<PAGE>
As filed with the Securities and Exchange Commission on August 28, 1997
Registration No. 811-8612
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
/X/
AMENDMENT NO. 4
/X/
(CHECK APPROPRIATE BOX OR BOXES)
---------------
MARTIN CURRIE BUSINESS TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
SALTIRE COURT, 20 CASTLE TERRACE,
EDINBURGH, SCOTLAND EH1 2ES
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (011-44-131) 229-5252
NAME AND ADDRESS
OF AGENT FOR SERVICE: COPY TO: COPY TO:
JULIAN M. C. LIVINGSTON STEVEN JOHNSON J.B. KITTREDGE, ESQ.
MARTIN CURRIE, INC. MARTIN CURRIE ROPES & GRAY
SALTIRE COURT INVESTOR SERVICES, ONE INTERNATIONAL PLACE
20 CASTLE TERRACE INC. BOSTON, MA 02110
EDINBURGH 53 FOREST AVENUE
SCOTLAND EH1 2ES OLD GREENWICH, CT 06870
<PAGE>
EXPLANATORY NOTE
This Amendment No. 4 to the Registration Statement has been
filed by the Registrant pursuant to Section 8(b) of the
Investment Company Act of 1940, as amended. However, beneficial
interests in the Registrant have not been and will not be
registered under the Securities Act of 1933, as amended (the
"1933 Act"), since such interests have been and will continue to
be issued and sold solely in private transactions which do not
involve any "public offering" within the meaning of Section 4(2)
of the 1933 Act. Investments in the Registrant may only be made
by individuals or entities which are "accredited investors"
within the meaning of Regulation D under the 1933 Act. This
Amendment No. 4 to the Registration Statement does not
constitute an offer to sell or the solicitation of an offer to
buy any beneficial interests in the Registrant.
<PAGE>
Part A. INFORMATION REQUIRED IN A PROSPECTUS
Item 1. COVER PAGE
Not applicable. See Paragraph 4 of General Instruction F.
Item 2. SYNOPSIS
Not applicable. See Paragraph 4 of General Instruction F.
Item 3. CONDENSED FINANCIAL INFORMATION
Not applicable. See Paragraph 4 of General Instruction F.
Item 4. GENERAL DESCRIPTION OF REGISTRANT
See the Cover Page and the sections entitled "Description of the
Trust and Ownership of Shares;" "Investment Objectives and
Policies;" and "More Information About the Funds' Investments" in
the Private Placement Memorandum attached as Appendix A to this
Part A (the "Private Placement Memorandum").
Item 5. MANAGEMENT OF THE FUND
See the sections entitled "Summary of Expenses;" "Management of the
Trust" and "Administrator; Custodian; Transfer and Dividend Paying
Agent" in the Private Placement Memorandum.
Item 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Not applicable. See Paragraph 4 of General Instruction F.
Item 6. CAPITAL STOCK AND OTHER SECURITIES
See the Cover Page and the sections entitled "Description of the
Trust and Ownership of Shares;" "Management of the Trust;"
"Redemption of Shares;" "Shareholder Inquiries;" "Distributions;"
and "Taxes" in the Private Placement Memorandum.
<PAGE>
Item 7. PURCHASE OF SECURITIES BEING OFFERED
See the section entitled "Purchase of Shares;" "Distribution and
Servicing Plans;" and "Determination of Net Asset Value" in the
Private Placement Memorandum.
Item 8. REDEMPTION OR REPURCHASE
See the section entitled "Redemption of Shares" in the Private
Placement Memorandum.
Item 9. PENDING LEGAL PROCEEDINGS
Not applicable.
<PAGE>
Appendix A to Part A
MARTIN CURRIE BUSINESS TRUST
c/o Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
011-44-131-229-5252
PRIVATE PLACEMENT MEMORANDUM
August 28, 1997
Martin Currie Business Trust (the "Trust") is an open-end, diversified
management investment company consisting of seven series (each a "Fund")
offering portfolios with different objectives and strategies.
MCBT GLOBAL GROWTH FUND (the "Global Growth Fund") seeks capital
appreciation through investments in a global portfolio.
MCBT OPPORTUNISTIC EAFE FUND (the "Opportunistic EAFE Fund") seeks capital
appreciation through investments in an international portfolio. Under normal
conditions, the Fund will not invest in securities of issuers located in
Canada or the United States or its territories.
MCBT GLOBAL EMERGING MARKETS FUND (the "Global Emerging Markets Fund")
seeks capital appreciation through investment in equity securities of issuers
located in countries with emerging markets and developing economies.
MCBT JAPAN SMALL COMPANIES FUND (the "Japan Small Companies Fund") seeks
capital appreciation through investment primarily in equity securities of
issuers located in Japan with relatively small equity capitalization, which
may include companies without wide market recognition.
MCBT EMERGING AMERICAS FUND (the "Emerging Americas Fund") seeks capital
appreciation through investment primarily in equity securities of issuers
located in countries of the Western Hemisphere with emerging markets and
developing economies.
MCBT EMERGING ASIA FUND (the "Emerging Asia Fund") seeks capital
appreciation through investment primarily in the equity securities of issuers
located in Asian countries with emerging markets and developing economies.
<PAGE>
MCBT EMEA FUND (The "EMEA Fund") seeks capital appreciation through
investment primarily in equity securities of issuers located in the emerging
markets and developing economies in Central and Eastern Europe, the Middle
East and Africa.
Shares of each Fund may be purchased directly from the Trust in cash or in
kind by means of exchanging securities which are eligible for purchase by the
relevant Fund. There is a purchase premium in the case of cash investments.
Shares of any Fund may be redeemed in cash or in-kind. There is a redemption
fee in the case of cash redemptions. All purchase premiums and redemption
fees are paid to and retained by the relevant Fund and are intended to offset
brokerage and transaction costs arising in connection with the purchase or
redemption. The purchase premium and redemption fee may be waived by the
Manager, however, if the brokerage and transaction costs in connection with
the purchase or redemption are minimal or in other circumstances in the
Manager's discretion. See "Purchase of Shares" and "Redemption of Shares" in
this Memorandum. The minimum investment in any Fund must be worth at least
$1,000,000; subsequent investments in any Fund must be worth at least
$100,000. The Manager may, in its discretion, permit smaller initial or
subsequent investments and may choose not to accept any investment for any or
no reason. An exchange of securities for shares of a Fund to effect an
in-kind purchase of the Fund's shares will generally be a taxable transaction
for an exchanging shareholder subject to U.S. federal income tax.
The Fund's manager is Martin Currie, Inc. (the "Manager").
This Private Placement Memorandum concisely describes the information that
investors should know before investing. Please read it carefully and keep it
for future reference.
A Statement of Additional Information (the "Statement") dated August 28,
1997 is available free of charge by contacting the Transfer Agent, State
Street Bank & Trust Company, Transfer Agent Operations, P.O. Box 1978,
Boston, MA 02105, fax 617-985-9626 by 5:00 p.m. (New York time) on any
business day or the Manager at Saltire Court, 20 Castle Terrace, Edinburgh,
Scotland EH1 2ES fax 011-44-131-479-4747 or Martin Currie Investor Services,
Inc., 53 Forest Avenue, Old Greenwich, Connecticut 06870, fax 203-698-9037.
The Statement, which contains more detailed information about the Trust and
the Funds is incorporated by reference into this Memorandum.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-2-
<PAGE>
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE TRANSFERRED OR RESOLD UNLESS SO REGISTERED OR EXEMPT THEREFROM.
HOWEVER, THE SECURITIES ARE REDEEMABLE AS DESCRIBED IN THIS PRIVATE PLACEMENT
MEMORANDUM. IN CERTAIN CASES INVESTORS MAY BE REDEEMED "IN KIND" AND RECEIVE
PORTFOLIO SECURITIES HELD BY THE FUND IN LIEU OF CASH UPON REDEMPTION. IN
SUCH CASE, AN INVESTOR WILL INCUR COSTS WHEN THE INVESTOR SELLS THE
SECURITIES DISTRIBUTED.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY
INFORMATION WITH RESPECT TO THE SHARES EXCEPT SUCH INFORMATION AS IS
CONTAINED IN THIS MEMORANDUM AND IN THE STATEMENT OF ADDITIONAL INFORMATION
OR IN OTHER MATERIALS APPROVED BY THE TRUST. NO SALES MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN MATTERS DISCUSSED HEREIN SINCE THE DATE HEREOF.
FOR RESIDENTS OF NEW HAMPSHIRE, IN ACCORDANCE WITH NEW HAMPSHIRE UNIFORM
SECURITIES ACT SECTION 421-B:20:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF
NEW HAMPSHIRE CONSTITUTES A FINDING BY THE DIRECTOR OF THE OFFICE OF
SECURITIES REGULATION THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS
THAT THE DIRECTOR OF THE OFFICE OF SECURITIES REGULATION HAS PASSED IN ANY
WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE
TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
-3-
<PAGE>
TABLE OF CONTENTS
SUMMARY OF EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . 6
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS. . . . . . . . . . . . . . . 11
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DISTRIBUTION AND SERVICING PLANS . . . . . . . . . . . . . . . . . . . . . 21
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . 21
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . 23
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . 24
ADMINISTRATOR; CUSTODIAN; TRANSFER AND DIVIDEND PAYING AGENT . . . . . . . 25
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SHAREHOLDER INQUIRIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the
various expenses that an investor in a Fund will bear directly or indirectly.
Except as otherwise noted, information is based on annualized expenses for
the Funds' third fiscal year ended April 30, 1997. The information below
should not be considered a representation of future expenses, as actual
expenses may be greater or less than those shown. Also, the assumed 5%
annual return in the examples should not be considered a representation of
investment performance as actual performance will depend upon actual
investment results of securities held in the particular Fund's portfolio.
<TABLE>
<CAPTION>
EMERGING
GLOBAL OPPORTUNISTIC MARKETS
GROWTH FUND EAFE FUND FUND
----------- ------------- --------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Purchase Premium 0.75% 0.75% 1.00%
(as a percentage
of amount purchased)(1)
Redemption Fee (as a percentage 0.75 0.75 1.00
of amount redeemed)(1)
ANNUAL FUND OPERATING EXPENSES:
(after waiver) (as a percentage
of average net assets)
Management Fees(2) 0.60 0.69 0.75
Other Expenses(2) 0.40 0.29 0.58
Total Operating Expenses(2) 1.00 0.98 1.33
EXAMPLES:
You would pay the following expenses
on a $1,000 investment assuming a
5% annual return and (1) redemption
at the end of each time period:
One Year $ 25 $ 25 $ 34
Three Years 48 47 63
(2) assuming no redemption:
One Year $ 18 $ 18 $ 24
Three Years 39 39 52
</TABLE>
The foregoing examples assume the payment of both a purchase premium and a
redemption fee even though such purchase premium and redemption fee may not be
applicable (see "Purchase of Shares" and "Redemption of Shares" below).
__________________
(1) Purchase premiums and redemption fees are paid to the relevant Fund, apply
only to cash purchases and redemptions and may be waived or reduced in
certain cases. See "Purchase of Shares" and "Redemption of Shares."
(2) The Manager and its affiliates advise other investment companies
(including offshore funds) and private accounts for which they receive
fees. Generally, for purposes of determining the fees charged on accounts
managed separately by the Manager or its affiliates, the Manager does not
count assets invested in investment companies it or its affiliates advise.
Assets invested in such investment companies are excluded from clients'
global fee calculations. In the case of assets invested in the Trust, the
Manager credits all indirect fees paid to affiliates against the Manager's
investment advisory account fees. The Manager has also agreed, if
necessary, to temporarily waive additional fees under the Management
Contract and to bear certain expenses of the Global Growth Fund and
Opportunistic EAFE Fund in order to limit the Total Operating Expenses of
these funds to 1.00%. In the absence of such voluntary waivers, which may
be discontinued at any time, the Management Fee and Total Operating
Expense would have been .70% and 1.10% for the Global Growth Fund, .70%
and .99% for the Opportunistic EAFE Fund and .80% and 1.38% for the Global
Emerging Markets Fund.
-4-
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the
various expenses that an investor in a Fund will bear directly or indirectly.
Except as otherwise noted, information is based on annualized expenses for
the Funds' third fiscal year ended April 30, 1997. The information below
should not be considered a representation of future expenses, as actual
expenses may be greater or less than those shown. Also, the assumed 5%
annual return in the examples should not be considered a representation of
investment performance as actual performance will depend upon actual
investment results of securities held in the particular Fund's portfolio.
<TABLE>
<CAPTION>
JAPAN
SMALL EMERGING EMERGING EMEA
COMPANIES AMERICAS ASIA FUND(4)
FUND FUND FUND
--------- -------- -------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Purchase Premium 1.00% 1.75% 1.75% 1.25%
(as a percentage
of amount purchased)(1)
Redemption Fee (as a percentage 1.00 1.75 1.75 1.25
of amount redeemed)(1)
ANNUAL FUND OPERATING EXPENSES:
(after waiver)(as a percentage
of average net assets)
Management Fees 1.00(2) 1.43(2),(3) 1.41(2),(3) 1.50(5)
Other Expenses 0.26(2) 0.27(2),(3) 0.48(2),(3) 0.78(5)
Total Operating Expenses 1.26(2) 1.70(2),(3) 1.89(2),(3) 2.28(5)
EXAMPLES:
You would pay the following expenses
on a $1,000 investment assuming a
5% annual return and (1) redemption
at the end of each time period:
One Year $ 33 $ 53 $ 54 $ 47
Three Years 61 90 95 93
(2) assuming no redemption:
One Year $ 23 $ 35 $ 37 $ 35
Three Years 50 71 77 80
</TABLE>
The foregoing examples assume the payment of both a purchase premium and a
redemption fee even though such purchase premium and redemption fee may not
be applicable (see "Purchase of Shares" and "Redemption of Shares" below).
__________________
(1) Purchase premiums and redemption fees are paid to the relevant Fund, apply
only to cash purchases and redemptions and may be waived or reduced in
certain cases. See "Purchase of Shares" and "Redemption of Shares."
(2) The Manager has agreed, if necessary, to temporarily waive a portion of
its fee under the Management Contract and to bear certain expenses of each
Fund in order to limit total Operating Expenses for the Japan Small
Companies Fund to no more than 1.50% and for both the Emerging Americas
and Emerging Asia Fund to no more than 2.00%.
(3) The Manager is permitted under its Management Contract with respect to the
Emerging Americas and Emerging Asia Funds to collect a Management Fee of
up to 1.50% of the average net assets of each of the Funds. Prior to
September 20, 1996, the Investment Manager had voluntarily agreed to limit
its fees to 1.25%. Without this limit the Management Fee and Total
Operating Expenses would have been 1.50% and 1.77% for the Emerging
Americas Fund and 1.50% and 1.98% for the Emerging Asia Fund.
(4) The information for the EMEA Fund is based on estimated annualized expenses
for the Fund's first fiscal year which has not yet commenced.
(5) The Manager is permitted under its Management Contract with respect to the
EMEA Fund to collect a Management Fee of up to 1.50% of the average net
assets of the Fund.
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<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Trust currently consists of seven Funds offering investors a range of
foreign and international investment choices. Each Fund has its own
investment objective and policies designed to meet its specific goals. No
Fund, nor the Trust as a whole, is intended or is appropriate as a complete
investment program and the Trust and the Funds should be considered as only
part of an overall investment strategy. Because all of the Funds will be
invested substantially in foreign issuers and many of the Funds will be
invested in issuers located in developing countries with emerging markets
and/or in issuers with relatively modest capitalization that are subject to
unique risks, the Funds generally present greater risks than most U.S. mutual
funds. An investor should pay particular attention to the risks of the
Funds' investments described below, under "More Information About The Funds'
Investments," and in the Statement.
Unless otherwise noted, the investment objectives and policies described
below are non-fundamental and may be changed by the trustees of the Trust
without shareholder approval.
THE GLOBAL GROWTH FUND
The investment objective of the Global Growth Fund is capital
appreciation through investments in a global portfolio. Current income will
not be a consideration. The Global Growth Fund will normally invest
primarily in equity securities which, in addition to common stocks, may
include convertible bonds, convertible preferred stocks, warrants, rights or
other securities convertible into common stock.
The Global Growth Fund will invest in securities traded in foreign and
domestic securities markets with particular consideration given to securities
principally traded in North American, Japanese, European, Pacific and
Australian securities markets. Although the Global Growth Fund will normally
be invested in securities of issuers located in at least three different
countries, there are no prescribed limits on geographic asset distribution
and the Global Growth Fund has the authority to invest in securities traded
in any securities market of any country in the world, including
over-the-counter markets. The Fund may also invest in foreign issuers by way
of Depositary Receipts, such as American Depositary Receipts (ADRs), Global
Depositary Receipts (GDRs) and European Depositary Receipts (EDRs) that are
listed on markets in industrialized countries or traded in the international
equity markets. See "Depositary Receipts" under "More Information About the
Funds' Investments" below. The responsibility for allocating the Global
Growth Fund's assets among the various securities markets of the world is
borne by the Manager. In making these allocations, the Manager will consider
such factors as the condition and growth potential of the various economies
and securities markets, currency and taxation considerations and other
pertinent financial, legal, social, national and political factors. Under
certain adverse investment conditions, the Global Growth Fund may restrict
the number of securities markets in which its assets will be invested,
although under normal market circumstances at least 65% of the Global Growth
Fund's investments will involve securities of issuers located in at least
three different countries, which may include the United States.
When the Manager believes that conditions in overseas securities markets
warrant investing more heavily in the United States for temporary defensive
purposes, the Global Growth Fund may invest a substantial portion of its
assets in securities (including equity securities) principally traded in the
United States; provided, however, that the Fund's weighting of investments in
U.S. equity securities will not exceed the U.S. weighting in the Morgan
Stanley Capital International World Index (the "MSCI World Index") by more
than 20%. The MSCI World Index is an index of securities traded in the world
markets weighted by relative market capitalization. Also for defensive
purposes, the Global Growth Fund may invest some or all of its assets in debt
instruments as described below under "More Information About the Funds'
Investments--Temporary Defensive Strategies."
The Global Growth Fund will not limit its investments to any particular
type or size of company. It may invest in companies whose earnings are
believed by the Manager to be in a relatively strong growth trend, or in
companies in which significant further growth is not anticipated but whose
market value per share is thought by the Manager to be undervalued. It may
invest in small and relatively less well-known companies, which
-6-
<PAGE>
may have more restricted product lines or more limited financial resources
than larger, more established companies and may be more severely affected by
economic downturns or other adverse developments. Trading volume of these
companies' securities may also be low and their values volatile.
Generally, the securities markets of different nations are expected by the
Manager to move relatively independently of one another, because business
cycles and other economic or political events that influence one country's
securities markets may have little effect on the securities markets of other
countries. By investing in a global portfolio, the Global Growth Fund seeks
to reduce the risks associated with investing in the economy of only one
country and with investing in foreign securities generally. See "More
Information About the Funds' Investments -- Special Consideration of Foreign
Investments" below.
For a description of additional investment techniques that may be utilized
by the Global Growth Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and
the Statement.
THE OPPORTUNISTIC EAFE FUND
The investment objective of the Opportunistic EAFE Fund is capital
appreciation through investments in an international portfolio of equity
securities. Current income will not be a consideration. Under normal
conditions, the Fund will not invest in securities of issuers located in
Canada or the United States or its territories. Equity securities, in
addition to common stocks, may include convertible bonds, convertible
preferred stocks, warrants, rights or other securities convertible into
common stock.
The Opportunistic EAFE Fund pursues an "opportunistic" strategy relative
to the Morgan Stanley Capital International EAFE Index (the "MSCI EAFE
Index"). The MSCI EAFE Index is an index of the securities traded in Europe,
Australasia and the Far East, weighted by market capitalization. The
strategy is opportunistic because the Manager will typically invest more or
less in securities traded in a particular country than would be suggested by
the weighting of that country's market capitalization in the MSCI EAFE Index.
In order to limit the investment risks associated with such a strategy, the
Manager will typically limit the Fund to an exposure of no more than 20
percentage points above or below the current level of the MSCI EAFE Index as
it applies to each of the major investment regions of Europe, Australasia and
the Far East. The Opportunistic EAFE Fund has no prescribed limits on
geographic asset distribution and it has the authority to invest in
securities traded in any securities market of any country in the world,
including over-the-counter markets. In making the allocation of assets among
the securities markets, the Manager will consider such factors as it
considers appropriate, including the condition and growth potential of the
various economies and securities markets and the issuers located therein,
currency and taxation considerations and other pertinent financial, legal,
social, national and political factors which may have an effect upon the
climate for investing within such securities markets. Under normal market
circumstances, at least 65% of the Opportunistic EAFE Fund's investment will
involve securities of issuers located in European, Australasian and Far
Eastern countries.
The Opportunistic EAFE Fund may also invest in foreign issuers by way of
ADRs, GDRs and EDRs. See "More Information About the Funds' Investments
- --Depositary Receipts."
When the Manager believes that conditions in overseas securities markets
warrant investing in the United States for temporary defensive purposes, the
Opportunistic EAFE Fund may invest a portion of its assets in securities
(including equity securities) principally traded in the United States;
provided, however, that the Fund's weighting of investments in U.S. equity
securities will not exceed the U.S. weighting in the MSCI World Index by more
than 20%. Also for defensive purposes, the Opportunistic EAFE Fund may
invest some or all of its assets in debt instruments as described below under
"More Information About the Funds' Investments--Temporary Defensive
Strategies."
For a description of additional investment techniques that may be utilized
by the Opportunistic EAFE Fund and the risks associated with all of the
Fund's investments, see "More Information About the Funds' Investments" below
and the Statement.
-7-
<PAGE>
THE GLOBAL EMERGING MARKETS FUND
The principal investment objective of the Global Emerging Markets Fund is
capital appreciation through investment in equity securities of issuers
located in countries with emerging markets and developing economies. In the
opinion of the Manager, such countries are currently found in Asia, the
Indian subcontinent, Latin and Central America, the Middle and Near East,
Eastern and Central Europe and Africa. A number of these markets are less
accessible to foreign investors due to their tax structures or limited
liquidity making investments by the Fund less feasible. However, many
emerging markets have, in recent years, liberalized access and more are
expected to do so over the coming few years if the present trend continues.
The Fund invests, under normal market conditions, at least 65% of its
total assets in securities of issuers located in countries with emerging
markets. For this purpose, emerging markets will include any countries (i)
having an "emerging stock market" as defined by the International Finance
Corporation; or (ii) with low- to middle-income economies according to the
International Bank for Reconstruction and Development (the World Bank); or
(iii) where, in the opinion of the Manager, the markets may not fully reflect
the potential of the developing economy. The countries which the Manager
believes do NOT constitute emerging markets are the United States, the United
Kingdom, Ireland, France, Germany, Italy, Japan, Canada, The Netherlands,
Australia, Hong Kong, New Zealand, Singapore, the Scandinavian countries and
Spain.
The Fund may also invest up to 35% of its assets in issuers located in
countries with more established markets and economies not considered as
emerging as described above.
The Fund will invest primarily in equity securities listed on emerging
stock exchanges or in over-the-counter markets. Equity securities, in
addition to common stocks, include convertible bonds, convertible preferred
stocks, warrants, rights and other securities convertible into common stock.
The Fund may also make investments through ADRs, GDRs and EDRs. See "More
Information About the Funds' Investments--Depositary Receipts."
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the
Funds' Investments--Special Risks of Foreign Investments." These risks are
heightened and additional risks are present in countries with emerging
markets and developing economies. See "More Information About the Funds'
Investments--Risks of Emerging Markets."
For temporary defensive purposes, the Fund may invest some or all of its
assets in debt instruments and may invest up to 100% of its assets in
securities (including equity securities) principally traded in the United
States. See "More Information About the Funds' Investments--Temporary
Defensive Strategies."
Generally, the securities markets of different nations are expected by the
Manager to move relatively independently of one another, because business
cycles and other economic or political events that influence one country's
securities markets may have little effect on the securities markets of other
countries. By investing in an international portfolio, the Global Emerging
Markets Fund seeks to reduce the risks associated with investing in the
economy of only one country and with investing in foreign securities
generally. See "More Information About the Funds' Investments--Special
Risks of Foreign Investments" below.
For a description of additional investment techniques that may be utilized
by the Global Emerging Markets Fund and the risks associated with all of the
Fund's investments, see "More Information About the Funds' Investments" below
and the Statement.
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THE JAPAN SMALL COMPANIES FUND
The principal investment objective of the Japan Small Companies Fund is
capital appreciation through investment in equity securities of issuers
located in Japan with relatively small equity capitalization, which may
include companies without wide market recognition. Current income will not
be a consideration. Under normal market conditions, at least 65% of the
Fund's assets will be invested in issuers located in Japan with equity
capitalization of less than approximately U.S. $2 billion at the time of
initial purchase using current exchange rates.
The Japan Small Companies Fund will invest primarily in equity securities
which, in addition to common stocks, may include convertible bonds,
convertible preferred stocks, warrants, rights or other securities
convertible into common stock. The Fund will invest in securities traded in
Japanese or other foreign securities markets (including over-the-counter
markets) and may also make investments by way of ADRs, GDRs and EDRs if
desirable issues are available. See "More Information About the Funds'
Investments -- Depositary Receipts."
Investment in foreign securities generally involves special risks. See
"More Information About the Funds' Investments -- Special Risks of Foreign
Investments," below. These risks are increased and 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 is dependent to a significant 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.
The Japan Small Companies Fund is subject to special risks because all or
a substantial portion of the Fund's assets may be invested in securities of
companies with relatively low equity market capitalization. These may
include securities traded over-the-counter and securities of companies with
limited operating histories. Companies in which the Fund may invest may have
more restricted product lines or more limited financial resources than
larger, more established companies. For these and other reasons, they may be
more severely affected by economic downturns or other adverse developments
than are larger, more established companies. Trading volume of these
companies' securities may also be low and their market values volatile.
For temporary defensive purposes, the Fund may invest some or all of its
assets in debt instruments and may invest up to 100% of its assets in
securities (including equity securities) principally traded in the United
States. See "More Information About the Funds' Investments -- Temporary
Defensive Strategies."
For a description of additional investment techniques that may be utilized
by the Japan Small Companies Fund and the risks associated with all of the
Fund's investments, see "More Information About the Funds' Investments" below
and the Statement.
THE EMERGING AMERICAS FUND
The investment objective of the Emerging Americas Fund is capital
appreciation through investment in equity securities of issuers located in
countries of the Western Hemisphere with emerging markets and developing
economies. Such countries may include Argentina, The Bahamas, Bolivia,
Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Paraguay, Uruguay
and Venezuela. In addition to investing in securities listed on the
exchanges of emerging American countries, the Fund may invest in securities
listed on more established securities markets and through ADRs, GDRs and
EDRs. See "More Information About the Funds' Investments -- Depositary
Receipts." The Fund may also invest in securities traded in over-the-counter
markets.
Under normal conditions, the Emerging Americas Fund will be primarily
invested in equity securities. Such securities may, in addition to common
stocks, include convertible bonds, convertible preferred stocks, warrants
rights and other securities convertible into common stock. The Fund may also
invest in Brady Bonds, which are
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securities issued in various currencies (primarily the dollar) that have been
created through the exchange of existing commercial bank loans to Latin
American public and private entities for new bonds in connection with debt
restructurings under a debt restructuring plan announced by U.S. Secretary of
the Treasury Nicholas F. Brady (the "Brady Plan"). Brady Bonds may be
collateralized or uncollateralized and are traded in the over-the-counter
secondary market for Latin American debt instruments. Brady Bonds are
neither issued nor guaranteed by the U.S. Government. Additional information
on Brady Bonds is included in the Statement.
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the
Funds' Investments --Special Risks of Foreign Investments." These risks are
heightened and additional risks are present in the case of investments in
emerging markets or countries with limited or developing capital markets such
as many of the Latin American countries in which the Fund will invest. See
"More Information About the Funds' Investments --Risks of Emerging Markets."
For temporary defensive purposes, the Emerging Americas Fund may invest
some or all of its assets in debt instruments and may invest up to 100% of
its assets in securities (including equity securities) principally traded in
the United States. See "More Information About the Funds' Investments --
Temporary Defensive Strategies."
For a description of additional investment techniques that may be utilized
by the Emerging Americas Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and
the Statement.
THE EMERGING ASIA FUND
The investment objective of the Emerging Asia Fund is capital appreciation
through investments primarily in equity securities of issuers located in
Asian countries with emerging markets and developing economies. Such
countries may include the Peoples Republic of China, India, Indonesia, the
Philippines, Sri Lanka, Pakistan, Thailand, Vietnam, South Korea and Taiwan.
The Fund may also invest in other countries in the Pacific Basin when their
markets become sufficiently developed.
Under normal conditions, the Emerging Asia Fund will invest at least 65%
of its assets in equity securities of issuers located in emerging Asian
countries. Such securities may, in addition to common stocks, include,
convertible bonds, convertible preferred stocks, warrants, rights and other
securities convertible into common stocks. In addition to investing in
securities listed on the exchanges of emerging Asian countries, the Fund may
invest in securities listed on more established securities markets and
through ADRs and EDRs. See "More Information About the Funds' Investments --
Depositary Receipts." The Fund may also invest in securities traded in
over-the-counter markets.
