<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING AMERICAS FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
<TABLE>
<S> <C>
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 $138.1m
PERFORMANCE Total return from May 1, 1997 through April 30, 1998
- MCBT - Emerging Americas Fund (excluding all transaction fees) +1.8%
- MCBT - Emerging Americas Fund (including all transaction fees) -1.7%
- The Morgan Stanley Capital International Latin America (Free) Index +6.4%
Annualized total return from September 19, 1994 through April 30, 1998
- MCBT - Emerging Americas Fund (excluding all transaction fees) -0.9%
- MCBT - Emerging Americas Fund (including all transaction fees) -1.8%
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, 1998.
- MCBT - Emerging Americas Fund (excluding all transaction fees) -2.2%
- MCBT - Emerging Americas Fund (including all transaction fees) -3.1%
- The Morgan Stanley Capital International Latin America (Free) Index +2.1%
</TABLE>
<TABLE>
<CAPTION>
10/1/94(a) 4/30/95 4/30/96 4/30/97 4/30/98
<S> <C> <C> <C> <C> <C>
MCBT Emerging Americas Fund $10,000 $6,310 $7,526 $8,762 $ 8,921
MSCI Latin America (Free) Index $10,000 $6,460 $7,429 $9,903 $10,784
</TABLE>
(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, 1998
PORTFOLIO Latin America failed to escape the effects of the Asian
COMMENTS crisis, and gains for the MSCI Latin America (free) Index
pulled back to 3.4% over the last twelve months. Only two
markets recorded positive returns with Mexico gaining 30.5%
and Argentina gaining 7.6%. Brazil posted losses of 3% over
the twelve months, but recovered 14.4% over the last six
months. The smaller markets all underperformed with Chile
being the worst performer falling 18.5%, and Colombia
falling 17.4%.
The economy in MEXICO grew faster than expected, led by the
consumer and investment sectors and the peso remained
stronger than anticipated over the year. We retained our
overweighting in the Mexican market favouring retail and
consumer recovery sectors through retailers Soriana, Cifra,
media stocks Televisa and TV Azteca, and consumption
recovery plays such as Kimberly Clark, Femsa, Cemex and
Bannacci. We continued to avoid the export sector in light
of the stronger peso.
The BRAZILIAN market was volatile over the period as the
high trade and current account deficits rendered it most
vulnerable to external shocks. The swift policy response to
the Asian crisis, which involved doubling of interest rates
and an emergency fiscal package, allowed stability to
gradually recover. We increased our weighting in the market
and continued to favour the privatisation plays in the
electricity and telecoms sectors. We took initial steps
into the private sector through the purchase of retailer
Lojas Renner, and Unibanco, a leading bank in anticipation
of a reduction in interest rates.
We remained underweighted in CHILE, and in the smaller
markets we remained with no exposure to COLOMBIA or
VENEZUELA. We purchased Ferreyros in PERU. This
Caterpillar distributor stands out as one of the prime
beneficiaries from the rebuilding and investment required
following the El Nino weather phenomenon.
OUTLOOK
-------
The longer term picture for Latin America continues to
improve with further progress on privatization and
structural and political reform. Valuations are approaching
very attractive levels but as emerging markets volatility is
expected to continue in the near term, greater scrutiny of
the deteriorating trade and current account imbalances is
likely to hold back revaluation of the region and limit the
upside gains in the short term.
2
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
INVESTMENT James Fairweather is Chief Investment Officer. All funds
MANAGER are managed on a team basis with a named director heading
PROFILE each team.
James Fairweather has managed the MCBT Emerging Americas
Fund since inception.
He 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. He was promoted to
Chief Investment Officer in 1997.
Joanna Terrett assists James. Joanna, with 6 years
investment experience, graduated from Manchester University
in 1990 with a degree in European Studies and French. She
joined Martin Currie in the same year as a member of the
Continental Europe team and was appointed investment manager
in 1994. A Spanish speaker, Joanne lived in Argentina and
Venezuela for six years and in early 1996 she joined the
Emerging Markets team with responsibility for Latin America.
She was appointed assistant director in October, 1996.
The Global Asset Allocation Committee sets limits for
regional allocation. The managers of the funds are
responsible for the selection of countries within those
regions, sectors, and stocks.
