<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMERGING AMERICAS FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1998
(UNAUDITED)
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in countries of the
Western Hemisphere with emerging markets and developing
economies.
LAUNCH DATE September 19, 1994
FUND SIZE $10.5m
PERFORMANCE Total return from May 1, 1998 through October 31, 1998
- MCBT - Emerging Americas Fund (excluding all
transaction fees) -52.4%
- MCBT - Emerging Americas Fund (including all
transaction fees) -54.2%
- The Morgan Stanley Capital International
Latin America (Free) Index -33.3%
Annualized total return from September 19, 1994 through
October 31, 1998
- MCBT - Emerging Americas Fund (excluding all
transaction fees) -17.2%
- MCBT - Emerging Americas Fund (including all
transaction fees) -17.9%
- The Morgan Stanley Capital International
Latin America (Free) Index (from October 1,
1994 through October 31, 1998) -7.8%
PORTFOLIO With the MSCI Latin America (Free) index falling 33.3%,
COMMENTS Latin American markets remained under pressure over the
period. No markets posted positive returns, but better
performance came from ARGENTINA, CHILE and MEXICO which fell
21.1%, 28.4% and 29.9% respectively over that period. BRAZIL
fell 35.6%, and the smaller markets of PERU, VENEZUELA and
COLOMBIA continued their underperformance, falling 41%,
47.5% and 50% respectively. Poor stock selection saw this
fund fall by 52.4%.
Initially sentiment towards the region improved and interest
rates fell back from punitively high levels, particularly in
Mexico and Brazil. But the Russian devaluation and default
in August prompted a swift reversal of confidence and the
region's currencies once again came under pressure. Colombia
and Ecuador both devalued, and the Brazilian REAL came under
a massive speculative attack. Fears about the ability of
Brazil to rollover the significant amounts of debt coming
due grew and were reflected in the massive capital flight -
despite interest rates rising to almost 50%. The unveiling
of a three year fiscal austerity plan totalling $83bn by the
newly re-elected Cardoso administration partially restored
battered confidence, despite doubts about its feasibility.
Elsewhere in the region fiscal policy and monetary policy
were tightened as the attack on the Brazilian REAL grew.
Growth has been the obvious casualty, and earnings generally
disappointed. Weakness in the Mexican peso fed through to
higher inflation but the consumer proved to be surprisingly
resilient to the increase in interest rates.
OUTLOOK
As the regional risks and outlook had deteriorated sharply,
we took the decision in September to close the fund. The
precarious fiscal position in Brazil is expected to keep
policy across the region very tight, with growth being the
obvious sacrifice. With credit availability tightening and
significant external funding requirements next year, the
risk of disappointment on the growth and earnings front is
expected to remain high. We will revisit this decision once
we feel that there has been sufficient progress with the
fiscal deficit in Brazil. Then the pressure on monetary and
fiscal policy across the region can ease.
1
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
INVESTMENT James Fairweather is Chief Investment Officer. All funds
MANAGER are managed on a team basis with a named director heading
PROFILE each team.
Joanna Terrett and Alison Hamilton manage the fund. A
Spanish speaker, Joanna lived in Argentina and Venezuela for
six years. She 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 European team and was appointed investment
manager in 1994. In early 1996 she joined the Emerging
Markets team with responsibility for Latin America. She was
appointed assistant director in October 1996. Alison
graduated from Edinburgh University in 1991 with a degree in
Law. She spent six years with Standard Life Assurance
managing money in Latin America before joining Martin Currie
as an assistant director in October 1997. She is a member of
the Institute of Investment Management and Research.
