<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL GROWTH FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1996
(UNAUDITED)
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
OBJECTIVE Long-term capital appreciation through active management of a
diversified portfolio of global equities.
LAUNCH DATE June 15, 1994
FUND SIZE $53.4m
PERFORMANCE Total return from May 1, 1996 through October 31, 1996
- MCBT - Global Growth Fund (excluding all
transaction fees) + 0.9%
- MCBT - Global Growth Fund (including all
transaction fees) - 0.6%
- The Morgan Stanley Capital International
World Index + 2.8%
Annualized total return from June 15, 1994 through October 31, 1996
- MCBT - Global Growth Fund (excluding all
transaction fees) + 9.4%
- MCBT - Global Growth Fund (including all
transaction fees) + 8.7%
- The Morgan Stanley Capital International
World Index +13.8%
(from July 1, 1994 through October 31, 1996)
PORTFOLIO Led again by the US, world markets rose over the six months.
COMMENTS Due, in large part, to our underweight position in US
equities, we have under performed the MSCI World Index.
Our concern about the US market - though our fears have yet
to be realised - has been more about valuations and earnings
growth than the economy and interest rates. Very high
levels of liquidity from the mutual funds have kept the
market boiling. Our stock selection here has been good and
our portfolio is defensive. We have continued to
concentrate on such themes as consumer brands, agriculture,
`21st century banking' and broadcasting.
JAPAN has been very disappointing. We had expected yen
weakness and had protected a portion of the fund's yen
assets by hedging the currency. But we thought that an
improving economy would feed through to a stronger
stockmarket. That did not happen. A surfeit of new issues
drained liquidity and the stockmarket actually fell. We
reduced our weighting to the market in August.
Elsewhere, we have added to our positions in CONTINENTAL
EUROPE. This is not because we think the economies are
exciting. It is because we are finding companies where
re-structuring and a focus on shareholder value are providing
us with opportunities. The UK market has been strong,
catching up with the rest of the world. Valuations here are
reasonable and our weighting is neutral, despite political
uncertainty. We think most of that is already discounted
and that, even if the market does fall around election time,
it will soon rally.
In the ASIAN region, Hong Kong has hit new all-time highs as
the market became more optimistic on the outlook for China.
Smaller markets have, again, seen mixed fortunes. LATIN
AMERICAN markets such as Brazil have strengthened markedly,
but the smaller Asian markets, such as Thailand, have
weakened.
1
<PAGE>
OUTLOOK
Looking to 1997, we are confident that the superior growth
opportunities in ASIA and LATIN AMERICA will prove
attractive to overseas investors. This should lead to
stronger markets. Across the world, we see a benign
environment of subdued inflation, low interest rates and
steady overall growth. These are circumstances in which
selected opportunities will abound.
INVESTMENT All members of the investment team report directly to Joe
MANAGER PROFILE Scott Plummer (Chief Investment Officer), who has 27 years'
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 at Manchester Business
school in 1986. He then worked for Salomon Brothers
International in New York and London as an institutional
bond salesman. Tony joined Martin Currie in 1988, working
in the North American team. He was appointed an investment
manager in 1991 and promoted to director in 1993. As head
of the Strategy and Asset Control team, he has
responsibility for communicating and monitoring our
investment strategy.
2
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Roche Holdings (Switzerland) 1.3
Hoechst (Germany) 1.2
Ciba - Geigy (Switzerland) 1.2
NORTH AMERICA
Intel 1.6
General Electric 1.6
Worldcom Inc. 1.5
JAPAN
Canon 1.0
Rohm 1.0
PACIFIC BASIN
Broken Hill Proprietary (Australia) 1.0
OTHER AREAS
Telekomunikasi Indonesia (Indonesia) 0.8
3
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCK AND EXCHANGEABLE NOTES - 98.1%
EUROPE - 33.0%
AUSTRIA - 0.6%
FLUGHAFEN WIEN 1,137 $ 56,047
VA TECHNOLOGIE 2,100 293,679
-----------
TOTAL AUSTRIA - (COST $334,849) 349,726
-----------
FRANCE - 5.1%
AIR LIQUIDE 2,740 422,858
AXA 9,209 575,146
ELF AQUITAINE 2,717 217,254
IMETAL 1,300 202,660
L'OREAL 990 335,196
MICHELIN 7,000 337,506
SCHNEIDER 7,440 363,814
SEITA 7,300 293,999
-----------
TOTAL FRANCE - (COST $2,397,908) 2,748,433
-----------
GERMANY - 5.2%
DEUTSCHE BANK 11,600 537,258
HOECHST * 17,400 654,339
MANNESMANN 1,500 582,409
SGL CARBON 3,600 405,309
VEBA 10,856 579,001
-----------
TOTAL GERMANY - (COST $2,324,623) 2,758,316
-----------
ITALY - 2.0%
ENI 70,619 338,198
LA RINASCENTE 16,000 94,608
TELECOM ITALIA 275,000 612,723
-----------
TOTAL ITALY - (COST $1,001,340) 1,045,529
-----------
NETHERLANDS - 2.2%
ELSEVIER 36,400 604,986
INTERNATIONALE NEDERLANDEN 17,950 559,648
-----------
TOTAL NETHERLANDS - (COST $701,294) 1,164,634
-----------
SPAIN - 1.4%
BANCO DE SANTANDER 8,700 446,608
CENTROS COMERCIALES CONTINENTE 13,818 280,486
-----------
TOTAL SPAIN - (COST $651,490) 727,094
-----------
SWEDEN - 1.5%
ERICSSON L.M., CL B 19,952 540,088
STORA KOPPARBERG, CL A 19,500 255,030
-----------
TOTAL SWEDEN - (COST $671,817) 795,118
-----------
See notes to financial statements.
4
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
EUROPE - CONTINUED
SWITZERLAND - 4.5%
CIBA - GEIGY 530 $ 652,856
NESTLE 510 553,980
ROCHE HOLDINGS 90 680,696
ZURICH VERSICHER 1,850 506,408
-----------
TOTAL SWITZERLAND - (COST $2,247,974) 2,393,940
-----------
UNITED KINGDOM - 10.5%
BRITISH TELECOMMUNICATIONS 42,000 243,018
CABLE & WIRELESS 39,000 309,766
EAST MIDLANDS ELECTRICITY 27,122 240,584
GKN 19,000 357,178
GLAXO WELLCOME 30,000 471,191
GRANADA 25,000 360,107
LADBROKE 109,000 353,931
LASMO 77,017 267,002
LLOYDS TSB 63,000 399,390
MCKECHNIE 22,000 205,892
NFC 94,000 293,750
RECKITT & COLMAN 35,000 405,599
SAFEWAY 41,496 246,180
SHELL TRANSPORT & TRADING 20,000 327,799
SMITHS INDUSTRIES 15,314 204,386
UNILEVER 17,000 357,210
WASSALL 45,000 218,994
WOLSELEY 48,000 372,656
-----------
TOTAL UNITED KINGDOM - (COST $4,457,697) 5,634,633
-----------
TOTAL EUROPE - (COST $14,788,992) 17,617,423
-----------
LATIN AMERICA - 5.1%
ARGENTINA - 0.6%
BANCO DE GALICIA, ADR 3,000 54,375
COMPANIA PEREZ COMPANC 25,536 162,170
YPF SOCIEDAD ANONIMA, ADR 5,400 122,850
-----------
TOTAL ARGENTINA - (COST $301,376) 339,395
-----------
BRAZIL - 2.3%
CEMIG, ADR 13,600 212,287
COMPANIA VALE DO RIO DOCE, ADR 8,500 176,222
ELETROBRAS, ADR 6,500 207,188
RHODIA - STER, GDR * 5,176 17,129
TELEBRAS, ADR 5,650 420,925
USIMINAS, ADR 20,100 206,025
-----------
TOTAL BRAZIL - (COST $1,058,759) 1,239,776
-----------
See notes to financial statements.
5
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
LATIN AMERICA - CONTINUED
CHILE - 0.3%
ENERSIS, ADR 2,500 $ 73,437
MADECO, ADR 2,300 55,200
SOCIEDAD QUIMICA Y MINERA, ADR 850 48,875
-----------
TOTAL CHILE - (COST $168,509) 177,512
-----------
COLOMBIA - 0.2%
CEMENTOS DIAMANTE, GDS (D) 5,700 82,650
-----------
TOTAL COLOMBIA - (COST $131,796) 82,650
-----------
MEXICO - 1.4%
CEMEX 27,000 97,083
CIFRA * 70,000 89,530
CORPORACION INDUSTRIAL ALFA, CL A 24,292 101,248
CORPORACION INDUSTRIAL SAN LUIS 1,400 43,050
EMPRESAS ICA SOCIEDAD, ADR * 7,200 93,600
GRUPO FINANCIERO BANAMEX, CL B * 58,000 122,675
KIMBERLY CLARKE, ADR 1,600 59,600
TUBOS DE ACERO DE MEXICO, ADR * 12,000 133,500
-----------
TOTAL MEXICO - (COST $708,933) 740,286
-----------
PERU - 0.3%
PERU REAL ESTATE, CL B * 180,000 46,735
TELEFONICA DEL PERU 4,000 82,500
-----------
TOTAL PERU - (COST $169,632) 129,235
-----------
TOTAL LATIN AMERICA - (COST $2,539,005) 2,708,854
-----------
NORTH AMERICA - 26.8%
CANADA - 1.4%
ROYAL BANK OF CANADA 22,700 750,343
-----------
TOTAL CANADA - (COST $559,731) 750,343
-----------
UNITED STATES - 25.4%
ALLIED SIGNAL 9,750 638,625
ARCHER - DANIELS - MIDLAND 27,479 597,668
BRISTOL - MYERS - SQUIBB 7,300 771,975
COLGATE - PALMOLIVE 8,300 763,600
DILLARD DEPARTMENT STORE 13,600 431,800
EASTMAN KODAK 8,300 661,925
FREEPORT MCMORAN COPPER & GOLD, CL A 25,636 740,239
FREEPORT MCMORAN, INC. 21,133 673,614
GENERAL ELECTRIC 8,600 832,050
INTEL 7,650 840,544
MARSH & MCLENNAN 6,700 697,637
MEDPARTNERS * 31,460 664,593
PHILIP MORRIS 6,850 634,481
SCHLUMBERGER 6,800 674,050
SEARS, ROEBUCK 9,500 459,563
See notes to financial statements.