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
<TABLE>
<CAPTION>
EMERGING AMERICAS IG05
- ----------------- ----
<S> <C>
Argentina 8%
Brazil 33%
Chile 6%
Mexico 32%
Other Areas 3%
Other Net Assets 18%
----
TOTAL: 100%
</TABLE>
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
<S> <C>
BRAZIL
Telebras, ADR 7.8
Petrobras Petroleo Brasil 4.4
MEXICO
Grupo Financiero Banamex, Cl B 4.3
Telefonos de Mexico, ADR 4.0
Cemex SA de CV 3.5
CHILE
Compania de Telefonos de Chile 2.9
ARGENTINA
YPF Sociedad Anonima, ADR 4.0
Disco, ADR 1.5
PERU
Ferreyros SA 3.0
</TABLE>
4
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------- ------
<S> <C> <C>
COMMON AND PREFERRED STOCKS - 81.9%
ARGENTINA - 8.3%
ARGENTINA EQUITY INVESTMENTS 15,000 $ 729,900
COMPANIA PEREZ COMPANY 322,565 1,938,897
DISCO, ADR * 52,400 2,082,900
IMPORTADORA Y EXPORTADORA PATAGONIA 72,000 1,260,183
YPF SOCIEDAD ANONIMA, ADR 158,500 5,527,687
-----------------
TOTAL ARGENTINA - (COST $11,262,110) 11,539,567
-----------------
BRAZIL - 32.7%
BRAZILIAN EQUITY INVESTMENTS * 44,000 1,208,240
CIA RIOGRANDENSE TELECOM * 2,230,000 2,944,345
COMPANHIA BRASILEIRA DE DISTRIBUICAO, GDR 79,500 2,116,688
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG), PREFERRED, ADR 69,063 3,351,547
COMPANHIA DE SANEAMENTO DO ESTADO DE SAO PAULO 14,273,000 3,244,856
COMPANIA VALE DO RIO DOCE, ADR 159,000 3,753,771
LOJAS RENNER SA 48,023,000 1,889,595
PETROBRAS PETROLEO BRASIL 24,100,000 6,111,135
TELEBRAS, ADR 88,000 10,719,500
TELECOMUNICACOES DE SAO PAULO 11,665,221 3,967,797
TELECOMUNICACOES DO RIO JANEIRO 23,373,735 3,678,811
TV FILME INCORPORATED * 231,700 557,528
UNIAO BANCOS BRASILEIROS SA 25,700,000 719,101
UNIAO BANCOS BRASILIEROS SA, PREFERRED 26,500,000 954,663
-----------------
TOTAL BRAZIL - (COST $38,788,016) 45,217,577
-----------------
CHILE - 5.7%
COMPANIA DE TELEFONOS DE CHILE, ADR 162,000 4,060,125
DISTRIBUCION Y SERVICIO D & S SA, ADR * 112,000 1,974,000
ENERSIS, ADR 60,400 1,778,025
-----------------
TOTAL CHILE - (COST $7,994,666) 7,812,150
-----------------
MEXICO - 32.2%
CEMEX SA DE CV 810,000 4,871,462
CIFRA SA DE CV, CL B 2,168,340 3,809,937
CORPORACION GEO, SERIES B * 328,000 2,266,604
FOMENTO ECONOMICO MEXICANO SA DE C.V. 430,000 3,184,434
GRUPO CARSO 422,000 2,657,406
GRUPO ELEKTRA SA DE C.V., GDR 218,000 3,133,750
GRUPO FINANCIERO BANAMEX, CL B * 1,880,000 5,875,000
GRUPO POSADAS * 2,759,000 1,997,672
GRUPO TELEVISA, ADR * 68,000 2,788,000
KIMBERLY-CLARK DE MEXICO 360,000 1,768,160
ORGANIZATION SORIANA SA DE CV 512,000 1,935,094
PEPSI-GEMEX, GDR 103,000 1,396,938
TELEFONOS DE MEXICO, ADR 98,000 5,549,250
TUBOS DE ACERO DE MEXICO, ADR * 173,400 3,186,225
-----------------
TOTAL MEXICO - (COST $39,497,515) 44,419,932
-----------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS - CONTINUED
PERU - 3.0%
FERREYROS SA, ADR (a) 165,500 $ 4,158,733
-----------------
TOTAL PERU - (COST $3,982,372) 4,158,733
-----------------
TOTAL COMMON AND PREFERRED STOCKS - (COST $101,524,679) + 113,147,959
-----------------
TOTAL INVESTMENTS - (COST $101,524,679) - 81.9% 113,147,959
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 18.1% 24,967,138
-----------------
NET ASSETS - 100.0% $ 138,115,097
-----------------
-----------------
</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 $4,158,733 or 3.0% of
net assets.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Banks 1.2%, Brewery 2.3%, Broadcasting 2.0%, Construction and Building
Materials 5.8%, Diversified 1.9%, Electric Utilities 3.7%, Financial
Services 4.3%, Food & Beverages 4.0%, Hotels & Restaurants 1.4%, Investment
Companies 1.4%, Manufacturing 1.6%, Metals 3.0%, Mining 2.7%, Oil & Gas
8.4%, Paper 1.3%, Petroleum Services 1.4%, Retail 4.6%, Retail Trade 5.7%,
Telecommunication 13.3%, Telecommunications Services 5.5%, Telephone 4.0%,
Water Utilities 2.4%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
6
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $101,524,679) (Note B) $ 113,147,959
Foreign currency, at value (cost $8,340,092) (Note B) 8,340,017
Receivable for investments sold 19,234,627
Receivable for fund shares sold 758,038
Receivable for currency sold 4,232,106
Dividend and interest receivable 1,593,952
Foreign tax reclaims receivable 1,566
Prepaid insurance expense 11,813
Deferred organization expenses (Note B) 3,538
-----------------
TOTAL ASSETS 147,323,616
-----------------
LIABILITIES
Payable for investments purchased 84,136
Payable for currency purchased 4,252,069
Payable to custodian bank 4,273,768
Management fee payable (Note C) 551,691
Administration fee payable (Note C) 9,455
Trustees fees payable (Note C) 3,128
