund (b) * 176,500 1,524,960
---------------
TOTAL TAIWAN - (Cost $1,652,817) 1,524,960
---------------
THAILAND - 1.8%
Thai Military Bank 273,100 1,319,820
TPI Polene, alien shares 31,000 171,919
TPI Polene, local shares 84,000 462,516
---------------
TOTAL THAILAND - (Cost $1,876,498) 1,954,255
---------------
TOTAL PACIFIC BASIN - (Cost $18,188,365) 19,805,581
---------------
OTHER AREAS - 2.8%
INDIA - 1.1%
Himalayan Fund, warrants, 12/31/1996 * 243 92
Indian Opportunities Fund (c) * 101,911 1,167,898
---------------
TOTAL INDIA - (Cost $1,494,888) 1,167,990
---------------
NEW ZEALAND - 0.6%
Carter Holt Harvey 280,000 663,598
---------------
TOTAL NEW ZEALAND - (Cost $652,469) 663,598
---------------
SOUTH AFRICA - 1.1%
Barlow 14,000 161,227
Malbak 41,000 199,306
Safmarine & Rennie 70,000 210,648
Sasol 35,000 369,444
South African Breweries 7,100 205,851
---------------
TOTAL SOUTH AFRICA - (Cost $1,227,053) 1,146,476
---------------
TOTAL OTHER AREAS - (Cost $3,374,410) 2,978,064
---------------
JAPAN - 36.6%
Amano 39,000 555,518
Asahi Chemical 188,000 1,428,804
Asahi Diamond 37,080 506,901
Canon 81,000 1,610,630
Canon Aptex 14,000 230,199
Daifuku 31,000 488,982
Daiwa Securities 52,000 800,344
</TABLE>
See notes to financial statements.
F-19
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
JAPAN - Continued
DDI 134 $ 1,151,628
Eiden Sakakiya 24,000 323,503
Exedy 19,000 339,659
Hitachi 106,000 1,145,070
Hitachi Metals 101,000 1,322,786
Ito - Yokado 24,000 1,415,611
Itochu 197,000 1,500,970
Kamigumi 89,000 918,885
Kirin Beverage 25,000 353,712
Komori 20,000 531,523
Kuraray, No 7 SFR warrants, 1997 * 1,320 66,978
Kyocera 24,000 1,807,944
Mabuchi Motor 7,000 430,955
Marui 35,000 772,908
MBL Int'l Finance (Bermuda), Exch. GTD Notes, 3.000%, 11/30/2002 $ 900,000 (d) 1,041,750
Mitsubishi Heavy Industries 257,000 2,294,709
Mitsui Fudosan 93,000 1,226,901
Nippon Express 144,000 1,500,502
Nitto Denko 35,000 565,460
Nomura Securities 63,000 1,373,166
Organo 30,000 332,680
Riso Kagaku 4,400 373,519
Rohm 29,000 1,846,374
Sekisui House, No 4 warrants, 1997 * 100 200,000
Shimachu 16,000 542,995
Shin - Etsu Chemical 61,950 1,356,202
Sony 22,600 1,469,146
Sumitomo Electric 83,000 1,190,192
Sumitomo Forestry 73,000 1,123,560
Sumitomo Trust & Banking 141,000 2,062,330
Taisho Pharmaceutical 16,000 350,270
Tokio Marine & Fire 108,000 1,486,736
Toyota Motor 71,000 1,622,198
---------------
TOTAL JAPAN - (Cost $35,689,900) 39,662,200
---------------
TOTAL COMMON STOCK, WARRANTS AND EXCHANGEABLE NOTES - (Cost $93,097,807)+ 104,988,118
---------------
Principal
Amount
---------
SHORT TERM INVESTMENT - 3.6%
State Street Bank and Trust repurchase agreement, 4.75%, 5/1/1996 (e) $ 3,903,000 3,903,000
---------------
TOTAL SHORT TERM INVESTMENT - (Cost $3,903,000) 3,903,000
---------------
</TABLE>
See notes to financial statements.
F-20
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
TOTAL INVESTMENTS - (Cost $97,000,807) - 100.6% $ 108,891,118
---------------
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (0.6)% (595,881)
---------------
NET ASSETS - 100.0% $ 108,295,237
===============
</TABLE>
* Non-income producing security.
(a) Reflected in units. 1 IDR Unit=1000 shares.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Taiwan
Opportunities Fund.
(c) The Indian Opportunities Fund is managed by Martin Currie Chescor Ltd.,
an associate of Martin Currie Inc.
(d) Reflected at par value and denominated in U.S. dollars.
(e) The repurchase agreement, dated 4/30/96, $3,903,515 due 5/1/96, is
collateralized by $3,995,000 United States Treasury Note, 5.875%, 4/30/98
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $296,000 or 0.3% of net
assets.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Air Travel 0.9%, Auto
Parts 0.1%, Automobiles 2.4%, Banks 11.6%, Building and Construction
1.0%, Chemicals 3.7%, Conglomerates 5.1%, Construction & Mining Equipment
0.1%, Construction and Building Materials 3.4%, Cosmetics & Toiletries
2.2%, Drugs & Health Care 2.3%, Electric Utilities 3.4%, Electrical
Equipment 2.7%, Electronics 5.6%, Engineering 0.8%, Financial Services
2.0%, Food & Beverages 2.4%, Forest Products 0.6%, Hotels & Restaurants
0.8%, Household Products 1.0%, Industrial Machinery 6.5%, Insurance 3.3%,
Investment Companies 2.9%, Leisure 1.8%, Liquor 0.2%, Metals 1.6%, Mining
1.3%, Oil & Gas 2.6%, Paper 0.8%, Petroleum Services 0.2%, Photography
1.7%, Printing 0.5%, Publishing 1.9%, Real Estate 3.8%, Retail Trade
4.9%, Semi-Conductor 0.3%, Steel 1.2%, Telecommunication 5.5%, Textiles
0.1%, Tobacco 0.6%, Transportation 3.2%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
IDR International Depositary Receipts.
See notes to financial statements.
F-21
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost - $93,097,807)
(Note B) $104,988,118
Investments in repurchase agreements, at cost and value
(Note B) 3,903,000
------------
Total Investments 108,891,118
Cash 385
Foreign currency, at value (cost - $428,906) (Note B) 427,735
Receivable for investments sold 382,761
Dividend and interest receivable 386,841
Foreign income tax reclaim receivable 81,526
Prepaid insurance expense 8,332
Deferred organization expenses (Note B) 8,075
------------
TOTAL ASSETS 110,186,773
------------
LIABILITIES
Payable for investments purchased 1,371,048
Payable for forward currency contracts (Note E) 252,447
Management fee payable (Note C) 165,912
Administration fee payable (Note C) 7,006
Trustees fees payable (Note C) 2,635
Accrued foreign capital gains tax on investments (Note B) 19,986
Accrued expenses and other liabilities 72,502
------------
TOTAL LIABILITIES 1,891,536
------------
TOTAL NET ASSETS $108,295,237
============
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 96,136,064
Undistributed net investment income 1,336,593
Accumulated net realized loss on investment and foreign
currency transactions (809,326)
Net unrealized appreciation on investment and foreign currency
transactions 11,631,906
------------
TOTAL NET ASSETS $108,295,237
============
NET ASSET VALUE PER SHARE $11.25
============
($108,295,237 / 9,628,089 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
F-22
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 260,032
Dividend income 2,351,532
Foreign taxes withheld (305,812)
-----------
TOTAL INVESTMENT INCOME 2,305,752
-----------
EXPENSES
Management fee (Note C) 655,301
Custodian fee 166,000
Administration fee (Note C) 76,848
Audit fee 37,000
Legal fees 17,500
Transfer agent fee 6,800
Trustees fees (Note C) 5,800
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 19,624
Fees and expenses waived by the investment manager (Note C) (51,287)
-----------
TOTAL EXPENSES 936,134
-----------
NET INVESTMENT INCOME 1,369,618
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments (net of foreign taxes of
$52,771 on net realized gains) 926,246
Net realized gain on foreign currency transactions 1,832,315
Net increase in unrealized appreciation(depreciation) on:
Investments (net of accrual for foreign capital gains tax of
$19,986 on unrealized appreciation) 10,906,825
Foreign currency transactions (549,779)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 13,115,607
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $14,485,225
===========
</TABLE>
See notes to financial statements.
F-23
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year July 1, 1994 *
Ended through
April 30, 1996 April 30, 1995
--------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of period $ 72,660,677 $ 0
------------ -----------
INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 1,369,618 401,984
Net realized gain(loss) on investment
transactions 926,246 (2,066,233)
Net realized gain(loss) on foreign currency
transactions 1,832,315 (230,538)
Net increase in unrealized
appreciation(depreciation) on:
Investments 10,906,825 963,500
Foreign currency transactions (549,779) 291,374
------------ -----------
Net increase(decrease) in net assets from
operations 14,485,225 (639,913)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,479,010) 0
In excess of net investment income (207,129) 0
------------ -----------
Total distributions (1,686,139) 0
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 28,787,468 73,000,541
Reinvestment of dividends and distributions
to shareholders 1,474,045 0
Cost of shares repurchased (7,701,317) (112,434)
Paid in capital from subscription and
redemption fees 275,278 412,483
------------ -----------
Total increase in net assets from capital
share transactions 22,835,474 73,300,590
------------ -----------
NET INCREASE IN NET ASSETS 35,634,560 72,660,677
------------ -----------
NET ASSETS at end of period (includes
undistributed net investment income $108,295,237 $72,660,677
of $1,336,593 and $109,392
respectively) ============ ===========
OTHER INFORMATION:
Capital share transactions:
Shares sold 2,869,376 7,382,111
Shares issued in reinvestment of
distributions to shareholders 141,057 0
Less shares repurchased (752,658) (11,797)
------------ -----------
Net share transactions 2,257,775 7,370,314
============ ===========
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
F-24
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year July 1, 1994 *
Ended through
April 30, 1996 April 30, 1995
--------------- ---------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------
Net asset value, beginning of period $ 9.860 $ 10.000
Net investment income 0.314 0.055
Net realized and unrealized gain (loss) on
investment and foreign currency transactions 1.239 (0.323)
------------ -----------
Total from investment operations 1.553 (0.268)
------------ -----------
Less distributions:
Net investment income (0.167) 0.000
In excess of net investment income (0.023) 0.000
------------ -----------
Total distributions (0.190) 0.000
------------ -----------
Paid in capital from subscription and
redemption fees (Note B) 0.027 0.128
------------ -----------
Net asset value, end of period $ 11.250 $ 9.860
============ ===========
TOTAL INVESTMENT RETURN (1) 16.17% (1.40)% (2)
- --------------------------- ============ ===========
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $108,295,237 $72,660,677
Operating expenses, net, to average net
assets (Note C) 1.00% 1.00% (3)
Operating expenses, gross, to average net
assets (Note C) 1.05% 1.37% (3)
Net investment income to average net assets 1.46% 1.32% (3)
Portfolio turnover rate 37% 39%
Average commission rate per share $ 0.0285 (4) N/A
Per share amount of fees waived (Note C) $ 0.012 $ 0.015
- ----------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
See notes to financial statements.