6
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
NORTH AMERICA - CONTINUED
UNITED STATES - CONTINUED
TEXACO 7,200 $ 731,700
UNION PACIFIC 9,100 510,738
UNION PACIFIC RESOURCES* 7,707 211,948
WALT DISNEY 8,900 586,288
WESTINGHOUSE ELECTRIC 38,000 650,750
WORLDCOM INC. * 32,000 780,000
-----------
TOTAL UNITED STATES - (COST $9,925,712) 13,553,788
-----------
TOTAL NORTH AMERICA - (COST $10,485,443) 14,304,131
-----------
PACIFIC BASIN - 13.9%
AUSTRALIA - 2.4%
BROKEN HILL PROPRIETARY 41,400 549,659
LEND LEASE CORPORATION 10,500 178,024
NEWS CORPORATION 91,000 400,325
QANTAS AIRWAYS 101,200 147,597
-----------
TOTAL AUSTRALIA - (COST $1,308,373) 1,275,605
-----------
HONG KONG - 6.0%
AMOY PROPERTIES 400,000 494,038
CHEUNG KONG HOLDINGS 53,000 424,976
CITIC PACIFIC 40,000 194,511
HONG KONG TELECOMMUNICATIONS 257,600 454,753
HSBC HOLDINGS 22,654 461,448
HUTCHISON WHAMPOA 71,000 495,849
NEW WORLD DEVELOPMENT LIMITED 75,000 436,486
SWIRE PACIFIC 29,500 260,388
-----------
TOTAL HONG KONG - (COST $2,866,128) 3,222,449
-----------
MALAYSIA - 2.7%
AMMB HOLDINGS 68,000 460,241
EDARAN OTOMOBILE NASIONAL 30,000 280,230
RESORTS WORLD 48,000 275,480
UNITED ENGINEERS 51,000 403,720
-----------
TOTAL MALAYSIA - (COST $1,219,789) 1,419,671
-----------
PHILIPPINES - 0.6%
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 5,800 347,275
-----------
TOTAL PHILIPPINES - (COST $349,373) 347,275
-----------
SINGAPORE - 1.8%
DEVELOPMENT BANK OF SINGAPORE 42,000 503,940
FIRST CAPITAL 55,000 127,299
JARDINE MATHESON 56,284 318,005
-----------
TOTAL SINGAPORE - (COST $1,086,326) 949,244
-----------
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
PACIFIC BASIN - CONTINUED
SOUTH KOREA - 0.4%
CITIC SEOUL EXEL TRUST, IDR * 7(a) $ 59,500
KOREA PREFERRED FUND * 22,000 149,820
-----------
TOTAL SOUTH KOREA - (COST $307,000) 209,320
-----------
TOTAL PACIFIC BASIN - (COST $7,136,989) 7,423,564
-----------
OTHER AREAS - 1.7%
INDIA - 0.7%
HIMALAYAN FUND * 29,031 348,372
-----------
TOTAL INDIA - (COST $506,643) 348,372
-----------
INDONESIA - 0.8%
TELEKOMUNIKASI INDONESIA 280,000 417,722
-----------
TOTAL INDONESIA - (COST $436,171) 417,722
-----------
SOUTH AFRICA - 0.2%
SAFMARINE & RENNIE 53,000 134,406
-----------
TOTAL SOUTH AFRICA - (COST $163,319) 134,406
-----------
TOTAL OTHER AREAS - (COST $1,106,133) 900,500
-----------
JAPAN - 17.6%
AMANO 12,000 143,340
ASAHI DIAMOND 10,300 106,750
CANON 29,000 555,268
DAIFUKU 11,000 135,260
DDI 51 382,987
EIDEN SAKAKIYA 10,000 114,180
HITACHI 41,000 363,708
HITACHI METALS 23,000 189,285
ITO - YOKADO 9,000 448,992
ITOCHU 58,000 349,971
KAMIGUMI 34,000 262,790
KIRIN BEVERAGE 8,000 106,803
KOMORI 6,000 134,908
KYOCERA 7,000 461,728
MABUCHI MOTOR 3,000 152,826
MARUI 14,000 259,453
MBL INT'L FINANCE (BERMUDA), EXCH. GTD NOTES,
3.00%, 11/30/2002 (b) $ 120,000 (b) 132,600
MITSUBISHI HEAVY INDUSTRIES 54,000 415,002
MITSUI FUDOSAN 24,000 297,220
NIPPON EXPRESS 42,000 341,223
NITTO DENKO 11,000 163,278
NOMURA SECURITIES 24,000 396,294
RISO KAGAKU 2,000 142,462
ROHM 9,000 533,573
SHIMACHU 6,000 164,947
SHIN - ETSU CHEMICAL 17,850 305,718
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
JAPAN - CONTINUED
SONY 7,000 $ 419,920
SUMITOMO ELECTRIC 26,000 342,541
SUMITOMO FORESTRY 17,000 240,393
SUMITOMO TRUST & BANKING 29,000 320,935
TAISHO PHARMACEUTICAL 8,000 158,798
TOKIO MARINE & FIRE 35,000 384,261
TOYOTA MOTOR CORPORATION 21,000 496,157
-----------
TOTAL JAPAN - (COST $10,399,134) 9,423,571
-----------
TOTAL COMMON STOCK AND EXCHANGEABLE NOTES -
(COST $46,455,696) + 52,378,043
-----------
PRINCIPAL
AMOUNT
----------
SHORT TERM INVESTMENT - 2.8%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 4.75%, 11/01/1996 (c) $1,513,000 1,513,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $1,513,000) 1,513,000
-----------
TOTAL INVESTMENTS - (COST $47,968,696) - 100.9% 53,891,043
CASH, RECEIVABLES AND OTHER ASSETS, LESS
LIABILITIES - (0.9)% (481,091)
-----------
NET ASSETS - 100.0% $53,409,952
-----------
-----------
* Non-income producing security.
(a) Reflected in units. 1 IDR Unit = 1000 shares.
(b) Reflected at par value and denominated in U.S. dollars.
(c) The repurchase agreement, dated 10/31/96, $1,513,200 due 11/1/96, is
collateralized by $1,550,890 United States Treasury Note, 6.125%, 7/31/00.
(d) 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 $82,650 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 1.6%, Air
Travel 0.4%, Auto Parts 0.1%, Automobiles 1.5%, Banks 8.0%, Building and
Construction 0.2%, Chemicals 3.5%, Conglomerates 4.2%, Construction &
Mining Equipment 0.2%, Construction and Building Materials 1.7%, Cosmetics
& Toiletries 1.4%, Drugs & Health Care 5.1%, Electric Utilities 2.5%,
Electrical Equipment 4.5%, Electronics 4.8%, Engineering 1.3%, Financial
Services 1.9%, Food & Beverages 3.0%, Hotels & Restaurants 0.7%, Household
Products 2.1%, Industrial Machinery 3.6%, Insurance 4.2%, Investment
Companies 1.0%, Leisure 2.3%, Metals 1.0%, Mining 3.0%, Oil & Gas 3.8%,
Paper 0.6%, Petroleum Services 1.6%, Photography 2.3%, Printing 0.2%,
Publishing 1.9%, Railroads & Equipment 1.4%, Real Estate 3.9%, Retail Trade
4.8%, Steel 1.0%, Telecommunication 8.6%, Tires & Rubber 0.6%, Tobacco
1.7%, Transportation 1.9%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
IDR International Depositary Receipts.
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost - $46,455,696) (Note B) $ 52,378,043
Investments in repurchase agreements, at cost and value (Note B) 1,513,000
---------------
Total Investments 53,891,043
Cash 367
Foreign currency, at value (cost $76,804) (Note B) 77,708
Receivable for forward currency contracts (Note E) 218,297
Receivable for foreign currency sold 214,427
Dividend and interest receivable 103,306
Foreign income tax reclaim receivable 36,876
Prepaid insurance expense 2,810
Deferred organization expenses (Note B) 6,672
---------------
TOTAL ASSETS 54,551,506
---------------
LIABILITIES
Payable for investments purchased 806,393
Payable for foreign currency purchased 214,881
Management fee payable (Note C) 76,875
Administration fee payable (Note C) 4,761
Trustees fees payable (Note C) 1,190
Accrued expenses and other liabilities (Note B) 37,454
---------------
TOTAL LIABILITIES 1,141,554
---------------
TOTAL NET ASSETS $ 53,409,952
---------------
---------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 45,722,001
Undistributed net investment income 813,574
Accumulated net realized gain on investment and foreign currency transactions 733,585
Net unrealized appreciation on investment and foreign currency transactions 6,140,792
---------------
TOTAL NET ASSETS $ 53,409,952
---------------
---------------
NET ASSET VALUE PER SHARE
($53,409,952 / 4,449,551 shares of beneficial interest outstanding) $ 12.00
---------------
---------------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 25,605
Dividend income 568,338
Foreign taxes withheld (51,858)
---------------
TOTAL INVESTMENT INCOME 542,085
---------------
EXPENSES
Management fee (Note C) 183,509
Custodian fee 52,126
Administration fee (Note C) 27,728
Audit fee 13,344
Legal fees 1,984
Transfer agent fee 3,232
Trustees fees (Note C) 1,065
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 7,166
Fees and expenses waived by the investment manager (Note C) (27,875)
-------------
TOTAL EXPENSES 263,563
-------------
NET INVESTMENT INCOME 278,522
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 523,467
Net realized gain on foreign currency transactions 169,053
Net increase in unrealized appreciation (depreciation) on:
Investments (net of accrual for foreign capital gains tax of $6,829 on unrealized depreciation) (767,238)
Foreign currency transactions 318,222
-------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 243,504
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 522,026
-------------
-------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 52,887,926 $ 37,259,376
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 278,522 563,980
Net realized gain on investment transactions 523,467 553,937
Net realized gain on foreign currency transactions 169,053 1,129,132
Net increase in unrealized appreciation (depreciation) on:
Investments (767,238) 5,906,618
Foreign currency transactions 318,222 (220,811)
------------- -------------
Net increase in net assets from operations 522,026 7,932,856
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income 0 (692,764)
In excess of net realized loss on investments 0 (63,581)
------------- -------------
Total distributions 0 (756,345)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 0 7,940,000
Reinvestment of dividends and distributions to shareholders 0 452,039
Cost of shares repurchased 0 0
Paid in capital from subscription and redemption fees 0 60,000
------------- -------------
Total increase in net assets from capital share transactions 0 8,452,039
------------- -------------
NET INCREASE IN NET ASSETS 522,026 15,628,550
------------- -------------
NET ASSETS at end of period (includes undistributed net investment
income of $813,574 and $528,223) $ 53,409,952 $ 52,887,926
------------- -------------
------------- -------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 0 679,794
Shares issued in reinvestment of distributions to shareholders 0 41,548
------------- -------------
Net share transactions 0 721,342
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year June 15, 1994 *
Ended Ended through
October 31, 1996 April 30, 1996 April 30, 1995
---------------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $11.890 $9.990 $10.000
Net investment income 0.064 0.279 0.079
Net realized and unrealized gain on investment
and foreign currency transactions 0.046 1.809 0.033
------- ------- ------
Total from investment operations 0.110 2.088 0.112
------- ------- ------
Less distributions:
Net investment income 0.000 (0.186) (0.040)
In excess of net investment income 0.000 (0.017) 0.000
Net realized gains 0.000 0.000 (0.082)
------- ------- ------
Total distributions 0.000 (0.203) (0.122)
------- ------- ------
Paid in capital from subscription fees (Note B) (5) 0.000 0.015 0.000
------- ------- ------
Net asset value, end of period $12.000 $11.890 $9.990
------- ------- ------
------- ------- ------
TOTAL INVESTMENT RETURN (1) (2) 0.93% 21.17% 1.18%
------- ------- ------
------- ------- ------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $53,409,952 $52,887,926 $37,259,376
Operating expenses, net, to average net assets (Note C) 1.00%(3) 1.00% 1.00%(3)
Operating expenses, gross, to average net assets (Note C) 1.11%(3) 1.27% 1.25%(3)
Net investment income to average net assets 1.06%(3) 1.40% 0.94%(3)
Portfolio turnover rate 19% 38% 44%
Average commission rate per share (4) $0.0190 $0.0335 N/A
Per share amount of fees waived (Note C) $0.006 $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) 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.
