<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL GROWTH FUND
ANNUAL REPORT
APRIL 30, 1996
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30,1996
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of global equities.
LAUNCH DATE June 15, 1994
FUND SIZE $52.9m
PERFORMANCE Total return from May 1, 1995 through April 30, 1996
- MCBT - Global Growth Fund (excluding all
transaction fees) +21.2%
- MCBT - Global Growth Fund (including all
transaction fees) +19.4%
- The Morgan Stanley Capital International
World Index +19.3%
Annualized total return from June 15, 1994
through April 30, 1996
- MCBT - Global Growth Fund (excluding all
transaction fees) +11.5%
- MCBT - Global Growth Fund (including all
transaction fees) +10.6%
The graph below represents the annualized total return of
the portfolio including all transaction fees versus the
Morgan Stanley Capital International World Index from
July 1, 1994 through April 30, 1996.
- MCBT - Global Growth Fund (excluding all
transaction fees) +12.7%
- MCBT - Global Growth Fund (including all
transaction fees) +11.8%
- The Morgan Stanley Capital International
World Index +16.1%
[GRAPH]
(a) Performance for the benchmark is not available for the period from June 15,
1994 (commencement of investment operations) through April 30, 1996. For
that reason, performance is shown from July 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 75 basis points on purchase and 75 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
PORTFOLIO The Fund has marginally outperformed the index over the
COMMENTS past 12 months, registering a healthy rise.
This time last year, the US dollar was weak against both
the yen and the deutschemark. The US stock market was very
strong and emerging markets in turmoil. Since then, the US
dollar has recovered, interest rates in the US have fallen
and confidence has returned to the smaller markets.
Over the twelve month period our confidence in the outlook
for Japanese equities has risen. We added to our position
there following falls in share prices, but partially hedged
the currency. The Japanese authorities have addressed the
problems of a strong currency, deflation and a stagnating
economy. We are confident that the economy will grow at a
rate of 2.5% in fiscal 1996. The consensus of opinion is
not as optimistic. We think that the market has the
potential to run further as the year progresses. The
domestic investor has stopped selling, and that is a good
sign.
To fund the increase in Japan, we have sold shares in the
UK where we are concerned about politics. A general
election is due within the next 12 months and there is a
high probability that there will be a change in Government.
We continue to run a relatively heavy position in ASIA and
added to our positions during the year. Markets here have
recovered and foreigners have been buying shares. Interest
rate falls in Hong Kong triggered a change in sentiment,
but South Korea has experienced political uncertainty and
Taiwan has suffered from Chinese aggression.
Our attitude towards CONTINENTAL EUROPEAN markets is
becoming more positive. We have been underweight,
reflecting our view that economies were sluggish and there
were better opportunities elsewhere. Interest rates have
been falling and weaker currencies may now allow a gentle
expansion in growth.
We have been caught out by strong US markets again. We
were underweight as we believed that profits growth had
peaked. Although there is evidence that profits growth is
slowing, the market has continued to rise. Elsewhere,
markets in LATIN AMERICA and INDIA have bounced as
confidence has returned.
We have been encouraged by good stock selection in nearly
all geographic regions, particularly in the US, UK and
Continental Europe. We are confident that markets will
advance further over the next six months and expect Japan
to do particularly well.
2
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
INVESTMENT All members of the investment team report directly to Joe
MANAGER PROFILE Scott Plummer (Chief Investment Officer ), who has 27 years
of investment experience. All funds are managed on a team
basis with a named director heading each team.
Tony Hanlon has managed the MCBT Global Growth Fund since
inception.
He graduated from Glasgow University in 1984 with a degree
in Public Law and completed a MBA degree at Manchester
Business school in 1986. Worked for Salomon Brothers
International in New York and London as an institutional
bond salesman. Joined Martin Currie in 1988, working in
the North American team. Appointed investment manager in
1991 and promoted to director in 1993. As head of the
Strategy & Asset Control team, he has responsibility for
communicating and monitoring investment strategy.