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the
Funds' Investments --Special Risks of Foreign Investments." These risks are
highlighted and additional risks are present in the case of investments in
emerging markets or countries with limited or developing capital markets such
as most of the Asian countries in which the Fund will invest. See "More
Information About the Funds' Investments -- Risks of Emerging Markets."
For temporary defensive purposes, the Emerging Asia Fund may invest some
or all of its assets in debt instruments and may invest up to 100% of its
assets in securities (including equity securities) principally traded in the
United States. See "More Information About the Funds' Investments --
Temporary Defensive Strategies."
For a description of additional investment techniques that may be utilized
by the Emerging Asia Fund and the risks associated with all of the Fund's
investments, see "More Information About the Funds' Investments" below and
the Statement.
THE EMEA FUND
The investment objective of the EMEA Fund is capital appreciation
through investment primarily in equity securities of issuers located in the
emerging markets
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and developing economies in Central and Eastern Europe, the Middle East and
Africa ("EMEA Countries"). Such EMEA Countries may include Botswana,
Croatia, Czech Republic, Egypt, Ghana, Greece, Hungary, Israel, Jordan,
Kazakhstan, Kenya, Lebanon, Mauritius, Morocco, Namibia, Nigeria, Oman,
Poland, Portugal, Russia, Slovakia, Slovenia, South Africa, Turkey, Ukraine
and Zimbabwe. The Fund may also invest in other countries in Europe, the
Middle East or Africa when, in the opinion of the Manager, their markets
become sufficiently developed. In addition to investing in securities listed
on the exchanges of EMEA Countries, the Fund may invest in securities listed
on more established securities markets through ADRs, GDRs, and EDRs. See
"More Information About the Funds' Investments -- Depositary Receipts." The
Fund may also invest in securities traded in over-the-counter markets.
Under normal conditions, the EMEA Fund will be primarily invested in
equity securities. Such securities may, in addition to common stocks,
include convertible bonds, convertible preferred stocks, warrants, rights and
other securities convertible into common stock.
Investing in securities of foreign issuers and in securities traded in
foreign markets involves special risks. See "More Information About the
Funds' Investments --Special Risks of Foreign Investments." These risks are
heightened and additional risks are present in the case of investments in
emerging markets or countries with limited or developing capital markets such
as many of the EMEA Countries in which the Fund will invest. See "More
Information About the Funds' Investments -- Risks of Emerging Markets."
For temporary defensive purposes, the EMEA Fund may invest some or all of
its assets in debt instruments and may invest up to 100% of its assets in
securities (including equity securities) principally traded in the United
States. See "More Information About the Funds' Investments -- Temporary
Defensive Strategies."
For a description of additional investment techniques that may be utilized
by the EMEA Fund and the risks associated with all of the Fund's investments,
see "More Information About the Funds' Investments" below and the Statement.
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
LOCATION OF ISSUERS. A number of the Funds' policies are determined by
reference to whether an issuer is "located in" a particular country or group
of countries. In determining whether an issuer is "located in" a particular
country for those purposes, the Manager will consider: (i) whether the
issuer's securities are principally traded in the country's markets; (ii)
where the issuer's principal offices or operations are located; and
(iii) whether a significant portion of the issuer's revenues are derived from
goods or services sold or manufactured in the country. No single factor will
necessarily be determinative nor must all be present for the Manager to
determine that an issuer is "located in" a particular country. The Manager
may also consider other factors in making this determination.
INVESTMENT RISKS. An investment in any Fund involves risks similar to
those of investing in common stock or other equity securities directly.
Investment in a Fund's shares is, like investment in equity securities, more
volatile and risky than some other forms of investment. Just as with such
securities, the value of Fund shares may increase or decrease depending on
market, economic, political, regulatory and other conditions affecting the
Fund's portfolio. These types of risks may be greater with respect to
investments in securities of foreign issuers and may be heightened in the
case of emerging market securities. In addition, a Fund's investments will
often be denominated in foreign currencies, whose values continually change
in relation to the dollar. These varying relationships will also affect the
value of a Fund's shares.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS. All of the Funds 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 capital, dividend or
interest payments, and possible difficulty in obtaining and enforcing
judgments against
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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.
Foreign brokerage commissions, custodial and other fees are also generally
higher than in the United States. There are also special tax considerations
which apply to securities of foreign issuers and securities principally
traded overseas. See "Taxes."
RISKS OF EMERGING MARKETS. The risks of investing in foreign securities
may be heightened in the case of investments in emerging markets or countries
with limited or developing capital markets. Security prices in emerging
markets can be significantly more volatile than in the more developed nations
of the world, reflecting the greater uncertainties of investing in less
established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, present the risk of
nationalization of business, 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. Expropriation, nationalization or other confiscation due to
political change could result in a Fund's loss of its entire investment in
the country involved. The possibility or reality of nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability or diplomatic
developments could affect adversely the economies of countries and the value
of the Funds' investments in those countries. The economies of individual
countries may differ favorably or unfavorably and significantly from the U.S.
economy in such respects as growth of gross domestic product ("GDP") or gross
national product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, structural unemployment and balance
of payments position. The domestic economies of emerging countries are
generally not as diversified as those of the United States and certain
Western European countries. A significant portion of many of such countries'
national GDPs are represented by one commodity or groups of commodities.
World fluctuations in the prices of certain commodities may significantly
affect the economy involved. Such countries' economies may also be dependent
on international aid or development assistance, may be highly vulnerable to
changes in local or global trade conditions, including trade barriers, and
may suffer from extreme and volatile debt burdens or inflation rates. Local
securities markets may trade a small number of securities and may be unable
to respond effectively to increases in trading volume, potentially making
prompt liquidation of substantial holdings difficult or impossible at times.
Consequently, securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements. Also, such local markets typically offer less
regulatory protections for investors.
As described above under "Investment Objectives and Policies," all of the
Funds may invest in issuers of emerging markets and several of the Funds may
invest primarily in such markets. Several of the Funds may concentrate their
investments in particular regions, such as in the emerging markets of Latin
America and the Pacific Basin. Such Funds will be subject to all of the
general risks described above as well as special risks (some of which are
described below) that may affect the region where the Fund invests.
ASIA. The Emerging Asia Fund is susceptible to political and economic
factors affecting issuers in Pacific Basin countries. Although the Fund will
not focus its investments in Japanese companies, some Asian economies are
directly affected by Japanese capital investment in the region and by
Japanese consumer demands. Securities of issuers located in some Asian
countries tend to have volatile prices and may offer significant potential
for loss as well as gain. Further, certain companies in Asia may not have
firmly established product markets, may lack depth of management, or may be
more vulnerable to political or economic developments such as nationalization
of their own industries. However, many of the countries of the Pacific Basin
are developing both economically and politically. Such countries may have
relatively unstable governments, economies based on only a few commodities or
industries, and securities markets trading infrequently or in low volumes.
Some Asian countries restrict the extent to which foreigners may invest in
their securities markets. Taiwan, for example, permits foreign investment
only through authorized qualified foreign institutional investors ("QFII").
Recently, the Manager was granted QFII status with its own investment quota
enabling the
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Trust to purchase Taiwanese investments through various sub-accounts. The
Manager will not collect charges or fees for the use of these facilities;
however, the Funds' sub-accounts will owe custodial or transaction fees
relating to investments through these facilities.
LATIN AMERICA. Although there have been significant improvements in
recent years, the Latin American economies continue to experience significant
problems, including high inflation rates and high interest rates. Inflation
and rapid fluctuations in inflation rates have had and may continue to have
very negative effects on the economies and securities markets of certain
Latin American countries. The emergence of the Latin American economies and
securities markets will require continued economic and fiscal discipline
which has been lacking at times in the past, as well as stable political and
social conditions. There is no assurance that economic initiatives will be
successful. Recovery may also be influenced by international economic
conditions, particularly those in the United States, and by world prices for
oil and other commodities.
MIDDLE EAST/AFRICA. The securities markets of Middle Eastern and African
countries are significantly smaller than the U.S. securities markets and have
substantially less trading volume. There may be a high concentration of
market capitalization and trading volume in a small number of issuers
representing a limited number of industries, as well as high concentrations
of investors and financial intermediaries. Many of the Middle Eastern and
African countries may be subject to a greater degree of economic, political
and social instability than is the case in the United States and Western
Europe. Such instability may result from, among other things; (i)
authoritarian governments or military involvement in political and economic
decision-making, including changes in government through extra-constitutional
means; (ii) popular unrest associated with demands for improved political,
economic and social conditions; (iii) internal insurgencies and terrorist
activities; (iv) hostile relations with neighboring counties; and (v) ethnic,
religious and racial disaffection. Such economic, political and social
instability could severely disrupt the principal financial markets in which
the Fund invests and could severely affect the value of the Fund's assets.
In addition, governments of many Middle Eastern and African countries have
exercised and continue to exercise substantial influence over many aspects of
the private sector. In certain cases, the government owns or controls many
companies, including the largest in the country. Accordingly, governmental
actions in the future could have a significant effect on economic conditions
in Middle Eastern and African countries, which could affect private sector
companies and the Fund, as well as the value of securities in the Fund's
portfolio. The legal systems in certain Middle Eastern and African countries
also may have an adverse impact on the Fund. For example, while the
potential liability for a shareholder in a U.S. corporation with respect to
acts of the corporation generally is limited to the amount of the
shareholder's investment, the notion of limited liability is less clear in
certain Middle Eastern and African countries. Similarly, the rights of
investors in Middle Eastern and African issuers may be more limited than
those of shareholders of U.S. corporations. It may be difficult or
impossible to obtain and/or enforce a judgement in a Middle Eastern or
African country.
CURRENCY RISKS; HEDGING TRANSACTIONS. The Funds may invest without
limitation in securities quoted or denominated in currencies other than the
U.S. dollar and may hold such currencies. As a result, fluctuations in
currency exchange rates and currency devaluations, if any, will affect the
U.S. dollar value of the Funds' portfolio securities as well as the net asset
value of the Funds' shares. The Funds may use various investment products to
reduce certain risks to the Funds of exposure to local currency movements.
These products include currency forward contracts, futures contracts and
options thereon, and options and "spot" transactions directly in foreign
currencies. A Fund may, but is not obligated to, attempt to hedge up to 75%
of its foreign currency exposure using such techniques. The Funds' ability
to use these products may be limited by market conditions, regulatory limits
and tax considerations and there can be no assurance that any of these
products would succeed in reducing the risk to the Fund of exposure to local
currency movements. Movements in the prices or values of these investment
products may not correlate precisely with changes in the value of the related
currency. New financial products and risk management techniques continue to
be developed and the Funds may use these new investments and techniques to
the extent consistent with their investment objective and policies. Hedging
against a decline in the value of a currency does not eliminate fluctuations
in the prices of
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portfolio securities or prevent losses if the prices of such securities
decline. Such transactions also preclude the opportunity for gain if the
value of the hedged currency should rise. Moreover, it may not be possible
for a Fund to hedge against a devaluation that is so generally anticipated
that the Fund is not able to contract to sell the currency at a price above
the devaluation level it anticipates.
FORWARD CONTRACTS: A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers.
CURRENCY FUTURES CONTRACTS: The Funds may enter into financial
futures contracts for the purchase or sale for future delivery of foreign
currencies. A sale of a futures contract entails entering into a
contractual obligation to deliver the foreign currency called for by the
contract at a specified price on a specified date. A purchase of a
futures contract entails entering into a contractual obligation to acquire
the foreign currency called for by the contract at a specified price on a
specified date.
Currency futures contracts are traded only on commodity exchanges --
known as "contract markets" -- approved for such trading by the Commodity
Futures Trading Commission ("CFTC"), and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market.
Although futures contracts by their terms often call for actual
delivery or acceptance, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out
a futures contract sale is effected by purchasing a futures contract for
the same aggregate amount of the specific type of financial instrument or
commodity and the same delivery date. If the price of the initial sale of
the futures contract exceeds the price of the offsetting purchase, the
seller is paid the difference and realizes a gain. Conversely, if the
price of the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by the purchaser entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds the
offsetting sale price, he realizes a loss.
The purchase or sale of a currency futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or U.S. Treasury bills generally not
exceeding 5% of the contract amount must be deposited with the broker.
This amount is known as initial margin. Subsequent payments to and from
the broker, known as variation margin, are made on a daily basis as the
price of the underlying futures contract fluctuates making the long and
short positions in the futures contract more or less valuable, a process
known as "marking to the market." At any time prior to the settlement
date of the futures contract, the position may be closed out by taking an
opposite position which will operate to terminate the position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid to or released by the broker, and
the purchaser realizes a loss or gain. In addition, a commission is paid
on each completed purchase and sale transaction.
OPTIONS ON CURRENCY FUTURES. Unlike a currency futures contract,
which requires the parties to buy and sell currency on a set date, an
option on a currency futures contract entitles its holder to decide on or
before a future date whether to enter into such a contract. If the holder
decides not to enter into the contract, the premium paid for the option is
lost. Since the value of the option is fixed at the point of sale, there
are no daily payments of cash by the holder of the option in the nature of
"variation" or "maintenance" margin payments to reflect the change in the
value of the underlying contract as there are by a purchaser or seller of
a currency futures contract.
The ability to establish and close out positions on options on
futures will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop or be
maintained.
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<PAGE>
A Fund will write (sell) only covered put and call options on
currency futures. This means that the Fund will provide for its
obligations upon exercise of the option by segregating sufficient cash or
short-term obligations or by holding an offsetting position in the option
or underlying currency future, or a combination of the foregoing. Set
forth below is a description of methods of providing cover that the Funds
currently expect to employ, subject to applicable exchange and regulatory
requirements. If other methods of providing appropriate cover are
developed, the Fund reserves the right to employ them to the extent
consistent with applicable regulatory and exchange requirements.
A Fund will, so long as it is obligated as the writer of a call
option on currency futures, own on a contract-for-contract basis an equal
long position in currency futures with the same delivery date or a call
option on currency futures with the difference, if any, between the market
value of the call written and the market value of the call or long currency
futures purchased maintained by the Fund in cash, Treasury bills, or other
high-grade short-term obligations in a segregated account with its
Custodian. If at the close of business on any day the market value of the
call purchased by a Fund falls below 100% of the market value of the call
written by the Fund, the Fund will so segregate an amount of cash, Treasury
bills or other high grade short-term obligations equal in value to the
difference.
In the case of put options on currency futures written by the Fund,
the Fund will hold the aggregate exercise price in cash, Treasury bills,
or other high grade short-term obligations in a segregated account with
its Custodian, or own put options on currency futures or short currency
futures, with the difference, if any, between the market value of the put
written and the market value of the puts purchased or the currency futures
sold maintained by the Fund in cash, Treasury bills or other high grade
short-term obligations in a segregated account with its Custodian. If at
the close of business on any day the market value of the put options
purchased or the currency futures sold by the Fund falls below 100% of the
market value of the put options written by the Fund, the Fund will so
segregate an amount of cash, Treasury bills or other high grade short-term
obligations equal in value to the difference.
OPTIONS ON FOREIGN CURRENCIES: The Funds may purchase and write put
options on foreign currencies traded on securities exchanges or boards of
trade (foreign and domestic) or over-the-counter. As in the case of other
kinds of options, the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium
received, and the Funds could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses.
The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the
event of rate movements adverse to expected movements, it may forfeit the
entire amount of the premium plus related transaction costs. There is no
specific percentage limitation on the Funds' investments in options on
foreign currencies. See the Funds' Statement of Additional Information for
further discussion of the use, risks and costs of options on foreign
currencies.
LIMITATIONS ON THE USE OF CURRENCY FUTURES PORTFOLIO STRATEGIES. The
Funds' ability to engage in currency futures strategies described above
will depend on the availability of liquid markets in such instruments.
Markets in futures with respect to currencies are relatively new and still
developing. It is impossible to predict the amount of trading interest
that may exist in various types of currency futures. Therefore no
assurance can be given that the Funds will be able to utilize these
instruments effectively for the purposes set forth above. Furthermore,
the Funds' ability to engage in such transactions may be limited by tax
considerations.
RISK FACTORS IN CURRENCY FORWARD AND FUTURES TRANSACTIONS. The
Funds' investment in currency forward and futures contracts involves risk.
Some of that risk may be caused by an imperfect correlation between
movements in the price of the forward or futures contract and the price of
the related currency. The risk of imperfect correlation generally tends
to diminish as the maturity date of the forward or futures contract
approaches.
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<PAGE>
Also, when a Fund purchases currency forward or futures contracts (or
options thereon) to hedge against a possible increase in the price of
currency in which is denominated the securities the Fund anticipates
purchasing, it is possible that the market may instead decline. If the
Fund does not then invest in such securities because of concern as to
possible further market decline or for other reasons, the Fund may realize
a loss on the forward or futures contract that is not offset by a
reduction in the price of the securities purchased.
The amount of risk a Fund assumes when it purchases an option on a
currency futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above,
the purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the
value of the option purchased. By writing a call option, the Fund limits
its opportunity to profit from any increase in the market value of the
underlying contract above the exercise price of the option. By writing a
put option, the Fund assumes the risk that it may be required to purchase
the underlying contract for an exercise price higher than its then current
market value, resulting in a potential loss unless the contract
subsequently appreciates in value.
The liquidity of a secondary market in a futures contract or related
option may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation
in a futures contract price during a single trading day. Once the daily
limit has been reached in the contract, no trades may be entered into at a
price beyond the limit, thus preventing the liquidation of open futures
positions. Prices have in the past exceeded the daily limit on a number
of consecutive trading days.
INDEX FUTURES. To the extent opportunities are available, each Fund may
purchase futures contracts or options on futures contracts on various stock
indices ("Index Futures") for investment purposes. An Index Future is a
contract to buy an integral number of units of a stock index at a specified
future date at a price agreed upon when the contract is made. A unit is the
value from time to time of the relevant Index.
The Funds may invest in Index Futures while the Manager seeks favorable
terms from brokers to effect transactions in common stocks selected for
purchase. Each Fund may also invest in Index Futures when the Manager
believes that there are not enough attractive common stocks available to
maintain the standards of diversity and liquidity set for a Fund pending
investment in such stocks if and when they do become available. Through this
use of Index Futures, a Fund may maintain a portfolio with diversified risk
without incurring the substantial brokerage costs which may be associated
with investment in multiple issuers. This use may also permit a Fund to
avoid potential market and liquidity problems (e.g., driving up the price by
purchasing additional shares of a portfolio security or owning so much of a
particular issuer's stock that the sale of such stock depresses that stock's
price) which may result from increases in positions already held by a Fund.
As contrasted with purchases of a common stock, no price is paid or
received by a Fund upon the purchase of a futures contract. Upon entering
into a contract, a Fund will be required to deposit with its custodian in a
segregated account in the name of the futures broker a specified amount of
cash or securities. This is known by participants in the market as "initial
margin." The type of instruments that may be deposited as initial margin, and
the required amount of initial margin, will be determined by the futures
exchange on which Index Futures are traded before trading of Index Futures
commences. The nature of initial margin in futures transactions is different
from that of margin in securities transactions in that futures contract
margin does not involve the borrowing of funds by the customer to finance the
transactions. Rather, the initial margin is in the nature of a performance
bond or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations
have been satisfied. Subsequent payments, called "variation margin," to and
from the broker, will be made on a daily basis as the price of the particular
Index fluctuates, making the position in the futures contract more or less
valuable, a process known as "marking to the market."
A Fund may close out a futures contract purchase by entering into a
futures contract sale. This will operate to terminate the Fund's position in
the futures
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<PAGE>
contract. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to the Fund, and the Fund realizes
a loss or a gain.
A Fund's investment in Index Futures involves risk. Positions in Index
Futures may be closed out by a Fund only on the futures exchanges on which
Index Futures are then traded. There can be no assurance that a liquid
market will exist for any particular contract at any particular time. The
liquidity of the market in futures contracts could be adversely affected by
"daily price fluctuation limits" established by the relevant futures exchange
which limit the amount of fluctuation in the price of an Index Futures
contract during a single trading day. Once the daily limit has been reached
in the contract, no trades may be entered into in the price beyond the limit.
In such events, it may not be possible for a Fund to close its futures
contract purchase, and, in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of variation
margin. When a Fund has purchased a futures contract, its risk is, however,
limited to the amount of the contract. The futures market may attract more
speculators than does the securities market, because deposit requirements in
the futures market are less onerous than margin requirements in the
securities market. Increased participation by speculators in the futures
market may also cause price distortions. In addition, investment in Index
Futures involves the risk of an imperfect correlation between movement in the
relevant Index and the price of Index Futures. This lack of correlation may
result from investors closing out futures contracts in order to avoid
additional margin deposit requirements or from the fact that trading hours
for Index Futures may not correspond perfectly to hours of trading on the
relevant foreign exchanges. Before a United States entity may purchase or
sell futures contracts traded on foreign exchanges, the CFTC must approve the
contract for purchase and sale by U.S. persons. Those contracts may involve
greater risks, including less liquidity and less governmental supervision.
DEPOSITARY RECEIPTS. Each Fund may invest in American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts
(EDRs) (collectively, "Depositary Receipts") if issues of such Depositary
Receipts are available that are consistent with a Fund's investment
objective. Depositary Receipts generally evidence an ownership interest in a
corresponding security on deposit with a financial institution. Transactions
in Depositary Receipts usually do not settle in the same currency as the
underlying securities are denominated or traded. Generally, ADRs, in
registered form, are designed for use in the U.S. securities markets and
EDRs, in bearer form, are designed for use in European securities markets.
GDRs may be traded in any public or private securities markets and may
represent securities held by institutions located anywhere in the world.
INVESTMENT COMPANIES. Each of the Funds may invest up to 10% of its total
assets through investment companies or other collective investment vehicles
designed to permit investments in a portfolio of securities listed in a
particular developing country or region, particularly in the case of
countries in which such an investment vehicle is the exclusive or main
vehicle for foreign portfolio investment. As a shareholder of these kinds of
investment vehicles, a Fund may indirectly bear fees which are in addition to
the fees the Fund pays its own service providers.
Section 17(a) of the Investment Company Act of 1940 (the "1940 Act")
prohibits most purchase and sale transactions between a registered investment
company and its affiliates (and their affiliates), including transactions
between separate series of a single investment company. Thus, the sale or
purchase of securities or other property to or from any series of the Trust
by an affiliate of such series (or an affiliate of such an affiliate) is
prohibited. This would include any other series of the Trust, and any other
investment company or account managed by Martin Currie, Inc. or an affiliate.
Rule 17a-7 under the 1940 Act provides an exemption for sales and purchases
among investment companies and other persons (or accounts) which are
affiliated solely by reason of having a common investment adviser (or
affiliated investment advisers), common board members and/or common officers,
provided that certain conditions (designed to ensure that the transaction is
fair to the investment company) are met. Rule 17a-7 requires that the
trustees of an investment company adopt procedures designed to ensure that
any transactions subject to the rule comply with the rule's conditions and
that trustees review all transactions effected pursuant to such procedures on a
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quarterly basis. The trustees of the Trust approved such procedures
governing transactions permitted by Rule 17a-7 on June 6, 1994.
TEMPORARY DEFENSIVE STRATEGIES. For temporary defensive purposes, each
Fund may vary from its investment policy during periods in which conditions
in certain countries or securities markets or other economic or political
conditions warrant. Each Fund may reduce its position in securities relating
to its investment objective and may invest without limit in short-term debt
securities (for this purpose, securities with a remaining maturity of one
year or less) issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities") and U.S. dollar-denominated
money market instruments or foreign currency-denominated short-term debt
securities issued or guaranteed by a foreign government or any of its
political subdivisions, authorities, agencies or instrumentalities, which in
each case are rated BB or higher by Standard & Poor's Corporation ("S&P") or
Baa or higher by Moody's Investors Service, Inc. ("Moody's") or, if not so
rated, deemed to be of equivalent quality by the Manager. Each Fund may also
at any time temporarily invest funds awaiting reinvestment or held as
reserves for dividends and other distributions to shareholders in any of the
foregoing types of securities as well as in repurchase agreements as
described below under the sub-caption "-Repurchase Agreements." Also for
defensive purposes, each Fund may invest its assets in securities (including
equity securities) principally traded in the United States; PROVIDED;
HOWEVER, that the Global Growth Fund's weighting of investments in U.S.
equity securities will not exceed the U.S. weighting in the MSCI World Index
by more than 20% and the Opportunistic EAFE Fund's weighting of investments
in U.S. equity securities will not exceed the U.S. weighting in the MSCI EAFE
Index by more than 20%.
REPURCHASE AGREEMENTS. As a means of earning income for periods as short
as overnight, each Fund may enter into repurchase agreements with selected
banks and broker/dealers. Under a repurchase agreement, a Fund acquires
securities subject to the seller's agreement to repurchase at a specified
time and price. If the seller under a repurchase agreement becomes insolvent,
a Fund's right to dispose of the securities may be restricted. In the event
of the commencement of bankruptcy or insolvency proceedings with respect to
the seller of the security under a repurchase agreement, a Fund may encounter
delay and incur costs before being able to sell the security. Also, if a
seller defaults, the value of such securities may decline before a Fund is
able to dispose of them.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
"illiquid securities," that is, securities which the Fund may not readily
dispose of within 7 days at a price approximately the value used by the Fund
for purposes of calculating its net asset value. These securities include
those whose disposition is restricted by securities laws. Investment in
illiquid securities involves the risk that, because of the lack of consistent
market demand for such securities, a Fund may be forced to sell them at a
discount.
PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions for the Funds. The portfolio turnover rates
for the Funds' last three fiscal years are set forth below:
<TABLE>
<CAPTION>
PORTFOLIO TURNOVER RATES FOR
YEARS ENDED APRIL 30,
-----------------------------
FUND 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C>
The Global Growth Fund 40% 38% 44%
The Opportunistic EAFE Fund 49 37 39
The Global Emerging Markets Fund 0 N/A N/A
The Japan Small Companies Fund 26 37 33
The Emerging Americas Fund 50 61 89
The Emerging Asia Fund 118 65 0
The EMEA Fund N/A N/A N/A
</TABLE>
In any particular year market conditions may well result in greater
rates than are presently anticipated. The rate of a Fund's turnover may vary
significantly from time to time depending on the volatility of economic and
market conditions. High
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<PAGE>
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs, which will be borne directly by the relevant Fund.
PURCHASE OF SHARES
You may make an initial purchase of shares of any Fund by submitting a
completed subscription agreement (attached as Exhibit A) and payment to the
Trust in accordance with the instructions set forth in the subscription
agreement.
While purchases are permitted on any business day, the Trust encourages
investors to make purchases on the first day of a month as this will allow
the Trust to avoid the expense of determining a Fund's net asset value other
than once a month. See "Determination of Net Asset Value." In order for a
purchase order to be effective as of a particular day, the Fund must have
accepted the order and have received immediately available funds by 5:00 p.m.
(New York time) on such day.
The minimum initial investment in each Fund must be worth at least
$1,000,000; subsequent investments must be worth at least $100,000. The
Trust reserves the right to waive these minimums in its sole discretion.
Shares of each Fund may be purchased by (i) giving cash, (ii) exchanging
securities on deposit with a custodian acceptable to the Manager or (iii) a
combination of such securities and cash. Purchase of shares of the Funds in
exchange for securities is subject in each case to the determination by the
Manager that the securities to be exchanged are acceptable for purchase by
the Fund. In all cases the Manager reserves the right to reject any
particular investment. In particular, and without limiting the generality of
the foregoing, the Manager may reject an investment if, in the opinion of the
Manager, the size of the investment and/or the transaction costs associated
with the investment are such that there would be a material discrepancy
between the purchase premium and the Fund's transaction expenses. Securities
accepted by the Manager in exchange for Fund shares will be valued in the
same manner as the Fund's assets as described below as of the time of the
Fund's next determination of net asset value after such acceptance. All
dividends and subscription or other rights which are reflected in the market
price of accepted securities at the time of valuation become the property of
the Funds and must be delivered to the Funds upon receipt by the investor
from the issuer. A gain or loss for federal income tax purposes would be
realized upon the exchange by an investor that is subject to federal income
taxation, depending upon the investor's basis in the securities tendered. A
shareholder who wishes to purchase shares by exchanging securities should
obtain instructions by calling the Trust (Attention: Susan Gillingham) at
011-44-131-229-5252 before 12:00 noon (New York time) on business days.