(5) The per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
13
<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 October 31, 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.
14
<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.
15
<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 October 31, 1996
there were no purchase premiums or redemption fees collected.
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.
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 0.70% 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 period ended October 31, 1996, the Investment Manager
has waived $27,875 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.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the Fund for the period ended October 31, 1996 were
$10,267,219 and $9,901,775, 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 October 31, 1996 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
---------- ------------ -------------- --------------
$47,968,696 $8,331,507 $(2,409,160) $5,922,347
16
<PAGE>
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At October 31, 1996, the outstanding forward exchange contracts, which
contractually obligate the Fund to deliver currencies at a specified date, were
as follows:
<TABLE>
<CAPTION>
U.S. $ COST U.S. $
ON ORIGINATION CURRENT NET UNREALIZED
CURRENCY SOLD SETTLEMENT DATE DATE VALUE APPRECIATION
- ------------- --------------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Japanese Yen 11/14/96 1,063,500 995,654 67,846
Japanese Yen 11/14/96 2,388,000 2,237,549 150,451
$3,451,500 $3,233,203 $218,297
</TABLE>
NOTE F - PRINCIPAL SHAREHOLDERS
As of October 31, 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.
17
<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
OPPORTUNISTIC EAFE FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1996
(UNAUDITED)
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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 $113.1m
PERFORMANCE Total return from May 1, 1996 through October 31, 1996
SINCE LAUNCH
<TABLE>
<S> <C> <C>
- MCBT - Opportunistic EAFE (excluding all transaction fees) -2.3%
- MCBT - Opportunistic EAFE (including all transaction fees) -3.8%
- The Morgan Stanley Capital International EAFE Index -2.3%
Annualized total return from July 1, 1994 through October 31, 1996
- MCBT - Opportunistic EAFE (excluding all transaction fees) +4.9%
- MCBT - Opportunistic EAFE (including all transaction fees) +4.3%
- The Morgan Stanley Capital International EAFE Index +6.0%
</TABLE>
PORTFOLIO International markets strengthened over the six month period.
COMMENTS The fund has matched the MSCI EAFE Index.
JAPAN has been very disappointing. We had expected yen weakness
and had protected a portion of the fund's yen assets by hedging
the currency. But we thought that an improving economy would
feed through to a stronger stockmarket. That did not happen. A
surfeit of new issues drained liquidity and the stockmarket
actually fell. We reduced our weighting to that market in
August.
Elsewhere, we have added to our positions in CONTINENTAL EUROPE.
This is not because we think the economies are exciting. It is
because we are finding companies where re-structuring and a focus
on shareholder value are providing us with opportunities. The UK
market has been strong, catching up with the rest of the world.
Valuations here are reasonable and our weighting is neutral,
despite political uncertainty. We think most of that is already
discounted and that even if the market does fall around election
time, it will soon rally.
In the ASIAN region, Hong Kong has hit new all-time highs as the
market became more optimistic on the outlook for China.
Smaller markets have, again, seen mixed fortunes. LATIN AMERICAN
markets such as Brazil have strengthened markedly, but the
smaller Asian markets, such as Thailand, have weakened.
OUTLOOK
Looking to 1997, we are confident that the superior growth
opportunities in ASIA and LATIN AMERICA will prove attractive to
overseas investors. This should lead to stronger markets.
Across the world, we see a benign environment of subdued
inflation, low interest rates and steady overall growth. These
are circumstances in which selected opportunities will abound.
1
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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 Opportunistic EAFE Fund since
inception.
He graduated from Glasgow University in 1984 with a degree in
Public Law and completed a MBA at Manchester Business school in
1986. He then worked for Salomon Brothers International in New
York and London as an institutional bond salesman. Tony joined
Martin Currie in 1988, working in the North American team. He
was appointed an investment manager in 1991 and promoted to
director in 1993. As head of the Strategy and Asset Control
team, he has responsibility for communicating and monitoring
our investment strategy.
2
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Roche Holdings (Switzerland) 1.7
Hoechst (Germany) 1.7
Ciba - Geigy (Switzerland) 1.6
JAPAN
Canon 1.4
Rohm 1.4
Mitsubishi Heavy Industries 1.3
PACIFIC BASIN
Broken Hill Proprietary (Australia) 1.1
Hutchison Whampoa (Hong Kong) 1.1
LATIN AMERICA
Telebras, ADR (Brazil) 1.1
OTHER AREAS
Telekomunikasi Indonesia (Indonesia) 0.9
3
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCK AND EXCHANGEABLE NOTES - 94.6%
EUROPE - 43.1%
AUSTRIA - 0.9%
FLUGHAFEN WIEN 3,181 $ 156,803
VA TECHNOLOGIE 6,000 839,082
------------
TOTAL AUSTRIA - (COST $959,294) 995,885
------------
FRANCE - 6.6%
AIR LIQUIDE 7,670 1,183,693
AXA 25,926 1,619,202
ELF AQUITAINE 7,503 599,947
IMETAL 3,250 506,650
L'OREAL 2,530 856,612
MICHELIN 20,000 964,303
SCHNEIDER 21,400 1,046,455
SEITA 17,300 696,738
------------
TOTAL FRANCE - (COST $6,470,768) 7,473,600
------------
GERMANY - 6.9%
DEUTSCHE BANK 33,000 1,528,407
HOECHST * 49,800 1,872,762
MANNESMANN 4,300 1,669,572
SGL CARBON 10,000 1,125,859
VEBA 30,202 1,610,813
------------
TOTAL GERMANY - (COST $6,708,569) 7,807,413
------------
ITALY - 2.6%
ENI 200,913 962,184
LA RINASCENTE 39,770 235,159
TELECOM ITALIA 770,000 1,715,623
------------
TOTAL ITALY - (COST $2,743,601) 2,912,966
------------
NETHERLANDS - 2.9%
ELSEVIER 99,630 1,655,900
INTERNATIONALE NEDERLANDEN 51,377 1,601,841
------------
TOTAL NETHERLANDS - (COST $2,138,320) 3,257,741
------------
SPAIN - 1.8%
BANCO DE SANTANDER 24,980 1,282,331
CENTROS COMERCIALES CONTINENTE 38,944 790,509
------------
TOTAL SPAIN - (COST $1,916,009) 2,072,840
------------
SWEDEN - 1.7%
ERICSSON L.M., CL B 47,227 1,278,405
STORA KOPPARBERG, CL A 50,600 661,770
------------
TOTAL SWEDEN - (COST $1,654,059) 1,940,175
------------
SWITZERLAND - 6.0%
CIBA - GEIGY 1,510 1,860,024
See notes to financial statements.
4
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
EUROPE - CONTINUED
SWITZERLAND - CONTINUED
NESTLE 1,420 $ 1,542,452
ROCHE HOLDINGS 260 1,966,456
ZURICH VERSICHER 5,190 1,420,680
------------
TOTAL SWITZERLAND - (COST $6,245,626) 6,789,612
------------
UNITED KINGDOM - 13.7%
BRITISH TELECOMMUNICATIONS 105,200 608,701
CABLE & WIRELESS 108,000 857,812
EAST MIDLANDS ELECTRICITY 67,588 599,535
GKN 54,530 1,025,100
GLAXO WELLCOME 68,260 1,072,118
GRANADA 62,435 899,332
LADBROKE 296,000 961,133
LASMO 228,419 791,882
LLOYDS TSB 164,000 1,039,681
MCKECHNIE 74,020 692,733
NFC 268,136 837,925
RECKITT & COLMAN 101,000 1,170,443
SAFEWAY 120,571 715,302
SHELL TRANSPORT & TRADING 56,000 917,839
SMITHS INDUSTRIES 46,751 623,955
UNILEVER 49,469 1,039,461
WASSALL 113,250 551,135
WOLSELEY 135,426 1,051,403
------------
TOTAL UNITED KINGDOM - (COST $12,003,173) 15,455,490
------------
TOTAL EUROPE - (COST $40,839,419) 48,705,722
------------
LATIN AMERICA - 6.9%
ARGENTINA - 0.8%
BANCO DE GALICIA, ADR 9,000 163,125
COMPANIA PEREZ COMPANC 74,303 471,871
YPF SOCIEDAD ANONIMA, ADR 14,186 322,732
------------
TOTAL ARGENTINA - (COST $781,932) 957,728
------------
BRAZIL - 3.2%
ELETROBRAS, ADR 39,800 621,253
COMPANIA VALE DO RIO DOCE, ADR 24,460 507,103
CEMIG, ADR 18,700 596,063
RHODIA - STER, GDR * 17,711 58,611
TELEBRAS, ADR 15,980 1,190,510
USIMINAS, ADR 57,800 592,450
------------
TOTAL BRAZIL - (COST $3,100,786) 3,565,990
------------
CHILE - 0.5%
ENERSIS, ADR 6,500 190,937
MADECO, ADR 6,388 153,312
MADERAS Y SINTETICOS SOCIEDAD, ADS 9,662 137,684
See notes to financial statements.
5
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
LATIN AMERICA - CONTINUED
CHILE - CONTINUED
SOCIEDAD QUIMICA Y MINERA, ADR 2,334 $ 134,205
------------
TOTAL CHILE - (COST $477,221) 616,138
------------
COLOMBIA - 0.3%
CEMENTOS DIAMANTE, GDS (e) 20,800 301,600
------------
TOTAL COLOMBIA - (COST $416,650) 301,600
------------
MEXICO - 1.8%
CEMEX 70,000 251,695
CIFRA * 190,000 243,011
CORPORACION INDUSTRIAL ALFA, CL A 63,573 264,970
CORPORACION INDUSTRIAL SAN LUIS 4,000 123,000
EMPRESAS ICA SOCIEDAD, ADR * 18,800 244,400
GRUPO FINANCIERO BANAMEX, CL B * 170,000 359,565
KIMBERLY CLARKE, ADR 3,900 145,275
TUBOS DE ACERO DE MEXICO, ADR * 35,000 389,375
------------
TOTAL MEXICO - (COST $1,941,503) 2,021,291
------------
PERU - 0.3%
PERU REAL ESTATE, CL B * 250,000 64,910
TELEFONICA DEL PERU 11,500 237,187
------------
TOTAL PERU - (COST $367,747) 302,097
------------
TOTAL LATIN AMERICA - (COST $7,085,839) 7,764,844
------------
PACIFIC BASIN - 15.9%
AUSTRALIA - 2.8%
BROKEN HILL PROPRIETARY 97,667 1,296,704
LEND LEASE CORPORATION 27,000 457,776
NEWS CORPORATION 230,000 1,011,810
QANTAS AIRWAYS 253,800 370,159
------------
TOTAL AUSTRALIA - (COST $3,179,415) 3,136,449
------------
HONG KONG - 7.0%
AMOY PROPERTIES 889,900 1,099,111
CHEUNG KONG HOLDINGS 133,000 1,066,449
CITIC PACIFIC * 105,000 510,592
HONG KONG TELECOMMUNICATIONS 650,000 1,147,474
HSBC HOLDINGS 53,564 1,091,065
HUTCHISON WHAMPOA 178,700 1,248,002
NEW WORLD DEVELOPMENT 190,000 1,105,765
SWIRE PACIFIC 77,925 687,823
------------
TOTAL HONG KONG - (COST $6,770,161) 7,956,281
------------
MALAYSIA - 3.1%
AMMB HOLDINGS 178,000 1,204,750
EDARAN OTOMOBILE NASIONAL 75,000 700,574
RESORTS WORLD 123,000 705,917
See notes to financial statements.
