<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
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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
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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
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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
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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.