F-25
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of April 30, 1996 the Global Emerging Markets Fund
had not commenced operations. The MCBT Opportunistic EAFE Fund (the "Fund")
commenced investment operations on July 1, 1994. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Valuation of Investments - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where any such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
Repurchase Agreements - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
Investment Transactions - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
Investment Income - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend date.
Interest income, which includes accretion of original issue discount, is accrued
as earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
Foreign Currency Translations - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into a foreign currency exchange contract for the purchase or
sale, for a fixed amount of U.S. dollars, of an amount of the foreign currency
required to settle the security transaction.
F-26
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign Currency Translations (Continued) - The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund on each day and
the resulting net unrealized appreciation, depreciation and related net
receivable or payable amounts are determined by using forward currency exchange
rates supplied by a quotation service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. The effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the Statement
of Operations from the effects of changes in market prices of those securities,
but are included with the net realized and unrealized gain or loss on investment
securities.
Forward Currency Contracts - A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in
currency exchange rates. The Forward is marked-to-market daily and the change
in the market value is recorded by the Fund as an unrealized gain or loss. When
the Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. The Fund could be exposed to risk if a counterparty is unable to
meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
Currency Call and Put Options - When a Fund writes an option, the premium
received by the fund is presented in the Fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. Written options are valued at the last sale price or, in
the absence of a sale, the last offering price on the market on which it is
principally traded. If an option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the Fund purchases upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into
a closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
Expenses - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are split evenly among the affected
Funds, allocated on the basis of relative average net assets, or otherwise
allocated among the Funds as the Board of Trustees may direct or approve.
Certain costs incurred in connection with the organization of the Trust and each
Fund have been deferred and are being amortized on a straight line basis over a
five year period starting on each Fund's commencement of operations.
Distributions to Shareholders - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be paid in shares of the Fund
at the net asset value unless the shareholder elects in the subscription
agreement to receive cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for market discount, foreign currency transactions, losses
deferred due to wash sales, post October 31 losses and excise tax regulations.
Permanent book and tax differences relating to shareholder distributions will
result in reclassifications to paid-in-capital. Distributions are recorded on
the ex-dividend date.
F-27
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Purchases and Redemptions of Fund Shares - There is a purchase premium for cash
investments into the Fund of 0.75% of the amount invested and a redemption fee
on cash redemptions of 0.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to, and recorded as paid-in-capital to the Fund,
subject to being waived by Martin Currie. For the period ended April 30, 1996,
$217,538 was collected in purchase premiums and $57,740 was collected in
redemption fees.
Income Taxes - Each Fund of the Trust is treated as a separate entity for
federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts, if any, during the calendar year, the Funds will not be subject
to a federal excise tax. As of April 30, 1996 the Fund had capital loss carry
forwards of $31,328 which expires in the year 2003 and $588,988 which expires in
the year 2004.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
unrealized appreciation as such income and/or gains are earned.
The Fund intends to pass-through foreign taxes paid during the year to its
shareholders. During the year ended April 30, 1996 the Fund paid $378,569 in
taxes to various countries.
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
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
Other - The financial highlights for certain 1995 amounts has been restated to
conform with the presentation for the period ended April 30, 1996.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie, Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by the Executive Directors of the various subsidiaries of Martin
Currie Ltd. Under the Management Contract, the Fund pays the Investment Manager
a quarterly management fee at the annual rate of 0.70% of the average net
assets.
The Investment Manager has agreed with the Fund to reduce its fee until further
notice to the extent necessary to limit the Fund's annual expenses (including
the management fee but excluding brokerage commissions, transfer taxes, and
extraordinary expenses) to 1.00% of the Fund's average net assets on an
annualized basis. For the year ended April 30, 1996, the Investment Manager has
waived $51,287 of its fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive annual fees of
$20,000. Each Fund pays a pro-rata share based on its respective net assets.
F-28
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the year ended April 30, 1996 were
$56,888,420 and $33,043,062, respectively.
The identified cost of investments in securities and repurchase agreements owned
by the Fund for federal income tax purposes and their respective gross
unrealized appreciation and depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Identified Gross Unrealized Net Unrealized
Cost Appreciation (Depreciation) Appreciation
------------ ------------ -------------- --------------
<S> <C> <C> <C>
$97,497,830 $13,355,114 $(1,961,826) $11,393,288
</TABLE>
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 1996, the outstanding forward exchange contracts, which
contractually obligate the Fund to deliver currencies at a specified date, were
as follows:
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Net Unrealized
on Origination Current Appreciation
Currency Sold Settlement Date Date Value (Depreciation)
- --------------- --------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Japanese Yen 5/14/96 $ 7,192,000 $ 7,281,769 $ (89,769)
Japanese Yen 5/14/96 10,203,000 10,340,026 (137,026)
Japanese Yen 5/14/96 1,604,500 1,630,152 (25,652)
----------- ----------- ---------
$18,999,500 $19,251,947 $(252,447)
=========== =========== =========
</TABLE>
NOTE F - PRINCIPAL SHAREHOLDERS
As of April 30, 1996, 24% of the Fund's outstanding shares were held by two
shareholders, each holding in excess of 10% of the Fund's outstanding shares.
NOTE G - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political, regulatory
and other conditions, and changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments and capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting, reporting
and disclosure requirements than domestic issuers. The securities of some
foreign companies and foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
F-29
<PAGE>
Report of Independent Accountants
---------------------------------
To the Trustees and Shareholders of the
Martin Currie Business Trust - Opportunistic EAFE Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunistic EAFE Fund at
April 30, 1996, the results of its operations, the changes in its net assets,
and the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 19, 1996
F-30
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - 96.0%
COMMON STOCK - 84.3%
<S> <C> <C>
Aiphone 33,000 $ 716,123
Asia Securities Printing 33,000 981,119
Brother Industries 144,000 934,716
Canon Aptex 68,000 1,118,111
Chain Store Okuwa 24,000 394,627
Chiyoda 52,000 1,212,944
Chiyoda Fire & Marine 136,000 913,991
Chugoku Bank 90,000 1,651,929
Circle K Japan 50,400 2,216,338
Coco's Japan 72,000 798,432
Daifuku 100,000 1,577,362
Daikin Manufacturing 86,200 1,540,978
Daiwa Kosho Lease 158,000 1,721,906
Daiwa Logistics 60,000 1,651,929
DDI 140 1,203,193
Dowa Fire & Marine 140,000 841,834
Eiden Sakakiya 74,000 997,467
Fuji Machine Manufacturing 70,000 2,301,993
Fujitsu Business Systems 40,000 1,047,751
Glory 30,000 1,075,474
Higashi Nihon House 30,000 487,548
Hikari Tsushim 20,000 3,326,801
Hirata Technical 60,000 1,049,663
Hirose Electric 30,800 1,902,089
Izumi * 40,000 848,908
Kato Denki 45,000 993,738
Kirin Beverage 110,000 1,556,331
Mabuchi Motor 28,000 1,723,818
Maezawa Industries 100,000 2,724,535
Melco 3,300 138,808
Miura Industry 58,000 1,081,210
National House Industrial 80,000 1,414,846
Nichicon 120,000 1,996,080
Nippon System Development 13,000 222,456
Nissen 59,900 1,042,187
Nissha Printing 110,000 1,735,099
Nissin Food Products 60,000 1,646,193
Nitto Kohki 30,000 1,218,871
Noritsu Koki 14,500 590,507
NTN 90,000 660,771
Organo 110,000 1,219,827
Oriental Construction 60,500 1,041,059
PCA 14,000 562,115
Promise 41,300 1,756,943
Riso Kagaku 20,000 1,697,816
Rohto Pharmaceutical 72,000 736,485
Ryosan 65,000 1,851,728
Sanki Engineering 160,000 2,248,459
Sankyo 40,300 1,548,741
Santen Pharmaceutical 40,700 953,253
Seika 120,000 739,926
Shimachu 40,000 1,357,488
</TABLE>
See notes to financial statements.
F-31
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
COMMON STOCK - Continued
Showa 107,000 $ 1,063,811
Sony Music Entertainment 33,000 1,788,729
Taisho Pharmaceutical 90,000 1,970,269
Ten Allied 10,000 159,648
Tokai Lease 60,000 648,153
Xebio 35,000 1,304,909
York Benimaru 25,000 1,003,776
---------------
TOTAL COMMON STOCK - (Cost $66,688,511) 74,911,811
---------------
<CAPTION>
Principal
Amount
------
<S> <C> <C>
CONVERTIBLE BONDS - 10.2%
Higashi Nihon House, 0.375%, 4/30/2000 (Yen) 1,000,000 1,030,928
Izumi, 4.5%, 2/28/2001 (Yen) 60,000,000 696,907
Jonas, 1.4%, 12/30/1999 (Yen) 106,500,000 1,467,614
Konami, 0.75%, 3/31/2000 (Yen) 160,000,000 1,621,338
Matsushita Electric, No.8, 2.7%, 5/31/2002 (Yen) 100,000,000 1,213,135
Meitec, 3.2%, 3/31/2004 (Yen) 26,000,000 412,600
Mirai Industry, 2.3%, 3/20/2002 (Yen) 138,000,000 1,773,070
Nitto Denko, No.4, 3.9%, 3/30/2001 (Yen) 70,000,000 869,939
---------------
TOTAL CONVERTIBLE BONDS - (Cost $8,325,064) 9,085,531
---------------
WARRANTS - 1.5%
Kuraray * 600 450,000
Nippon Engineering Consultants * 1,500 221,086
Nissen * 6,500 288,719
Royal * 300 243,750
Tampopo * 150 90,000
---------------
TOTAL WARRANTS - (Cost $1,342,668) 1,293,555
---------------
TOTAL COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - (Cost $76,356,243)+ 85,290,897
---------------
<CAPTION>
Principal
Amount
------
<S> <C> <C>
SHORT TERM INVESTMENT - 3.7%
State Street Bank and Trust repurchase agreement, 4.75%, 5/1/1996 (a) $ 3,308,000 3,308,000
---------------
TOTAL SHORT TERM INVESTMENT - (Cost $3,308,000) 3,308,000
---------------
TOTAL INVESTMENTS - (Cost $79,664,243) - 99.7% 88,598,897
---------------
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.3% 264,157
---------------
NET ASSETS - 100.0% $ 88,863,054
===============
</TABLE>
* Non-income producing security.
(Yen) Denominated in Japanese yen.
(a) The repurchase agreement, dated 4/30/96, $3,308,436 due 5/1/96, is
collateralized by $3,385,000 United States Treasury Note, 5.875%, 4/30/98.