The purchase price of shares of a Fund is (i) the net asset value next
determined after a purchase order is received plus (ii), in the case of cash
investments, a purchase premium equal to the percentage of the amount
invested shown below PROVIDED, HOWEVER, that the Manager will waive such
premium on behalf of the Trust if, in the view of the Manager, there are
minimal brokerage and transaction costs incurred in connection with the
purchase. To the extent that shares are purchased at a time when other
shares of the same Fund are being redeemed, the Manager will treat the
purchase (up to the amount being concurrently redeemed) as involving minimal
brokerage and transaction costs and will charge any purchase premium only
with respect to the excess, if any, of the amount of the purchase over the
amount of the concurrent redemption. If there is more than one purchase at
the time of a concurrent redemption, each of the purchasers will share, pro
rata, in the reduction in purchase premium caused by the concurrent
redemption. There is no purchase premium on purchases in-kind or on
purchases effected through the reinvestment of dividends. All purchase
premiums are paid to and retained by the relevant Fund and are intended to
cover brokerage and other expenses of the Fund arising in connection with a
cash purchase. Absent any waiver, the following purchase premiums shall be
applicable to cash purchases:
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<PAGE>
FUND PURCHASE PREMIUM
---- ----------------
The Global Growth Fund 0.75%
The Opportunistic EAFE Fund 0.75
The Global Emerging Markets Fund 1.00
The Japan Small Companies Fund 1.00
The Emerging Americas Fund 1.75
The Emerging Asia Fund 1.75
The EMEA Fund 1.25
The Manager will not approve the acceptance of securities in exchange for
Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor
represents and agrees that all securities offered to a Fund are not subject
to any restrictions upon their sale by the Fund under the Securities Act of
1933, or otherwise; and (3) the securities may be acquired under the Fund's
investment policies and restrictions. No investor owning 5% or more of a
Fund's shares may purchase additional Fund shares by exchange of securities.
Upon acceptance of your order, the Trust opens an account for you, applies
the payment to the purchase of full and fractional Fund shares of beneficial
interest and mails a statement of the account confirming the transaction.
After an account has been established, you may send subsequent investments at
any time upon notification to the Trust and confirmation by the Trust
(Attention: Susan Gillingham at tel. 011-44-131-229-5252, fax
011-44-131-228-5959.
Purchases of shares in any Fund are limited to persons who are "accredited
investors" as defined in Regulation D under the Securities Act of 1933, as
amended, and who have completed and signed a subscription agreement in the
form attached hereto as Exhibit A. Each Fund reserves the right to reject
any purchase order for any reason which the Fund in its sole discretion deems
appropriate. Purchasers must be acquiring shares for their own account and
for investment purposes only. Each Fund reserves the right to suspend or
change the terms of the offering of its shares.
REDEMPTION OF SHARES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED OR RESOLD UNLESS SO REGISTERED OR EXEMPT THEREFROM.
However, the securities are redeemable.
You can redeem your shares by sending a written request by mail or by
telecopy to the Trust (c/o Martin Currie, Inc., Saltire Court, 20 Castle
Terrace, Edinburgh, Scotland EH1 2ES; Attention: Susan Gillingham; Telecopy
# 011-44-131-228-5959 AND to the Transfer Agent (State Street Bank and Trust
Company, Transfer Agent Operations, P.O. Box 1978, Boston, MA 02105;
Telecopy # 617-985-9626). The request must include the name of the Fund,
your account number, the exact name(s) in which your shares are registered,
and the number of shares or the dollar amount to be redeemed. All owners of
the shares must sign the request in the exact names in which the shares are
registered and should indicate any special capacity in which they are signing
(such as officers, trustees or custodian or on behalf of a partnership,
corporation or other entity).
Shares of a Fund may be redeemed on any business day. However, the Trust
encourages investors to make redemptions on the first day of a month as this
will allow the Trust to avoid the expense of determining a Fund's net asset
value other than once a month. See "Determination of Net Asset Value."
The redemption price is (i) the net asset value per share next
determined after the redemption request and any necessary special
documentation are received by the Trust in proper form, less (ii), in the
case of cash redemptions, a redemption fee equal to the percentage of the
amount redeemed indicated below. To the extent that shares are redeemed at a
time when other shares of the same Fund are being purchased, the Manager will
treat the redemption (up to the amount being concurrently purchased) as
involving minimal brokerage and transaction costs and will charge a
redemption fee only with respect to the excess, if any, of the amount of the
redemption over the amount of the
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<PAGE>
concurrent purchase. If there is more than one redemption at the time of a
concurrent purchase, each of the redeeming shareholders will share, pro rata,
in the reduction in redemption fee caused by the concurrent purchase.
Redemption fees will be paid to and retained by the relevant Fund and are
intended to cover brokerage and other expenses of the Fund in connection with
cash redemptions. In the absence of any waiver, the following redemption
fees will apply to cash redemptions:
FUND REDEMPTION FEE
- ---- --------------
The Global Growth Fund 0.75%
The Opportunistic EAFE Fund 0.75
The Global Emerging Markets Fund 1.00
The Japan Small Companies Fund 1.00
The Emerging Americas Fund 1.75
The Emerging Asia Fund 1.75
The EMEA Fund 1.25
Shares of a Fund may be redeemed by the payment of the redemption price in
whole or in part by a distribution in kind of securities held by the Fund in
lieu of cash if the Manager determines, in its sole discretion, that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment wholly or partly in cash. Securities used to redeem
Fund shares in kind will be valued in accordance with the Funds' procedures
for valuation described under "Determination of Net Asset Value." Securities
distributed by a Fund in kind will be selected by the Manager in light of the
Fund's objective and will not generally represent a pro rata distribution of
each security held in the Fund's portfolio. Investors may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions.
Payment on redemption will be made as promptly as possible and normally
within seven days after the request for redemption is received by the Trust
in good order. If an investor purchased shares by check and the check was
deposited less than fifteen days prior to the redemption request, a Fund may
withhold redemption proceeds until that check has cleared. A redemption
request is in good order if it includes the exact name in which shares are
registered and the number of shares or the dollar amount of shares to be
redeemed and if it is signed exactly in accordance with the form of
registration. Persons acting in a fiduciary capacity, or on behalf of a
corporation, partnership or trust, must specify, in full, the capacity in
which they are acting. Cash payments will be made by transfer of Federal
funds for payment into the investor's account.
When opening an account with the Trust, shareholders will be required to
designate the account(s) to which funds may be transferred upon redemption.
Designation of additional accounts and any change in the accounts originally
designated must be made in writing with the signature guaranteed by any of
the following entities: U.S. banks, foreign banks having a U.S.
correspondent bank, credit unions, savings associations, U.S. registered
dealers and brokers, municipal securities dealers and brokers, government
securities dealers and brokers, national securities exchanges, registered
securities associations and clearing agencies.
The Trust may suspend the right of redemption and may postpone payment for
any Fund for more than seven days during an emergency which makes it
impracticable for a Fund to dispose of its securities or to fairly determine
the value of the net assets of the Fund, or during any other period permitted
by the Securities and Exchange Commission for the protection of investors.
DISTRIBUTION AND SERVICING PLANS
The Trust has adopted a distribution and servicing plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 for each Fund (the "Plans").
The Plans authorize the Manager to spend an amount of the advisory fees it
collects from each Fund up to 0.25% per annum of the average monthly net
assets of the Fund for activities or services primarily intended to result in
the sale of shares of the relevant Fund or for the provision of personal
services to shareholders of such Fund.
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<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of each Fund will be determined as of the
close of the business day in New York on any day on which an order for
purchase or redemption of a Fund's shares is received. While the Trust will
accept purchase or redemption orders on any day, shareholders are encouraged
to submit purchase and redemption orders on the last day of a month so as to
permit the Trust to avoid the expense of determining the net asset value of a
Fund especially for the purpose of accommodating the purchase or redemption.
The net asset value per share for a Fund is determined by dividing the total
market value of the Fund's portfolio investments and other assets, less any
liabilities, by the total outstanding shares of that Fund. Portfolio
securities listed on a securities exchange for which market quotations are
available are valued at the last quoted sale price on each business day, or,
if there is no such reported sale, at the mean of the most recent quoted bid
and ask prices unless the trustees, or persons acting on their behalf,
determine that such value is not the fair value of such a security. Price
information on listed securities is generally taken from the closing price on
the exchange where the security is primarily traded. Unlisted securities for
which market quotations are readily available are valued at the mean of the
most recent quoted bid and ask prices, except that debt obligations with
sixty days or less remaining until maturity may be valued at their amortized
cost. Other assets and securities for which no quotations are readily
available (or for which quotations are not believed by the trustees to be
reliable) are valued at fair value as determined in good faith by the
trustees of the Trust, or by persons acting pursuant to procedures
established by the trustees.
DISTRIBUTIONS
The Funds intend to pay out as dividends substantially all of their net
investment taxable income (which comes from dividends and any interest they
receive from investments and net realized short-term capital gains). For
these purposes and for federal income tax purposes, a portion of the premiums
from certain expired call or put options on currency futures written by a
Fund, net gains from certain closing purchase and sale transactions with
respect to such options and a portion of net gains from other options and
futures transactions may be treated as short-term capital gain. The Funds
also intend to distribute substantially all of their net realized long-term
capital gains, if any, after giving effect to any available capital loss
carryover. Each Fund's policy is to declare and pay distributions of its
dividend income annually, although any Fund may do so more frequently as
determined by the trustees of the Trust. Each Fund's policy is to distribute
net realized short-term capital gains and net realized long-term gains
annually although any Fund may do so more frequently as determined by the
trustees of the Trust to the extent permitted by applicable regulations. For
tax purposes, distributions to shareholders will be deemed to be increased by
each shareholder's applicable share of a portion of the Fund's expense,
including the Fund's advisory expenses.
All dividends and/or distributions will be paid in shares of the relevant
Fund at net asset value unless the shareholder elects in the subscription
agreement to receive cash. There is no purchase premium on reinvested
dividends or distributions. Shareholders may make this election by marking
the appropriate box on the subscription agreement.
TAXES
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. So long
as a Fund qualifies, the Fund itself will not pay federal income tax on its
dividend, interest and certain other income, its net realized short-term
gains and its net realized long-term capital gains distributed to its
shareholders. Dividend distributions (I.E., distributions derived from
interest, dividends and certain other income, including in general short-term
capital gains) will be taxable to shareholders subject to income tax as
ordinary income. Pursuant to the Taxpayer Relief Act of 1997 (the "1997
Act"), two different tax rates apply to net capital gains (that is, the
excess of net gains from capital assets held for more than one year
("long-term capital assets") over net losses from capital assets held for not
more than one year ("short-term capital assets")). One rate (generally 28%)
applies to net gains on capital assets held for more than one year but not
more than 18 months ("mid-term gains") and a second, preferred rate (generally
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<PAGE>
20%) applies to the balance of such net capital gains ("adjusted net capital
gains"). Distributions of net capital gains will be treated in the hands of
shareholders as mid-term gains to the extent designated by the Fund as
deriving from net gains from assets held for more than one year but not more
than 18 months, and the balance will be treated as adjusted net capital
gains. Distributions of mid-term gains and adjusted net capital gains will be
taxable to shareholders as such, regardless of how long a shareholder has
held the shares in the Fund. Distributions from the Fund will be taxed as
described above whether received in cash or in shares through reinvestment of
dividends. A distribution paid to shareholders by a Fund in January of a year
is generally deemed to have been received by shareholders on December 31 of
the preceding year, if the distribution was declared and payable to
shareholders of record on a date in October, November or December of that
preceding year. A Fund's transactions in foreign currencies and hedging
activities will likely produce a difference between its book income and
taxable income. This difference may cause a portion of a Fund's income
distributions to constitute a return of capital for tax purposes or require a
Fund to make distributions exceeding book income to qualify as a regulated
investment company. The sale or redemption of shares of Fund, including a
redemption in-kind, is a taxable event to the selling or redeeming
shareholder.
The Trust will provide federal tax information annually, including
information about dividends and distributions paid during the preceding year.
Each Fund may make an election with the Internal Revenue Service for each
fiscal year which would allow shareholders who are U.S. citizens or U.S.
corporations to claim a foreign tax credit or deduction (but not both) on
their U.S. income tax return for foreign income taxes paid by the Fund. As a
result, income of a Fund from non-U.S. sources that is distributed to Fund
shareholders would be treated as income from non-U.S. sources to the
shareholders. The amount of foreign income taxes paid by a Fund would be
treated as foreign taxes paid directly by Fund shareholders and, in addition,
this amount would be treated as additional income to Fund shareholders from
non-U.S. sources regardless of whether the Fund shareholder would be eligible
to claim a foreign tax credit or deduction. Investors should consult their
tax advisors for further information relating to the foreign tax credit and
deduction, which are subject to certain restrictions and limitations
(including a holding period requirement applied at both the fund and the
shareholder level imposed by the 1997 Act).
The foregoing is a general summary of the federal income tax consequences
for shareholders who are U.S. citizens or corporations. Fund shareholders
who are not U.S. citizens or which are foreign corporations may receive
substantially different tax treatment of distributions by the Funds.
Shareholders should consult their own tax advisors about the tax consequences
of an investment in a Fund in light of each shareholder's particular tax
situation. Shareholders should also consult their own tax advisors about
consequences under foreign, state, local or other applicable tax laws.
MANAGEMENT OF THE TRUST
Each Fund is advised and managed by Martin Currie, Inc., Saltire Court, 20
Castle Terrace, Edinburgh Scotland (the "Manager"). The Manager is a
registered investment adviser which, together with its affiliates, advises
other mutual funds, ERISA Group Trusts and other private accounts. The
Manager is a wholly owned subsidiary of Martin Currie Ltd. which is
controlled by some of the Executive Directors of the various subsidiaries of
Martin Currie Ltd.
Investment decisions made by the Manager for the Funds are made by
committees organized for that purpose and no person or persons are primarily
responsible for making recommendations to such committees.
Under the Management Contract with the Trust on behalf of each Fund, the
Manager selects and reviews each Fund's investments and provides executive
and other personnel for the management of the Trust. Pursuant to the Trust's
Agreement and Declaration of Trust, the Board of Trustees supervises the
affairs of the Trust as conducted by the Manager. In the event that the
Manager ceases to be the manager of the Funds, the right of the Trust to use
the identifying name "Martin Currie" with respect to any Fund may be
withdrawn.
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Under the Management Contract, each Fund pays the Manager a quarterly
management fee at the following annual rate of the respective Fund's average
net assets:
FUND MANAGEMENT FEE
---- --------------
The Global Growth Fund 0.70%
The Opportunistic EAFE Fund 0.70
The Global Emerging Markets Fund 0.80
The Japan Small Companies Fund 1.00
The Emerging Americas Fund 1.50
The Emerging Asia Fund 1.50
The EMEA Fund 1.50
The Manager has voluntarily undertaken to reduce its fee to certain of the
Funds until further notice to the extent necessary to limit each Fund's annual
expenses (including the management fee but excluding brokerage commissions,
transfer taxes, and extraordinary expenses) to the percentage shown under
"Summary of Expenses" above. The Manager's fee for management of each Fund may
be higher than that paid by most other mutual funds but is comparable to the
management fees of mutual funds with similar investment objectives.
The organizational expenses of the Funds as well as all other expenses
incurred in the operation of the Funds are borne by the relevant Fund,
including but not limited to brokerage commissions, transfer taxes and
extraordinary expenses in connection with its portfolio transactions, all
applicable taxes, the compensation of trustees who are not directors,
officers or employees of the Manager or its affiliates, interest charges,
charges of custodians, auditing and legal expenses.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is a diversified open-end series investment company organized as
a Massachusetts business trust under the laws of Massachusetts by an
Agreement and Declaration of Trust ("Declaration of Trust") dated May 20,
1994, as amended.
The Declaration of Trust permits the trustees to issue an unlimited number
of full and fractional shares of beneficial interest which are presently
divided into nine series, two of which are currently inactive. Each share of
a series represents an equal proportionate interest in that series with each
other share. The Declaration of Trust also permits the trustees, without
shareholder approval, to subdivide any series of shares into various
sub-series (or "classes") of shares with such dividend preferences and other
rights as the trustees may designate. The trustees may also, without
shareholder approval, establish one or more additional separate portfolios
for investments in the Trust or merge two or more existing portfolios.
Shareholders' investments in such a portfolio would be evidenced by a
separate series of shares.
Subject to the restrictions described under "Redemption of Shares," the
Trust's shares are freely transferable. Shareholders are entitled to
dividends as declared by the trustees, and, in liquidation of the relevant
Fund's portfolio, are entitled to receive the net assets of the portfolio.
Shareholders are entitled to vote at any meetings of shareholders. The Trust
does not generally hold annual meetings of shareholders and will do so only
when required by law. Special meetings of shareholders may be called for
purposes such as electing or removing trustees, changing a fundamental
investment policy or approving an investment advisory agreement. In
addition, a special meeting of shareholders of the Fund will be held if, at
any time, less than a majority of the trustees then in office have been
elected by shareholders of the Fund.
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust, may, however, be terminated at any time by vote of at least
two-thirds of the outstanding shares of the Trust. The Declaration of Trust
further provides that the trustees may also terminate the Trust or any Fund
upon written notice to the shareholders.
Because the Trust is organized as a Massachusetts business trust,
shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. Massachusetts business trusts are
voluntary associations; therefore, a court might deem the Trust to be a
partnership if shareholders exercise significant control
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<PAGE>
over the Trust's management. However, the Trust's Agreement and Declaration
of Trust explicitly limits shareholder liability and provides shareholders
with indemnification rights payable out of Trust assets if shareholders were
held liable for Trust obligations. Thus, the risk of a shareholder incurring
financial loss on account of that liability is considered remote since it may
arise only in very limited circumstances.
ADMINISTRATOR; CUSTODIAN; TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank & Trust Company, 225 Franklin Street, Boston, MA 02110
serves as the Trust's administrator, custodian and transfer and dividend
paying agent. Each Fund pays the Administrator a fee at the rate of 0.08% of
such 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 $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110 serves as the
Trust's independent public accountants.
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<PAGE>
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110, is the Trust's
legal counsel.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust c/o Martin Currie, Inc.,
Saltire Court, 20 Castle Terrace, Edinburgh, Scotland, United Kingdom EH1 2ES
(Attention: Susan Gillingham), tel. 011-44-131-229-5252, fax
011-44-131-479-4747. Institutional investors in the U.S. may contact Martin
Currie Investor Services, Inc., an affiliate of the Manager, 53 Forest
Avenue, Old Greenwich, CT 06870, tel. 203-698-9031 (Attention: Steven
Johnson).
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<PAGE>
EXHIBIT A
MARTIN CURRIE BUSINESS TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest
Amount of
Subscription
(US$)
MCBT Global Growth Fund -------------
MCBT Opportunistic EAFE Fund -------------
MCBT Global Emerging Markets Fund -------------
MCBT Japan Small Companies Fund -------------
MCBT Emerging Americas Fund -------------
MCBT Emerging Asia Fund -------------
MCBT EMEA Fund -------------
Total Amount Subscribed $____________
SUBSCRIBER INFORMATION
Name of Subscriber:
_______________________________________________________________
(hereinafter "SUBSCRIBER")
Name for Registration
_______________________________________________________________
(if different from above)
Person Signing (if different):
<PAGE>
_______________________________________________________________
Capacity (if applicable):
_______________________________________________________________
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
BANK INFORMATION
Bank Name:
_______________________________________________________________
ABA Number:
_______________________________________________________________
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
Account Name:
_______________________________________________________________
-2-
<PAGE>
Account Number:
_______________________________________________________________
-3-
<PAGE>
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the one
or more series (each a "Fund") of Martin Currie Business Trust (the
"Trust") indicated above and in the dollar amount(s) set forth above. Upon
completion of this Subscription Agreement, SUBSCRIBER should send this
agreement by telecopy and courier to:
Martin Currie Business Trust
c/o Martin Currie, Inc.
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
ATTENTION: Susan Gillingham
TELECOPY: 011-44-131-479-4747
After the Trust has reviewed the completed Subscription Agreement,
SUBSCRIBER will receive telephonic notice of the acceptance or non-
acceptance of the subscription. If the subscription is accepted by the
Trust, SUBSCRIBER agrees to wire immediately available funds in the
amounts indicated on the cover of this Subscription Agreement to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA # 011000028
BNF = AC-42306662 "Mutual Fund F/B/O
Martin Currie Business Trust"
OBI = "NAME OF FUND"
Shareholder Name
2. SUBSCRIBER agrees that, unless the Trust is otherwise specifically
notified, this subscription will be treated as a subscription for shares
of beneficial interest in the indicated Funds (the "Shares") to become
effective as of the first day of the month following the satisfaction of
all of the conditions specified in Section 3 of this Subscription
Agreement unless otherwise agreed by the Trust. Any funds received by
the Trust before such date will be held for investment on such first day
of the month.
3. SUBSCRIBER understands and agrees that this subscription for the Shares is
ineffective and that SUBSCRIBER will not become a shareholder of the Trust
until (i) SUBSCRIBER completes all applicable information requested in this
Subscription
-4-
<PAGE>
Agreement, (ii) SUBSCRIBER executes this Subscription Agreement and
delivers it to the Trust, (iii) the Subscription Agreement is accepted
by or on behalf of the Trust, which acceptance may be withheld
in the Trust's sole discretion, and (iv) the Trust can and has confirmed
that the subscription amount has been received in the account listed in
Section 1 above.
4. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated August __, 1997
(the "Placement Memorandum") relating to the offer for sale by the Trust of
the Shares and has had an opportunity to request a Statement of Additional
Information dated as of August __, 1997 (the "SAI"), and has reviewed the
Placement Memorandum carefully prior to executing this Subscription
Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the opportunity to
ask questions of, and receive answers from, representatives of the Trust
concerning terms and conditions of the Offering and to obtain any
additional information necessary to verify the accuracy of the information
contained in the Placement Memorandum or the SAI. SUBSCRIBER further
acknowledges that no person is authorized to give any information or to
make any representation which is contrary to the information contained in
the Placement Memorandum or the SAI and that, if given or made, any such
contrary information or representation may not be relied upon as having
been authorized.
5. SUBSCRIBER understands and agrees that an entry expense may be applicable
to this subscription for the Shares according to the terms described in
the Placement Memorandum, and that some of the funds paid under this
Agreement may be applied to such entry expense.
6. SUBSCRIBER hereby elects:
/ / To reinvest all distributions of income and realized capital
gains from a Fund in additional shares of that Fund or
/ / To receive all distributions of income and realized capital gains
from a Fund as cash when declared or
/ / To reinvest all realized capital gains from a Fund in additional
shares of the Fund and to receive all distributions of income as
cash.
SUBSCRIBER understands and agrees that, unless otherwise indicated above,
SUBSCRIBER will be deemed to have elected to reinvest all distributions of
income and capital gains.
-5-
<PAGE>
7. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that the
sale of the Shares to SUBSCRIBER complies with (or meets the requirements
of any applicable exemption from) the Securities Act of 1933, as amended
(the "1933 Act"), and applicable state securities laws.
8. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this Subscription Agreement for its own account for investment only and
not with a view to any resale or distribution.
9. SUBSCRIBER represents that it (either alone or together with its purchaser
representative, whose identity has been disclosed to the Trust, if any)
has such knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of the investment represented
by the Trust and that SUBSCRIBER is able to bear the economic risk of this
investment including the risk of loss of the investment.
10. SUBSCRIBER understands that the Trust will offer the Shares only to
investors which qualify as "accredited investors" as defined in Regulation
D under the 1933 Act. SUBSCRIBER represents that it qualifies as an
"accredited investor" because SUBSCRIBER is described in the paragraph or
paragraphs indicated below: (CHECK ONE OR MORE).
/ / A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with his or her spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same
income level in the current year.
/ / A natural person whose individual net worth, or joint net worth
with his or her spouse, exceeds $1,000,000 at the time of
purchase of the Shares.
/ / A trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares offered, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D of the 1933 Act.
/ / An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the Shares offered, with total assets in excess of
$5,000,000.
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<PAGE>
/ / A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940, as
amended.
/ / A bank as defined in Section 3(a)(2) of the 1933 Act, or savings
and loan association or other institution as defined in Section
3(a)(5)(A) of the 1933 Act, whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; an insurance
company as defined in Section 2(13) of the 1933 Act; an
investment company registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), or a business development
company as defined in Section 2(a)(48) of the 1940 Act; a Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by persons
that are accredited investors.
/ / A Trustee or Executive Officer of the Trust whose purchase
exceeds $1,000,000.
/ / An entity in which all of the equity owners are accredited
investors as defined above.
11. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is an
entity, its principal offices are located in) __________________.
(U.S. State)
12. SUBSCRIBER agrees to promptly notify the Trust of any development that
causes any of the representations made or information supplied in this
Subscription Agreement to be untrue at any time.
13. SUBSCRIBER understands that the Shares are not publicly traded and that
there will be no public market for the Shares upon completion of the
Offering.
14. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the 1933
Act and, in certain cases, of state securities laws, and that such
interests will be subject to transfer restrictions under the 1933 Act and
applicable state securities laws and,
-7-
<PAGE>
except to the extent that redemption is permitted as described in the
Placement Memorandum and the SAI, must be held indefinitely unless
subsequently registered under the 1933 Act and applicable state securities
laws or an exemption from such registration is available. The undersigned
further understands and agrees that the Trust is under no obligation to
register such Shares and that any exemptions are extremely limited.
15. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained in
this Subscription Agreement, the Placement Memorandum, the SAI, the 1933
Act and any applicable state securities laws.
16. SUBSCRIBER hereby agrees to be bound by all terms and conditions of this
Subscription Agreement.
17. This Subscription Agreement shall be governed by and construed under the
laws of The Commonwealth of Massachusetts and is intended to take effect as
an instrument under seal and shall be binding on SUBSCRIBER in accordance
with its terms.
-8-
<PAGE>
18. Please sign this Subscription Agreement exactly as you wish your Shares
to be registered. (The information supplied by you below should conform
to that given on the cover page).
Dated: __________, _____ Name of SUBSCRIBER:____________________
By:_______________________
Name of Person Signing if different
from SUBSCRIBER:______________________
(please print)
Capacity:______________________
(please print)
Accepted:
MARTIN CURRIE BUSINESS TRUST
By:___________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the trustees,
officers or shareholders of any Fund individually but are binding only upon the
assets and property belonging to the Funds.
-9-
<PAGE>
Part B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. COVER PAGE
See the Cover Page of the Statement of Additional Information attached as
Appendix B to this Part B of the Registration Statement (the "Statement of
Additional Information").
Item 11. TABLE OF CONTENTS
See the Table of Contents of the Statement of Additional Information.
Item 12. GENERAL INFORMATION AND HISTORY
Not applicable.
Item 13. INVESTMENT OBJECTIVES AND POLICIES
See the section entitled "Investment Objectives, Policies and Restrictions"
in the Statement of Additional Information.
Item 14. MANAGEMENT OF THE FUND
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 16. INVESTMENT ADVISORY AND OTHER SERVICES
See the section entitled "Investment Advisory and Other Services" and
"Distribution and Servicing Plans" in the Statement of Additional
Information.
Item 17. BROKERAGE ALLOCATION
See the section entitled "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
<PAGE>
Item 18. CAPITAL STOCK AND OTHER SECURITIES
See the Cover Page of the Private Placement Memorandum and the sections
entitled "Description of the Trust"; "Redemptions" and "Income Dividends,
Capital Gain Distributions and Tax Status" in the Statement of Additional
Information.
Item 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
See the sections entitled "How to Buy Shares" "Redemptions" and "Net Asset
Value and Offering Price" in the Statement of Additional Information.
Item 20. TAX STATUS
See the section entitled "Income Dividends, Capital Gain Distributions and
Tax Status" in the Statement of Additional Information.
Item 21. UNDERWRITERS
Not applicable.
Item 22. CALCULATION OF PERFORMANCE DATA
Not applicable.
Item 23. FINANCIAL STATEMENTS
See the section entitled "Financial Statements" in the Statement of
Additional Information.
<PAGE>
Appendix B to Part B
MARTIN CURRIE BUSINESS TRUST
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 28, 1997
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Martin Currie Business
Trust Private Placement Memorandum dated AUGUST 28, 1997, and should be read
in conjunction therewith. A copy of the Private Placement Memorandum may be
obtained from Martin Currie Business Trust, c/o Martin Currie, Inc., Saltire
Court, 20 Castle Terrace, Edinburgh, Scotland EH1 2ES OR C/O MARTIN CURRIE
INVESTOR SERVICES, INC., 53 FOREST AVENUE, OLD GREENWICH, CONNECTICUT 06870.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS . . . . . . . . . . . . . . . 1
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .10
DISTRIBUTION AND SERVICING PLANS . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . .13
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . .14
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
NET ASSET VALUE AND OFFERING PRICE . . . . . . . . . . . . . . . . . . . . . .17
REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS. . . . . . . . . .18
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objective and policies of each series ("Fund") of Martin
Currie Business Trust (the "Trust"), are summarized in the Private Placement
Memorandum under "Investment Objectives and Policies" and "More Information
About the Funds' Investments." The investment policies of each Fund set
forth in the Private Placement Memorandum and in this Statement of Additional
Information may be changed by the Trust's trustees, without shareholder
approval except that any policy explicitly identified as "fundamental" may
not be changed without the approval of the holders of a majority of the
outstanding shares of the relevant Fund (which means the lesser of (i) 67% of
the shares of that Fund represented at a meeting at which 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares).
