<PAGE>
MARTIN CURRIE BUSINESS TRUST
OPPORTUNISTIC EAFE FUND
ANNUAL REPORT
APRIL 30, 1998
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
OBJECTIVE Long term capital appreciation through active management of
a diversified portfolio of international equities outside
the USA and Canada.
LAUNCH DATE July 1, 1994
FUND SIZE $159.4m
PERFORMANCE
SINCE LAUNCH Total return from May 1, 1997 through April 30, 1998
- MCBT - Opportunistic EAFE (excluding all transaction fees) +23.3%
- MCBT - Opportunistic EAFE (including all transaction fees) +21.5%
- The Morgan Stanley Capital International EAFE Index +19.2%
Annualized total return from July 1, 1994 through April 30,
1998
- MCBT - Opportunistic EAFE (excluding all transaction fees) +10.5%
- MCBT - Opportunistic EAFE (including all transaction fees) +10.1%
- The Morgan Stanley Capital International EAFE Index +9.0%
</TABLE>
FUND IG02
7/1/94 (a) 4/30/95 4/30/96 4/30/97 4/30/98
MCBT Opportunistic EAFE $10,000 $9,710 $11,283 $11,718 $14,451
MSCI EAFE Index $10,000 $10,500 $11,729 $11,666 $13,906
(a) Commencement of investment operations.
Performance shown is net of all fees after reimbursement from the Manager.
Returns and net asset values of fund investments will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. The total returns would have been lower had certain expenses
not been waived during the period shown. Each performance figure including
all transaction fees assumes purchase at the beginning and redemption at the
end of the stated period and is calculated using an offering price which
reflects a transaction fee of 75 basis points on purchase and 75 basis points
on redemption. Transaction fees are paid to the Fund to cover trading costs.
Past performance is not indicative of future performance.
1
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
PORTFOLIO Despite the troubles in Asia, the MSCI EAFE index was up
COMMENTS 19.2% over the 12 months. Additions to the strongly
performing UK and European markets and our outperformance
in Japan helped us to beat that, and the fund has
returned 23.3%.
Compounded by a weak currency, Japan has performed very
poorly - although many of the blue chip exporters which
form the core of our portfolio have held up relatively
well. Apart from the first two months of this year, the
pressure to restructure on the financial sector and
economically sensitive sectors such as construction has
remained intense. We further increased our convertible
content and, concerned for the outlook for the yen, have
hedged 50% of Japanese assets against the dollar.
We have continued to add to our positions in Continental
Europe. The markets have rallied further, helped by
converging bond markets and increased domestic buying.
Restructuring and the enhancement of shareholder value have
been persistent themes, and our portfolio reflects this.
New holdings have concentrated on the financial sector where
enormous corporate change is occurring. We have been
positive about the UK, where a strong currency and a stable
economic background have helped markets. Bond convergence
in Europe has also been supportive, with financial stocks
moving ahead strongly.
Asia's crisis has worsened over the period and we have
substantially reduced our weighting. Our emphasis is now on
China, India, Australia and Taiwan. While some of the hard
hit ASEAN markets rallied in January and February, recent
market and currency weakness support our defensive approach
to the region. We have no holdings in Indonesia.
The impact of Asia on the rest of the world has been felt
particularly in the smaller markets. We have reduced
substantially our exposure to Latin America. Brazil and
Mexico make up the bulk of our investment. We have
established new positions in Israel, Greece and Hungary.
OUTLOOK
Looking ahead, the impact of the Asian crisis is likely to
leave markets volatile. However, slowing growth in the
Pacific region may well help restrain the US economy and
reduce pressure on higher interest rates in the maturer
markets of the UK and Europe. Broader Europe, or Euroland
as it has been named, will continue to benefit from
corporate restructuring and lower bond yields. The
increasing move to equity ownership by domestic investors is
being fuelled by the search for higher returns and changing
pensions legislation. The UK market continues to benefit
from good liquidity and robust earnings growth. We remain
cautious on the Pacific region. Defensive stock selection
in Japan - and asset allocation in Asia - is appropriate in
an environment of falling growth forecasts, currency
volatility and financial and social instability. Smaller
markets will remain out of favour, as capital flows seek
safety in maturer markets and strong currencies.
2
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
INVESTMENT James Fairweather is Chief Investment Officer. All funds
MANAGER PROFILE are managed on a team basis with a named director heading
each team.