+ Percentages of assets by industry are as follows: Auto Parts 1.4%,
Automobiles 1.2%, Banks 1.9%, Building and Construction 5.3%, Commercial
Services 2.7%, Computers & Business Equipment 1.9%, Drugs & Health Care
5.9%, Electrical Equipment 7.2%, Electronics 6.3%, Engineering 3.4%,
Entertainment 2.0%, Finance 2.0%, Financial Services 2.1%, Food &
Beverages 5.4%, Industrial Machinery 14.5%, Metals 1.2%, Office
Furnishings & Supplies 5.8%, Printing 3.1%, Retail Trade 14.8%, Semi-
Conductor 1.4%, Shipbuilding 1.0%, Software 1.8%, Telecommunication 1.3%,
Textiles 0.5%, Transportation 1.9%.
See notes to financial statements.
F-32
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $76,356,243) (Note B) $ 85,290,897
Investments in repurchase agreements, at cost and value (Note B) 3,308,000
------------
Total Investments 88,598,897
Cash 973
Foreign currency, at value (cost $696,915) (Note B) 699,533
Receivable for foreign currency sold 694,888
Dividend and interest receivable 269,520
Prepaid insurance expense 6,151
Deferred organization expenses (Note B) 8,389
------------
TOTAL ASSETS 90,278,351
------------
LIABILITIES
Payable for forward currency contracts (Note E) 455,858
Payable for foreign currency purchased 699,533
Management fee payable (Note C) 193,281
Administration fee payable (Note C) 5,900
Trustees fees payable (Note C) 1,886
Accrued expenses and other liabilities (Note B) 58,839
------------
TOTAL LIABILITIES 1,415,297
------------
TOTAL NET ASSETS $ 88,863,054
============
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 78,610,134
Undistributed net investment income 1,985,058
Accumulated net realized loss on investment and foreign
currency transactions (212,593)
Net unrealized appreciation on investment and foreign
currency transactions 8,480,455
------------
TOTAL NET ASSETS $ 88,863,054
============
NET ASSET VALUE PER SHARE $10.77
============
($88,863,054 / 8,247,704 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
F-33
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 269,741
Dividend income 410,090
Foreign taxes withheld (72,503)
-----------
TOTAL INVESTMENT INCOME 607,328
-----------
EXPENSES
Management fee (Note C) 603,494
Custodian fee 83,000
Administration fee (Note C) 63,074
Audit fee 37,000
Legal fees 11,000
Transfer agent fee 6,400
Trustees fees (Note C) 3,600
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 17,187
-----------
TOTAL EXPENSES 827,303
-----------
NET INVESTMENT LOSS (219,975)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 323,979
Net realized gain on foreign currency transactions 2,490,116
Net increase in unrealized appreciation(depreciation) on:
Investments 8,273,355
Foreign currency transactions (929,597)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 10,157,853
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,937,878
===========
</TABLE>
See notes to financial statements.
F-34
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year August 15, 1994 *
Ended through
April 30, 1996 April 30, 1995
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 44,969,083 $ 0
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment (loss)income (219,975) 54,959
Net realized gain(loss) on investment transactions 323,979 (239,637)
Net realized gain on foreign currency
transactions 2,490,116 10,618
Net increase in unrealized appreciation(depreciation)
on:
Investments 8,273,355 661,299
Foreign currency transactions (929,597) 475,398
-------------- -------------
Net increase in net assets from operations 9,937,878 962,637
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (4,024)
In excess of net investment income (639,196) 0
In excess of net realized loss on investments 0 (4,375)
-------------- -------------
Total distributions (639,196) (8,399)
-------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 33,742,120 43,727,477
Reinvestment of dividends and distributions
to shareholders 611,375 8,399
Cost of shares repurchased (100,000) 0
Paid in capital from subscription and redemption
fees 341,794 278,969
-------------- -------------
Total increase in net assets from capital
share transactions 34,595,289 44,014,845
-------------- -------------
NET INCREASE IN NET ASSETS 43,893,971 44,969,083
-------------- -------------
NET ASSETS at end of period (net of accumulated
net investment income(loss) $ 88,863,054 $ 44,969,083
of $1,985,058 and $(70,503)) ============== =============
OTHER INFORMATION:
Capital share transactions:
Shares sold 3,514,816 4,680,605
Shares issued in reinvestment of distributions
to shareholders 61,943 833
Less shares repurchased (10,493) 0
-------------- -------------
Net share transactions 3,566,266 4,681,438
============== =============
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
F-35
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year August 15, 1994 *
Ended through
April 30, 1996 April 30, 1995
-------------- --------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.610 $ 10.000
----------- -----------
Net investment (loss)income (0.034) (5) 0.013
Net realized and unrealized gain(loss) on
investment and foreign currency transactions 1.248 (5) (0.492)
----------- -----------
Total from investment operations 1.214 (0.479)
----------- -----------
Less distributions:
Net investment income 0.000 (0.002)
In excess of net investment income (0.097) 0.000
Net realized capital gains 0.000 (0.003)
----------- -----------
Total distributions (0.097) (0.005)
----------- -----------
Paid in capital from subscription and
redemption fees (Note B) 0.043 (5) 0.094
----------- -----------
Net asset value, end of period $ 10.770 $ 9.610
=========== ===========
TOTAL INVESTMENT RETURN (1) 13.13% (3.85)% (2)
- --------------------------- =========== ===========
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $88,863,054 $44,969,083
Operating expenses, net, to average net
assets (Note C) 1.37% 1.50% (3)
Operating expenses, gross, to average net
assets (Note C) 1.37% 1.72% (3)
Net investment (loss)income to average
net assets (0.36)% 0.37% (3)
Portfolio turnover rate 37% 33%
Average commission rate per share $ 0.0763 (4) N/A
Per share amount of fees waived (Note C) $ 0.000 $ 0.008
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
(5) The per share amounts were computed using a monthly average number of
shares outstanding during the year.
See notes to financial statements.
F-36
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of April 30, 1996 the Global Emerging Markets Fund
had not commenced operations. The MCBT Japan Small Companies Fund (the "Fund")
commenced investment operations on August 15, 1994. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Valuation of Investments - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where any such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
Repurchase Agreements - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
Investment Transactions - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
Investment Income - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend date.
Interest income, which includes accretion of original issue discount, is accrued
as earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
Foreign Currency Translations - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into a foreign currency exchange contract for the purchase or
sale, for a fixed amount of U.S. dollars, of an amount of the foreign currency
required to settle the security transaction.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
F-37
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign Currency Translations (Continued) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
Forward Currency Contracts - A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in
currency exchange rates. The Forward is marked-to-market daily and the change
in the market value is recorded by the Fund as an unrealized gain or loss. When
the Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. The Fund could be exposed to risk if a counterparty is unable to
meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
Currency Call and Put Options - When a Fund writes an option, the premium
received by the fund is presented in the Fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. Written options are valued at the last sale price or, in
the absence of a sale, the last offering price on the market on which it is
principally traded. If an option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the Fund purchases upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into
a closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
Expenses - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are split evenly among the affected
Funds, allocated on the basis of relative average net assets, or otherwise
allocated among the Funds as the Board of Trustees may direct or approve.
Certain costs incurred in connection with the organization of the Trust and each
Fund have been deferred and are being amortized on a straight line basis over a
five year period starting on each Fund's commencement of operations.
Distributions to Shareholders - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be paid in shares of the Fund
at the net asset value unless the shareholder elects in the subscription
agreement to receive cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for market discount, foreign currency transactions, losses
deferred due to wash sales, post October 31 losses and excise tax regulations.
Permanent book and tax differences relating to shareholder distributions will
result in reclassifications to paid-in-capital. Distributions are recorded on
the ex-dividend date.
Purchases and Redemptions of Fund Shares - There is a purchase premium for cash
investments into the Fund of 1.00% of the amount invested and a redemption fee
on cash redemptions of 1.00% of the amount redeemed. All purchase premiums and
redemption fees are paid to, and recorded as paid-in-capital to the Fund,
subject to being waived by Martin Currie. For the period ended April 30, 1996,
$340,794 in purchase premiums and $1,000 in redemption fees were collected.
F-38
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Income Taxes - Each Fund of the Trust is treated as a separate entity for
federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts, if any, during the calendar year, the Funds will not be subject
to a federal excise tax. The Fund is subject to foreign taxes on certain
income, gains on investments or currency repatriation. As of April 30, 1996 the
Fund has elected for Federal income tax purposes to defer a $461,230 current
year post October 31 loss as though the loss was incurred on the first day of
the next fiscal year.
The Fund intends to pass-through foreign taxes paid during the year to its
shareholders. During the year ended April 30, 1996 the Fund paid $72,503 in
taxes to various countries.
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
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
Other - The financial highlights for certain 1995 amounts has been restated to
conform with the presentation for the period ended April 30, 1996.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie, Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by the Executive Directors of the various subsidiaries of Martin
Currie Ltd. Under the Management Contract, the Fund pays the Investment Manager
a quarterly management fee at the annual rate of 1.00% of the average net
assets.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive annual fees of
$20,000. Each Fund pays a pro-rata share based on its respective net assets.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the year ended April 30, 1996 were
$56,207,405 and $21,196,265, respectively.
The identified cost of investments in securities owned by the Fund for federal
income tax purposes and their respective gross unrealized appreciation and
depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Identified Gross Unrealized Net Unrealized
Cost Appreciation (Depreciation) Appreciation
------------- ------------ -------------- --------------
<S> <C> <C> <C>
$ 79,727,015 $ 10,645,908 $ (1,774,026) $ 8,871,882
</TABLE>
F-39
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 1996, the outstanding forward exchange contracts, which
contractually obligate the Fund to deliver currencies at a specified date, were
as follows:
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $
on Origination Current Net Unrealized
Currency Sold Settlement Date Date Value (Depreciation)
- ------------- --------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Japanese Yen 5/14/96 $19,310,000 $19,569,333 $(259,333)
Japanese Yen 5/14/96 15,745,000 15,941,525 (196,525)
----------- ----------- ---------
$35,055,000 $35,510,858 $(455,858)
=========== =========== =========
</TABLE>
NOTE F - PRINCIPAL SHAREHOLDERS
As of April 30, 1996, 28% of the Fund's outstanding shares were held by one
shareholder holding in excess of 10% of the Fund's outstanding shares.
NOTE G - CONCENTRATION OF RISK
Investment in foreign securities generally involves special risks. Additional
risks are present in the case of a fund such as the Japan Small Companies Fund
which will invest most of its assets in the issuers of a single foreign country.
This means that the Fund's performance will be directly affected by political,
economic and market conditions in Japan. In addition, since the Japanese
economy depends to some extent on foreign trade, the relationships between Japan
and its trading partners and between the yen and other currencies are expected
to have a significant impact on particular Japanese companies and on the
Japanese economy generally. The Fund is designed for investors who are willing
to accept the risks associated with changes in such conditions and
relationships.
