<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 1, 1998
REGISTRATION NO. 811-8612
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
/X/
AMENDMENT NO. 5
/X/
(CHECK APPROPRIATE BOX OR BOXES)
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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 INVESTOR ROPES & GRAY
SALTIRE COURT SERVICES, INC. ONE INTERNATIONAL PLACE
20 CASTLE TERRACE 53 FOREST AVENUE BOSTON, MA 02110
EDINBURGH OLD GREENWICH, CT 06870
SCOTLAND EH1 2ES
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<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
DISTRIBUTION AND SERVICING PLANS . . . . . . . . . . . . . . . . . . . . . .22
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . .22
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . .24
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . .25
ADMINISTRATOR; CUSTODIAN; TRANSFER AND DIVIDEND PAYING AGENT . . . . . . . .26
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .26
LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
SHAREHOLDER INQUIRIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
<PAGE>
EXPLANATORY NOTE
This Amendment No. 5 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. 5 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 3 of General Instruction F.
Item 2. SYNOPSIS
Not applicable. See Paragraph 3 of General Instruction F.
Item 3. CONDENSED FINANCIAL INFORMATION
Not applicable. See Paragraph 3 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 3 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
September 1, 1998
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 ASIA PACIFIC EX JAPAN FUND (the "Asia Pacific Fund") (formerly the
MCBT Emerging Asia Fund) seeks capital appreciation through investment primarily
in securities of issuers located in Asian countries.
<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.
THE FUNDS MAY INVEST IN LOWER-RATED BONDS, COMMONLY KNOWN AS "JUNK BONDS."
INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL AND
NON-PAYMENT OF INTEREST. INVESTORS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THE FUNDS. PLEASE SEE "MORE INFORMATION ABOUT THE FUNDS'
INVESTMENTS -- LOWER RATED SECURITIES."
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 September 1,
1998 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,
<PAGE>
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.
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.
<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.
Information is based on annualized expenses for the Funds' fiscal year ended
April 30, 1998. 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>
Global
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) 0.70(3) 0.70 0.80
Other Expenses(2) 030(3) 0.26 0.34
Total Operating Expenses(2) 1.00(3) 0.96 1.14
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 $ 32
Three Years 48 46 57
(2) assuming no redemption:
One Year $ 18 $ 17 $ 22
Three Years 39 38 46
</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 the Trust against the Manager's
investment advisory account fees.
(3) 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 in order to limit the Total Operating Expenses of this
fund 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 1.05% for the Global Growth Fund.
<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.
Information is based on annualized expenses for the Funds' fiscal year ended
April 30, 1998. 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 Asia
Companies Americas Pacific EMEA
Fund Fund Fund(3) 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(2) 1.00 1.50 1.50(4) 1.50
Other Expenses(2) 0.29 0.26 0.50(4) 0.43
Total Operating Expenses(2) 1.29 1.76 2.00(4) 1.93
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 $ 56 $ 45
Three Years 62 91 99 87
(2) assuming no redemption:
One Year $ 23 $ 35 $ 38 $ 32
Three Years 51 73 80 73
</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 the Trust against the Manager's
investment advisory account fees.
(3) Formerly, the MCBT Emerging Asia Fund.
(4) The Manager has agreed, if necessary, to temporarily waive a portion of its
fee under the Management Contract and to bear certain expenses of the Fund
in order to limit total Operating Expenses for the Fund to no more than
2.00%. Without this limit the Other Expenses and Total Operating Expenses
would have been .73% and 2.23% for the Fund.
<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."
<PAGE>
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 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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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 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 ASIA PACIFIC FUND
The investment objective of the Asia Pacific Fund is capital appreciation
through investments primarily in securities of issuers located in Asian
countries. Such countries may include Hong Kong, the Peoples Republic of China,
India, Indonesia, the Philippines, Sri Lanka, Pakistan, Thailand, Vietnam, South
Korea, Taiwan, Singapore, Malaysia, Australia and New Zealand. The Fund may
also invest in other countries in the Pacific Basin when their markets, in the
opinion of the Manager, become sufficiently diversified.
Under normal conditions, the Asia Pacific Fund will invest at least 65% of
its assets in securities of issuers located in Asian countries. Such securities
may, in addition to common stocks, include bonds, sovereign debt, convertible
bonds, convertible preferred stocks, warrants, rights and other securities
convertible into common stocks. The Fund may also invest in below investment
grade debt of Asian issuers. In addition to investing in securities listed on
the exchanges of Asian countries, the Fund may invest in securities 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. The Fund may also invest in non-Asian markets, including United States
and non-United States dollar denominated bonds.
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
some of the Asian countries in which
<PAGE>
the Fund will invest. See "More Information About the Funds' Investments --
Risks of Emerging Markets."
For temporary defensive purposes, the Asia Pacific Fund 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 Asia Pacific 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 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.
<PAGE>
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 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.
<PAGE>
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. Also, adverse
developments in certain regions such as Southeast Asia or Russia can, however,
adversely affect securities of issuers located in countries or regions, such as
Latin America, whose economies appear to be unrelated.
ASIA. The Asia Pacific Fund is susceptible to political and economic
factors affecting issuers in Pacific Basin countries. Although the Fund will
not invest in Japanese companies or focus its investments in Chinese companies,
some Asian economies are directly affected by Japanese capital investment in the
region, by Japanese consumer demands and by the Chinese economy in general.
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"). The Manager has been granted QFII status with
its own investment quota enabling the 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. Recently,
the region has experienced political and economic uncertainty, increased market
volatility, decline in foreign currency exchange rates, slower economic growth,
high inflation and higher interest rates. In addition, a number of regional
currencies, including those in China and Hong Kong have been under pressure in
the markets.
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
LOWER RATED SECURITIES. Each Fund may invest some or all of its assets in
securities rated below investment grade (that is, rated below BBB by Standard &
Poor's or below Baa by Moody's) at the time of purchase, including securities in
the lowest rating categories, and comparable unrated securities ("Lower Rated
Securities"). Lower Rated Securities generally provide higher yields, but are
subject to greater credit and market risk, than higher quality fixed income
securities. Lower Rated Securities are considered predominantly speculative
with respect to the ability of the issuer to meet principal and interest
payments. The market for Lower Rated Securities may be more severely affected
than some other financial markets by economic recession or substantial interest
rate increases, by changing public perceptions of this market or by legislation
that limits the ability of certain categories of financial institutions to
invest in these securities. In addition, the secondary market may be less
liquid for Lower Rated Securities. This reduced liquidity at certain times may
affect the values of these securities and may make the valuation and sale of
these securities more difficult.
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 quarterly basis. The trustees of the
Trust approved such procedures governing transactions permitted by Rule 17a-7 on
June 6, 1994.
<PAGE>
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 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C>
The Global Growth Fund 60% 40% 38%
The Opportunistic EAFE Fund 63% 49% 37%
The Global Emerging Markets Fund 89% 0% N/A
The Japan Small Companies Fund 26% 26% 37%
The Emerging Americas Fund 99% 50% 61%
The Asia Pacific Fund 162% 118% 65%
The EMEA Fund 81% 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 portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by the relevant Fund. To the extent
<PAGE>
portfolio turnover results in the realization of short-term capital gains, such
gains will generally be taxed to shareholders at ordinary income tax rates.
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 is 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: Timothy
Hall) 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:
<PAGE>
<TABLE>
<CAPTION>
FUND PURCHASE PREMIUM
---- ----------------
<S> <C>
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 Asia Pacific Fund 1.75
The EMEA Fund 1.25
</TABLE>
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: Timothy
Hall at tel. 011-44-131-229-5252, fax 011-44-131-479-4747.
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: Timothy Hall; Telecopy #
011-44-131-479-4747 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,
<PAGE>
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 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:
<TABLE>
<CAPTION>
FUND REDEMPTION FEE
---- --------------
<S> <C>
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 Asia Pacific Fund 1.75
The EMEA Fund 1.25
</TABLE>
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
<PAGE>
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.
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 company taxable income", if any (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 capital gains, if
any, after giving effect to any net short-term capital losses, including any
available capital loss carryover. Each Fund's policy is to declare and pay
distributions of its net investment company taxable 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 allocable share of a portion of the
Fund's expenses, 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.,
<PAGE>
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. Distributions of long-term gains
(generally taxed at a 20% rate) will be taxable to shareholders as such,
regardless of how long a shareholder has held the shares in the Fund. Some 1998
distributions of gains realized in 1997 may be subject to tax at a 28% rate.
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, with respect to the
foreign tax credit, a holding period requirement applied at both the Fund and
the shareholder level).
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
<PAGE>
right of the Trust to use the identifying name "Martin Currie" with respect to
any Fund may be withdrawn.
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:
<TABLE>
<CAPTION>
FUND MANAGEMENT FEE
---- --------------
<S> <C>
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 Asia Pacific Fund 1.50
The EMEA Fund 1.50
</TABLE>
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
<PAGE>
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 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 $250 million, subject to certain minimum
requirements, plus certain out of pocket costs. State Street Bank and Trust
Company also receives fees and compensation of expenses for certain custodian
and transfer agent services.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110 serves as
the Trust's independent public accountants.
<PAGE>
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110, is the Trust's
legal counsel.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust c/o Martin Currie, Inc.,
Saltire Court, 20 Castle Terrace, Edinburgh, Scotland, United Kingdom EH1 2ES
(Attention: Timothy Hall), tel. 011-44-131-229-5252, fax 011-44-131-479-4747.
Institutional investors in the U.S. may contact Martin Currie Investor Services,
Inc., an affiliate of the Manager, 53 Forest Avenue, Old Greenwich, CT 06870,
tel. 203-698-9031 (Attention: Steven Johnson).
<PAGE>
EXHIBIT A
MARTIN CURRIE BUSINESS TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest
Amount of
Subscription
(US$)
MCBT Global Growth Fund -------------
MCBT Opportunistic EAFE Fund -------------
MCBT Global Emerging Markets Fund -------------
MCBT Japan Small Companies Fund -------------
MCBT Emerging Americas Fund -------------
MCBT Asia Pacific 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:
- ---------------------------------------------------------------
<PAGE>
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: Timothy Hall
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
<PAGE>
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 __, 1998
(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 __, 1998 (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.
<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.
<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, except to
<PAGE>
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>
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
SEPTEMBER 1, 1998
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 September 1, 1998, 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 (Attention: Timothy Hall),
tel. 011-44-131-229-5252, fax 011-44-131-479-4747 or c/o Martin Currie Investor
Services, Inc., 53 Forest Avenue, Old Greenwich, Connecticut 06870 (Attention:
Steven Johnson), tel. 203-698-9031.
<PAGE>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS . . . . . . . . . . . . . . .1
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .9
DISTRIBUTION AND SERVICING PLANS . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 14
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
NET ASSET VALUE AND OFFERING PRICE . . . . . . . . . . . . . . . . . . . . . 17
REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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.
<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, in
<PAGE>
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.
<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 reflects an agreed upon
<PAGE>
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 (*)[51]-- 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 [55] -- 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 [63]-- TRUSTEE. 27 Chestnut Street, Boston, MA 02108.
Chairman and Manager of Venturi Investment Trust.
COLIN WINCHESTER [50]-- 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 Property
- ---------------
(*) Trustees who are "interested persons" (as defined in the 1940 Act) of
the Trust or the Manager.
<PAGE>
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 [35]-- 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 [38]-- 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, 1998,
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 31, 1998. 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
(Closed as of 6/30/98)
OPPORTUNISTIC EAFE FUND
API Retirement Income 1220 L Street NW 7.6
Plan Washington, D.C. 20005
<PAGE>
National Geographic 1145 17th Street NW 8.6
Society Washington, D.C. 20036
Georgia Tech 225 N Avenue, NW 9.2
Foundation Inc. Atlanta, GA 30332-0182
Lin Television Corp. 1 Richmond Square 5.4
Retirement Plan Providence, RI 02906
Medtronics Inc. 7000 Central Ave, N.E. 9.9
Minneapolis, MN 55432
Southcoast Health 500 Washington Avenue 8.1
System Suite 1010
St. Louis, MO 63102
The Fresh Air Fund 1040 Avenue of the 12.5
Americas
New York, NY 10018
GLOBAL EMERGING
MARKETS FUND
State Universities 1901 Fox Drive 99.9
Retirement System of P.O. Box 2710
Illinois Champaign, IL 61825-
2710
JAPAN SMALL COMPANIES
FUND
CAAT Pension Plan Suite 902 5.3
50 Burnhamthorpe Road
West
Mississauga, Ontario
Canada L5B 3CZ
State Universities 1901 Fox Drive 8.1
Retirement System of P.O. Box 2710
Illinois Champaign, IL 61825-
2710
<PAGE>
Vought Aircraft Co. 2301 West 120th Street 5.1
Employee Benefit Mail Zone 152/N5-1
Account Fund Hawthorne, CA 90250
Pennsylvania Public P.O. Box 125 29.0
Schools Employee Harrisburg, PA 17108-
Retirement System 0125
Maine State Retirement State House Station #46 7.5
System Augusta, ME 04333
EMERGING AMERICAS FUND
State Universities 1901 Fox Drive 11.1
Retirement System Of P.O. Box 2710
Illinois Champaign, IL 61825-
2710
Pennsylvania Public P.O. Box 125 25.9
Schools Employee Harrisburg, PA 17108-
Retirement System 0125
CAAT Pension Plan Suite 902 5.5
50 Burnhamthorpe Road
West
Mississauga, Ontario
Canada LTB 3CZ
Maine State Retirement State House Station #46 10.3
System Augusta, ME 04333
ASIA PACIFIC FUND
State Universities 1901 Fox Drive 9.7
Retirement System of P.O. Box 2710
Illinois Champaign, IL 61825-
2710
<PAGE>
Pennsylvania Public P.O. Box 125 26.9
Schools Employee Harrisburg, PA 17108-
Retirement System 0125
CAAT Pension Plan Suite 902 6.4
50 Burnhamthorpe Road
West
Mississauga, Ontario
Canada L5B 3CZ
Maine State State House Station #46 8.7
Retirement System Augusta, ME 04333
EMEA FUND
Mayo Foundation Pension 200 SW 1st Street 5.6
Fund Rochester, MN 55905
Mayo Foundation General 200 SW 1st Street 5.9
Fund Rochester, MN 55905
Maine State Retirement State House Station #46 12.9
System Augusta, ME 04333
Pennsylvania Public P.O. Box 125 28.7
Schools Employee Harrisburg, PA 17108-
Retirement System 0125
State Universities 1901 Fox Drive 13.9
Retirement System P.O. Box 2710
of Illinois Champaign, IL 61825-
2710
</TABLE>
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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 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
<PAGE>
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.
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, 1998, 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,
- ---- ------------- --------- ---------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Global Growth Fund 6/15/94 $ 433,593 $ 375,240 $ 282,867 $33,589 $55,729 $107,235
Opportunistic EAFE Fund 7/1/94 934,444 786,120 655,301 0 0 51,287
Japan Small Companies Fund 8/15/94 712,359 797,216 603,494 0 0 0
Emerging Americas Fund 9/19/94 2,494,823 2,157,383 910,272 0 104,649 151,712
Asia Pacific Fund 3/24/95 640,772 1,911,419 1,216,136 96,494 123,328 202,689
Global Emerging Markets Fund 2/14/97 518,048 77,760 N/A 0 0 N/A
EMEA Fund 6/25/97 729,204 N/A N/A 0 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
<PAGE>
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 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
<PAGE>
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
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts.
PricewaterhouseCoopers 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. ("MCIS") is
under common control with the Manager and was registered with the National
Association of Securities Dealers, Inc. on April 23, 1996. Investors may be
solicited for investment in the Funds by MCIS and MCIS may charge a fee for
these services. MCIS 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
<PAGE>
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. 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, 1998 (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
---- ------------- ---------------- ------------ ------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Global Growth Fund 6/15/94 $157,940 $117,102 $120,093 N/A N/A
Opportunistic EAFE Fund 7/1/94 354,011 284,371 281,823 N/A N/A
Japan Small Companies
Fund 8/15/94 123,592 136,976 293,649 N/A N/A
Emerging Americas Fund 9/19/94 908,106 517,507 229,996 N/A N/A
<PAGE>
Asia Pacific Fund 3/24/95 703,503 1,757,693 1,195,696 N/A N/A
Global Emerging Markets
Fund 2/14/97 332,523 118,786 N/A N/A N/A
EMEA Fund 6/25/97 342,376 N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
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
<PAGE>
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").
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
<PAGE>
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 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.
<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.
- --------------------------------------------------------------------------------
REDEMPTIONS
- --------------------------------------------------------------------------------
<PAGE>
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, if any, 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.
Distributions of long-term gains (generally taxed at a 20% rate) will be taxable
to shareholders as such, regardless of how long a shareholder has held the
shares in the Fund. Some 1998 distributions of gains realized in 1997 may be
subject to tax at a 28% rate.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when the Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed.
<PAGE>
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 gain or loss realized will be
long-term capital gain or loss, 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.
The Internal Revenue Service recently revised its regulations affecting the
application to foreign investors of the back-up withholding and withholding tax
rules described above. The new regulations will generally be effective for
payments made after December 31, 1999 (although transition rules will apply).
In some circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
the 31% back-up withholding tax and for reduced withholding tax rates under
income tax treaties. Foreign investors in a Fund should consult their tax
advisors with respect to the potential application of these new regulations.
A Fund's transactions in options, futures contracts, hedging transactions,
forward contracts, straddles and foreign currencies will be subject to special
tax rules (including constructive sale, 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, convert long-term capital gains into short-term capital gains 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 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.
<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 foreign, state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to foreign, 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,
1998 included in this Statement of Additional Information (see "Financial
Statements" below) have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMEA FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
OBJECTIVE 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.
LAUNCH DATE June 25, 1997
FUND SIZE $78.9m
PERFORMANCE Total return from June 25, 1997 through April 30, 1998
- MCBT - EMEA Fund (excluding all transaction fees) +10.7%
- MCBT - EMEA Fund (including all transaction fees) +8.0%
- The Morgan Stanley Capital International - EMEA +10.6%
(from July 1, 1997 through April 30, 1998)
The graph below represents the total return of the portfolio
including all transaction fees versus the Morgan Stanley Capital
International EMEA Index from July 1, 1997 through April 30,
1998.