6
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
PACIFIC BASIN - CONTINUED
MALAYSIA - CONTINUED
UNITED ENGINEERS 120,000 $ 949,931
------------
TOTAL MALAYSIA - (COST $3,151,657) 3,561,172
------------
PHILIPPINES - 0.8%
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 15,000 898,125
------------
TOTAL PHILIPPINES - (COST $902,372) 898,125
------------
SINGAPORE - 1.9%
DEVELOPMENT BANK OF SINGAPORE 87,800 1,053,475
FIRST CAPITAL 116,000 268,484
JARDINE MATHESON 140,566 794,198
------------
TOTAL SINGAPORE - (COST $2,450,615) 2,116,157
------------
SOUTH KOREA - 0.3%
CITIC SEOUL EXEL TRUST, IDR * 18 (a) 153,000
KOREA PREFERRED FUND * 29,000 197,490
------------
TOTAL SOUTH KOREA - (COST $508,200) 350,490
------------
TOTAL PACIFIC BASIN - (COST $16,962,420) 18,018,674
------------
OTHER AREAS - 1.9%
INDIA - 0.8%
INDIAN OPPORTUNITIES FUND (b)* 101,911 883,057
------------
TOTAL INDIA - (COST $1,494,050) 883,057
------------
INDONESIA - 0.9%
TELEKOMUNIKASI INDONESIA 700,000 1,044,305
------------
TOTAL INDONESIA - (COST $1,090,427) 1,044,305
------------
SOUTH AFRICA - 0.2%
SAFMARINE & RENNIE 110,000 278,956
------------
TOTAL SOUTH AFRICA - (COST $375,743) 278,956
------------
TOTAL OTHER AREAS - (COST $2,960,220) 2,206,318
------------
JAPAN - 26.8%
AMANO 39,000 465,856
ASAHI DIAMOND 37,080 384,299
CANON 85,000 1,627,509
DAIFUKU 38,000 467,261
DDI 152 1,141,452
EIDEN SAKAKIYA 24,000 274,033
EXEDY 19,000 302,051
HITACHI 129,000 1,144,350
HITACHI METALS 70,000 576,084
ITO-YOKADO 26,000 1,297,088
ITOCHU 181,000 1,092,152
KAMIGUMI 110,000 850,204
See notes to financial statements.
7
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
JAPAN - CONTINUED
KIRIN BEVERAGE 24,000 $ 320,408
KOMORI 20,000 449,695
KYOCERA 21,000 1,385,183
MABUCHI MOTOR 10,000 509,420
MARUI 43,000 796,891
MBL INT'L FINANCE (BERMUDA), EXCH. GTD NOTES,
3.000%, 11/30/2002 $ 720,000 (c) 795,600
MITSUBISHI HEAVY INDUSTRIES 196,000 1,506,302
MITSUI FUDOSAN 75,000 928,813
NIPPON EXPRESS 131,000 1,064,292
NITTO DENKO 36,000 534,364
NOMURA SECURITIES 73,000 1,205,393
ORGANO 20,000 179,175
RISO KAGAKU 6,400 455,878
ROHM 27,000 1,600,720
SHIMACHU 17,000 467,349
SHIN - ETSU CHEMICAL 59,950 1,026,766
SONY 21,600 1,295,753
SUMITOMO ELECTRIC 83,000 1,093,496
SUMITOMO FORESTRY 54,000 763,603
SUMITOMO TRUST & BANKING 101,000 1,117,737
TAISHO PHARMACEUTICAL 25,000 496,245
TOKIO MARINE & FIRE 104,000 1,141,803
TOYOTA MOTOR CORPORATION 64,000 1,512,099
------------
TOTAL JAPAN - (COST $31,553,367) 30,269,324
------------
TOTAL COMMON STOCK AND EXCHANGEABLE NOTES -
(COST $99,401,265) + 106,964,882
------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 5.8%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 4.750%, 11/01/1996 (d) $6,521,000 6,521,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $6,521,000) 6,521,000
------------
See notes to financial statements.
8
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
TOTAL INVESTMENTS - (COST $105,922,265) - 100.4% $113,485,882
CASH, RECEIVABLES AND OTHER ASSETS, LESS
LIABILITIES - (0.4)% (407,850)
-------------
NET ASSETS - 100.0% $113,078,032
-------------
-------------
* Non-income producing security.
(a) Reflected in units. 1 IDR Unit = 1000 shares.
(b) The Indian Opportunities Fund is managed by Martin Currie Chescor Ltd., an
associate of Martin Currie Inc.
(c) Reflected at par value and denominated in U.S. dollars.
(d) The repurchase agreement, dated 10/31/96, $6,521,860 due 11/1/96, is
collateralized by $6,663,329 United States Treasury Note, 6.125%, 5/15/98.
(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 $301,600 or 0.3% of net
assets.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Aerospace 0.6%, Air
Travel 0.5%, Auto Parts 0.1%, Automobiles 2.0%, Banks 8.9%, Building and
Construction 0.3%, Chemicals 4.8%, Conglomerates 7.4%, Construction &
Mining Equipment 0.2%, Construction and Building Materials 3.0%, Cosmetics
& Toiletries 2.6%, Drugs & Health Care 3.0%, Electric Utilities 3.0%,
Electrical Equipment 2.6%, Electronics 4.7%, Engineering 1.6%, Financial
Services 2.5%, Food & Beverages 2.6%, Hotels & Restaurants 0.8%, Household
Products 0.9%, Industrial Machinery 5.8%, Insurance 3.9%, Investment
Companies 1.1%, Leisure 1.4%, Metals 1.1%, Mining 0.4%, Oil & Gas 3.2%,
Paper 0.7%, Petroleum Services 0.6%, Photography 1.4%, Printing 0.4%,
Publishing 2.4%, Real Estate 2.7%, Retail Trade 4.0%, Semi-Conductor 0.2%,
Steel 1.0%, Telecommunication 8.9%, Tobacco 0.6%, Transportation 2.7%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
IDR International Depositary Receipts.
See notes to financial statements.
9
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITES
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $99,401,265) (Note B) $106,964,882
Investments in repurchase agreements, at cost and value (Note B) 6,521,000
------------
Total Investments 113,485,882
Cash 864
Foreign currency, at value (cost $176,670) (Note B) 176,697
Receivable for investments sold 326,982
Receivable for forward currency contracts (Note E) 631,459
Receivable for foreign currency sold 144,809
Dividend and interest receivable 206,906
Foreign income tax reclaim receivable 84,388
Prepaid insurance expense 6,415
Deferred organization expenses (Note B) 6,791
------------
TOTAL ASSETS 115,071,193
------------
LIABILITIES
Payable for investments purchased 1,591,485
Payable for foreign currency purchased 145,372
Management fee payable (Note C) 193,656
Administration fee payable (Note C) 8,180
Trustees fees payable (Note C) 2,402
Accrued expenses and other liabilities 52,066
------------
TOTAL LIABILITIES 1,993,161
------------
TOTAL NET ASSETS $113,078,032
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $103,562,849
Undistributed net investment income 1,948,366
Accumulated net realized loss on investment and foreign currency transactions (627,452)
Net unrealized appreciation on investment and foreign currency transactions 8,194,269
------------
TOTAL NET ASSETS $113,078,032
------------
------------
NET ASSET VALUE PER SHARE $10.99
------------
------------
($113,078,032 / 10,289,252 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 138,286
Dividend income 1,129,923
Foreign taxes withheld (130,278)
-----------
TOTAL INVESTMENT INCOME 1,137,931
-----------
EXPENSES
Management fee (Note C) 386,840
Custodian fee 78,442
Administration fee (Note C) 45,241
Audit fee 13,344
Legal fees 4,063
Transfer agent fee 3,360
Trustees fees (Note C) 2,272
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 11,298
-----------
TOTAL EXPENSES 546,144
-----------
NET INVESTMENT INCOME 591,787
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (309,851)
Net realized gain on foreign currency transactions 491,725
Net increase in unrealized appreciation (depreciation) on :
Investments (net of accrual for foreign capital gains tax of $19,986 on unrealized depreciation) (4,306,708)
Foreign currency transactions 889,057
-----------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (3,235,777)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(2,643,990)
-----------
-----------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $108,295,237 $ 72,660,677
------------ ------------
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 591,787 1,369,618
Net realized gain (loss) on investment transactions (309,851) 926,246
Net realized gain on foreign currency transactions 491,725 1,832,315
Net increase in unrealized appreciation (depreciation) on :
Investments (4,306,708) 10,906,825
Foreign currency transactions 889,057 (549,779)
------------ ------------
Net increase/(decrease) in net assets from operations (2,643,990) 14,485,225
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (1,479,010)
In excess of net investment income 0 (207,129)
------------ ------------
Total distributions 0 (1,686,139)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 7,452,432 28,787,468
Reinvestment of dividends and distributions to shareholders 0 1,474,045
Cost of shares repurchased (82,567) (7,701,317)
Paid in capital from subscription and redemption fees 56,920 275,278
------------ ------------
Total increase in net assets from capital share transactions 7,426,785 22,835,474
------------ ------------
NET INCREASE IN NET ASSETS 4,782,795 35,634,560
------------ ------------
NET ASSETS at end of period (includes undistributed net investment
income of $1,948,366 and $1,336,593) $113,078,032 $108,295,237
------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 668,684 2,869,376
Shares issued in reinvestment of distributions to shareholders 0 141,057
Less shares repurchased (7,521) (752,658)
------------ ------------
Net share transactions 661,163 2,257,775
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year July 1, 1994 *
Ended Ended through
October 31, 1996 April 30, 1996 April 30, 1995
---------------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 11.250 $ 9.860 $ 10.000
Net investment income 0.051 0.314 0.055
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (0.317) 1.239 (0.323)
------------ ------------ -----------
Total from investment operations (0.266) 1.553 (0.268)
------------ ------------ -----------
Less distributions:
Net investment income 0.000 (0.167) 0.000
In excess of net investment income 0.000 (0.023) 0.000
------------ ------------ -----------
Total distributions 0.000 (0.190) 0.000
------------ ------------ -----------
Paid in capital from subscription and redemption fees (Note B) (5) 0.006 0.027 0.128
------------ ------------ -----------
Net asset value, end of period $ 10.990 $ 11.250 $ 9.860
------------ ------------ -----------
------------ ------------ -----------
TOTAL INVESTMENT RETURN (1) (2) (2.31)% 16.17% (1.40)%
------------ ------------ -----------
------------ ------------ -----------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $103,078,032 $108,295,237 $72,660,677
Operating expenses, net, to average net assets (Note C) 0.98%(3) 1.00% 1.00%(3)
Operating expenses, gross, to average net assets (Note C) 0.98%(3) 1.05% 1.37%(3)
Net investment income to average net assets 1.06%(3) 1.46% 1.32%(3)
Portfolio turnover rate 23% 40% 39%
Average commission rate per share (4) $ 0.0200 $ 0.0285 N/A
Per share amount of fees waived (Note C) $ 0.000 $ 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) 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.