In addition to its investment objective and policies set forth in the
Private Placement Memorandum, the following investment restrictions are
policies of each Fund (and those marked with an asterisk are fundamental
policies of each Fund):
Each Fund will not:
*(1) Act as underwriter of securities issued by other persons, except to
the extent that, in connection with the disposition of portfolio securities,
it may be deemed to be an underwriter under certain federal securities laws.
(2) Change its classification pursuant to Section 5(b) of the 1940 Act
from a "diversified" management investment company to a "non-diversified" one
without shareholder approval.
*(3) Borrow money in excess of 10% of its total assets (taken at cost)
or 5% of its total assets (taken at current value), whichever is lower, nor
borrow any money except as a temporary measure for extraordinary or emergency
purposes, however, any sale coupled with an agreement to repurchase or any
Fund's use of reverse repurchase agreements and "dollar roll" arrangements
shall not constitute borrowing by such Fund for purposes of this restriction.
*(4) Purchase or sell real estate or interests in real estate, except
that the Fund may purchase and sell securities that are secured by real
estate or interests in real estate and may purchase securities issued by
companies that invest or deal in real estate.
*(5) Invest in commodities, except that the Fund may invest in
financial futures contracts and options thereon, and options on currencies.
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<PAGE>
*(6) Make loans to others, except through the purchase of qualified
debt obligations, the entry into repurchase agreements and/or the making of
loans of portfolio securities consistent with the Fund's investment
objectives and policies.
*(7) Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business activities in
the same industry; provided that there shall be no limit on the purchase of
U.S. government securities, including securities issued by any agency or
instrumentality of the U.S. government, and related repurchase agreements.
The SEC takes the position that government securities of a single foreign
country (including agencies and instrumentalities of such government, to the
extent such obligations are backed by the assets and revenues of such
government) are a separate industry for these purposes.
*(8) Pledge, hypothecate, mortgage or otherwise encumber the Fund's
assets except to secure borrowings and as margin or collateral for financial
futures, swaps, and other negotiable transactions in the over-the-counter
market.
The Trust understands that the staff of the SEC deems certain
transactions that a Fund may enter into to involve the issuance of a senior
security unless certain cash, U.S. government securities, high grade debt
instruments or other liquid securities are deposited in a segregated account
or are otherwise covered. Such transactions include: short sales, reverse
repurchase agreements, forward contracts, futures contracts and options
thereon, options on securities and currencies, dollar rolls, and swaps, caps,
floors and collars.
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities that may be converted
at either a stated price or a stated rate into underlying shares of common
stock. Convertible securities have general characteristics similar to both
fixed income and equity securities. Although to a lesser extent than with
fixed income securities generally, the market value of convertible securities
tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion
feature, the market value of convertible securities tends to vary with
fluctuations in the market value of the underlying common stocks and,
therefore, also will react to variations in the general market for equity
securities.
Like fixed income securities, convertible securities are investments
which provide for a stable stream of income with generally higher yields than
common stocks. Of course, like all fixed income securities, there can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation. A
convertible security,
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<PAGE>
in addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
However, there can be no assurance of capital appreciation because securities
prices fluctuate.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds
enjoy seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock of the same issuer. Because of the
subordination feature, however, convertible securities typically have lower
ratings than similar non-convertible securities.
BRADY BONDS
The Emerging Americas Fund may invest in Brady Bonds of countries that
have restructured or are in the process of restructuring their sovereign debt
pursuant to the Brady Plan. "Brady Bonds" are debt securities issued under
the framework of the Brady Plan, an initiative announced by former U.S.
Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor
nations to restructure their outstanding external commercial bank
indebtedness. In restructuring its external debt under the Brady Plan
framework, a debtor nation negotiates with its existing bank lenders as well
as multilateral institutions such as the World Bank and the International
Monetary Fund ("IMF"). The Brady Plan framework, as it has developed,
contemplates the exchange of commercial bank debt for newly issued Brady
Bonds. Brady Bonds may also be issued in respect of new money being advanced
by existing lenders in connection with the debt restructuring. The World
Bank and/or the IMF may support the restructuring by providing funds pursuant
to loan agreements or other arrangements which enable the debtor nation to
collateralize the new Brady Bonds or to repurchase outstanding bank debt at a
discount.
Brady Plan debt restructurings have been implemented to date in such
countries as Mexico, Brazil, Costa Rica, Venezuela, Uruguay, Nigeria,
Argentina and the Philippines. Investors should recognize that Brady Bonds
have been issued only recently and, accordingly, do not have a long payment
history. Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt service reduction through specific options negotiated
by a debtor nation with its creditors. As a result, the financial packages
offered by each country differ. The types of options have included the
exchange of outstanding commercial bank debt for bonds issued at 100% of face
value of such debt, which carry a below-market stated rate of interest
(generally known as par bonds), bonds issued at a discount from the face
value of such debt (generally known as discount bonds), bonds bearing an
interest rate which increases over time and bonds issued in exchange for the
advancement of new money by existing lenders. Regardless of the stated face
amount and stated interest rate of the various types of Brady Bonds, the Fund
will purchase Brady Bonds in secondary markets, as described below, in which
the price and yield to the investor reflect market conditions at the time of
purchase.
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<PAGE>
Certain Brady Bonds have been collateralized as to principal due at
maturity by U.S. Treasury zero coupon bonds with a maturity equal to the
final maturity of such Brady Bonds. Collateral purchases are financed by the
IMF, the World Bank and the debtor nations' reserves. In the event of a
default with respect to collateralized Brady Bonds as a result of which the
payment obligations of the issuer are accelerated, the U.S. Treasury zero
coupon obligations held as collateral for the payment of principal will not
be distributed to investors, nor will such obligations be sold and the
proceeds distributed. The collateral will be held by the collateral agent to
the scheduled maturity of the defaulted Brady Bonds, which will continue to
be outstanding, at which time the face amount of the collateral will equal
the principal payments which would have then been due on the Brady Bonds in
the normal course. In addition, interest payments on certain types of Brady
Bonds may be collateralized by cash or high grade securities in amounts that
typically represent between 12 and 18 months of interest accruals on these
instruments with the balance of the interest accruals being uncollateralized.
Brady Bonds are often viewed as having the following valuation components:
(i) the collateralized repayment of principal, if any, at final maturity,
(ii) the collateralized interest payments, if any, (iii) the uncollateralized
interest payments, and (iv) any uncollateralized repayment of principal at
maturity (these uncollateralized amounts constitute the "residual risk"). In
light of the residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, investments in Brady Bonds
are to be viewed as speculative. The Fund may purchase Brady Bonds with no,
or limited, collateralization, and will be relying for payment of interest
and (except in the case of principal collateralized Brady Bonds) principal
primarily on the willingness and ability of the foreign government to make
payment in accordance with the terms of the Brady Bonds. Brady Bonds issued
to date are purchased and sold in secondary markets through U.S. securities
dealers and other financial institutions and are generally maintained through
European transnational securities depositories. Many of the Brady Bonds in
which the Fund invests are likely to be acquired at a discount.
YANKEE BONDS
The Funds may invest in U.S. dollar denominated bonds sold in the United
States by non-U.S. issuers ("Yankee bonds"). As compared with bonds issued
in the United States, such bond issues normally carry a higher interest rate
but are less actively traded.
Repurchase Agreements
Pursuant to guidelines adopted by the trustees of the Trust, each
Fund may enter into repurchase agreements, by which the Fund purchases a
security and obtains a simultaneous commitment from the seller (a bank or, to
the extent permitted by the Investment Company Act of 1940 (the "1940 Act"),
a recognized securities dealer) to repurchase the security at an agreed upon
price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and
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<PAGE>
reflects an agreed upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford the Funds the opportunity to
earn a return on temporarily available cash at minimal market risk. While
the underlying security may be a bill, certificate of indebtedness, note or
bond issued by an agency, authority or instrumentality of the United States
Government, the obligation of the seller is not guaranteed by the U.S.
Government and there is a risk that the seller may fail to repurchase the
underlying security. In such event, the Fund would attempt to exercise
rights with respect to the underlying security, including possible
disposition in the market. However, the Fund may be subject to various
delays and risks of loss, including (a) possible declines in the value of the
underlying security during the period while the Fund seeks to enforce its
rights thereto and (b) inability to enforce rights and the expenses involved
in attempted enforcement. Pursuant to the guidelines, the Manager maintains
an approved list of banks and non-bank dealers with which the Trust may
engage in repurchase agreement transactions, and the Manager may propose
changes to such list which are reviewed by the trustees of the Trust on at
least a quarterly basis. Currently, State Street Bank and Trust Company is
the only counterparty on the approved list.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
C. JAMES P. DAWNAY* [50]--Trustee and President. Director of Corporate
Development at Martin Currie Ltd. since 1992. Formerly, Director of Mercury
Asset Management and Chairman of Mercury Fund Managers.
PATRICK R. WILMERDING [54]--Trustee. 79 Milk Street, Room 907,
Boston, MA 02109. Self-employed investment manager since 1993. Director of
The Providence Journal. Formerly, Director of Lenox Capital and Division
Executive of The First National Bank of Boston.
SIMON D. ECCLES [62]--Trustee. 27 Chestnut Street, Boston, MA 02108.
Chairman and Manager of Venturi Investment Trust.
COLIN WINCHESTER [49]--Vice President and Treasurer. Director of
Finance and Administration of Martin Currie Ltd. since 1997. Associated with
Martin Currie Ltd. since 1994. Formerly director of Dunedin Development Co.
Ltd, Dunedin
- -------------------
* Trustees who are "interested persons" (as defined in the 1940 Act) of
the Trust or the Manager.
-5-
<PAGE>
Property Investment Co. Ltd, Dunedin Property Development Co. (Retail) Ltd,
Dunedin Property Management Services, Ltd, Dunedin Property Development Co.
Ltd, Dunedin Mortgage Co. Ltd, LAS Unit Trust Managers Ltd and LAS Investment
Management Ltd.
J. GRANT WILSON [34]-- Vice President. Director and head of North
American Investment Team at Martin Currie Investment Management Ltd.
Formerly a North American fund manager at Gartmore Investments.
JULIAN M.C. LIVINGSTON [37]-- Clerk. Group Legal Director at Martin
Currie Group since April 1997. Formerly Legal Executive and Compliance
Officer at Martin Currie Group since August 1992.
Previous positions during the past five years with Martin Currie are
omitted, if not materially different from the positions listed.
The address of each trustee and officer of the Trust affiliated with
Martin Currie is Saltire Court, 20 Castle Terrace, Edinburgh, Scotland EH1
2ES. The Trust pays no compensation to its officers or to the trustees
listed above who are interested persons of the Trust. For the fiscal year
ended April 30, 1997, Simon Eccles and Patrick Wilmerding were paid $10,000
each. Currently, the Trust pays both Messrs. Eccles and Wilmerding $10,000
per annum.
As of the date hereof, the trustees and officers as a group owned less
than 1% of the outstanding shares of each Fund.
The following table sets forth the name, address and percentage
ownership of the control persons and each other holder of 5% or more of a
Fund's outstanding securities as of July 29, 1997. Other than those
shareholders noted below, the Trust believes that no person or group owns, of
record or beneficially, 5% or more of the shares of any Fund. A holder is
deemed to control a Fund through possession of beneficial ownership, either
directly or indirectly, of more than 25% of the Fund's shares:
<TABLE>
<CAPTION>
Shareholder Address Percentage of Shares Held
----------- ------- -------------------------
<S> <C> <C>
GLOBAL GROWTH FUND
The Fresh Air Fund 1040 Avenue of the
Americas New York, NY
10018 33.0
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Walter and Elise
Haas Fund One Lombard, Suite 305
San Francisco, CA 94111 67.0
OPPORTUNISTIC EAFE FUND
Saint Lukes Health Care
System 101 Page Street
New Bedford, MA 02740 5.0
API Retirement Income
Plan 1220 L Street NW
Washington, D.C. 20005 8.4
National Geographic
Society 1145 17th Street NW
Washington, D.C. 20036 9.5
Georgia Tech
Foundation Inc. 225 N Avenue, NW
Atlanta, GA 30332-0182 6.0
Comerica Bank as TTEE
for The Henry Ford II
STLMT TR # 1007871 2401 PGA BLVD
Suite 198
Palm Beach Gardens,
FL 33410 6.6
Lin Television Corp.
Retirement Plan 1 Richmond Square
Providence, RI 02906 5.7
Medtronics Inc. 7000 Central Ave, N.E.
Minneapolis, MN 55432 12.7
GLOBAL EMERGING
MARKETS FUND
State Universities
Retirement System of
Illinois 1901 Fox Drive
P.O. Box 2710
Champaign, IL 61825-2710 99.6
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
JAPAN SMALL COMPANIES FUND
CAAT Pension Plan Suite 902
50 Burnhamthorpe Road West
Mississauga, Ontario
Canada L5B 3CZ 6.4
State Universities
Retirement System of
Illinois 1901 Fox Drive
P.O. Box 2710
Champaign, IL 61825-2710 8.3
Vought Aircraft Co.
Employee Benefit
Account Fund 2301 West 120th Street
Mail Zone 152/N5-1
Hawthorne, CA 90250 5.0
Pennsylvania Public
Schools Employee
Retirement System P.O. Box 125
Harrisburg, PA 17108-0125 28.1
Maine State Retirement
System State House Station #46
Augusta, ME 04333 5.2
EMERGING AMERICAS FUND
State Universities
Retirement System Of
Illinois 1901 Fox Drive
P.O. Box 2710
Champaign, IL 61825-2710 7.6
Mayo Foundation 200 SW 1st Street 6.8
Pension Fund Rochester, MN 55905
Mayo Foundation 200 SW 1st Street 7.6
General Fund Rochester, MN 55905
Pennsylvania Public
Schools Employee
Retirement System P.O. Box 125
Harrisburg, PA 17108-0125 25.4
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
CAAT Pension Plan Suite 902
50 Burnhamthorpe Road West
Mississauga, Ontario
Canada LTB 3CZ 6.7
EMERGING ASIA FUND
Vought Aircraft Co.
Employee Benefit
Account Fund 2301 West 120th Street
Mail Zone 152/N5-1
Hawthorne, CA 90250 5.0
State Universities
Retirement System of
Illinois 1901 Fox Drive
P.O. Box 2710
Champaign, IL 61825-2710 8.3
Pennsylvania Public
Schools Employee
Retirement System P.O. Box 125
Harrisburg, PA 17108-0125 28.0
CAAT Pension Plan Suite 902
50 Burnhamthorpe Road West
Mississauga, Ontario
Canada L5B 3CZ 6.4
Maine State
Retirement System State House Station #46
Augusta, ME 04333 5.2
EMEA FUND
CAAT Pension Plan Suite 902
50 Burnhamthorpe Road West
Mississauga, Ontario
Canada L5B 3CZ 7.5
Maine State Retirement
System State House Station #46
Augusta, ME 04333 5.8
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LICR Fund Inc. 1345 Avenue of the Americas
Room 3424
New York, NY 10105 5.2
Pennsylvania Public
Schools Employee
Retirement System P.O. Box 125
Harrisburg, PA 17108-0125 32.5
Arthur Andersen & Co.
-- U.S. Profit Sharing
and Retirement Trust 225 No. Michigan Avenue, A16B
Chicago, IL 60601-7600 5.2
State Universities
Retirement System
of Illinois 1901 Fox Drive
P.O. Box 2710
Champaign, IL 61825-2710 9.7
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISORY AGREEMENTS Martin Currie serves as the investment adviser of
each Fund under a separate investment advisory agreement dated May 23, 1994
(June 16, 1997, in the case of the EMEA Fund) and subsequently reapproved.
Martin Currie is a wholly-owned subsidiary of Martin Currie, Ltd. Under each
investment advisory agreement, Martin Currie manages the investment and
reinvestment of the assets of the relevant Fund, subject to supervision by
the trustees of the Trust. Martin Currie furnishes, at its own expense, all
necessary office space, facilities and equipment, services of executive and
other personnel of the Fund and certain administrative services. For these
services, the investment advisory agreements provide that each Fund shall pay
Martin Currie a quarterly investment advisory fee as stated in the Private
Placement Memorandum.
Under each investment advisory agreement, if the total ordinary business
expenses of a Fund or the Trust as a whole for any fiscal year exceed the
lowest applicable limitation (based on percentage of average net assets or
income) prescribed by any state in which the shares of the Fund or the Trust
are qualified for sale, Martin Currie shall pay such excess. Presently, none
of the Funds nor the Trust as a whole is subject to any such expense
limitation, however.
-10-
<PAGE>
As described in the Private Placement Memorandum, Martin Currie has
agreed to certain voluntary arrangements to limit Fund expenses. These
arrangements may be modified or terminated by Martin Currie at any time.
During each fiscal year from each Fund's commencement of operations to
April 30, 1997, Martin Currie received the following amount of investment
advisory fees from each Fund (before voluntary fee reductions and expense
assumptions) and bore the following amounts of fee reductions and expense
assumptions for each Fund:
<TABLE>
<CAPTION>
Fee Waivers and
Advisory Fees for Expense Limitations
Commencement fiscal year ending for fiscal year ending
Fund of Operations April 30, April 30,
---- ------------- ------------------ ----------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Global Growth Fund 6/15/94 $375,240 $282,867 $224,290 $55,729 $107,235 $81,381
Opportunistic EAFE Fund 7/1/94 786,120 655,301 213,097 0 51,287 113,102
Japan Small Companies Fund 8/15/94 797,216 603,494 147,123 0 0 32,425
Emerging Americas Fund 9/19/94 2,157,383 910,272 286,187 104,649 151,712 0
Emerging Asia Fund 3/24/95 1,911,419 1,216,136 47,587 123,328 202,689 27,339
Global Emerging Markets Fund 2/14/97 77,760 N/A N/A 0 N/A N/A
EMEA Fund 6/25/97 N/A N/A N/A N/A N/A N/A
</TABLE>
Each investment advisory agreement provides that it will continue in
effect for two years from its date of execution and thereafter from year to
year if its continuance is approved at least annually (i) by the trustees of
the Trust or by vote of a majority of the outstanding voting securities of
the relevant Fund and (ii) by vote of a majority of the trustees who are not
"interested persons" of the Trust, as that term is defined in the 1940 Act,
cast in person at a meeting called for the purpose of voting on such
approval. Any amendment to an advisory agreement must be approved by vote of
a majority of the outstanding voting securities of the relevant Fund and by
vote of a majority of the trustees who are not interested persons, cast in
person at a meeting called for the purpose of voting on such approval. Each
investment advisory agreement may be terminated without penalty by vote of
the trustees or by vote of a majority of the outstanding voting securities of
the relevant Fund, upon sixty days' written notice, or by Martin Currie upon
sixty days' written notice, and each terminates automatically in the event of
its assignment.
Each advisory agreement provides that Martin Currie shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of
-11-
<PAGE>
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
Martin Currie acts as investment adviser to other registered investment
companies and to numerous other corporate and fiduciary clients.
Certain officers and trustees of the Trust also serve as officers,
directors and trustees of other investment companies and clients advised by
Martin Currie. The other investment companies and clients sometimes invest
in securities in which the Funds also invest. If a Fund and such other
investment companies or clients desire to buy or sell the same portfolio
securities at the same time, purchases and sales may be allocated, to the
extent practicable, on a pro rata basis in proportion to the amounts desired
to be purchased or sold for each. It is recognized that in some cases the
practices described in this paragraph could have a detrimental effect on the
price or amount of the securities which a Fund purchases or sells. In other
cases, however, it is believed that these practices may benefit the Funds.
It is the opinion of the trustees that the desirability of retaining Martin
Currie as adviser for the Funds outweighs the disadvantages, if any, which
might result from these practices.
CUSTODIAL ARRANGEMENTS State Street Bank and Trust Company ("State
Street Bank"), Boston, Massachusetts 02110, provides certain administrative
services to each Fund and serves as the Trust's custodian. As such, State
Street Bank or sub-custodians acting at its direction hold in safekeeping
certificated securities and cash belonging to the Funds and, in such
capacity, are the registered owners of securities held in book entry form
belonging to the Funds. Upon instruction, State Street Bank or such
sub-custodians receive and deliver cash and securities of the Funds in
connection with Fund transactions and collect all dividends and other
distributions made with respect to Fund portfolio securities.
With respect to securities obtained by the Trust through the Manager's
investment quota granted by authorities in Taiwan, such purchases will be
made through various sub-accounts, the custody of which will be maintained by
the Hong Kong and Shanghai Banking Corporation Limited, Taipei, acting on
instructions from State Street Bank relating to order confirmation and the
settlement of transactions.
INDEPENDENT ACCOUNTANTS The Fund's independent accountants are Price
Waterhouse LLP, 160 Federal Street, Boston, Massachusetts. Price Waterhouse
LLP conducts an annual audit of the Trust's financial statements, assists in
the preparation of the Funds' federal and state income tax returns and
consults with the Funds as to matters of accounting and federal and state
income taxation.
AFFILIATED BROKER-DEALER Martin Currie Investor Services, Inc. was
registered with the National Association of Securities Dealers, Inc. on April
23, 1996. The business of Martin Currie Investor Services, Inc. involves
only the solicitation of direct investments in
-12-
<PAGE>
mutual funds; Martin Currie Investor Services, Inc. does not have custody of
customer funds or securities.
DISTRIBUTION AND SERVICING PLANS
The Trust has adopted a distribution and servicing plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 for each Fund (the "Plans").
The Plans authorize the Manager to spend an amount of the advisory fees it
collects from each Fund up to 0.25% per annum of the average monthly net
assets of the Fund for activities or services primarily intended to result in
the sale of shares of the relevant Fund or for the provision of personal
services to shareholders of such Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for
each Fund, Martin Currie always seeks the best price and execution.
Transactions in unlisted securities are carried out through broker-dealers
who make the primary market for such securities unless, in the judgment of
Martin Currie, a more favorable price can be obtained by carrying out such
transactions through other brokers or dealers.
Martin Currie selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Martin Currie will use its best efforts to obtain information as to the
general level of commission rates being charged by the brokerage community
from time to time and will evaluate the overall reasonableness of brokerage
commissions paid on transactions by reference to such data. In making such
evaluation, all factors affecting liquidity and execution of the order, as
well as the amount of the capital commitment by the broker in connection with
the order, are taken into account. The Funds may pay a broker a commission
at a higher rate than otherwise available for the same transaction in
recognition of the value of research services provided by the broker or in
recognition of the value of any other services provided by the broker.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Martin Currie believes will provide best price and
execution for a transaction.
-13-
<PAGE>
These research services include not only a wide variety of reports on such
matters as economic and political developments, industries, companies,
securities, portfolio strategy, account performance, daily prices of
securities, stock and bond market conditions and projections, asset
allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar value to these services, they
may, to the extent used, tend to reduce Martin Currie's expenses. Such
services may be used by Martin Currie in servicing other client accounts and
in some cases may not be used with respect to the Funds. Receipt of services
or products other than research from brokers is not a factor in the selection
of brokers.
The following table sets forth for each fiscal year from each Fund's
commencement of operations (shown below) through April 30, 1997 (1) the
aggregate dollar amount of brokerage commissions paid on portfolio
transactions during the period; (2) the dollar amount of transactions on
which commissions were paid during such period that were directed to brokers
providing research services ("directed transactions"); and (3) the dollar
amount of commissions paid on directed transactions during such period:
<TABLE>
<CAPTION>
Aggregate
Brokerage
Commissions Commissions
Commencement for fiscal year Directed on Directed
Fund of Operations ending April 30, Transactions Transactions
---- ------------- ----------------- ------------ -----------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Global Growth Fund 6/15/94 $117,102 $ 120,093 $122,012 N/A N/A
Opportunistic EAFE Fund 7/1/94 284,371 281,823 241,090 N/A N/A
Japan Small Companies
Fund 8/15/94 136,976 293,649 207,329 N/A N/A
Emerging Americas Fund 9/19/94 517,507 229,996 127,468 N/A N/A
Emerging Asia Fund 3/24/95 1,757,693 1,195,696 166,481 N/A N/A
Global Emerging Markets
Fund 2/14/97 118,786 N/A N/A N/A N/A
EMEA Fund 6/25/97 N/A N/A N/A N/A N/A
</TABLE>
-14-
<PAGE>
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of Massachusetts by an Agreement and Declaration of Trust (the
"Declaration of Trust") dated May 20, 1994, as amended.
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of each series. Each share of each Fund
represents an equal proportionate interest in such Fund with each other share
of that Fund and is entitled to a proportionate interest in the dividends and
distributions from that Fund. The shares of each Fund do not have any
preemptive rights. Upon termination of any Fund, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund are entitled
to share pro rata in the net assets of that Fund available for distribution
to shareholders. The Declaration of Trust also permits the trustees to
charge shareholders directly for custodial, transfer agency and servicing
expenses.
The assets received by each Fund for the issue or sale of its shares and
all income, earnings, profits, losses and proceeds therefrom, subject only to
the rights of creditors, are allocated to, and constitute the underlying
assets of, that Fund. The underlying assets are segregated and are charged
with the expenses with respect to that Fund and with a share of the general
expenses of the Trust. Any general expenses of the Trust that are not
readily identifiable as belonging to a particular Fund are allocated by or
under the direction of the trustees in such manner as the trustees determine
to be fair and equitable. While the expenses of the Trust are allocated to
the separate books of account of each Fund, certain expenses may be legally
chargeable against the assets of all Funds.
The Declaration of Trust also permits the trustees, without shareholder
approval, to issue shares of the Trust in one or more series, and to
subdivide any series of shares into various classes of shares with such
dividend preferences and other rights as the trustees may designate. While
the trustees have no current intention to exercise this power, it is intended
to allow them to provide for an equitable allocation of the impact of any
future regulatory requirements which might affect various classes of
shareholders differently, or to permit shares of a series to be distributed
through more than one distribution channel, with the costs of the particular
means of distribution (or costs of related services) to be borne by the
shareholders who purchase through that means of distribution. The trustees
may also, without shareholder approval, establish one or more additional
separate portfolios for investments in the Trust or merge two or more
existing portfolios. Shareholders' investments in such an additional or
merged portfolio would be evidenced by a separate series of shares (i.e., a
new "Fund").
-15-
<PAGE>
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or any Fund, however, may be terminated at any time by vote
of at least two-thirds of the outstanding shares of each Fund affected. The
Declaration of Trust further provides that the trustees may also terminate
the Trust or any Fund upon written notice to the shareholders.
VOTING RIGHTS
As summarized in the Private Placement Memorandum shareholders are
entitled to one vote for each full share held (with fractional votes for each
fractional share held) and may vote (to the extent provided in the
Declaration of Trust) in the election of trustees and the termination of the
Trust and on other matters submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a vote
of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a
particular series or sub-series would be affected by the vote, in which case
a separate vote of that series or sub-series shall also be required to decide
the question. Also, a separate vote shall be held whenever required by the
1940 Act or any rule thereunder. Rule 18f-2 under the 1940 Act provides in
effect that a class shall be deemed to be affected by a matter unless it is
clear that the interests of each class in the matter are substantially
identical or that the matter does not affect any interest of such class. On
matters affecting an individual series, only shareholders of that series are
entitled to vote. Consistent with the current position of the SEC,
shareholders of all series vote together, irrespective of series, on the
election of trustees and the selection of the Trust's independent
accountants, but shareholders of each series vote separately on other matters
requiring shareholder approval, such as certain changes in fundamental
investment policies of that series or the approval of the investment advisory
agreement relating to that series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time
as less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders.
In addition, trustees may be removed from office by a written consent signed
by the holders of two-thirds of the outstanding shares and filed with the
Trust's custodian or by a vote of the holders of two-thirds of the
outstanding shares at a meeting duly called for that purpose, which meeting
shall be held upon the written request of the holders of not less than 10% of
the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to
-16-
<PAGE>
consider removal of a trustee, the Trust has undertaken to provide a list of
shareholders or to disseminate appropriate materials (at the expense of the
requesting shareholders).
Except as set forth above, the trustees shall continue to hold office
and may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the
Declaration of Trust, (ii) to establish, change or eliminate the par value of
any shares (currently all shares have no par value) and (iii) to issue shares
of the Trust in one or more series, and to subdivide any series of shares
into various classes of shares with such dividend preferences and other
rights as the trustees may designate.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund of which they are
shareholders. However, the Declaration of Trust disclaims shareholder
liability for acts or obligations of each Fund and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or the trustees. The Declaration of Trust
provides for indemnification out of Fund property for all loss and expense of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote since it is limited to
circumstances in which the disclaimer is inoperative and the Fund itself
would be unable to meet its obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing
in the Declaration of Trust protects a trustee against any liability to which
the trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. The By-Laws of the Trust provide for indemnification
by the Trust of the trustees and officers of the Trust except with respect to
any matter as to which any such person did not act in good faith in the
reasonable belief that such action was in or not opposed to the best
interests of the Trust. No officer or trustee may be indemnified against any
liability to the Trust or the Trust's shareholders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
or her office.
