<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL EMERGING MARKETS FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in countries with
emerging markets and developing economies.
LAUNCH DATE February 14, 1997
FUND SIZE $50.1m
PERFORMANCE Total return from February 14, 1997 through April 30, 1997
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) +0.2%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -1.8%
The graph below represents the total return of the portfolio
including all transaction fees versus the Morgan Stanley
Capital International Emerging Markets Free Index from March
1, 1997 through April 30, 1997.
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) +0.5%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -1.5%
- Morgan Stanley Capital International - Emerging Markets
Free Index -2.5%
[GRAPH]
a) Performance for the benchmark is not available from February 14, 1997
(commencement of investment operations). For that reason, performance is
shown from March 1, 1997.
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 GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO The Fund was launched on February 14, 1997.
COMMENTS
Initially, we favoured Latin America. Here we expected
interest rate reductions and falling inflation. Both are
good for stockmarkets. Latin American stocks are not
expensive as investors have been nervous since the Mexican
currency devaluation in late 1994. Politics are very
important to domestic and international investors alike.
Looming elections in Mexico and Argentina and a
privatisation programme in Brazil will keep politics
uppermost in investors' minds. We do, therefore, expect
some turbulence in these markets.
We are positive on the outlook for the EMEA markets (Europe,
Middle East and Africa). We have already seen handsome
returns from our stocks in Zimbabwe. We are excited by the
pace of economic reform in selected African markets. We
expect international investors to reassess the potential for
this area and anticipate that investors will buy stocks.
Middle Eastern markets should make further progress despite
the stalling of the peace process.
We have been less keen on the Asian markets, except for
China and India. Reforms in India and the freeing up of the
Chinese economy and stockmarket provide us with good
opportunities. Elsewhere, markets are suffering due to high
interest rates and deteriorating current account balances.
We are not tempted yet.
OUTLOOK
We expect emerging markets as a whole to benefit from
international buying. We intend to reduce our exposure to
Latin America and build positions in the EMEA region. We
have very few holdings in South Africa at the moment, but
will invest in smaller and medium-sized companies where
opportunities arise. We expect this to give us exposure to
the recovering economy and the expansion of South African
companies into sub-Saharan Africa. Although markets may be
quiet over the summer period, we expect good progress in the
final quarter of 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.
James Fairweather, Deputy Chief Investment Officer, oversees
the management of the MCBT Global Emerging Markets Fund.
The Fund is managed by Tristan Clube.
Tristan who graduated from Christ Church, Oxford with a
degree in Earth Sciences, gained a PhD in Geophysics from
Edinburgh University in 1985 and was awarded a Royal Society
Fellowship to pursue scientific interests at a research
institute in France. Tristan joined Martin Currie's Far
East team in 1987, was appointed Director of Martin Currie
Investment Management Ltd. in 1991, and became head of the
Pacific Basin team in 1993. He was appointed head of the
Emerging Markets team in 1995.
2
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
17 % EUROPE
8 % AFRICA
42 % LATIN AMERICA
7 % MIDDLE EAST
5 % OTHER AREAS
19 % PACIFIC BASIN
2 % OTHER NET ASSETS
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
<C> <S> <C> <C>
LATIN AMERICA
Telebras, ADR (Brazil) 5.7
Petrobras Petroleo Brasil (Brazil) 4.7
Compania de Telefonos de Chile, ADR (Chile) 3.9
OTHER AREAS
Taiwan Opportunities Fund (Investment Companies) 4.8
Indian Opportunities Fund (Investment Companies) 2.6
East Europe Development Fund (Investment Companies) 2.1
PACIFIC BASIN
Commerce Asset Holdings (Malaysia) 1.3
MIDDLE EAST
Commercial International Bank, GDR (Egypt) 1.1
AFRICA
Sasol (South Africa) 1.1
</TABLE>
3
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS - 98.4%
AFRICA - 8.1%
SOUTH AFRICA - 6.4%
ANGLO AMERICAN CORPORATION 6,400 $ 408,771
BARLOW LIMITED 44,000 484,876
ELLERINE HOLDINGS LIMITED 20,000 125,942
GENCOR LIMITED 114,000 479,433
NAMPAK LIMITED 114,000 489,689
NEW CLICKS HOLDINGS 290,000 332,621
Q DATA SYSTEMS 145,000 302,620
SASOL 44,000 564,039
-----------
