<PAGE>
MARTIN CURRIE BUSINESS TRUST
OPPORTUNISTIC EAFE FUND
SEMI-ANNUAL
OCTOBER 31, 1997
(UNAUDITED)
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1997 (Unaudited)
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 $126.6m
PERFORMANCE Total return from May 1, 1997 through October 31, 1997
SINCE LAUNCH
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +5.0%
- MCBT - Opportunistic EAFE (including all
transaction fees) +3.4%
- The Morgan Stanley Capital International
EAFE Index +3.2%
Annualized total return from July 1, 1994 through
October 31, 1997
- MCBT - Opportunistic EAFE (excluding all
transaction fees) +6.9%
- MCBT - Opportunistic EAFE (including all
transaction fees) +6.4%
- The Morgan Stanley Capital International
EAFE Index +5.7%
PORTFOLIO Despite the troubles in Asia, the MSCI EAFE index was up
COMMENTS 3.2% over the six months. Our out performance in Japan
helped us to beat that, and the fund has returned 5.0%.
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. We reduced our weighting, and are now looking for
opportunities to go back in.
We have continued to add to our positions in CONTINENTAL
EUROPE, although weaker currencies have reduced overall
returns to a US dollar investor. Restructuring and the
enhancement of shareholder value have been persistent
themes, and our portfolio reflects this. We have been
positive about the UK, where a strengthening currency and
a stable economic background have helped stock markets.
ASIA's crisis has worsened over the period, and we have
responded by cutting our weightings. Our emphasis is now
on CHINA and INDIA. Reforms in India and the freeing up
of the Chinese economy and stockmarket open many
opportunities. AUSTRALIA, where we switched from
resources stocks to industrials, has also served us well.
In LATIN AMERICA, Brazil's fall has affected our
performance. Even so, the region as a whole continues to
respond positively to low inflation and falling interest
rates. Mexico, up 5.4% over the period, has held up
well. Growth in regional economies is accelerating and
governments are deregulating.
OUTLOOK
It remains our view that the US presents a benign
background. Steady growth and low inflation there provide
excellent support for developing markets. But Asia has
mountains to climb. In Latin America, by contrast, the
future looks positive. Economic resurgence is being met
with a new corporate and political ideology. Our
strategy does and will continue to emphasise this,
favouring Mexico in particular. Our commitment to Asia
will remain low and focus on opportunities in China and
India.
1
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1997 (Unaudited)
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.
2
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1997 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[CHART]
Europe 58%
Japan 17%
Latin America 7%
Pacific Basin 6%
Other Areas 2%
ST Investment 7%
Other Net Assets 3%
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Novartis (Switzerland) 2.3
Credit Suisse Group (Switzerland) 2.0
Veba (Germany) 2.0
JAPAN
Rohm 1.7
Sony 1.4
LATIN AMERICA
Compania Anonima Nacional (Venezuela) 1.2
OTHER AREAS
Indian Opportunities Fund (India) 0.8
PACIFIC BASIN
Telekomunikasi Indonesia (Indonesia) 0.7
3
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (Unaudited)
SHARES VALUE
------ -----
COMMON AND PREFERRED STOCKS, CONVERTIBLE BONDS,
EXCHANGEABLE NOTES, AND WARRANTS - 89.7%
EUROPE - 58.5%
AUSTRIA - 0.8%
VA TECHNOLOGIE 6,000 $ 1,064,656
------------
TOTAL AUSTRIA - (COST $827,060) 1,064,656
------------
BELGIUM - 1.1%
GENERALE DE BANQUE 3,500 1,431,639
------------
TOTAL BELGIUM - (COST $1,410,303) 1,431,639
------------
DENMARK - 1.7%
NOVO NORDISK, CL B 20,000 2,166,616
------------
TOTAL DENMARK - (COST $1,974,375) 2,166,616
------------
FRANCE - 6.8%
AIR LIQUIDE 9,270 1,438,330
AXA 25,926 1,775,369
CIE GENERALE DES EAUX 14,748 1,715,582
RHONE-POULENC, CL A 51,300 2,236,718
SCHNEIDER 26,400 1,409,648
------------
TOTAL FRANCE - (COST $7,588,805) 8,575,647
------------
GERMANY - 10.9%
BAYERISCHE MOTOREN WERKE 1,700 1,229,783
DEUTSCHE BANK 33,000 2,159,415
HOECHST 49,800 1,895,162
MANNESMANN 4,800 2,027,150
PREUSSAG AG 5,000 1,296,554
SGL CARBON 10,000 1,403,875
VEBA 45,402 2,531,113
VOLKSWAGEN 2,100 1,241,385
------------
TOTAL GERMANY - (COST $11,757,354) 13,784,437
------------
ITALY - 1.1%
ENI 255,913 1,439,038
------------
TOTAL ITALY - (COST $1,253,904) 1,439,038
------------
NETHERLANDS - 3.7%
GUCCI GROUP N.V. 24,000 873,000
INTERNATIONALE NEDERLANDEN GROEP N.V. 38,377 1,610,984
PHILIPS ELECTRONICS N.V. 28,000 2,192,120
------------
TOTAL NETHERLANDS - (COST $3,670,387) 4,676,104
------------
SPAIN - 2.8%
BANCO DE SANTANDER 58,940 1,651,065
TELEFONICA DE ESPANA 68,000 1,855,778
------------
TOTAL SPAIN - (COST $2,470,165) 3,506,843
See notes to financial statements.