3
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
JAPAN
Mitsubishi Heavy Industries 1.5
Sumitomo Trust & Banking 1.5
NORTH AMERICA
Eastman Kodak 1.5
Freeport McMoran 1.5
Caremark International 1.4
PACIFIC BASIN
HSBC Holdings (Hong Kong) 1.3
Broken Hill Proprietary (Australia) 1.2
Swire Pacific (Hong Kong) 1.2
EUROPE
Veba (Germany) 1.1
OTHER AREAS
Himalayan Fund (India) 0.9
4
<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.
5
<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.
6
<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, ADR850 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.
7
<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.
8
<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.
9
<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.
10
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS
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.
11
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
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.
12
<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 undistributed net investment income
of $528,223 and $159,777) $52,887,926 $37,259,376
------------ -------------
------------ -------------
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.
13
<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
-------------- --------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
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.
14
<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.
15
<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.
16
<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.
17
<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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------ -------------- -------------
$46,534,435 $7,455,265 $(1,066,720) $6,388,545
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:
U.S. $ COST U.S. $ NET UNREALIZED
ON ORIGINATION CURRENT APPRECIATION
CURRENCY SOLD SETTLEMENT DATE DATE VALUE (DEPRECIATION)
- ------------- --------------- --------------- ------------- --------------
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)
---------- ---------- --------
---------- ---------- --------
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.
18
<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
19
<PAGE>
MARTIN CURRIE BUSINESS TRUST
--------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
--------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Scotland
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
____________________
- -------------------------------------------------------------------------------
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
- -------------------------------------------------------------------------------
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING ASIA FUND
ANNUAL REPORT
APRIL 30, 1996
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
OBJECTIVE Long term capital appreciation through active management of
a diversified portfolio of equities in Asian countries with
emerging markets and developing economies.
LAUNCH DATE March 24, 1995
FUND SIZE $129.3m
PERFORMANCE Total return from May 1, 1995 through April 30, 1996
- MCBT - Emerging Asia Fund (excluding all
transaction fees) +26.3%
- MCBT - Emerging Asia Fund (including all
transaction fees) +22.0%
- The Morgan Stanley Capital International -
Emerging Free Asia +18.6%
- The Morgan Stanley Capital International -
Far East (ex Japan) Free Index +25.4%
Annualized total return from March 24, 1995 through
April 30, 1996
- MCBT - Emerging Asia Fund (excluding all
transaction fees) +23.3%
- MCBT - Emerging Asia Fund (including all
transaction fees) +19.4%
The graph below represents the annualized total return of
the portfolio including all transaction fees versus the
Morgan Stanley Capital International Emerging Free Asia
Index and the Morgan Stanley Capital International Far East
(ex Japan) Free Index from April 1, 1995 through April 30,
1996.
- MCBT - Emerging Asia Fund (excluding all
transaction fees) +22.7%
- MCBT - Emerging Asia Fund (including all
transaction fees) +18.8%
- The Morgan Stanley Capital International -
Emerging Free Asia (b) +15.4%
- The Morgan Stanley Capital International -
Far East (ex Japan) Free Index +22.2%
[GRAPH]
(a) Performance for the benchmark is not available for the period from March
24, 1995 (commencement of investment operations) through April 30, 1996.
For that reason, performance is shown from April 1, 1995.
(b) Morgan Stanley has over the previous year published a new index which is a
much better comparison as it excludes Hong Kong.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 175 basis points on purchase and 175 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
PORTFOLIO COMMENTS The Fund has done well over the past 12 months. During the
year, Morgan Stanley published a new index, the MSCI
Emerging Free Asia. This is a much better comparison for
the Fund and we have used it in our performance data. The
Fund size has increased from $42m to $129m over the
reporting period due to both market moves and new
subscriptions.
This time last year, the smaller Asian markets were weak.
The ripples from the Mexican devaluation in December 1994
had not dispersed and confidence was low.
Since then, confidence has returned. Lower interest rates
in the US have encouraged investors to seek returns
elsewhere. Asia has been a major recipient of these funds.