-17-
<PAGE>
HOW TO BUY SHARES
The procedures for purchasing shares of the Funds are summarized in the
Private Placement Memorandum under "Purchase of Shares".
NET ASSET VALUE AND OFFERING PRICE
The net asset value of the shares of each Fund is determined by dividing
that Fund's total net assets (the excess of its assets over its liabilities)
by the total number of shares of the Fund outstanding and rounding to the
nearest cent. Such determination is made monthly and as of the close of
regular trading on the New York Stock Exchange on any day on which an order
for purchase or redemption of a Fund's shares is received that the Exchange
is open for unrestricted trading. Equity securities listed on an established
securities exchange or on the NASDAQ National Market System are normally
valued at their last sale price on the exchange where primarily traded or, if
there is no reported sale during the day, and in the case of over the counter
securities not so listed, at the mean between the last bid and asked price.
Other securities for which current market quotations are not readily
available (including restricted securities, if any) and all other assets are
taken at fair value as determined in good faith by the trustees, although the
actual calculations may be made by persons acting pursuant to the direction
of the trustees or by pricing services.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of regular trading on
the New York Stock Exchange. Occasionally, events affecting the value of
foreign fixed income securities and of equity securities of non-U.S. issuers
not traded on a U.S. exchange may occur between the completion of substantial
trading of such securities for the day and the close of regular trading on
the New York Stock Exchange, which events will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of any Fund's portfolio securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by
or in accordance with procedures approved by the trustees.
-18-
<PAGE>
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Private Placement Memorandum under "How to Redeem Shares."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Private Placement Memorandum under "Distributions,"
it is the policy of each Fund to pay its shareholders, as dividends,
substantially all net investment income and to distribute annually all net
realized capital gains, if any, after offsetting any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the particular Fund based upon the net asset value
determined as of the close of regular trading on the New York Stock Exchange
on the record date for each dividend or distribution. Shareholders, however,
may elect to receive their distributions in cash. The election may be made
at any time by submitting a written request directly to the Trust. In order
for a change to be in effect for any dividend or distribution, it must be
received by the Trust on or before the record date for such dividend or
distribution.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31
of the succeeding year.
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. To the extent it qualifies for treatment as
a regulated investment company, the Fund will not be subject to federal
income tax on income paid to its shareholders in the form of dividends or
capital gain distributions.
Non-tax-exempt shareholders of each Fund will be subject to federal
income taxes on distributions made by the Fund whether received in cash or
additional shares of the Fund. Distributions by each Fund of net income and
short-term capital gains, if any, will be taxable to shareholders as ordinary
income. Pursuant to the Taxpayer Relief Act of 1997 (the "1997 Act"), two
different tax rates apply to net capital gains (that is, the excess of net
gains from capital assets held for more than one year ("long-term capital
assets") over net losses from capital assets held for not more than one year
("short-term capital assets")). One rate (generally 28%) applies to net
gains on capital assets held for more than one year but not more than 18
months ("mid-term gains") and a second, preferred rate (generally 20%)
applies to the balance of such net capital gains ("adjusted net capital
gains"). Distributions of net capital gains will be treated in the hands of
shareholders as mid-term gains to the extent designated by the Fund as
deriving from net gains from assets held for more than one year but not more
than 18 months, and the balance will be treated as adjusted net capital
gains. Distributions of mid-term
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<PAGE>
gains and adjusted net capital gains will be taxable to shareholders as
such, regardless of how long a shareholder has held the shares in the Fund.
Dividends and distributions on Fund shares received shortly after their
purchase are subject to federal income taxes, notwithstanding that such
payments are effectively a return of capital to the purchasing shareholder.
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions.
If shares have been held for more than one year but not more than 18 months,
gain realized will be mid-term gains, provided the shareholder holds the
shares as a capital asset. If shares have been held for more than 18 months,
gains realized will be adjusted net capital gains, provided the shareholder
holds the shares as a capital asset. However, if a shareholder sells Fund
shares at a loss within six months after purchasing the shares, the loss will
be treated as a long-term capital loss to the extent of any long-term capital
gain distributions received by the shareholder. Furthermore, no loss will be
allowed on the sale of Fund shares to the extent the shareholder acquired
other shares of the same Fund within 30 days prior to the sale of the loss
shares or 30 days after such sale.
The Fund is generally required to withhold and remit to the U.S.
Treasury 31% of all dividends from net investment income and capital gain
distributions, whether distributed in cash or reinvested in shares of the
Fund, paid or credited to any shareholder account for which an incorrect or
no taxpayer identification number has been provided or where the Fund is
notified that the shareholder has underreported income in the past (or the
shareholder fails to certify that he is not subject to such withholding). In
addition, the Fund will generally be required to withhold and remit to the
U.S. Treasury 31% of the amount of the proceeds of any redemption of Fund
shares from a shareholder account for which an incorrect or no taxpayer
identification number has been provided.
A Fund's transactions in options, futures contracts, hedging
transactions, forward contracts, straddles and foreign currencies will be
subject to special tax rules (including mark-to-market, straddle, wash-sale
and short-sale rules), the effect of which may be to accelerate income to the
Fund, defer losses to the Fund, cause adjustments in the holding periods of
the Fund's securities and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders. The tax consequences of certain
hedging techniques have been modified by the Taxpayer Relief Act of 1997,
effective for transactions after June 8, 1997.
The Fund may be subject to foreign withholding taxes on income and gains
derived from foreign investments. Such taxes would reduce the yield on the
Fund's investments, but, as discussed in the Private Placement Memorandum,
may be taken as either a deduction or a credit by U.S. citizens and
corporations.
-20-
<PAGE>
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative
or administrative action.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility
that distributions may be subject to a 30% United States withholding tax (or
a reduced rate of withholding provided by treaty).
FINANCIAL STATEMENTS
The financial statements of each Fund for the fiscal year ended April
30, 1997 included in this Statement of Additional Information (see "Financial
Statements" below) have been included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
-21-
<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL GROWTH FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
OBJECTIVE Long-term capital appreciation through active management of a
diversified portfolio of global equities.
LAUNCH DATE June 15, 1994
FUND SIZE $56.6m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
- MCBT - Global Growth Fund (excluding all
transaction fees) +8.9%
- MCBT - Global Growth Fund (including all
transaction fees) +7.2%
- The Morgan Stanley Capital International World
Index +10.8%
Annualized total return from June 15, 1994 through
April 30, 1997
- MCBT - Global Growth Fund (excluding all
transaction fees) +10.6%
- MCBT - Global Growth Fund (including all
transaction fees) +10.0%
The graph below represents the annualized total return of the
portfolio including all transaction fees versus the Morgan
Stanley Capital International World Index from July 1, 1994
through April 30, 1997.
- MCBT - Global Growth Fund (excluding all
transaction fees) +11.3%
- MCBT - Global Growth Fund (including all
transaction fees) +10.7%
- The Morgan Stanley Capital International World
Index +14.2%
[Graph]
(a) Performance for the benchmark is not available from June 15, 1994
(commencement of investment operations). For that reason, performance
is shown from July 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. The total returns would have been lower had certain expenses
not been waived during the period shown. Each performance figure including
all transaction fees assumes purchase at the beginning and redemption at the
end of the stated period and is calculated using an offering price which
reflects a transaction fee of 75 basis points on purchase and 75 basis points
on redemption. Transaction fees are paid to the Fund to cover trading costs.
Past performance is not indicative of future performance.
1
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO Led by the US, markets rose over the twelve months. We have
COMMENTS had an underweight position in US equities throughout the
period and have underperformed the MSCI World Index.
The US was powered by strong liquidity, despite a poor
outlook for earnings growth. Our stock selection in this
area has been good. Intel, for example, has risen by 126%
and the Royal Bank of Canada by 65.7% since we bought it in
July. Large stocks have risen most, having attracted a
disproportionately high amount of new money. We expect to
move down the capitalisation scale in our search for value.
Compounded by a weak currency, JAPAN has been a weak
market. 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 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 been overweight to 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 in LATIN AMERICA at the end of
1996 and were rewarded by strong markets.
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
MANAGER to Joe Scott Plummer (Chief Investment Officer), who has 27
PROFILE 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 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 GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
40% Europe
12% Japan
6% Latin America
26% North America
2% Other Areas
11% Pacific Basin
3% Other Net Assets
[CHART]
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Roche Holdings (Switzerland) 1.3
Novartis (Switzerland) 1.3
Internationale Nederlanden (Netherlands) 1.2
LATIN AMERICA
Telebras, ADR (Brazil) 1.0
NORTH AMERICA
Colgate - Palmolive (United States) 1.5
Union Pacific Resources (United States) 1.4
Bristol - Myers Squibb (United States) 1.4
JAPAN
Canon 1.0
Rohm 1.0
PACIFIC BASIN
Hutchison Whampoa (Hong Kong) 0.9
3
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARE VALUE
----- -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS AND EXCHANGEABLE NOTES - 97.5%
EUROPE - 39.8%
AUSTRIA - 0.6%
VA TECHNOLOGIE 2,100 $ 326,330
----------
TOTAL AUSTRIA - (COST $290,145) 326,330
----------
DENMARK - 0.7%
NOVO NORDISK, CL B 4,200 415,494
----------
TOTAL DENMARK - (COST $391,864) 415,494
----------
FRANCE - 5.6%
AIR LIQUIDE 3,340 503,017
AXA 9,209 566,599
ELF AQUITAINE 3,617 350,762
MICHELIN, CL B 8,800 491,678
RHONE-POULENC, CL A 14,000 470,864
SCHNEIDER 9,340 526,490
SEITA 7,300 259,906
----------
TOTAL FRANCE - (COST $2,818,610) 3,169,316
----------
GERMANY - 6.5%
DEUTSCHE BANK 11,600 612,218
DEUTSCHE TELEKOM 5,080 110,236
HOECHST 17,400 683,220
MANNESMANN 1,500 589,849
SGL CARBON 3,600 502,021
VEBA 10,856 559,161
VOLKSWAGEN 1,000 635,755
----------
TOTAL GERMANY - (COST $2,901,061) 3,692,460
----------
ITALY - 0.6%
ENI 70,619 358,421
----------
TOTAL ITALY - (COST $334,894) 358,421
----------
NETHERLANDS - 3.3%
ELSEVIER 36,400 582,908
INTERNATIONALE NEDERLANDEN 17,950 704,807
PHILIPS ELECTRONICS N.V. 11,000 574,193
----------
TOTAL NETHERLANDS - (COST $1,213,328) 1,861,908
----------
SPAIN - 2.4%
BANCO DE SANTANDER 8,700 654,560
CENTROS COMERCIALES CONTINENTE 13,818 233,442
TELEFONICA DE ESPANA 19,000 486,680
----------
TOTAL SPAIN - (COST $1,095,271) 1,374,682
----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARE VALUE
----- -----
<S> <C> <C>
EUROPE - CONTINUED
SWEDEN - 1.4%
ABB AB, SERIES A 47,000 $ 572,170
ERICSSON L.M., CL B 6,352 200,810
----------
TOTAL SWEDEN - (COST $700,337) 772,980
----------
SWITZERLAND - 3.7%
NOVARTIS 565 744,339
ROCHE HOLDINGS 90 760,125
ZURICH VERSICHER 1,850 607,421
----------
TOTAL SWITZERLAND - (COST $1,742,897) 2,111,885
----------
UNITED KINGDOM - 15.0%
BRITISH TELECOMMUNICATIONS 60,000 439,546
CABLE & WIRELESS 49,000 377,328
GENERAL ELECTRIC 42,000 249,359
GKN 28,000 431,572
GLAXO WELLCOME 30,000 589,789
GRANADA 29,000 418,785
LADBROKE 109,000 406,321
LASMO 89,017 321,731
LLOYDS TSB 63,000 574,862
MARKS & SPENCER 59,000 467,601
MCKECHNIE 22,000 176,143
NFC 131,000 300,430
RECKITT & COLMAN 40,250 547,974
ROYAL BANK OF SCOTLAND GROUP 52,000 490,502
SAFEWAY 53,496 296,526
SCOTTISH POWER 70,000 424,311
SHELL TRANSPORT & TRADING 27,000 477,423
SMITHS INDUSTRIES 31,314 382,670
UNILEVER 17,000 446,629
WASSALL 45,000 256,726
WOLSELEY 48,000 384,311
----------
TOTAL UNITED KINGDOM - (COST $6,839,971) 8,460,539
----------
TOTAL EUROPE - (COST $18,328,378) 22,544,015
----------
LATIN AMERICA - 6.4%
ARGENTINA - 0.7%
COMPANIA PEREZ COMPANC 25,536 207,117
TELEFONICA DE ARGENTINA, ADR 6,500 216,125
----------
TOTAL ARGENTINA - (COST $286,315) 423,242
----------
BRAZIL - 2.4%
COMPANIA VALE DO RIO DOCE, ADR 8,500 216,596
ELECTROBRAS, ADR 13,600 304,300
PETROBRAS, ADR 13,000 275,641
TELEBRAS, ADR 4,800 550,800
----------
TOTAL BRAZIL - (COST $822,340) 1,347,337
----------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARE VALUE
----- -----
<S> <C> <C>
LATIN AMERICA - CONTINUED
CHILE - 0.6%
COMPANIA DE TELEFONOS DE CHILE, ADR 11,000 $ 356,125
----------
TOTAL CHILE - (COST $318,117) 356,125
----------
MEXICO - 1.9%
CEMEX, CL B 67,000 245,353
CIFRA SA DE CV, CL B 200,000 307,054
CORPORACION INDUSTRIAL ALFA, CL A 24,292 133,283
EMPRESAS ICA SOCIEDAD, ADR 7,200 107,100
GRUPO FINANCIERO BANAMEX, CL B 128,000 274,153
----------
TOTAL MEXICO - (COST $973,151) 1,066,943
----------
PERU - 0.2%
PERU REAL ESTATE, CL B 180,000 23,640
TELEFONICA DEL PERU, ADR, CL B 4,000 96,000
----------
TOTAL PERU - (COST $169,632) 119,640
----------
VENEZUELA - 0.6%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 11,000 330,000
----------
TOTAL VENEZUELA - (COST $253,000) 330,000
----------
TOTAL LATIN AMERICA - (COST $2,822,555) 3,643,287
----------
NORTH AMERICA - 26.4%
CANADA - 1.2%
ROYAL BANK OF CANADA 16,704 667,802
----------
TOTAL CANADA - (COST $411,226) 667,802
----------
UNITED STATES - 25.2%
ALLIED SIGNAL 9,750 704,437
ARCHER - DANIELS - MIDLAND 27,479 504,927
BRISTOL - MYERS SQUIBB 12,000 786,000
COLGATE - PALMOLIVE 7,600 843,600
DILLARD DEPARTMENT STORES, CL A 13,600 419,900
EASTMAN KODAK 8,300 693,050
FREEPORT MCMORAN COPPER & GOLD, CL A 23,136 647,808
FREEPORT MCMORAN, INC. 21,133 618,140
GENERAL ELECTRIC 5,600 620,900
INPHYNET MEDICAL MANAGEMENT * 8,200 188,600
INTEL 4,050 620,156
MARSH & MCLENNAN 6,100 735,050
MEDPARTNERS * 22,760 415,370
PHILIP MORRIS 18,450 726,469
SCHLUMBERGER 6,800 753,100
SEARS, ROEBUCK 9,500 456,000
TEXACO 6,000 633,000
TRANSOCEAN OFFSHORE 8,000 485,000
UNION PACIFIC 9,100 580,125
UNION PACIFIC RESOURCES 29,207 792,240
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARE VALUE
----- -----
<S> <C> <C>
NORTH AMERICA - CONTINUED
UNITED STATES - CONTINUED
WALT DISNEY 8,900 $ 729,800
WESTINGHOUSE ELECTRIC 38,000 646,000
WORLDCOM INC. * 27,700 664,800
----------
TOTAL UNITED STATES - (COST $10,250,941) 14,264,472
----------
TOTAL NORTH AMERICA - (COST $10,662,167) 14,932,274
----------
PACIFIC BASIN - 11.3%
AUSTRALIA - 1.5%
LEND LEASE CORPORATION 10,500 200,943
NATIONAL AUSTRALIA BANK LIMITED 20,000 273,727
NEWS CORPORATION 91,000 347,025
----------
TOTAL AUSTRALIA - (COST $854,205) 821,695
----------
HONG KONG - 6.3%
AMOY PROPERTIES 260,000 256,761
CHEUNG KONG HOLDINGS 53,000 465,243
CHINA LIGHT & POWER 47,000 211,747
CHINA OVERSEAS LAND & INVESTMENT 510,000 288,033
CITIC PACIFIC 40,000 216,356
FIRST PACIFIC COMPANY 150,000 179,113
HONG KONG TELECOMMUNICATIONS 152,800 262,343
HSBC HOLDINGS 19,054 482,100
HUTCHISON WHAMPOA 71,000 527,012
NEW WORLD DEVELOPMENT LIMITED 75,000 432,776
SWIRE PACIFIC 29,500 227,538
----------
TOTAL HONG KONG - (COST $3,155,683) 3,549,022
----------
INDONESIA - 0.7%
TELEKOMUNIKASI INDONESIA 280,000 406,173
----------
TOTAL INDONESIA - (COST $436,171) 406,173
----------
MALAYSIA - 1.5%
AMMB HOLDINGS 47,000 312,609
EDARAN OTOMOBILE NASIONAL 30,000 283,177
UNITED ENGINEERS 39,000 276,486
----------
TOTAL MALAYSIA - (COST $772,546) 872,272
----------
PHILIPPINES - 0.6%
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 5,800 323,350
----------
TOTAL PHILIPPINES - (COST $349,373) 323,350
----------
SINGAPORE - 0.7%
DEVELOPMENT BANK OF SINGAPORE 35,000 415,889
----------
TOTAL SINGAPORE - (COST $373,691) 415,889
----------
TOTAL PACIFIC BASIN - (COST $5,941,669) 6,388,401
----------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARE VALUE
----- -----
<S> <C> <C>
OTHER AREAS - 1.6%
INDIA - 1.6%
HIMALAYAN FUND 29,031 $ 400,628
SCHRODER INDIA FUND * 18,000 197,703
VIDESH SANCHAR NIGAM LIMITED, GDR (A) * 16,000 313,600
----------
TOTAL INDIA - (COST $941,407) 911,931
----------
TOTAL OTHER AREAS - (COST $941,407) 911,931
----------
JAPAN - 12.0%
ASAHI DIAMOND 309 2,425
CANON 23,000 545,397
DDI 51 338,701
EIDEN SAKAKIYA 10,000 80,356
HITACHI 41,000 371,450
ITO - YOKADO 7,000 335,841
KAMIGUMI 34,000 168,212
KYOCERA 3,000 179,619
MABUCHI MOTOR 3,000 151,968
MARUI 14,000 230,512
MBL INT'L. FINANCE (BERMUDA), EXCH. GTD NOTES, 3.00%, 11/30/2002 (B) 120,000 122,100
MITSUBISHI HEAVY INDUSTRIES 52,000 343,294
MITSUI FUDOSAN 24,000 274,156
NIPPON EXPRESS 29,000 199,905
NITTO DENKO 11,000 159,452
NOMURA SECURITIES 15,000 167,802
RISO KAGAKU 2,000 118,171
ROHM 7,000 542,640
SECOM COMPANY LIMITED 4,000 237,917
SHIMACHU 6,000 144,168
SHIN - ETSU CHEMICAL 15,850 319,660
SONY 7,000 509,552
SUMITOMO ELECTRIC 26,000 352,306
TAISHO PHARMACEUTICAL 8,000 197,897
TOKIO MARINE & FIRE 16,000 156,300
TOYOTA MOTOR CORPORATION 18,000 521,842
----------
TOTAL JAPAN - (COST $7,231,155) 6,771,643
----------
TOTAL COMMON AND PREFFERED STOCKS AND
EXCHANGEABLE NOTES - (COST $45,927,331) + 55,191,551
----------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 2.0%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT, 5.15%, 5/01/1997 (C) $ 1,144,000 1,144,000
----------
TOTAL SHORT TERM INVESTMENT - (COST $1,144,000) 1,144,000
----------
</TABLE>
See notes to financial statements
8
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
VALUE
-----
<S> <C>
TOTAL INVESTMENTS - (COST $47,071,331) - 99.5% $ 56,335,551
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.5% 298,914
-------------
NET ASSETS - 100.0% $ 56,634,465
-------------
-------------
</TABLE>
* Non-income producing security.
(a) 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 $313,600 or 0.6% of net
assets.
(b) Reflected at par value and denominated in U.S. dollars.
(c) The repurchase agreement, dated 4/30/97, $1,144,000 par due 5/01/97, is
collateralized by United States Treasury Notes, 5.875%, due 1/31/99, with a
market value of $1,168,055.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 1.9%, Automobiles 2.5%, Banks 9.3%, Chemicals 4.4%, Conglomerates
3.1%, Construction & Building Materials 1.1%, Construction & Mining
Equipment 0.2%, Diversified 0.3%, Drugs & Health Care 5.9%, Electric
Utilities 2.7%, Electrical Equipment 4.2%, Electronics 5.2%, Engineering
1.1%, Financial Services 1.2%, Food & Beverages 1.8%, Hotels & Restaurants
0.7%, Household Products 3.3%, Industrial Machinery 2.7%, Insurance 3.9%,
Investment Companies 1.1%, Leisure Time 2.0%, Mining 2.6%, Oil & Gas 5.1%,
Petroleum Services 1.7%, Photography 2.2%, Publishing 1.6%, Railroads &
Equipment 3.4%, Real Estate 3.5%, Retail Trade 5.3%, Telecommunications
2.4%, Telecommunications Services 2.8%, Telephone 4.5%, Tires & Rubber
0.9%, Tobacco 1.7%, Transportation 1.2%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $45,927,331) (Note B) $ 55,191,551
Investments in repurchase agreements, at value (Note B) 1,144,000
-------------
Total Investments 56,335,551
Cash 627
Foreign currency, at value (cost $27,125) (Note B) 27,095
Receivable for investments sold 174,082
Dividend and interest receivable 169,723
Foreign tax reclaims receivable 28,077
Prepaid insurance expense 4,743
Deferred organization expenses (Note B) 5,408
-------------
TOTAL ASSETS 56,745,306
-------------
LIABILITIES
Management fee payable (Note C) 78,808
Administration fee payable (Note C) 4,576
Trustees fees payable (Note C) 1,163
Accrued expenses and other liabilities 26,294
-------------
TOTAL LIABILITIES 110,841
-------------
TOTAL NET ASSETS $ 56,634,465
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 46,827,646
Undistributed net investment income 153,352
Accumulated net realized gain on investment and foreign
currency transactions 393,209
Net unrealized appreciation on investment and foreign currency
transactions 9,260,258
-------------
TOTAL NET ASSETS $ 56,634,465
-------------
-------------
NET ASSET VALUE PER SHARE $ 12.47
($56,634,465 / 4,540,616 shares of beneficial interest outstanding) -------------
-------------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 43,182
Dividend income 1,053,384
Foreign taxes withheld (87,026)
-----------
TOTAL INVESTMENT INCOME 1,009,540
-----------
EXPENSES
Management fee (Note C) 375,240
Custodian fee 113,878
Administration fee (Note C) 55,043
Audit fee 24,113
Legal fees 2,825
Transfer agent fee 6,586
Trustees fees (Note C) 2,074
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 10,887
Fees and expenses waived by the investment manager (Note C) (55,729)
-----------
TOTAL EXPENSES 537,465
-----------
NET INVESTMENT INCOME 472,075
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 1,072,718
Net realized gain on foreign currency transactions 475,540
Net increase in unrealized appreciation on:
Investments (net of foreign taxes of ($6,829)) 2,574,635
Foreign currency transactions 95,815
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 4,218,708
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,690,783
-----------
-----------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL GROWTH 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 $ 52,887,926 $ 37,259,376
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 472,075 563,980
Net realized gain on investment transactions 1,072,718 553,937
Net realized gain on foreign currency transactions 475,540 1,129,132
Net unrealized appreciation (depreciation) on:
Investments 2,574,635 5,906,618
Foreign currency transactions 95,815 (220,811)
------------ ------------
Net increase in net assets from operations 4,690,783 7,932,856
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,000,298) (692,764)
In excess of net investment income (404,226) (63,581)
Net realized gains (645,365) 0
------------ ------------
Total distributions (2,049,889) (756,345)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 0 7,940,000
Reinvestment of dividends and distributions to shareholders 1,355,645 452,039
Cost of shares repurchased (251,875) 0
Paid in capital from subscription and redemption fees 1,875 60,000
------------ ------------
Total increase in net assets from capital share transactions 1,105,645 8,452,039
------------ ------------
NET INCREASE IN NET ASSETS 3,746,539 15,628,550
------------ ------------
NET ASSETS at end of period (includes undistributed net investment $ 56,634,465 $ 52,887,926
income of $153,352 and $528,223, respectively) ------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 0 679,794
Shares issued in reinvestment of distributions to shareholders 111,576 41,548
Less shares repurchased (20,511) 0
------------ ------------
Net share transactions 91,065 721,342
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR JUNE 15, 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 $ 11.890 $ 9.990 $ 10.000
Net investment income 0.141 0.279 0.079
Net realized and unrealized gain on investment
and foreign currency transactions 0.902 1.809 0.033
------------ ------------ ------------
Total from investment operations 1.043 2.088 0.112
------------ ------------ ------------
Less distributions:
Net investment income (0.226) (0.186) (0.040)
In excess of net investment income (0.091) (0.017) 0.000
Net realized gains (0.146) 0.000 (0.082)
------------ ------------ ------------
Total distributions (0.463) (0.203) (0.122)
------------ ------------ ------------
Paid in capital from subscription and redemption fees (Note B) 0.000 0.015 0.000
------------ ------------ ------------
Net asset value, end of period $ 12.470 $ 11.890 $ 9.990
------------ ------------ ------------
------------ ------------ ------------
TOTAL INVESTMENT RETURN (1) 8.87% 21.17% 1.18%(2)
------------ ------------ ------------
------------ ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 56,634,465 $ 52,887,926 $ 37,259,376
Operating expenses, net, to average net assets (Note C) 1.00% 1.00% 1.00%(3)
Operating expenses, gross, to average net assets (Note C) 1.10% 1.27% 1.25%(3)
Net investment income to average net assets 0.88% 1.40% 0.94%(3)
Portfolio turnover rate 40% 38% 44%
Average commission rate per share (4) $ 0.0227 $ 0.0335 N/A
Per share amount of fees waived (Note C) $ 0.017 $ 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.
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"). 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 such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
14
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to paid-
in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 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, $1,875 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. On December 30, 1996 the
Fund declared a long term capital gain distribution of $645,365, representing
$0.146 per share.
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.
15
<PAGE>
MCBT GLOBAL GROWTH FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
INCOME TAXES (CONTINUED) - The Fund intends to make an election under Internal
Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its
shareholders. During the year ended April 30, 1997 the total amount of foreign
taxes that will be passed through to the shareholders and the foreign source
income for information reporting purposes will be $87,026 and $814,664,
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, the Investment Manager
has waived $55,729 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 $21,460,825 and
$22,173,466, 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
------------ ------------ -------------- ------------
$ 47,317,682 $ 11,308,304 $ (2,290,435) $ 9,017,869
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997, 100% of the Fund's outstanding shares were held by two
shareholders, each holding in excess of 10% of the Fund's outstanding shares.
16
<PAGE>
MCBT GLOBAL GROWTH 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.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Global Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Global Growth Fund (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
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
18
<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
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
<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,
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.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL EMERGING MARKETS FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in countries with
emerging markets and developing economies.
LAUNCH DATE February 14, 1997
FUND SIZE $50.1m
PERFORMANCE Total return from February 14, 1997 through April 30, 1997
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) +0.2%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -1.8%
The graph below represents the total return of the portfolio
including all transaction fees versus the Morgan Stanley
Capital International Emerging Markets Free Index from March
1, 1997 through April 30, 1997.
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) +0.5%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -1.5%
- Morgan Stanley Capital International - Emerging Markets
Free Index -2.5%
[GRAPH]
a) Performance for the benchmark is not available from February 14, 1997
(commencement of investment operations). For that reason, performance is
shown from March 1, 1997.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 100 basis points on purchase and 100 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO The Fund was launched on February 14, 1997.
COMMENTS
Initially, we favoured Latin America. Here we expected
interest rate reductions and falling inflation. Both are
good for stockmarkets. Latin American stocks are not
expensive as investors have been nervous since the Mexican
currency devaluation in late 1994. Politics are very
important to domestic and international investors alike.
Looming elections in Mexico and Argentina and a
privatisation programme in Brazil will keep politics
uppermost in investors' minds. We do, therefore, expect
some turbulence in these markets.
We are positive on the outlook for the EMEA markets (Europe,
Middle East and Africa). We have already seen handsome
returns from our stocks in Zimbabwe. We are excited by the
pace of economic reform in selected African markets. We
expect international investors to reassess the potential for
this area and anticipate that investors will buy stocks.
Middle Eastern markets should make further progress despite
the stalling of the peace process.