- MCBT - EMEA Fund (excluding all transaction fees) +10.5%
- MCBT - EMEA Fund (including all transaction fees) +7.7%
- The Morgan Stanley Capital International - EMEA +10.6%
FUND IG07
7/1/97 (a) 10/31/97 4/30/98
MCBT EMEA Fund $10,000 $9,887 $10,774
MSCI EMEA Free Index $10,000 $9,400 $11,061
(a) Performance for the benchmark is not available from June 25, 1997
(commencement of investment operations). For that reason, performance is
shown from July 1, 1997.
1
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
PORTFOLIO
COMMENTS This new fund, launched on June 25, 1997, aims to exploit the
investment opportunities in emerging markets which include
Eastern & Central Europe, Russia, Central Asia, Mediterranean
Europe, Africa and the Middle East. We established the fund
because we saw:
- Market growth due to privatisations and new listings
- Increasing levels of FDI (Foreign Direct Investment)
- Accelerating consumption and exports
- Development of indigenous savings markets
BENCHMARK
The MSCI EMEA Index has only recently been established. It
is dominated by South Africa (42%) - Russia (15.4%), Greece
(13.6%), Turkey (9.5%) and Israel (8.5%) are the other major
constituents.
INVESTMENT APPROACH
We are underweighted in those countries which are most
dependent on foreign capital inflows. Chief among these is
RUSSIA (just 3% of the portfolio) where a spiraling budget
deficit could provoke a currency crisis. The SOUTH AFRICAN
rand is also vulnerable given weak prices for the country's
commodity exports and low foreign currency reserves. Our
South African portfolio (19%) is designed to benefit from
corporate restructuring and demutualisation of the two giant
insurance companies.
In the next twelve months, we expect the best returns to come
from markets such as GREECE (9%) and ISRAEL (16%) where falling
interest rates will encourage local investors to switch from
cash and fixed interest into equities. TURKEY (13%) should
benefit from a similar trend in the short term, although
sustained progress will depend on tough structural reforms.
INVESTMENT Chris Butler manages the MCBT EMEA Fund.
MANAGER
PROFILE Chris graduated from Edinburgh University in 1989 with a
degree in French with European History. He joined Martin
Currie's Continental European team in 1989 and moved to the
UK investment team in 1991. Chris was appointed investment
manager in 1993, and became asset controller in the emerging
markets team in 1995. He is a member of the Institute of
Investment Management and Research.
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.
2
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
EMEA IG07
---- ----
Africa 21%
Europe 25%
Middle East 47%
Other Net Assets 7%
----
TOTAL: 100%
LARGEST HOLDINGS
BY REGION/COUNTRY
<TABLE>
<CAPTION>
MIDDLE EAST % OF NET ASSETS
<S> <C>
Carsi Buyuk Magazacilik (Turkey) 3.5
Teva Pharmaceutical Industries
Limited, ADR (Israel) 3.3
Dogan Sirketler Gruba Holding A.S. (Turkey) 3.0
Orbotech Limited (Israel) 2.8
AFRICA
Anglo American Corporation (South Africa) 3.9
Liberty Life Association of Africa (South Africa) 3.5
South African Breweries Limited (South Africa) 3.0
EUROPE
Alpha Credit Bank, GDR (Greece) 4.3
Pliva D.D., GDR (Croatia) 2.8
Lukoil Holding, ADR (Russia) 2.2
3
</TABLE>
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS AND WARRANTS - 93.1%
AFRICA - 21.4%
KENYA - 0.9%
KENYA AIRWAYS 4,308,244 $ 500,959
KENYA COMMERCIAL BANK 184,644 214,702
-----------
TOTAL KENYA - (COST $844,747) 715,661
-----------
MAURITIUS - 1.6%
MAURITIUS COMMERCIAL BANK 262,083 1,266,368
-----------
TOTAL MAURITIUS - (COST $1,182,249) 1,266,368
-----------
SOUTH AFRICA - 18.7%
ANGLO AMERICAN CORPORATION 51,700 3,058,627
BARLOW LIMITED 153,000 1,478,838
LIBERTY LIFE ASSOCIATION OF AFRICA 81,900 2,771,053
NAMPAK LIMITED 421,000 1,815,948
RMB HOLDINGS LIMITED 368,000 1,201,424
SASOL 207,500 2,093,886
SOUTH AFRICAN BREWERIES LIMITED 71,000 2,382,588
-----------
TOTAL SOUTH AFRICA - (COST $13,986,236) 14,802,364
-----------
ZIMBABWE - 0.2%
TRANS ZAMBEZI INDUSTRIES, ZDR 640,000 127,251
-----------
TOTAL ZIMBABWE - (COST $575,186) 127,251
-----------
TOTAL AFRICA - (COST $16,588,418) 16,911,644
-----------
EUROPE - 24.8%
CROATIA - 2.8%
PLIVA D.D., GDR 123,000 2,204,160
-----------
TOTAL CROATIA - (COST $1,951,158) 2,204,160
-----------
GREECE - 8.6%
ALPHA CREDIT BANK, GDR 32,500 3,427,494
ATTICA ENTERPRISES SA, GDR 80,000 1,335,920
HELLENIC TECHNODOMIKI, GDR 63,585 498,543
SARANTIS SA 96,340 1,498,466
-----------
TOTAL GREECE - (COST $5,244,320) 6,760,423
-----------
HUNGARY - 4.9%
GRABOPLAST TEXTILE 22,000 834,222
MAGYAR OLAJ-ES GAZIPARI RT., GDS 56,500 1,724,380
OTP BANK, GDR 28,000 1,346,800
-----------
TOTAL HUNGARY - (COST $3,470,464) 3,905,402
-----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - CONTINUED
IRELAND - 1.8%
FOREIGN & COLONIAL ROMANIAN * 140,000 $ 1,435,000
-----------
TOTAL IRELAND - (COST $1,414,000) 1,435,000
-----------
POLAND - 2.3%
BANK HANDLOWY W. WARSZAWIE, GDR * 54,000 1,030,320
IZOLACJA A.S. 10,500 763,580
-----------
TOTAL POLAND - (COST $1,521,466) 1,793,900
-----------
RUSSIA - 3.0%
BRUNSWICK RUSSIAN GROWTH FUND * 2,465 570,457
LUKOIL HOLDING, ADR 26,000 1,768,000
-----------
TOTAL RUSSIA - (COST $2,850,000) 2,338,457
-----------
UNITED KINGDOM - 1.4%
ORYX FUND * 65,000 1,137,500
-----------
TOTAL UNITED KINGDOM - (COST $1,196,577) 1,137,500
-----------
TOTAL EUROPE - (COST $17,647,985) 19,574,842
-----------
MIDDLE EAST - 46.9%
BAHRAIN - 1.5%
ARAB INSURANCE GROUP, BSC, GDR * 95,000 1,216,000
-----------
TOTAL BAHRAIN - (COST $1,498,500) 1,216,000
-----------
CYPRUS - 2.4%
BANK OF CYPRUS LIMITED 126,313 938,971
CYPRUS POPULAR BANK 120,238 932,673
-----------
TOTAL CYPRUS - (COST $1,460,047) 1,871,644
-----------
EGYPT - 9.1%
COMMERCIAL INTERNATIONAL BANK, GDR 73,730 1,264,870
INTERNATIONAL FOODS COMPANY * 15,000 291,730
MISR ELGEDIDA FOR HOUSE & RECO * 12,250 1,580,645
MISR FREE SHOPS * 85,000 952,449
NASR (EL) CITY FOR HOUSING & CONSTRUCTION 32,090 1,966,712
NORTH CAIRO MILLS 6,865 158,559
SUEZ CEMENT 45,998 957,730
-----------
TOTAL EGYPT - (COST $8,080,890) 7,172,695
-----------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
SHARES VALUE
------ -----
<S> <C> <C>
MIDDLE EAST - CONTINUED
ISRAEL - 16.1%
BANK HAPOALIM LIMITED 700,000 $ 1,876,215
BANK HAPOALIM LIMITED, WARRANTS 08/05/1998 * 214,637 267,079
BANK LEUMI LE-ISRAEL 900,000 1,642,194
BANQUE INTERNATIONALE DE ARABE (a) * 125,000 1,375,000
ECI TELECOMMUNICATIONS 45,500 1,387,750
NICE-SYSTEMS LIMITED, ADR * 31,260 1,344,180
ORBOTECH LIMITED * 61,000 2,203,625
TEVA PHARMACEUTICAL INDUSTRIES LIMITED, ADR 61,000 2,607,750
-----------
TOTAL ISRAEL - (COST $12,250,760) 12,703,793
-----------
JORDAN - 4.5%
ARAB BANK GROUP 3,200 1,574,139
JORDAN CEMENT FACTORIES 306,000 1,075,193
JORDAN PHOSPHATE MINES 201,000 861,631
-----------
TOTAL JORDAN - (COST $4,080,003) 3,510,963
-----------
TURKEY - 13.3%
AKBANK T.A.S. 16,960,000 1,441,888
AKSIGORTA A.S. 26,747,000 1,979,674
CARSI BUYUK MAGAZACILIK 4,500,000 2,790,558
DOGAN SIRKETLER GRUBA HOLDING A.S. 41,000,000 2,337,468
HURRIYET GAZETECILIK VE MATBAACILIK A.S. 52,292,000 1,966,573
-----------
TOTAL TURKEY - (COST $7,530,397) 10,516,161
-----------
TOTAL MIDDLE EAST - (COST $34,900,597) 36,991,256
-----------
TOTAL COMMON STOCKS AND WARRANTS - (COST $69,137,000)+ 73,477,742
-----------
TOTAL INVESTMENTS - (COST $69,137,000) - 93.1% 73,477,742
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 6.9% 5,460,439
-----------
NET ASSETS - 100.0% $ 78,938,181
------------
------------
</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 $1,375,000 of 1.7% 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:
Air Travel 0.6%, Banks 23.6%, Brewery 3.0%, Building Construction 3.5%,
Cement 2.6%, Containers & Glass 2.3%, Diversified 5.8%, Drugs & Health Care
6.1%, Electronics 2.8%, Financial Services 5.4%, Food & Beverages 0.6%,
Household Products 1.9%, Insurance 7.6%, Investment Companies 2.5%,
Manufacturing 1.0%, Mining 1.1%, Miscellaneous 3.2%, Mobile Homes 2.5%,
Mutual Funds 1.4%, Newspapers 2.5%, Oil & Gas 4.4%, Retail 3.5%,
Telecommunications Equipment 3.5%, Transportation 1.7%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
ZDR Zimbabwe Depositary Receipts.
See notes to financial statements.
6
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value
(cost $69,137,000) (Note B) $ 73,477,742
Foreign currency, at value (cost $4,429,853) (Note B) 4,438,776
Receivable for investments sold 6,552,601
Receivable for currency sold 4,703,875
Dividend and interest receivable 89,823
Prepaid insurance expense 8,887
------------
TOTAL ASSETS 89,271,704
------------
LIABILITIES
Payable for investments purchased 149,991
Payable for foreign currency purchased 4,732,014
Payable to custodian bank 5,133,342
Management fee payable (Note C) 294,392
Administration fee payable (Note C) 5,442
Trustees fees payable (Note C) 685
Accrued expenses and other liabilities 17,657
------------
TOTAL LIABILITIES 10,333,523
------------
TOTAL NET ASSETS $ 78,938,181
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 72,524,213
Undistributed net investment income 156,324
Accumulated net realized gain on investment and foreign
currency transactions 1,941,060
Net unrealized appreciation on investment and foreign
currency transactions 4,316,584
------------
TOTAL NET ASSETS $ 78,938,181
------------
------------
NET ASSET VALUE PER SHARE
($78,938,181/ 7,272,647 shares
of beneficial interest outstanding) $ 10.85
------------
------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
JUNE 25, 1997* THROUGH APRIL 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 335,935
Dividend income 1,025,904
Foreign taxes withheld (20,025)
-----------
TOTAL INVESTMENT INCOME 1,341,814
-----------
EXPENSES
Management fee (Note C) 729,204
Custodian fee 127,481
Administration fee (Note C) 39,002
Audit fee 19,002
Legal fees 4,073
Transfer agent fee 6,233
Trustees fees (Note C) 1,361
Miscellaneous expenses 7,852
-----------
TOTAL EXPENSES 934,208
-----------
NET INVESTMENT INCOME 407,606
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 3,158,791
Net realized loss on foreign currency transactions (114,819)
Net unrealized appreciation (depreciation) on:
Investments 4,340,742
Foreign currency transactions (24,158)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 7,360,556
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,768,162
-----------
-----------
</TABLE>
- ----------------------------------------------------------------------------
*Commencement of investment operations.
See notes to financial statements.
8
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
JUNE 25, 1997* THROUGH APRIL 30, 1998
<TABLE>
<S> <C>
NET ASSETS AT BEGINNING OF PERIOD $ 0
-----------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 407,606
Net realized gain on investment transactions 3,158,791
Net realized loss on foreign currency transactions (114,819)
Net unrealized appreciation (depreciation) on:
Investments 4,340,742
Foreign currency transactions (24,158)
------------
Net increase in net assets from operations 7,768,162
------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (138,147)
Net realized gains (1,216,047)
-------------
Total distributions (1,354,194)
-------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 84,237,826
Reinvestment of dividends and distributions to shareholders 1,345,957
Cost of shares repurchased (13,910,000)
Paid in capital from subscription and redemption fees 850,430
-------------
Total increase in net assets from capital share transactions 72,524,213
-------------
NET INCREASE IN NET ASSETS 78,938,181
-------------
NET ASSETS at end of period (includes undistributed net
investment income of $156,324) $ 78,938,181
-------------
-------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 8,454,754
Shares issued in reinvestment of distributions to shareholders 140,350
Less shares repurchased (1,322,457)
-------------
Net share transactions 7,272,647
-------------
-------------
</TABLE>
- -----------------------------------------------------------------------------
*Commencement of investment operations
See notes to financial statements.
9
<PAGE>
MCBT EMEA FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING
JUNE 25, 1997* THROUGH APRIL 30, 1998
<TABLE>
<S> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $ 10.000
--------------
Net investment income 0.041
Net realized and unrealized loss on investment
and foreign currency transactions 0.887
--------------
Total from investment operations 0.928
--------------
Less distributions:
Net investment income (0.020)
Net realized gains (0.175)
--------------
Total distributions (0.195)
--------------
Paid in capital from subscription and redemption fees (Note B) 0.117
--------------
Net asset value, end of period $ 10.850
--------------
--------------
</TABLE>
TOTAL INVESTMENT RETURN (1) (2) 10.71%
- ------------------------------ --------------
--------------
<TABLE>
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
<S> <C>
Net assets, end of period $ 78,938,181
Operating expenses, net, to average net assets (Note C) 1.93%(3)
Operating expenses, gross, to average net assets (Note C) 1.93%(3)
Net investment income (loss) to average net assets 0.84%(3)
Portfolio turnover rate 81%
- -------------------------------------------------------------------------------
</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.
See notes to financial statements.
10
<PAGE>
MCBT EMEA 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 EMEA Fund (the
"Fund") commenced investment operations on June 25, 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 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 EMEA 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.
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 1.25% of the amount invested and a
redemption fee on cash redemptions of 1.25% 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, 1998, $676,555 was collected in purchase premiums and $173,875 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, 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. As of April 30, 1998, the Fund has elected for Federal income tax
purposes to defer a $38,397 current year post October 31 currency loss as
though the loss was incurred on the first day of the next fiscal year.
12
<PAGE>
MCBT EMEA 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.
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
$103,801,629 and $37,823,420, 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>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------- -------------- -------------- --------------
<S> <C> <C> <C>
$ 69,806,263 $ 8,951,923 $ (5,280,444) $ 3,671,479
</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 EMEA 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 $17,970 (of the total $20,025 taxes withheld) and
$1,025,581, respectively.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - EMEA 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 EMEA 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 period
June 25, 1997 (commencement of operations) through April 30, 1998, 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, 1998 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provides 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
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 shares.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING ASIA FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
<TABLE>
<S> <C>
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 $21.1m
PERFORMANCE Total return from May 1, 1997 through April 30, 1998
- MCBT - Emerging Asia Fund (excluding all transaction fees) -73.1%
- MCBT - Emerging Asia Fund (including all transaction fees) -74.0%
- The Morgan Stanley Capital International - Emerging Free Asia Index -44.0%
Annualized total return from March 24, 1995 through April 30, 1998
- MCBT - Emerging Asia Fund (excluding all transaction fees) -34.3%
- MCBT - Emerging Asia Fund (including all transaction fees) -35.0%
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, 1998.
- MCBT - Emerging Asia Fund (excluding all transaction fees) -34.7%
- MCBT - Emerging Asia Fund (including all transaction fees) -35.4%
- The Morgan Stanley Capital International - Emerging Free Asia Index -16.5%
</TABLE>
<TABLE>
<CAPTION>
4/1/95(a) 4/30/95 4/30/96 4/30/97 4/30/98
<S> <C> <C> <C> <C> <C>
MCBT Emerging Asia Fund $10,000 $9,541 $11,957 $ 9,664 $2,598
MCBT Emerging Free Asia Index $10,000 $9,850 $11,682 $10,246 $5,737
</TABLE>
(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>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
PORTFOLIO There has been a complete collapse in stockmarkets and
COMMENTS currencies of emerging Asian countries. This has brought
about a dramatic economic slowdown which will see an
escalation of bad news over the next few months. High
unemployment, bankruptcies, shrinking money supply and debt
restructuring will be common to many countries and in some,
social unrest is a real possibility. Although the issue of
deteriorating current account deficits is being resolved,
that is because import demand has disappeared rather than
because export growth is particularly robust.
However, bleak as the general outlook is, stockmarkets have
already fallen a long way and in many cases share prices
have been sold down indiscriminately. There are therefore
areas of interest to the Asian investor.