TOTAL SOUTH AFRICA - (COST $3,142,752) 3,187,991
-----------
ZIMBABWE - 1.7%
MEIKLES AFRICA LIMITED 135,000 314,550
NMBZ HOLDINGS * 60,000 171,000
TRANS ZAMBEZI INDUSTRIES 375,000 375,000
-----------
TOTAL ZIMBABWE - (COST $705,979) 860,550
-----------
TOTAL AFRICA - (COST $3,848,731) 4,048,541
-----------
EUROPE - 5.1%
GREECE - 2.7%
ALPHA CREDIT BANK, RIGHTS, 5/09/97 * 8,200 582,584
ERGO BANK 11,430 753,275
-----------
TOTAL GREECE - (COST $1,140,206) 1,335,859
-----------
HUNGARY - 2.4%
BORSODCHEM RT., GDR 11,500 419,750
GEDEON RICHTER, GDR 5,700 427,500
GRABOPLAST TEXTILE 8,300 380,507
-----------
TOTAL HUNGARY - (COST $1,240,621) 1,227,757
-----------
TOTAL EUROPE - (COST $2,380,827) 2,563,616
-----------
LATIN AMERICA - 42.0%
ARGENTINA - 2.5%
TELEFONICA DE ARGENTINA, ADR 38,000 1,263,500
-----------
TOTAL ARGENTINA - (COST $1,201,996) 1,263,500
-----------
BRAZIL - 22.9%
CEMIG, ADR 27,000 1,215,000
ELECTROBRAS, ADR 55,000 1,230,625
LIGHT SERVICOS DE ELETRICIDADE 3,100,000 1,288,387
PETROBRAS PETROLEO BRASIL 11,200,000 2,353,738
TELEBRAS, ADR 25,000 2,868,750
TELEC DO RIO JANEIRO 7,800,000 1,298,166
TELECOMUNICACOES DE SAO PAULO 4,200,000 1,192,666
-----------
TOTAL BRAZIL - (COST $10,827,437) 11,447,332
------------
</TABLE>
See notes to financial statements
4
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
LATIN AMERICA - Continued
CHILE - 5.1%
COMPANIA DE TELEFONOS DE CHILE, ADR 60,000 $ 1,942,500
PROVIDA, ADR 35,000 630,000
-----------
TOTAL CHILE - (COST $2,568,685) 2,572,500
-----------
MEXICO - 9.0%
CIFRA SA DE CV, CL A 57,485 86,808
CIFRA SA DE CV, CL B 470,000 721,576
CORPORACION GEO, SERIES B * 140,000 651,859
EMPRESAS ICA SOCIEDAD, ADR 45,000 669,375
TELEFONOS DE MEXICO, ADR 30,000 1,237,500
TUBOS DE ACERO DE MEXICO, ADR * 70,000 1,146,250
-----------
TOTAL MEXICO - (COST $4,582,061) 4,513,368
-----------
PERU - 1.6%
TELEFONICA DEL PERU, ADR, CL B 33,000 792,000
-----------
TOTAL PERU - (COST $751,556) 792,000
-----------
VENEZUELA - 0.9%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 15,000 450,000
-----------
TOTAL VENEZUELA - (COST $469,220) 450,000
-----------
TOTAL LATIN AMERICA - (COST $20,400,955) 21,038,700
-----------
MIDDLE EAST - 6.9%
EGYPT - 3.0%
AL-AHRAM BEVERAGES, GDR * 27,000 510,300
COMMERCIAL INTERNATIONAL BANK, GDR * 25,000 562,500
SUEZ CEMENT, GDR * 22,000 409,200
-----------
TOTAL EGYPT - (COST $1,510,050) 1,482,000
-----------
ISRAEL - 2.1%
ECI TELECOMMUNICATIONS 23,000 503,125
TADIRAN TELECOMMUNICATIONS 27,000 526,500
-----------
TOTAL ISRAEL - (COST $1,060,895) 1,029,625
-----------
TURKEY - 1.8%
AKCANSA CIMENTO A.S. 3,500,000 458,216
YAPI KREDI BANKASI 11,000,000 462,458
-----------
TOTAL TURKEY - (COST $989,435) 920,674
-----------
TOTAL MIDDLE EAST - (COST $3,560,380)
3,432,299
-----------
PACIFIC BASIN - 19.0%
CHINA - 4.5%
GUANGDONG KELON ELECTRICAL 650,000 629,316
GUANGSHEN RAILWAY 1,100,000 525,399
QINGLING MOTORS 900,000 493,771
</TABLE>
See notes to financial statements
5
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
PACIFIC BASIN - Continued
CHINA - Continued
TINGYI 2,400,000 $ 585,555
TOTAL CHINA - (COST $2,041,817) 2,234,041
-----------
HONG KONG - 2.3%
CHINA OVERSEAS LAND & INVESTMENT 1,000,000 564,771
CITIC PACIFIC 105,000 567,934
-----------
TOTAL HONG KONG - (COST $1,028,234) 1,132,705
-----------
INDONESIA - 3.3%
CITRAMARGA NUSAPHALA PERSADA 530,000 463,477
HANJAYA MANDALA SAMPOERNA 85,000 341,924
LIPPO BANK * 430,000 411,420
TELEKOMUNIKASI INDONESIA, SERIES B 300,000 435,185
------------
TOTAL INDONESIA - (COST $2,010,064) 1,652,006
------------
MALAYSIA - 6.3%
AMMB HOLDINGS 75,000 498,845
COMMERCE ASSET HOLDINGS 110,000 657,161
DIVERSIFIED RESOURCES 180,000 430,142
MALAYSIAN ASSURANCE ALLIANCE 110,000 591,445
MULTIPURPOSE HOLDINGS 300,000 489,884
UNITED ENGINEERS 72,000 510,435
-----------
TOTAL MALAYSIA - (COST $4,303,487) 3,177,912
-----------
PHILIPPINES - 2.6%
BELLE CORPORATION * 1,600,000 382,253
EQUITABLE BANKING CORPORATION * 150,000 585,893
FILINVEST LAND 1,500,000 352,673
-----------
TOTAL PHILIPPINES - (COST $1,684,073) 1,320,819
-----------
TOTAL PACIFIC BASIN - (COST $11,067,675)
9,517,483
-----------
OTHER AREAS - 17.3%
INDIA - 6.4%
GREAT EASTERN SHIPPING, GDR 80,000 442,400
LARSEN & TOUBRO, GDR 36,000 513,000
MAHINDRA & MAHINDRA, GDR 50,000 622,000
STATE BANK OF INDIA, GDR * 29,000 700,930
TATA ELECTRIC COMPANIES, GDR 1,500 495,000
VIDESH SANCHAR NIGAM LIMITED, GDR (C) * 23,000 450,800
-----------
TOTAL INDIA - (COST $3,148,255) 3,224,130
-----------
RUSSIA - 0.8%
GAZPROM, ADR * 9,600 148,992
LUKOIL HOLDING, ADR 4,700 266,137
-----------
TOTAL RUSSIA - (COST $494,025) 415,129
-----------
</TABLE>
See notes to financial statements
6
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------------ ----------
<S> <C> <C>
OTHER AREAS - CONTINUED