We have been less keen on the Asian markets, except for
China and India. Reforms in India and the freeing up of the
Chinese economy and stockmarket provide us with good
opportunities. Elsewhere, markets are suffering due to high
interest rates and deteriorating current account balances.
We are not tempted yet.
OUTLOOK
We expect emerging markets as a whole to benefit from
international buying. We intend to reduce our exposure to
Latin America and build positions in the EMEA region. We
have very few holdings in South Africa at the moment, but
will invest in smaller and medium-sized companies where
opportunities arise. We expect this to give us exposure to
the recovering economy and the expansion of South African
companies into sub-Saharan Africa. Although markets may be
quiet over the summer period, we expect good progress in the
final quarter of 1997.
INVESTMENT All members of the investment team report directly to Joe
MANAGER PROFILE Scott Plummer (Chief Investment Officer) who has 27 years of
investment experience. All funds are managed on a team
basis with a named director heading each team.
James Fairweather, Deputy Chief Investment Officer, oversees
the management of the MCBT Global Emerging Markets Fund.
The Fund is managed by Tristan Clube.
Tristan who graduated from Christ Church, Oxford with a
degree in Earth Sciences, gained a PhD in Geophysics from
Edinburgh University in 1985 and was awarded a Royal Society
Fellowship to pursue scientific interests at a research
institute in France. Tristan joined Martin Currie's Far
East team in 1987, was appointed Director of Martin Currie
Investment Management Ltd. in 1991, and became head of the
Pacific Basin team in 1993. He was appointed head of the
Emerging Markets team in 1995.
2
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
17 % EUROPE
8 % AFRICA
42 % LATIN AMERICA
7 % MIDDLE EAST
5 % OTHER AREAS
19 % PACIFIC BASIN
2 % OTHER NET ASSETS
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
<C> <S> <C> <C>
LATIN AMERICA
Telebras, ADR (Brazil) 5.7
Petrobras Petroleo Brasil (Brazil) 4.7
Compania de Telefonos de Chile, ADR (Chile) 3.9
OTHER AREAS
Taiwan Opportunities Fund (Investment Companies) 4.8
Indian Opportunities Fund (Investment Companies) 2.6
East Europe Development Fund (Investment Companies) 2.1
PACIFIC BASIN
Commerce Asset Holdings (Malaysia) 1.3
MIDDLE EAST
Commercial International Bank, GDR (Egypt) 1.1
AFRICA
Sasol (South Africa) 1.1
</TABLE>
3
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS - 98.4%
AFRICA - 8.1%
SOUTH AFRICA - 6.4%
ANGLO AMERICAN CORPORATION 6,400 $ 408,771
BARLOW LIMITED 44,000 484,876
ELLERINE HOLDINGS LIMITED 20,000 125,942
GENCOR LIMITED 114,000 479,433
NAMPAK LIMITED 114,000 489,689
NEW CLICKS HOLDINGS 290,000 332,621
Q DATA SYSTEMS 145,000 302,620
SASOL 44,000 564,039
-----------
TOTAL SOUTH AFRICA - (COST $3,142,752) 3,187,991
-----------
ZIMBABWE - 1.7%
MEIKLES AFRICA LIMITED 135,000 314,550
NMBZ HOLDINGS * 60,000 171,000
TRANS ZAMBEZI INDUSTRIES 375,000 375,000
-----------
TOTAL ZIMBABWE - (COST $705,979) 860,550
-----------
TOTAL AFRICA - (COST $3,848,731) 4,048,541
-----------
EUROPE - 5.1%
GREECE - 2.7%
ALPHA CREDIT BANK, RIGHTS, 5/09/97 * 8,200 582,584
ERGO BANK 11,430 753,275
-----------
TOTAL GREECE - (COST $1,140,206) 1,335,859
-----------
HUNGARY - 2.4%
BORSODCHEM RT., GDR 11,500 419,750
GEDEON RICHTER, GDR 5,700 427,500
GRABOPLAST TEXTILE 8,300 380,507
-----------
TOTAL HUNGARY - (COST $1,240,621) 1,227,757
-----------
TOTAL EUROPE - (COST $2,380,827) 2,563,616
-----------
LATIN AMERICA - 42.0%
ARGENTINA - 2.5%
TELEFONICA DE ARGENTINA, ADR 38,000 1,263,500
-----------
TOTAL ARGENTINA - (COST $1,201,996) 1,263,500
-----------
BRAZIL - 22.9%
CEMIG, ADR 27,000 1,215,000
ELECTROBRAS, ADR 55,000 1,230,625
LIGHT SERVICOS DE ELETRICIDADE 3,100,000 1,288,387
PETROBRAS PETROLEO BRASIL 11,200,000 2,353,738
TELEBRAS, ADR 25,000 2,868,750
TELEC DO RIO JANEIRO 7,800,000 1,298,166
TELECOMUNICACOES DE SAO PAULO 4,200,000 1,192,666
-----------
TOTAL BRAZIL - (COST $10,827,437) 11,447,332
------------
</TABLE>
See notes to financial statements
4
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
LATIN AMERICA - Continued
CHILE - 5.1%
COMPANIA DE TELEFONOS DE CHILE, ADR 60,000 $ 1,942,500
PROVIDA, ADR 35,000 630,000
-----------
TOTAL CHILE - (COST $2,568,685) 2,572,500
-----------
MEXICO - 9.0%
CIFRA SA DE CV, CL A 57,485 86,808
CIFRA SA DE CV, CL B 470,000 721,576
CORPORACION GEO, SERIES B * 140,000 651,859
EMPRESAS ICA SOCIEDAD, ADR 45,000 669,375
TELEFONOS DE MEXICO, ADR 30,000 1,237,500
TUBOS DE ACERO DE MEXICO, ADR * 70,000 1,146,250
-----------
TOTAL MEXICO - (COST $4,582,061) 4,513,368
-----------
PERU - 1.6%
TELEFONICA DEL PERU, ADR, CL B 33,000 792,000
-----------
TOTAL PERU - (COST $751,556) 792,000
-----------
VENEZUELA - 0.9%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 15,000 450,000
-----------
TOTAL VENEZUELA - (COST $469,220) 450,000
-----------
TOTAL LATIN AMERICA - (COST $20,400,955) 21,038,700
-----------
MIDDLE EAST - 6.9%
EGYPT - 3.0%
AL-AHRAM BEVERAGES, GDR * 27,000 510,300
COMMERCIAL INTERNATIONAL BANK, GDR * 25,000 562,500
SUEZ CEMENT, GDR * 22,000 409,200
-----------
TOTAL EGYPT - (COST $1,510,050) 1,482,000
-----------
ISRAEL - 2.1%
ECI TELECOMMUNICATIONS 23,000 503,125
TADIRAN TELECOMMUNICATIONS 27,000 526,500
-----------
TOTAL ISRAEL - (COST $1,060,895) 1,029,625
-----------
TURKEY - 1.8%
AKCANSA CIMENTO A.S. 3,500,000 458,216
YAPI KREDI BANKASI 11,000,000 462,458
-----------
TOTAL TURKEY - (COST $989,435) 920,674
-----------
TOTAL MIDDLE EAST - (COST $3,560,380)
3,432,299
-----------
PACIFIC BASIN - 19.0%
CHINA - 4.5%
GUANGDONG KELON ELECTRICAL 650,000 629,316
GUANGSHEN RAILWAY 1,100,000 525,399
QINGLING MOTORS 900,000 493,771
</TABLE>
See notes to financial statements
5
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
PACIFIC BASIN - Continued
CHINA - Continued
TINGYI 2,400,000 $ 585,555
TOTAL CHINA - (COST $2,041,817) 2,234,041
-----------
HONG KONG - 2.3%
CHINA OVERSEAS LAND & INVESTMENT 1,000,000 564,771
CITIC PACIFIC 105,000 567,934
-----------
TOTAL HONG KONG - (COST $1,028,234) 1,132,705
-----------
INDONESIA - 3.3%
CITRAMARGA NUSAPHALA PERSADA 530,000 463,477
HANJAYA MANDALA SAMPOERNA 85,000 341,924
LIPPO BANK * 430,000 411,420
TELEKOMUNIKASI INDONESIA, SERIES B 300,000 435,185
------------
TOTAL INDONESIA - (COST $2,010,064) 1,652,006
------------
MALAYSIA - 6.3%
AMMB HOLDINGS 75,000 498,845
COMMERCE ASSET HOLDINGS 110,000 657,161
DIVERSIFIED RESOURCES 180,000 430,142
MALAYSIAN ASSURANCE ALLIANCE 110,000 591,445
MULTIPURPOSE HOLDINGS 300,000 489,884
UNITED ENGINEERS 72,000 510,435
-----------
TOTAL MALAYSIA - (COST $4,303,487) 3,177,912
-----------
PHILIPPINES - 2.6%
BELLE CORPORATION * 1,600,000 382,253
EQUITABLE BANKING CORPORATION * 150,000 585,893
FILINVEST LAND 1,500,000 352,673
-----------
TOTAL PHILIPPINES - (COST $1,684,073) 1,320,819
-----------
TOTAL PACIFIC BASIN - (COST $11,067,675)
9,517,483
-----------
OTHER AREAS - 17.3%
INDIA - 6.4%
GREAT EASTERN SHIPPING, GDR 80,000 442,400
LARSEN & TOUBRO, GDR 36,000 513,000
MAHINDRA & MAHINDRA, GDR 50,000 622,000
STATE BANK OF INDIA, GDR * 29,000 700,930
TATA ELECTRIC COMPANIES, GDR 1,500 495,000
VIDESH SANCHAR NIGAM LIMITED, GDR (C) * 23,000 450,800
-----------
TOTAL INDIA - (COST $3,148,255) 3,224,130
-----------
RUSSIA - 0.8%
GAZPROM, ADR * 9,600 148,992
LUKOIL HOLDING, ADR 4,700 266,137
-----------
TOTAL RUSSIA - (COST $494,025) 415,129
-----------
</TABLE>
See notes to financial statements
6
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------------ ----------
<S> <C> <C>
OTHER AREAS - CONTINUED
INVESTMENT COMPANIES - 10.1%
EAST EUROPE DEVELOPMENT FUND * 25,000 $ 1,034,500
INDIAN OPPORTUNITIES FUND (a) * 140,000 1,301,300
NEAR EAST OPPORTUNITIES FUND (b) * 25,000 343,250
TAIWAN OPPORTUNITIES FUND (b) * 150,000 2,389,500
-----------
TOTAL INVESTMENT COMPANIES - (COST $4,593,000) 5,068,550
-----------
TOTAL OTHER AREAS - (COST $8,235,280) 8,707,809
-----------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS-(COST $49,493,848)+ 49,308,448
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT TERM INVESTMENT - 1.1%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.15%, 5/01/1997 (d) $555,000 555,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $555,000) 555,000
-----------
TOTAL INVESTMENTS - (COST $50,048,848) - 99.5% 49,863,448
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.5% 232,408
-----------
NET ASSETS - 100.0% $50,095,856
-----------
-----------
</TABLE>
* Non-income producing security.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd., an
affiliate of Martin Currie Inc.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Near East
Opportunities and Taiwan Opportunities Funds.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $450,800 or 0.9% of net
assets.
(d) The repurchase agreement, dated 4/30/97, $555,000 par, due 5/01/97, is
collateralized by United States Treasury Notes, 5.125%, due 2/28/98, with a
market value of $570,834.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Automobiles 3.1%, Banks 9.7%, Chemicals 0.8%, Commercial Services 0.9%,
Computers 0.6%, Conglomerates 1.1%, Construction & Building Materials 4.0%,
Construction & Mining Equipment 1.3%, Containers & Glass 1.0%, Diversified
0.7%, Drugs & Health Care 0.9%, Electric Utilities 8.4%, Engineering 1.0%,
Financial Services 4.1%, Food & Beverages 2.2%, Gas Exploration 0.8%,
Hotels & Restaurants 0.6%, Household Appliances & Home Furnishings 1.3%,
Industrial Machinery 1.0%, Insurance 1.2%, Investment Companies 10.1%,
Manufacturing 3.1%, Mining 1.0%, Oil & Gas 6.6%, Real Estate 1.8%, Retail
Trade 2.5%, Telecommunication 10.7%, Telecommunications Equipment 2.1%,
Telecommunications Services 7.3%, Telephone 5.9%, Tobacco 0.7%,
Transportation 1.9%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $49,493,848) (Note B) $ 49,308,448
Investments in repurchase agreements, at value (Note B) 555,000
-------------
Total Investments 49,863,448
Cash 1,603
Foreign currency, at value (cost $29,367) (Note B) 29,347
Dividend and interest receivable 293,140
Prepaid insurance expense 4,929
Deferred organization expenses (Note B) 12,183
-------------
TOTAL ASSETS 50,204,650
-------------
LIABILITIES
Management fee payable (Note C) 77,760
Administration fee payable (Note C) 3,381
Trustees fees payable (Note C) 448
Accrued expenses and other liabilities 27,205
-------------
TOTAL LIABILITIES 108,794
-------------
TOTAL NET ASSETS $50,095,856
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $50,000,000
Undistributed net investment income 275,775
Accumulated net realized gain on investment and foreign
currency transactions 5,684
Net unrealized depreciation on investment and foreign
currency transactions (185,603)
-------------
TOTAL NET ASSETS $50,095,856
-------------
-------------
NET ASSET VALUE PER SHARE $ 10.02
-------------
-------------
($50,095,856 / 5,000,000 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 96,021
Dividend income 357,231
Foreign taxes withheld (23,102)
-----------
TOTAL INVESTMENT INCOME 430,150
-----------
EXPENSES
Management fee (Note C) 77,760
Custodian fee 32,000
Administration fee (Note C) 8,372
Audit fee 12,700
Legal fees 1,500
Transfer agent fee 1,374
Trustees fees (Note C) 448
Amortization of deferred organization expenses 555
Miscellaneous expenses 3,072
-----------
TOTAL EXPENSES 137,781
-----------
NET INVESTMENT INCOME
292,369
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 5,684
Net realized loss on foreign currency transactions (16,594)
Net unrealized depreciation on:
Investments (185,400)
Foreign currency transactions (203)
-----------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
(196,513)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 95,856
-----------
-----------
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS at beginning of period $ 0
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 292,369
Net realized gain on investment transactions 5,684
Net realized loss on foreign currency transactions (16,594)
Net unrealized depreciation on:
Investments (185,400)
Foreign currency transactions (203)
-----------
Net increase in net assets from operations 95,856
-----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 50,000,000
-----------
Total increase in net assets from capital share transactions 50,000,000
-----------
NET INCREASE IN NET ASSETS 50,095,856
-----------
NET ASSETS at end of period (includes undistributed net investment $50,095,856
income of $275,775) -----------
-----------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,000,000
-----------
Net share transactions 5,000,000
-----------
-----------
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
FEBRUARY 14, 1997* THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.000
Net investment income 0.055
Net realized and unrealized loss on investment
and foreign currency transactions (0.035)
-----------
Total from investment operations 0.020
-----------
Net asset value, end of period $ 10.020
-----------
-----------
TOTAL INVESTMENT RETURN (1) (2) 0.20%
-----------
-----------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $50,095,856
Operating expenses, net, to average net assets (Note C) 1.33% (3)
Operating expenses, gross, to average net assets (Note C) 1.33% (3)
Net investment income to average net assets 2.83% (3)
Portfolio turnover rate 0%
Average commission rate per share (4) $ 0.002
</TABLE>
- -------------------------------------------------------------------------------
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Periods less than one year are not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged.
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). The MCBT Global Emerging Markets Fund (the "Fund")
commenced investment operations on February 14, 1997. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF INVESTMENTS - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
12
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 1.00% of the amount invested and a redemption fee
on cash redemptions of 1.00% of the amount redeemed. All purchase premiums and
redemption fees are paid to and retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the period ended April 30, 1997, no purchase premiums
or redemption fees were collected.
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for U.S.
federal income tax purposes. Each Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. By so qualifying, the Funds will not be subject to federal
income taxes to the extent that they distribute substantially all of their
taxable income, including realized capital gains, for the fiscal year. In
addition, by distributing substantially all of their net investment income,
capital gains and certain other amounts, if any, during the calendar year, the
Funds will not be subject to a federal excise tax.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
unrealized appreciation as such income and/or gains are earned.
13
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund intends to make an election under Internal
Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its
shareholders. During the year ended April 30, 1997 the total amount of foreign
taxes that will be passed through to the shareholders and the foreign source
income for information reporting purposes will be $11,109 (of the total $23,102
taxes withheld) and $357,254, respectively.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 0.80% of the Fund's average net assets.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the period ended April 30, 1997 were $49,493,848 and
$5,684, respectively.
The identified cost of investments in securities and repurchase agreements owned
for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at April 30, 1997 were as follows:
<TABLE>
<CAPTION>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) DEPRECIATION
------------ -------------- -------------- --------------
<S> <C> <C> <C>
$ 50,545,898 $ 2,157,214 $ (2,839,664) $ (682,450)
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997, 100% of the Fund's outstanding shares were held by one
shareholder.
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political, regulatory
and other conditions, and changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments and capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting, reporting
and disclosure requirements than domestic issuers. The securities of some
foreign companies and foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
14
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
CONCENTRATION OF RISK (CONTINUED) - The risks of investing in foreign securities
may be heightened in the case of investments in emerging markets or countries
with limited or developing capital markets. Security prices in emerging markets
can be significantly more volatile than in the more developed nations of the
world, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets may have
relatively unstable governments, present the risk of nationalization,
restrictions on foreign ownership, imposition of witholding taxes on dividend or
interest payments and capital gains, or prohibitions on repatriation of assets,
and may have less protection for property rights than more developed countries.
Political change or instability may adversely affect the economies and
securities markets of such countries.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Global Emerging Markets
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Global Emerging Markets Fund
(the "Fund") at April 30, 1997, and the results of its operations, the changes
in its net assets and the financial highlights for the period from February 14,
1997 (commencement of operations) through April 30, 1997, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 17, 1997
16
<PAGE>
MARTIN CURRIE BUSINESS TRUST
------------------------
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
------------------------
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Scotland
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
-----------------------
- -------------------------------------------------------------------------------
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
- -------------------------------------------------------------------------------
<PAGE>
MARTIN CURRIE BUSINESS TRUST
JAPAN SMALL COMPANIES FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
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 $66.7m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
- MCBT - Japan Small Companies Fund (excluding all
transaction fees) (22.7%)
- MCBT - Japan Small Companies Fund (including all
transaction fees) (24.2%)
- Tokyo Stock Exchange - Second Section Index (38.3%)
Annualized total return from August 15, 1994 through
April 30, 1997
- MCBT - Japan Small Companies Fund (excluding all
transaction fees) (6.2%)
- MCBT - Japan Small Companies Fund (including all
transaction fees) (6.9%)
The graph below represents the annualized total return of the
portfolio including all transaction fees versus the Tokyo Stock
Exchange - Second Section Index from September 1, 1994 through
April 30, 1997.
- MCBT - Japan Small Companies Fund (excluding all
transaction fees) (6.4%)
- MCBT - Japan Small Companies Fund (including all
transaction fees) (7.1%)
- Tokyo Stock Exchange - Second Section Index (20.5%)
[GRAPH]
(a) Performance for the benchmark is not available from August 15, 1994
(commencement of investment operations). For that reason, performance is
shown from September 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 100 basis points on purchase and 100 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO The Japanese market fell heavily over the 12 month period.
COMMENTS A very weak currency reduced still further the returns to
a US$-based investor. Small companies fared worse than
their larger counterparts. The currency hedge we had in
place for most of the year ensured that the fund return
was better than that of the index. Our stock selection
was also good.
More pessimistic forecasts for economic growth in 1997
drove the stockmarket down. A less active consumer and the
inability of the government to stimulate consumption led
to the lowering of estimates. Interest rates are at
historic lows and capital has been flowing out of Japan.
Companies have taken advantage of these extremely low
interest rates to raise convertible bond issues. This
dilutes ordinary shareholders.
During the year, we shortened the list of stocks which we
were holding. We sold very small companies, such as Ten
Allied, NAC and PCA, because we felt uncomfortable with
illiquid companies. We have sought good value new issues,
such as Yusen Air, Nippon Broadcasting, Tsubaki, Nakashima
and Bridgestone Metalpha. These have boosted our returns.
We also benefited from the strong performance of Circle
K, a medium-sized convenience store.
Outlook
The outlook unfortunately remains cloudy. For a fully
fledged recovery in stock prices, we would need to see a
pick up in the economy - something which remains elusive.
Severe problems persist in the financial system (an
example is the recent bankruptcy of Nissan Mutual Life).
In addition, the deregulation initiatives currently
underway will probably lead to margin pressures in most
targeted industries as competition increases. Smaller
companies have performed very badly and we expect to see
some recovery in 1997.
INVESTMENT All members of the investment team report directly to Joe
MANAGER Scott Plummer (Chief Investment Officer) who has 27 years
PROFILE of investment experience. All funds are managed on a team
basis with a named director heading each team.
Michael Thomas 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 markets in 1975 and
became Director of the 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.
He has recently been joined by Keith Donaldson. Keith
graduated from the University of Kingston-upon-Hull with a
degree in Social Studies. Having spent five years as a
financial analyst with Wood Mackenzie, followed by four
years with UBS Philips and Drew. Keith moved to Tokyo in
1988 as Vice President and head of Japanese equity sales
at Morgan Stanley, then joined Martin Currie's Japan team
as an assistant director in 1997.
LARGEST HOLDINGS % OF NET ASSETS
Circle K Japan 4.2
Taisho Pharmaceutical 3.7
Meitec 3.0
Fuji Machine Manufacturing 3.0
Promise 2.6
2
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - 94.3%
COMMON STOCK - 80.1%
AIPHONE 49,600 $ 679,907
ASIA SECURITIES PRINTING 55,000 823,256
BRIDGESTONE METALPHA 67,000 533,108
BROTHER INDUSTRIES 134,000 505,660
CANON APTEX 88,000 1,227,085
CHAIN STORE OKUWA 5,000 49,632
CHIYODA 70,000 871,312
CHIYODA FIRE & MARINE 11,550 41,401
CHUGOKU BANK 100,000 1,284,122
CIRCLE K JAPAN 60,480 2,777,787
COCO'S JAPAN 50,000 350,573
DAIFUKU 100,000 1,150,195
DAIWA LOGISTICS 94,800 1,194,942
EIDEN SAKAKIYA 74,000 594,635
EXEDY 86,200 1,018,632
FUJI MACHINE MANUFACTURING 70,000 1,974,239
FUJITSU BUSINESS SYSTEMS 40,000 806,712
GLORY 20,000 362,390
HIKARI TSUSHIN 17,940 1,003,458
HIRATA TECHNICAL 74,400 691,630
HIROSE ELECTRIC 30,800 1,683,948
KATO DENKI 45,000 347,422
KIRIN BEVERAGE 110,000 1,499,193
MABUCHI MOTOR 28,000 1,418,364
MAEZAWA INDUSTRIES 100,000 1,213,219
MEITEC 100,000 2,001,024
MELCO 3,300 93,071
MIURA 44,000 540,749
NATIONAL HOUSE INDUSTRIAL 80,000 945,366
NICHICON 120,000 1,314,058
NIPPON BROADCASTING SYSTEM 9,000 673,573
NIPPON KONPO UNYU SOKO 129,000 757,120
NIPPON SYSTEM DEVELOPMENT 49,000 613,779
NISSHA PRINTING 110,000 979,241
NITTO KOHKI 33,000 933,312
NORITSU KOKI 600 25,572
ORGANO 39,000 242,415
ORIENTAL CONSTRUCTION 60,500 428,006
PROMISE 41,300 1,708,158
RISO KAGAKU 20,000 1,181,707
ROHTO PHARMACEUTICAL 80,000 762,595
RYOSAN 65,000 1,377,477
SANKI ENGINEERING 160,000 1,285,697
SANKYO 60,300 1,391,886
SANTEN PHARMACEUTICAL 88,770 1,594,482
SHIMACHU 40,000 961,122
SONY MUSIC ENTERTAINMENT 40,000 1,373,932
</TABLE>
See notes to financial statements.
3
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK - CONTINUED
TAISHO PHARMACEUTICAL 100,000 $ 2,473,707
TOKAI LEASE 60,000 233,033
TSUBAKI NAKASHIMA 140,000 1,102,927
UNI-CHARM 40,000 1,225,824
XEBIO 35,000 821,680
YOROZU 50,000 582,976
YUSEN AIR & SEA SERVICE 49,000 1,698,507
------------
TOTAL COMMON STOCK - (COST $65,727,345) 53,425,818
------------
CONVERTIBLE BONDS - 13.9%
JONAS, 1.35%, 12/30/1999 Y106,500,000 1,202,304
KONAMI, 0.75%, 03/31/2000 Y160,000,000 1,632,332
MIRAI INDUSTRY, 2.30%, 03/20/2002 Y138,000,000 1,522,039
NAMCO, 0.80%, 09/28/2001 Y 50,000,000 464,805
NAMCO, 0.90%, 09/30/2003 Y110,000,000 1,026,904
NITTO DENKO, NO 4, 3.90%, 03/30/2001 Y 70,000,000 766,534
RISO KAGAKU, 4.50%, 03/31/1999 Y 61,000,000 539,189
SHOWA, 1.70%, 09/29/2000 Y111,000,000 1,040,611
TAIYO YUDEN, 1.15%, 09/30/2008 Y100,000,000 1,087,171
------------
TOTAL CONVERTIBLE BONDS - (COST $9,672,626) 9,281,889
------------
WARRANTS - 0.3%
NIPPON ENGINEERING CONSULTANTS * 1,500 24,422
SATORI * 200 85,000
TAMPOPO * 150 102,656
------------
TOTAL WARRANTS - (COST $494,115) 212,078
------------
TOTAL COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - (COST $75,894,086) + 62,919,785
------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 5.5%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT, 5.15%, 5/01/1997 (A) $ 3,713,000 3,713,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $3,713,000) 3,713,000
------------
TOTAL INVESTMENTS - (COST $79,607,086) - 99.8% 66,632,785
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 0.2% 115,871
------------
NET ASSETS - 100.0% $ 66,748,656
------------
------------
</TABLE>
* Non-income producing security.
Y Denominated in Japanese yen.
(a) The repurchase agreement, dated 4/30/97, $3,713,000 par, due 5/01/97, is
collateralized by United States Treasury Notes, 6.25%, due 3/31/99, with a
market value of $3,790,505.
+ Percentages of long term investments by industry are as follows: Auto Parts
3.5%, Banks 1.9%, Broadcasting 1.0%, Building & Construction 4.3%,
Commercial Services 0.3%, Computers & Business Equipment 6.8%, Drugs &
Health Care 9.3%, Electrical Equipment 10.2%, Electronics 7.1%, Engineering
2.0%, Entertainment 2.1%, Financial Services 2.7%, Food & Beverages 4.0%,
Industrial Machinery 10.9%, Insurance 0.1%, Metals 2.5%, Paper 1.8%,
Photography 1.8%, Printing 2.7%, Retail Trade 10.1%, Semi-Conductor
Manufacturing Equipment 0.5%, Shipbuilding 0.8%, Software 2.4%,
Transportation 5.5%.
See notes to financial statements.
