<PAGE>
MARTIN CURRIE BUSINESS TRUST
OPPORTUNISTIC EAFE FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
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 $120.6m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
SINCE LAUNCH
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +3.9%
- MCBT - Opportunistic EAFE (including all
transaction fees) +2.3%
- The Morgan Stanley Capital International
EAFE Index (0.6%)
Annualized total return from July 1, 1994 through April 30, 1997
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +6.3%
- MCBT - Opportunistic EAFE (including all
transaction fees) +5.7%
- The Morgan Stanley Capital International
EAFE Index +5.6%
[graph]
(a) Commencement of investment operations.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. The total returns would have been lower had certain expenses
not been waived during the period shown. Each performance figure including
all transaction fees assumes purchase at the beginning and redemption at the
end of the stated period and is calculated using an offering price which
reflects a transaction fee of 75 basis points on purchase and 75 basis points
on redemption. Transaction fees are paid to the Fund to cover trading costs.
Past performance is not indicative of future performance.
1
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO Markets slipped back over the twelve month period. But with a
COMMENTS positive return, we outperformed the falling MSCI EAFE Index.
Compounded by a weak currency, JAPAN has performed very poorly
- although many of the blue chip exporters which form the core
of our portfolio have seen new highs. Having had a currency
hedge in place for much of the year, we removed it in January.
We reduced our weighting in August and continued to sell
stock until February. We are now very underweight in
comparison with the index.
We have continued to add to our positions
in CONTINENTAL EUROPE. Local markets have been very
strong, although weaker currencies have reduced overall
returns to a US dollar investor. Restructuring and the
enhancement of shareholder value have been persistent
themes and our portfolio reflects this. We have added to
our holdings in such stocks as Michelin and Volkswagen. We
have been positive about the UK, where a strengthening
currency and a stable economic background have helped
stockmarkets. The change in government was very well
received by financial markets.
In ASIA, we have been very selective as the region is
becoming less homogenous. Our preferred markets are Hong
Kong, Indonesia, the Philippines and India.
We increased our weighting to LATIN AMERICA at the end of
1996 and were rewarded by good returns. We have recently
taken profits from some of our holdings in the region.
Outlook
-------
We are confident that selected markets can make good
progress over the coming 12 months. Superior growth in
Latin America and Asia should feed through into stock
prices. In Continental Europe, the restructuring has only
just begun. We are more cautious on Japan at the moment,
as the economy has shown no signs of recovering.
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 an 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 APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
5% Other Net Assets
15% Pacific Basin
2% Other Areas
16% Japan
9% Latin America
53% Europe
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Roche Holdings (Switzerland) 1.8
Novartis (Switzerland) 1.8
Internationale Nederlanden (Netherlands) 1.7
JAPAN
Rohm 1.4
Canon 1.3
PACIFIC BASIN