INVESTMENT COMPANIES - 10.1%
EAST EUROPE DEVELOPMENT FUND * 25,000 $ 1,034,500
INDIAN OPPORTUNITIES FUND (a) * 140,000 1,301,300
NEAR EAST OPPORTUNITIES FUND (b) * 25,000 343,250
TAIWAN OPPORTUNITIES FUND (b) * 150,000 2,389,500
-----------
TOTAL INVESTMENT COMPANIES - (COST $4,593,000) 5,068,550
-----------
TOTAL OTHER AREAS - (COST $8,235,280) 8,707,809
-----------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS-(COST $49,493,848)+ 49,308,448
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT TERM INVESTMENT - 1.1%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.15%, 5/01/1997 (d) $555,000 555,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $555,000) 555,000
-----------
TOTAL INVESTMENTS - (COST $50,048,848) - 99.5% 49,863,448
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.5% 232,408
-----------
NET ASSETS - 100.0% $50,095,856
-----------
-----------
</TABLE>
* Non-income producing security.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd., an
affiliate of Martin Currie Inc.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Near East
Opportunities and Taiwan Opportunities Funds.
(c) 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 $450,800 or 0.9% of net
assets.
(d) The repurchase agreement, dated 4/30/97, $555,000 par, due 5/01/97, is
collateralized by United States Treasury Notes, 5.125%, due 2/28/98, with a
market value of $570,834.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Automobiles 3.1%, Banks 9.7%, Chemicals 0.8%, Commercial Services 0.9%,
Computers 0.6%, Conglomerates 1.1%, Construction & Building Materials 4.0%,
Construction & Mining Equipment 1.3%, Containers & Glass 1.0%, Diversified
0.7%, Drugs & Health Care 0.9%, Electric Utilities 8.4%, Engineering 1.0%,
Financial Services 4.1%, Food & Beverages 2.2%, Gas Exploration 0.8%,
Hotels & Restaurants 0.6%, Household Appliances & Home Furnishings 1.3%,
Industrial Machinery 1.0%, Insurance 1.2%, Investment Companies 10.1%,
Manufacturing 3.1%, Mining 1.0%, Oil & Gas 6.6%, Real Estate 1.8%, Retail
Trade 2.5%, Telecommunication 10.7%, Telecommunications Equipment 2.1%,
Telecommunications Services 7.3%, Telephone 5.9%, Tobacco 0.7%,
Transportation 1.9%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $49,493,848) (Note B) $ 49,308,448
Investments in repurchase agreements, at value (Note B) 555,000
-------------
Total Investments 49,863,448
Cash 1,603
Foreign currency, at value (cost $29,367) (Note B) 29,347
Dividend and interest receivable 293,140
Prepaid insurance expense 4,929
Deferred organization expenses (Note B) 12,183
-------------
TOTAL ASSETS 50,204,650
-------------
LIABILITIES
Management fee payable (Note C) 77,760
Administration fee payable (Note C) 3,381
Trustees fees payable (Note C) 448
Accrued expenses and other liabilities 27,205
-------------
TOTAL LIABILITIES 108,794
-------------
TOTAL NET ASSETS $50,095,856
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $50,000,000
Undistributed net investment income 275,775
Accumulated net realized gain on investment and foreign
currency transactions 5,684
Net unrealized depreciation on investment and foreign
currency transactions (185,603)
-------------
TOTAL NET ASSETS $50,095,856
-------------
-------------
NET ASSET VALUE PER SHARE $ 10.02
-------------
-------------
($50,095,856 / 5,000,000 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 96,021
Dividend income 357,231
Foreign taxes withheld (23,102)
-----------
TOTAL INVESTMENT INCOME 430,150
-----------
EXPENSES
Management fee (Note C) 77,760
Custodian fee 32,000
Administration fee (Note C) 8,372
Audit fee 12,700
Legal fees 1,500
Transfer agent fee 1,374
Trustees fees (Note C) 448
Amortization of deferred organization expenses 555
Miscellaneous expenses 3,072
-----------
TOTAL EXPENSES 137,781
-----------
NET INVESTMENT INCOME
292,369
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 5,684
Net realized loss on foreign currency transactions (16,594)
Net unrealized depreciation on:
Investments (185,400)
Foreign currency transactions (203)
-----------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
(196,513)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 95,856
-----------
-----------
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS at beginning of period $ 0
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 292,369
Net realized gain on investment transactions 5,684
Net realized loss on foreign currency transactions (16,594)
Net unrealized depreciation on:
Investments (185,400)
Foreign currency transactions (203)
-----------
Net increase in net assets from operations 95,856
-----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 50,000,000
-----------
Total increase in net assets from capital share transactions 50,000,000
-----------
NET INCREASE IN NET ASSETS 50,095,856