The region offers excellent growth prospects at reasonable
prices at a time when profits growth is slowing elsewhere.
But it hasn't all been good. The Taiwanese have been
suffering from renewed Chinese aggression and some of the
economies of South East Asia have been overheating.
Our holdings in Malaysia account for 30.0% of the Fund. We
have been reducing this position throughout the year. We
have been concerned about inflation and our view on the
economy has been right. Our banking and infrastructure
related stocks have done well. The stock market, however,
has been stronger than we thought it would be.
We redirected the money that we raised from sales in
Malaysia towards Indonesia and the Philippines. We were
attracted by strong earnings growth and our stock selection
has been good. We have also added to our Chinese
portfolio, expecting the government to ease credit policy.
Thailand (16.3% of the Fund) has lagged the region over the
12 months. We think interest rates are close to their peak
and have recently added to our positions.
Elsewhere, Korea has been disappointing. Politics have
been an important influence. Since the presidential
election, the market has moved forward.
We are confident that the region will provide investors
with premium rates of growth. We do not believe that
valuations are too high, although the strong gains posted
this year may not be reported in the 12 months to April 30,
1997.
INVESTMENT All members of the investment team report directly to Joe
MANAGER PROFILE Scott Plummer (Chief Investment Officer), who has 27 years
of investment experience. All funds are managed on a team
basis with a named director heading each team.
Allan MacLeod has managed the MCBT Emerging Asia Fund since
inception.
He graduated from Edinburgh University in 1989 with a
degree in Law and joined Martin Currie in 1990 as a member
of the Pacific Basin team. Appointed investment manager in
1993 and promoted to director in 1994. Member of the
Institute of Investment Management and Research.
2
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
ASSET ALLOCATION
(% of net assets)
[GRAPH]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
MALAYSIA
AMMB Holdings 5.0
United Engineers 4.1
INDONESIA
Bank Bira 3.7
PT Indosat 3.4
PHILIPPINES
Filinvest Land 3.1
3
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<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.
4
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<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
-------------
-------------
</TABLE>
* 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.
See notes to financial statements.
5
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS
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 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.
6
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
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.
7
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
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 $129,326,397 $42,027,699
of $185,162 and $100,454 respectively) ------------ -----------
------------ -----------
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.
8
<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
-------------- ----------------
PER SHARE OPERATING PERFORMANCE
<S> <C> <C>
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.
9
<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.
10
<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.
11
<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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
$114,310,888 $ 15,639,312 $(4,009,232) $ 11,630,080
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.
12
<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.
13
<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
14
<PAGE>
MARTIN CURRIE BUSINESS TRUST
-----------------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
-----------------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
-----------------------------
- -------------------------------------------------------------------------------
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
- --------------------------------------------------------------------------------
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING AMERICAS FUND
ANNUAL REPORT
APRIL 30, 1996
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in countries of the
Western Hemisphere with emerging markets and developing
economies.
LAUNCH DATE September 19, 1994
FUND SIZE $89.6m
PERFORMANCE Total return from May 1, 1995 through April 30, 1996
- MCBT - Emerging Americas Fund (excluding
all transaction fees) +12.5%
- MCBT - Emerging Americas Fund (including
all transaction fees) +8.6%
- The Morgan Stanley Capital International
Latin America (Free) Index +15.0%
Annualized total return from September 19, 1994 through
April 30, 1996
- MCBT - Emerging Americas Fund (excluding all
transaction fees) -14.9%
- MCBT - Emerging Americas Fund (including all
transaction fees) -16.7%
The graph below represents the annualized total return of
the portfolio including all transaction fees versus the
Morgan Stanley Capital International Latin America (Free
Index) from October 1, 1994 through April 30, 1996.