(5) The per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
13
<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 October 31, 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.
14
<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.
15
<PAGE>
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 October 31,
1996, $56,316 was collected in purchase premiums and $604 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.
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.
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 0.70% 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 period ended October 31, 1996 were
$30,746,369 and $24,131,984, 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 October 31, 1996 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
--------------- ------------ ------------- --------------
$ 105,922,265 $ 12,339,015 $ (4,775,398) $ 7,563,617
16
<PAGE>
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At October 31, 1996, the outstanding forward exchange contracts, which
contractually obligate the Fund to deliver currencies at a specified date, were
as follows:
<TABLE>
<CAPTION>
U.S. $ COST U.S. $
ON ORIGINATION CURRENT NET UNREALIZED
CURRENCY SOLD SETTLEMENT DATE DATE VALUE APPRECIATION
- ------------- --------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Japanese Yen 11/14/96 2,798,000 2,619,660 178,340
Japanese Yen 11/14/96 7,192,000 6,738,881 453,119
------------ ------------ ------------
$ 9,990,000 $ 9,358,541 $ 631,459
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
NOTE F - PRINCIPAL SHAREHOLDERS
As of October 31, 1996, 13% of the Fund's outstanding shares was held by one
shareholder, 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.
17
<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 AMERICAS FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1996
(UNAUDITED)
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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 $147.9m
PERFORMANCE Total return from May 1, 1996 through October 31, 1996
- MCBT - Emerging Americas Fund (excluding all
transaction fees) + 0.4%
- MCBT - Emerging Americas Fund (including all
transaction fees) - 3.1%
- The Morgan Stanley Capital International Latin
America (Free) Index + 5.9%
Annualized total return from September 19, 1994 through October
31, 1996
- MCBT - Emerging Americas Fund (excluding all
transaction fees) - 11.4%
- MCBT - Emerging Americas Fund (including all
transaction fees) - 12.9%
- The Morgan Stanley Capital International Latin
America (Free) Index
(from October 1, 1994 through October 31, 1996) - 10.8%
PORTFOLIO Markets have strengthened over the six months. The MSCI Latin
COMMENTS America (Free) Index has risen by 5.9%. The best performing
regions were VENEZUELA and BRAZIL. The fund has not risen in line
with the index because we had no holdings in Venezuela until late
in the period and were overweight in the more pedestrian Mexican
market.
The economic recovery is now well underway in MEXICO. Stocks
which are direct beneficiaries of stronger economic activity -
such as Corporacion Geo and Tamsa - have done well. Others like
Cifra and Soriana have performed well in anticipation of a
recovery in consumer spending. We welcome the recent weakening
of the Mexican peso, and expect an already healthy trade picture
to improve further still.
In BRAZIL, our stock selection has been poor. Telebras, where we
were underweight until late June, was the star performer in the
market as privatisation plans improved prospects for the sector.
Our concentration on privatisation stocks such as Eletrobras and
Usiminas was too early. But as the regulatory environment takes
shape at last, we have added to our positions in the electrical
sector. We are confident that these holdings will reward our
faith in 1997.
Elsewhere, we have continued to reduce our exposure to ARGENTINA
where a new austerity programme has begun. We now have a neutral
weighting there.
Towards the end of the reporting period, we bought holdings in
Mavesa (consumer) and Sivensa (steel) in VENEZUELA. The
government seems solidly committed to the IMF reform package.
That gives us encouragement. We have recently visited the region
and expect to add to our Venezuelan exposure.
OUTLOOK
We remain positive on the region over the longer term. Latin
America has proved to be remarkably resilient in bouncing back
from the 1995 Tequila crisis, and valuations do not yet reflect
the much improved outlook. Foreign direct investment has held up
and we anticipate a pick up in capital flows to the region in
1997.
1
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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.
She graduated from Manchester University in 1990 with a degree in
European Studies and French and joined Martin Currie in the same
year as a member of the Continental Europe team. She was
appointed investment manager in 1994. A Spanish speaker, Joanna
lived in Argentina and Venezuela for six years and in early 1996
she joined our Emerging Markets team with responsibility for
Latin America. She was appointed assistant director in 1996.
2
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
BRAZIL
Telebras 8.5
Banco Itau 4.0
MEXICO
Empresas La Moderna 3.0
Tubos de Acero de Mexico, ADR 2.9
Grupo Financiero Banamex, Cl B 2.8
ARGENTINA
Companhia Perez Companc 3.3
Banco de Galicia, ADR 2.8
CHILE
Provida, ADR 2.1
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
COMMON AND PREFERRED STOCKS AND RIGHTS - 95.8%
ARGENTINA - 11.1%
ARGENTINA EQUITY INVESTMENTS * 15,000 $ 1,548,600
BANCO DE GALICIA, ADR 229,670 4,162,769
BANCO DE GALICIA, ADR N/P * 31,428 0
COMPANIA PEREZ COMPANC 778,567 4,944,395
DISCO, ADR * 140,000 3,150,000
TELEFONICA DE ARGENTINA, ADR 114,000 2,650,500
------------
TOTAL ARGENTINA - (COST $14,547,078) 16,456,264
------------
BRAZIL - 35.3%
BANCO ITAU 13,632,000 5,904,458
BRASMOTOR 7,842,902 2,664,174
BRAZIL FAST FOOD * 312,500 1,093,750
BRAZIL REALTY, GDR * 50,000 1,018,750
BRAZILIAN EQUITY INVESTMENTS * 44,000 1,381,160
CEMENTOS PORTLAND ITAU, PREFERRED 6,769,000 1,795,722
CEMIG, ADR 85,063 2,711,383
COMPANIA VALE DO RIO DOCE, ADR 145,800 3,022,718
DIXIE TOGA 1,050,346 787,197
ELETROBRAS 12,105,000 3,758,512
GLOBEX UTILIDADES * 115,000 2,171,501
LIGHT SERVICOS DE ELETRICIDADE 9,500,000 3,143,858
MAKRO ATACADISTA * 200,000 1,860,000
MULTICANAL PARTICIPACOES, ADR * 34,000 476,000
TELEBRAS, ADR 168,945 12,586,403
TELEC DO RIO JANEIRO * 38,500,000 3,709,850
UNIAO DE BANCOS BRASILIEROS 38,130,000 1,057,723
USIMINAS, ADR 296,700 3,041,175
------------
TOTAL BRAZIL - (COST $47,313,560) 52,184,334
------------
CHILE - 9.9%
ANTOFAGASTA HOLDINGS 45,500 265,120
BANCO DE LA EDWARDS, ADR 160,000 3,060,000
ENERSIS, ADR 37,400 1,098,625
LABORATORIO CHILE, ADR 180,000 2,857,500
MADECO, ADR 62,320 1,495,680
MADERAS Y SINTETICO SOCIEDAD, ADS 74,800 1,065,900
PROVIDA, ADR 135,000 3,138,750
SOCIEDAD QUIMICA Y MINERA, ADR 28,200 1,621,500
------------
TOTAL CHILE - (COST $14,629,596) 14,603,075
------------
COLOMBIA - 1.4%
CEMENTOS DIAMANTE, GDR (b) 30,500 442,250
GRAN CADENA DE ALMACENES, ADR (b) 49,500 618,750
PAPELES NACIONALES 133,000 964,250
------------
TOTAL COLOMBIA - (COST $3,295,679) 2,025,250
------------
MEXICO - 29.9%
BUFETE INDUSTRIAL, ADR * 38,000 617,500
CEMEX, CL B 900,000 3,236,081
CIFRA * 2,710,000 3,466,103
CONTROLADORA COMERCIAL MEXICANA, ADR * 35,000 616,875
See notes to financial statements.
4
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
MEXICO - Continued
CORPORACION GEO * 430,000 $ 1,925,972
CORPORACION INDUSTRIAL ALFA, CL A 825,244 3,439,586
EMPRESAS LA MODERNA 1,000,000 4,429,238
GRUMA, ADR * 100,000 1,850,000
GRUPO ARA * 450,000 967,465
GRUPO CORVI * 3,000,000 2,575,428
GRUPO FINANCIERO BANAMEX, CL B 1,950,000 4,124,417
GRUPO INDUSTRIAL CAMESA * 1,760,000 792,684
GRUPO MODELO, CL C 442,000 2,290,426
HYLSAMEX, GDS 113,000 2,457,750
KIMBERLY CLARKE, ADR 40,000 1,490,000
ORGANIZATION SORIANA, CL B 1,450,000 2,579,782
SAN LUIS CPO 545,000 2,732,628
TRANSPORT MARITIMA MEXICO, ADS 43,400 303,800
TUBOS DE ACERO DE MEXICO, ADR * 384,400 4,276,450
------------
TOTAL MEXICO - (COST $43,493,459) 44,172,185
------------
PERU - 4.5%
CEMENTOS LIMA 927,341 1,279,339
CREDICORP LTD. 123,000 2,152,500
MINAS BUENAVENTURA, ADR 7,862 61,025
MINAS BUENAVENTURA, CL A 42,000 703,500
MINAS BUENAVENTURA, CL B * 1,965 16,677
PERU REAL ESTATE, CL B * 2,176,100 565,002
TELEFONICA DEL PERU, CL B 908,512 1,922,292
------------
TOTAL PERU - (COST $7,011,216) 6,700,335
------------
URUGUAY - 1.7%
BANCO COMERCIAL, GDR * 149,800 2,546,600
------------
TOTAL URUGUAY - (COST $2,583,938) 2,546,600
------------
VENEZUELA - 2.0%
MAVESA, ADR 275,000 1,748,828
SIVENSA, ADR * 350,000 1,203,125
------------
TOTAL VENEZUELA - (COST $3,331,335) 2,951,953
------------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS -
(COST $136,205,861) + 141,639,996
------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 6.6%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 4.750%, 11/01/1996 (a) $ 9,808,000 9,808,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $9,808,000) 9,808,000
------------
See notes to financial statements.
5
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
TOTAL INVESTMENTS - (COST $146,013,861) - 102.4% $ 151,447,996
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES
- (2.4)% (3,541,476)
-------------
NET ASSETS - 100.0% $ 147,906,520
-------------
-------------
* Non-income producing security.
(a) The repurchase agreement, dated 10/31/96, $9,809,294 due 11/1/96, is
collateralized by $9,997,415 United States Treasury Bond, 8.375%, 8/15/08.
(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 $1,061,000 or 0.7% of net
assets.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Auto Parts 1.8%, Banks
17.6%, Chemicals 1.1%, Conglomerates 0.5%, Construction and Building
Materials 6.0%, Drugs & Health Care 1.9%, Electric Utilities 7.2%,
Electrical Equipment 1.0%, Engineering 0.4%, Food & Beverages 6.2%,
Insurance 2.3%, Investment Companies 2.0%, Manufacturing 1.3%, Mining 2.8%,
Miscellaneous 4.5%, Paper 1.0%, Petroleum Services 3.3%, Real Estate 1.1%,
Retail Trade 11.7%, Steel 7.4%, Telecommunication 14.5%, Transportation
0.2%.