Accrued expenses and other liabilities 34,272
-----------------
TOTAL LIABILITIES 9,208,519
-----------------
TOTAL NET ASSETS $ 138,115,097
-----------------
-----------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 128,039,992
Undistributed net investment income 218,115
Accumulated net realized loss on investment and foreign currency transactions (1,756,773)
Net unrealized appreciation on investment and foreign currency transactions 11,613,763
-----------------
TOTAL NET ASSETS $ 138,115,097
-----------------
-----------------
NET ASSET VALUE PER SHARE $ 8.79
($138,115,097 / 15,719,171 shares of beneficial interest outstanding) -----------------
-----------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 618,398
Dividend income 4,054,178
Foreign taxes withheld (268,311)
---------------
TOTAL INVESTMENT INCOME 4,404,265
---------------
EXPENSES
Management fee (Note C) 2,494,823
Custodian fee 230,033
Administration fee (Note C) 123,118
Audit fee 25,802
Legal fees 11,277
Transfer agent fee 6,798
Trustees fees (Note C) 7,119
Amortization of deferred organization expenses 2,547
Miscellaneous expenses 33,585
---------------
TOTAL EXPENSES 2,935,102
---------------
NET INVESTMENT INCOME 1,469,163
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 22,708,108
Net realized loss on foreign currency transactions (493,576)
Net unrealized depreciation on:
Investments (25,099,168)
Foreign currency transactions (9,335)
---------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (2,893,971)
---------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (1,424,808)
---------------
---------------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
YEAR YEAR
ENDED ENDED
APRIL 30, 1998 APRIL 30, 1997
--------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 194,596,827 $ 89,599,602
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 1,469,163 885,447
Net realized gain on investment transactions 22,708,108 1,359,144
Net realized loss on foreign currency transactions (493,576) (70,475)
Net unrealized appreciation (depreciation) on:
Investments (25,099,168) 31,143,844
Foreign currency transactions (9,335) 330
Net increase (decrease) in net assets from operations (1,424,808) 33,318,290
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (990,803) (581,714)
Net realized gains (12,415,579) 0
In excess of net realized gains (2,250,349) 0
----------------- -----------------
Total distributions (15,656,731) (581,714)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 54,531,962 73,420,567
Reinvestment of dividends and distributions to shareholders 15,605,446 564,807
Cost of shares repurchased (112,466,633) (3,086,300)
Paid in capital from subscription and redemption fees 2,929,034 1,361,575
----------------- -----------------
Total increase (decrease) in net assets from capital share transactions (39,400,191) 72,260,649
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS (56,481,730) 104,997,225
----------------- -----------------
NET ASSETS at end of period (net of accumulated net investment $ 138,115,097 $ 194,596,827
income of $218,115 and $233,331, respectively) ----------------- -----------------
----------------- -----------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,629,531 9,227,999
Shares issued in reinvestment of distributions to shareholders 1,739,738 69,729
Less shares repurchased (12,296,439) (351,983)
Net share transactions (4,927,170) 8,945,745
----------------- -----------------
----------------- -----------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT EMERGING AMERICAS FUND
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
YEAR YEAR YEAR SEPT. 19, 1994 *
ENDED ENDED ENDED THROUGH
APRIL 30, 1998 APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 9.430 $ 7.660 $ 6.850 $ 10.000
Net investment income (loss) 0.055 0.040 0.025 (0.004)
Net realized and unrealized gain (loss) on investment
and foreign currency transactions (0.050) 1.688 0.720 (3.298)
---------- ---------- ------------ -----------
Total from investment operations 0.005 1.728 0.745 (3.302)
---------- ---------- ------------ -----------
Less distributions:
Dividends from net investment income (0.053) (0.029) (0.040) 0.000
Net realized gains (0.659) 0.000 0.000 0.000
In excess of net realized gains (0.119) 0.000 0.000 0.000
---------- ---------- ------------ -----------
Total distributions (0.831) (0.029) (0.040) 0.000
---------- ---------- ------------ -----------
Paid in capital from subscription and
redemption fees (Note B) 0.186 .071 0.105 0.152
---------- ---------- ------------ -----------
Net asset value, end of period $ 8.790 $ 9.430 $ 7.660 $ 6.850
---------- ---------- ------------ -----------
