<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING AMERICAS FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
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 $194.6m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
- MCBT - Emerging Americas Fund (excluding all transaction
fees) + 23.5%
- MCBT - Emerging Americas Fund (including all transaction
fees) + 19.3%
- The Morgan Stanley Capital International Latin America
(Free) Index + 33.3%
Annualized total return from September 19, 1994 through
April 30, 1997
- MCBT - Emerging Americas Fund (excluding all transaction
fees) (1.9%)
- MCBT - Emerging Americas Fund (including all transaction
fees) (3.2%)
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, 1997.
- MCBT - Emerging Americas Fund (excluding all transaction
fees) (3.7%)
- MCBT - Emerging Americas Fund (including all transaction
fees) (5.0%)
- The Morgan Stanley Capital International Latin America
(Free) Index (0.4%)
[graph]
(a) Performance for the benchmark is not available from September 19, 1994
(commencement of investment operations). 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, 1997
PORTFOLIO It has been a good year for Latin American equities. The MSCI Latin
COMMENTS America (Free) Index has risen by 33.3%. Brazil, Colombia and
Argentina were the star performers. New subscriptions have
helped to swell the size of the fund from US$89.6m at the
beginning of the 12 month period to US$194.6m now.
Economies across the region are recovering and interest rates are
falling. Inflation has declined and currencies have stabilised.
Strong oil prices have been good for Venezuela and Mexico. It is
not, therefore, surprising that the international investor has
returned to the region.
Our largest position was in BRAZIL. Here we have bought and held
privatisation and electrical utility stocks such as Telebras,
Telesp and Cemig. We had to wait until the second half of the
year to reap the benefits of this strategy.
Our MEXICAN portfolio was very focused. We favoured domestic
stocks because we expected consumption to rise. Even though the
consumer recovery did not materialise, stocks such as Soriana
performed well earlier in the year. We also bought stocks which
benefit directly from stronger economic activity such as Tamsa
and Corporacion Geo. They have served us well.
Elsewhere, we reduced our exposure to ARGENTINA in December in
anticipation of a rise in US interest rates. We established
holdings in VENEZUELA. Here, CANTV, the first privatisation
issue, provided us with a good opportunity to make money. We
also added to our CHILEAN exposure, buying CTC.
Outlook
We expect markets to pause for breath before moving ahead towards
the end of the calendar year. Looming elections in Mexico and
Argentina may create short-term turbulence.
Longer-term, economic growth of 4-5% across the region, falling
interest rates and deregulation make Latin America attractive.
INVESTMENT All members of the investment team report directly to Joe Scott
MANAGER Plummer (Chief Investment Officer), who has 27 years investment
PROFILE 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. He has worked in our Far East, North American
and Continental European investment teams. Appointed a director
in 1987, he became head of our Continental Europe team in 1992.
A member of the asset allocation committee, James was appointed
Deputy Chief Investment Officer in 1994 with overall
responsibility for our investments in emerging markets.
Joanna Terrett assists James.