4
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (Unaudited)
SHARES VALUE
------ -----
EUROPE - CONTINUED
SWEDEN - 1.1%
INCENTIVE AB 15,200 $ 1,331,286
-----------
TOTAL SWEDEN - (COST $1,393,527) 1,331,286
-----------
SWITZERLAND - 6.1%
CREDIT SUISSE GROUP 18,000 2,535,619
NOVARTIS 1,860 2,913,037
ROCHE HOLDINGS 260 2,284,806
-----------
TOTAL SWITZERLAND - (COST $6,319,981) 7,733,462
-----------
UNITED KINGDOM - 22.4%
CABLE & WIRELESS 194,000 1,549,302
GENERAL ELECTRIC 157,000 1,002,922
GKN 80,530 1,806,411
GLAXO WELLCOME 81,260 1,742,349
GRANADA 101,435 1,398,902
LADBROKE 321,000 1,437,950
LASMO 251,419 1,160,001
LLOYDS TSB 163,000 2,037,377
MARKS & SPENCER 176,000 1,786,469
MCKECHNIE 74,020 624,661
NATIONAL WESTMINSTER BANCORP 100,000 1,437,833
NFC 358,136 811,165
RECKITT & COLMAN 109,950 1,686,967
ROYAL BANK OF SCOTLAND GROUP 145,000 1,537,491
SAFEWAY 153,571 1,000,341
SCOTTISH POWER 199,000 1,489,071
SHELL TRANSPORT & TRADING 246,000 1,744,802
SMITHS INDUSTRIES 92,751 1,346,053
UNILEVER 189,876 1,414,427
WASSALL 88,982 503,106
WOLSELEY 98,426 820,305
-----------
TOTAL UNITED KINGDOM - (COST $20,677,715) 28,337,905
-----------
TOTAL EUROPE - (COST $59,343,576) 74,047,633
-----------
LATIN AMERICA - 6.8%
ARGENTINA - 0.6%
COMPANIA PEREZ COMPANC 82,865 519,049
TELEFONICA DE ARGENTINA, ADR 10,000 281,250
-----------
TOTAL ARGENTINA - (COST $584,107) 800,299
-----------
BRAZIL - 1.6%
ELETROBRAS, ADR 39,800 875,600
PETROBRAS, ADR 36,000 684,000
TELEBRAS, ADR 5,080 515,620
-----------
TOTAL BRAZIL - (COST $1,915,129) 2,075,220
-----------
See notes to financial statements.