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
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (Unaudited)
ASSETS
Investments in securities, at value (cost $136,205,861)
(Note B) $ 141,639,996
Investments in repurchase agreements, at cost and value
(Note B) 9,808,000
--------------
Total Investments 151,447,996
Cash 463
Foreign currency, at value (cost $806,513) (Note B) 794,396
Receivable for investments sold 20,947
Receivable for foreign currency sold 61,400
Dividend and interest receivable 91,862
Foreign income tax reclaim receivable 5,907
Prepaid insurance expense 5,556
Deferred organization expenses (Note B) 7,349
--------------
TOTAL ASSETS 152,435,876
--------------
LIABILITIES
Payable for investments purchased 3,936,266
Payable for foreign currency purchased 61,037
Management fee payable (Note C) 489,778
Administration fee payable (Note C) 10,027
Trustees fees payable (Note C) 1,801
Accrued expenses and other liabilities (Note B) 30,447
--------------
TOTAL LIABILITIES 4,529,356
--------------
TOTAL NET ASSETS $ 147,906,520
--------------
--------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 155,215,355
Undistributed net investment loss (56,011)
Accumulated net realized loss on investment and foreign
currency transactions (12,673,759)
Net unrealized appreciation on investment and foreign
currency transactions 5,420,935
--------------
TOTAL NET ASSETS $ 147,906,520
--------------
--------------
NET ASSET VALUE PER SHARE $ 7.69
($147,906,520 / 19,234,887 shares of beneficial interest --------------
outstanding) --------------
See notes to financial statements.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
OCTOBER 31, 1996 (Unaudited)
INVESTMENT INCOME
Interest income $ 117,235
Dividend income 829,525
Foreign taxes withheld (68,382)
--------------
TOTAL INVESTMENT INCOME 878,378
--------------
EXPENSES
Management fee (Note C) 781,147
Custodian fee 74,392
Administration fee (Note C) 46,527
Audit fee 13,344
Legal fees 2,841
Transfer agent fee 3,200
Trustees fees (Note C) 1,973
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 9,755
--------------
TOTAL EXPENSES 934,463
--------------
NET INVESTMENT LOSS (56,085)
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY
Net realized loss on investments (1,412,416)
Net realized loss on foreign currency transactions (103,245)
Net increase in unrealized depreciation on:
Investments (144,469)
Foreign currency transactions (12,688)
--------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (1,672,818)
--------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (1,728,903)
--------------
--------------
See notes to financial statements.
8
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 89,599,602 $ 39,833,637
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) (56,085) 532,282
Net realized loss on investment transactions (1,412,416) (1,320,182)
Net realized loss on foreign currency transactions (103,245) (431,239)
Net increase in unrealized appreciation (depreciation) on:
Investments (144,469) 8,674,586
Foreign currency transactions (12,688) (209)
------------- -------------
Net increase/(decrease) in net assets from operations (1,728,903) 7,455,238
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (369,749)
------------- -------------
m
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 58,985,264 49,179,620
Reinvestment of dividends and distributions to shareholders 0 353,471
Cost of shares repurchased 0 (7,864,000)
Paid in capital from subscription and redemption fees 1,050,557 1,011,385
------------- -------------
Total increase in net assets from capital share transactions 60,035,821 42,680,476
------------- -------------
NET INCREASE IN NET ASSETS 58,306,918 49,765,965
------------- -------------
NET ASSETS at end of period (net of accumulated net investment income
(loss) of $(56,011) and $74) $ 147,906,520 $ 89,599,602
------------- -------------
------------- -------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 7,534,291 6,887,372
Shares issued in reinvestment of distributions to shareholders 0 51,526
Less shares repurchased 0 (1,057,543)
------------- -------------
Net share transactions 7,534,291 5,881,355
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year Sept. 19, 1994 *
Ended Ended through
October 31, 1996 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) (0.003) 0.025 (0.004)
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (0.046) 0.720 (3.298)
------------ ------------ ------------
Total from investment operations (0.049) 0.745 (3.302)
------------ ------------ ------------
Less distributions:
Dividends from net investment income 0.000 (0.040) 0.000
------------ ------------ ------------
Paid in capital from subscription and redemption fees (Note B) (5) 0.079 0.105 0.152
------------ ------------ ------------
Net asset value, end of period $ 7.690 $ 7.660 $ 6.850
------------ ------------ ------------
------------ ------------ ------------
TOTAL INVESTMENT RETURN (1) (2) 0.39% 12.48% (31.50)%
- ----------------------- ------------ ------------ ------------
------------ ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $147,906,520 $ 89,599,602 $ 39,833,637
Operating expenses, net, to average net assets (Note C) 1.58% (3) 1.70% 1.80% (3)
Operating expenses, gross, to average net assets (Note C) 1.58% (3) 1.95% 1.80% (3)
Net investment income(loss) to average net assets (0.09)% (3) 0.88% (0.11)% (3)
Portfolio turnover rate 30% 61% 89%
Average commission rate per share (4) $ 0.0001 $ 0.0001 N/A
Per share amount of fees waived (Note C) $ 0.000 $ 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.
(5) The per share amounts were computed using an average number of shares
outstanding during the year.
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 October 31, 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.
11
<PAGE>
MCBT EMERGING AMERICAS 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.
12
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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 October 31,
1996, $1,050,557 was collected in purchase premiums and no redemption fees
collected.
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.
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 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 period ended October 31, 1996 were
$92,242,829 and $33,441,194, 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 October 31, 1996 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------ -------------- --------------
$ 146,013,861 $ 12,302,688 $ (6,868,553) $ 5,434,135
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 1996, 26% 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>
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 ASIA FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1996
(UNAUDITED)
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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 $122.9m
PERFORMANCE Total return from May 1, 1996 through October 31, 1996
- MCBT - Emerging Asia Fund (excluding all
transaction fees) -13.1%
- MCBT - Emerging Asia Fund (including all
transaction fees) -16.1%
- The Morgan Stanley Capital International -
Emerging Free Asia -12.9%
- The Morgan Stanley Capital International - Far
East(ex Japan) Free Index -6.2%
Annualized total return from March 24, 1995 through
April 30, 1996
- MCBT - Emerging Asia Fund (excluding all
transaction fees) +5.8%
- MCBT - Emerging Asia Fund (including all
transaction fees) +3.5%
- The Morgan Stanley Capital International -
Emerging Free Asia +1.1%
(from April 1, 1995 through October 31, 1996)
- The Morgan Stanley Capital International - Far
East(ex Japan) Free Index +10.1%
(from April 1, 1995 through October 31, 1996)
PORTFOLIO Smaller Asian markets have had a difficult six months.
COMMENTS The fund has marginally underperformed a falling index
(MSCI Emerging Free Asia). The rate of Asian growth
has slowed during 1996. In the first half of the
year, the decline in the rate of economic growth
coincided with a fall in exports. We think that a
cyclical downtown in world demand for Asian exports
(such as electronic components) and recently expanded
capacity are to blame.
In response to the announcement in May that TAIWAN was
to be included in the MSCI Indices, the shape of the
fund has changed markedly over the period. We are
taking our weighting in Taiwan up to 16%, and have
reduced all other regions accordingly. We were mid-
way through this move at the end of the quarter, which
accounts for the high cash balance.
During the six months, the THAI market has come under
pressure. High interest rates, necessary to address
the current account deficit, conflict with a weak
economy's need for lower rates. This has led to
problems in the banking sector. Sentiment is
extremely fragile and there is speculation that a
devaluation will be necessary. We think that
confidence will take some time to recover and have
sold all but one holding in Thailand.
We are running with overweight positions in INDONESIA
(concentrating on banks and infrastructure stocks) and
the PHILIPPINES, where valuations are attractive and
the potential for stronger earnings growth is very
good.
OUTLOOK
Overall, we anticipate good returns from the region
over the coming 12 months, fuelled by a benign US
interest rate background, some improvement in export
markets and reasonable earnings growth. A
strengthening Chinese economy will be an important
theme for the region over the long term.
1
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
INVESTMENT All members of the investment team report directly to
MANAGER Joe Scott Plummer (Chief Investment Officer), who has
PROFILE 27 years' 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, he was promoted to
director in 1994. He is a member of the institute of
Investment Management and Research.
Allan has recently been joined by Tom Walker. With
nine years' investment experience, Tom has been
appointed head of the Pacific Basin team. He
graduated from Magdalene College, Cambridge with a
degree in Law and completed a diploma in accounting at
Heriot Watt University in 1983. He qualified as a
chartered accountant in 1986 at Peat Marwick before
spending six years with Edinburgh Fund Managers plc.
He then moved to Hong Kong in 1993 as an investment
manager with Barings Asset Management (Asia) Ltd. and
joined Martin Currie Investment Management LTD as a
director in 1996.
2
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
MALAYSIA
Resorts World 5.4
United Engineers 4.9
INDONESIA
Hanjaya Mandala Sampoerna 5.8
Bank Bira 3.7
PHILIPPINES
Belle Corporatia 3.8
Philippine Long Distance Telephone, ADR 3.4
3
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENT
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------- -----
<S> <C> <C>
COMMON STOCK - 83.8%
CHINA - 2.4%
GUANGSHEN RAILWAY * 7,833,000 $ 2,912,480
-------------
TOTAL CHINA - (COST $3,081,677) 2,912,480
-------------
INDONESIA - 14.8%
BANK BIRA 4,656,000 4,547,460
CITRAMARGA NUSAPHALA 5,340,000 3,897,308
HANJAYA MANDALA SAMPOERNA 764,500 7,105,751
LIPPO BANK 1,800,000 2,608,080
-------------
TOTAL INDONESIA - (COST $16,992,486) 18,158,599
-------------
KOREA - 6.5%
COMMERCIAL BANK OF KOREA 210,000 1,804,539
KOREA FIRST BANK * 253,000 1,684,115
LG INDUSTRIAL SYSTEMS 46,500 1,187,473
SAMSUNG ELECTRONICS 21,590 1,518,159
SHINHAN BANK 1,660 26,721
YUKONG 76,968 1,797,861
-------------
TOTAL KOREA - (COST $10,629,182) 8,018,868
-------------
MALAYSIA - 41.6%
AMMB HOLDINGS 852,000 5,766,555
COMMERCE ASSET HOLDINGS 802,000 5,237,681
DIVERSIFIED RESOURCES 1,450,000 4,993,073
EDARAN OTOMOBILE NASIONAL 528,000 4,932,040
GENTING 474,000 3,545,854
MALAYSIAN ASSURANCE ALLIANCE 850,000 4,171,779
MULTIPURPOSE HOLDINGS 2,900,000 4,958,638
RESORTS WORLD 1,157,000 6,640,214
TELEKOM MALAYSIA 550,000 4,854,542
UNITED ENGINEERS 765,000 6,055,808
-------------
TOTAL MALAYSIA - (COST $47,547,406) 51,156,184
-------------
PHILIPPINES - 12.9%
BELLE CORPORATIA * 17,500,000 4,661,339
FILINVEST DEVELOPMENT 7,000,000 2,610,350
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 69,000 4,131,375
PHILIPINO TELEPHONE * 2,500,000 2,211,758
SOUTH EAST ASIA CEMENT 23,850,000 2,268,836
-------------
TOTAL PHILIPPINES - (COST $17,536,630) 15,883,658
-------------
TAIWAN - 4.5%
PACIFIC CONSTRUCTION 2,093,000 1,861,964
PACIFIC ELECTRICAL WIRE & CABLE 1,659,000 1,385,512
TAIWAN KOLIN 400,000 300,654
YUE LOONG MOTOR * 2,100,000 1,990,196
-------------
TOTAL TAIWAN - (COST $5,503,349) 5,538,326
-------------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
THAILAND - 1.1%
PRECIOUS SHIPPING 663,300 $1,339,869
-------------
TOTAL THAILAND - (COST $3,782,868) 1,339,869
-------------
TOTAL COMMON STOCK - (COST $105,073,598) + 103,007,984
-------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 4.0%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 4.750%, 11/01/1996 (A) $4,910,000 4,910,000
-------------
TOTAL SHORT TERM INVESTMENT - (COST $4,910,000) 4,910,000
-------------
TOTAL INVESTMENTS - (COST $109,983,598) - 87.8% 107,917,984
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 12.2% 14,936,214
-------------
NET ASSETS - 100.0% $122,854,198
-------------
-------------
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 10/31/96, $4,910,648 due 11/1/96, is
collateralized by $5,019,988 United States Treasury Note, 6.125%, 7/31/00.