- MCBT - Emerging Americas Fund (excluding all
transaction fees) -17.7%
- MCBT - Emerging Americas Fund (including all
transaction fees) -19.5%
- The Morgan Stanley Capital International Latin America
(Free) Index -17.1%
[GRAPH]
(a) Performance for the benchmark is not available for the period from
September 19, 1994 (commencement of investment operations) through April
30, 1996. For that reason, performance is shown from October 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 175 basis points on purchase and 175 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
PORTFOLIO COMMENTS The Fund has marginally under-performed the index over the
past 12 months. During that time, markets have provided
widely differing returns e.g. Argentina rose 44%, Brazil
25%, Mexico 30%, Columbia fell by 7% and Chile fell by 4%.
This time last year investors were still suffering from a
loss of confidence in the wake of the Mexican devaluation.
Markets had fallen as a group and investors were ignoring
the specifics of each country. Since then, fundamental
qualities have been more important in determining the
direction of markets.
In Mexico, the economy has improved significantly.
Interest rates have fallen sharply, inflation is lower and
the authorities have succeeded in rescheduling their debt
maturity profile. Foreign buyers have returned to the
market. During the 12 month period we have moved from a
very underweight position to a more neutral one, buying
stocks to reflect the better economy. These included
Apasco, Cemex (cement) and Bufete (infrastructure).
Brazilian reforms have been delayed, which is
disappointing. These delays limit the potential for much
needed reductions in interest rates. Domestic debt is high
and economic growth sluggish. We have reduced over
exposure to this market over the year, concentrating our
holdings on companies with strong market positions, or
where there is potential for deregulation or privatization.
An underweight position in the largest index stock,
Telebras, held back the overall return.
In October, we reduced holdings in Argentina to reinvest
the proceeds into Mexico. We missed the last upward move
in the Argentinean market, but captured the full rise in
Mexico. Our reduction was prompted by concern that
stronger economic growth in the US may lead to a halt in
interest rate easing in Argentina.
Although the Chilean market declined as the economy began
to overheat, our stock selection was extremely good. We
registered a positive return from this element of the
portfolio.
In other areas, Millicom and Ceteco were particularly
rewarding.
We remain positive on the region longer term. Foreign
buying continues and foreign direct investment is strong.
Our positive outlook for Mexico may lead us to add to our
exposure there and we are considering a new investment in
Venezuela.
2
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
INVESTMENT
MANAGER PROFILE All members of the investment team report directly to Joe
Scott Plummer (Chief Investment Officer) who has 27 years
of investment experience. All funds are managed on a team
basis with a named director heading each team.
James Fairweather has managed the MCBT Emerging Americas
Fund since inception.
James spent three years with Montague Loebl Stanley & Co.
as an institutional sales and economic assistant. Moved
into Eurobond sales for 18 months with Kleinwort Benson
before joining Martin Currie in 1984. Has worked in the
Far East and North American investment teams. Appointed
Deputy Chief Investment Officer (investments) in 1994 with
overall responsibility for the company's investments in
emerging markets. He became head of Pacific Basin team in
1995.
Following Nicholas Morse's departure from Martin Currie in
February, 1996, James has been assisted by Joanna Terrett.
Joanna graduated from Manchester University in 1990 with a
degree in European Studies and French. Joined Martin
Currie in the same year as a member of the Continental
Europe team. Appointed investment manager in 1994. A
Spanish speaker, Joanna lived in Argentina and Venezuela
for six years and in early 1996 she joined the Emerging
Markets team with responsibility for Latin America.
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
ASSET ALLOCATION
(% of net assets)
[GRAPH]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
BRAZIL
Telebras 7.5
Eletrobras 3.3
MEXICO
Grupo Industrial San Luis C.P.O. 3.6
Hylsamex 3.0
Grupo Financiero Banamex, Cl B 2.4
ARGENTINA
Banco Frances del Rio de la Plata 3.1
Companhia Naviera Perez Companc 2.3
CHILE
Santa Isabel 1.9
Antofagasta Holdings 1.6
Madeco 1.3
4
<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.
5
<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.
6
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
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.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
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>
8
<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) $ 89,599,602 $ 39,833,637
of $74 and $(88,818) respectively) -------------- -------------
------------- -------------
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.
9
<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.
10
<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.
11
<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.