In the semi-annual report, six months ago, we stated our
intention to remain in Indonesia. However, the situation
there has deteriorated to such an extent that we have sold
out of Indonesia altogether and have moved funds into the
north of the region, principally Taiwan, and also reentered
the Thai stockmarket.
Taiwan's economy will certainly be affected by the slowdown
in Japan and South East Asia. However, its current account
surplus, and healthy balance of foreign exchange reserves
will provide better liquidity conditions than elsewhere in
Asia. Furthermore Taiwan's asset bubble (both property and
stockmarket) was burst early in the 1990's and its banking
system is in better shape than those in some ASEAN
countries. We have a portfolio in Taiwan with an emphasis
in the electronics, banking and construction sectors.
Thailand and South Korea have taken some steps to address
their economic problems. While we believe the economic
recovery is still some way off, we believe it is a good time
to start reinvesting in these countries, having identified
companies that will survive the economic downturn. We have
purchased Pohang Iron and Steel in Korea, the world's second
largest steel manufacturer. We also participated in the
recapitalisation of Thailand's two largest banks, Bangkok
Bank and Thai Farmers Bank.
Outlook
-------
As stated above, the economic outlook remains bleak for the
region as a whole. However, the slowdown in China and
Taiwan will be less significant than elsewhere in Asia.
Companies in these countries which have superior product and
management, can continue to grow their profits. Buying the
recovery in the crisis areas of Asia will increasingly come
to the fore in our investment strategy over the next twelve
months.
INVESTMENT James Fairweather is Chief Investment Officer. All
MANAGER funds are managed on a team basis, with a named
PROFILE director heading each team.
Tom Walker manages the MCBT Emerging Asia Fund.
With ten 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.
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.
2
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
<TABLE>
<CAPTION>
EMERGING ASIA IG06
- ------------- ----
<S> <C>
China 4%
Hong Kong 21%
Korea 12%
Philippines 7%
Taiwan 42%
Thailand 7%
ST Investment 3%
Other Net Assets 4%
----
TOTAL: 100%
</TABLE>
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
<S> <C>
TAIWAN
Evergreen Marine Corporation 4.3
Teco Electric & Machine, 2.750%, 04/15/2004 4.2
CHINA
Guangdong Kelon Electrical 4.0
PHILIPPINES
Belle Corporation 3.3
HONG KONG
Road King Infrastructure Limited 4.8
Qingling Motors 4.7
THAILAND
Thai Farmers Bank 2.8
KOREA
Samsung Electronics America Incorporated 4.7
</TABLE>
3
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES/PAR VALUE
---------- -----
<S> <C> <C>
COMMON STOCK, WARRANTS, RIGHTS AND
CONVERTIBLE BONDS - 92.3%
CHINA - 4.0%
GUANGDONG KELON ELECTRICAL 820,000 $ 841,596
-----------
TOTAL CHINA - (COST $715,177)
HONG KONG - 20.5%
CHEUNG KONG HOLDINGS 135,000 897,560
FIRST TRACTOR LIMITED 1,100,000 614,188
HUANENG POWER INTERNATIONAL INCORPORATED 1,450,000 814,291
QINGLING MOTORS 2,300,000 994,707
ROAD KING INFRASTRUCTURE LIMITED 1,090,000 1,013,168
-----------
TOTAL HONG KONG - (COST $4,586,525) 4,333,914
-----------
KOREA - 11.7%
HOUSING & COMMERCIAL BANK, GDR 107,532 652,719
POHANG IRON & STEEL COMPANY 17,000 794,987
SAMSUNG ELECTRONICS AMERICA INCORPORATED * 17,702 980,133
SAMSUNG ELECTRONICS AMERICA INCORPORATED, RIGHTS 06/01/1998 * 1,408 27,180
-----------
TOTAL KOREA - (COST $2,693,274) 2,455,019
-----------
PHILIPPINES - 7.5%
BELLE CORPORATION * 16,100,000 705,754
BELLE CORPORATION, WARRANTS 10/06/2000 * 3,220,000 10,025
JOLLIBEE FOODS, WARRANTS 03/25/2003 * 1,290,000 586,364
METRO BANK & TRUST 34,600 269,302
-----------
TOTAL PHILIPPINES - (COST $4,010,127) 1,571,445
-----------
TAIWAN - 41.5%
A.D.I. CORPORATION 650,000 504,632
ACER INCORPORATED 113,000 188,479
ACER PERIPHERALS INCORPORATED 461,000 838,830
BANK SINO PAC 1,180,000 858,845
BES ENGINEERING CORPORATION 900,000 742,392
CHINATRUST COMMERCIAL BANK 335,000 393,168
EVERGREEN MARINE CORPORATION 895,000 895,692
FAR EASTERN TEXTILE LIMITED 771,559 701,960
ORIENT SEMICONDUCTOR ELECTRONICS LIMITED, 1.500%, 02/26/2003 650,000 661,830
PACIFIC CONSTRUCTION 1,300,000 737,236
TAIWAN SEMICONDUCTOR MANUFACTURING 189,611 819,408
TECO ELECTRIC & MACHINE, 2.750%, 04/15/2004 1,300,000 879,580
UNITED MICROELECTRONICS LIMITED 278,165 523,017
-----------
TOTAL TAIWAN - (COST $9,346,212) 8,745,069
-----------
THAILAND - 7.1%
BANGKOK BANK 195,600 490,898
SIAM COMMERCIAL BANK 353,000 420,129
THAI FARMERS BANK 257,000 588,473
-----------
TOTAL THAILAND - (COST $1,831,450) 1,499,500
-----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
VALUE
-----
<S> <C> <C>
TOTAL COMMON STOCK, WARRANTS, RIGHTS AND
CONVERTIBLE BONDS - (COST $23,182,765)+ $ 19,446,543
-----------
PRINCIPAL
AMOUNT
---------
SHORT TERM INVESTMENT - 3.4%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.150%, 05/01/1998 (a) $ 711,000 711,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $711,000) 711,000
-----------
TOTAL INVESTMENTS - (COST $23,893,765) - 95.7% 20,157,543
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 4.3% 915,431
-----------
NET ASSETS - 100.0% $ 21,072,974
-----------
-----------
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 4/30/98, $711,000 par due 5/1/98, is
collateralized by United States Treasury Bonds, 6.00%, due 2/15/26, with a
market value of $725,736.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Agricultural Machinery 2.9%, Automobiles 4.7%, Banks 17.4%, Building &
Construction 8.3%, Computers 7.3%, Electric Utilities 3.9%, Electrical
Equipment 4.2%, Electronics 7.3%, Food & Beverages 2.8%, Household
Appliances & Home Furnishings 4.0%, Real Estate 11.2%, Semi-Conductor
Manuf. Equip. 7.0%, Steel 3.8%, Textiles 3.3%, Transportation 4.2%.
GDR Global Depositary Receipts.
See notes to financial statements.
5
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $23,182,765) (Note B) $ 19,446,543
Investments in repurchase agreements, at value (Note B) 711,000
----------------
Total Investments 20,157,543
Cash 852
Foreign currency, at value (cost $992,049) (Note B) 992,557
Dividend and interest receivable 26,638
Prepaid insurance expense 202
Deferred organization expenses (Note B) 4,649
----------------
TOTAL ASSETS 21,182,441
----------------
LIABILITIES
Management fee payable (Note C) 73,199
Administration fee payable (Note C) 6,371
Trustees fees payable (Note C) 1,467
Accrued expenses and other liabilities 28,430
----------------
TOTAL LIABILITIES 109,467
----------------
TOTAL NET ASSETS $ 21,072,974
----------------
----------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 81,999,677
Undistributed net investment loss (1,920,658)
Accumulated net realized loss on investment and foreign
currency transactions (55,268,003)
Net unrealized depreciation on investment and foreign currency transactions (3,738,042)
----------------
TOTAL NET ASSETS $ 21,072,974
----------------
----------------
NET ASSET VALUE PER SHARE $ 2.59
($21,072,974 / 8,125,027 shares of beneficial interest outstanding) ----------------
----------------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 148,078
Dividend income 786,674
Foreign taxes withheld (120,577)
------------
TOTAL INVESTMENT INCOME 814,175
------------
EXPENSES
Management fee (Note C) 640,772
Custodian fee 183,786
Administration fee (Note C) 58,118
Audit fee 25,802
Legal fees 3,329
Transfer agent fee 7,099
Trustee fees (Note C) 2,380
Amortization of deferred organization expenses 2,547
Miscellaneous expenses 27,024
Fees and expenses waived by the investment manager (Note C) (96,494)
------------
TOTAL EXPENSES 854,363
------------
NET INVESTMENT LOSS (40,188)
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (44,893,511)
Net realized loss on foreign currency transactions (2,054,320)
Net unrealized depreciation on:
Investments (net of foreign taxes of ($2,331)) (4,450,434)
Foreign currency transactions (15,262)
------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (51,413,527)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(51,453,715)
------------
------------
</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, 1998 APRIL 30, 1997
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 84,384,554 $129,326,397
------------- --------------
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss (40,188) (1,132,121)
Net realized loss on investment transactions (44,893,511) (10,462,605)
Net realized loss on foreign currency transactions (2,054,320) (251,855)
Net unrealized depreciation on:
Investments (4,450,434) (10,666,199)
Foreign currency transactions (15,262) 17,243
------------- --------------
Net decrease in net assets from operations (51,453,715) (22,495,537)
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
In excess of net investment income 0 (119,214)
In excess of net realized gains 0 (3,999,558)
------------- --------------
Total distributions 0 (4,118,772)
------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 8,136,783 33,631,104
Reinvestment of dividends and distributions to shareholders 0 4,115,185
Cost of shares repurchased (20,466,078) (57,682,075)
Paid in capital from subscription and redemption fees 471,430 1,608,252
------------- --------------
Total decrease in net assets from capital share transactions (11,857,865) (18,327,534)
------------- --------------
NET DECREASE IN NET ASSETS (63,311,580) (44,941,843)
------------- --------------
NET ASSETS at end of period (includes undistributed
net investment losses of $1,920,658 and $82,681, respectively) $ 21,072,974 $ 84,384,554
------------- --------------
------------- --------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 2,782,687 2,990,256
Shares issued in reinvestment of distributions to shareholders 0 381,036
Less shares repurchased (3,417,299) (5,074,489)
------------- --------------
Net share transactions (634,612) (1,703,197)
------------- --------------
------------- --------------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT EMERGING ASIA FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR (4) YEAR (4) MARCH 24, 1995 *
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 $ 9.630 $ 12.360 $ 9.980 $ 10.000
Net investment income (loss) (0.227) (.101) (0.029) 0.009
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions (6.871) (2.503) 2.446 (0.029)
----------- ------------ ----------- -----------
Total from investment operations (7.098) (2.604) 2.417 (0.020)
----------- ------------ ----------- -----------
Less distributions:
In excess of net investment income 0.000 (0.009) 0.000 0.000
Net realized gains 0.000 0.000 (0.209) 0.000
In excess of net realized gains 0.000 (0.305) 0.000 0.000
----------- ------------ ----------- -----------
Total distributions 0.000 (0.314) (0.209) 0.000
----------- ------------ ----------- -----------
Paid in capital from subscription and
redemption fees (Note B) 0.058 0.188 0.172 0.000
----------- ------------ ----------- -----------
Net asset value, end of period $ 2.590 $ 9.630 $ 12.360 $ 9.980
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
TOTAL INVESTMENT RETURN (1) (73.10)% (19.82)% 26.30% (0.20)%(2)
- ----------------------- ----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $21,072,974 $84,384,554 $129,326,397 $42,027,699
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Operating expenses, net, to average net
assets (Note C) 2.00% 1.89% 1.93% 1.85%(3)
Operating expenses, gross, to average
net assets (Note C) 2.23% 1.98% 2.18% 2.57%(3)
Net investment income (loss) to
average net assets (0.09)% (0.89)% (0.27)% 0.96%(3)
Portfolio turnover rate 162% 118% 65% 0%
Per share amount of fees waived (Note C) $ 0.552 $ 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 per share amounts were computed using a monthly average number of
shares outstanding during the year.
See notes to financial statements.
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 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 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 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.
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 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, $128,716 was collected in purchase premiums and $342,714 was
collected in redemption fees.
11
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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. As of April 30, 1998, the Fund has a realized capital loss carryforward,
for Federal income tax purposes, of $23,016,785 ($3,928,107 expires April 30,
2005, $19,088,678 expires April 30, 2006), 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 $32,249,612 current year post October
31 capital loss and a $1,920,658 post October 31 currency loss current year
as though the losses were 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.
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, the Investment Manager
has waived $96,494 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 ($10,000 per Trustee).
12
<PAGE>
MCBT EMERGING ASIA FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $62,052,897 and
$76,834,697 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) DEPRECIATION
------------- ------------ -------------- --------------
<S> <C> <C> <C>
$ 23,895,371 $ 323,622 $ (4,061,450) $ (3,737,828)
</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 47% of the Fund.
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.
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, 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, provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Boston, Massachusetts
June 16, 1998
14
<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.
<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.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
JAPAN SMALL COMPANIES FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
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 $57.5m
PERFORMANCE Total return from May 1, 1997 through April 30, 1998
- MCBT - Japan Small Companies Fund
(excluding all transaction fees) -15.0%
- MCBT - Japan Small Companies Fund
(including all transaction fees) -16.7%
- Tokyo Stock Exchange - Second Section Index -24.6%
Annualized total return from August 15, 1994 through April
30, 1998
- MCBT - Japan Small Companies Fund
(excluding all transaction fees) -8.7%
- MCBT - Japan Small Companies Fund
(including all transaction fees) -9.1%
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, 1998.
- MCBT - Japan Small Companies Fund
(excluding all transaction fees) -8.8%
- MCBT - Japan Small Companies Fund
(including all transaction fees) -9.3%
- Tokyo Stock Exchange - Second Section Index -21.0%
<TABLE>
<CAPTION>
9/1/94(a) 4/30/95 4/30/96 4/30/97 4/30/98
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
MCBT Japan Small Companies $10,000 $9,410 $10,652 $8,229 $6,993
TSE Second Section Index $10,000 $8,325 $ 8,853 $5,425 $4,210
</TABLE>
(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.
See notes to financial statements.
1
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
PORTFOLIO The last 12 months were characterised by economic weakness
COMMENTS in Japan. This was reflected in the bond, currency and
equity markets with smaller companies faring particularly
badly. Successful stock and sector selection has led to
outperformance against the market although absolute returns
remain elusive.
Tax rises, reduced government expenditure, depressed
consumption and the economic slowdown in Asia all conspired
to slow the economy. A series of high profile bankruptcies
did little to improve investor confidence and credit became
more expensive for many Japanese companies. Yet it was
encouraging to see the smaller companies rally in January.
The performance of the fund was aided by the domestic blue
chip element of the portfolio. Uni Charm and Meitec, who
account for 8% of the portfolio, rose 29% and 71%
respectively. We bought Toppan Forms, a printing company,
which has risen 37% since we bought in February. We also
bought, and have since sold for a profit, an underwear
manufacturer called Gunze as a value play. The theme behind
our sales was to reduce the general economic sensitivity of
the portfolio. Chain Store Okuwa, retail and restaurants,
and Nitto Kohki, machine tool manufacturers, have both been
sold entirely.
OUTLOOK
Later this year the government's 16 trillion yen package
will help stimulate the economy. Longer term, there is cause
for cautious optimism. The government's increasingly tight
financial situation should result in further deregulation
and tax reform. Moreover, companies are beginning to embrace
the concept of shareholder value. Share buybacks and return
on equity targets are no longer the preserve of companies
like Toyota. These are longer term changes, but in the
meantime it is reassuring to know that value investors are
underpinning the market.
INVESTMENT James Fairweather is Chief Investment Officer. All funds
MANAGER are managed on a team basis with a named director heading
PROFILE 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 is assisted 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. He was promoted to director in October, 1997.
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.
See notes to financial statements.
2
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
LARGEST HOLDINGS % OF NET ASSETS
Meitec 4.7
Circle K Japan 3.9
Kirin Beverage 3.7
Sony Music Entertainment 3.4
Uni-Charm 3.3
Promise 3.0
Taisho Pharmaceutical 2.9
Mabuchi Motor 2.8
Aiful 2.8
Hirose Electric 2.7
See notes to financial statements.