F-40
<PAGE>
Report of Independent Accountants
---------------------------------
To the Trustees and Shareholders of the
Martin Currie Business Trust - Japan Small Companies Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Japan Small Companies Fund at
April 30, 1996, the results of its operations, the changes in its net assets,
and the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 19, 1996
F-41
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION> Shares Value
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS - 94.2%
ARGENTINA - 12.3%
Argentina Equity Investments * 15,000 $ 1,539,600
Banco Frances del Rio de la Plata 287,700 2,753,564
Buenos Aires Embotelladora, ADS 102,600 1,628,775
Capex, GDR 95,000 1,330,000
Companhia Naviera Perez Companc 328,567 2,043,891
Telecom Argentina, ADR 37,000 1,674,250
---------------
TOTAL ARGENTINA - (Cost $10,384,300) 10,970,080
---------------
BRAZIL - 36.2%
Acos Especitabira 191,217,075 824,926
Bardella 14,050 1,203,760
Brasmotor 6,511,000 1,771,968
Brazilian Equity Investments * 44,000 1,224,960
Cim Port Itau Cia, preferred 6,769,000 1,944,527
Companhia Energetica de Minas, ADR 85,063 2,211,213
Companhia Vale do Rio Doce, ADR 135,800 2,537,763
Dixie Toga * 1,498,346 1,404,558
Eletrobras 12,105,000 2,916,132
Lojas Arapua * 175,800,000 1,807,439
Minas Buenaventura 7,862 66,332
Minas Buenaventura, rights, 5/20/96 * 1,966 0
Perdigao 20,668,682 41,666
Perdigao, preferred 879,331,318 1,586,536
Rhodia - Ster, GDR * 146,229 1,208,626
Telebras, ADR 123,445 6,681,461
Usiminas, ADR 231,700 2,583,455
White Martins 1,899,900,000 2,451,237
---------------
TOTAL BRAZIL - (Cost $32,697,150) 32,466,559
---------------
CHILE - 7.2%
Antofagasta Holdings 279,000 1,469,968
Enersis, ADR 37,400 1,112,650
Madeco, ADR 46,820 1,170,500
Maderas y Sintetico Sociedad, ADS 64,300 1,020,763
Santa Isabel, ADR * 57,600 1,663,200
---------------
TOTAL CHILE - (Cost $5,112,071) 6,437,081
---------------
COLOMBIA - 3.9%
Cementos Diamante, GDS (b) 65,500 1,310,000
Gran Cadena De Almacenes, ADR (b) 49,500 866,250
Papeles Nacionales 133,000 1,330,000
---------------
TOTAL COLOMBIA - (Cost $2,494,513) 3,506,250
---------------
MEXICO - 29.7%
Apasco 245,000 1,328,869
Bufete Industrial, ADR * 38,000 665,000
Cemex, Cl B 400,000 1,703,903
Cifra * 1,110,000 1,511,871
Corporacion Industrial Alfa, Cl A 123,000 1,796,164
Corporacion Industrial San Luis, ADR 16,500 577,500
Grupo Carso, ADR * 128,000 1,952,000
Grupo Financiero Banamex Cl L * 28,500 58,534
</TABLE>
See notes to financial statements.
F-42
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION> Shares Value
------ -----
<S> <C> <C>
MEXICO - Continued
Grupo Financiero Banamex, Cl B * 950,000 $ 2,188,964
Grupo Industrial Durango, ADS * 157,000 1,216,750
Grupo Industrial San Luis C.P.O. 545,000 3,198,116
Grupo Modelo, Cl C 442,000 2,079,125
Hylsamex, GDS * 113,000 2,683,750
Industrias Penoles 201,000 846,743
Kimberly Clarke, ADR 40,000 1,465,000
Organiz Soriana 1,450,000 1,912,517
Transport Maritima Mexico, ADS 165,000 1,381,875
---------------
TOTAL MEXICO - (Cost $22,806,416) 26,566,681
---------------
PERU - 2.1%
Peru Real Estate, Cl B * 2,176,100 780,293
Telefonica de Peru, Cl B 508,512 1,136,939
---------------
TOTAL PERU - (Cost $3,412,904) 1,917,232
---------------
UNITED STATES - 1.9%
Brazil Fast Food 312,500 1,679,688
---------------
TOTAL UNITED STATES - (Cost $1,007,500) 1,679,688
---------------
URUGUAY - 0.9%
Banco Comercial, GDR * 54,800 835,700
---------------
TOTAL URUGUAY - (Cost $885,813) 835,700
---------------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS - (Cost $78,800,667) 84,379,271
---------------
Principal
Amount
------
SHORT TERM INVESTMENT - 5.7%
State Street Bank and Trust repurchase agreement, 4.75%, 5/1/96 (a) $ 5,110,000 5,110,000
---------------
TOTAL SHORT TERM INVESTMENT - (Cost $5,110,000) 5,110,000
---------------
TOTAL INVESTMENTS - (Cost $83,910,667) - 99.9% 89,489,271
---------------
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.1% 110,331
---------------
NET ASSETS - 100.0% $ 89,599,602
===============
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 4/30/96, $5,110,624 due 5/1/96, is
collateralized by $5,230,000 United States Treasury Notes, 5.875%,
4/30/98.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,176,250 or 2.4% of net
assets.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Auto Parts 2.6%, Banks
8.0%, Chemicals 4.1%, Conglomerates 3.7%, Construction and Building
Materials 8.2%, Electric Utilities 8.5%, Electrical Equipment 1.3%,
Engineering 0.7%, Food & Beverages 5.5%, Insurance 2.0%, Investment
Companies 3.1%, Metals 6.1%, Mining 4.6%, Paper 3.0%, Petroleum Services
2.3%, Real Estate 0.9%, Retail Trade 14.5%, Steel 3.0%, Telecommunication
10.6%, Transportation 1.5%.
ADR American Depositary Receipts.
ADS American Depositary Shares.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
See notes to financial statements.
F-43
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $78,800,667) (Note B) $ 84,379,271
Investments in repurchase agreements, at cost and value (Note B) 5,110,000
------------
Total Investments 89,489,271
Cash 682
Dividend and interest receivable 432,536
Foreign income tax reclaim receivable 1,409
Prepaid insurance expense 7,204
Deferred organization expenses (Note B) 8,633
------------
TOTAL ASSETS 89,939,735
------------
LIABILITIES
Management fee payable (Note C) 269,450
Administration fee payable (Note C) 5,848
Trustees fees payable (Note C) 1,782
Accrued expenses and other liabilities 63,053
------------
TOTAL LIABILITIES 340,133
------------
TOTAL NET ASSETS $ 89,599,602
============
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 95,179,534
Undistributed net investment income 74
Accumulated net realized loss on investment and foreign
currency transactions (11,158,098)
Net unrealized appreciation on investment and foreign
currency transactions 5,578,092
------------
TOTAL NET ASSETS $ 89,599,602
============
NET ASSET VALUE PER SHARE $ 7.66
============
($89,599,602 / 11,700,596 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
F-44
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 243,175
Dividend income 1,366,223
Foreign taxes withheld (44,451)
-----------
TOTAL INVESTMENT INCOME 1,564,947
-----------
EXPENSES
Management fee (Note C) 910,272
Custodian fee 130,000
Administration fee (Note C) 64,775
Audit fee 39,400
Legal fees 9,000
Transfer agent fee 6,600
Trustees fees (Note C) 3,400
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 18,382
Fees and expenses waived by the investment manager (Note C) (151,712)
-----------
TOTAL EXPENSES 1,032,665
-----------
NET INVESTMENT INCOME 532,282
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (1,320,182)
Net realized loss on foreign currency transactions (431,239)
Net increase in unrealized appreciation(depreciation) on:
Investments 8,674,586
Foreign currency transactions (209)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 6,922,956
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,455,238
===========
</TABLE>
See notes to financial statements.
F-45
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Sept. 19, 1994 *
Ended through
April 30, 1996 April 30, 1995
--------------- -----------------
<S> <C> <C>
NET ASSETS at beginning of period $39,833,637 $ 0
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss) 532,282 (24,378)
Net realized loss on investment
transactions (1,320,182) (7,884,575)
Net realized loss on foreign currency
transactions (431,239) (1,708,570)
Net increase in unrealized
appreciation (depreciation) on:
Investments 8,674,586 (3,095,982)
Foreign currency transactions (209) (303)
----------- ------------
Net increase (decrease) in net assets from
operations 7,455,238 (12,713,808)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (369,749) 0
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 49,179,620 73,445,945
Reinvestment of dividends and
distributions to shareholders 353,471 0
Cost of shares repurchased (7,864,000) (21,486,720)
Paid in capital from subscription and
redemption fees 1,011,385 588,220
----------- ------------
Total increase in net assets from capital
share transactions 42,680,476 52,547,445
----------- ------------
NET INCREASE IN NET ASSETS 49,765,965 39,833,637
----------- ------------
NET ASSETS at end of period (includes
undistributed net investment income (loss)
of $74 and $(88,818) respectively) $89,599,602 $ 39,833,637
=========== ============
OTHER INFORMATION:
Capital share transactions:
Shares sold 6,887,372 9,100,433
Shares issued in reinvestment of
distributions to shareholders 51,526 0
Less shares repurchased (1,057,543) (3,281,192)
----------- ------------
Net share transactions 5,881,355 5,819,241
=========== ============
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
F-46
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year Sept. 19, 1994 *
Ended through
April 30, 1996 April 30, 1995
--------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $ 6.850 $ 10.000
Net investment income (loss) 0.025 (0.004)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions 0.720 (3.298)
----------- ------------
Total from investment operations 0.745 (3.302)
----------- ------------
Less distributions:
Dividends from net investment income (0.040) 0.000
----------- ------------
Paid in capital from subscription and
redemption fees (Note B) 0.105 0.152
----------- ------------
Net asset value, end of period $ 7.660 $ 6.850
=========== ============
TOTAL INVESTMENT RETURN (1) 12.48% (31.50)% (2)
- --------------------------- =========== ============
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $89,599,602 $ 39,833,637
Operating expenses, net, to average net
assets (Note C) 1.70% 1.80% (3)
Operating expenses, gross, to average net
assets (Note C) 1.95% 1.80% (3)
Net investment income (loss) to average net
assets 0.88% (0.11)% (3)
Portfolio turnover rate 61% 89%
Average commission rate per share $ 0.0001 (4) N/A
Per share amount of fees waived (Note C) $ 0.007 $ 0.000
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
(2) Not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
See notes to financial statements.
F-47
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of April 30, 1996 the Global Emerging Markets Fund
had not commenced operations. The MCBT Emerging Americas Fund (the "Fund")
commenced investment operations on September 19, 1994. The Fund's Declaration
of Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Valuation of Investments - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where any such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
Repurchase Agreements - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
Investment Transactions - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
Investment Income - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend date.