+ Percentages of investments are presented in the portfolio by country.
Percentages of assets by industry are as follows: Automobiles 9.7%, Banks
8.7%, Commercial Services 3.2%, Communication Services 5.2%, Construction
and Building Materials 1.8%, Electrical Equipment 1.1%, Electronics 1.5%,
Engineering 4.9%, Financial Services 13.0%, Gas Exploration 3.8%,
Industrial 1.0%, Leisure 8.3%, Oil & Gas 1.5%, Real Estate 3.6%,
Telecommunications 3.9%, Tobacco 5.8%, Transportation 6.8%.
ADR American Depositary Receipts.
5
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $105,073,598) (Note B) $ 103,007,984
Investments in repurchase agreements, at cost and value (Note B) 4,910,000
---------------
Total Investments 107,917,984
Cash 580
Foreign currency, at value (cost $21,713,559) (Note B) 21,749,635
Receivable for investments sold 772,285
Receivable for foreign currency sold 708,062
Dividend and interest receivable 25,718
Prepaid insurance expense 7,007
Deferred organization expenses (Note B) 8,460
---------------
TOTAL ASSETS 131,189,731
---------------
LIABILITIES
Payable for investments purchased 7,072,829
Payable for foreign currency purchased 708,269
Management fee payable (Note C) 430,334
Administration fee payable (Note C) 8,920
Trustees fees payable (Note C) 3,095
Accrued expenses and other liabilities 112,086
---------------
TOTAL LIABILITIES 8,335,533
---------------
TOTAL NET ASSETS $122,854,198
---------------
---------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $125,271,275
Undistributed net investment loss (325,153)
Accumulated net realized loss on investment and foreign currency transactions (75,371)
Net unrealized depreciation on investment and foreign currency transactions (2,016,553)
---------------
TOTAL NET ASSETS $ 122,854,198
---------------
---------------
NET ASSET VALUE PER SHARE
($122,854,198 / 11,439,091 shares of beneficial interest outstanding) $ 10.74
---------------
---------------
</TABLE>
See notes to financial statements
6
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 121,086
Dividend income 919,265
Foreign taxes withheld (176,856)
---------------
TOTAL INVESTMENT INCOME 863,495
---------------
EXPENSES
Management fee (Note C) 835,180
Custodian fee 222,754
Administration fee (Note C) 51,180
Audit fee 13,344
Legal fees 3,981
Transfer agent fee 3,368
Trustee fees (Note C) 2,673
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 11,253
---------------
TOTAL EXPENSES 1,145,017
---------------
NET INVESTMENT LOSS (281,522)
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (net of foreign taxes of $112,539 on net
realized gains) (4,038,576)
Net realized loss on foreign currency transactions (146,819)
Net increase in unrealized appreciation (depreciation) on:
Investments (net of accrual of foreign capital gains tax of $254,070 on
unrealized depreciation) (13,443,694)
Foreign currency transactions 50,531
---------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (17,578,558)
---------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (17,860,080)
---------------
---------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1996 April 30, 1996
---------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of period $129,326,397 $42,027,699
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss (281,522) (221,319)
Net realized gain (loss) on investment transactions (4,038,576) 6,626,583
Net realized loss on foreign currency transactions (146,819) (618,897)
Net increase in unrealized appreciation (depreciation) on:
Investments (13,443,694) 11,471,189
Foreign currency transactions 50,531 (1,495)
------------- -------------
Net increase/(decrease) in net assets from operations (17,860,080) 17,256,061
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains 0 (1,619,520)
------------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 11,630,718 68,843,300
Reinvestment of dividends and distributions to shareholders 0 1,619,520
Cost of shares repurchased (457,875) (26,549)
Paid in capital from subscription and redemption fees 215,038 1,225,886
------------- ------------
Total increase in net assets from capital share transactions 11,387,881 71,662,157
------------- -------------
NET INCREASE/(DECREASE) IN NET ASSETS (6,472,199) 87,298,698
------------- ------------
NET ASSETS at end of period (includes undistributed net investment losses $122,854,198 $129,326,397
of $325,153 and $185,162) ------------- ------------
------------- ----------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,160,147 6,098,105
Shares issued in reinvestment of distributions to shareholders 0 154,830
Less shares repurchased (183,892) (2,538)
------------- -------------
Net share transactions 976,255 6,250,397
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year March 24, 1995 *
Ended Ended through
October 31, 1996 April 30, 1996 April 30, 1995
---------------- ------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $12.360 $9.980 $10.000
Net investment income(loss) (0.011) (0.029)(5) 0.009
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (1.631) 2.446 (5) (0.029)
---------------- ------------- --------------
Total from investment operations (1.642) 2.417 (0.020)
---------------- ------------- --------------
Less distributions:
Net realized gains 0.000 (0.209) 0.000
---------------- ------------- --------------
Paid in capital from subscription and redemption fees (Note B) (5) 0.022 0.172 0.000
---------------- ------------- --------------
Net asset value, end of period $10.740 $12.360 $9.980
---------------- ------------- --------------
---------------- ------------- --------------
TOTAL INVESTMENT RETURN (1) (2) (13.11)% 26.3% (0.20)%
---------------- ------------- --------------
---------------- ------------- --------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $122,854,198 $129,326,397 $42,027,699
Operating expenses, net, to average net assets (Note C) 1.79%(3) 1.93% 1.85%(3)
Operating expenses, gross, to average net assets (Note C) 1.79%(3) 2.18% 2.57%(3)
Net investment income(loss) to average net assets (0.44)%(3) (0.27)% 0.96%(3)
Portfolio turnover rate 61% 65% 0%
Average commission rate per share (4) $ 0.0126 $ 0.0124 N/A
Per share amount of fees waived (Note C) $ 0.000 $ 0.027 $ 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) 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.
(5) The per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
9
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATMENTS
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 October 31, 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 STATMENTS (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 October 31,
1996, $207,163 was collected in purchase premiums and $7,875 was collected in
redemption fees.
11
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATMENTS (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.
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 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 period ended October 31, 1996 were
$71,560,478 and $77,079,812, 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 October 31, 1996 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) DEPRECIATION)
------------ ------------ ------------- -----------
$109,983,598 $8,825,504 $(10,891,118) $(2,065,614)
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 1996, 25% 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 STATMENTS (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>
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
SEMI-ANNUAL REPORT
OCTOBER 31, 1996
(UNAUDITED)
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
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 $81.2m
PERFORMANCE Total return from May 1, 1996 through October 31, 1996
- MCBT - Japan Small Companies Fund (excluding all
transaction fees) - 11.0%
- MCBT - Japan Small Companies Fund (including all
transaction fees) - 12.8%
- The Tokyo Stock Exchange - Second Section Index - 16.0%
Annualized total return from August 15, 1994 through
October 31, 1996
- MCBT - Japan Small Companies Fund (excluding all
transaction fees) - 1.5%
- MCBT - Japan Small Companies Fund (including all
transaction fees) - 2.3%
- The Tokyo Stock Exchange - Second Section Index
(from September 1, 1994 through October 31, 1996) - 13.0%
PORTFOLIO The Japanese stockmarket has fallen over the last six months,
COMMENTS despite the slow but steady recovery in economic activity. The
currency has also been weak (down 8% against the US$), reducing
still further the returns to a US$-based investor. The fund has
fared a little better, in part due to the currency hedge that we
have in place.
There were two main reasons for market weakness:
1. Less optimistic forecasts for economic growth in 1997.
2. A plethora of new issues.
The consumer has been less willing to spend than forecasters had
anticipated and the government has not yet stimulated
consumption. As the budget deficit is already very high and
interest rates very low, the only option available to revive
economic growth is to allow the yen to depreciate further. The
very low level of interest rates has also encouraged an outflow
of capital.
Companies have taken advantage of these extremely low interest
rates to raise convertible bond issues. This dilutes ordinary
shareholders. Liquidity has been drained still further by new
issues, such as the government's sale of a further tranche of the
railway company, J R West, for $7 billion. When small companies
have announced new issues, their share prices have usually fallen
sharply. We have one of these in the portfolio - DAIWA
LOGISTICS.
To reflect the deteriorating conditions, we have made significant
changes to the portfolio over the period. As a defensive move,
we have once again increased our exposure to convertible bonds,
most of which have an attractive `price re-fix clause' that is at
present unique to Japan.
We have sold shares in DAIWA KOSHO LEASE COMPANY - whose
involvement in leasing prefabricated housing is very dependent on
a robust economy and HIGASHI HOUSE, where management have shown a
disregard for shareholders' interests. Elsewhere we have
1
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1996 (Unaudited)
increased our exposure to the leisure industry with a purchase of
NAMCO, while adding to MEITEC (sourcing design) and our holdings
in the motor components industry.
OUTLOOK
We feel that the market may continue to fall short-term, but that
Japanese smaller companies do present the investor with long term
opportunities. Despite its present difficulties, we still see
the Nikkei at 23,000 by the end of 1997.
INVESTMENT All members of the investment team report directly to Joe Scott
MANAGER Plummer (Chief Investment Officer) who has 27 years of investment
PROFILE 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.