5
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (Unaudited)
SHARES VALUE
------ -----
LATIN AMERICA - CONTINUED
CHILE - 0.8%
COMPANIA DE TELEFONOS DE CHILE, ADR 34,000 $ 943,500
-----------
TOTAL CHILE - (COST $983,270) 943,500
-----------
MEXICO - 2.6%
CIFRA SA DE CV 425,000 734,943
CIFRA SA DE CV, CL B 66,039 131,369
CORPORACION INDUSTRIAL ALFA, CL A 63,573 464,003
EMPRESAS ICA SOCIEDAD, ADR 18,800 250,275
GRUPO FINANCIERO BANAMEX, CL B * 380,000 752,296
TELEFONOS DE MEXICO, ADR 21,000 908,250
-----------
TOTAL MEXICO - (COST $3,166,673) 3,241,136
-----------
VENEZUELA - 1.2%
COMPANIA ANONIMA NACIONAL TELEFONOS,
ADR, CL 35,000 1,531,250
-----------
TOTAL VENEZUELA - (COST $827,709) 1,531,250
-----------
TOTAL LATIN AMERICA - (COST $7,476,888) 8,591,405
-----------
PACIFIC BASIN - 5.5%
AUSTRALIA - 1.7%
JOHN FAIRFAX HOLDINGS LIMITED 240,000 529,969
LEND LEASE CORPORATION 27,000 552,924
MAYNE NICKLESS LIMITED 108,000 493,682
NEWS CORPORATION 130,000 576,876
-----------
TOTAL AUSTRALIA - (COST $2,244,732) 2,153,451
-----------
HONG KONG - 2.2%
AMOY PROPERTIES 18,900 16,256
CHEUNG KONG HOLDINGS 46,000 319,796
CHINA LIGHT & POWER 82,000 431,663
CITIC PACIFIC 85,000 406,777
FIRST PACIFIC COMPANY 356,000 224,471
HSBC HOLDINGS 10,364 234,586
HUTCHISON WHAMPOA 63,700 440,788
NEW WORLD DEVELOPMENT LIMITED 124,000 436,241
SWIRE PACIFIC 56,425 301,410
-----------
TOTAL HONG KONG - (COST $3,090,831) 2,811,988
-----------
INDONESIA - 0.9%
BANK INTERNATIONAL INDONESIA 1,100,000 236,477
TELEKOMUNIKASI INDONESIA 1,020,000 947,850
-----------
TOTAL INDONESIA - (COST $2,280,659) 1,184,327
-----------
PHILIPPINES - 0.3%
BELLE CORPORATION * 4,000,000 361,072
BELLE CORPORATION, WARRANTS * 800,000 99
-----------
TOTAL PHILIPPINES - (COST $1,137,750) 361,171
-----------
See notes to financial statements.
6
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (Unaudited)
SHARES VALUE
------ -----
PACIFIC BASIN - CONTINUED
SINGAPORE - 0.4%
DEVELOPMENT BANK OF SINGAPORE 48,800 $ 455,467
-----------
TOTAL SINGAPORE - (COST $506,106) 455,467
-----------
TOTAL PACIFIC BASIN - (COST $9,260,078) 6,966,404
-----------
OTHER AREAS - 1.7%
INDIA - 1.7%
INDIAN OPPORTUNITIES FUND (a)* 101,911 1,033,375
SCHRODER INDIA FUND * 60,000 652,830
VIDESH SANCHAR NIGAM LIMITED, GDR (b)* 36,000 496,800
-----------
TOTAL INDIA - (COST $2,677,590) 2,183,005
-----------
TOTAL OTHER AREAS - (COST $2,677,590) 2,183,005
-----------
JAPAN - 17.2%
ASAHI DIAMOND 82 477
CANON 65,000 1,577,067
DDI 117 390,810
EIDEN SAKAKIYA 24,000 132,613
HITACHI 150,000 1,152,887
HONDA MOTOR 36,000 1,211,466
ITO - YOKADO 23,000 1,142,833
KAMIGUMI 100,000 452,846
MABUCHI MOTOR 10,000 556,710
MARUI 36,000 607,229
MBL INT'L. FINANCE
(BERMUDA), 3.00%, 11/30/2002 $900,000 (c) 922,950
MITSUBISHI HEAVY INDUSTRIES 171,000 839,726
MITSUI FUDOSAN 54,000 610,220
NAMCO, 4.70%, 09/30/1998 Y 35,000,000 378,064
NIPPON EXPRESS 73,000 393,054
NITTO DENKO, 2.20%, 03/30/1999 Y 70,000,000 661,138
RISO KAGAKU 6,400 377,034
ROHM 22,000 2,175,322
SAKURA FINANCE Y 72,000,000 564,633
SECOM COMPANY LIMITED 11,000 711,093
SHIMACHU 17,000 361,612
SHIN - ETSU CHEMICAL 28,950 707,212
SONY 21,900 1,817,873
SUMITOMO ELECTRIC 52,000 686,996
TAISHO PHARMACEUTICAL 25,000 639,801
TOPPAN PRINTING 73,000 915,912
TOYOTA MOTOR CORPORATION 28,000 779,393
YAMANOUCHI PHARMACEUTICAL 40,000 983,797
-----------
TOTAL JAPAN - (COST $21,585,096) 21,750,768
-----------
COMMON AND PREFERRED STOCKS, CONVERTIBLE BONDS,
EXCHANGEABLE NOTES, AND WARRANTS - (COST $100,343,228)+ 113,539,215
-----------
See notes to financial statements.