Cheung Kong Holdings (Hong Kong) 1.4
HSBC Holdings (Hong Kong) 1.2
LATIN AMERICA
Telebras, ADR (Brazil) 1.3
OTHER AREAS
Indian Opportunities Fund (India) 0.8
3
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFFERED STOCKS AND EXCHANGEABLE NOTES - 95.4%
EUROPE - 52.8%
AUSTRIA - 0.8%
VA TECHNOLOGIE 6,000 $ 932,370
----------
TOTAL AUSTRIA - (COST $827,060) 932,370
----------
DENMARK - 1.0%
NOVO NORDISK, CL B 12,500 1,236,591
----------
TOTAL DENMARK - (COST $1,165,855) 1,236,591
----------
FRANCE - 7.3%
AIR LIQUIDE 9,270 1,396,099
AXA 25,926 1,595,138
ELF AQUITAINE 10,303 999,143
MICHELIN, CL B 24,500 1,368,877
RHONE-POULENC, CL A 40,000 1,345,327
SCHNEIDER 26,400 1,488,152
SEITA 17,300 615,941
----------
TOTAL FRANCE - (COST $7,777,446) 8,808,677
----------
GERMANY - 8.7%
DEUTSCHE BANK 33,000 1,741,656
DEUTSCHE TELEKOM 14,342 311,221
HOECHST 49,800 1,955,422
MANNESMANN 4,300 1,690,900
SGL CARBON 10,000 1,394,503
VEBA 30,202 1,555,617
VOLKSWAGEN 2,900 1,843,689
----------
TOTAL GERMANY - (COST $8,371,167) 10,493,008
----------
ITALY - 0.8%
ENI 200,913 1,019,717
----------
TOTAL ITALY - (COST $952,721) 1,019,717
----------
NETHERLANDS - 4.3%
ELSEVIER 99,630 1,595,471
INTERNATIONALE NEDERLANDEN 51,377 2,017,318
PHILIPS ELECTRONICS N.V. 30,000 1,565,980
----------
TOTAL NETHERLANDS - (COST $3,534,777) 5,178,769
----------
SPAIN - 3.3%
BANCO DE SANTANDER 24,980 1,879,416
CENTROS COMERCIALES CONTINENTE 38,944 657,923
TELEFONICA DE ESPANA 55,000 1,408,810
----------
TOTAL SPAIN - (COST $3,200,530) 3,946,149
----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - CONTINUED
SWEDEN - 1.8%
ABB AB, SERIES A 134,000 $ 1,631,293
ERICSSON L.M., CL B 17,727 560,416
------------
TOTAL SWEDEN - (COST $2,004,509) 2,191,709
------------
SWITZERLAND - 5.0%
NOVARTIS 1,610 2,121,037
ROCHE HOLDINGS 260 2,195,916
ZURICH VERSICHER 5,190 1,704,063
------------
TOTAL SWITZERLAND - (COST $4,831,825) 6,021,016
-----------
UNITED KINGDOM - 19.8%
BRITISH TELECOMMUNICATIONS 169,200 1,239,520
CABLE & WIRELESS 134,000 1,031,876
GENERAL ELECTRIC 120,000 712,454
GKN 80,530 1,241,232
GLAXO WELLCOME 68,260 1,341,967
GRANADA 79,435 1,147,108
LADBROKE 321,000 1,196,597
LASMO 251,419 908,694
LLOYDS TSB 183,000 1,669,838
MARKS & SPENCER 176,000 1,394,879
MCKECHNIE 74,020 592,640
NFC 358,136 821,333
RECKITT & COLMAN 109,950 1,496,888
ROYAL BANK OF SCOTLAND GROUP 145,000 1,367,747
SAFEWAY 153,571 851,236
SCOTTISH POWER 199,000 1,206,256
SHELL TRANSPORT & TRADING 82,000 1,449,952
SMITHS INDUSTRIES 92,751 1,133,456
UNILEVER 47,469 1,247,119
WASSALL 113,250 646,094
WOLSELEY 151,426 1,212,390
------------
TOTAL UNITED KINGDOM - (COST $19,388,669) 23,909,276
------------
TOTAL EUROPE - (COST $52,054,559) 63,737,282
------------
LATIN AMERICA - 8.8%
ARGENTINA - 1.0%
COMPANIA PEREZ COMPANC 74,303 602,657
TELEFONICA DE ARGENTINA, ADR 18,000 598,500
------------
TOTAL ARGENTINA - (COST $786,145) 1,201,157
------------
BRAZIL - 3.2%
COMPANIA VALE DO RIO DOCE, ADR 24,460 623,287
ELECTROBRAS, ADR 39,800 890,525
PETROBRAS, ADR 36,000 763,313
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
LATIN AMERICA - CONTINUED
BRAZIL - CONTINUED
TELEBRAS, ADR 13,480 $ 1,546,830
------------
TOTAL BRAZIL - (COST $2,368,838) 3,823,955
------------
CHILE - 0.9%
COMPANIA DE TELEFONOS DE CHILE, ADR 34,000 1,100,750
------------
TOTAL CHILE - (COST $983,270) 1,100,750
------------
MEXICO - 2.5%
CEMEX, CL B 200,000 732,398
CIFRA SA DE CV, CL B 590,000 905,808
CORPORACION INDUSTRIAL ALFA, CL A 63,573 348,805
EMPRESAS ICA SOCIEDAD, ADR 18,800 279,650