James spent three years with Montague Loebl Stanley & Co.
as an institutional sales and economic assistant. Moved
into Eurobond sales for 18 months with Kleinwort Benson
before joining Martin Currie in 1984. He has worked in
our Far East, North American and Continental European
investment teams. Appointed director in 1987, he became
head of our Continental Europe team in 1992. A member of
the asset allocation committee, James was appointed
Deputy Chief Investment Officer in 1994 with overall
responsibility for our investments in emerging markets.
He was promoted to Chief Investment Officer in 1997.
The Global Asset Allocation Committee sets limits for
regional allocation. The managers of the funds are
responsible for the selection of countries within those
regions, sectors, and stocks.
3
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- ------------------------------------------------------------------------------
PROFILE AT APRIL 30, 1998
ASSET ALLOCATION
(% of net assets)
OPPORTUNISTIC EAFE IG02
----------------- ----
Europe 69%
Japan 15%
Latin America 3%
Middle East 1%
Pacific Basin 4%
Other Areas 1%
ST Investment 4%
Other Net Assets 3%
----
TOTAL: 100%
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
EUROPE
Credit Suisse Group (Switzerland) 2.6
Novartis (Switzerland) 2.4
Cie Generale des Eaux (France) 2.4
JAPAN
Sony 1.3
Rohm 1.1
LATIN AMERICA
Petrobas, ADR (Brazil) 0.6
PACIFIC BASIN
Taiwan American Fund (Taiwan) 0.7
MIDDLE EAST
ECI Telecommunications (Israel) 0.7
4
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS, WARRANTS AND
EXCHANGEABLE NOTES - 92.9%
EUROPE - 68.7%
AUSTRIA - 0.8%
VA TECHNOLOGIE 8,500 $ 1,221,835
------------
TOTAL AUSTRIA - (COST $1,225,302) 1,221,835
------------
BELGIUM - 1.3%
GENERALE DE BANQUE 3,500 2,022,069
------------
TOTAL BELGIUM - (COST $1,410,303) 2,022,069
------------
DENMARK - 0.7%
UNIDANMARK 12,500 1,050,320
------------
TOTAL DENMARK - (COST $952,672) 1,050,320
------------
FINLAND - 1.5%
NOKIA AB OY * 36,000 2,419,124
------------
TOTAL FINLAND - (COST $1,900,728) 2,419,124
------------
FRANCE - 11.9%
AIR LIQUIDE 9,270 1,711,812
AXA 31,426 3,691,026
CIE GENERALE DES EAUX 20,148 3,747,374
ELF AQUITAINE 20,500 2,690,817
PROMODES 4,000 1,927,799
RHONE-POULENC, CL A 56,300 2,754,588
SOCIETE GENERALE 11,500 2,395,275
------------
TOTAL FRANCE - (COST $14,125,599) 18,918,691
------------
GERMANY - 11.9%
ALLIANZ AG (REGISTERED) 11,800 3,629,657
ALLIANZ AG 241 73,460
BAYERISCHE MOTOREN WERKE 1,750 1,930,846
BAYERISCHE VEREINSBANK 32,500 2,472,068
DEUTSCHE BANK 33,000 2,539,523
MANNESMANN 4,530 3,594,617
PREUSSAG AG 5,000 1,777,604
VEBA 45,402 3,000,572
------------
TOTAL GERMANY - (COST $13,979,697) 19,018,347
------------
GREECE - 0.7%
ALPHA CREDIT BANK, GDR 11,000 1,160,075
------------
TOTAL GREECE - (COST $654,602) 1,160,075
------------
ITALY - 5.9%
ENI 269,913 1,812,524
IMI BANK 175,600 2,874,870
ISTITUTO NAZIONALE DELLE ASSICURAZIONI 900,000 2,690,321
TELECOM ITALIA MOBILE * 370,000 2,109,690
------------
TOTAL ITALY - (COST $7,504,014) 9,487,405