Interest income, which includes accretion of original issue discount, is accrued
as earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
Foreign Currency Translations - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into a foreign currency exchange contract for the purchase or
sale, for a fixed amount of U.S. dollars, of an amount of the foreign currency
required to settle the security transaction.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
F-48
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign Currency Translations (Continued) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
Forward Currency Contracts - A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in
currency exchange rates. The Forward is marked-to-market daily and the change
in the market value is recorded by the Fund as an unrealized gain or loss. When
the Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. The Fund could be exposed to risk if a counterparty is unable to
meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
Currency Call and Put Options - When a Fund writes an option, the premium
received by the fund is presented in the Fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. Written options are valued at the last sale price or, in
the absence of a sale, the last offering price on the market on which it is
principally traded. If an option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the Fund purchases upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into
a closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
Expenses - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are split evenly among the affected
Funds, allocated on the basis of relative average net assets, or otherwise
allocated among the Funds as the Board of Trustees may direct or approve.
Certain costs incurred in connection with the organization of the Trust and each
Fund have been deferred and are being amortized on a straight line basis over a
five year period starting on each Fund's commencement of operations.
Distributions to Shareholders - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be paid in shares of the Fund
at the net asset value unless the shareholder elects in the subscription
agreement to receive cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for market discount, foreign currency transactions, losses
deferred due to wash sales, post October 31 losses and excise tax regulations.
Permanent book and tax differences relating to shareholder distributions will
result in reclassifications to paid-in-capital. Distributions are recorded on
the ex-dividend date.
Purchases and Redemptions of Fund Shares - There is a purchase premium for cash
investments into the Fund of 1.75% of the amount invested and a redemption fee
on cash redemptions of 1.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to, and recorded as paid-in-capital to the Fund,
subject to being waived by Martin Currie. For the period ended April 30, 1996,
$873,765 was collected in purchase premiums and $137,620 in redemption fees
collected.
F-49
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Income Taxes - Each Fund of the Trust is treated as a separate entity for
federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts, if any, during the calendar year, the Funds will not be subject
to a federal excise tax. The Fund is subject to foreign taxes on certain
income, gains on investments or currency repatriation. As of April 30, 1996 the
Fund had capital loss carry forwards of $952,459 which expires in the year 2003
and $9,917,612 which expires in the year 2004. As of April 30, 1996 the Fund
has elected for Federal income tax purposes to defer a $68,963 current year post
October 31 loss as though the loss was incurred on the first day of the next
fiscal year.
The Fund intends to pass-through foreign taxes paid during the year to its
shareholders. During the year ended April 30, 1996 the Fund paid $44,451 in
taxes to various countries.
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
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
Other - The financial highlights for certain 1995 amounts has been restated to
conform with the presentation for the period ended April 30, 1996.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie, Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by the Executive Directors of the various subsidiaries of Martin
Currie Ltd. Under the Management Contract, the Fund pays the Investment Manager
a quarterly management fee at the annual rate of 1.50% of the average net
assets. However, the Investment Manager has voluntarily agreed to limit its fee
to 1.25% of the Fund's average net assets until further notice, which resulted
in a waiver of $151,712.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive annual fees of
$20,000. Each Fund pays a pro-rata share based on its respective net assets.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the year ended April 30, 1996 were
$74,932,919 and $35,162,963, respectively.
The identified cost of investments in securities and repurchase agreements owned
by the Fund for federal income tax purposes and their respective gross
unrealized appreciation and depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Net Unrealized
Identified Gross Unrealized Appreciation
Cost Appreciation (Depreciation) (Depreciation)
-------------- ------------ -------------- ---------------
<S> <C> <C> <C>
$84,665,914 $10,186,499 $(5,363,142) $4,823,357
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1996, 27% of the Fund's outstanding shares were held by one
shareholder holding in excess of 10% of the Fund's outstanding shares.
F-50
<PAGE>
NOTE F - CONCENTRATION OF RISK
The risks of investing in foreign securities may be heightened in the case of
investments in emerging markets or countries with limited or developing capital
markets. Security prices in emerging markets can be significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization, restrictions on foreign
ownership, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political change
or instability may adversely affect the economies and securities markets of such
countries.
F-51
<PAGE>
Report of Independent Accountants
---------------------------------
To the Trustees and Shareholders of the
Martin Currie Business Trust - Emerging Americas Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Emerging Americas Fund at April
30, 1996, the results of its operations, the changes in its net assets, and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and the financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 19, 1996
F-52
<PAGE>
<TABLE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
COMMON STOCK, RIGHTS, WARRANTS AND EXCHANGEABLE BONDS - 97.4%
HONG KONG - 5.5%
Consolidated Electric Power 1,600,000 $ 2,647,534
New World Infrastructure * 1,630,000 3,624,329
Shenzhen Chiwan Wharf 2,000,400 783,558
---------------
TOTAL HONG KONG - (Cost $6,724,414) 7,055,421
---------------
INDONESIA - 20.1%
Bank Bira, * 4,656,000 4,838,569
Bank Dagang Nasional 2,000,000 1,992,714
Citra Marga Nusaphala * 2,670,000 3,918,899
Gadjah Tunggal, IDR * 1,358,500 (a) 800,487
Hanjaya Mandala Sampoerna 330,000 3,641,526
Lippo Bank * 1,200,000 2,725,520
Mulia Industrindo 1,911,000 3,685,237
PT Indosat, ADR * 127,000 4,429,125
---------------
TOTAL INDONESIA - (Cost $21,610,686) 26,032,077
---------------
KOREA - 8.4%
Commerce Bank of Korea 210,000 2,455,509
Korea First Bank * 253,000 2,646,219
LG Industrial Systems 46,500 1,457,886
Samsung Fire & Marine Insurance * 480 315,169
Shinhan Bank 64,410 1,423,517
Yukong 67,000 2,496,627
---------------
TOTAL KOREA - (Cost $10,416,318) 10,794,927
---------------
MALAYSIA - 30.0%
AMMB Holdings 426,000 6,449,886
Commerce Asset Holdings 402,000 2,740,946
DCB Holdings 928,000 3,386,997
Edaran Otomobile Nasional 528,000 4,510,648
Genting 474,000 4,258,453
Land & General 285,000 760,137
Larut Consolidated * 1,290,000 2,069,546
Renong, Exchangeable Bond & Rights, 4.000%, 04/15/2001 334,000 (b) 133,959
Renong Group * 1,670,000 2,906,911
Renong, warrants 1996/2000 * 208,750 58,607
Resorts World 757,000 4,584,567
TA Enterprise * 1,000,000 1,724,622
United Engineers 765,000 5,246,661
---------------
TOTAL MALAYSIA - (Cost $32,960,011) 38,831,940
---------------
PHILIPPINES - 15.9%
Belle * 17,500,000 2,574,513
Filinvest Land * 7,700,000 3,972,105
Metropolitan Bank & Trust 130,000 3,502,101
Philippine Long Distance Telephone 69,000 3,467,250
San Miguel, Cl B 1,200,000 3,760,031
Southeast Asia Cement * 22,500,000 3,310,088
---------------
TOTAL PHILIPPINES - (Cost $19,376,606) 20,586,088
---------------
</TABLE>
See notes to financial statements.
F-53
<PAGE>
<TABLE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
SINGAPORE - 1.2%
China Yuchai International 160,000 $ 1,540,000
---------------
TOTAL SINGAPORE - (Cost $1,639,650) 1,540,000
---------------
THAILAND - 16.3%
First Bangkok City Bank 1,781,500 3,528,491
Hana Microelectronics 575,000 3,166,036
Krung Thai Bank 630,040 3,094,732
Precious Shipping 680,700 3,721,072
Sahavirya Steel * 1,650,000 2,303,967
Siam Sindhorn, Exchangeable Bond & Warrants, 2.000%, 7/31/2000 $ 2,500,000 (c) 2,200,000
TPI Polene 556,500 3,086,217
---------------
TOTAL THAILAND - (Cost $21,581,133) 21,100,515
---------------
TOTAL COMMON STOCK, RIGHTS, WARRANTS AND
EXCHANGEABLE BONDS - (Cost $114,308,818)+ 125,940,968
---------------
TOTAL INVESTMENTS - (Cost $114,308,818) - 97.4% 125,940,968
---------------
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 2.6% 3,385,429
---------------
NET ASSETS - 100.0% $ 129,326,397
===============
* Non-income producing security.
(a) Reflected in units. 1 IDR Unit = 1000 shares.
(b) Reflected at par .
(c) Reflected at par and denominated in U.S. dollars.
+ Percentages of investments are presented in the portfolio by country. Percentages of assets by industry are as follows:
Auto Parts 1.2%, Automobiles 3.5%, Banks 20.3%, Building and Construction 2.8%, Commercial Services 3.0%, Communication
Services 6.1%, Conglomerates 2.4%, Construction and Building Materials 7.8%, Electric Utilities 2.0%, Electronics 2.4%,
Engineering 4.1%, Financial Services 11.1%, Food & Beverages 2.9%, Gas Exploration 2.0%, Industrial 2.8%, Insurance 0.2%,
Leisure 6.9%, Oil & Gas 1.9%, Real Estate 3.7%, Retail Trade 1.6%, Steel 1.8%, Tires & Rubber 0.6%, Tobacco 2.8%,
Transportation 3.5%.
ADR American Depositary Receipts.
IDR International Depositary Receipts.
</TABLE>
See notes to financial statements.
F-54
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $114,308,818)(Note B) $125,940,968
Cash 3,605,765
Foreign currency, at value (cost $247,808) (Note B) 247,913
Receivable for investments sold 58,963
Dividend and interest receivable 403,960
Prepaid insurance expense 8,725
Deferred organization expenses (Note B) 9,744
------------
TOTAL ASSETS 130,276,038
------------
LIABILITIES
Payable for investments purchased 190,272
Management fee payable (Note C) 348,232
Administration fee payable (Note C) 8,084
Trustees fees payable (Note C) 3,013
Accrued foreign capital gains tax on investments (Note B) 254,070
Accrued expenses and other liabilities 145,970
------------
TOTAL LIABILITIES 949,641
------------
TOTAL NET ASSETS $129,326,397
============
COMPOSITION OF NET ASSETS:
Paid-in-capital $113,883,394
Undistributed net investment loss (185,162)
Accumulated net realized gain on investment and foreign
currency transactions 3,997,485
Net unrealized appreciation on investment and foreign
currency transactions 11,630,680
------------
TOTAL NET ASSETS $129,326,397
============
NET ASSET VALUE PER SHARE $ 12.36
============
($129,326,397 / 10,462,836 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
F-55
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 397,411
Dividend income 1,127,340
Foreign taxes withheld (182,973)
-----------
TOTAL INVESTMENT INCOME 1,341,778
-----------
EXPENSES
Management fee (Note C) 1,216,136
Custodian fee 405,000
Administration fee (Note C) 68,892
Audit fee 40,000
Legal fees 7,889
Transfer agent fee 6,800
Trustee fees (Note C) 2,300
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 16,221
Fees and expenses waived by the investment manager (Note C) (202,689)
-----------
TOTAL EXPENSES 1,563,097
-----------
NET INVESTMENT LOSS (221,319)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments (net of foreign taxes of
$385,305 on net realized gains) 6,626,583
Net realized loss on foreign currency transactions (618,897)
Net increase in unrealized appreciation(depreciation) on:
Investments (net of accrual for foreign capital gains tax of
$254,070 on unrealized appreciation) 11,471,189
Foreign currency transactions (1,495)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 17,477,380
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $17,256,061
===========
</TABLE>
See notes to financial statements.