GRUPO FINANCIERO BANAMEX, CL B 380,000 813,893
------------
TOTAL MEXICO - (COST $2,827,828) 3,080,554
------------
PERU - 0.3%
PERU REAL ESTATE, CL B 250,000 32,833
TELEFONICA DEL PERU, ADR, CL B 11,500 276,000
------------
TOTAL PERU - (COST $367,746) 308,833
------------
VENEZUELA - 0.9%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 35,000 1,050,000
------------
TOTAL VENEZUELA - (COST $827,709) 1,050,000
------------
TOTAL LATIN AMERICA - (COST $8,161,536) 10,565,249
------------
PACIFIC BASIN - 15.4%
AUSTRALIA - 1.7%
LEND LEASE CORPORATION 27,000 516,712
NATIONAL AUSTRALIA BANK LIMITED 52,000 711,690
NEWS CORPORATION 230,000 877,096
------------
TOTAL AUSTRALIA - (COST $2,176,219) 2,105,498
------------
HONG KONG - 9.3%
AMOY PROPERTIES 889,900 878,814
CHEUNG KONG HOLDINGS 193,000 1,694,185
CHINA LIGHT & POWER 140,000 630,737
CHINA OVERSEAS LAND & INVESTMENT 1,720,000 971,406
CITIC PACIFIC 105,000 567,934
FIRST PACIFIC COMPANY 506,000 604,208
HONG KONG TELECOMMUNICATIONS 650,000 1,115,988
HSBC HOLDINGS 57,164 1,446,349
HUTCHISON WHAMPOA 187,700 1,393,242
NEW WORLD DEVELOPMENT LIMITED 216,000 1,246,395
SWIRE PACIFIC 80,425 620,331
------------
TOTAL HONG KONG - (COST $9,950,395) 11,169,589
------------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - CONTINUED
INDONESIA - 0.8%
TELEKOMUNIKASI INDONESIA 700,000 $ 1,015,432
------------
TOTAL INDONESIA - (COST $1,090,427) 1,015,432
------------
MALAYSIA - 2.0%
AMMB HOLDINGS 138,000 917,875
EDARAN OTOMOBILE NASIONAL 75,000 707,942
UNITED ENGINEERS 114,000 808,188
------------
TOTAL MALAYSIA - (COST $2,182,290) 2,434,005
------------
PHILIPPINES - 0.7%
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 15,000 836,250
------------
TOTAL PHILIPPINES - (COST $902,372) 836,250
------------
SINGAPORE - 0.9%
DEVELOPMENT BANK OF SINGAPORE 87,800 1,043,289
------------
TOTAL SINGAPORE - (COST $956,005) 1,043,289
------------
TOTAL PACIFIC BASIN - (COST $17,257,708) 18,604,063
------------
OTHER AREAS - 1.9%
INDIA - 1.9%
INDIAN OPPORTUNITIES FUND (A) * 101,911 947,261
SCHRODER INDIA FUND * 60,000 659,010
VIDESH SANCHAR NIGAM LIMITED, GDR (B) * 36,000 705,600
------------
TOTAL INDIA - (COST $2,677,590) 2,311,871
------------
TOTAL OTHER AREAS - (COST $2,677,590) 2,311,871
------------
JAPAN - 16.5%
ASAHI DIAMOND 80 628
CANON 65,000 1,541,340
DDI 150 996,179
EIDEN SAKAKIYA 24,000 192,855
HITACHI 119,000 1,078,111
ITO - YOKADO 19,000 911,569
KAMIGUMI 100,000 494,741
KYOCERA 9,000 538,858
MABUCHI MOTOR 10,000 506,558
MARUI 41,000 675,070
MBL INT'L. FINANCE (BERMUDA), EXCH. GTD NOTES, 3.00%,
11/30/2002 (C) 720,000 732,600
MITSUBISHI HEAVY INDUSTRIES 150,000 990,271
MITSUI FUDOSAN 68,000 776,775
NIPPON EXPRESS 82,000 565,250
NITTO DENKO 36,000 521,842
NOMURA SECURITIES 43,000 481,034
RISO KAGAKU 6,400 378,146
ROHM 22,000 1,705,440
SECOM COMPANY LIMITED 7,000 416,355
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
JAPAN - CONTINUED
SHIMACHU 17,000 $ 408,477
SHIN - ETSU CHEMICAL 44,950 906,543
SONY 20,600 1,499,539
SUMITOMO ELECTRIC 77,000 1,043,369
TAISHO PHARMACEUTICAL 25,000 618,427
TOKIO MARINE & FIRE 43,000 420,057
TOYOTA MOTOR CORPORATION 53,000 1,536,534
------------
TOTAL JAPAN - (COST $19,777,147) 19,936,568
------------
TOTAL COMMON AND PREFFERED STOCKS AND
EXCHANGEABLE NOTES - (COST $99,928,540)+ 115,155,033
------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 2.8%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.15%, 5/01/1997 (D) $ 3,364,000 3,364,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $3,364,000) 3,364,000