3
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK, WARRANTS AND CONVERTIBLE BONDS - 100.2%
COMMON STOCK - 87.0%
ADERANS 64,000 $ 1,513,677
AIFUL * 24,000 1,588,635
AIPHONE 63,600 470,008
ALTECH CORPORATION 16,000 126,946
ASIA SECURITIES PRINTING 85,000 886,353
CANON APTEX 100,000 884,086
CAPCOM 70,000 911,894
CHIYODA 70,000 460,178
CIRCLE K JAPAN 54,428 2,241,443
COCO'S JAPAN 90,000 346,834
DAIFUKU 100,000 395,194
DAIWA KOSHO LEASE 319,000 1,371,551
DAIWA LOGISTICS 94,800 474,215
EIDEN SAKAKIYA 150,000 629,062
EXEDY 200 1,058
FUJI MACHINE MANUFACTURING 240,000 1,142,512
FUJITSU BUSINESS SYSTEMS 40,000 619,616
HIRATA TECHNICAL 155,400 556,594
HIROSE ELECTRIC 30,800 1,556,990
KIRIN BEVERAGE 110,000 2,152,788
KOMORI 67,000 1,139,111
MABUCHI MOTOR 28,000 1,620,674
MAEZAWA INDUSTRIES 100,000 978,540
MEITEC 82,800 2,721,626
MICRONICS JAPAN 500 12,090
MIURA 6,700 63,790
NICHICON 70,000 761,675
NIPPON BROADCASTING SYSTEM 30,000 1,378,268
NIPPON ENGINEERING CONSULTANTS * 50,000 136,013
NIPPON KONPO UNYU SOKO 160,000 910,382
NIPPON SYSTEM DEVELOPMENT 49,000 1,221,853
NISHIO RENT ALL 66,500 562,793
NISSHA PRINTING 110,000 665,785
NORITSU KOKI 40,600 1,211,803
ORIENTAL CONSTRUCTION 60,500 301,723
PCA CORPORATION 15,000 215,354
PROMISE 33,430 1,697,519
RISO KAGAKU * 20,000 1,044,280
ROHTO PHARMACEUTICAL 80,000 649,237
RYOSAN 65,000 932,711
SANKI ENGINEERING 160,000 1,218,679
SANKYO 60,300 965,966
SANTEN PHARMACEUTICAL 88,770 892,127
SHIMACHU 40,000 720,871
SONY MUSIC ENTERTAINMENT 50,000 1,957,080
TAISHO PHARMACEUTICAL 79,000 1,671,452
TDC SOFTWARE 20,000 219,133
TOKAI LEASE 119,000 279,651
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES/PAR VALUE
---------- -----
<S> <C> <C>
COMMON STOCK - Continued
TOPPAN FORMS COMPANY 110,000 $ 1,321,596
TRANS COSMOS INCORPORATED 5,500 159,589
TSUBAKI NAKASHIMA 140,000 753,211
UNI-CHARM 50,000 1,889,074
XEBIO 55,000 706,514
YUSEN AIR & SEA SERVICE 49,000 703,491
-----------
TOTAL COMMON STOCK - (COST $67,683,389) 50,013,295
-----------
CONVERTIBLE BONDS - 12.8%
JONAS, 1.35%, 12/30/1999 Y 106,500,000 961,590
KONAMI, 0.75%, 03/31/2000 Y 160,000,000 1,307,662
MIRAI INDUSTRY, 2.30%, 03/20/2002 Y 160,000,000 1,244,068
MITSUI HIGH-TEC INCORPORATED, 1.90%, 01/31/2000 Y 50,000,000 483,603
NAMCO, 0.80%, 09/28/2001 Y 50,000,000 383,482
NAMCO, 0.90%, 09/30/2003 Y 110,000,000 860,284
NAMCO, 4.70%, 09/30/1998 Y 40,000,000 305,879
NITTO DENKO, NO 4, 3.90%, 03/30/2001 Y 70,000,000 835,726
RISO KAGAKU, 4.50%, 03/31/1999 Y 61,000,000 493,199
TAIYO YUDEN, 1.15%, 09/30/2008 Y 50,000,000 483,603
-----------
TOTAL CONVERTIBLE BONDS - (COST $9,005,197) 7,359,096
-----------
WARRANTS - 0.4%
NIPPON ENGINEERING CONSULTANTS, 01/20/2000 * 1,500 2,999
SATORI ELECTRIC, 05/23/2000 * 200 20,000
TAMPOPO (PROMISE) 02/08/2000 * 100 202,500
-----------
TOTAL WARRANTS - (COST $453,802) 225,499
-----------
TOTAL COMMON STOCK, WARRANTS AND
CONVERTIBLE BONDS - (COST $77,142,388) + 57,597,890
-----------
TOTAL INVESTMENTS - (COST $77,142,388) - 100.2% 57,597,890
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (0.2)% (91,518)
-----------
NET ASSETS - 100.0% $57,506,372
-----------
-----------
</TABLE>
* Non-income producing security.
Y Reflected at par and denominated in Japanese yen.
+ Percentages of long term investments by industry are as follows: Auto Parts
1.0%, Broadcasting 2.4%, Building & Construction 2.7%, Commercial Services
0.5%, Computer Software 0.9%, Computers & Business Equipment 9.5%,
Cosmetics & Toiletries 2.6%, Drugs & Health Care 7.3%, Electrical Equipment
9.7%, Electronics 6.7%, Engineering 4.5%, Entertainment 3.4%, Financial
Services 6.1%, Food & Beverages 5.4%, Industrial Machinery 4.5%, Lease
Rental Obligations 3.4%, Leisure Time 0.5%, Metals 2.2%, Paper 3.3%,
Photography 1.5%, Printing 7.0%, Retail Trade 8.9%, Software 2.6%,
Transportation 3.6%.
See notes to financial statements.
5
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value
(cost $77,142,388) (Note B) $57,597,890
Receivable for investments sold 571,677
Dividend and interest receivable 241,519
Prepaid insurance expense 5,237
Deferred organization expenses (Note B) 3,300
-----------
TOTAL ASSETS 58,419,623
-----------
LIABILITIES
Payable for forward foreign currency contracts 452,206
Payable to custodian bank 281,409
Management fee payable (Note C) 152,001
Administration fee payable (Note C) 1,858
Trustees fees payable (Note C) 1,383
Accrued expenses and other liabilities 24,394
-----------
TOTAL LIABILITIES 913,251
-----------
TOTAL NET ASSETS $57,506,372
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in-capital $86,700,304
Undistributed net investment loss (827,685)
Accumulated net realized loss on investment and foreign currency
transactions (8,362,478)
Net unrealized depreciation on investment and foreign currency
transactions (20,003,769)
-----------
TOTAL NET ASSETS $57,506,372
-----------
-----------
NET ASSET VALUE PER SHARE $ 6.46
($57,506,372 / 8,901,820 shares of beneficial interest outstanding) -----------
-----------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 252,837
Dividend income 546,808
Foreign taxes withheld (92,598)
-------------
TOTAL INVESTMENT INCOME 707,047
-------------
EXPENSES
Management fee (Note C) 712,359
Custodian fee 85,832
Administration fee (Note C) 57,114
Audit fee 25,804
Legal fees 6,872
Transfer agent fee 6,816
Trustees fees (Note C) 2,613
Amortization of deferred organization expenses 2,541
Miscellaneous expenses 17,625
-------------
TOTAL EXPENSES 917,576
-------------
NET INVESTMENT LOSS (210,529)
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (5,451,368)
Net realized loss on foreign currency transactions (47,734)
Net unrealized depreciation on:
Investments (6,570,197)
Foreign currency transactions (454,673)
-------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (12,523,972)
-------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (12,734,501)
-------------
-------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1998 APRIL 30, 1997
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 66,748,656 $ 88,863,054
------------ ------------
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss (210,529) (325,801)
Net realized loss on investment transactions (5,451,368) (1,933,163)
Net realized gain (loss) on foreign currency transactions (47,734) 2,960,291
Net unrealized appreciation (depreciation) on:
Investments (6,570,197) (21,908,955)
Foreign currency transactions (454,673) 449,601
------------ ------------
Net decrease in net assets from operations (12,734,501) (20,758,027)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (586,947) (1,659,257)
In excess of net investment income 0 (2,562,640)
Return of capital (249,391) 0
Net realized gains 0 (814,535)
In excess of net realized gains 0 (330,947)
------------ ------------
Total distributions (836,338) (5,367,379)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 16,045,506 7,729,431
Reinvestment of dividends and distributions to shareholders 785,178 5,251,397
Cost of shares repurchased (12,791,111) (9,125,750)
Paid in capital from subscription and redemption fees 288,982 155,930
------------ ------------
Total increase in net assets from capital share transactions 4,328,555 4,011,008
------------ ------------
NET DECREASE IN NET ASSETS (9,242,284) (22,114,398)
------------ ------------
NET ASSETS at end of period (net of accumulated net investment $ 57,506,372 $ 66,748,656
income (loss) of ($827,685) and $89,565, respectively) ------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,970,622 816,185
Shares issued in reinvestment of distributions to shareholders 125,628 628,158
Less shares repurchased (1,841,334) (1,045,143)
------------ ------------
Net share transactions 254,916 399,200
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR YEAR (4) AUGUST 15, 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 $ 7.720 $ 10.770 $ 9.610 $ 10.000
Net investment income (loss) (0.005) (0.027) (0.034) 0.013
Net realized and unrealized gain (loss) on investment
and foreign currency transactions (1.189) (2.384) 1.248 (0.492)
------------ ----------- ----------- -----------
Total from investment operations (1.194) (2.411) 1.214 (0.479)
------------ ----------- ----------- -----------
Less distributions:
Net investment income (0.069) (0.203) 0.000 (0.002)
In excess of net investment income 0.000 (0.314) (0.097) 0.000
Return of capital (0.029) 0.000 0.000 0.000
Net realized gains 0.000 (0.100) 0.000 (0.003)
In excess of net realized gains 0.000 (0.040) 0.000 (0.000)
------------ ----------- ----------- -----------
Total distributions (0.098) (0.657) (0.097) (0.005)
------------ ----------- ----------- -----------
Paid in capital from subscription and
redemption fees (Note B) 0.032 0.018 0.043 0.094
------------ ----------- ----------- -----------
Net asset value, end of period $ 6.460 $ 7.720 $ 10.770 $ 9.610
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
TOTAL INVESTMENT RETURN (1) (15.01)% (22.69)% 13.13% (3.85)%(2)
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 57,506,372 $66,748,656 $88,863,054 $44,969,083
Operating expenses, net, to average
net assets (Note C) 1.29% 1.26% 1.37% 1.50%(3)
Operating expenses, gross, to average
net assets (Note C) (3) 1.29% 1.26% 1.37% 1.72%
Net investment income(loss) to average net assets (3) (0.30)% (0.41)% (0.36)% 0.37%
Portfolio turnover rate 26% 26% 37% 33%
Per share amount of fees waived (Note C) $ 0.000 $ 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 per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
9
<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 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 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 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.
10
<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 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.
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.
The Fund had the following open forward foreign currency contract at April 30,
1998:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY DATE LOCAL CURRENCY FACE AMOUNT VALUE (DEPRECIATION)
------------- -------------- ----------- ----- --------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (sell) July 8, 1998 3,896,582,400 $29,280,000 $29,732,206 $(452,206)
</TABLE>
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 1.00% 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, 1998, $161,571 was collected
in purchase premiums and $127,411 was collected in redemption fees.
11
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for 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. As of April 30,
1998, the Fund has a realized capital loss carryforward, for Federal income tax
purposes, of $5,060,484 (expires April 30, 2006), 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 $3,300,744 current year post October 31
capital loss and a $857,700 current year post October 31 currency loss as though
the losses were 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.
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, 1998, 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 ($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 $24,621,802 and
$17,922,131, 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) (DEPRECIATION)
------------ ------------ -------------- --------------
<S> <C> <C> <C>
$ 77,565,829 $ 4,897,152 $ (24,865,091) $ (19,967,939)
</TABLE>
12
<PAGE>
MCBT JAPAN SMALL COMPANIES FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there was one shareholder who owned greater than 10% of the
Fund's outstanding shares, representing 29% 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.
- -------------------------------------------------------------------------------
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 $91,837 (of the total $92,598 taxes withheld) and
$682,153, respectively.
13
<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, 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 broker, provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 16, 1998
14
<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.
<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL EMERGING MARKETS FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
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 $99.8m
PERFORMANCE Total return from May 1, 1997 through April 30, 1998
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) -8.2%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -10.0%
- Morgan Stanley Capital International - Emerging Markets
Free Index -14.5%
Annualized total return from February 14, 1997 through April 30,
1998
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) -6.7%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -8.3%
The graph below represents the annualized 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, 1998.
- MCBT - Global Emerging Markets Fund (excluding all
transaction fees) -6.7%
- MCBT - Global Emerging Markets Fund (including all
transaction fees) -8.3%
- Morgan Stanley Capital International - Emerging Markets Free
Index -14.4%
</TABLE>
FUND IG03
3/1/97 (a) 3/31/97 4/30/97 4/30/98
MCBT Emerging Markets Fund $10,000 $9,890 $9,850 $9,041
MSCI Emerging Markets Free Index $10,000 $9,559 $9,750 $8,337
(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, 1998
PORTFOLIO
COMMENTS A committed, disciplined approach to emerging markets remains our
guiding principle. This means investing only where we see a long
term investment case. The collapse of Asian markets and
currencies has emphasised the need for selectivity in this area.
LATIN AMERICA remains our largest position. After 3 years of
economic and stockmarket recovery, the last year has seen
greater volatility. The impact of Asia has seen a withdrawal
of funds from the region as investors looked for security in
the maturer markets and currencies.
We remain positive on the outlook for the EMEA markets (Europe,
Middle East and Africa). The main investment emphasis in the
region has shifted towards EUROPE. Our exposure in Europe is
gained through HUNGARY, RUSSIA, CROATIA, GREECE, and TURKEY,
where we identify earnings growth and gradual economic
transformation. SOUTH AFRICA has recovered over the period,
helped recently by the prospect of restructuring of a large
number of key conglomerates. In the MIDDLE EAST, despite public
discord over the longer term peace process, markets have been
resilient. ISRAEL is our largest position.
Asia's crisis has worsened, and we have continued to run a
defensive portfolio. CHINA, INDIA, and TAIWAN dominate the
portfolio - the latter two areas increased over the recent
period. Attracted to some relative value, we have built up
modest exposure to the THAI banking stocks again.
OUTLOOK
-------
We continue to believe that the US presents a benign background.
Steady growth and low inflation provide support for developing
markets. But Asia has left investors nervous. Latin America is
caught between reasonable growth and continued deregulation and
the general caution of the international investor. Interest rates
and currencies remain volatile. Our commitment to Asia will
remain defensive and focus on opportunities in China, India and
Taiwan. Elsewhere, broader Europe and the Middle East offer
attractive opportunities.
INVESTMENT All funds are managed on a team basis with a named director
MANAGER heading each team.
PROFILE
James Fairweather, Chief Investment Officer, oversees the
management of the MCBT Global Emerging Markets Fund. The Fund
is managed by Tom Walker.
With ten 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.
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.