12
<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:
NET UNREALIZED
IDENTIFIED GROSS UNREALIZED APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
--------------- --------------- ---------------- ---------------
$ 84,665,914 $ 10,186,499 $ (5,363,142) $ 4,823,357
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.
13
<PAGE>
MCBT EMERGING AMERICAS 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, 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.
14
<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
15
<PAGE>
MARTIN CURRIE BUSINESS TRUST
-----------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
--------------------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
------------------------
- --------------------------------------------------------------------------------
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
- --------------------------------------------------------------------------------
<PAGE>
MARTIN CURRIE BUSINESS TRUST
JAPAN SMALL COMPANIES FUND
ANNUAL REPORT
APRIL 30, 1996
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in Japanese companies
with relatively small capitalization, which may not have
wide market recognition.
LAUNCH DATE August 15, 1994
FUND SIZE $88.9m
PERFORMANCE Total return from May 1, 1995 through April 30, 1996
- MCBT - Japan Small Companies Fund (excluding
all transaction fees) +13.1%
- MCBT - Japan Small Companies Fund (including
all transaction fees) +10.9%
- Tokyo Stock Exchange - Second Section +5.7%
Annualized total return from August 15, 1994 through
April 30, 1996
- MCBT - Japan Small Companies Fund (excluding
all transaction fees) +5.1%
- MCBT - Japan Small Companies Fund (including
all transaction fees) +3.8%
The graph below represents the annualized total return
of the portfolio including all transaction fees versus
the Tokyo Stock Exchange - Second Section from
September 1, 1994 through April 30, 1996.
- MCBT - Japan Small Companies Fund (excluding
all transaction fees) +5.1%
- MCBT - Japan Small Companies Fund (including
all transaction fees) +3.8%
- Tokyo Stock Exchange - Second Section -7.4%
[GRAPH]
(a) Performance for the benchmark is not available for the period from August
15, 1994 (commencement of investment operations) through April 30, 1996.
For that reason, performance is shown from September 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 100 basis points on purchase and 100 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
PORTFOLIO The Fund has done well over the past 12 months.
COMMENTS Smaller companies began to out perform larger ones
towards the end of the reporting period.
This time last year, deflation was a problem, the
currency was very strong and the economy
stagnating. The Japanese authorities have
addressed these problems. To combat deflation, the
Government loosened money supply. Interest rates
are at historic lows and the currency has been
managed lower by foreign exchange intervention. A
large stimulatory package was also announced and
the impact is now being felt.
We are confident that the economy will grow at a
rate of 2.5% in fiscal year 1996. The consensus of
opinion is not as optimistic. We think that
earnings will recover sharply for a number of
reasons:
1. The improving economy.
2. Cost reductions that are being made.
3. Changes in product design.
4. The lower yen and the easing of deflation.
Smaller companies should benefit most as they are more
geared to economic activity.
There has been a steady inflow of cash into the
Fund, allowing us to buy gently into the rising
market. We have moved from owning defensive
stocks, and a high proportion of convertible bonds
to more economically sensitive ones. We were able
to sell some of the convertibles on high premiums
(e.g. Showa Corp.). We have positioned the
portfolio to benefit from a consumer recovery.
Circle K, a convenience store which we own, has
risen 67% (in local currency terms) since purchase.
A new holding, Hikari Tsushim (a distributor of
mobile phones) has done particularly well, rising
by 70% (in local currency terms) since we purchased
it in March. We are also heavily committed to the
service sector which has long term growth
potential.
The portfolio remains 50% hedged. This is a
defensive hedge, as we feel that the yen may weaken
still further. The position is reviewed
constantly.
The Japanese market has the potential to run
further as the year progresses. The economy has
turned and the currency is no longer causing
problems for exporters. Most importantly, though,
the domestic investor has stopped selling.
2
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
INVESTMENT MANAGER All members of the investment team report directly
PROFILE to Joe Scott Plummer (Chief Investment Officer)
who has 27 years of investment experience. All
funds are managed on a team basis with a named
director heading each team.