The international strategy group 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 AMERICAS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
ASSET ALLOCATION
(% of net assets)
Argentina 5%
Brazil 8%
ST Investment 84%
Other Net Assets 3%
TOTAL: 100%
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
BRAZIL
Brazilian Equity Investments 8.4
ARGENTINA
Argentina Equity Investments 4.9
3
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCK - 13.3%
ARGENTINA - 4.9%
ARGENTINA EQUITY INVESTMENTS 15,000 $509,700
-----------
TOTAL ARGENTINA - (COST $1,128,377) 509,700
-----------
BRAZIL - 8.4%
BRAZILIAN EQUITY INVESTMENTS * 44,000 883,520
-----------
TOTAL BRAZIL - (COST $1,100,000) 883,520
-----------
TOTAL COMMON STOCK - (COST $2,228,377) 1,393,220
-----------
PRINCIPAL
AMOUNT
---------
SHORT TERM INVESTMENT - 84.0%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
4.250%, 11/02/1998 (a) $809,000 809,000
UNITED STATES TREASURY BILLS, 3.500%, 11/12/1998 8,000,000 7,991,444
-----------
TOTAL SHORT TERM INVESTMENT - (COST $8,800,444) 8,800,444
-----------
TOTAL INVESTMENTS - (COST $11,028,821) - 97.3% 10,193,664
CASH, RECEIVABLES AND OTHER ASSETS, LESS
LIABILITIES - 2.7% 261,235
-----------
NET ASSETS - 100.0% $10,454,899
-----------
-----------
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 10/30/98, $809,000 par due 11/2/98, is
collateralized by United States Treasury Notes, 5.750%, due 11/30/02 with
a market value of $828,712.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Investment Companies 13.3%.
See notes to financial statements.
4
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $10,219,821)
(Note B) $9,384,664
Investments in repurchase agreements, at value (Note B) 809,000
-----------
Total Investments 10,193,664
Cash 738
Foreign currency, at value (cost $17) (Note B) 17
Dividend and interest receivable 498,525
-----------
TOTAL ASSETS 10,692,944
-----------
LIABILITIES
Management fee payable (Note C) 209,342
Administration fee payable (Note C) 6,266
Accrued expenses and other liabilities 22,437
-----------
TOTAL LIABILITIES 238,045
-----------
TOTAL NET ASSETS $10,454,899
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in-capital $58,259,189
Undistributed net investment loss (678,757)
Accumulated net realized loss on investment
and foreign currency transactions (46,269,161)
Net unrealized depreciation on investment
and foreign currency transactions (856,372)
-----------
TOTAL NET ASSETS $10,454,899
-----------
-----------
NET ASSET VALUE PER SHARE $3.72
($10,454,899 / 2,806,953 shares of beneficial -----------
interest outstanding) -----------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $233,861
Dividend income 823,291
Foreign taxes withheld (217,970)
-----------
TOTAL INVESTMENT INCOME 839,182
-----------
EXPENSES
Management fee (Note C) 559,068
Custodian fee 57,994
Administration fee (Note C) 29,448
Legal fees 4,205
Transfer agent fee 3,334
Amortization of deferred organization expenses 3,538
Miscellaneous expenses 11,813
-----------
TOTAL EXPENSES 669,400
-----------
NET INVESTMENT INCOME 169,782
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (40,251,728)
Net realized loss on foreign currency transactions (414,846)
Net unrealized depreciation on:
Investments (12,458,436)
Foreign currency transactions (11,699)
-----------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (53,136,709)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(52,966,927)
-----------
-----------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
October 31, 1998 Ended
(Unaudited) April 30, 1998
--------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $138,115,097 $194,596,827
--------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 169,782 1,469,163
Net realized gain (loss) on investment
transactions (40,251,728) 22,708,108
Net realized loss on foreign currency
transactions (414,846) (493,576)
Net unrealized depreciation on:
Investments (12,458,436) (25,099,168)
Foreign currency transactions (11,699) (9,335)
--------------- --------------
Net decrease in net assets from operations (52,966,927) (1,424,808)
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,066,654) (990,803)
Net realized gains (3,845,814) (12,415,579)
In excess of net realized gains 0 (2,250,349)
--------------- --------------
Total distributions (4,912,468) (15,656,731)
--------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 165,133 54,531,962
Reinvestment of dividends and distributions
to shareholders 4,863,987 15,605,446
Cost of shares repurchased (75,522,000) (112,466,633)
Paid in capital from subscription and
redemption fees 712,077 2,929,034