F-56
<PAGE>
MCBT EMERGING ASIA FUND
________________________________________________________________________________
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year March 24, 1995 *
Ended through
April 30, 1996 April 30, 1995
--------------- -----------------
<S> <C> <C>
NET ASSETS at beginning of period $ 42,027,699 $ 0
------------ -----------
INCREASE(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment (loss)income (221,319) 36,423
Net realized gain on investment
transactions 6,626,583 0
Net realized loss on foreign currency
transactions (618,897) (136,877)
Net increase in unrealized
appreciation(depreciation) on:
Investments 11,471,189 (93,109)
Foreign currency transactions (1,495) 25
------------ -----------
Net increase(decrease) in net assets from
operations 17,256,061 (193,538)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains (1,619,520) 0
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 68,843,300 42,221,237
Reinvestment of dividends and
distributions to shareholders 1,619,520 0
Cost of shares repurchased (26,549) 0
Paid in capital from subscription and
redemption fees 1,225,886 0
------------ -----------
Total increase in net assets from capital
share transactions 71,662,157 42,221,237
------------ -----------
NET INCREASE IN NET ASSETS 87,298,698 42,027,699
------------ -----------
NET ASSETS at end of period (includes
undistributed net investment losses
of $185,162 and $100,454 respectively) $129,326,397 $42,027,699
============ ===========
OTHER INFORMATION:
Capital share transactions:
Shares sold 6,098,105 4,212,439
Shares issued in reinvestment of
distributions to shareholders 154,830 0
Less shares repurchased (2,538) 0
------------ -----------
Net share transactions 6,250,397 4,212,439
============ ===========
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
F-57
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year March 24, 1995 *
Ended through
April 30, 1996 April 30, 1995
--------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $ 9.980 $ 10.000
Net investment (loss)income (0.029) (5) 0.009
Net realized and unrealized gain(loss) on
investment and foreign currency transactions 2.446 (5) (0.029)
------------ -----------
Total from investment operations 2.417 (0.020)
------------ -----------
Less distributions:
Net realized gains (0.209) 0.000
------------ -----------
Paid in capital from subscription and
redemption fees (Note B) 0.172 (5) 0.000
------------ -----------
Net asset value, end of period $ 12.360 $ 9.980
============ ===========
TOTAL INVESTMENT RETURN (1) 26.3% (0.20)% (2)
- --------------------------- ============ ===========
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $129,326,397 $42,027,699
Operating expenses, net, to average net
assets (Note C) 1.93% 1.85% (3)
Operating expenses, gross, to average net
assets (Note C) 2.18% 2.57% (3)
Net investment (loss)income to average net
assets (0.27)% 0.96% (3)
Portfolio turnover rate 65% 0%
Average commission rate per share $ 0.0124 (4)
Per share amount of fees waived (Note C) $ 0.027 (5) $ 0.007
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
(5) The per share amounts were computed using a monthly average number of
shares outstanding during the year.
See notes to financial statements.
F-58
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of April 30, 1996 the Global Emerging Markets Fund
had not commenced operations. The MCBT Emerging Asia Fund (the "Fund")
commenced investment operations on March 24, 1995. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Valuation of Investments - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where any such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
Repurchase Agreements - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
Investment Transactions - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
Investment Income - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend date.
Interest income, which includes accretion of original issue discount, is accrued
as earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
Foreign Currency Translations - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into a foreign currency exchange contract for the purchase or
sale, for a fixed amount of U.S. dollars, of an amount of the foreign currency
required to settle the security transaction.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
F-59
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Foreign Currency Translations (Continued) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
Forward Currency Contracts - A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in
currency exchange rates. The Forward is marked-to-market daily and the change
in the market value is recorded by the Fund as an unrealized gain or loss. When
the Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. The Fund could be exposed to risk if a counterparty is unable to
meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
Currency Call and Put Options - When a Fund writes an option, the premium
received by the fund is presented in the Fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. Written options are valued at the last sale price or, in
the absence of a sale, the last offering price on the market on which it is
principally traded. If an option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the Fund purchases upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into
a closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
Expenses - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are split evenly among the affected
Funds, allocated on the basis of relative average net assets, or otherwise
allocated among the Funds as the Board of Trustees may direct or approve.
Certain costs incurred in connection with the organization of the Trust and each
Fund have been deferred and are being amortized on a straight line basis over a
five year period starting on each Fund's commencement of operations.
Distributions to Shareholders - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be paid in shares of the Fund
at the net asset value unless the shareholder elects in the subscription
agreement to receive cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for market discount, foreign currency transactions, losses
deferred due to wash sales, post October 31 losses and excise tax regulations.
Permanent book and tax differences relating to shareholder distributions will
result in reclassifications to paid-in-capital. Distributions are recorded on
the ex-dividend date.
Purchases and Redemptions of Fund Shares - There is a purchase premium for cash
investments into the Fund of 1.75% of the amount invested and a redemption fee
on cash redemptions of 1.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to, and recorded as paid-in-capital to the Fund,
subject to being waived by Martin Currie. For the period ended April 30, 1996,
there was $1,225,886 in purchase premiums and no redemption fees collected.
F-60
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Income Taxes - Each Fund of the Trust is treated as a separate entity for
federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts, if any, during the calendar year, the Funds will not be subject
to a federal excise tax.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
unrealized appreciation as such income and/or gains are earned.
The Fund intends to pass-through foreign taxes paid during the year to its
shareholders. During the year ended April 30, 1996 the Fund paid $568,278 in
taxes to various countries.
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
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
Other - The financial highlights for certain 1995 amounts has been restated to
conform with the presentation for the period ended April 30, 1996.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie, Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by the Executive Directors of the various subsidiaries of Martin
Currie Ltd. Under the Management Contract, the Fund pays the Investment Manager
a quarterly management fee at the annual rate of 1.50% of the average net
assets. However, the Investment Manager has voluntarily agreed to limit its fee
to 1.25% of the Fund's average net assets until further notice, which resulted
in a waiver of $202,689.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive annual fees of
$20,000. Each Fund pays a pro-rata share based on its respective net assets.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the year ended April 30, 1996 were
$128,487,068 and $49,610,743, respectively.
The identified cost of investments in securities owned by the Fund for federal
income tax purposes and their respective gross unrealized appreciation and
depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Identified Gross Unrealized Net Unrealized
Cost Appreciation (Depreciation) Appreciation
--------------- ------------ -------------- --------------
<S> <C> <C> <C>
$114,310,888 $15,639,312 $(4,009,232) $11,630,080
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1996, 26% of the Fund's outstanding shares was held by one
shareholder holding in excess of 10% of the Fund's outstanding shares.
F-61
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE F - CONCENTRATION OF RISK
The risks of investing in foreign securities may be heightened in the case of
investments in emerging markets or countries with limited or developing capital
markets. Security prices in emerging markets can be significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization, restrictions on foreign
ownership, imposition of witholding taxes on dividend or interest payments and
capital gains, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political change
or instability may adversely affect the economies and securities markets of such
countries.
F-62
<PAGE>
Report of Independent Accountants
---------------------------------
To the Trustees and Shareholders of the
Martin Currie Business Trust - Emerging Asia Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Emerging Asia Fund at April 30,
1996, the results of its operations, the changes in its net assets, and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and the financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 19, 1996
F-63
<PAGE>
Part C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial statements:
See the section entitled "Financial Statements" in the Statement of
Additional Information. No other financial statements are applicable.
(b) Exhibits:
1. (a) Agreement and Declaration of Trust of Martin Currie
Business Trust (the "Trust") dated May 20, 1994 and (b)
Amendment No. 1 to Agreement and Declaration of Trust dated
May 23, 1994 incorporated by reference to the original
registration statement on Form N-1A (File No. 811-8612)
filed on July 7, 1994 (the "Registration Statement").
2. By-Laws of the Trust incorporated by reference to the
Registration Statement filed on July 7, 1994.
3. Not Applicable.
4. Not Applicable.
5. Investment Advisory Agreements between the Trust and Martin
Currie, Inc. ("Martin Currie") for each of MCBT Global
Growth Fund, MCBT Opportunistic EAFE Fund, MCBT Global
Emerging Markets Fund, MCBT Japan Small Companies Fund; MCBT
Emerging Americas Fund, and MCBT Emerging Asia Fund
incorporated by reference to the Registration Statement
filed on July 7, 1994.
6. Not Applicable. See Paragraph 4 of General Instruction F.
7. Not Applicable.
8. Form of Custodian Agreement between the Trust and State
Street Bank and Trust Company ("State Street") incorporated
by reference to the Registration Statement filed on July 7,
1994.
9. (a) Form of Administration Agreement between the Trust and
State Street incorporated by reference to the Registration
Statement filed on July 7, 1994.
<PAGE>
(b) Form of Transfer Agency and Service Agreement between
the Trust and State Street incorporated by reference to the
Registration Statement filed on July 7, 1994.
(c) Form of Subscription Agreement for the purchase of
Shares of any series of the Trust filed herewith.
10. Not Applicable. See Paragraph 4 of General Instruction F.
11. Consent of Price Waterhouse LLP.
12. Not Applicable. See Paragraph 4 of General Instruction F.
13. Not Applicable.
14. Not Applicable.
15. Distribution and Servicing Plans adopted pursuant to Rule
12b-1 for each of MCBT Global Growth Fund, MCBT
Opportunistic EAFE Fund, MCBT Global Emerging Markets Fund,
MCBT Japan Small Companies Fund, MCBT Emerging Americas
Fund, MCBT Emerging Asia Fund incorporated by reference to
the Registration Statement filed on July 7, 1994.
16. Not Applicable.
17. Financial Data Schedule for Registrant's fiscal year ended
April 30, 1996.
18. Not Applicable.
19. Powers of Attorney for C. James P. Dawnay, Patrick R.
Wilmerding and Simon D. Eccles incorporated by reference to
the Registration Statement filed on July 7, 1994.
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
Not applicable.