Michael Thomas assisted by James Salter has
managed the MCBT Japan Small Companies Fund since
inception.
Michael graduated from Bristol University with a
degree in Economics and joined stockbrokers
Vickers da Costa in 1973. He began covering the
Japanese market in 1975 and became director of its
Japanese department in 1982. A specialist on
Japan, he joined Martin Currie in 1989 as a
director and head of the Far East investment team.
Became head of the Japan team in 1993 following
the restructure of the Far East team.
James graduated from Reading University in 1988 in
Classics and Anthropology and went to complete the
Japan studies MA course at the School of Oriental
and African Studies. Joined Foreign & Colonial in
1989 and was seconded to Japan with The Long Term
Credit Bank of Japan. Joined Martin Currie in
July 1992 as a member of the Pacific Basin and
latterly the Japan team. He was promoted to
director in 1995.
LARGEST HOLDINGS % OF NET ASSETS
Hikari Tsushim 3.7
Maezawa Industries 3.1
Fuji Machine 2.6
Sanki Engineering 2.5
Circle K Japan 2.5
3
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
SHARES VALUE
------ -----
COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - 96.0%
COMMON STOCK - 84.3%
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
See notes to financial statements.
4
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1996
SHARES VALUE
------ -----
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
-----------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BONDS - 10.2%
HIGASHI NIHON HOUSE, 0.375%, 4/30/2000 Y 1,000,000 1,030,928
IZUMI, 4.5%, 2/28/2001 Y 60,000,000 696,907
JONAS, 1.4%, 12/30/1999 Y 106,500,000 1,467,614
KONAMI, 0.75%, 3/31/2000 Y 160,000,000 1,621,338
MATSUSHITA ELECTRIC, NO.8, 2.7%, 5/31/2002 Y 100,000,000 1,213,135
MEITEC, 3.2%, 3/31/2004 Y 26,000,000 412,600
MIRAI INDUSTRY, 2.3%, 3/20/2002 Y 138,000,000 1,773,070
NITTO DENKO, NO.4, 3.9%, 3/30/2001 Y 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
------------
PRINCIPAL
AMOUNT
---------
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
-----------
-----------
* Non-income producing security.
Y 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.
5
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS
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 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.
6
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<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.
7
<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 gain(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.
8
<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
Operting 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.
9
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINNACIAL 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.
10
<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.
11
<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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
--------------- --------------- ---------------- ---------------
$ 79,727,015 $ 10,645,908 $ (1,774,026) $ 8,871,882
12
<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>
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.
13
<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
14
<PAGE>
MARTIN CURRIE BUSINESS TRUST
-------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
---------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
--------------------
- --------------------------------------------------------------------------------
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
- -------------------------------------------------------------------------------
<PAGE>
MARTIN CURRIE BUSINESS TRUST
OPPORTUNISTIC EAFE FUND
ANNUAL REPORT
APRIL 30, 1996
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
OBJECTIVE Long term capital appreciation through active management of
a diversified portfolio of international equities outside
the USA and Canada.
LAUNCH DATE July 1, 1994
FUND SIZE $108.3 m
PERFORMANCE Total return from May 1, 1995 through April 30, 1996
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +16.2%
- MCBT - Opportunistic EAFE (including all
transaction fees) +14.4%
- The Morgan Stanley Capital International
EAFE Index +11.7%
The graph below represents the annualized total return
of the portfolio including all transaction fees versus
the Morgan Stanley Capital International EAFE Index
from July 1, 1994 through April 30, 1996.
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +7.7%
- MCBT - Opportunistic EAFE (including all
transaction fees) +6.8%
- The Morgan Stanley Capital International
EAFE Index +9.1%
[GRAPH]
(a) Commencement of investment operations.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 75 basis points on purchase and 75 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
PORTFOLIO
COMMENTS The Fund has outperformed the index over the past 12
months, registering a healthy rise.