------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - Continued
NETHERLANDS - 1.9%
ELSEVIER 129,000 $ 1,947,676
GUCCI GROUP N.V. 24,000 1,117,500
----------
TOTAL NETHERLANDS - (COST $3,669,222) 3,065,176
----------
SPAIN - 3.2%
BANCO CENTRAL HISPANOAMERICANO 60,000 1,997,374
BANCO DE SANTANDER 58,940 3,115,345
----------
TOTAL SPAIN - (COST $2,824,864) 5,112,719
----------
SWEDEN - 3.5%
ASTRA AB 112,000 2,300,181
INCENTIVE AB 19,200 1,859,985
NORDBANKEN HOLDING AB 191,700 1,411,379
----------
TOTAL SWEDEN - (COST $5,131,901) 5,571,545
----------
SWITZERLAND - 5.1%
CREDIT SUISSE GROUP 19,100 4,200,599
NOVARTIS 2,340 3,867,511
----------
TOTAL SWITZERLAND - (COST $5,485,066) 8,068,110
----------
UNITED KINGDOM - 20.3%
CABLE & WIRELESS 173,000 1,982,233
GENERAL ELECTRIC 157,000 1,299,938
GKN 63,530 1,836,287
GLAXO WELLCOME 81,260 2,297,108
LADBROKE 321,000 1,765,179
LAND SECURITIES 55,000 982,544
LASMO 251,419 1,104,991
LLOYDS TSB 145,000 2,171,959
MARKS & SPENCER 176,000 1,673,636
MCKECHNIE 74,020 616,590
NATIONAL WESTMINSTER BANCORP 100,000 2,002,221
NFC 358,136 1,075,302
RECKITT & COLMAN 107,950 2,175,843
ROYAL BANK OF SCOTLAND GROUP 145,000 2,238,657
SAFEWAY 153,571 915,771
SCOTTISH POWER 199,000 1,829,937
SHELL TRANSPORT & TRADING 246,000 1,831,104
SMITHS INDUSTRIES 92,751 1,335,019
UNILEVER 189,876 2,023,147
WASSALL 88,982 464,381
ZENECA GROUP 16,000 689,420
----------
TOTAL UNITED KINGDOM - (COST $20,224,252) 32,311,267
----------
TOTAL EUROPE - (COST $79,088,222) 109,426,683
----------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES/PAR VALUE
---------- -------
<S> <C> <C>
JAPAN - 14.8%
ASAHI CHEMICAL 120,000 $ 420,734
CANON 59,000 1,395,421
FUJI PHOTO FILM 25,000 889,754
HITACHI 127,000 910,707
HONDA MOTOR 44,000 1,595,889
ITO - YOKADO 28,000 1,449,297
KAO CORPORATION 60,000 881,820
MABUCHI MOTOR 10,000 578,812
MARUI 49,000 773,840
MBL INT'L. FINANCE (BERMUDA), 3.000%,
EXCHANGEABLE NOTE, 11/30/2002 (d) 1,282,000 1,316,486
MITSUI FUDOSAN 54,000 492,912
NITTO DENKO, 2.200%, EXCHANGEABLE NOTE, 03/31/1999 Y 70,000,000 571,785
PROMISE 11,000 558,561
RISO KAGAKU * 7,400 386,384
ROHM 16,000 1,806,257
SAKURA FINANCE 36,000,000 242,784
SANWA INTERNATIONAL FINANCE, PREFERRED * 102,000,000 750,549
SECOM COMPANY LIMITED 18,000 1,060,904
SHIMACHU 21,000 378,457
SHIN - ETSU CHEMICAL 53,950 1,051,768
SONY 24,700 2,054,912
SUMITOMO ELECTRIC 1,000 11,916
TAISHO PHARMACEUTICAL 34,000 719,359
TOPPAN PRINTING 107,000 1,271,809
TOYOTA MOTOR CORPORATION 29,000 756,007
YAMANOUCHI PHARMACEUTICAL 55,000 1,300,816
------------
TOTAL JAPAN - (COST $22,969,709) 23,627,940
------------
LATIN AMERICA - 3.0%
ARGENTINA - 0.3%
YPF SOCIEDAD ANONIMA, ADR 13,500 470,812
------------
TOTAL ARGENTINA - (COST $436,273) 470,812
------------
BRAZIL - 1.2%
ELETROBRAS, ADR 22,300 465,512
PETROBRAS, ADR 36,000 913,500
TELEBRAS, ADR 4,800 584,700
------------
TOTAL BRAZIL - (COST $1,550,061) 1,963,712
------------
CHILE - 0.2%
COMPANIA DE TELEFONOS DE CHILE, ADR 11,000 275,688
------------
TOTAL CHILE - (COST $318,117) 275,688
------------
</TABLE>
See note to financial statements.