------------
TOTAL INVESTMENTS - (COST $103,292,540) - 98.2% 118,519,033
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 1.8% 2,130,774
-------------
NET ASSETS - 100.0% $ 120,649,807
-------------
-------------
</TABLE>
* Non-income producing security.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd.,
an affiliate of Martin Currie Inc.
(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 $705,600 or 0.6% of net
assets.
(c) Reflected at par value and denominated in U.S. dollars.
(d) The repurchase agreement, dated 4/30/97, $3,364,000 par due 5/01/97, is
collateralized by United States Treasury Notes, 5.875%, due 7/31/97, with a
market value of $3,431,991.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 0.9%, Automobiles 3.4%, Banks 11.1%, Chemicals 5.8%,
Conglomerates 4.0%, Construction & Building Materials 1.6%, Construction &
Mining Equipment 0.2%, Diversified 0.5%, Drugs & Health Care 4.4%, Electric
Utilities 3.5%, Electrical Equipment 2.8%, Electronics 5.5%, Engineering
1.4%, Financial Services 1.6%, Food & Beverages 1.2%, Hotels & Restaurants
1.0%, Household Products 2.3%, Industrial Machinery 3.7%, Insurance 3.4%,
Investment Companies 1.3%, Leisure Time 0.9%, Mining 0.5%, Oil & Gas 4.3%,
Petroleum Services 0.5%, Photography 1.3%, Publishing 2.0%, Railroads &
Equipment 1.4%, Real Estate 5.2%, Retail Trade 5.0%, Telecommunications
3.2%, Telecommunications Services 4.0%, Telephone 4.3%, Tires & Rubber
1.1%, Tobacco 0.5%, Transportation 1.6%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
8
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $99,928,540) (Note B) $ 115,155,033
Investments in repurchase agreements, at value (Note B) 3,364,000
--------------
Total Investments 118,519,033
Cash 136
Foreign currency, at value (cost $109,238) (Note B) 109,099
Receivable for investments sold 1,345,661
Receivable for fund shares sold 446,632
Dividend and interest receivable 389,620
Foreign tax reclaims receivable 75,127
Prepaid insurance expense 10,080
Deferred organization expenses (Note B) 5,528
--------------
TOTAL ASSETS 120,900,916
--------------
LIABILITIES
Payable for fund shares repurchased 908
Management fee payable (Note C) 199,512
Administration fee payable (Note C) 7,916
Trustees fees payable (Note C) 2,376
Accrued expenses and other liabilities 40,397
--------------
TOTAL LIABILITIES 251,109
--------------
TOTAL NET ASSETS $ 120,649,807
--------------
--------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 107,650,631
Undistributed net investment income 464,481
Accumulated net realized loss on investment and foreign currency transactions (2,679,549)
Net unrealized appreciation on investment and foreign currency transactions 15,214,244
--------------
TOTAL NET ASSETS $ 120,649,807
--------------
--------------
NET ASSET VALUE PER SHARE $ 11.32
($120,649,807/10,655,768 shares of beneficial interest outstanding) --------------
--------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 249,147
Dividend income 2,110,241
Foreign taxes withheld (223,113)
------------
TOTAL INVESTMENT INCOME 2,136,275
------------
EXPENSES
Management fee (Note C) 786,120
Custodian fee 171,551
Administration fee (Note C) 91,658
Audit fee 24,229
Legal fees 5,668
Transfer agent fee 7,211
Trustees fees (Note C) 4,470
Amortization of deferred organization expenses 2,547
Miscellaneous expenses 19,603
------------
TOTAL EXPENSES 1,113,057
------------
NET INVESTMENT INCOME 1,023,218
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (1,528,624)