2
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
GLOBAL EMERGING MKT IG03
------------------- ----
Africa 8%
Europe 9%
Latin America 33%
Middle East 13%
Pacific Basin 15%
Other Areas 12%
ST Investment 7%
Other Net Assets 3%
----
TOTAL: 100%
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
<S> <C>
LATIN AMERICA
Telefonos de Mexico, ADR (Mexico) 2.8
Telebras, ADR (Brazil) 2.7
OTHER AREAS
Taiwan Opportunities Fund (Investment Companies) 2.7
Indian Opportunities Fund (Investment Companies) 2.6
PACIFIC BASIN
Qingling Motors (Hong Kong) 1.5
Zhejiang Expressway Limited (China) 1.2
MIDDLE EAST
Dogan Sirketler Gruba Holding A.S (Turkey) 2.3
Aksigorta A.S (Turkey) 1.8
EUROPE
Alpha Credit Bank, GDR (Greece) 2.0
AFRICA
RMB Holding Limited (South Africa) 1.4
</TABLE>
3
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS, RIGHTS AND WARRANTS - 90.0%
AFRICA - 8.5%
KENYA - 0.2%
FIRESTONE EAST AFRICA 500,000 $ 143,688
KENYA AIRWAYS 600,000 69,767
-----------
TOTAL KENYA - (COST $396,545) 213,455
-----------
MAURITIUS - 0.9%
MAURITIUS COMMERCIAL BANK 196,404 949,011
-----------
TOTAL MAURITIUS - (COST $872,062) 949,011
-----------
SOUTH AFRICA - 7.3%
ANGLO AMERICAN CORPORATION 21,400 1,266,047
LIBERTY LIFE ASSOCIATION OF AFRICA 35,000 1,184,210
NAMPAK LIMITED 279,000 1,203,443
RMB HOLDINGS LIMITED 414,000 1,351,602
SASOL 104,000 1,049,466
SOUTH AFRICAN BREWERIES LIMITED 36,000 1,208,073
-----------
TOTAL SOUTH AFRICA - (COST $6,931,843) 7,262,841
-----------
ZIMBABWE - 0.1%
TRANS ZAMBEZI INDUSTRIES, ZDR 375,000 75,000
-----------
TOTAL ZIMBABWE - (COST $319,866) 75,000
-----------
TOTAL AFRICA - (COST $8,520,316) 8,500,307
-----------
EUROPE - 8.9%
CROATIA - 1.2%
PLIVA D.D., GDR 67,500 1,209,600
-----------
TOTAL CROATIA - (COST $1,142,007) 1,209,600
-----------
GREECE - 2.6%
ALPHA CREDIT BANK, GDR 19,200 2,024,858
HELLENIC TECHNODOMIKI, GDR 73,237 574,221
-----------
TOTAL GREECE - (COST $1,847,453) 2,599,079
-----------
HUNGARY - 3.4%
GRABOPLAST TEXTILE 17,800 674,961
MAGYAR OLAJ-ES GAZIPARI RT., GDS 50,500 1,541,260
OTP BANK, GDR 25,000 1,202,500
-----------
TOTAL HUNGARY - (COST $2,853,083) 3,418,721
-----------
RUSSIA - 1.7%
BRUNSWICK RUSSIAN GROWTH FUND * 2,279 527,369
LUKOIL HOLDING, ADR 17,000 1,156,000
-----------
TOTAL RUSSIA - (COST $2,275,000) 1,683,369
-----------
TOTAL EUROPE - (COST $8,117,543) 8,910,769
-----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
LATIN AMERICA - 32.6%
ARGENTINA - 3.6%
DISCO, ADR * 27,000 $ 1,073,250
PEREZ COMPANC, ADR 66,500 805,273
YPF SOCIEDAD ANONIMA, ADR 48,500 1,691,438
------------
TOTAL ARGENTINA - (COST $3,758,682) 3,569,961
------------
BRAZIL - 14.0%
COMPANHIA BRASILEIRA DE DISTRIBUICAO, GDR 80,000 2,130,000
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG), ADR 16,000 772,000
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG),
PREFERRED, ADR 21,800 1,057,929
COMPANHIA DE SANEAMENTO DO ESTADO DE SAO PAULO 4,885,000 1,110,567
ELETROBRAS, ADR 77,000 1,607,375
ERICSSON TELECOMUNICACOES 21,000,000 642,679
PETROBRAS PETROLEO BRASIL 7,373,775 1,869,798
TELEBRAS, ADR 22,500 2,740,781
TELECOMUNICACOES DE SAO PAULO 5,907,366 2,009,326
------------
TOTAL BRAZIL - (COST $12,382,462) 13,940,455
------------
CHILE - 2.2%
COMPANIA DE TELEFONOS DE CHILE, ADR 44,000 1,102,750
DISTRIBUCION Y SERVICIO D & S SA, ADR * 65,000 1,145,625
------------
TOTAL CHILE - (COST $2,312,592) 2,248,375
------------
MEXICO - 12.8%
APASCO SA DE CV 119,000 808,302
CIFRA SA DE CV, CL B 680,653 1,195,959
CORPORACION GEO, SERIES B * 180,000 1,243,868
FOMENTO ECONOMICO MEXICANO SA DE C.V. 140,000 1,036,792
GRUPO CARSO 140,000 881,604
GRUPO FINANCIERO BANAMEX, CL B * 340,000 1,062,500
GRUPO TELEVISA, ADR * 29,000 1,189,000
PEPSI-GEMEX, GDR 88,000 1,193,500
TELEFONOS DE MEXICO, ADR 48,500 2,746,314
TUBOS DE ACERO DE MEXICO, ADR * 75,000 1,378,125
------------
TOTAL MEXICO - (COST $12,204,284) 12,735,964
------------
TOTAL LATIN AMERICA - (COST $30,658,020) 32,494,755
------------
MIDDLE EAST - 13.1%
EGYPT - 2.1%
COMMERCIAL INTERNATIONAL BANK, GDR 62,000 1,050,900
MISR INTERNATIONAL BANK SAE, GDR * 64,900 811,250
NORTH CAIRO MILLS 9,100 210,181
------------
TOTAL EGYPT - (COST $2,709,260) 2,072,331
------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MIDDLE EAST - Continued
ISRAEL - 4.9%
BANK HAPOALIM LIMITED, WARRANTS 08/05/1998 * 290,000 $ 360,856
ECI TELECOMMUNICATIONS 57,000 1,738,500
ORBOTECH LIMITED * 45,000 1,625,625
TEVA PHARMACEUTICAL INDUSTRIES LIMITED, ADR 27,500 1,175,625
------------
TOTAL ISRAEL - (COST $4,252,919) 4,900,606
------------
JORDAN - 1.0%
ARAB BANK GROUP 2,000 983,837
------------
TOTAL JORDAN - (COST $963,156) 983,837
------------
TURKEY - 5.1%
AKBANK T.A.S. 12,300,000 1,045,709
AKSIGORTA A.S. 24,000,000 1,776,355
DOGAN SIRKETLER GRUBA HOLDING A.S. 40,000,000 2,280,456
------------
TOTAL TURKEY - (COST $3,329,277) 5,102,520
------------
TOTAL MIDDLE EAST - (COST $11,254,612) 13,059,294
------------
OTHER AREAS - 11.9%
INDIA - 4.2%
MAHANAGAR TELEPHONE NIGAM, GDR * 128,300 2,059,215
TATA ELECTRIC COMPANIES, GDR 1,010 227,250
VIDESH SANCHAR NIGAM LIMITED, GDR (c) * 156,000 1,931,280
------------
TOTAL INDIA - (COST $4,180,567) 4,217,745
------------
SRI LANKA - 1.1%
NATIONAL DEVELOPMENT BANK 288,000 1,069,110
------------
TOTAL SRI LANKA - (COST $1,162,765) 1,069,110
------------
INVESTMENT COMPANIES - 6.6%
EAST EUROPE DEVELOPMENT FUND * 25,000 968,750
INDIAN OPPORTUNITIES FUND (a) * 240,000 2,554,800
NEAR EAST OPPORTUNITIES FUND (b) * 25,000 402,500
TAIWAN OPPORTUNITIES FUND (b) * 191,600 2,718,804
------------
TOTAL INVESTMENT COMPANIES - (COST $5,870,100) 6,644,854
------------
TOTAL OTHER AREAS - (COST $11,213,432) 11,931,709
------------
PACIFIC BASIN - 15.0%
CHINA - 2.8%
GUANGDONG KELON ELECTRICAL 930,000 954,493
TINGYI HOLDINGS 6,400,000 627,937
ZHEJIANG EXPRESSWAY LIMITED 4,800,000 1,158,792
------------
TOTAL CHINA - (COST $2,680,257) 2,741,222
------------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - Continued
HONG KONG - 4.1%
CITIC PACIFIC 250,000 $ 768,138
HUANENG POWER INTERNATIONAL INCORPORATED 610,000 342,564
LI & FUNG LIMITED 500,000 839,143
NEW WORLD DEVELOPMENT LIMITED 220,000 626,259
QINGLING MOTORS 3,500,000 1,513,684
-----------
TOTAL HONG KONG - (COST $4,396,419) 4,089,788
-----------
KOREA - 1.8%
HOUSING & COMMERCIAL BANK, GDR 128,513 780,074
POHANG IRON & STEEL COMPANY 610 28,526
SAMSUNG ELECTRONICS AMERICA INCORPORATED * 17,000 941,264
SAMSUNG ELECTRONICS AMERICA INCORPORATED,
RIGHTS 06/01/1998 * 1,352 26,099
------------
TOTAL KOREA - (COST $1,408,404) 1,775,963
------------
PHILIPPINES - 0.3%
BELLE CORPORATION * 3,400,000 149,041
BELLE CORPORATION, WARRANTS 10/06/2000 * 680,000 2,117
MUSIC CORPORATION 700,000 209,216
------------
TOTAL PHILIPPINES - (COST $1,245,725) 360,374
------------
TAIWAN - 4.5%
ACER INCORPORATED 140,000 233,514
BANK SINOPAC 1,019,000 741,664
EVERGREEN MARINE CORPORATION 686,000 686,530
FAR EASTERN TEXTILE LIMITED 774,000 704,180
PACIFIC CONSTRUCTION 1,863,000 1,056,516
TAIWAN SEMICONDUCTOR MANUFACTURING 239,000 1,032,844
------------
TOTAL TAIWAN - (COST $4,576,925) 4,455,248
------------
THAILAND - 1.5%
BANGKOK BANK 256,300 643,237
SIAM COMMERCIAL BANK 139,000 165,433
THAI FARMERS BANK 308,000 705,252
------------
TOTAL THAILAND - (COST $1,561,301) 1,513,922
------------
TOTAL PACIFIC BASIN - (COST $15,869,031) 14,936,517
------------
TOTAL COMMON AND PREFERRED STOCKS, RIGHTS
AND WARRANTS - (COST $85,632,954) + 89,833,351
------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----
<S> <C> <C>
SHORT TERM INVESTMENT - 7.2%
STATE STREET BANK AND TRUST REPURCHASE
AGREEMENT, 5.150%, 05/01/1998 (d) $ 7,168,000 $ 7,168,000
-----------
TOTAL SHORT TERM INVESTMENT - (COST $7,168,000) 7,168,000
-----------
TOTAL INVESTMENTS - (COST $92,800,954) - 97.2% 97,001,351
CASH, RECEIVABLES AND OTHER ASSETS, LESS
LIABILITIES - 2.8% 2,830,528
-------------
NET ASSETS - 100.0% $ 99,831,879
-------------
-------------
</TABLE>
* Non-income producing security.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd., an
affiliate of Martin Currie Fund Inc. Martin Currie Inc. does not receive
advisory fees on the portion of net assets represented by affiliated
investment companies.
(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. Martin Currie Inc. does not
receive advisory fees on the portion of net assets represented by
affiliated investment companies.
(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 $1,931,280 or 1.9% of net
assets.
(d) The repurchase agreement, dated 4/30/98, $7,168,000 par, due 5/1/98, is
collateralized by United States Treasury Notes, 5.625%, due 11/30/99, with
a market value of $7,314,694.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Air Travel 0.1%, Automobiles 1.5%, Banks 12.6%, Brewery 2.2%, Broadcasting
1.2%, Building Construction 0.6%, Cement 0.8%, Computers 0.2%,
Conglomerates 0.8%, Construction & Building Materials 1.4%, Containers &
Glass 1.2%, Diversified 4.3%, Drugs & Health Care 2.4%, Electric Utilities
4.0%, Electronics 2.6%, Financial Services 3.7%, Food & Beverages 5.3%,
Household Appliances & Home Furnishings 1.0%, Insurance 3.0%, Investment
Companies 8.0%, Manufacturing 1.9%, Oil & Gas 7.1%, Real Estate 1.8%,
Retail Trade 2.3%, Semi-Conductor Manufacturing Equipment 1.2%,
Steel 0.0%, Telecommunications 4.8%, Telecommunications Equipment 2.4%,
Telecommunications Services 5.1%, Telephone 2.7%, Textiles 0.7%, Tires &
Rubber 0.1%, Traffic Management System 1.2%, Transportation 0.7%, Water
Utilities 1.1%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
GDS Global Depositary Shares.
ZDR Zimbabwe Depositary Receipts.
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value
(cost $85,632,954) (Note B) $ 89,833,351
Investments in repurchase agreements, at value (Note B) 7,168,000
------------
Total Investments 97,001,351
Cash 818
Foreign currency, at value (cost $505,851) (Note B) 503,516
Receivable for investments sold 2,284,036
Receivable for foreign currency sold 246,619
Dividend and interest receivable 387,358
Foreign tax reclaims receivable 279
Prepaid insurance 8,933
Deferred organization expenses (Note B) 9,635
------------
TOTAL ASSETS 100,442,545
------------
LIABILITIES
Payable for investments purchased 160,269
Payable for currency purchased 247,872
Management fee payable (Note C) 178,181
Trustees fees payable (Note C) 608
Accrued expenses and other liabilities 23,736
------------
TOTAL LIABILITIES 610,666
------------
TOTAL NET ASSETS $ 99,831,879
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 102,301,104
Undistributed net investment loss (878,053)
Accumulated net realized loss on investment and
foreign currency transactions (5,783,354)
Net unrealized appreciation on investment and
foreign currency transactions 4,192,182
------------
TOTAL NET ASSETS $ 99,831,879
------------
------------
NET ASSET VALUE PER SHARE
($99,831,879 / 11,102,984 shares of
beneficial interest outstanding) $ 8.99
------------
------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 275,408
Dividend income 1,205,941
Foreign taxes withheld (59,117)
----------
TOTAL INVESTMENT INCOME 1,422,232
----------
EXPENSES
Management fee (Note C) 518,048
Custodian fee 139,665
Administration fee (Note C) 51,608
Audit fee 24,908
Legal fees 4,082
Transfer agent fee 6,398
Trustees fees (Note C) 2,090
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 14,330
----------
TOTAL EXPENSES 763,677
----------
NET INVESTMENT INCOME 658,555
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (5,347,587)
Net realized loss on foreign currency transactions (118,131)
Net unrealized appreciation (depreciation) on:
Investments (net of foreign taxes of ($3,054)) 4,382,743
Foreign currency transactions (4,958)
----------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (1,087,933)
----------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (429,378)
----------
----------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR FEBRUARY 14, 1997*
ENDED THROUGH
APRIL 30, 1998 APRIL 30, 1997
-------------- ----------------
<S> <C> <C>
NET ASSETS at beginning of period $50,095,856 $0
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 658,555 292,369
Net realized gain (loss) on investment
transactions (5,347,587) 5,684
Net realized loss on foreign currency
transactions (118,131) (16,594)
Net unrealized appreciation (depreciation) on:
Investments 4,382,743 (185,400)
Foreign currency transactions (4,958) (203)
------------ -------------
Net increase (decrease) in net assets
from operations (429,378) 95,856
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (934,330) 0
In excess of net investment income (574,501) 0
Net realized gains (626,872) 0
------------ -------------
Total distributions (2,135,703) 0
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 49,870,325 50,000,000
Reinvestment of dividends and
distributions to shareholders 2,135,703 0
Cost of shares repurchased (210,772) 0
Paid in capital from subscription and
redemption fees 505,848 0
------------ -------------
Total increase in net assets from capital
share transactions 52,301,104 50,000,000
------------ -------------
NET INCREASE IN NET ASSETS 49,736,023 50,095,856
------------ -------------
NET ASSETS at end of period (includes
undistributed net investment income (loss)
of $(878,053) and $275,775, respectively) $99,831,879 $ 50,095,856
------------ -------------
------------ -------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,876,028 5,000,000
Shares issued in reinvestment of
distributions to shareholders 250,375 0
Less shares repurchased (23,419) 0
------------ -------------
Net share transactions 6,102,984 5,000,000
------------ -------------
------------ -------------
</TABLE>
* Commencement of investment operations.
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR FEBRUARY 14, 1997*
ENDED THROUGH
APRIL 30, 1998 APRIL 30, 1997
-------------- ----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.020 $ 10.000
------- --------
Net investment income 0.004 0.055
Net realized and unrealized loss on investment
and foreign currency transactions (0.883) (0.035)
------- --------
Total from investment operations (0.879) 0.020
------- --------
Less distributions:
Net investment income (0.086) 0.000
In excess of net investment income (0.053) 0.000
Net realized gains (0.058) 0.000
------- --------
Total distributions (0.197) 0.000
------- --------
Paid in capital from subscription and
redemption fees 0.046 0.000
------- --------
Net asset value, end of period $8.990 $ 10.020
------- --------
------- --------
TOTAL INVESTMENT RETURN (1) (8.21)% 0.20% (2)
------- --------
------- --------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $99,831,879 $ 50,095,856
Operating expenses, net, to average
net assets (Note C) 1.14% 1.33% (3)
Operating expenses, gross, to average net
assets (Note C) 1.14% 1.33% (3)
Net investment income to average net assets 0.98% 2.83% (3)
Portfolio turnover rate 89% 0%
Per share amount of fees waived (Note C) $ N/A $ N/A
- -----------------------------------------------------------------------------------------
</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.
See notes to financial statements.
12
<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 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 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 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.
13
<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 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 1.00% 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, 1998, $503,740 was collected in purchase premiums and $2,108 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. As of April 30, 1998, the Fund has elected for Federal income tax
purposes to defer a $5,760,602 current year post October 31 capital loss and
a $96,323 current year post October 31 currency loss as though these losses
were incurred on the first day of the next fiscal year.
14
<PAGE>
MCBT GLOBAL EMERGING MARKETS 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 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 ($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 $97,428,302 and
$55,941,609 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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
----------- ------------ ------------- -------------
$ 94,133,405 $ 9,962,488 $ (7,094,542) $ 2,867,946
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there was one shareholder who owned greater than 10% of
the Fund's outstanding shares, representing 99% of the Fund.
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.
15
<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 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 $44,210 (of the total $59,117 taxes withheld) and
$1,184,216, respectively.
16
<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, 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 confirmation from brokers were not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 16, 1998
17
<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
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, 1998
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
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 $159.4m
PERFORMANCE
SINCE LAUNCH Total return from May 1, 1997 through April 30, 1998
- MCBT - Opportunistic EAFE (excluding all transaction fees) +23.3%
- MCBT - Opportunistic EAFE (including all transaction fees) +21.5%
- The Morgan Stanley Capital International EAFE Index +19.2%
Annualized total return from July 1, 1994 through April 30,
1998
- MCBT - Opportunistic EAFE (excluding all transaction fees) +10.5%
- MCBT - Opportunistic EAFE (including all transaction fees) +10.1%
- The Morgan Stanley Capital International EAFE Index +9.0%
</TABLE>
FUND IG02
7/1/94 (a) 4/30/95 4/30/96 4/30/97 4/30/98
MCBT Opportunistic EAFE $10,000 $9,710 $11,283 $11,718 $14,451
MSCI EAFE Index $10,000 $10,500 $11,729 $11,666 $13,906
(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, 1998
PORTFOLIO Despite the troubles in Asia, the MSCI EAFE index was up
COMMENTS 19.2% over the 12 months. Additions to the strongly
performing UK and European markets and our outperformance
in Japan helped us to beat that, and the fund has
returned 23.3%.
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 held up relatively
well. Apart from the first two months of this year, the
pressure to restructure on the financial sector and
economically sensitive sectors such as construction has
remained intense. We further increased our convertible
content and, concerned for the outlook for the yen, have
hedged 50% of Japanese assets against the dollar.
We have continued to add to our positions in Continental
Europe. The markets have rallied further, helped by
converging bond markets and increased domestic buying.
Restructuring and the enhancement of shareholder value have
been persistent themes, and our portfolio reflects this.
New holdings have concentrated on the financial sector where
enormous corporate change is occurring. We have been
positive about the UK, where a strong currency and a stable
economic background have helped markets. Bond convergence
in Europe has also been supportive, with financial stocks
moving ahead strongly.
Asia's crisis has worsened over the period and we have
substantially reduced our weighting. Our emphasis is now on
China, India, Australia and Taiwan. While some of the hard
hit ASEAN markets rallied in January and February, recent
market and currency weakness support our defensive approach
to the region. We have no holdings in Indonesia.
The impact of Asia on the rest of the world has been felt
particularly in the smaller markets. We have reduced
substantially our exposure to Latin America. Brazil and
Mexico make up the bulk of our investment. We have
established new positions in Israel, Greece and Hungary.
OUTLOOK
Looking ahead, the impact of the Asian crisis is likely to
leave markets volatile. However, slowing growth in the
Pacific region may well help restrain the US economy and
reduce pressure on higher interest rates in the maturer
markets of the UK and Europe. Broader Europe, or Euroland
as it has been named, will continue to benefit from
corporate restructuring and lower bond yields. The
increasing move to equity ownership by domestic investors is
being fuelled by the search for higher returns and changing
pensions legislation. The UK market continues to benefit
from good liquidity and robust earnings growth. We remain
cautious on the Pacific region. Defensive stock selection
in Japan - and asset allocation in Asia - is appropriate in
an environment of falling growth forecasts, currency
volatility and financial and social instability. Smaller
markets will remain out of favour, as capital flows seek
safety in maturer markets and strong currencies.
2
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
INVESTMENT James Fairweather is Chief Investment Officer. All funds
MANAGER PROFILE are managed on a team basis with a named director heading
each team.
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 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.