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 Africa 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
Maezawa Industries 3.0
Sankyo 2.6
Circle K Japan 2.6
Mirai Industry 2.5
Taisho Pharmaceutical 2.4
2
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - 90.0%
COMMON STOCK - 76.7%
AIPHONE 33,000 $ 637,653
ASIA SECURITIES PRINTING 33,000 794,168
BRIDGESTONE METALPHA 67,000 703,219
BROTHER INDUSTRIES 144,000 718,387
CANON APTEX 80,000 1,089,105
CHAIN STORE OKUWA 24,000 349,919
CHIYODA 52,000 968,249
CHIYODA FIRE & MARINE 136,000 701,173
CHUGOKU BANK 100,000 1,616,091
CIRCLE K JAPAN 50,400 2,076,114
COCO'S JAPAN 50,000 489,658
DAIFUKU 100,000 1,229,634
DAIMON 15,000 533,573
DAIWA LOGISTICS 79,000 1,443,239
DOWA FIRE & MARINE 140,000 692,284
EIDEN SAKAKIYA 74,000 844,934
EXEDY 86,200 1,370,357
FUJI MACHINE MANUFACTURING 70,000 1,653,858
FUJITSU BUSINESS SYSTEMS 40,000 1,011,813
GLORY 30,000 772,035
HIGASHI NIHON HOUSE 22,000 316,894
HIKARI TSUSHIN 10,400 1,233,147
HIRATA TECHNICAL 62,000 756,928
HIROSE ELECTRIC 30,800 1,828,712
IZUMI 40,000 628,870
KATO DENKI 45,000 648,193
KIRIN BEVERAGE 110,000 1,468,535
MABUCHI MOTOR 28,000 1,426,376
MAEZAWA INDUSTRIES 100,000 2,397,787
MEITEC 60,000 1,233,147
MELCO 3,300 98,546
MIURA 58,000 886,391
NAC 10,000 223,091
NATIONAL HOUSE INDUSTRIAL 80,000 1,152,343
NICHICON 120,000 1,496,640
NIPPON KONPO UNYU SOKO 100,000 767,643
NIPPON SYSTEM DEVELOPMENT 49,000 710,114
NISSHA PRINTING 110,000 1,313,952
NISSIN FOOD PRODUCTS 60,000 1,354,354
NITTO KONKI 30,000 988,099
NORITSU KOKI 500 26,130
ORGANO 54,000 483,773
ORIENTAL CONSTRUCTION 60,500 887,401
PCA 14,000 510,298
PROMISE 41,300 1,926,160
RISO KAGAKU 20,000 1,424,619
ROHTO PHARMACEUTICAL 32,000 300,733
RYOSAN 65,000 1,478,635
SANKI ENGINEERING 160,000 1,883,097
SANKYO 60,300 2,097,299
SANTEN PHARMACEUTICAL 80,700 1,708,199
SHIMACHU 40,000 1,099,644
See notes to financial statements.
3
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCK - CONTINUED
SONY MUSIC ENTERTAINMENT 33,000 $ 1,272,408
TAISHO PHARMACEUTICAL 100,000 1,984,981
TOKAI LEASE 60,000 469,018
TSUBAKI NAKASHIMA 140,000 1,377,190
XEBIO 35,000 1,137,412
YORK BENIMARU 25,000 821,220
YOROZU 50,000 711,431
------------
TOTAL COMMON STOCK - (COST $67,693,689) 62,224,873
------------
CONVERTIBLE BONDS - 12.7%
IZUMI, 4.50%, 02/28/2001 Y 60,000,000 600,764
JONAS, 1.35%, 12/30/1999 Y 106,500,000 1,377,377
KONAMI, 0.75%, 03/31/2000 Y 160,000,000 1,742,568
MIRAI INDUSTRY, 2.30%, 03/20/2002 Y 138,000,000 2,012,033
NAMCO, 0.80%, 09/30/2001 Y 50,000,000 489,658
NAMCO, 0.90%, 09/30/2003 Y 110,000,000 1,082,078
NITTO DENKO, NO 4, 3.90%, 03/30/2001 Y 70,000,000 829,388
SHOWA, 1.70%, 09/29/2000 Y 111,000,000 1,150,411
TAIYO YUDEN, 1.15%, 09/29/2008 Y 100,000,000 1,059,242
------------
TOTAL CONVERTIBLE BONDS - (COST $9,807,495) 10,343,519
------------
WARRANTS - 0.6%
KURARAY * 600 180,000
NIPPON ENGINEERING CONSULTANTS * 1,500 115,111
SATORI * 200 96,250
TAMPOPO * 150 94,237
------------
TOTAL WARRANTS - (COST $823,215) 485,598
------------
TOTAL COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS -
(COST $78,324,399) + 73,053,990
------------
PRINCIPAL
AMOUNT
------------
SHORT TERM INVESTMENT - 8.4%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 4.75%, 11/01/1996 (a) $ 6,771,000 6,771,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $6,771,000) 6,771,000
------------
TOTAL INVESTMENTS - (COST $85,095,399) - 98.4% 79,824,990
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES
- 1.6% 1,338,650
------------
NET ASSETS - 100.0% $ 81,163,640
------------
------------
* Non-income producing security.
Y Denominated in Japanese yen.
(a) The repurchase agreement, dated 10/31/96, $6,771,893 due 11/1/96, is
collateralized by $6,922,889 United States Treasury Note, 6.125%, 7/31/00.
+ Percentages of assets by industry are as follows: Auto Parts 3.2%, Banks
2.0%, Building and Construction 5.3%, Commercial Services 0.9%, Computers &
Business Equipment 5.9%, Drugs & Health Care 7.5%, Electrical Equipment
8.6%, Electronics 5.9%, Engineering 2.5%, Entertainment 1.6%, Financial
Services 4.2%, Food & Beverages 5.8%, Industrial Machinery 11.5%, Metals
2.6%, Photography 1.3%, Printing 2.6%, Retail Trade 11.8%, Semi-Conductor
0.7%, Shipbuilding 0.9%, Software 2.2%, Textiles 0.2%, Transportation 2.7%.
See notes to financial statements.
4
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (Unaudited)
ASSETS
Investments in securities, at value (cost $78,324,399)
(Note B) $ 73,053,990
Investments in repurchase agreements, at cost and value
(Note B) 6,771,000
-------------
Total Investments 79,824,990
Cash 658
Foreign currency, at value (cost $3,151) (Note B) 3,136
Receivable for investments sold 19,482
Receivable for forward currency contracts (Note E) 1,419,727
Dividend and interest receivable 155,920
Prepaid insurance expense 4,871
Deferred organization expenses (Note B) 7,105
-------------
TOTAL ASSETS 81,435,889
-------------
LIABILITIES
Management fee payable (Note C) 218,213
Administration fee payable (Note C) 6,483
Trustees fees payable (Note C) 1,945
Accrued expenses and other liabilities (Note B) 45,608
-------------
TOTAL LIABILITIES 272,249
-------------
TOTAL NET ASSETS $ 81,163,640
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 81,159,295
Undistributed net investment income 1,773,731
Accumulated net realized gain on investment and foreign
currency transactions 2,086,149
Net unrealized depreciation on investment and foreign
currency transactions (3,855,535)
-------------
TOTAL NET ASSETS $ 81,163,640
-------------
-------------
NET ASSET VALUE PER SHARE $ 9.58
($81,163,640/ 8,469,784 shares of beneficial interest -------------
outstanding) -------------
See notes to financial statements.
5
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996
(Unaudited)
INVESTMENT INCOME
Interest income $ 168,088
Dividend income 218,127
Foreign taxes withheld (39,827)
-------------
TOTAL INVESTMENT INCOME 346,388
-------------
EXPENSES
Management fee (Note C) 442,011
Custodian fee 48,320
Administration fee (Note C) 35,628
Audit fee 13,344
Legal fees 3,004
Transfer agent fee 3,273
Trustees fees (Note C) 1,899
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 8,952
-------------
TOTAL EXPENSES 557,715
-------------
NET INVESTMENT LOSS (211,327)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY
Net realized gain on investments 1,209,836
Net realized gain on foreign currency transactions 1,088,906
Net increase in unrealized appreciation (depreciation) on:
Investments (14,205,063)
Foreign currency transactions 1,869,073
-------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (10,037,248)
-------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (10,248,575)
-------------
-------------
See notes to financial statements.
6
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 88,863,054 $ 44,969,083
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss (211,327) (219,975)
Net realized gain on investment transactions 1,209,836 323,979
Net realized gain on foreign currency transactions 1,088,906 2,490,116
Net increase in unrealized appreciation (depreciation) on:
Investments (14,205,063) 8,273,355
Foreign currency transactions 1,869,073 (929,597)
------------- -------------
Net increase/(decrease) in net assets from operations (10,248,575) 9,937,878
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
In excess of net investment income 0 (639,196)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 5,835,051 33,742,120
Reinvestment of dividends and distributions to shareholders 0 611,375
Cost of shares repurchased (3,378,600) (100,000)
Paid in capital from subscription and redemption fees 92,710 341,794
------------- -------------
Total increase in net assets from capital share transactions 2,549,161 34,595,289
------------- -------------
NET INCREASE/(DECREASE) IN NET ASSETS (7,699,414) 43,893,971
------------- -------------
NET ASSETS at end of period (net of accumulated net investment income $ 81,163,640 $ 88,863,054
of $1,773,731 and $1,985,058) ------------- -------------
------------- -------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 570,575 3,514,816
Shares issued in reinvestment of distributions to shareholders 0 61,943
Less shares repurchased (348,495) (10,493)
------------- -------------
Net share transactions 222,080 3,566,266
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year August 15, 1994 *
Ended Ended through
October 31, 1996 April 30, 1996 April 30, 1996
---------------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $ 10.770 $ 9.610 $ 10.000
Net investment income(loss) (0.031) (0.034) (5) 0.013
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (1.170) 1.248 (5) (0.492)
------------ ------------ ------------
Total from investment operations (1.201) 1.214 (0.479)
------------ ------------ ------------
Less distributions:
Net investment income 0.000 0.000 (0.002)
In excess of net investment income 0.000 (0.097) 0.000
Net realized capital gains 0.000 0.000 (0.003)
------------ ------------ ------------
Total distributions 0.000 (0.097) (0.005)
------------ ------------ ------------
Paid in capital from subscription and redemption fees (Note B) (5) 0.011 0.043 0.094
------------ ------------ ------------
Net asset value, end of period $ 9.580 $ 10.770 $ 9.610
------------ ------------ ------------
------------ ------------ ------------
TOTAL INVESTMENT RETURN (1) (2) (11.05)% 13.13% (3.85)%
- ----------------------- ------------ ------------ ------------
------------ ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $ 81,163,640 $ 88,863,054 $ 44,969,083
Operating expenses, net, to average net assets (Note C) 1.26% (3) 1.37% 1.50% (3)
Operating expenses, gross, to average net assets (Note C) 1.26% (3) 1.37% 1.72% (3)
Net investment income(loss) to average net assets (0.48)% (3) (0.36)% 0.37% (3)
Portfolio turnover rate 17% 37% 33%
Average commission rate per share (4) $ 0.0606 $ 0.0763 N/A
Per share amount of fees waived (Note C) $ 0.000 $ 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) 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.
(5) The per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
8
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). As of October 31, 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.
9
<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 October 31,
1996, $58,940 in purchase premiums and $33,770 in redemption fees were
collected.
10
<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.
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 1.00% 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 period ended October 31, 1996 were
$14,313,887 and $13,555,568, 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 October 31, 1996 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------- ------------ -------------- --------------
$ 85,095,399 $ 3,061,768 $ (8,332,177) $ (5,270,409)
NOTE E - FORWARD FOREIGN CURRENCY CONTRACTS
At October 31, 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. $
ON ORIGINATION CURRENT NET UNREALIZED
CURRENCY SOLD SETTLEMENT DATE DATE VALUE APPRECIATION
- ------------- --------------- -------------- ------------- -------------
Japanese Yen 11/14/96 $ 6,705,000 $ 6,277,255 $ 427,745
Japanese Yen 11/14/96 15,745,000 14,753,018 991,982
------------- ------------- ------------
$ 22,450,000 $ 21,030,273 $ 1,419,727
------------- ------------- ------------
------------- ------------- ------------
11
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE F - PRINCIPAL SHAREHOLDERS
As of October 31, 1996, 26% 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.
12
<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.