Net realized gain on foreign currency transactions 1,413,982
Net increase in unrealized appreciation on:
Investments (net of foreign taxes of ($19,986)) 3,356,168
Foreign currency transactions 246,156
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 3,487,682
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,510,900
------------
-----------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1997 APRIL 30, 1996
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 108,295,237 $ 72,660,677
-------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 1,023,218 1,369,618
Net realized gain (loss) on investment transactions (1,528,624) 926,246
Net realized gain on foreign currency transactions 1,413,982 1,832,315
Net unrealized appreciation (depreciation) on :
Investments 3,356,168 10,906,825
Foreign currency transactions 246,156 (549,779)
------------- -------------
Net increase in net assets from operations 4,510,900 14,485,225
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,359,811) (1,479,010)
In excess of net investment income (1,311,086) (207,129)
------------- -------------
Total distributions (3,670,897) (1,686,139)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 9,813,416 28,787,468
Reinvestment of dividends and distributions to shareholders 3,268,114 1,474,045
Cost of shares repurchased (1,637,958) (7,701,317)
Paid in capital from subscription and redemption fees 70,995 275,278
------------- -------------
Total increase in net assets from capital share transactions 11,514,567 22,835,474
------------- -------------
NET INCREASE IN NET ASSETS 12,354,570 35,634,560
------------- -------------
NET ASSETS at end of period (includes undistributed net investment $ 120,649,807 $ 108,295,237
------------- -------------
------------- -------------
income of $464,481 and $1,336,593, respectively)
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 880,191 2,869,376
Shares issued in reinvestment of distributions to shareholders 294,425 141,057
Less shares repurchased (146,937) (752,658)
------------- -------------
Net share transactions 1,027,679 2,257,775
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR JULY 1, 1994 *
ENDED ENDED THROUGH
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- ---------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 11.250 $ 9.860 $ 10.000
Net investment income 0.134 0.314 0.055
Net realized and unrealized gain(loss) on investment
and foreign currency transactions 0.286 1.239 (0.323)
--------- -------- ----------
Total from investment operations 0.420 1.553 (0.268)
--------- -------- ----------
Less distributions:
Net investment income (0.229) (0.167) 0.000
In excess of net investment income (0.127) (0.023) 0.000
--------- -------- ----------
Total distributions (0.356) (0.190) 0.000
--------- -------- ----------
Paid in capital from subscription and redemption fees (Note B) 0.006 0.027 0.128
--------- -------- ----------
Net asset value, end of period $ 11.320 $ 11.250 $ 9.860
--------- -------- ----------
--------- -------- ----------
TOTAL INVESTMENT RETURN (1) 3.85% 16.17% (1.40)%(2)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 120,649,807 $ 108,295,237 $ 72,660,677
Operating expenses, net, to average net assets (Note C) 0.98% 1.00% 1.00%(3)
Operating expenses, gross, to average net assets (Note C) 0.98% 1.05% 1.37%(3)
Net investment income to average net assets 0.90% 1.46% 1.32%(3)
Portfolio turnover rate 49% 37% 39%
Average commission rate per share (4) $ 0.0191 $ 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.