<PAGE>
Item 26. Number of Holders of Securities
-------------------------------
<TABLE>
<CAPTION>
(1) (2)
Number of Record Holders
Title of Series (as of July 31, 1996)
--------------- --------------------
<S> <C>
MCBT Global Growth Fund 2
MCBT Opportunistic EAFE Fund 35
MCBT Global Emerging Markets Fund 0
MCBT Japan Small Companies Fund 24
MCBT Emerging Americas Fund 22
MCBT Emerging Asia Fund 22
</TABLE>
Item 27. Indemnification
---------------
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto) provides for indemnification of its trustees and
officers. The effect of this provision is to provide indemnification
for each of the Registrant's trustees and officers against liabilities
and counsel fees reasonably incurred in connection with the defense of
any legal proceeding in which such trustee or officer may be involved
by reason of being or having been a trustee or officer, except with
respect to any matter as to which such trustee or officer shall have
been adjudicated to be liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's
office. As to any matter disposed of without an adjudication by a
court or other body, indemnification will be provided to the
Registrant's trustees and officers if (a) such indemnification is
approved by a majority of the disinterested trustees, or (b) an
opinion of independent legal counsel is obtained that such
indemnification would not protect the trustee or officer against any
liability to which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
duties.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Martin Currie is a New York corporation and is registered as an
investment adviser under the Investment Advisers Act of 1940. Its
principal place of business is Saltire Court, 20 Castle Terrace,
Edinburgh, Scotland EH1 2ES. Martin Currie and its parent company,
Martin Currie Ltd., provide investment advice to other registered
investment companies and advise and manage individual and
institutional accounts.
Other business, profession, vocation or employment of a substantial
nature in which each director or officer of Martin Currie is or has
been, at any time during the past two
<PAGE>
fiscal years, engaged for his own account or in the capacity of
director, officer, employee, partner or trustee is as follows:
<TABLE>
<CAPTION>
Name and Position with
Martin Currie Business and Other Connections
- ---------------------- ------------------------------
<S> <C>
W. M. C. Kennedy Director of Martin Currie Limited
Director and President (formerly Martin Currie International
Limited), Martin Currie Investment
Management Limited, Martin Currie
Pacific Trust plc, Martin Currie Unit
Trusts Limited, Martin Currie Gefinor
Fund Management Ltd., Martin Currie,
Inc., Scottish Unit Managers Ltd.,
The Scottish Life Assurance Company,
The Scottish Life Pensions Annuity
Limited, The Scottish Life, Adam &
Company Group plc, Adam & Company
plc, The Fleming Income & Growth
Investment Trust plc.
Investment Management Co. Ltd., The
Scottish Life Asset Managers Limited,
Transatlantic Ventures NV, Venture
Associates SA and Securities Trust of
Scotland. Formerly, Director of The
Scottish Life Investment Assurance
Co. Ltd.
A. P. Hanlon Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Services Limited and Martin Currie
Limited (formerly Martin Currie
International Limited).
P. J. Scott Plummer Director of Martin Currie Limited
Director and Vice President (formerly Martin Currie International
Limited), Martin Currie Investment
Management Limited, Martin Currie
Unit Trusts Limited, Martin Currie,
Inc., Candover Investments Public
Limited Company and The Scottish
Eastern Investment Trust plc.
M. J. Gibson Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Management Limited.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
J. M. A. Fairweather Director of Martin Currie Investment
Directors and Vice President Management Limited, Martin Currie
European Investment Trust, Martin
Currie Unit Trusts Limited and
Martin Currie Unit Trust Ltd.
J. G. Wilson Director of Martin Currie
Director and Vice President Investment Management Limited and
Martin Currie, Inc.
J. K. R. Falconer Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Limited, Martin Currie, Inc.,
Martin Currie Gefinor Fund
Management SA and Gefinor Bank Ltd.
C. J. P. Dawnay Director of Martin Currie Investment
Director and Vice President Management Ltd., Martin Currie Unit
Trusts Ltd., Martin Currie, Inc. and
Martin Currie Ltd.
M. W. Thomas Director of Martin Currie Investment
Director Management Limited, Martin Currie
Pacific Trust plc, Martin Currie,
Inc., Martin Currie Japan Investment
Trust plc and Schroder Korea Fund.
W. S. Coghill Director of Martin Currie Services
Treasurer and Secretary Limited and Martin Currie Management
Limited.
J. M. C. Livingston Legal and Compliance Officer, Martin
Clerk Currie Investment Management Limited,
Director of Martin Currie Services
Ltd., Director of Martin Currie
Private Clients Ltd. and Director of
Martin Currie (Bermuda) Ltd.
S. Johnson Vice President, Martin Currie, Inc.
Vice President and President, Martin Currie Investor
Services, Inc.
</TABLE>
<PAGE>
The principal business address of Martin Currie Ltd. and its affiliates is
Saltire Court, 20 Castle Terrace, Edinburgh, Scotland EH1 2ES.
Item 29. Principal Underwriters
----------------------
Not Applicable.
Item 30. Location of Accounts and Records
--------------------------------
The following companies maintain possession of the documents required
by the specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland EH1 2ES
Rule 31a-1(f)
Rule 31a-2(e)
Item 31. Management Services
-------------------
Not Applicable.
Item 32. Undertakings
------------
Not Applicable.
<PAGE>
* * * * * * * * * * *
NOTICE
A copy of the Agreement and Declaration of Trust of Martin Currie Business
Trust (the "Trust") is on file with the Secretary of State of The Commonwealth
of Massachusetts and the Clerk of the City of Boston and notice is hereby given
that this Registration Statement has been executed on behalf of the Trust and
each of its series ("Funds") by an officer of the Trust as an officer and by its
trustees as trustees and not individually and the obligations of or arising out
of this Registration Statement are not binding upon any of the trustees,
officers or shareholders individually but are binding only upon the assets and
property of the Trust Funds, as the case may be.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Edinburgh, Scotland on this 20th day of September, 1996.
MARTIN CURRIE BUSINESS TRUST
By: /s/ C. James P. Dawnay
---------------------------------
C. James P. Dawnay,
President
<PAGE>
Exhibit Index
Exhibit # Description
- --------- -----------
9(c) Form of Subscription Agreement
11 Consent of Price Waterhouse LLP
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 1
<NAME> MCBT GLOBAL GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 46,226,566
<INVESTMENTS-AT-VALUE> 52,922,980
<RECEIVABLES> 302,608
<ASSETS-OTHER> 431,177
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,656,765
<PAYABLE-FOR-SECURITIES> 545,729
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 223,110
<TOTAL-LIABILITIES> 768,839
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,722,001
<SHARES-COMMON-STOCK> 4,449,551
<SHARES-COMMON-PRIOR> 3,728,209
<ACCUMULATED-NII-CURRENT> 528,223
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41,065
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,596,637
<NET-ASSETS> 52,887,926
<DIVIDEND-INCOME> 1,009,321
<INTEREST-INCOME> 68,990
<OTHER-INCOME> (110,235)
<EXPENSES-NET> (404,096)
<NET-INVESTMENT-INCOME> 563,980
<REALIZED-GAINS-CURRENT> 1,683,069
<APPREC-INCREASE-CURRENT> 5,685,807
<NET-CHANGE-FROM-OPS> 7,932,856
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (756,345)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 679,794
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 41,548
<NET-CHANGE-IN-ASSETS> 15,628,550
<ACCUMULATED-NII-PRIOR> 159,777
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (1,074,364)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 282,867
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511,331
<AVERAGE-NET-ASSETS> 40,409,611
<PER-SHARE-NAV-BEGIN> 9.990
<PER-SHARE-NII> .279
<PER-SHARE-GAIN-APPREC> 1.809
<PER-SHARE-DIVIDEND> (.203)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.890
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 2
<NAME> MCBT OPPORTUNISTIC EAFE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 97,000,807
<INVESTMENTS-AT-VALUE> 108,891,118
<RECEIVABLES> 851,128
<ASSETS-OTHER> 444,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 110,186,773
<PAYABLE-FOR-SECURITIES> 1,371,048
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 520,488
<TOTAL-LIABILITIES> 1,891,536
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96,136,064
<SHARES-COMMON-STOCK> 9,628,089
<SHARES-COMMON-PRIOR> 7,370,314
<ACCUMULATED-NII-CURRENT> 1,336,593
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (809,326)
<ACCUM-APPREC-OR-DEPREC> 11,631,906
<NET-ASSETS> 108,295,237
<DIVIDEND-INCOME> 2,351,532
<INTEREST-INCOME> 260,032
<OTHER-INCOME> (305,812)
<EXPENSES-NET> (936,134)
<NET-INVESTMENT-INCOME> 1,369,618
<REALIZED-GAINS-CURRENT> 2,758,561
<APPREC-INCREASE-CURRENT> 10,357,046
<NET-CHANGE-FROM-OPS> 14,485,225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,686,139)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,869,376
<NUMBER-OF-SHARES-REDEEMED> (752,658)
<SHARES-REINVESTED> 141,057
<NET-CHANGE-IN-ASSETS> 35,634,560
<ACCUMULATED-NII-PRIOR> 109,392
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (2,004,179)
<GROSS-ADVISORY-FEES> 653,301
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 987,421
<AVERAGE-NET-ASSETS> 93,613,387
<PER-SHARE-NAV-BEGIN> 9.860
<PER-SHARE-NII> .314
<PER-SHARE-GAIN-APPREC> 1.239
<PER-SHARE-DIVIDEND> (.190)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.25
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 4
<NAME> MCBT JAPAN SMALL COMPANIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 79,664,243
<INVESTMENTS-AT-VALUE> 88,598,897
<RECEIVABLES> 964,408
<ASSETS-OTHER> 715,046
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90,278,351
<PAYABLE-FOR-SECURITIES> 455,858
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 959,439
<TOTAL-LIABILITIES> 1,415,297
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 78,610,134
<SHARES-COMMON-STOCK> 8,247,704
<SHARES-COMMON-PRIOR> 4,581,438
<ACCUMULATED-NII-CURRENT> 1,985,058
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (212,593)
<ACCUM-APPREC-OR-DEPREC> 8,480,455
<NET-ASSETS> 88,863,054
<DIVIDEND-INCOME> 410,090
<INTEREST-INCOME> 269,741
<OTHER-INCOME> (72,503)
<EXPENSES-NET> (827,303)
<NET-INVESTMENT-INCOME> (219,975)
<REALIZED-GAINS-CURRENT> 2,814,095
<APPREC-INCREASE-CURRENT> 7,343,758
<NET-CHANGE-FROM-OPS> 9,937,878
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (639,196)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,514,816
<NUMBER-OF-SHARES-REDEEMED> (10,493)
<SHARES-REINVESTED> 61,943
<NET-CHANGE-IN-ASSETS> 43,893,971
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (70,503)
<OVERDIST-NET-GAINS-PRIOR> (111,956)
<GROSS-ADVISORY-FEES> 603,494
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 827,303
<AVERAGE-NET-ASSETS> 60,349,447
<PER-SHARE-NAV-BEGIN> 9.610
<PER-SHARE-NII> (.034)
<PER-SHARE-GAIN-APPREC> 1.248
<PER-SHARE-DIVIDEND> (.097)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.770
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 5
<NAME> MCBT EMERGING AMERICAS FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 83,910,667
<INVESTMENTS-AT-VALUE> 89,489,271
<RECEIVABLES> 433,945
<ASSETS-OTHER> 16,519
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,939,735
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 340,133
<TOTAL-LIABILITIES> 340,133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,179,534
<SHARES-COMMON-STOCK> 11,700,596
<SHARES-COMMON-PRIOR> 5,819,241
<ACCUMULATED-NII-CURRENT> 74
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11,158,098)
<ACCUM-APPREC-OR-DEPREC> 5,578,092
<NET-ASSETS> 89,599,602
<DIVIDEND-INCOME> 1,366,223
<INTEREST-INCOME> 243,175
<OTHER-INCOME> (44,451)
<EXPENSES-NET> (1,032,665)
<NET-INVESTMENT-INCOME> 532,282
<REALIZED-GAINS-CURRENT> (1,751,421)
<APPREC-INCREASE-CURRENT> 8,674,377
<NET-CHANGE-FROM-OPS> 7,455,238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (369,749)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,887,372
<NUMBER-OF-SHARES-REDEEMED> (1,057,543)
<SHARES-REINVESTED> 51,526
<NET-CHANGE-IN-ASSETS> 49,765,965
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (88,818)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 910,272