2
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
39% Brazil
25% Mexico
10% Argentina
4% Peru
4% Other Areas
13% Chile
5% Other Net Assets
[CHART]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
BRAZIL
Telebras, ADR 10.0
Telec do Rio Janeiro 3.3
MEXICO
Bufete Industrial, ADR 2.7
Empresas La Moderna 2.6
ARGENTINA
Banco de Galicia, ADR 3.3
Compania Perez Companc 3.2
CHILE
Compania de Telefonos de Chile 4.7
PERU
Telefonica del Peru, CL B 3.0
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
COMMON AND PREFERRED STOCKS - 94.9%
ARGENTINA - 9.9%
ARGENTINA EQUITY INVESTMENTS * 15,000 $ 1,590,600
BANCO DE GALICIA, ADR 261,098 6,352,025
COMPANIA PEREZ COMPANC 778,567 6,314,810
IMPORTADORA Y EXPORTADORA PATAGONIA 90,000 1,125,112
TELEFONICA DE ARGENTINA, ADR 114,000 3,790,500
-----------
TOTAL ARGENTINA - (COST $13,409,932) 19,173,047
-----------
BRAZIL - 39.3%
BANCO ITAU 7,910,000 4,276,681
BRASMOTOR 5,850,000 1,402,680
BRAZIL FAST FOOD * 312,500 703,125
BRAZIL REALTY, GDR 50,000 1,349,318
BRAZILIAN EQUITY INVESTMENTS * 44,000 1,395,240
CEMIG, ADR 85,063 3,827,835
COMPANIA VALE DO RIO DOCE, ADR 145,800 3,715,261
ELETROBRAS 12,105,000 5,474,852
GLOBEX UTILIDADES 115,000 2,054,537
KLABIN FABRICADORA 3,500,000 3,620,122
LIGHT SERVICOS DE ELETRICIDADE 9,500,000 3,948,284
MULTICANAL PARTICIPACOES, ADR * 73,000 1,058,500
PETROBRAS PETROLEO BRASIL 20,000,000 4,203,103
TELEBRAS, ADR 168,945 19,386,439
TELEC DO RIO JANEIRO 38,500,000 6,407,616
TELECOMUNICACOES DE SAO PAULO 10,740,000 3,049,817
TV FILME INC. * 300,000 3,337,500
UNIAO DE BANCOS BRASILIEROS 104,130,000 3,846,984
USIMINAS, ADR 296,700 3,450,621
-----------
TOTAL BRAZIL - (COST $54,640,382) 76,508,515
-----------
CHILE - 12.6%
BANCO A. EDWARDS, ADR 160,000 3,360,000
COMPANIA DE TELEFONOS DE CHILE, ADR 280,000 9,065,000
ENERSIS, ADR 37,400 1,178,100
LABORATORIO CHILE, ADR 180,000 3,960,000
MADECO, ADR 62,320 1,706,010
MADERAS Y SINTETICO SOCIEDAD, ADS 74,800 1,196,800
PROVIDA, ADR 135,000 2,430,000
SOCIEDAD QUIMICA Y MINERA, ADR 28,200 1,670,850
-----------
TOTAL CHILE - (COST $21,962,858) 24,566,760
-----------
COLOMBIA - 1.8%
BANCO GANADERO, ADR, CL B 4,500 154,125
BANCO GANADERO, ADR, CL C 120,000 3,315,000
-----------
TOTAL COLOMBIA - (COST $3,241,470) 3,469,125
-----------
See notes to financial statements.
4
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
MEXICO - 25.2%
BUFETE INDUSTRIAL, ADR * 270,000 $ 5,163,750
CEMEX, CL B 900,000 3,295,790
CIFRA SA DE CV, CL A 331,453 500,527
CIFRA SA DE CV, CL B 2,710,000 4,160,574
COCA COLA FEMSA, ADR 85,050 2,966,119
CONSORCIO ARA * 450,000 1,528,975
CONTROLADORA COMERCIAL MEXICANA, GDR * 35,000 533,750
CORPORACION GEO, SERIES B * 430,000 2,002,139
CORPORACION INDUSTRIAL ALFA, CL A 825,244 4,527,860
EMPRESAS LA MODERNA 1,000,000 5,134,336
GRUPO FINANCIERO BANAMEX, CL B 1,950,000 4,176,556
GRUPO INDUSTRIAL CAMESA SA DE CV * 1,000,000 553,703
HYLSAMEX, GDS 113,000 2,902,970
KIMBERLY CLARKE, ADR 80,000 1,520,000
SAN LUIS CPO 545,000 3,147,989
TELEFONOS DE MEXICO, ADR 81,000 3,341,250
TUBOS DE ACERO DE MEXICO, ADR * 224,400 3,674,550
-----------
TOTAL MEXICO - (COST $43,238,654) 49,130,838
-----------
PERU - 3.6%
MINAS BUENAVENTURA, ADR 42,000 913,500
MINAS BUENAVENTURA, CL A 7,862 73,900
MINAS BUENAVENTURA, CL B 1,965 21,309
PERU REAL ESTATE, CL B * 2,176,100 285,792
TELEFONICA DEL PERU, CL B 2,408,512 5,802,119
-----------
TOTAL PERU - (COST $6,699,275) 7,096,620
-----------
VENEZUELA - 2.5%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 62,000 1,860,000
MAVESA, ADR 275,000 1,890,625
SIVENSA, ADR 350,000 1,050,000
-----------
TOTAL VENEZUELA - (COST $4,830,511) 4,800,625
-----------
TOTAL COMMON AND PREFERRED STOCKS - (COST $148,023,082) + 184,745,530
-----------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 3.6%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.15%, 5/01/1997 (A) $ 6,954,000 6,954,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $6,954,000) 6,954,000
-----------
See notes to financial statements.