4
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $75,894,086) (Note B) $ 62,919,785
Investments in repurchase agreements, at value (Note B) 3,713,000
-------------
Total Investments 66,632,785
Cash 218
Foreign currency, at value (cost $105,885) (Note B) 105,677
Dividend and interest receivable 190,860
Prepaid insurance expense 5,787
Deferred organization expenses (Note B) 5,841
-------------
TOTAL ASSETS 66,941,168
-------------
LIABILITIES
Management fee payable (Note C) 160,104
Administration fee payable (Note C) 4,595
Trustees fees payable (Note C) 1,631
Accrued expenses and other liabilities 26,182
-------------
TOTAL LIABILITIES 192,512
-------------
TOTAL NET ASSETS $ 66,748,656
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 82,621,142
Undistributed net investment income 89,565
Accumulated net realized loss on investment and foreign currency transactions (2,983,152)
Net unrealized depreciation on investment and foreign currency transactions (12,978,899)
-------------
TOTAL NET ASSETS $ 66,748,656
-------------
-------------
NET ASSET VALUE PER SHARE $ 7.72
($66,748,656 / 8,646,904 shares of beneficial interest outstanding) -------------
-------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 298,662
Dividend income 465,031
Foreign taxes withheld (83,182)
-------------
TOTAL INVESTMENT INCOME 680,511
-------------
EXPENSES
Management fee (Note C) 797,216
Custodian fee 89,740
Administration fee (Note C) 63,807
Audit fee 24,189
Legal fees 4,694
Transfer agent fee 7,143
Trustees fees (Note C) 3,300
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 13,675
-------------
TOTAL EXPENSES 1,006,312
-------------
NET INVESTMENT LOSS (325,801)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (1,933,163)
Net realized gain on foreign currency transactions 2,960,291
Net unrealized appreciation (depreciation) on:
Investments (21,908,955)
Foreign currency transactions 449,601
-------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (20,432,226)
-------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (20,758,027)
-------------
-------------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT JAPAN SMALL COMPANIES 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 $ 88,863,054 $ 44,969,083
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss (325,801) (219,975)
Net realized gain (loss) on investment transactions (1,933,163) 323,979
Net realized gain on foreign currency transactions 2,960,291 2,490,116
Net unrealized appreciation (depreciation) on:
Investments (21,908,955) 8,273,355
Foreign currency transactions 449,601 (929,597)
------------ ------------
Net increase (decrease) in net assets from operations (20,758,027) 9,937,878
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,659,257) 0
In excess of net investment income (2,562,640) (639,196)
Net realized gains (814,535) 0
In excess of net realized gains (330,947) 0
------------ ------------
Total distributions (5,367,379) (639,196)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 7,729,431 33,742,120
Reinvestment of dividends and distributions to shareholders 5,251,397 611,375
Cost of shares repurchased (9,125,750) (100,000)
Paid in capital from subscription and redemption fees 155,930 341,794
------------ ------------
Total increase in net assets from capital share transactions 4,011,008 34,595,289
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (22,114,398) 43,893,971
------------ ------------
NET ASSETS at end of period (net of accumulated net investment $ 66,748,656 $ 88,863,054
income of $89,565 and $1,985,058, respectively) ------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 816,185 3,514,816
Shares issued in reinvestment of distributions to shareholders 628,158 61,943
Less shares repurchased (1,045,143) (10,493)
------------ ------------
Net share transactions 399,200 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
<TABLE>
<CAPTION>
YEAR YEAR (5) AUGUST 15, 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 $ 10.770 $ 9.610 $ 10.000
Net investment income(loss) (0.027) (0.034) 0.013
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (2.384) 1.248 (0.492)
------------ ------------ ------------
Total from investment operations (2.411) 1.214 (0.479)
------------ ------------ ------------
Less distributions:
Net investment income (0.203) 0.000 (0.002)
In excess of net investment income (0.314) (0.097) 0.000
Net realized gains (0.100) 0.000 (0.003)
In excess of net realized gains (0.040) 0.000 (0.000)
------------ ------------ ------------
Total distributions (0.657) (0.097) (0.005)
------------ ------------ ------------
Paid in capital from subscription and redemption fees (Note B) 0.018 0.043 0.094
------------ ------------ ------------
Net asset value, end of period $ 7.720 $ 10.770 $ 9.610
------------ ------------ ------------
------------ ------------ ------------
TOTAL INVESTMENT RETURN (1) (22.69)% 13.13% (3.85)%(2)
------------ ------------ ------------
------------ ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 66,748,656 $ 88,863,054 $ 44,969,083
------------ ------------ ------------
Operating expenses, net, to average net assets (Note C) 1.26% 1.37% 1.50%(3)
Operating expenses, gross, to average net assets (Note C) 1.26% 1.37% 1.72%(3)
Net investment income(loss) to average net assets (0.41)% (0.36)% 0.37%(3)
Portfolio turnover rate 26% 37% 33%
Average commission rate per share (4) $ 0.0612 $ 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"). 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 such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
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, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 1.00% of the amount invested and a redemption fee
on cash redemptions of 1.00% of the amount redeemed. All purchase premiums and
redemption fees are paid to and retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the year ended April 30, 1997, $71,510 was collected
in purchase premiums and $84,420 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 elected for Federal income tax purposes to defer a $2,981,901 current
year post October 31 loss as though the loss was incurred on the first day of
the next fiscal year.
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.
10
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund intends to make an election under Internal
Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its
shareholders. During the year ended April 30, 1997 the total amount of foreign
taxes that will be passed through to the shareholders and the foreign source
income for information reporting purposes will be $83,182 and $603,045,
respectively.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 1.00% 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 1.50% 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 $20,742,202 and
$19,271,196, 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) (DEPRECIATION)
------------ ------------ -------------- --------------
$ 79,647,974 $ 3,248,129 $ (16,263,318) $ (13,015,189)
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 28% of the Fund.
NOTE F - 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.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Japan Small Companies Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Japan Small Companies Fund (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
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.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING AMERICAS FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
OBJECTIVE Long-term capital appreciation through active management of a
diversified portfolio of equities in countries of the Western
Hemisphere with emerging markets and developing economies.
LAUNCH DATE September 19, 1994
FUND SIZE $194.6m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
- MCBT - Emerging Americas Fund (excluding all transaction
fees) + 23.5%
- MCBT - Emerging Americas Fund (including all transaction
fees) + 19.3%
- The Morgan Stanley Capital International Latin America
(Free) Index + 33.3%
Annualized total return from September 19, 1994 through
April 30, 1997
- MCBT - Emerging Americas Fund (excluding all transaction
fees) (1.9%)
- MCBT - Emerging Americas Fund (including all transaction
fees) (3.2%)
The graph below represents the annualized total return of the
portfolio including all transaction fees versus the Morgan Stanley
Capital International Latin America (Free) Index from October 1,
1994 through April 30, 1997.
- MCBT - Emerging Americas Fund (excluding all transaction
fees) (3.7%)
- MCBT - Emerging Americas Fund (including all transaction
fees) (5.0%)
- The Morgan Stanley Capital International Latin America
(Free) Index (0.4%)
[graph]
(a) Performance for the benchmark is not available from September 19, 1994
(commencement of investment operations). For that reason, performance is
shown from October 1, 1994.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 175 basis points on purchase and 175 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
PORTFOLIO It has been a good year for Latin American equities. The MSCI Latin
COMMENTS America (Free) Index has risen by 33.3%. Brazil, Colombia and
Argentina were the star performers. New subscriptions have
helped to swell the size of the fund from US$89.6m at the
beginning of the 12 month period to US$194.6m now.
Economies across the region are recovering and interest rates are
falling. Inflation has declined and currencies have stabilised.
Strong oil prices have been good for Venezuela and Mexico. It is
not, therefore, surprising that the international investor has
returned to the region.
Our largest position was in BRAZIL. Here we have bought and held
privatisation and electrical utility stocks such as Telebras,
Telesp and Cemig. We had to wait until the second half of the
year to reap the benefits of this strategy.
Our MEXICAN portfolio was very focused. We favoured domestic
stocks because we expected consumption to rise. Even though the
consumer recovery did not materialise, stocks such as Soriana
performed well earlier in the year. We also bought stocks which
benefit directly from stronger economic activity such as Tamsa
and Corporacion Geo. They have served us well.
Elsewhere, we reduced our exposure to ARGENTINA in December in
anticipation of a rise in US interest rates. We established
holdings in VENEZUELA. Here, CANTV, the first privatisation
issue, provided us with a good opportunity to make money. We
also added to our CHILEAN exposure, buying CTC.
Outlook
We expect markets to pause for breath before moving ahead towards
the end of the calendar year. Looming elections in Mexico and
Argentina may create short-term turbulence.
Longer-term, economic growth of 4-5% across the region, falling
interest rates and deregulation make Latin America attractive.
INVESTMENT All members of the investment team report directly to Joe Scott
MANAGER Plummer (Chief Investment Officer), who has 27 years investment
PROFILE experience. All funds are managed on a team basis with a named
director heading each team.
James Fairweather has managed the MCBT Emerging Americas Fund
since inception.
James spent three years with Montague Loebl Stanley & Co. as an
institutional sales and economic assistant. Moved into Eurobond
sales for 18 months with Kleinwort Benson before joining Martin
Currie in 1984. He has worked in our Far East, North American
and Continental European investment teams. Appointed a director
in 1987, he became head of our Continental Europe team in 1992.
A member of the asset allocation committee, James was appointed
Deputy Chief Investment Officer in 1994 with overall
responsibility for our investments in emerging markets.
Joanna Terrett assists James.
2
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1997
ASSET ALLOCATION
(% of net assets)
39% Brazil
25% Mexico
10% Argentina
4% Peru
4% Other Areas
13% Chile
5% Other Net Assets
[CHART]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
BRAZIL
Telebras, ADR 10.0
Telec do Rio Janeiro 3.3
MEXICO
Bufete Industrial, ADR 2.7
Empresas La Moderna 2.6
ARGENTINA
Banco de Galicia, ADR 3.3
Compania Perez Companc 3.2
CHILE
Compania de Telefonos de Chile 4.7
PERU
Telefonica del Peru, CL B 3.0
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
COMMON AND PREFERRED STOCKS - 94.9%
ARGENTINA - 9.9%
ARGENTINA EQUITY INVESTMENTS * 15,000 $ 1,590,600
BANCO DE GALICIA, ADR 261,098 6,352,025
COMPANIA PEREZ COMPANC 778,567 6,314,810
IMPORTADORA Y EXPORTADORA PATAGONIA 90,000 1,125,112
TELEFONICA DE ARGENTINA, ADR 114,000 3,790,500
-----------
TOTAL ARGENTINA - (COST $13,409,932) 19,173,047
-----------
BRAZIL - 39.3%
BANCO ITAU 7,910,000 4,276,681
BRASMOTOR 5,850,000 1,402,680
BRAZIL FAST FOOD * 312,500 703,125
BRAZIL REALTY, GDR 50,000 1,349,318
BRAZILIAN EQUITY INVESTMENTS * 44,000 1,395,240
CEMIG, ADR 85,063 3,827,835
COMPANIA VALE DO RIO DOCE, ADR 145,800 3,715,261
ELETROBRAS 12,105,000 5,474,852
GLOBEX UTILIDADES 115,000 2,054,537
KLABIN FABRICADORA 3,500,000 3,620,122
LIGHT SERVICOS DE ELETRICIDADE 9,500,000 3,948,284
MULTICANAL PARTICIPACOES, ADR * 73,000 1,058,500
PETROBRAS PETROLEO BRASIL 20,000,000 4,203,103
TELEBRAS, ADR 168,945 19,386,439
TELEC DO RIO JANEIRO 38,500,000 6,407,616
TELECOMUNICACOES DE SAO PAULO 10,740,000 3,049,817
TV FILME INC. * 300,000 3,337,500
UNIAO DE BANCOS BRASILIEROS 104,130,000 3,846,984
USIMINAS, ADR 296,700 3,450,621
-----------
TOTAL BRAZIL - (COST $54,640,382) 76,508,515
-----------
CHILE - 12.6%
BANCO A. EDWARDS, ADR 160,000 3,360,000
COMPANIA DE TELEFONOS DE CHILE, ADR 280,000 9,065,000
ENERSIS, ADR 37,400 1,178,100
LABORATORIO CHILE, ADR 180,000 3,960,000
MADECO, ADR 62,320 1,706,010
MADERAS Y SINTETICO SOCIEDAD, ADS 74,800 1,196,800
PROVIDA, ADR 135,000 2,430,000
SOCIEDAD QUIMICA Y MINERA, ADR 28,200 1,670,850
-----------
TOTAL CHILE - (COST $21,962,858) 24,566,760
-----------
COLOMBIA - 1.8%
BANCO GANADERO, ADR, CL B 4,500 154,125
BANCO GANADERO, ADR, CL C 120,000 3,315,000
-----------
TOTAL COLOMBIA - (COST $3,241,470) 3,469,125
-----------
See notes to financial statements.
4
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
MEXICO - 25.2%
BUFETE INDUSTRIAL, ADR * 270,000 $ 5,163,750
CEMEX, CL B 900,000 3,295,790
CIFRA SA DE CV, CL A 331,453 500,527
CIFRA SA DE CV, CL B 2,710,000 4,160,574
COCA COLA FEMSA, ADR 85,050 2,966,119
CONSORCIO ARA * 450,000 1,528,975
CONTROLADORA COMERCIAL MEXICANA, GDR * 35,000 533,750
CORPORACION GEO, SERIES B * 430,000 2,002,139
CORPORACION INDUSTRIAL ALFA, CL A 825,244 4,527,860
EMPRESAS LA MODERNA 1,000,000 5,134,336
GRUPO FINANCIERO BANAMEX, CL B 1,950,000 4,176,556
GRUPO INDUSTRIAL CAMESA SA DE CV * 1,000,000 553,703
HYLSAMEX, GDS 113,000 2,902,970
KIMBERLY CLARKE, ADR 80,000 1,520,000
SAN LUIS CPO 545,000 3,147,989
TELEFONOS DE MEXICO, ADR 81,000 3,341,250
TUBOS DE ACERO DE MEXICO, ADR * 224,400 3,674,550
-----------
TOTAL MEXICO - (COST $43,238,654) 49,130,838
-----------
PERU - 3.6%
MINAS BUENAVENTURA, ADR 42,000 913,500
MINAS BUENAVENTURA, CL A 7,862 73,900
MINAS BUENAVENTURA, CL B 1,965 21,309
PERU REAL ESTATE, CL B * 2,176,100 285,792
TELEFONICA DEL PERU, CL B 2,408,512 5,802,119
-----------
TOTAL PERU - (COST $6,699,275) 7,096,620
-----------
VENEZUELA - 2.5%
COMPANIA ANONIMA NACIONAL TELEFONOS, ADR, CL D * 62,000 1,860,000
MAVESA, ADR 275,000 1,890,625
SIVENSA, ADR 350,000 1,050,000
-----------
TOTAL VENEZUELA - (COST $4,830,511) 4,800,625
-----------
TOTAL COMMON AND PREFERRED STOCKS - (COST $148,023,082) + 184,745,530
-----------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 3.6%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.15%, 5/01/1997 (A) $ 6,954,000 6,954,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $6,954,000) 6,954,000
-----------
See notes to financial statements.
5
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
SHARES VALUE
------ -----
TOTAL INVESTMENTS - (COST $154,977,082) - 98.5% $ 191,699,530
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 1.5% 2,897,297
-----------
NET ASSETS - 100.0% $ 194,596,827
-----------
-----------
* Non-income producing security.
(a) The repurchase agreement, dated 4/30/97, $6,954,000 par due 5/01/97, is
collateralized by United States Treasury Notes, 6.25%, due 3/31/99, with a
market value of $7,094,661.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Auto Parts 0.7%, Banks 14.3%, Chemicals 0.9%, Construction and Building
Materials 4.2%, Direct 0.3%, Drugs & Health Care 2.0%, Electric Utilities
6.8%, Electrical Equipment 0.9%, Engineering 2.7%, Food & Beverages 5.5%,
Insurance 2.3%, Investment Companies 1.5%, Manufacturing 1.0%, Mining 2.4%,
Oil & Gas 2.2%, Paper 2.6%, Petroleum Services 3.9%, Real Estate 1.6%,
Retail 0.6%, Retail Trade 5.3%, Steel 3.8%, Telecommunication 15.4%,
Telecommunications Services 10.3%, Telephone 3.7%.
ADR American Depositary Receipts.
ADS American Depositary Shares.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
See notes to financial statements.
6
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $148,023,082) (Note B) $ 184,745,530
Investments in repurchase agreements, at value (Note B) 6,954,000
-------------
Total Investments 191,699,530
Cash 938
Foreign currency, at value (cost $79,255) (Note B) 79,196
Receivable for investments sold 3,441,757
Dividend and interest receivable 1,121,764
Foreign tax reclaims receivable 5,587
Prepaid insurance expense 15,664
Deferred organization expenses (Note B) 6,085
-------------
TOTAL ASSETS 196,370,521
-------------
LIABILITIES
Payable for investments purchased 1,026,103
Management fee payable (Note C) 680,059
Administration fee payable (Note C) 13,305
Trustees fees payable (Note C) 2,486
Accrued expenses and other liabilities 51,741
-------------
TOTAL LIABILITIES 1,773,694
-------------
TOTAL NET ASSETS $ 194,596,827
-------------
-------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 167,440,183
Undistributed net investment income 233,331
Accumulated net realized loss on investment and foreign currency transactions (9,798,953)
Net unrealized appreciation on investment and foreign currency transactions 36,722,266
-------------
TOTAL NET ASSETS $ 194,596,827
-------------
-------------
NET ASSET VALUE PER SHARE $ 9.43
($194,596,827 / 20,646,341 shares of beneficial interest outstanding) -------------
-------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
Interest income $ 339,275
Dividend income 3,204,198
Foreign taxes withheld (218,810)
-----------
TOTAL INVESTMENT INCOME 3,324,663
-----------
EXPENSES
Management fee (Note C) 2,157,383
Custodian fee 208,238
Administration fee (Note C) 111,619
Audit fee 24,194
Legal fees 10,888
Transfer agent fee 6,835
Trustees fees (Note C) 5,172
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 16,988
Fees and expenses waived by the investment manager (Note C) (104,649)
-----------
TOTAL EXPENSES 2,439,216
-----------
NET INVESTMENT INCOME 885,447
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 1,359,144
Net realized loss on foreign currency transactions (70,475)
Net increase in unrealized appreciation on:
Investments 31,143,844
Foreign currency transactions 330
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 32,432,843
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $33,318,290
-----------
-----------
See notes to financial statements.
8
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1997 APRIL 30, 1996
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 89,599,602 $ 39,833,637
------------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 885,447 532,282
Net realized gain (loss) on investment transactions 1,359,144 (1,320,182)
Net realized loss on foreign currency transactions (70,475) (431,239)
Net unrealized appreciation (depreciation) on:
Investments 31,143,844 8,674,586
Foreign currency transactions 330 (209)
------------- ------------
Net increase in net assets from operations 33,318,290 7,455,238
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (581,714) (369,749)
------------- ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 73,420,567 49,179,620
Reinvestment of dividends and distributions to shareholders 564,807 353,471
Cost of shares repurchased (3,086,300) (7,864,000)
Paid in capital from subscription and redemption fees 1,361,575 1,011,385
------------- ------------
Total increase in net assets from capital share transactions 72,260,649 42,680,476
------------- ------------
NET INCREASE IN NET ASSETS 104,997,225 49,765,965
------------- ------------
NET ASSETS at end of period (net of accumulated net investment $ 194,596,827 $ 89,599,602
income of $233,331 and $74, respectively) ------------- ------------
------------- ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 9,227,999 6,887,372
Shares issued in reinvestment of distributions to shareholders 69,729 51,526
Less shares repurchased (351,983) (1,057,543)
------------- ------------
Net share transactions 8,945,745 5,881,355
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR SEPT. 19, 1994*
ENDED ENDED THROUGH
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.660 $ 6.850 $ 10.000
Net investment income(loss) 0.040 0.025 (0.004)
Net realized and unrealized gain(loss) on investment
and foreign currency transactions 1.688 0.720 (3.298)
------------- ------------ ------------
Total from investment operations 1.728 0.745 (3.302)
------------- ------------ ------------
Less distributions:
Dividends from net investment income (0.029) (0.040) 0.000
------------- ------------ ------------
Paid in capital from subscription and redemption fees (Note B) 0.071 0.105 0.152
------------- ------------ ------------
Net asset value, end of period $ 9.430 $ 7.660 $ 6.850
------------- ------------ ------------
------------- ------------ ------------
TOTAL INVESTMENT RETURN (1) 23.55% 12.48% (31.50)%(2)
------------- ------------ ------------
------------- ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $194,596,827 $ 89,599,602 $ 39,833,637
Operating expenses, net, to average net assets (Note C) 1.70% 1.70% 1.80%(3)
Operating expenses, gross, to average net assets (Note C) 1.77% 1.95% 1.80%(3)
Net investment income(loss) to average net assets 0.62% 0.88% (0.11)%(3)
Portfolio turnover rate 50% 61% 89%
Average commission rate per share (4) $ 0.0002 $ 0.0001 N/A
Per share amount of fees waived (Note C) $ 0.005 $ 0.007 $ 0.000
</TABLE>
- -------------------------------------------------------------------------------
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
(2) Periods less than one year are not annualized.
(3) Annualized.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
See notes to financial statements.
10
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). The MCBT Emerging Americas Fund (the "Fund")
commenced investment operations on September 19, 1994. The Fund's Declaration
of Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF INVESTMENTS - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities
which are primarily traded in foreign markets are furnished by quotation
services expressed in the local currency's value and are translated into U.S.
dollars at the current rate of exchange. Short-term securities and debt
securities with a remaining maturity of 60 days or less are valued at their
amortized cost. Options and futures contracts are valued at the last sale price
on the market where such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
11
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 1.75% of the amount invested and a redemption fee
on cash redemptions of 1.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to and retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the year ended April 30, 1997, $1,307,675 was
collected in purchase premiums and $53,900 was collected in redemption fees.
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for U.S.
federal income tax purposes. Each Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. By so qualifying, the Funds will not be subject to federal
income taxes to the extent that they distribute substantially all of their
taxable income, including realized capital gains, for the fiscal year. In
addition, by distributing substantially all of their net investment income,
capital gains and certain other amounts, if any, during the calendar year, the
Funds will not be subject to a federal excise tax. As of April 30, 1997 the
Fund has a realized capital loss carryforward, for Federal income tax purposes,
of $9,535,196 (expires April 30, 2004), available to be used to offset future
realized capital gains. As of April 30, 1997 the Fund has elected for Federal
income tax purposes to defer a $44,693 current year post October 31 loss as
though the loss was incurred on the first day of the next fiscal year.
12
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund may be subject to taxes imposed by countries
in which it invests. Such taxes are generally based on income and/or capital
gains earned or repatriated. Taxes are accrued and applied to net investment
income, net realized gains and unrealized appreciation as such income and/or
gains are earned.
The Fund intends to make an election under Internal Revenue Code Section 853 to
pass through foreign taxes paid by the Fund to its shareholders. During the
year ended April 30, 1997 the total amount of foreign taxes that will be passed
through to the shareholders and the foreign source income for information
reporting purposes will be $207,307 (of the total $218,810 taxes withheld) and
$3,209,921, respectively.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 1.50% of the Fund's average net assets.
Prior to September 20, 1996 the Investment Manager had voluntarily agreed to
limit its fee to 1.25% of the Fund's average net assets, which resulted in a
waiver of $104,649.
The Investment Manager has also voluntarily undertaken to reduce its fee until
further notice to the extent necessary to limit the Fund's annual expenses
(including the management fee but excluding brokerage commissions, transfer
taxes, and extraordinary expenses) to 2.00% of the Fund's average net assets on
an annualized basis. For the year ended April 30, 1997, it was not necessary
for the Investment Manager to waive any additional fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 1997 were $135,733,800 and
$67,870,530, respectively.
The identified cost of investments in securities and repurchase agreements owned
for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at April 30, 1997 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------ -------------- --------------
$ 155,953,609 $ 40,234,856 $ (4,488,935) $ 35,745,921
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 28% of the Fund.
13
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political, regulatory
and other conditions, and changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments and capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting, reporting
and disclosure requirements than domestic issuers. The securities of some
foreign companies and foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
The risks of investing in foreign securities may be heightened in the case of
investments in emerging markets or countries with limited or developing capital
markets. Security prices in emerging markets can be significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization, restrictions on foreign
ownership, imposition of witholding taxes on dividend or interest payments and
capital gains, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political change
or instability may adversely affect the economies and securities markets of such
countries.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Emerging Americas Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Emerging Americas Fund (the
"Fund") at April 30, 1997, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 17, 1997
15
<PAGE>
MARTIN CURRIE BUSINESS TRUST
____________________
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
W. Stewart Coghill, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
____________________
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
____________________
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current Private Placement
Memorandum which contains important information concerning the Fund and its
current offering of shares.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING ASIA FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
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 $84.4m
PERFORMANCE Total return from May 1, 1996 through April 30, 1997
- MCBT - Emerging Asia Fund (excluding all transaction
fees) (19.8)%
- MCBT - Emerging Asia Fund (including all transaction
fees) (22.6)%
- The Morgan Stanley Capital International - Emerging
Free Asia Index (12.3)%
Annualized total return from March 24, 1995 through April 30, 1997
- MCBT - Emerging Asia Fund (excluding all transaction
fees) +0.5%
- MCBT - Emerging Asia Fund (including all transaction
fees) (1.2)%
The graph below represents the annualized total return of the
portfolio including all transaction fees versus the Morgan
Stanley Capital International Emerging Free Asia Index from
April 1, 1995 through April 30, 1997.
- MCBT - Emerging Asia Fund (excluding all transaction
fees) +0.0%
- MCBT - Emerging Asia Fund (including all transaction
fees) (1.6)%
- The Morgan Stanley Capital International - Emerging
Free Asia Index +1.2%
[GRAPH]
(a) Performance for the benchmark is not available from March 24, 1995
(commencement of investment operations). For that reason, performance is
shown from April 1, 1995.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total returns would have been lower had certain expenses not been
waived during the period shown. Each performance figure including all
transaction fees assumes purchase at the beginning and redemption at the end of
the stated period and is calculated using an offering price which reflects a
transaction fee of 175 basis points on purchase and 175 basis points on
redemption. Transaction fees are paid to the Fund to cover trading costs. Past
performance is not indicative of future performance.
1
<PAGE>
PORTFOLIO Smaller Asian markets have performed poorly as a group over the
COMMENTS twelve month period. The fund has underperformed the MSCI
Emerging Free Asia Index. Slower regional growth, combined with
falling exports, has proved very damaging to economies.
Political uncertainty in Indonesia and Korea, and concerns
regarding bank lending to property, have made the situation
worse.
INDONESIA has been a good market for us. Here, we have
concentrated on banks and infrastructure stocks. Bank Bira rose
by 35% and the toll road operator, CMNP, by 24%. The economy
looks sound and earnings are growing. We are likely to retain
our position in this market.
Midway through the year, we bought holdings in TAIWAN, as it
became a constituent of the index. After strong gains, we sold
out in February.
We sold our positions in THAILAND in October and have not been
tempted back. Banking problems and a loss of confidence will
take time to unwind.
We have become increasingly concerned with the outlook for
MALAYSIA. The economy had been overheating for some time and
banking problems had surfaced. More recently, local liquidity
has been reversed and the economy has slowed. We made partial
sales in February and may reduce further.
The PHILIPPINES was disappointing. Two of our stocks, Seacem (a
cement company), and Piltel (the mobile phone operator), both
performed poorly.
Outlook
The region is becoming less homogenous, although recent
stockmarket moves have been indiscriminate. We believe that to
be successful, we have to be very selective in our choice of
markets and stocks. We are optimistic that we will be able to
make money in Indonesia and the Philippines. China will become
increasingly important and we expect to add to our investments
there.
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.
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>
ASSET ALLOCATION
(% of net assets)
53% Malaysia
27% Indonesia
15% Philippines
4% China
1% Other Net Assets
[CHART]
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
MALAYSIA
Edaran Otomobile Nasional 5.1
Telekom Malaysia 5.0
Malaysian Assurance Alliance 5.0
INDONESIA
Bank Indonesia Raya 5.4
Citramarga Nusaphala Persada 4.4
PHILIPPINES
Philippine Long Distance Telephone, ADR 4.6
Belle Corporation 4.2
3
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK - 99.0%
CHINA - 4.2%
GUANGSHEN RAILWAY 7,433,000 $ 3,550,262
------------
TOTAL CHINA - (COST $2,877,282) 3,550,262
------------
INDONESIA - 27.2%
BANK INDONESIA RAYA 3,356,000 4,523,004
CITRAMARGA NUSAPHALA PERSADA 4,240,000 3,707,819
HANJAYA MANDALA SAMPOERNA 779,000 3,133,632
LIPPO BANK 3,600,000 3,444,445
LIPPO LIFE INSURANCE 3,000,000 3,641,975
PUTRA SURYA MULTIDANA * 1,137,500 1,287,294
TELEKOMUNIKASI INDONESIA 2,200,000 3,191,358
------------
TOTAL INDONESIA - (COST $19,382,976) 22,929,527
------------
MALAYSIA - 52.3%
ACP INDUSTRIES 420,000 1,722,957
AMMB HOLDINGS 502,000 3,338,936
COMMERCE ASSET HOLDINGS 602,000 3,596,463
DIVERSIFIED RESOURCES 1,480,000 3,536,721
EDARAN OTOMOBILE NASIONAL 458,000 4,323,164
JAYA TIASA HOLDINGS BERHAD 810,000 4,161,622
MALAYSIAN ASSURANCE ALLIANCE 780,000 4,193,882
MULTIPURPOSE HOLDINGS 2,000,000 3,265,891
RASHID HUSSAIN 600,000 3,990,760
SUNGEI WAY HOLDINGS 1,730,000 3,961,885
TELEKOM MALAYSIA 600,000 4,205,831
UNITED ENGINEERS 540,000 3,828,262
------------
TOTAL MALAYSIA - (COST $46,562,857) 44,126,374
------------
PHILIPPINES - 15.2%
BELLE CORPORATION * 14,700,000 3,511,945
FILINVEST LAND 11,200,000 2,633,295
METRO PACIFIC 12,500,000 2,891,544
PHILIPPINE LONG DISTANCE TELEPHONE, ADR 69,000 3,846,750
------------
TOTAL PHILIPPINES - (COST $13,965,337) 12,883,534
------------
TAIWAN - 0.1%
CHINA STEEL 75,000 80,260
------------
TOTAL TAIWAN - (COST $69,624) 80,260
------------
TOTAL COMMON STOCK - (COST $82,858,076) + 83,569,957
------------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 4.9%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT, 5.15%, 05/01/1997 (A) $ 4,140,000 4,140,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $4,140,000) 4,140,000
------------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
<TABLE>
<CAPTION>
VALUE
-----
<S> <C>
TOTAL INVESTMENTS - (COST $86,998,076) - 103.9% $ 87,709,957
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (3.9)% (3,325,403)
------------
NET ASSETS - 100.0% $ 84,384,554
------------
------------
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 4/30/97, $4,140,000 par due 5/01/97, is
collateralized by United States Treasury Notes, 6.25%, due 3/31/99, with a
market value of $4,226,713.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Automobiles 9.3%, Banks 9.5%, Cement 2.0%, Commercial Services 4.4%,
Conglomerates 3.4%, Construction and Building Materials 9.7%, Engineering
4.5%, Financial Services 16.8%, Gas Exploration 4.2%, Insurance 9.3%, Real
Estate 4.7%, Telecommunications Services 5.0%, Telephone 8.3%, Tobacco
3.7%, Transportation 4.2%.