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,184,377
<AVERAGE-NET-ASSETS> 60,684,807
<PER-SHARE-NAV-BEGIN> 6.850
<PER-SHARE-NII> .025
<PER-SHARE-GAIN-APPREC> .720
<PER-SHARE-DIVIDEND> (.040)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.66
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 6
<NAME> MCBT EMERGING ASIA FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 114,308,818
<INVESTMENTS-AT-VALUE> 125,940,968
<RECEIVABLES> 462,923
<ASSETS-OTHER> 3,872,147
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,276,038
<PAYABLE-FOR-SECURITIES> 190,272
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 759,369
<TOTAL-LIABILITIES> 949,641
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 113,883,394
<SHARES-COMMON-STOCK> 10,462,836
<SHARES-COMMON-PRIOR> 4,212,439
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (185,162)
<ACCUMULATED-NET-GAINS> 3,997,485
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,630,680
<NET-ASSETS> 129,326,397
<DIVIDEND-INCOME> 1,127,340
<INTEREST-INCOME> 397,411
<OTHER-INCOME> (182,973)
<EXPENSES-NET> (1,563,097)
<NET-INVESTMENT-INCOME> (221,319)
<REALIZED-GAINS-CURRENT> 6,007,686
<APPREC-INCREASE-CURRENT> 11,469,694
<NET-CHANGE-FROM-OPS> 17,256,061
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,619,520)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,098,105
<NUMBER-OF-SHARES-REDEEMED> (2,538)
<SHARES-REINVESTED> 154,830
<NET-CHANGE-IN-ASSETS> 87,298,698
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (100,454)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,216,136
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,765,786
<AVERAGE-NET-ASSETS> 81,075,706
<PER-SHARE-NAV-BEGIN> 9.980
<PER-SHARE-NII> (.029)
<PER-SHARE-GAIN-APPREC> 2.446
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.209)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.36
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 9(c)
MARTIN CURRIE BUSINESS TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest
Amount of
Subscription
(US$)
MCBT Global Growth Fund -------------
MCBT Opportunistic EAFE Fund -------------
MCBT Global Emerging Markets Fund -------------
MCBT Japan Small Companies Fund -------------
MCBT Emerging Americas Fund -------------
MCBT Emerging Asia Fund -------------
Total Subscription Price $
-------------
SUBSCRIBER INFORMATION
Name of Subscriber:
- ---------------------------------------------------------------
(hereinafter "SUBSCRIBER")
Name for Registration
- ---------------------------------------------------------------
(if different from above)
Person Signing (if different):
- ---------------------------------------------------------------
Capacity (if applicable):
- ---------------------------------------------------------------
<PAGE>
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
BANK INFORMATION
Bank Name:
_______________________________________________________________
ABA Number:
_______________________________________________________________
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
Account Name:
_______________________________________________________________
Account Number:
_______________________________________________________________
-2-
<PAGE>
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the one
or more series (each a "Fund") of Martin Currie Business Trust (the
"Trust") indicated above and in the dollar amount(s) set forth above. Upon
completion of this Subscription Agreement, SUBSCRIBER should send this
agreement by telecopy and courier to:
Martin Currie Business Trust
c/o Martin Currie, Inc.
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
Attention: Susan Gillingham
----------
Telecopy: 011-44-131-228-5959
---------
After the Trust has reviewed the completed Subscription Agreement,
SUBSCRIBER will receive telephonic notice of the acceptance or non-
acceptance of the subscription. If the subscription is accepted by the
Trust, SUBSCRIBER agrees to wire immediately available funds in the
amounts indicated on the cover of this Subscription Agreement to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA # 011000028
BNF = AC-42306662 "Mutual Fund F/B/O
Martin Currie Business Trust"
OBI = "NAME OF FUND"
Shareholder Name
2. SUBSCRIBER agrees that, unless the Trust is otherwise specifically
notified, this subscription will be treated as a subscription for shares of
beneficial interest in the indicated Funds (the "Shares") to become
effective as of the first day of the month following the satisfaction of
all of the conditions specified in Section 3 of this Subscription
Agreement. Any funds received by the Trust before such date will be held
for investment on such first day of the month.
3. SUBSCRIBER understands and agrees that this subscription for the Shares is
ineffective and that SUBSCRIBER will not become a shareholder of the Trust
until (i) SUBSCRIBER completes all applicable information requested in this
Subscription Agreement, (ii) SUBSCRIBER executes this Subscription
Agreement and delivers it to the Trust, (iii) the Trust accepts the
Subscription Agreement, which acceptance may be
-3-
<PAGE>
withheld in the Trust's sole discretion, and (iv) the Trust can and has
confirmed that the subscription amount has been received in the account
listed in Section 1 above.
4. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated September 20,
1996 (the "Placement Memorandum") relating to the offer for sale by the
Trust of the Shares and has had an opportunity to request a Statement of
Additional Information dated as of September 20, 1996 (the "SAI"), and has
reviewed the Placement Memorandum carefully prior to executing this
Subscription Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the
opportunity to ask questions of, and receive answers from, representatives
of the Trust concerning terms and conditions of the Offering and to obtain
any additional information necessary to verify the accuracy of the
information contained in the Placement Memorandum or the SAI. SUBSCRIBER
further acknowledges that no person is authorized to give any information
or to make any representation which is contrary to the information
contained in the Placement Memorandum or the SAI and that, if given or
made, any such contrary information or representation may not be relied
upon as having been authorized.
5. SUBSCRIBER understands and agrees that a purchase premium may be applicable
to this subscription for the Shares according to the terms described in the
Placement Memorandum, and that some of the funds paid under this Agreement
may be applied to such purchase premium.
6. SUBSCRIBER hereby elects:
[_] To reinvest all distributions of income and realized capital gains
from a Fund in additional shares of that Fund
or
--
[_] To receive all distributions of income and realized capital gains from
a Fund as cash when declared.
SUBSCRIBER understands and agrees that, unless otherwise indicated above,
SUBSCRIBER will be deemed to have elected to reinvest all distributions of
income and capital gains.
7. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that the
sale of the Shares to SUBSCRIBER complies with (or meets the requirements
of any applicable exemption from) the Securities Act of 1933, as amended
(the "1933 Act"), and applicable state securities laws.
-4-
<PAGE>
8. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this Subscription Agreement for its own account for investment only and not
with a view to any resale or distribution.
9. SUBSCRIBER represents that it (either alone or together with its purchaser
representative, whose identity has been disclosed to the Trust, if any) has
such knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of the investment represented by
the Trust and that SUBSCRIBER is able to bear the economic risk of this
investment including the risk of loss of the investment.
10. SUBSCRIBER understands that the Trust will offer the Shares only to
investors which qualify as "accredited investors" as defined in Regulation
D under the 1933 Act. SUBSCRIBER represents that it qualifies as an
"accredited investor" because SUBSCRIBER is described in the paragraph or
paragraphs indicated below: (check one or more).
[_] A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with his or her
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the
current year.
[_] A natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000 at the time of purchase of the
Shares.
[_] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D of the 1933 Act.
[_] An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Shares offered, with total assets in excess of $5,000,000.
[_] A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as amended.
[_] A bank as defined in Section 3(a)(2) of the 1933 Act, or savings and
loan association or other institution as defined in Section 3(a)(5)(A)
of the 1933 Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an
-5-
<PAGE>
insurance company as defined in Section 2(13) of the 1933 Act; an
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), or a business development company
as defined in Section 2(a)(48) of the 1940 Act; a Small Business
Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958; an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are accredited investors.
[_] A Trustee or Executive Officer of the Trust whose purchase exceeds
$1,000,000.
[_] An entity in which all of the equity owners are accredited investors
as defined above.
11. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is an
entity, its principal offices are located in) ________________.
(U.S. State)
12. SUBSCRIBER agrees to promptly notify the Trust of any development that
causes any of the representations made or information supplied in this
Subscription Agreement to be untrue at any time.
13. SUBSCRIBER understands that the Shares are not publicly traded and that
there will be no public market for the Shares upon completion of the
Offering.
14. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the 1933
Act and, in certain cases, of state securities laws, and that such
interests will be subject to transfer restrictions under the 1933 Act and
applicable state securities laws and, except to the extent that redemption
is permitted as described in the Placement Memorandum and the SAI, must be
held indefinitely unless subsequently registered under the 1933 Act and
applicable state securities laws or an exemption from such registration is
available. The undersigned further understands and agrees that the Trust is
under no obligation to register such Shares and that any exemptions are
extremely limited.
15. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained in
this Subscription Agreement, the
-6-
<PAGE>
Placement Memorandum, the SAI, the 1933 Act and any applicable state
securities laws.
16. SUBSCRIBER hereby agrees to be bound by all terms and conditions of this
Subscription Agreement.
17. This Subscription Agreement shall be governed by and construed under the
laws of The Commonwealth of Massachusetts and is intended to take effect as
an instrument under seal and shall be binding on SUBSCRIBER in accordance
with its terms.
-7-
<PAGE>
18. Please sign this Subscription Agreement exactly as you wish your Shares to
be registered. (The information supplied by you below should conform to
that given on the cover page).
Dated: __________, _____ Name of SUBSCRIBER:____________________
By:_______________________
Name of Person Signing if different
from SUBSCRIBER:______________________
(please print)
Capacity:______________________
(please print)
Accepted:
MARTIN CURRIE BUSINESS TRUST
By:___________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the trustees,
officers or shareholders of any Fund individually but are binding only upon the
assets and property belonging to the Funds.
-8-
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 to the registration
statement on Form N-1A (the "Registration Statement") of Martin Currie Business
Trust ("MCBT") of our reports dated June 19, 1996, relating to the financial
statements and financial highlights appearing in the April 30, 1996 Annual
Reports to Shareholders of MCBT Global Growth Fund, MCBT Opportunistic EAFE
Fund, MCBT Japan Small Companies Fund, MCBT Emerging Americas Fund and MCBT
Emerging Asia Fund, which appear in such Statement of Additional Information.
We also consent to the references to us under the headings "Financial
Statements" and "Independent Accountants" in such Statement of Additional
Information and "Independent Accountants" in the Private Placement Memorandum
which constitutes part of this Registration Statement.
PRICE WATERHOUSE LLP
Boston, Massachusetts
September 13, 1996