7
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------
<S> <C> <C>
SHORT TERM INVESTMENT - 7.1%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.150%, 11/03/1997 (d) $ 9,016,000 $ 9,016,000
------------
TOTAL SHORT TERM INVESTMENT - (COST $9,016,000) 9,016,000
------------
TOTAL INVESTMENTS - (COST $109,359,228) - 96.8% 122,555,215
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 3.2% 4,035,671
------------
NET ASSETS - 100.0% $126,590,886
------------
------------
</TABLE>
* 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 Inc.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $496,800 or 0.4% of net
assets.
(c) Reflected at par value and denominated in U.S. dollars.
(d) The repurchase agreement, dated 10/31/97, $9,016,000 par due 11/03/97, is
collateralized by United States Treasury Notes, 5.875%, due 8/31/99 with a
market value of $9,201,189.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 1.1%, Apparel 0.7%, Automobiles 3.5%, Banks 12.8%, Chemicals
6.1%, Commercial Services 0.4%, Conglomerates 2.5%, Construction & Building
Materials 0.7%, Construction & Mining Equipment 0.2%, Diversified 3.0%,
Drugs & Health Care 6.7%, Electric Utilities 4.2%, Electrical Equipment
3.0%, Electronics 5.7%, Engineering 0.8%, Financial Services 1.5%, Food &
Beverages 1.1%, Hotels & Restaurants 1.1%, Household Products 1.3%,
Industrial Machinery 4.2%, Insurance 1.8%, Investment Companies 1.3%,
Leisure Time 1.1%, Manufacturing 0.5%, Miscellaneous 1.1%, Newspapers 0.4%,
Oil & Gas 4.0%, Petroleum Services 0.4%, Photography 1.3%, Publishing 1.2%,
Real Estate 1.6%, Retail Trade 4.7%, Steel 1.0%, Telecommunications 4.7%,
Telephone 2.7%, Transportation 1.3%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
8
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $100,343,228) (Note B) $113,539,215
Investments in repurchase agreements, at value (Note B) 9,016,000
------------
Total Investments 122,555,215
Cash 353
Foreign currency, at value (cost $464,799) (Note B) 464,750
Receivable for investments sold 6,565,666
Dividend and interest receivable 173,699
Foreign tax reclaims receivable 124,458
Prepaid insurance 5,240
Deferred organization expenses (Note B) 4,250
------------
TOTAL ASSETS 129,893,631
------------
LIABILITIES
Payable for fund shares repurchased 3,017,025
Payable for currency purchased 492
Management fee payable (Note C) 236,287
Administration fee payable (Note C) 9,935
Trustees fees payable (Note C) 1,830
Accrued expenses and other liabilities 37,176
------------
TOTAL LIABILITIES 3,302,745
------------
TOTAL NET ASSETS $126,590,886
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $107,690,483
Undistributed net investment income 1,328,705
Accumulated net realized gain on investment and foreign currency transactions 4,371,158
Net unrealized appreciation on investment and foreign currency transactions 13,200,540
------------
TOTAL NET ASSETS $126,590,886
------------
------------
NET ASSET VALUE PER SHARE $ 11.88
($126,590,886 / 10,658,136 shares of beneficial interest outstanding) ------------
------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 166,384
Dividend income 1,516,588
Foreign taxes withheld (177,499)
------------
TOTAL INVESTMENT INCOME 1,505,473
------------
EXPENSES
Management fee (Note C) 464,537
Custodian fee 87,328
Administration fee (Note C) 53,436
Audit fee 12,536
Legal fees 6,844
Transfer agent fee 3,425
Trustees fees (Note C) 1,964
Amortization of deferred organization expenses 1,278
Miscellaneous expenses 9,901
------------
TOTAL EXPENSES 641,249
------------
NET INVESTMENT INCOME 864,224
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 7,154,936
Net realized loss on foreign currency transactions (104,229)
Net unrealized appreciation (depreciation) on:
Investments (2,030,506)
Foreign currency transactions 16,802
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 5,037,003
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,901,227
------------
------------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
October 31, 1997 Ended
(Unaudited) 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 864,224 1,023,218
Net realized gain (loss) on investment transactions 7,154,936 (1,528,624)
Net realized gain (loss) on foreign currency transactions (104,229) 1,413,982
Net unrealized appreciation (depreciation) on :
Investments (2,030,506) 3,356,168
Foreign currency transactions 16,802 246,156
------------ ------------
Net increase in net assets from operations 5,901,227 4,510,900
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income 0 (2,359,811)
In excess of net investment income 0 (1,311,086)
------------ ------------
Total distributions 0 (3,670,897)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 602,540 9,813,416
Reinvestment of dividends and distributions to shareholders 0 3,268,114
Cost of shares repurchased (573,326) (1,637,958)
Paid in capital from subscription and redemption fees 10,638 70,995