ADR American Depositary Receipts.
See notes to financial statements.
5
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $82,858,076)(Note B) $ 83,569,957
Investments in repurchase agreements, at value (Note B) 4,140,000
------------
Total Investments 87,709,957
Cash 106
Foreign currency, at value (cost $3,410,427) (Note B) 3,410,250
Receivable for foreign currency sold 563,004
Dividend and interest receivable 592
Prepaid insurance expense 11,843
Deferred organization expenses (Note B) 7,196
------------
TOTAL ASSETS 91,702,948
------------
LIABILITIES
Payable for investments purchased 6,249,278
Payable for foreign currency purchased 563,004
Management fee payable (Note C) 422,392
Administration fee payable (Note C) 6,937
Trustees fees payable (Note C) 2,449
Accrued expenses and other liabilities 74,334
------------
TOTAL LIABILITIES 7,318,394
------------
TOTAL NET ASSETS $ 84,384,554
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 94,114,077
Undistributed net investment loss (82,681)
Accumulated net realized loss on investment and foreign currency transactions (10,374,496)
Net unrealized appreciation on investment and foreign currency transactions 727,654
------------
TOTAL NET ASSETS $ 84,384,554
------------
------------
NET ASSET VALUE PER SHARE $ 9.63
($84,384,554 / 8,759,639 shares of beneficial interest outstanding) ------------
------------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 332,314
Dividend income 1,167,598
Foreign taxes withheld (228,105)
------------
TOTAL INVESTMENT INCOME 1,271,807
------------
EXPENSES
Management fee (Note C) 1,911,419
Custodian fee 446,882
Administration fee (Note C) 101,627
Audit fee 24,276
Legal fees 8,718
Transfer agent fee 7,479
Trustee fees (Note C) 4,537
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 19,770
Fees and expenses waived by the investment manager (Note C) (123,328)
------------
TOTAL EXPENSES 2,403,928
------------
NET INVESTMENT LOSS (1,132,121)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (net of foreign taxes of $112,539) (10,462,605)
Net realized loss on foreign currency transactions (251,855)
Net unrealized appreciation (depreciation) on:
Investments (net of foreign taxes of ($254,070)) (10,666,199)
Foreign currency transactions 17,243
------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (21,363,416)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(22,495,537)
------------
------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING ASIA 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 $ 129,326,397 $ 42,027,699
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss (1,132,121) (221,319)
Net realized gain (loss) on investment transactions (10,462,605) 6,626,583
Net realized loss on foreign currency transactions (251,855) (618,897)
Net unrealized appreciation (depreciation) on:
Investments (10,666,199) 11,471,189
Foreign currency transactions 17,243 (1,495)
-------------- --------------
Net increase (decrease) in net assets from operations (22,495,537) 17,256,061
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
In excess of net investment income (119,214) 0
Net realized gains 0 (1,619,520)
In excess of net realized gains (3,999,558) 0
-------------- --------------
Total distributions (4,118,772) (1,619,520)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 33,631,104 68,843,300
Reinvestment of dividends and distributions to shareholders 4,115,185 1,619,520
Cost of shares repurchased (57,682,075) (26,549)
Paid in capital from subscription and redemption fees 1,608,252 1,225,886
-------------- --------------
Total increase (decrease) in net assets from capital share transactions (18,327,534) 71,662,157
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (44,941,843) 87,298,698
-------------- --------------
NET ASSETS at end of period (includes undistributed net investment $ 84,384,554 $ 129,326,397
losses of $82,681 and $185,162, respectively) -------------- --------------
-------------- --------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 2,990,256 6,098,105
Shares issued in reinvestment of distributions to shareholders 381,036 154,830
Less shares repurchased (5,074,489) (2,538)
-------------- --------------
Net share transactions (1,703,197) 6,250,397
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR (5) YEAR (5) MARCH 24, 1995*
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 $ 12.360 $ 9.980 $ 10.000
Net investment income(loss) (.101) (0.029) 0.009
Net realized and unrealized gain(loss) on investment
and foreign currency transactions (2.503) 2.446 (0.029)
------------ ------------ ------------
Total from investment operations (2.604) 2.417 (0.020)
------------ ------------ ------------
Less distributions:
In excess of net investment income (0.009) 0.000 0.000
Net realized gains 0.000 (0.209) 0.000
In excess of net realized gains (0.305) 0.000 0.000
------------ ------------ ------------
Total distributions (0.314) (0.209) 0.000
------------ ------------ ------------
Paid in capital from subscription and redemption fees (Note B) 0.188 0.172 0.000
------------ ------------ ------------
Net asset value, end of period $ 9.630 $ 12.360 $ 9.980
------------ ------------ ------------
------------ ------------ ------------
TOTAL INVESTMENT RETURN (1) (19.82)% 26.30% (0.20)%(2)
------------ ------------ ------------
------------ ------------ ------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 84,384,554 $129,326,397 $ 42,027,699
Operating expenses, net, to average net assets (Note C) 1.89% 1.93% 1.85%(3)
Operating expenses, gross, to average net assets (Note C) 1.98% 2.18% 2.57%(3)
Net investment income(loss) to average net assets (0.89)% (0.27)% 0.96%(3)
Portfolio turnover rate 118% 65% 0%
Average commission rate per share (4) $ 0.0079 $ 0.0124 N/A
Per share amount of fees waived (Note C) $ 0.011 $ 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 a monthly average number of
shares outstanding during the year.
9
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers six funds which have differing investment objectives
and policies: Global Growth Fund, Opportunistic EAFE Fund, Global Emerging
Markets Fund, Japan Small Companies Fund, Emerging Americas Fund and Emerging
Asia Fund, (the "Funds"). 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 such options or futures contract is principally traded.
Options traded over-the-counter are valued based upon prices provided by market
makers in such securities or dealers in such currencies. Securities for which
current market quotations are unavailable or for which quotations are not deemed
by the investment adviser to be representative of market values are valued at
fair value as determined in good faith by the Trustees of the Fund, or by
persons acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
10
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a Fund are either split evenly among the
affected Funds, allocated on the basis of relative average net assets, or
otherwise allocated among the Funds as the Board of Trustees may direct or
approve. Certain costs incurred in connection with the organization of the
Trust and each Fund have been deferred and are being amortized on a straight
line basis over a five year period starting on each Fund's commencement of
operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends from
net investment income, if any, and distributes its net realized capital gains,
if any, at least annually. All distributions will be reinvested in shares of
the Fund at the net asset value unless the shareholder elects in the
subscription agreement to receive cash. Income and capital gain distributions
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post October
31 losses and excise tax regulations. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in-capital. Distributions are recorded on the ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for cash
investments into the Fund of 1.75% of the amount invested and a redemption fee
on cash redemptions of 1.75% of the amount redeemed. All purchase premiums and
redemption fees are paid to and retained by the Fund and are recorded as
paid-in-capital by the Fund. These fees are intended to offset brokerage and
transaction costs arising in connection with the purchase and redemption. The
purchase and redemption fees may be waived by the Manager, however, if these
brokerage and transaction costs are minimal or in other circumstances at the
Manager's discretion. For the year ended April 30, 1997, $599,027 was collected
in purchase premiums and $1,009,225 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. On December 30, 1996 the
Fund declared a long term capital gain distribution of $1,969,193, representing
$0.150 per share. As of April 30, 1997 the Fund has a realized capital loss
carryforward, for Federal income tax purposes, of $3,928,107 (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
$6,446,385 current year post October 31 loss as though the loss was incurred on
the first day of the next fiscal year.
11
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund may be subject to taxes imposed by countries
in which it invests. Such taxes are generally based on income and/or capital
gains earned or repatriated. Taxes are accrued and applied to net investment
income, net realized gains and unrealized appreciation as such income and/or
gains are earned.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
income and expenses at the date of the financial statements. Actual results
could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 1.50% of the Fund's average net assets.
Prior to September 20, 1996 the Investment Manager had voluntarily agreed to
limit its fee to 1.25% of the Fund's average net assets, which resulted in a
waiver of $123,328.
The Investment Manager has also voluntarily undertaken to reduce its fee until
further notice to the extent necessary to limit the Fund's annual expenses
(including the management fee but excluding brokerage commissions, transfer
taxes, and extraordinary expenses) to 2.00% of the Fund's average net assets on
an annualized basis. For the year ended April 30, 1997, it was not necessary
for the Investment Manager to waive any additional fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000.
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 1997 were $140,040,239 and
$161,140,914, 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
------------- ------------ -------------- --------------
$ 86,998,076 $ 9,149,840 $ (8,437,959) $ 711,881
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1997 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 28% of the Fund.
12
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political, regulatory
and other conditions, and changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments and capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting, reporting
and disclosure requirements than domestic issuers. The securities of some
foreign companies and foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
The risks of investing in foreign securities may be heightened in the case of
investments in emerging markets or countries with limited or developing capital
markets. Security prices in emerging markets can be significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization, restrictions on foreign
ownership, imposition of witholding taxes on dividend or interest payments and
capital gains, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political change
or instability may adversely affect the economies and securities markets of such
countries.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Emerging Asia Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Emerging Asia Fund (the "Fund")
at April 30, 1997, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 17, 1997
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>
Part C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements:
See the section entitled "Financial Statements" in the
Statement of Additional Information. No other financial
statements are applicable.
(b) Exhibits:
1. (a) Agreement and Declaration of Trust of Martin Currie Business
Trust (the "Trust") dated May 20, 1994 and (b) Amendment No. 1 to
Agreement and Declaration of Trust dated May 27, 1994 incorporated
by reference to the original registration statement on Form N-1A
(File No. 811-8612) filed on July 7, 1994 (the "Registration
Statement") and (c) Amendment No. 2 to Agreement and Declaration of
Trust dated June 13, 1997 incorporated by reference to the Trust's
Amendment No. 3 to the Registration Statement filed on Form POS-AMI
on June 16, 1997.
2. By-Laws of the Trust incorporated by reference to the
Registration Statement filed on July 7, 1994.
3. Not Applicable.
4. Not Applicable.
5. (a) Investment Advisory Agreements between the Trust and Martin
Currie, Inc. ("Martin Currie") for each of MCBT Global Growth
Fund, MCBT Opportunistic EAFE Fund, MCBT Global Emerging Markets
Fund, MCBT Japan Small Companies Fund; MCBT Emerging Americas
Fund, and MCBT Emerging Asia Fund incorporated by reference to
the Registration Statement filed on July 7, 1994 and (b)
Investment Advisory Agreement between the Trust and Martin Currie
for the MCBT EMEA Fund incorporated by reference to the Trust's
Amendment No. 3 to the Registration Statement filed on Form POS-
AMI on June 16, 1997.
6. Not Applicable. See Paragraph 4 of General Instruction F.
7. Not Applicable.
-1-
<PAGE>
8. (a) Form of Custodian Agreement between the Trust and State
Street Bank and Trust Company ("State Street") incorporated by
reference to the Registration Statement filed on July 7, 1994
and (b) form of letter amendment to Custodian Agreement between
the Trust and State Street dated June 10, 1997 relating to the
MCBT EMEA Fund incorporated by reference to the Trust's
Amendment No. 3 to the Registration Statement filed on Form
POS-AMI on June 16, 1997.
9. (a) Form of Administration Agreement between the Trust and
State Street incorporated by reference to the Registration
Statement filed on July 7, 1994.
(b) Form of letter amendment to Administration Agreement
between the Trust and State Street dated June 10, 1997 relating
to the MCBT EMEA Fund incorporated by reference to the Trust's
Amendment No. 3 to the Registration Statement filed on Form
POS-AMI on June 16, 1997.
(c) Form of Transfer Agency and Service Agreement between the
Trust and State Street incorporated by reference to the
Registration Statement filed on July 7, 1994.
(d) Form of letter amendment to Transfer Agency and Service
Agreement between the Trust and State Street dated June 10, 1997
relating to the MCBT EMEA Fund incorporated by reference to the
Trust's Amendment No. 3 to the Registration Statement filed on
Form POS-AMI on June 16, 1997.
(e) Form of Subscription Agreement for the purchase of Shares
of any series of the Trust filed herewith.
10. Not Applicable. See Paragraph 4 of General Instruction F.
11. Consent of Price Waterhouse LLP.
12. Not Applicable. See Paragraph 4 of General Instruction F.
13. Not Applicable.
14. Not Applicable.
15. (a) Distribution and Servicing Plans adopted pursuant to Rule
12b-1 for each of MCBT Global Growth Fund, MCBT Opportunistic
EAFE Fund, MCBT Global Emerging Markets Fund, MCBT Japan Small
Companies Fund, MCBT Emerging Americas Fund, MCBT Emerging Asia
Fund incorporated by reference to the Registration Statement
filed on July 7, 1994 and (b)
-2-
<PAGE>
Distribution and Servicing Plan adopted pursuant to Rule 12b-1
for MCBT EMEA Fund incorporated by reference to the Trust's
Amendment No. 3 to the Registration Statement filed on Form
POS-AMI on June 16, 1997.
16. Not Applicable.
17. Financial Data Schedule for Registrant's fiscal year ended
April 30, 1997.
18. Not Applicable.
19. Powers of Attorney for C. James P. Dawnay, Patrick R. Wilmerding
and Simon D. Eccles incorporated by reference to the
Registration Statement filed on July 7, 1994.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
NUMBER OF RECORD HOLDERS
TITLE OF SERIES (AS OF JULY 29, 1997)
MCBT Global Growth Fund 2
MCBT Opportunistic EAFE Fund 36
MCBT Global Emerging Markets Fund 2
MCBT Japan Small Companies Fund 26
MCBT Emerging Americas Fund 24
MCBT Emerging Asia Fund 24
MCBT EMEA Fund 20
Item 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto) provides for indemnification of its trustees and
officers. The effect of this provision is to provide indemnification
for each of the Registrant's trustees and officers against
liabilities and counsel fees reasonably incurred in connection with
the defense of any legal proceeding in which such trustee or officer
may be involved by reason of being or having been a trustee or
officer, except with respect to any matter as to which such trustee
or officer shall have
-3-
<PAGE>
been adjudicated to be liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's
office. As to any matter disposed of without an adjudication by a
court or other body, indemnification will be provided to the
Registrant's trustees and officers if (a) such indemnification is
approved by a majority of the disinterested trustees, or (b) an
opinion of independent legal counsel is obtained that such
indemnification would not protect the trustee or officer against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
duties.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Martin Currie is a New York corporation and is registered as an
investment adviser under the Investment Advisers Act of 1940. Its
principal place of business is Saltire Court, 20 Castle Terrace,
Edinburgh, Scotland EH1 2ES. Martin Currie and its parent company,
Martin Currie Ltd., provide investment advice to other registered
investment companies and advise and manage individual and
institutional accounts.
Other business, profession, vocation or employment of a substantial
nature in which each director or officer of Martin Currie is or has
been, at any time during the past two fiscal years, engaged for his
own account or in the capacity of director, officer, employee,
partner or trustee is as follows:
Name and Position with
Martin Currie Business and Other Connections
- ---------------------- ------------------------------
A. P. Hanlon
Director and Vice President Director of Martin Currie Investment
Management Limited, Martin Currie
Services Limited and Martin Currie,
Inc.
P. J. Scott Plummer
Director and Vice President Director of Martin Currie Limited
(formerly Martin Currie International
Limited), Martin Currie Investment
Management Limited, Martin Currie Unit
Trusts Limited, Martin Currie Services
Limited, Martin Currie Trustees
Limited, Martin Currie, Inc., Candover
Investments PLC, Candover Partners
Ltd., Near East Opportunities
Fund Limited,
-4-
<PAGE>
Scottish Unit Managers Limited
and The Scottish Eastern Investment
Trust plc.
M. J. Gibson
Director and Vice President Director of Martin Currie Investment
Management Limited, Martin Currie
Management Limited, Martin Currie, Inc.
and Martin Currie Services Ltd.
J. M. A. Fairweather
Directors and Vice President Director of Martin Currie Investment
Management Limited, Martin Currie,
Inc., Martin Currie European
Investment Trust plc and Martin Currie
Unit Trusts Limited.
J. G. Wilson
Director and Vice President Director of Martin Currie Investment
Management Limited and Martin Currie,
Inc.
J. K. R. Falconer
Director and Vice President Director of Martin Currie Investment
Management Limited, Martin Currie
Limited, Martin Currie, Inc., Martin
Currie Management Limited, Martin
Currie Gefinor Fund Management Co. SA,
Gefinor Bank Limited, Capital Trust
Limited, 3i Smaller Quoted Companies
Trust plc and Clifton Hall School
Limited.
C. J. P. Dawnay
Director and Vice President Director of Martin Currie Investment
Management Ltd., Martin Currie , Inc.,
Martin Currie Unit Trusts Limited and
Martin Currie Limited.
M. W. Thomas
Director Director of Martin Currie Investment
Management Limited, Martin Currie
Pacific Trust plc, Martin Currie, Inc.,
Martin Currie, Limited, Martin Currie
Japan Investment Trust plc and Schroder
Korea Fund.
-5-
<PAGE>
Colin Winchester
Treasurer and Secretary Director, Martin Currie Services
Limited, Martin Currie Trustees
Limited, Martin Currie Bermuda Limited
and Martin Currie Limited.
J. M. C. Livingston
Clerk Group Legal Director, Martin Currie
Investment Management Limited, Director
of Martin Currie Services Ltd.,
Director of Martin Currie Private
Clients Ltd., Director of Martin Currie
(Bermuda) Ltd. and Saltire Private Fund
Managers Limited.
S. Johnson
Vice President Vice President and Director, Martin
Currie, Inc. and President, Martin
Currie Investor Services, Inc.
Timothy J.D. Hall
Director Director, Martin Currie Investment
Management Limited, Martin Currie
Private Clients Limited, Martin Currie,
Inc. and Saltire Private Fund Managers
Limited.
Susan Gillingham
Director Director, Martin Currie Services
Limited, Martin Currie Investment
Management Limited and Martin Currie,
Inc.
The principal business address of Martin Currie Ltd. and its affiliates is
Saltire Court, 20 Castle Terrace, Edinburgh, Scotland EH1 2ES.
Item 29. PRINCIPAL UNDERWRITERS
Not Applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The following companies maintain possession of the documents
required by the specified rules:
(a)
Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
-6-
<PAGE>
(b)
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c)
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland EH1 2ES
Rule 31a-1(f)
Rule 31a-2(e)
Item 31. MANAGEMENT SERVICES
Not Applicable.
Item 32. UNDERTAKINGS
Not Applicable.
-7-
<PAGE>
* * * * * * * * * * *
NOTICE
A copy of the Agreement and Declaration of Trust of Martin Currie
Business Trust (the "Trust") is on file with the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston and notice
is hereby given that this Registration Statement has been executed on behalf
of the Trust and each of its series ("Funds") by an officer of the Trust as
an officer and by its trustees as trustees and not individually and the
obligations of or arising out of this Registration Statement are not binding
upon any of the trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust Funds, as the case may
be.
-8-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 4 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Edinburgh, Scotland on this 28th day of August, 1997.
MARTIN CURRIE BUSINESS TRUST
By: /s/ C. James P. Dawnay
-----------------------
C. James P. Dawnay,
President
<PAGE>
Exhibit Index
Exhibit # Description
-------- -----------
9(e) Form of Subscription Agreement
11 Consent of Price Waterhouse LLP
17 Financial Data Schedule
<PAGE>
EXHIBIT A
MARTIN CURRIE BUSINESS TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest
Amount of
Subscription
(US$)
MCBT Global Growth Fund -------------
MCBT Opportunistic EAFE Fund -------------
MCBT Global Emerging Markets Fund -------------
MCBT Japan Small Companies Fund -------------
MCBT Emerging Americas Fund -------------
MCBT Emerging Asia Fund -------------
MCBT EMEA Fund -------------
Total Amount Subscribed $____________
SUBSCRIBER INFORMATION
Name of Subscriber:
_______________________________________________________________
(hereinafter "SUBSCRIBER")
Name for Registration
_______________________________________________________________
(if different from above)
Person Signing (if different):
_______________________________________________________________
Capacity (if applicable):
_______________________________________________________________
<PAGE>
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
BANK INFORMATION
Bank Name:
_______________________________________________________________
ABA Number:
_______________________________________________________________
Address:
_______________________________________________________________
(Number and Street)
_______________________________________________________________
(City) (State) (Zip Code)
Telephone:
_______________________________________________________________
Fax:
_______________________________________________________________
Account Name:
_______________________________________________________________
Account Number:
_______________________________________________________________
<PAGE>
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the
one or more series (each a "Fund") of Martin Currie Business Trust (the
"Trust") indicated above and in the dollar amount(s) set forth above.
Upon completion of this Subscription Agreement, SUBSCRIBER should send
this agreement by telecopy and courier to:
Martin Currie Business Trust
c/o Martin Currie, Inc.
20 Castle Terrace
Edinburgh, Scotland
United Kingdom EH1 2ES
ATTENTION: Susan Gillingham
TELECOPY: 011-44-131-479-4747
After the Trust has reviewed the completed Subscription Agreement,
SUBSCRIBER will receive telephonic notice of the acceptance or
non-acceptance of the subscription. If the subscription is accepted by
the Trust, SUBSCRIBER agrees to wire immediately available funds in the
amounts indicated on the cover of this Subscription Agreement to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA # 011000028
BNF = AC-42306662 "Mutual Fund F/B/O
Martin Currie Business Trust"
OBI = "NAME OF FUND"
Shareholder Name
2. SUBSCRIBER agrees that, unless the Trust is otherwise specifically
notified, this subscription will be treated as a subscription for shares
of beneficial interest in the indicated Funds (the "Shares") to become
effective as of the first day of the month following the satisfaction of
all of the conditions specified in Section 3 of this Subscription
Agreement unless otherwise agreed by the Trust.. Any funds received by
the Trust before such date will be held for investment on such first day
of the month.
3. SUBSCRIBER understands and agrees that this subscription for the Shares
is ineffective and that SUBSCRIBER will not become a shareholder of the
Trust until (i) SUBSCRIBER completes all applicable information
requested in this Subscription Agreement, (ii) SUBSCRIBER executes this
Subscription Agreement and delivers it to the Trust, (iii) the
Subscription Agreement is accepted by or on behalf of the Trust, which
acceptance may be withheld in the Trust's sole discretion, and (iv) the
Trust can and has confirmed that the subscription amount has been
received in the account listed in Section 1 above.
<PAGE>
4. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated August __,
1997 (the "Placement Memorandum") relating to the offer for sale by the
Trust of the Shares and has had an opportunity to request a Statement of
Additional Information dated as of August __, 1997 (the "SAI"), and has
reviewed the Placement Memorandum carefully prior to executing this
Subscription Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the
opportunity to ask questions of, and receive answers from,
representatives of the Trust concerning terms and conditions of the
Offering and to obtain any additional information necessary to verify
the accuracy of the information contained in the Placement Memorandum or
the SAI. SUBSCRIBER further acknowledges that no person is authorized
to give any information or to make any representation which is contrary
to the information contained in the Placement Memorandum or the SAI and
that, if given or made, any such contrary information or representation
may not be relied upon as having been authorized.
5. SUBSCRIBER understands and agrees that an entry expense may be
applicable to this subscription for the Shares according to the terms
described in the Placement Memorandum, and that some of the funds paid
under this Agreement may be applied to such entry expense.
6. SUBSCRIBER hereby elects:
/ / To reinvest all distributions of income and realized capital
gains from a Fund in additional shares of that Fund OR
/ / To receive all distributions of income and realized capital
gains from a Fund as cash when declared OR
/ / To reinvest all realized capital gains from a Fund in
additional shares of the Fund and to receive all distributions
of income as cash.
SUBSCRIBER understands and agrees that, unless otherwise indicated
above, SUBSCRIBER will be deemed to have elected to reinvest all
distributions of income and capital gains.
7. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that
the sale of the Shares to SUBSCRIBER complies with (or meets the
requirements of any applicable exemption from) the Securities Act of
1933, as amended (the "1933 Act"), and applicable state securities laws.
8. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this
<PAGE>
Subscription Agreement for its own account for investment only and
not with a view to any resale or distribution.
9. SUBSCRIBER represents that it (either alone or together with its
purchaser representative, whose identity has been disclosed to the
Trust, if any) has such knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of the
investment represented by the Trust and that SUBSCRIBER is able to bear
the economic risk of this investment including the risk of loss of the
investment.
10. SUBSCRIBER understands that the Trust will offer the Shares only to
investors which qualify as "accredited investors" as defined in
Regulation D under the 1933 Act. SUBSCRIBER represents that it
qualifies as an "accredited investor" because SUBSCRIBER is described
in the paragraph or paragraphs indicated below: (CHECK ONE OR MORE).
/ / A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with his or her spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same
income level in the current year.
/ / A natural person whose individual net worth, or joint net worth
with his or her spouse, exceeds $1,000,000 at the time of
purchase of the Shares.
/ / A trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares offered, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D of the 1933 Act.
/ / An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the Shares offered, with total assets in excess of
$5,000,000.
/ / A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940, as
amended.
/ / A bank as defined in Section 3(a)(2) of the 1933 Act, or
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the 1933 Act, whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934;
an insurance company as defined in Section 2(13) of the 1933
Act; an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), or a business
development company as defined in Section 2(a)(48) of the 1940
Act; a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; an
<PAGE>
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are
accredited investors.
/ / A Trustee or Executive Officer of the Trust whose purchase
exceeds $1,000,000.
/ / An entity in which all of the equity owners are accredited
investors as defined above.
11. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is
an entity, its principal offices are located in) __________________.
(U.S. State)
12. SUBSCRIBER agrees to promptly notify the Trust of any development
that causes any of the representations made or information supplied
in this Subscription Agreement to be untrue at any time.
13. SUBSCRIBER understands that the Shares are not publicly traded and
that there will be no public market for the Shares upon completion of
the Offering.
14. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the
1933 Act and, in certain cases, of state securities laws, and that
such interests will be subject to transfer restrictions under the
1933 Act and applicable state securities laws and, except to the
extent that redemption is permitted as described in the Placement
Memorandum and the SAI, must be held indefinitely unless subsequently
registered under the 1933 Act and applicable state securities laws or
an exemption from such registration is available. The undersigned
further understands and agrees that the Trust is under no obligation
to register such Shares and that any exemptions are extremely
limited.
15. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained
in this Subscription Agreement, the Placement Memorandum, the SAI,
the 1933 Act and any applicable state securities laws.
16. SUBSCRIBER hereby agrees to be bound by all terms and conditions of
this Subscription Agreement.
17. This Subscription Agreement shall be governed by and construed under
the laws of The Commonwealth of Massachusetts and is intended to take
effect as an instrument under seal and shall be binding on SUBSCRIBER
in accordance with its terms.
<PAGE>
18. Please sign this Subscription Agreement exactly as you wish your
Shares to be registered. (The information supplied by you below
should conform to that given on the cover page).
Dated: __________, _____ Name of SUBSCRIBER:____________________
By:_______________________
Name of Person Signing if different
from SUBSCRIBER:______________________
(please print)
Capacity:______________________
(please print)
Accepted:
MARTIN CURRIE BUSINESS TRUST
By:___________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed
on behalf of the Trust by officers of the Trust as officers and not
individually and that the obligations of or arising out of this Agreement
are not binding upon any of the trustees, officers or shareholders of any
Fund individually but are binding only upon the assets and property
belonging to the Funds.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 4 to the registration
statement on Form N-1A (the "Registration Statement") of Martin Currie
Business Trust ("MCBT") of our reports dated June 17, 1997, relating to the
financial statements and financial highlights appearing in the April 30, 1997
Annual Reports to Shareholders of MCBT Global Growth Fund, MCBT Opportunistic
EAFE Fund, MCBT Global Emerging Markets Fund, MCBT Japan Small Companies Fund,
MCBT Emerging Americas Fund and MCBT Emerging Asia Fund, which appear in such
Statement of Additional Information. We also consent to the references to us
under the headings "Financial Statements" and "Independent Accountants" in
such Statement of Additional Information and "Independent Accountants" in the
Private Placement Memorandum which constitutes part of this Registration
Statement.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 28, 1997
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