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 OPPORTUNISTIC EAFE FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
OPPORTUNISTIC EAFE IG02
----------------- ----
Europe 69%
Japan 15%
Latin America 3%
Middle East 1%
Pacific Basin 4%
Other Areas 1%
ST Investment 4%
Other Net Assets 3%
----
TOTAL: 100%
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Credit Suisse Group (Switzerland) 2.6
Novartis (Switzerland) 2.4
Cie Generale des Eaux (France) 2.4
JAPAN
Sony 1.3
Rohm 1.1
LATIN AMERICA
Petrobas, ADR (Brazil) 0.6
PACIFIC BASIN
Taiwan American Fund (Taiwan) 0.7
MIDDLE EAST
ECI Telecommunications (Israel) 0.7
4
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS, WARRANTS AND
EXCHANGEABLE NOTES - 92.9%
EUROPE - 68.7%
AUSTRIA - 0.8%
VA TECHNOLOGIE 8,500 $ 1,221,835
------------
TOTAL AUSTRIA - (COST $1,225,302) 1,221,835
------------
BELGIUM - 1.3%
GENERALE DE BANQUE 3,500 2,022,069
------------
TOTAL BELGIUM - (COST $1,410,303) 2,022,069
------------
DENMARK - 0.7%
UNIDANMARK 12,500 1,050,320
------------
TOTAL DENMARK - (COST $952,672) 1,050,320
------------
FINLAND - 1.5%
NOKIA AB OY * 36,000 2,419,124
------------
TOTAL FINLAND - (COST $1,900,728) 2,419,124
------------
FRANCE - 11.9%
AIR LIQUIDE 9,270 1,711,812
AXA 31,426 3,691,026
CIE GENERALE DES EAUX 20,148 3,747,374
ELF AQUITAINE 20,500 2,690,817
PROMODES 4,000 1,927,799
RHONE-POULENC, CL A 56,300 2,754,588
SOCIETE GENERALE 11,500 2,395,275
------------
TOTAL FRANCE - (COST $14,125,599) 18,918,691
------------
GERMANY - 11.9%
ALLIANZ AG (REGISTERED) 11,800 3,629,657
ALLIANZ AG 241 73,460
BAYERISCHE MOTOREN WERKE 1,750 1,930,846
BAYERISCHE VEREINSBANK 32,500 2,472,068
DEUTSCHE BANK 33,000 2,539,523
MANNESMANN 4,530 3,594,617
PREUSSAG AG 5,000 1,777,604
VEBA 45,402 3,000,572
------------
TOTAL GERMANY - (COST $13,979,697) 19,018,347
------------
GREECE - 0.7%
ALPHA CREDIT BANK, GDR 11,000 1,160,075
------------
TOTAL GREECE - (COST $654,602) 1,160,075
------------
ITALY - 5.9%
ENI 269,913 1,812,524
IMI BANK 175,600 2,874,870
ISTITUTO NAZIONALE DELLE ASSICURAZIONI 900,000 2,690,321
TELECOM ITALIA MOBILE * 370,000 2,109,690
------------
TOTAL ITALY - (COST $7,504,014) 9,487,405
------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - Continued
NETHERLANDS - 1.9%
ELSEVIER 129,000 $ 1,947,676
GUCCI GROUP N.V. 24,000 1,117,500
----------
TOTAL NETHERLANDS - (COST $3,669,222) 3,065,176
----------
SPAIN - 3.2%
BANCO CENTRAL HISPANOAMERICANO 60,000 1,997,374
BANCO DE SANTANDER 58,940 3,115,345
----------
TOTAL SPAIN - (COST $2,824,864) 5,112,719
----------
SWEDEN - 3.5%
ASTRA AB 112,000 2,300,181
INCENTIVE AB 19,200 1,859,985
NORDBANKEN HOLDING AB 191,700 1,411,379
----------
TOTAL SWEDEN - (COST $5,131,901) 5,571,545
----------
SWITZERLAND - 5.1%
CREDIT SUISSE GROUP 19,100 4,200,599
NOVARTIS 2,340 3,867,511
----------
TOTAL SWITZERLAND - (COST $5,485,066) 8,068,110
----------
UNITED KINGDOM - 20.3%
CABLE & WIRELESS 173,000 1,982,233
GENERAL ELECTRIC 157,000 1,299,938
GKN 63,530 1,836,287
GLAXO WELLCOME 81,260 2,297,108
LADBROKE 321,000 1,765,179
LAND SECURITIES 55,000 982,544
LASMO 251,419 1,104,991
LLOYDS TSB 145,000 2,171,959
MARKS & SPENCER 176,000 1,673,636
MCKECHNIE 74,020 616,590
NATIONAL WESTMINSTER BANCORP 100,000 2,002,221
NFC 358,136 1,075,302
RECKITT & COLMAN 107,950 2,175,843
ROYAL BANK OF SCOTLAND GROUP 145,000 2,238,657
SAFEWAY 153,571 915,771
SCOTTISH POWER 199,000 1,829,937
SHELL TRANSPORT & TRADING 246,000 1,831,104
SMITHS INDUSTRIES 92,751 1,335,019
UNILEVER 189,876 2,023,147
WASSALL 88,982 464,381
ZENECA GROUP 16,000 689,420
----------
TOTAL UNITED KINGDOM - (COST $20,224,252) 32,311,267
----------
TOTAL EUROPE - (COST $79,088,222) 109,426,683
----------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES/PAR VALUE
---------- -------
<S> <C> <C>
JAPAN - 14.8%
ASAHI CHEMICAL 120,000 $ 420,734
CANON 59,000 1,395,421
FUJI PHOTO FILM 25,000 889,754
HITACHI 127,000 910,707
HONDA MOTOR 44,000 1,595,889
ITO - YOKADO 28,000 1,449,297
KAO CORPORATION 60,000 881,820
MABUCHI MOTOR 10,000 578,812
MARUI 49,000 773,840
MBL INT'L. FINANCE (BERMUDA), 3.000%,
EXCHANGEABLE NOTE, 11/30/2002 (d) 1,282,000 1,316,486
MITSUI FUDOSAN 54,000 492,912
NITTO DENKO, 2.200%, EXCHANGEABLE NOTE, 03/31/1999 Y 70,000,000 571,785
PROMISE 11,000 558,561
RISO KAGAKU * 7,400 386,384
ROHM 16,000 1,806,257
SAKURA FINANCE 36,000,000 242,784
SANWA INTERNATIONAL FINANCE, PREFERRED * 102,000,000 750,549
SECOM COMPANY LIMITED 18,000 1,060,904
SHIMACHU 21,000 378,457
SHIN - ETSU CHEMICAL 53,950 1,051,768
SONY 24,700 2,054,912
SUMITOMO ELECTRIC 1,000 11,916
TAISHO PHARMACEUTICAL 34,000 719,359
TOPPAN PRINTING 107,000 1,271,809
TOYOTA MOTOR CORPORATION 29,000 756,007
YAMANOUCHI PHARMACEUTICAL 55,000 1,300,816
------------
TOTAL JAPAN - (COST $22,969,709) 23,627,940
------------
LATIN AMERICA - 3.0%
ARGENTINA - 0.3%
YPF SOCIEDAD ANONIMA, ADR 13,500 470,812
------------
TOTAL ARGENTINA - (COST $436,273) 470,812
------------
BRAZIL - 1.2%
ELETROBRAS, ADR 22,300 465,512
PETROBRAS, ADR 36,000 913,500
TELEBRAS, ADR 4,800 584,700
------------
TOTAL BRAZIL - (COST $1,550,061) 1,963,712
------------
CHILE - 0.2%
COMPANIA DE TELEFONOS DE CHILE, ADR 11,000 275,688
------------
TOTAL CHILE - (COST $318,117) 275,688
------------
</TABLE>
See note to financial statements.
7
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ ----
<S> <C> <C>
LATIN AMERICA - CONTINUED
MEXICO - 1.3%
CIFRA SA DE CV 240,000 $ 408,113
GRUPO CARSO 70,000 440,802
GRUPO FINANCIERO BANAMEX, CL B * 200,000 625,000
TELEFONOS DE MEXICO, ADR 10,500 594,563
---------
TOTAL MEXICO - (COST $1,742,164) 2,068,478
---------
TOTAL LATIN AMERICA - (COST $4,046,615) 4,778,690
---------
MIDDLE EAST - 1.2%
ISRAEL - 1.2%
ECI TELECOMMUNICATIONS 34,000 1,037,000
TEVA PHARMACEUTICAL INDUSTRIES LIMITED, ADR 20,000 855,000
---------
TOTAL ISRAEL - (COST $1,903,476) 1,892,000
---------
TOTAL MIDDLE EAST - (COST $1,903,476) 1,892,000
---------
OTHER AREAS - 1.2%
INDIA - 0.5%
MAHANAGAR TELEPHONE NIGAM, GDR * 33,000 529,650
VIDESH SANCHAR NIGAM LIMITED, GDR (c) * 28,700 355,306
---------
TOTAL INDIA - (COST $857,179) 884,956
---------
INVESTMENT COMPANIES - 0.7%
INDIAN OPPORTUNITIES FUND (a) * 101,911 1,084,840
---------
TOTAL INVESTMENT COMPANIES - (COST $1,494,050) 1,084,840
---------
TOTAL OTHER AREAS - (COST $2,351,229) 1,969,796
---------
PACIFIC BASIN - 4.0%
AUSTRALIA - 1.3%
LEND LEASE CORPORATION 32,300 741,582
MAYNE NICKLESS LIMITED 134,000 723,860
WOODSIDE PETROLEUM LIMITED 106,000 693,459
---------
TOTAL AUSTRALIA - (COST $2,094,184) 2,158,901
---------
HONG KONG - 1.0%
CITIC PACIFIC 85,000 261,167
CLP HOLDINGS LIMITED 82,000 393,803
HUTCHISON WHAMPOA 98,700 610,345
NEW WORLD DEVELOPMENT LIMITED 124,000 352,982
---------
TOTAL HONG KONG - (COST $1,847,454) 1,618,297
---------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - CONTINUED
NEW ZEALAND - 0.4%
TELECOM CORPORATION OF NEW ZEALAND (INSTALLMENT RECEIPTS) * 72,700 $ 195,059
TELECOM CORPORATION OF NEW ZEALAND * 95,000 451,205
---------
TOTAL NEW ZEALAND - (COST $662,635) 646,264
---------
PHILIPPINES - 0.1%
BELLE CORPORATION * 2,195,300 96,232
BELLE CORPORATION, WARRANTS 10/02/2000 * 800,000 2,491
---------
TOTAL PHILIPPINES - (COST $617,418) 98,723
---------
SINGAPORE - 0.3%
DEVELOPMENT BANK OF SINGAPORE * 55,800 370,237
DEVELOPMENT BANK OF SINGAPORE, CL A * 16,740 80,923
---------
TOTAL SINGAPORE - (COST $632,777) 451,160
---------
TAIWAN - 0.7%
TAIWAN AMERICAN FUND (b) * 65,000 1,114,750
---------
TOTAL TAIWAN - (COST $1,029,600) 1,114,750
---------
THAILAND - 0.2%
THAI FARMERS BANK 133,000 304,544
---------
TOTAL THAILAND - (COST $305,848) 304,544
---------
TOTAL PACIFIC BASIN - (COST $7,189,916) 6,392,639
---------
TOTAL COMMON AND PREFERRED STOCKS,
WARRANTS AND EXCHANGEABLE NOTES - (COST $117,549,167) + 148,087,748
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT TERM INVESTMENT - 4.5%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.150%, 05/01/1998 (e) $7,166,000 7,166,000
---------
TOTAL SHORT TERM INVESTMENT - (COST $7,166,000) 7,166,000
---------
TOTAL INVESTMENTS - (COST $124,715,167) - 97.4% 155,253,748
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 2.6% 4,108,536
---------
NET ASSETS - 100.0% $159,362,284
------------
------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
* Non-income producing security.
Y Reflected at par and denominated in Japanese yen.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd., an
affiliate of Martin Currie Fund Inc. Martin Currie Inc. does not
receive advisory fees on the portion of net assets represented by
affiliated investment companies.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Taiwan
American Fund. Martin Currie Inc. does not receive advisory fees on the
portion of net assets represented by affiliated investment companies.
(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 $355,306 or 0.2% of net
assets.
(d) Reflected at par value and denominated in U.S. dollars.
(e) The repurchase agreement, dated 4/30/98, $7,166,000 par due 5/1/98, is
collateralized by United States Treasury Notes, 5. 75%, due 9/30/99 with a
market value of $7,311,728.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 0.8%, Apparel & Textiles 0.7%, Automobiles 2.7%, Banks 21.2%,
Chemicals 3.7%, Commercial Services 0.5%, Conglomerates 0.5%, Diversified
5.3%, Drugs & Health Care 7.5%, Electric Utilities 3.6%, Electrical
Equipment 1.8%, Electronics 3.3%, Engineering 0.8%, Financial Services
1.8%, Food & Beverages 1.2%, Hotels & Restaurants 1.1%, Household Products
1.9%, Industrial Machinery 3.8%, Insurance 6.3%, Investment Companies 1.4%,
Manufacturing 0.4%, Miscellaneous 1.3%, Oil & Gas 6.0%, Photography 1.4%,
Publishing 0.8%, Real Estate 1.2%, Retail Trade 3.5%, Steel 1.1%,
Telecommunications 2.9%, Telecommunications Equipment 2.2%,
Telecommunications Services 1.1%, Telephone 0.4%, Transportation 0.7%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $117,549,167) (Note B) $148,087,748
Investments in repurchase agreements, at value (Note B) 7,166,000
------------
Total Investments 155,253,748
Cash 630
Foreign currency, at value (cost $3,024,964) (Note B) 3,024,162
Receivable for investments sold 3,932,126
Receivable for currency sold 1,203,978
Dividend and interest receivable 539,427
Foreign tax reclaims receivable 114,535
Prepaid insurance expense 16,690
Deferred organization expenses (Note B) 2,987
------------
TOTAL ASSETS 164,088,283
------------
LIABILITIES
Payable for investments purchased 3,033,163
Payable for currency purchased 1,208,279
Payable for forward foreign currency contracts 194,813
Management fee payable (Note C) 245,929
Administration fee payable (Note C) 11,408
Trustees fees payable (Note C) 2,248
Accrued expenses and other liabilities 30,159
------------
TOTAL LIABILITIES 4,725,999
------------
TOTAL NET ASSETS $159,362,284
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $124,403,321
Undistributed net investment loss (173,999)
Accumulated net realized gain on investment and foreign currency transactions 4,796,823
Net unrealized appreciation on investment and foreign currency transactions 30,336,139
------------
TOTAL NET ASSETS $159,362,284
------------
NET ASSET VALUE PER SHARE
($159,362,284 / 11,972,709 shares of beneficial interest outstanding) $13.31
------------
------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 362,276
Dividend income 2,684,289
Foreign taxes withheld (298,326)
------------
TOTAL INVESTMENT INCOME 2,748,239
------------
EXPENSES
Management fee (Note C) 934,444
Custodian fee 181,014
Administration fee (Note C) 107,314
Audit fee 25,807
Legal fees 10,236
Transfer agent fee 6,673
Trustees fees (Note C) 4,604
Amortization of deferred organization expenses 2,541
Miscellaneous expenses 26,248
------------
TOTAL EXPENSES 1,298,881
------------
NET INVESTMENT INCOME 1,449,358
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 11,993,175
Net realized loss on foreign currency transactions (465,273)
Net unrealized appreciation (depreciation) on:
Investments 15,312,088
Foreign currency transactions (190,193)
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 26,649,797
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $28,099,155
------------
------------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1998 APRIL 30, 1997
------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of period $120,649,807 $108,295,237
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 1,449,358 1,023,218
Net realized gain (loss) on investment transactions 11,993,175 (1,528,624)
Net realized gain (loss) on foreign currency transactions (465,273) 1,413,982
Net unrealized appreciation (depreciation) on:
Investments 15,312,088 3,356,168
Foreign currency transactions (190,193) 246,156
------------ ------------
Net increase in net assets from operations 28,099,155 4,510,900
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,634,448) (2,359,811)
In excess of net investment income 0 (1,311,086)
Net realized gains (4,504,920) 0
------------ ------------
Total distributions (6,139,368) (3,670,897)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 14,186,364 9,813,416
Reinvestment of dividends and distributions to shareholders 5,801,630 3,268,114
Cost of shares repurchased (3,331,509) (1,637,958)
Paid in capital from subscription and redemption fees 96,205 70,995
------------ ------------
Total increase in net assets from capital share transactions 16,752,690 11,514,567
------------ ------------
NET INCREASE IN NET ASSETS 38,712,477 12,354,570
------------ ------------
NET ASSETS at end of period (includes undistributed net investment
income (loss) of ($173,999) and $464,481, respectively) $159,362,284 $120,649,807
------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,082,176 880,191
Shares issued in reinvestment of distributions to shareholders 492,917 294,425
Less shares repurchased (258,152) (146,937)
------------ ------------
Net share transactions 1,316,941 1,027,679
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
13
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR YEAR JULY 1, 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 $11.320 $11.250 $9.860 $10.000
------- ------- ------ -------
Net investment income 0.095 0.134 0.314 0.055
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 2.462 0.286 1.239 (0.323)
------- ------- ------ -------
Total from investment operations 2.557 0.420 1.553 (0.268)
------- ------- ------ -------
Less distributions:
Net investment income (0.153) (0.229) (0.167) 0.000
In excess of net investment income 0.000 (0.127) (0.023) 0.000
Net realized gains (0.422) 0.000 0.000 0.000
------- ------- ------ -------
Total distributions (0.575) (0.356) (0.190) 0.000
------- ------- ------ -------
Paid in capital from subscription and
redemption fees (Note B) 0.008 0.006 0.027 0.128
------- ------- ------ -------
Net asset value, end of period $13.310 $11.320 $11.250 $9.860
------- ------- ------ -------
------- ------- ------ -------
TOTAL INVESTMENT RETURN (1) 23.33% 3.85% 16.17% (1.40)% (2)
------- ------- ------ -------
------- ------- ------ -------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $159,362,284 $120,649,807 $108,295,237 $72,660,677
Operating expenses, net, to average
net assets (Note C) 0.96% 0.98% 1.00% 1.00%(3)
Operating expenses, gross, to average
net assets (Note C) 0.96% 0.98% 1.05% 1.37%(3)
Net investment income to average net assets 1.08% 0.90% 1.46% 1.32%(3)
Portfolio turnover rate 63% 49% 37% 39%
Per share amount of fees waived (Note C) $0.000 $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.