------------ ------------
Total increase in net assets from capital share transactions 39,852 11,514,567
------------ ------------
NET INCREASE IN NET ASSETS 5,941,079 12,354,570
------------ ------------
NET ASSETS at end of period (includes undistributed net investment $126,590,886 $120,649,807
income of $1,328,705 and $464,481, respectively) ------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 48,718 880,191
Shares issued in reinvestment of distributions to shareholders 0 294,425
Less shares repurchased (46,350) (146,937)
------------ ------------
Net share transactions 2,368 1,027,679
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Six Months
Ended Year Year July 1, 1994 *
October 31, 1997 Ended Ended through
(Unaudited) 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 0.081 0.134 0.314 0.055
Net realized and unrealized gain(loss) on investment
and foreign currency transactions 0.478 0.286 1.239 (0.323)
------- ------- ------- -------
Total from investment operations 0.559 0.420 1.553 (0.268)
------- ------- ------- -------
Less distributions:
Net investment income 0.000 (0.229) (0.167) 0.000
In excess of net investment income 0.000 (0.127) (0.023) 0.000
------- ------- ------- -------
Total distributions 0.000 (0.356) (0.190) 0.000
------- ------- ------- -------
Paid in capital from subscription and
redemption fees (Note B) 0.001 0.006 0.027 0.128
------- ------- ------- -------
Net asset value, end of period $11.880 $11.320 $11.250 $9.860
------- ------- ------- -------
------- ------- ------- -------
TOTAL INVESTMENT RETURN (1) (2) 4.95% 3.85% 16.17% (1.40)%
------- ------- ------- -------
------- ------- ------- -------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $126,590,886 $120,649,807 $108,295,237 $72,660,677
Operating expenses, net, to average
net assets (Note C) 0.95% (3) 0.98% 1.00% 1.00% (3)
Operating expenses, gross, to average
net assets (Note C) 0.95% (3) 0.98% 1.05% 1.37% (3)
Net investment income to average net assets 1.29% (3) 0.90% 1.46% 1.32% (3)
Portfolio turnover rate 26% 49% 37% 39%
Average commission rate per share (4) $0.0127 $0.0191 $0.0285 N/A
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.
(4) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
See notes to financial statements.
12
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on May
20, 1994. The Trust offers 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 the 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.
13
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MCBT OPPORTUNISTIC EAFE FUND
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NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund on each day and
the resulting net unrealized appreciation, depreciation and related net
receivable or payable amounts are determined by using forward currency exchange
rates supplied by a quotation service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. The effects of changes in foreign currency
exchange rates on investments in securities are not segregated in the Statement
of Operations from the effects of changes in market prices of those securities,
and are included with the net realized and unrealized gain or loss on investment
securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards in connection
with planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
EXPENSES - Expenses directly attributable to the Fund are charged to the Fund.
Expenses not directly attributable to a 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 six months ended October 31, 1997, $7,135 was
collected in purchase premiums and $3,503 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.
14
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MCBT OPPORTUNISTIC EAFE FUND
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NOTES TO FINANCIAL STATEMENTS (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 0.70% 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 six months ended October 31, 1997, it was not
necessary for the Investment Manager to waive any of its fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000 ($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, 1997 were $32,501,721
and $39,105,167, 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, 1997 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------ ------------ -------------- --------------
$109,359,228 $21,204,992 $(8,009,005) $13,195,987
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 1997 there was one shareholder who owned greater than 10% of
the Fund's outstanding shares, representing 13% 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.
15
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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
--------------------
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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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