5
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
TOTAL INVESTMENTS - (COST $154,977,082) - 98.5% $ 191,699,530
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 1.5% 2,897,297
-----------
NET ASSETS - 100.0% $ 194,596,827
-----------
-----------
* Non-income producing security.
(a) The repurchase agreement, dated 4/30/97, $6,954,000 par due 5/01/97, is
collateralized by United States Treasury Notes, 6.25%, due 3/31/99, with a
market value of $7,094,661.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Auto Parts 0.7%, Banks 14.3%, Chemicals 0.9%, Construction and Building
Materials 4.2%, Direct 0.3%, Drugs & Health Care 2.0%, Electric Utilities
6.8%, Electrical Equipment 0.9%, Engineering 2.7%, Food & Beverages 5.5%,
Insurance 2.3%, Investment Companies 1.5%, Manufacturing 1.0%, Mining 2.4%,
Oil & Gas 2.2%, Paper 2.6%, Petroleum Services 3.9%, Real Estate 1.6%,
Retail 0.6%, Retail Trade 5.3%, Steel 3.8%, Telecommunication 15.4%,
Telecommunications Services 10.3%, Telephone 3.7%.
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, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $148,023,082) (Note B) $ 184,745,530
Investments in repurchase agreements, at value (Note B) 6,954,000
-------------
Total Investments 191,699,530
Cash 938
Foreign currency, at value (cost $79,255) (Note B) 79,196
Receivable for investments sold 3,441,757
Dividend and interest receivable 1,121,764
Foreign tax reclaims receivable 5,587
Prepaid insurance expense 15,664
Deferred organization expenses (Note B) 6,085
-------------
TOTAL ASSETS 196,370,521
-------------
LIABILITIES
Payable for investments purchased 1,026,103
Management fee payable (Note C) 680,059
Administration fee payable (Note C) 13,305
Trustees fees payable (Note C) 2,486
Accrued expenses and other liabilities 51,741
-------------
TOTAL LIABILITIES 1,773,694
-------------
TOTAL NET ASSETS $ 194,596,827
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 167,440,183
Undistributed net investment income 233,331
Accumulated net realized loss on investment and foreign currency transactions (9,798,953)
Net unrealized appreciation on investment and foreign currency transactions 36,722,266
-------------
TOTAL NET ASSETS $ 194,596,827
-------------
-------------
NET ASSET VALUE PER SHARE $ 9.43
($194,596,827 / 20,646,341 shares of beneficial interest outstanding) -------------
-------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
Interest income $ 339,275
Dividend income 3,204,198
Foreign taxes withheld (218,810)
-----------
TOTAL INVESTMENT INCOME 3,324,663
-----------
EXPENSES
Management fee (Note C) 2,157,383
Custodian fee 208,238
Administration fee (Note C) 111,619
Audit fee 24,194
Legal fees 10,888
Transfer agent fee 6,835
Trustees fees (Note C) 5,172
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 16,988
Fees and expenses waived by the investment manager (Note C) (104,649)
-----------
TOTAL EXPENSES 2,439,216
-----------
NET INVESTMENT INCOME 885,447
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 1,359,144
Net realized loss on foreign currency transactions (70,475)
Net increase in unrealized appreciation on:
Investments 31,143,844
Foreign currency transactions 330
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 32,432,843
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $33,318,290
-----------
-----------
See notes to financial statements.