-----------
NET ASSETS at end of period (includes undistributed net investment $50,095,856
income of $275,775) -----------
-----------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,000,000
-----------
Net share transactions 5,000,000
-----------
-----------
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.000
Net investment income 0.055
Net realized and unrealized loss on investment
and foreign currency transactions (0.035)
-----------
Total from investment operations 0.020
-----------
Net asset value, end of period $ 10.020
-----------
-----------
TOTAL INVESTMENT RETURN (1) (2) 0.20%
-----------
-----------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $50,095,856
Operating expenses, net, to average net assets (Note C) 1.33% (3)
Operating expenses, gross, to average net assets (Note C) 1.33% (3)
Net investment income to average net assets 2.83% (3)
Portfolio turnover rate 0%
Average commission rate per share (4) $ 0.002
</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) Periods less than one year are 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.
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL EMERGING MARKETS 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"). The MCBT Global Emerging Markets Fund (the "Fund")
commenced investment operations on February 14, 1997. 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 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.
Interest income 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 forward foreign currency contracts.
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.
12
<PAGE>
MCBT GLOBAL EMERGING MARKETS 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, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN 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.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either 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 reinvested 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 passive foreign investment companies (PFIC's),
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 retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the period ended April 30, 1997, no purchase premiums
or redemption fees were collected.
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for U.S.
federal income 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 substantially 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.
13
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
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NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund intends to make an election under Internal
Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its
shareholders. During the year ended April 30, 1997 the total amount of foreign
taxes that will be passed through to the shareholders and the foreign source
income for information reporting purposes will be $11,109 (of the total $23,102
taxes withheld) and $357,254, respectively.
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.
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. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 0.80% of the Fund's 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 aggregate annual
fees of $20,000.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the period ended April 30, 1997 were $49,493,848 and
$5,684, respectively.
The identified cost of investments in securities and repurchase agreements owned
for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at April 30, 1997 were as follows:
<TABLE>
<CAPTION>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) DEPRECIATION
------------ -------------- -------------- --------------
<S> <C> <C> <C>
$ 50,545,898 $ 2,157,214 $ (2,839,664) $ (682,450)
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997, 100% of the Fund's outstanding shares were held by one
shareholder.
NOTE F - 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.
14
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
CONCENTRATION OF RISK (CONTINUED) - 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.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Global Emerging Markets
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 Emerging Markets Fund
(the "Fund") at April 30, 1997, and the results of its operations, the changes
in its net assets and the financial highlights for the period from February 14,
1997 (commencement of operations) through April 30, 1997, 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 audit. We conducted our
audit 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
audit, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 17, 1997
16
<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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