See notes to financial statements.
12
<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"). 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 such options or futures contract is
principally traded. Options traded over-the-counter are valued based upon
prices provided by market makers in such securities or dealers in such
currencies. Securities for which current market quotations are unavailable
or for which quotations are not deemed by the investment adviser to be
representative of market values are valued at fair value as determined in
good faith by the Trustees of the Fund, or by persons acting pursuant to
procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
13
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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,
and are included with the net realized and unrealized gain or loss on investment
securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 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 retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the year ended April 30, 1997, $64,736 was collected
in purchase premiums and $6,259 was collected in redemption fees.
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for U.S.
federal income tax purposes. Each Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. By so qualifying, the Funds will not be subject to federal
income taxes to the extent that they distribute substantially all of their
taxable income, including realized capital gains, for the fiscal year. In
addition, by distributing substantially all of their net investment income,
capital gains and certain other amounts, if any, during the calendar year, the
Funds will not be subject to a federal excise tax. As of April 30, 1997 the
Fund has a realized capital loss carryforward, for Federal income tax purposes,
of $1,249,504 ($31,328 expires April 30, 2003, $588,988 expires April 30, 2004,
$629,188 expires April 30, 2005), available to be used to offset future realized
capital gains. As of April 30, 1997 the Fund has elected for Federal income tax
purposes to defer a $1,327,267 current year post October 31 loss as though the
loss was incurred on the first day of the next fiscal year.
14
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUTED) - The Fund may be subject to taxes imposed by
countries in which it invests. Such taxes are generally based on income and/or
capital gains earned or repatriated. Taxes are accrued and applied to net
investment income, net realized gains and unrealized appreciation as such income
and/or gains are earned.
The Fund intends to make an election under Internal Revenue Code Section 853 to
pass through foreign taxes paid by the Fund to its shareholders. During the
year ended April 30, 1997 the total amount of foreign taxes that will be passed
through to the shareholders and the foreign source income for information
reporting purposes will be $223,113 and $2,136,400, respectively.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 0.70% of the Fund's average net assets.
The Investment Manager has voluntarily undertaken to reduce its fee until
further notice to the extent necessary to limit the Fund's annual expenses
(including the management fee but excluding brokerage commissions, transfer
taxes, and extraordinary expenses) to 1.00% of the Fund's average net assets on
an annualized basis. For the year ended April 30, 1997, it was not necessary for
the Investment Manager to waive any 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 aggregate annual
fees of $20,000.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 1997 were $62,039,822 and
$53,680,464, respectively.
The identified cost of investments in securities and repurchase agreements owned
for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at April 30, 1997 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------ ------------- -------------- ---------------
$ 103,556,783 $ 19,146,841 $ (4,184,591) $ 14,962,250
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 13% of the Fund.
15
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political,
regulatory and other conditions, and changes in currency exchange rates,
exchange control regulations (including currency blockage), expropriation of
assets or nationalization, imposition of withholding taxes on dividend or
interest payments and capital gains, and possible difficulty in obtaining and
enforcing judgments against foreign entities. Furthermore, issuers of
foreign securities are subject to different, and often less comprehensive,
accounting, reporting and disclosure requirements than domestic issuers. The
securities of some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable U.S.
companies and U.S. securities markets.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Opportunistic EAFE Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunistic EAFE Fund (the
"Fund") at April 30, 1997, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 17, 1997
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.