8
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1997 APRIL 30, 1996
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 89,599,602 $ 39,833,637
------------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 885,447 532,282
Net realized gain (loss) on investment transactions 1,359,144 (1,320,182)
Net realized loss on foreign currency transactions (70,475) (431,239)
Net unrealized appreciation (depreciation) on:
Investments 31,143,844 8,674,586
Foreign currency transactions 330 (209)
------------- ------------
Net increase in net assets from operations 33,318,290 7,455,238
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (581,714) (369,749)
------------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 73,420,567 49,179,620
Reinvestment of dividends and distributions to shareholders 564,807 353,471
Cost of shares repurchased (3,086,300) (7,864,000)
Paid in capital from subscription and redemption fees 1,361,575 1,011,385
------------- ------------
Total increase in net assets from capital share transactions 72,260,649 42,680,476
------------- ------------
NET INCREASE IN NET ASSETS 104,997,225 49,765,965
------------- ------------
NET ASSETS at end of period (net of accumulated net investment $ 194,596,827 $ 89,599,602
income of $233,331 and $74, respectively) ------------- ------------
------------- ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 9,227,999 6,887,372
Shares issued in reinvestment of distributions to shareholders 69,729 51,526
Less shares repurchased (351,983) (1,057,543)
------------- ------------
Net share transactions 8,945,745 5,881,355
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR SEPT. 19, 1994*
ENDED ENDED THROUGH
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.660 $ 6.850 $ 10.000
Net investment income(loss) 0.040 0.025 (0.004)
Net realized and unrealized gain(loss) on investment
and foreign currency transactions 1.688 0.720 (3.298)
------------- ------------ ------------
Total from investment operations 1.728 0.745 (3.302)
------------- ------------ ------------
Less distributions:
Dividends from net investment income (0.029) (0.040) 0.000
------------- ------------ ------------
Paid in capital from subscription and redemption fees (Note B) 0.071 0.105 0.152
------------- ------------ ------------
Net asset value, end of period $ 9.430 $ 7.660 $ 6.850
------------- ------------ ------------
------------- ------------ ------------
TOTAL INVESTMENT RETURN (1) 23.55% 12.48% (31.50)%(2)
------------- ------------ ------------
------------- ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $194,596,827 $ 89,599,602 $ 39,833,637
Operating expenses, net, to average net assets (Note C) 1.70% 1.70% 1.80%(3)
Operating expenses, gross, to average net assets (Note C) 1.77% 1.95% 1.80%(3)
Net investment income(loss) to average net assets 0.62% 0.88% (0.11)%(3)
Portfolio turnover rate 50% 61% 89%
Average commission rate per share (4) $ 0.0002 $ 0.0001 N/A
Per share amount of fees waived (Note C) $ 0.005 $ 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) 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. 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"). 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 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.
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, 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 1.75% 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 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 year ended April 30, 1997, $1,307,675 was
collected in purchase premiums and $53,900 was collected in redemption fees.
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. As of April 30, 1997 the
Fund has a realized capital loss carryforward, for Federal income tax purposes,
of $9,535,196 (expires April 30, 2004), available to be used to offset future
realized capital gains. As of April 30, 1997 the Fund has elected for Federal
income tax purposes to defer a $44,693 current year post October 31 loss as
though the loss was incurred on the first day of the next fiscal year.
12
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - 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 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 $207,307 (of the total $218,810 taxes withheld) and
$3,209,921, 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 1.50% of the Fund's average net assets.
Prior to September 20, 1996 the Investment Manager had voluntarily agreed to
limit its fee to 1.25% of the Fund's average net assets, which resulted in a
waiver of $104,649.
The Investment Manager has also voluntarily undertaken 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 2.00% of the Fund's average net assets on
an annualized basis. For the year ended April 30, 1997, it was not necessary
for the Investment Manager to waive any additional 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 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 year ended April 30, 1997 were $135,733,800 and
$67,870,530, 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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------ -------------- --------------
$ 155,953,609 $ 40,234,856 $ (4,488,935) $ 35,745,921
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 28% of the Fund.
13
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
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.
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 (the
"Fund") at April 30, 1997, and 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, 1997 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 17, 1997
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.