--------------- --------------
Total decrease in net assets from capital
share transactions (69,780,803) (39,400,191)
--------------- --------------
NET DECREASE IN NET ASSETS (127,660,198) (56,481,730)
--------------- --------------
NET ASSETS at end of period (net of
accumulated net investment $10,454,899 $138,115,097
income (loss) of ($678,757) --------------- --------------
and $218,115, respectively) --------------- --------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 24,061 5,629,531
Shares issued in reinvestment of
distributions to shareholders 1,300,532 1,739,738
Less shares repurchased (14,236,811) (12,296,439)
--------------- --------------
Net share transactions (12,912,218) (4,927,170)
--------------- --------------
--------------- --------------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT EMERGING AMERICAS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Year Year Sept. 19, 1994 *
October 31, 1998 Ended Ended Ended through
(Unaudited) April 30, 1998 April 30, 1997 April 30, 1996 April 30, 1995
----------- -------------- -------------- -------------- --------------
<S> <S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $8.790 $9.430 $7.660 $6.850 $10.000
Net investment income (loss) (0.158) 0.055 0.040 0.025 (0.004)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions (4.714) (0.050) 1.688 0.720 (3.298)
----------- ------------ ------------ ----------- -----------
Total from investment operations (4.872) 0.005 1.728 0.745 (3.302)
----------- ------------ ------------ ----------- -----------
Less distributions:
Dividends from net investment income (0.098) (0.053) (0.029) (0.040) 0.000
Net realized gains (0.354) (0.659) 0.000 0.000 0.000
In excess of net realized gains 0.000 (0.119) 0.000 0.000 0.000
----------- ------------ ------------ ----------- -----------
Total distributions (0.452) (0.831) (0.029) (0.040) 0.000
----------- ------------ ------------ ----------- -----------
Paid in capital from subscription and
redemption fees (Note B) 0.254 0.186 0.071 0.105 0.152
----------- ------------ ------------ ----------- -----------
Net asset value, end of period $3.720 $8.790 $9.430 $7.660 $6.850
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
TOTAL INVESTMENT RETURN (1) (2) (52.56)% 1.84% 23.55% 12.48% (31.50)%
- ----------------------- ----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $10,454,899 $138,115,097 $194,596,827 $89,599,602 $39,833,637
Operating expenses, net, to average
net assets (Note C) 1.80%(3) 1.76% 1.70% 1.70% 1.80%(3)
Operating expenses, gross, to average
net assets (Note C) 1.80%(3) 1.76% 1.77% 1.95% 1.80%(3)
Net investment income(loss) to average
net assets 0.46%(3) 0.88% 0.62% 0.88% (0.11)%(3)
Portfolio turnover rate 36% 99% 50% 61% 89%
Per share amount of fees waived (Note C) $0.000 $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.
8
<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,
Asia Pacific ex Japan Fund (formerly "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.
9
<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 October 31, 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 six months ended
October 31, 1998, $2,942 was collected in purchase premiums and $709,135 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 October 16, 1998, the Fund declared a long term capital gain
distribution of $3,845,814, representing $0.35 per share.
10
<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 six months ended October 31,
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 six months ended October 31, 1998 were
$20,590,570 and $79,635,143, 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 October 31, 1998 were as follows:
<TABLE>
<CAPTION>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------ ------------ -------------- --------------
<S> <C> <C> <C>
$11,028,821 $0 $(835,157) $(835,157)
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 1998 there were three shareholders who owned greater than
10% of the Fund's outstanding shares, representing 49% of the Fund.
11
<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.
NOTE G - SUBSEQUENT EVENT
The Fund is in the process of completely redeeming all outstanding shares and
anticipates completion by December 31, 1998.
- -------------------------------------------------------------------------------
12
<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
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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
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| 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. |
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