---------- ---------- ------------ -----------
TOTAL INVESTMENT RETURN (1) 1.84% 23.55% 12.48% (31.50)%(2)
---------- ---------- ------------ -----------
---------- ---------- ------------ -----------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $138,115,097 $194,596,827 $89,599,602 $39,833,637
Operating expenses, net, to average
net assets (Note C) 1.76% 1.70% 1.70% 1.80% (3)
Operating expenses, gross, to average
net assets (Note C) 1.76% 1.77% 1.95% 1.80% (3)
Net investment income (loss) to average net assets 0.88% 0.62% 0.88% (0.11)%(3)
Portfolio turnover rate 99% 50% 61% 89%
Per share amount of fees waived (Note C) $ 0.000 $ 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.
Total return would have been lower had certain expenses not been waived.
(2) Periods less than one year are not annualized.
(3) Annualized.
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 seven 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,
Emerging Asia Fund and EMEA 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 that could delay or increase the cost of such realization
or retention.
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 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. There were no open forward foreign currency contracts
at April 30, 1998.
Although forward currency contracts limit the risk of loss due to a decline
in the value of hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the
Funds could be exposed to additional risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
EXPENSES - Expenses directly attributable to the Fund are charged to the
Fund. Expenses not directly attributable to a particular 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 either to receive cash in respect of all
distributions or to receive cash with respect to distributions of income and
to reinvest in shares of the Fund with respect to distributions of realized
capital gains. 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, 1998, $966,042 was collected in purchase premiums and $1,962,992 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, if any, for the
fiscal year. In addition, by distributing substantially all of their net
investment income, realized 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, 1997, the Fund declared a long term capital gain
distribution of $14,665,928, representing $0.778 per share. As of April 30,
1998, 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, 1998, the Fund has
elected for Federal income tax purposes to defer a $226,211 current year post
October 31 capital loss and a $91,074 current year post October 31 currency
loss as though these losses were 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.
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.
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, 1998, 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 ($10,000 per Trustee).
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 1998 were $150,384,086 and
$219,590,597, 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, 1998 were as follows:
<TABLE>
<CAPTION>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- ------------- ------------- --------------
<S> <C> <C> <C>
$ 107,658,511 $ 9,739,270 $ (4,249,822) $ 5,489,448
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there were three shareholders who owned greater than 10%
of the Fund's outstanding shares, representing 53% 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) in emerging markets.
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 withholding 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. 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 or gross national product,
diversification, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, dependence on foreign assistance,
vulnerability to change in trade conditions, structural unemployment and
balance of payments position.
- ------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION - (UNAUDITED)
The Fund intends to make an election under Internal Revenue Code 853 to pass
through foreign taxes paid by the Fund to its shareholders. During the year
ended April 30, 1998, 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 $128,645 (of the total $268,311 taxes withheld)
and $4,019,080, respectively.
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, 1998, 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, 1998 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 16, 1998
15
<PAGE>
MARTIN CURRIE BUSINESS TRUST
____________________
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
Colin Winchester, 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.