This time last year, the US dollar was weak against both
the yen and the deutschemark. The US stock market was very
strong and emerging markets in turmoil. Since then, the US
dollar has recovered, interest rates in the US have fallen
and confidence has returned to the smaller markets.
Over the twelve month period our confidence in the outlook
for Japanese equities has risen. We added to our position
there following falls in share prices, but partially hedged
the currency. The Japanese authorities have addressed the
problems of a strong currency, deflation and a stagnating
economy. We are confident that the economy will grow at a
rate of 2.5% in fiscal 1996. The consensus of opinion is
not as optimistic. We think that the market has the
potential to run further as the year progresses. The
domestic investor has stopped selling, and that is a good
sign.
To fund the increase in Japan, we have sold shares in the
UK where we are concerned about politics. A general
election is due within the next 12 months and there is a
high probability that there will be a change in Government.
We continue to run a relatively heavy position in ASIA and
added to our positions during the year. Markets here have
recovered and foreigners have been buying shares. Interest
rate falls in Hong Kong triggered a change in sentiment,
but South Korea has experienced political uncertainty and
Taiwan has suffered from Chinese aggression.
Our attitude towards CONTINENTAL EUROPEAN markets is
becoming more positive. We have been underweight,
reflecting our view that economies were sluggish and there
were better opportunities elsewhere. Interest rates have
been falling and weaker currencies may now allow a gentle
expansion in growth.
We have been encouraged by good stock selection in nearly
all geographic regions, particularly in the UK and
Continental Europe. We are confident that markets will
advance further over the next six months and expect Japan
to do particularly well.
2
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
INVESTMENT
MANAGER PROFILE All members of the investment team report directly to Joe
Scott Plummer (Chief Investment Officer ), who has 27 years
of investment experience. All funds are managed on a team
basis with a named director heading each team.
Tony Hanlon has managed the MCBT Opportunistic EAFE Fund
since inception.
He graduated from Glasgow University in 1984 with a degree
in Public Law and completed a MBA degree at Manchester
Business school in 1986. Worked for Salomon Brothers
International in New York and London as an institutional
bond salesman. Joined Martin Currie in 1988, working in
the North American team. Appointed investment manager in
1991 and promoted to director in 1993. As head of the
Strategy & Asset Control team, he has responsibility for
communicating and monitoring investment strategy.
3
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1996
ASSET ALLOCATION
(% of net assets)
[GRAPH]
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
<S> <C> <C>
JAPAN
Mitsubishi Heavy Industries 2.1
Sumitomo Trust & Banking 1.9
Rohm 1.7
EUROPE
Veba (Germany) 1.4
Elsevier (Netherlands) 1.4
Internationale Nederlanden (Netherlands) 1.3
PACIFIC BASIN
Taiwan Opportunities Fund (Taiwan) 1.4
Broken Hill Proprietary (Australia) 1.4
Swire Pacific (Hong Kong) 1.3
OTHER AREAS
Indian Opportunities Fund (India) 1.1
</TABLE>
4
<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>
See notes to financial statements.
5
<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.
6
<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>
See notes to financial statements.
7
<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.
8
<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.
9
<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.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS
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 foreign currency contracts 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
($108,295,237 / 9,628,089 shares of beneficial interest outstanding) $11.25
------------
------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
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.
12
<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
of $1,336,593 and $109,392 respectively) $108,295,237 $ 72,660,677
------------ -------------
------------ -------------
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
13
<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 40% 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.
14
<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.
15
<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.
16
<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.
17
<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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------ -------------- -------------
$ 97,497,830 $ 13,355,114 $ (1,961,826) $ 11,393,288
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:
U.S. $ COST U.S. $ NET UNREALIZED
ON ORIGINATION CURRENT APPRECIATION
CURRENCY SOLD SETTLEMENT DATE DATE VALUE (DEPRECIATION)
- ------------- --------------- --------------- ------------- --------------
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)
------------- ------------- -------------
------------- ------------- -------------
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.
18
<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
19
<PAGE>
MARTIN CURRIE BUSINESS TRUST
--------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
--------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Scotland
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
____________________
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The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
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