See notes to financial statements.
14
<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 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 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 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.
15
<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 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.
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.
The Fund had the following open forward foreign currency contract at April
30, 1998:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY DATE LOCAL CURRENCY FACE AMOUNT VALUE (DEPRECIATION)
------------- -------------- ------------ ------ -------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (sell) July 8, 1998 1,678,671,120 $12,614,000 $12,808,81 3 $ (194,813)
</TABLE>
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 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, 1998, $87,424 was collected in purchase premiums and $8,781 was collected
in redemption fees.
16
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $3,264,849, representing $0.306 per share. As of April 30,
1998, 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, 1998, the Fund has
elected for Federal income tax purposes to defer a $614,505 current year post
October 31 currency 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.
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, 1998, 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 ($10,000 per Trustee).
17
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $86,254,690 and
$80,627,238, 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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
----------- ------------- ------------- --------------
$125,096,888 $34,384,577 $(4,227,717) $30,156,860
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there was one shareholder who owned greater than 10% of
the Fund's outstanding shares, representing 10% of the Fund.
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.
- ------------------------------------------------------------------------------
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 $292,567 (of the total $298,326 taxes withheld)
and $2,746,669, respectively.
18
<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, 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
19
<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
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 GROWTH FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of global equities.
LAUNCH DATE June 15, 1994
FUND SIZE $67.5m
PERFORMANCE Total return from May 1, 1997 through April 30, 1998
- MCBT - Global Growth Fund (excluding
all transaction fees) +22.9%
- MCBT - Global Growth Fund (including
all transaction fees) +21.0%
- The Morgan Stanley Capital International
World Index +29.5%
Annualized total return from June 15, 1994 through
April 30, 1998
- MCBT - Global Growth Fund (excluding
all transaction fees) +13.6%
- MCBT - Global Growth Fund (including
all transaction fees) +13.2%
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, 1998
- MCBT - Global Growth Fund (excluding
all transaction fees) +14.2%
- MCBT - Global Growth Fund (including
all transaction fees) +13.8%
- The Morgan Stanley Capital International
World Index +18.0%
FUND IG01
7/1/94 (a) 4/30/95 4/30/96 4/30/97 4/30/98
MCBT Global Growth Fund $10,000 $10,120 $12,265 $13,357 $16,412
MSCI World Index $10,000 $11,027 $13,192 $14,582 $18,880
(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, 1998
PORTFOLIO Led by the US, most western markets rose strongly over
COMMENTS the year - despite the fallout from Asia. We have had
an underweighted position in US equities throughout the
period and, combined with a difficult recent six months
of US stock selection, the fund has underperformed the
MSCI World Index, which was up 29.5%.
In the US, the benign environment for equities remains
intact. While corporate earnings have weakened, a
positive outlook for bonds has continued to support the
equity market. Mutual fund cashflows have remained
buoyant, fuelling a market where corporate activity has
increased. Our portfolio suffered over the final
quarter of 1997 and early January as the energy and
commodity related sectors underperformed in the wake of
the Asian turmoil. We also held Medpartners which
collapsed in January in the face of a profits warning.
We remain underweighted because we believe that
valuations elsewhere offer better potential returns.
Compounded by a weak currency, JAPAN has fallen
further. We have reduced our weighting further. Our
portfolio continues to concentrate on the export
orientated manufacturing sector. This approach has
generally been a positive, apart from the first two
months of this year, when domestic stocks rallied on
expectations of economic recovery. We have increased
the convertible content of the portfolio and have
hedged 50% of yen assets in expectation of further
currency weakness.
We have continued to add to our positions in
CONTINENTAL EUROPE. Restructuring and the enhancement
of shareholder value have been persistent themes.
Additions to the financial sector reflect this. We
have been overweighted to the UK, where a strengthening
currency and a stable economic background have helped
stocks. A general theme of converging bond yields and
increasing domestic equity ownership has fuelled the
strong rises in broader European markets.
In ASIA, we have reduced substantially our position and
now concentrate on CHINA, INDIA, AUSTRALIA and TAIWAN.
While some of the hard hit ASEAN markets rallied in
January and February, recent market and currency
weakness support our defensive approach to the region.
We have no holdings in Indonesia.
OUTLOOK
Looking ahead, the impact of the Asian crisis is likely
to leave markets volatile. However, slowing growth in
the Pacific region may well help restrain the US
economy and reduce pressure on higher interest rates in
the maturer markets of the UK and Europe. Broader
Europe, or "Euroland" as it has been named, will
continue to benefit from corporate restructuring and
lower bond yields. The increasing move to equity
ownership by domestic investors is being fuelled by the
search for higher returns and changing pensions
legislation. The UK market continues to benefit from
good liquidity and robust earnings growth. We remain
cautious on the Pacific region. Defensive stock
selection in Japan - and asset allocation in Asia -
is appropriate in an environment of falling growth
forecasts, currency volatility and financial and
social instability. Smaller markets will remain out
of favour, as capital flows seek safety in maturer
markets and strong currencies.
2
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
INVESTMENT James Fairweather is Chief Investment Officer. All
MANAGER PROFILE funds are managed on a team basis with a named
director heading each team.
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 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.
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 GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
GLOBAL GROWTH IG01
-------------- ----
Europe 45%
Japan 10%
Latin America 2%
Middle East 1%
North America 36%
Pacific Basin 3%
Other Areas 1%
Other Net Assets 2%
----
TOTAL: 100%
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
NORTH AMERICA
Commonwealth Energy Systems (United States) 1.7
Marsh & McLennan (United States) 1.6
Walt Disney (United States) 1.6
EUROPE
Cie Generale des Eaux (France) 1.6
Credit Suisse Group (Switzerland) 1.6
AXA (France) 1.5
JAPAN
Sony 0.9
Rohm 0.8
LATIN AMERICA
Petrobras, ADR (Brazil) 0.3
PACIFIC BASIN
Lend Lease Corporation (Australia) 0.4
4
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------- ------
<S> <C> <C>
COMMON AND PREFERRED STOCKS, WARRANTS AND
EXCHANGEABLE NOTES - 98.1%
EUROPE - 45.4%
AUSTRIA - 0.4%
VA TECHNOLOGIE 2,100 $ 301,865
---------
TOTAL AUSTRIA - (COST $290,145) 301,865
---------
BELGIUM - 1.0%
GENERALE DE BANQUE 1,200 693,281
---------
TOTAL BELGIUM - (COST $475,594) 693,281
---------
DENMARK - 0.5%
UNIDANMARK 4,200 352,908
---------
TOTAL DENMARK - (COST $317,764) 352,908
---------
FINLAND - 1.1%
NOKIA AB OY * 11,000 739,177
---------
TOTAL FINLAND - (COST $579,369) 739,177
---------
FRANCE - 7.9%
AIR LIQUIDE 3,340 616,769
AXA 8,509 999,394
CIE GENERALE DES EAUX 5,717 1,063,318
ELF AQUITAINE 6,100 800,682
PROMODES 1,200 578,340
RHONE-POULENC, CL A 12,700 621,373
SOCIETE GENERALE 3,000 624,854
---------
TOTAL FRANCE - (COST $3,963,444) 5,304,730
---------
GERMANY - 7.3%
ALLIANZ AG (REGISTERED) 3,000 922,794
ALLIANZ AG 73 22,251
BAYERISCHE MOTOREN WERKE 410 452,370
BAYERISCHE VEREINSBANK 8,400 638,935
DEUTSCHE BANK 8,500 654,119
MANNESMANN 1,060 841,125
PREUSSAG AG 1,700 604,385
VEBA 11,856 783,551
---------
TOTAL GERMANY - (COST $3,608,223) 4,919,530
---------
GREECE - 0.4%
ALPHA CREDIT BANK, GDR 2,400 253,107
---------
TOTAL GREECE - (COST $142,091) 253,107
---------
</TABLE>
5
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - CONTINUED
ITALY - 3.8%
ENI 87,619 $ 588,380
IMI BANK 43,500 712,169
ISTITUTO NAZIONALE DELLE ASSICURAZIONI 215,000 642,688
TELECOM ITALIA MOBILE * 110,000 627,205
---------
TOTAL ITALY - (COST $2,029,616) 2,570,442
---------
NETHERLANDS - 1.5%
ELSEVIER 41,000 619,029
GUCCI GROUP N.V. 8,000 372,500
---------
TOTAL NETHERLANDS - (COST $1,189,525) 991,529
---------
SPAIN - 1.9%
BANCO CENTRAL HISPANOAMERICANO 16,000 532,633
BANCO DE SANTANDER 14,000 739,987
---------
TOTAL SPAIN - (COST $698,375) 1,272,620
---------
SWEDEN - 2.4%
ASTRA AB 27,500 564,777
INCENTIVE AB 6,300 610,307
NORDBANKEN HOLDING AB 58,700 432,175
---------
TOTAL SWEDEN - (COST $1,467,721) 1,607,259
---------
SWITZERLAND - 3.0%
CREDIT SUISSE GROUP 4,820 1,060,046
NOVARTIS 585 966,878
---------
TOTAL SWITZERLAND - (COST $1,294,551) 2,026,924
---------
UNITED KINGDOM - 14.2%
CABLE & WIRELESS 55,000 630,189
GENERAL ELECTRIC 55,000 455,392
GKN 17,000 491,372
GLAXO WELLCOME 22,000 621,910
LADBROKE 94,000 516,906
LAND SECURITIES 18,000 321,560
LASMO 89,017 391,231
LLOYDS TSB 40,000 599,161
MARKS & SPENCER 49,000 465,955
MCKECHNIE 22,000 183,261
NATIONAL WESTMINSTER BANCORP 27,000 540,600
NFC 92,000 276,230
RECKITT & COLMAN 29,250 589,564
ROYAL BANK OF SCOTLAND GROUP 41,000 633,000
SAFEWAY 53,496 319,006
SCOTTISH POWER 61,000 560,936
SHELL TRANSPORT & TRADING 78,000 580,594
SMITHS INDUSTRIES 27,314 393,146
UNILEVER 57,000 607,340
WASSALL 35,357 184,522
</TABLE>
6
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES/PAR VALUE
---------- -----
<S> <C> <C>
EUROPE - CONTINUED
UNITED KINGDOM - CONTINUED
ZENECA GROUP 5,000 $ 215,444
----------
TOTAL UNITED KINGDOM - (COST $5,912,413) 9,577,319
----------
TOTAL EUROPE - (COST $21,968,831) 30,610,691
----------
JAPAN - 9.9%
ASAHI CHEMICAL 35,000 122,714
CANON 16,000 378,419
FUJI PHOTO FILM 7,000 249,131
HITACHI 35,000 250,982
HONDA MOTOR 12,000 435,243
ITO - YOKADO 8,000 414,085
KAO CORPORATION 17,000 249,849
MABUCHI MOTOR 3,000 173,644
MARUI 14,000 221,097
MBL INT'L. FINANCE (BERMUDA), 3.000%,
EXCHANGEABLE NOTE, 11/30/2002 (b) $ 307,000 315,258
MITSUI FUDOSAN 16,000 146,048
NITTO DENKO, 2.200%,
EXCHANGEABLE NOTE, 03/31/1999 Y 21,000,000 171,535
PROMISE 3,000 152,335
RISO KAGAKU * 2,000 104,428
ROHM 5,000 564,455
SANWA INTERNATIONAL FINANCE, PREFERRED * 30,000,000 220,750
SECOM COMPANY LIMITED 5,000 294,695
SHIMACHU 6,000 108,131
SHIN - ETSU CHEMICAL 14,850 289,504
SONY 7,200 599,003
SUMITOMO ELECTRIC 5,000 59,581
TAISHO PHARMACEUTICAL 10,000 211,576
TOPPAN PRINTING 31,000 368,468
TOYOTA MOTOR CORPORATION 8,000 208,554
YAMANOUCHI PHARMACEUTICAL 15,000 354,768
----------
TOTAL JAPAN - (COST $6,696,650) 6,664,253
----------
LATIN AMERICA - 2.1%
ARGENTINA - 0.2%
YPF SOCIEDAD ANONIMA, ADR 3,800 132,525
----------
TOTAL ARGENTINA - (COST $122,803) 132,525
----------
BRAZIL - 0.9%
ELETROBRAS, ADR 9,400 196,225
PETROBRAS, ADR 9,300 235,987
TELEBRAS, ADR 1,100 133,994
----------
TOTAL BRAZIL - (COST $426,242) 566,206
----------
</TABLE>
7
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ ------
<S> <C> <C>
LATIN AMERICA - Continued
CHILE - 0.1%
COMPANIA DE TELEFONOS DE CHILE, ADR 3,000 $ 75,188
---------
TOTAL CHILE - (COST $86,759) 75,188
---------
MEXICO - 0.9%
CIFRA SA DE CV 70,000 119,033
CIFRA SA DE CV, CL B 1 2
GRUPO CARSO 19,000 119,646
GRUPO FINANCIERO BANAMEX, CL B * 58,000 181,250
TELEFONOS DE MEXICO, ADR 3,400 192,525
---------
TOTAL MEXICO - (COST $511,777) 612,456
---------
TOTAL LATIN AMERICA - (COST $1,147,581) 1,386,375
---------
MIDDLE EAST - 0.9%
ISRAEL - 0.9%
ECI TELECOMMUNICATIONS 11,000 335,500
TEVA PHARMACEUTICAL INDUSTRIES LIMITED, ADR 6,500 277,875
---------
TOTAL ISRAEL - (COST $617,251) 613,375
---------
TOTAL MIDDLE EAST - (COST $617,251) 613,375
---------
OTHER AREAS - 1.0%
INDIA - 1.0%
HIMALAYAN FUND 29,031 333,856
MAHANAGAR TELEPHONE NIGAM, GDR * 10,000 160,500
VIDESH SANCHAR NIGAM LIMITED, GDR (a) 16,000 198,080
---------
TOTAL INDIA - (COST $884,443) 692,436
---------
TOTAL OTHER AREAS - (COST $884,443) 692,436
---------
PACIFIC BASIN - 3.2%
AUSTRALIA - 1.2%
LEND LEASE CORPORATION 12,600 289,286
MAYNE NICKLESS LIMITED 52,000 280,900
WOODSIDE PETROLEUM LIMITED 41,000 268,225
---------
TOTAL AUSTRALIA - (COST $812,065) 838,411
---------
HONG KONG - 0.7%
CITIC PACIFIC 29,000 89,104
CLP HOLDINGS LIMITED 28,000 134,469
HUTCHISON WHAMPOA 22,000 136,045
NEW WORLD DEVELOPMENT LIMITED 44,000 125,252
---------
TOTAL HONG KONG - (COST $548,449) 484,870
---------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - Continued
NEW ZEALAND - 0.4%
TELECOM CORPORATION OF NEW ZEALAND
(INSTALLMENT RECEIPTS) * 24,600 $ 66,003
TELECOM CORPORATION OF NEW ZEALAND * 37,000 175,733
---------
TOTAL NEW ZEALAND - (COST $248,471) 241,736
---------
PHILIPPINES - 0.0%
BELLE CORPORATION * 150,000 6,575
BELLE CORPORATION, WARRANTS 10/06/2000 * 260,000 810
---------
TOTAL PHILIPPINES - (COST $43,292) 7,385
---------
SINGAPORE - 0.2%
DEVELOPMENT BANK OF SINGAPORE * 17,000 112,796
DEVELOPMENT BANK OF SINGAPORE, CL A * 5,100 24,654
---------
TOTAL SINGAPORE - (COST $183,036) 137,450
---------
TAIWAN - 0.5%
TAIWAN AMERICAN FUND (c) * 20,000 343,000
---------
TOTAL TAIWAN - (COST $316,800) 343,000
---------
THAILAND - 0.2%
THAI FARMERS BANK 52,000 119,069
---------
TOTAL THAILAND - (COST $119,580) 119,069
---------
TOTAL PACIFIC BASIN - (COST $2,271,693) 2,171,921
---------
NORTH AMERICA - 35.6%
CANADA - 1.3%
MACMILLAN BLOEDEL LIMITED 63,072 897,595
---------
TOTAL CANADA - (COST $836,039) 897,595
---------
UNITED STATES - 34.3%
ALLIED SIGNAL 11,600 508,225
ARCHER - DANIELS - MIDLAND 44,002 946,043
BRISTOL - MYERS SQUIBB 4,200 444,675
CALENERGY * 28,500 929,813
CBS CORPORATION 27,090 965,081
COLGATE - PALMOLIVE 7,200 645,750
COMMONWEALTH ENERGY SYSTEMS 30,000 1,147,500
DILLARD DEPARTMENT STORES, CL A 13,600 498,100
EASTMAN KODAK 8,300 599,156
ELECTRONIC DATA SYSTEMS CORPORATION 15,000 645,000
EQUIFAX 27,500 1,063,906
FREEPORT MCMORAN COPPER & GOLD, CL A 44,136 786,173
HS RESOURCES * 28,000 453,250
IMC GLOBAL 19,019 684,684
INTEL 8,100 654,581
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
NORTH AMERICA - CONTINUED
UNITED STATES - CONTINUED
LOUISIANA PACIFIC 41,000 $ 896,875
MARSH & MCLENNAN 12,200 1,111,725
MEDPARTNERS * 71,436 732,219
MOLEX INCORPORATED 18,000 515,250
PHILIP MORRIS 8,450 315,291
REDWOOD TRUST INCORPORATED 31,000 763,375
SARA LEE CORPORATION 13,200 786,225
SCHLUMBERGER 12,000 994,500
SEARS, ROEBUCK 18,500 1,097,281
SOUTHERN COMPANY 29,000 768,500
TEXACO 6,000 369,000
TEXAS INSTRUMENTS INCORPORATED 4,000 256,250
TRANSOCEAN OFFSHORE 16,000 894,000
UNION PACIFIC 12,400 678,900
UNION PACIFIC RESOURCES 37,207 888,317
WALT DISNEY 8,900 1,106,381
----------
TOTAL UNITED STATES - (COST $17,951,005) 23,146,026
----------
TOTAL NORTH AMERICA - (COST $18,787,044) 24,043,621
----------
TOTAL COMMON AND PREFERRED STOCKS, WARRANTS
AND EXCHANGEABLE NOTES - (COST $52,373,493) + 66,182,672
----------
TOTAL INVESTMENTS - (COST $52,373,493) - 98.1% 66,182,672
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 1.9% 1,310,474
----------
NET ASSETS - 100.0% $ 67,493,146
----------
----------
</TABLE>
* Non-income producing security.
Y Reflected at par value and denominated in Japanese yen.
(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 $198,080 or 0.3% of net
assets.
(b) Reflected at par value and denominated in U.S. dollars.
(c) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Taiwan
American Fund. Martin Currie Inc. does not receive advisory fees on the
portion of net assets represented by affiliated investment companies.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 1.3%, Apparel & Textiles 0.6%, Automobiles 1.6%, Banks 13.4%,
Broadcasting 1.4%, Chemicals 2.5%, Commercial Services 0.4%, Computers
1.0%, Conglomerates 0.3%, Diversified 3.8%, Drugs & Health Care 6.5%,
Electric Utilities 6.7%, Electrical Equipment 1.4%, Electronics 4.4%,
Engineering 0.4%, Fertilizers 1.0%, Financial Services 4.0%, Food &
Beverages 3.4%, Hotels & Restaurants 0.8%, Household Products 2.2%,
Industrial Machinery 2.2%, Insurance 5.5%, Investment Companies 0.5%,
Leisure Time 1.6%, Manufacturing 0.3%, Mining 1.2%, Miscellaneous 0.9%,
Mutual Funds 0.5%, Oil & Gas 7.0%, Paper 2.7%, Petroleum Services 1.5%,
Photography 1.8%, Publishing 0.5%, Railroads & Equipment 2.3%, Real Estate
0.9%, Retail Trade 4.8%, Steel 0.9%, Telecommunications 2.1%,
Telecommunications Equipment 1.6%, Telecommunications Services 1.0%,
Telephone 0.3%, Tobacco 0.5%, Transportation 0.4%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value
(cost $52,373,493) (Note B) $ 66,182,672
Cash 139,749
Foreign currency, at value (cost $1,587,490)
(Note B) 1,587,850
Receivable for investments sold 1,221,918
Receivable for currency sold 745,843
Dividend and interest receivable 201,285
Foreign tax reclaims receivable 38,010
Prepaid insurance expense 3,640
Deferred organization expenses (Note B) 2,860
----------
TOTAL ASSETS 70,123,827
----------
LIABILITIES
Payable for investments purchased 1,703,454
Payable for currency purchased 747,094
Payable for forward foreign currency contracts 56,996
Management fee payable (Note C) 97,910
Administration fee payable (Note C) 4,570
Trustees fees payable (Note C) 1,121
Accrued expenses and other liabilities 19,536
----------
TOTAL LIABILITIES 2,630,681
----------
TOTAL NET ASSETS $ 67,493,146
----------
----------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 50,589,340
Undistributed net investment loss (48,786)
Accumulated net realized gain on investment
and foreign currency transactions 3,207,232
Net unrealized appreciation on investment
and foreign currency transactions 13,745,360
----------
TOTAL NET ASSETS $ 67,493,146
----------
----------
NET ASSET VALUE PER SHARE
($67,493,146 / 4,842,313 shares of beneficial interest outstanding) $ 13.94
----------
----------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 70,658
Dividend income 1,203,277
Foreign taxes withheld (99,821)
----------
TOTAL INVESTMENT INCOME 1,174,114
----------
EXPENSES
Management fee (Note C) 433,593
Custodian fee 110,953
Administration fee (Note C) 55,022
Audit fee 25,805
Legal fees 5,104
Transfer agent fee 6,218
Trustees fees (Note C) 2,172
Amortization of deferred organization expenses 2,548
Miscellaneous expenses 14,977
Fees and expenses waived by the investment manager (Note C) (33,589)
----------
TOTAL EXPENSES 622,803
----------
NET INVESTMENT INCOME 551,311
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 7,816,627
Net realized loss on foreign currency transactions (142,046)
Net unrealized appreciation (depreciation) on:
Investments 4,544,959
Foreign currency transactions (59,857)
----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 12,159,683
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 12,710,994
----------
----------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1998 APRIL 30, 1997
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 56,634,465 $ 52,887,926
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 551,311 472,075
Net realized gain on investment transactions 7,816,627 1,072,718
Net realized gain (loss) on foreign currency transactions (142,046) 475,540
Net unrealized appreciation (depreciation) on:
Investments 4,544,959 2,574,635
Foreign currency transactions (59,857) 95,815
------------- -------------
Net increase in net assets from operations 12,710,994 4,690,783
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (612,874) (1,000,298)
In excess of net investment income 0 (404,226)
Net realized gains (5,000,735) (645,365)
------------- -------------
Total distributions (5,613,609) (2,049,889)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Reinvestment of dividends and distributions to shareholders 3,761,296 1,355,645
Cost of shares repurchased 0 (251,875)
Paid in capital from subscription and redemption fees 0 1,875
------------- -------------
Total increase in net assets from capital share transactions 3,761,296 1,105,645
------------- -------------
NET INCREASE IN NET ASSETS 10,858,681 3,746,539
------------- -------------
NET ASSETS at end of period (includes undistributed net investment
income (loss) of ($48,786) and $153,352, respectively) $ 67,493,146 $ 56,634,465
------------- -------------
------------- -------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares issued in reinvestment of distributions to shareholders 301,697 111,576
Less shares repurchased 0 (20,511)
------------- -------------
Net share transactions 301,697 91,065
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
13
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR YEAR JUNE 15, 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 $ 12.470 $ 11.890 $ 9.990 $ 10.000
Net investment income 0.091 0.141 0.279 0.079
Net realized and unrealized gain on investment
and foreign currency transactions 2.615 0.902 1.809 0.033
------------- ------------- ------------- -------------
Total from investment operations 2.706 1.043 2.088 0.112
------------- ------------- ------------- -------------
Less distributions:
Net investment income (0.135) (0.226) (0.186) (0.040)
In excess of net investment income 0.000 (0.091) (0.017) 0.000
Net realized gains (1.101) (0.146) 0.000 (0.082)
------------- ------------- ------------- -------------
Total distributions (1.236) (0.463) (0.203) (0.122)
------------- ------------- ------------- -------------
Paid in capital from subscription and
redemption fees (Note B) 0.000 0.000 0.015 0.000
------------- ------------- ------------- -------------
Net asset value, end of period $ 13.940 $ 12.470 $ 11.890 $ 9.990
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
TOTAL INVESTMENT RETURN (1) 22.88% 8.87% 21.17% 1.18%(2)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 67,493,146 $ 56,634,465 $ 52,887,926 $ 37,259,376
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Operating expenses, net, to average
net assets (Note C) 1.00% 1.00% 1.00% 1.00%(3)
Operating expenses, gross, to average
net assets (Note C) 1.05% 1.10% 1.27% 1.25%(3)
Net investment income to average net assets 0.89% 0.88% 1.40% 0.94%(3)
Portfolio turnover rate 60% 40% 38% 44%
Per share amount of fees waived (Note C) $ 0.007 $ 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.
See notes to financial statement.
14
<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 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 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 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.
15
<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 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.
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.
The Fund had the following open forward foreign currency contract at April
30, 1998:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY DATE LOCAL CURRENCY FACE AMOUNT VALUE (DEPRECIATION)
------------- -------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (sell) July 8, 1998 491,131,740 $3,690,500 $3,747,496 $(56,996)
</TABLE>
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 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, 1998, there were no purchase premiums or redemption fees collected.
16
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $4,204,801, representing $0.926 per share. As of April 30,
1998, the Fund has elected for Federal income tax purposes to defer a
$186,196 current year post October 31 currency 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.
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, 1998, the Investment
Manager has waived $33,589 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 ($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 $36,663,865 and
$37,982,270, 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:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
---------- ------------ -------------- --------------
$52,483,544 $16,506,138 $(2,807,010) $13,699,128
17
<PAGE>
MCBT GLOBAL GROWTH FUND
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there were two shareholders who owned greater than 10%
of the Fund's outstanding shares, representing 100% of the Fund.
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.
NOTE F - SUBSEQUENT EVENT
On May 6, 1998, the Fund experienced significant redemptions of fund shares
totaling $20,955,000.
- -----------------------------------------------------------------------------
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 $97,629 (of the total $99,821 taxes withheld) and
$909,981, respectively.
18
<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, 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 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
19
<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
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>
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 Asia
Pacific 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 3 of General Instruction F.
7. Not Applicable.
<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 3 of General Instruction F.
11. Consent of PricewaterhouseCoopers LLP.
12. Not Applicable. See Paragraph 3 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 Asia Pacific Fund incorporated
by reference to the Registration Statement filed on July 7, 1994 and
(b)
<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, 1998.
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
<TABLE>
<CAPTION>
(1) (2)
Number of Record Holders
TITLE OF SERIES (as of July 31, 1998)
--------------- ---------------------
<S> <C>
MCBT Global Growth Fund 0
MCBT Opportunistic EAFE Fund 32
MCBT Global Emerging Markets Fund 2
MCBT Japan Small Companies Fund 25
MCBT Emerging Americas Fund 23
MCBT Asia Pacific Fund 23
MCBT EMEA Fund 20
</TABLE>
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,
<PAGE>
except with respect to any matter as to which such trustee or officer
shall have 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 wilful 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:
<TABLE>
<CAPTION>
Name and Position with
Martin Currie Business and Other Connections
- ---------------------- ------------------------------
<S> <C>
A. P. Hanlon Director of Martin Currie Investment
Director and President Management Limited, Martin Currie
Services Limited and Martin Currie,
Inc.
P. J. Scott Plummer Director of Martin Currie Limited
Director and President (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, Scottish
Unit
<PAGE>
Managers Limited and The
Scottish Eastern Investment Trust
plc.
M. J. Gibson Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Management Limited and Martin Currie,
Inc.
J. M. A. Fairweather Director of Martin Currie Investment
Directors and Vice President Management Limited, Martin Currie,
Inc., Martin Currie European
Investment Trust Plc and Martin
Currie Unit Trusts Limited.
J. G. Wilson Director of Martin Currie Investment
Director and Vice President Management Limited and Martin Currie,
Inc.
J. K. R. Falconer Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Limited, Martin Currie, Inc., Martin
Currie Management Limited, Martin
Currie Gefinor Fund Management Co.
SA, Edinburgh International
Investments Trust Ltd., Martin Currie
Services Ltd., The Western Canada
Investment Ltd., 3i Smaller Quoted
Companies Trust plc and Clifton Hall
School Limited.
C. J. P. Dawnay Director of Martin Currie Investment
Director and Vice President Management Ltd., Martin Currie, Inc.,
Martin Currie Unit Trusts Limited,
Martin Currie Limited, China
Heartland Fund, Martin Currie
Business Trust and Taiwan American
Fund.
M. W. Thomas Director of Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Pacific Trust plc, Martin Currie,
Inc., Martin Currie, Limited, Martin
Currie Japan Investment Trust plc and
Schroder Korea Fund.
Colin Winchester Director of Martin Currie Services
<PAGE>
Director and Secretary Limited, Martin Currie Trustees
Limited, Martin Currie Bermuda
Limited, Martin Currie Limited,
Martin Currie Management Ltd., Martin
Currie Trustees Ltd. and The Western
Canada Investment Ltd.
J. M. C. Livingston Group Legal Director, Martin Currie
General Counsel 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. N. Johnson Vice President and Director, Martin
Director and Vice President Currie, Inc. and President, Martin
Currie Investor Services, Inc.
Timothy J.D. Hall Director, Martin Currie Investment
Director and Vice President Management Limited, Martin Currie
Private Clients Limited, Martin
Currie, Inc. and Saltire Private Fund
Managers Limited.
A.D. MacLeod Director, Martin Currie Investment
Director and Vice President Management Limited and Martin Currie,
Inc.
</TABLE>
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.
<PAGE>
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)
(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.
<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.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 5 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Edinburgh, Scotland on this 1st day of September, 1998.
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 PricewaterhouseCoopers 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 Asia Pacific 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:
- ---------------------------------------------------------------
<PAGE>
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: Timothy Hall
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
<PAGE>
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 __, 1998
(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 __, 1998 (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.
<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.
<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, except to
<PAGE>
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>
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-1A (the "Registration Statement") of Martin Currie Business
Trust (hereafter referred to as the "Trust") of our reports dated June 16, 1998,
relating to the financial statements and financial highlights of each of the
seven funds constituting the Trust appearing in the Annual Reports to
Shareholders, 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 constitute
parts of this Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 001
<NAME> GLOBAL GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 52,373,493
<INVESTMENTS-AT-VALUE> 66,182,672
<RECEIVABLES> 2,207,056
<ASSETS-OTHER> 1,734,099
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70,123,827
<PAYABLE-FOR-SECURITIES> 1,703,454
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 927,227
<TOTAL-LIABILITIES> 2,630,681
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,589,340
<SHARES-COMMON-STOCK> 4,842,313
<SHARES-COMMON-PRIOR> 4,540,616
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (48,786)
<ACCUMULATED-NET-GAINS> 3,207,232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,745,360
<NET-ASSETS> 67,493,146
<DIVIDEND-INCOME> 1,103,456
<INTEREST-INCOME> 70,658
<OTHER-INCOME> 0
<EXPENSES-NET> (622,803)
<NET-INVESTMENT-INCOME> 551,311
<REALIZED-GAINS-CURRENT> 7,674,581
<APPREC-INCREASE-CURRENT> 4,485,102
<NET-CHANGE-FROM-OPS> 12,710,994
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (612,874)
<DISTRIBUTIONS-OF-GAINS> (5,000,735)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 301,697
<NET-CHANGE-IN-ASSETS> 10,858,681
<ACCUMULATED-NII-PRIOR> 153,352
<ACCUMULATED-GAINS-PRIOR> 393,209
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 433,593
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 656,392
<AVERAGE-NET-ASSETS> 62,279,358
<PER-SHARE-NAV-BEGIN> 12.47
<PER-SHARE-NII> .09
<PER-SHARE-GAIN-APPREC> 2.62
<PER-SHARE-DIVIDEND> (.14)
<PER-SHARE-DISTRIBUTIONS> (1.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.94
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 002
<NAME> OPPORTUNISTIC EAFE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 124,715,167
<INVESTMENTS-AT-VALUE> 155,253,748
<RECEIVABLES> 5,790,066
<ASSETS-OTHER> 3,044,469
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 164,088,283
<PAYABLE-FOR-SECURITIES> 3,033,163
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,692,836
<TOTAL-LIABILITIES> 4,725,999
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124,403,321
<SHARES-COMMON-STOCK> 11,972,709
<SHARES-COMMON-PRIOR> 10,655,768
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (173,999)
<ACCUMULATED-NET-GAINS> 4,796,823
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,336,139
<NET-ASSETS> 159,362,284
<DIVIDEND-INCOME> 2,385,963
<INTEREST-INCOME> 362,276
<OTHER-INCOME> 0
<EXPENSES-NET> (1,298,881)
<NET-INVESTMENT-INCOME> 1,449,358
<REALIZED-GAINS-CURRENT> 11,527,902
<APPREC-INCREASE-CURRENT> 15,121,895
<NET-CHANGE-FROM-OPS> 28,099,155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,634,448)
<DISTRIBUTIONS-OF-GAINS> (4,504,920)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,082,176
<NUMBER-OF-SHARES-REDEEMED> (258,152)
<SHARES-REINVESTED> 492,917
<NET-CHANGE-IN-ASSETS> 38,712,477
<ACCUMULATED-NII-PRIOR> 464,481
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (2,679,549)
<GROSS-ADVISORY-FEES> 934,444
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,298,881
<AVERAGE-NET-ASSETS> 134,784,970
<PER-SHARE-NAV-BEGIN> 11.32
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 2.46
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> (.41)
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 13.31
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000925583
<NAME> MARTIN CURRIE BUSINESS TRUST
<SERIES>
<NUMBER> 003
<NAME> GLOBAL EMERGING MARKETS FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 92,800,954
<INVESTMENTS-AT-VALUE> 97,001,351
<RECEIVABLES> 2,918,292
<ASSETS-OTHER> 522,902
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,442,545
<PAYABLE-FOR-SECURITIES> 160,269
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 450,397
<TOTAL-LIABILITIES> 610,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,301,104
<SHARES-COMMON-STOCK> 11,102,984
<SHARES-COMMON-PRIOR> 5,000,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (878,053)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (5,783,354)
<ACCUM-APPREC-OR-DEPREC> 4,192,182
<NET-ASSETS> 99,831,879
<DIVIDEND-INCOME> 1,146,824
<INTEREST-INCOME> 275,408
<OTHER-INCOME> 0
<EXPENSES-NET> (763,677)
<NET-INVESTMENT-INCOME> 658,555
<REALIZED-GAINS-CURRENT> (5,465,718)
<APPREC-INCREASE-CURRENT> 4,377,785
<NET-CHANGE-FROM-OPS> (429,378)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (934,330)
<DISTRIBUTIONS-OF-GAINS> (626,372)
<DISTRIBUTIONS-OTHER> (574,501)
<NUMBER-OF-SHARES-SOLD> 5,876,028
<NUMBER-OF-SHARES-REDEEMED> (23,419)
<SHARES-REINVESTED> 250,375
<NET-CHANGE-IN-ASSETS> 49,736,023
<ACCUMULATED-NII-PRIOR> 275,775
<ACCUMULATED-GAINS-PRIOR> 5,684
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 518,048
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 763,677
<AVERAGE-NET-ASSETS> 67,101,023
<PER-SHARE-NAV-BEGIN> 10.02
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