7
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ ----
<S> <C> <C>
LATIN AMERICA - CONTINUED
MEXICO - 1.3%
CIFRA SA DE CV 240,000 $ 408,113
GRUPO CARSO 70,000 440,802
GRUPO FINANCIERO BANAMEX, CL B * 200,000 625,000
TELEFONOS DE MEXICO, ADR 10,500 594,563
---------
TOTAL MEXICO - (COST $1,742,164) 2,068,478
---------
TOTAL LATIN AMERICA - (COST $4,046,615) 4,778,690
---------
MIDDLE EAST - 1.2%
ISRAEL - 1.2%
ECI TELECOMMUNICATIONS 34,000 1,037,000
TEVA PHARMACEUTICAL INDUSTRIES LIMITED, ADR 20,000 855,000
---------
TOTAL ISRAEL - (COST $1,903,476) 1,892,000
---------
TOTAL MIDDLE EAST - (COST $1,903,476) 1,892,000
---------
OTHER AREAS - 1.2%
INDIA - 0.5%
MAHANAGAR TELEPHONE NIGAM, GDR * 33,000 529,650
VIDESH SANCHAR NIGAM LIMITED, GDR (c) * 28,700 355,306
---------
TOTAL INDIA - (COST $857,179) 884,956
---------
INVESTMENT COMPANIES - 0.7%
INDIAN OPPORTUNITIES FUND (a) * 101,911 1,084,840
---------
TOTAL INVESTMENT COMPANIES - (COST $1,494,050) 1,084,840
---------
TOTAL OTHER AREAS - (COST $2,351,229) 1,969,796
---------
PACIFIC BASIN - 4.0%
AUSTRALIA - 1.3%
LEND LEASE CORPORATION 32,300 741,582
MAYNE NICKLESS LIMITED 134,000 723,860
WOODSIDE PETROLEUM LIMITED 106,000 693,459
---------
TOTAL AUSTRALIA - (COST $2,094,184) 2,158,901
---------
HONG KONG - 1.0%
CITIC PACIFIC 85,000 261,167
CLP HOLDINGS LIMITED 82,000 393,803
HUTCHISON WHAMPOA 98,700 610,345
NEW WORLD DEVELOPMENT LIMITED 124,000 352,982
---------
TOTAL HONG KONG - (COST $1,847,454) 1,618,297
---------
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - CONTINUED
NEW ZEALAND - 0.4%
TELECOM CORPORATION OF NEW ZEALAND (INSTALLMENT RECEIPTS) * 72,700 $ 195,059
TELECOM CORPORATION OF NEW ZEALAND * 95,000 451,205
---------
TOTAL NEW ZEALAND - (COST $662,635) 646,264
---------
PHILIPPINES - 0.1%
BELLE CORPORATION * 2,195,300 96,232
BELLE CORPORATION, WARRANTS 10/02/2000 * 800,000 2,491
---------
TOTAL PHILIPPINES - (COST $617,418) 98,723
---------
SINGAPORE - 0.3%
DEVELOPMENT BANK OF SINGAPORE * 55,800 370,237
DEVELOPMENT BANK OF SINGAPORE, CL A * 16,740 80,923
---------
TOTAL SINGAPORE - (COST $632,777) 451,160
---------
TAIWAN - 0.7%
TAIWAN AMERICAN FUND (b) * 65,000 1,114,750
---------
TOTAL TAIWAN - (COST $1,029,600) 1,114,750
---------
THAILAND - 0.2%
THAI FARMERS BANK 133,000 304,544
---------
TOTAL THAILAND - (COST $305,848) 304,544
---------
TOTAL PACIFIC BASIN - (COST $7,189,916) 6,392,639
---------
TOTAL COMMON AND PREFERRED STOCKS,
WARRANTS AND EXCHANGEABLE NOTES - (COST $117,549,167) + 148,087,748
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT TERM INVESTMENT - 4.5%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
5.150%, 05/01/1998 (e) $7,166,000 7,166,000
---------
TOTAL SHORT TERM INVESTMENT - (COST $7,166,000) 7,166,000
---------
TOTAL INVESTMENTS - (COST $124,715,167) - 97.4% 155,253,748
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 2.6% 4,108,536
---------
NET ASSETS - 100.0% $159,362,284
------------
------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
* Non-income producing security.
Y Reflected at par and denominated in Japanese yen.
(a) The Indian Opportunities Fund is managed by Martin Currie Bermuda Ltd., an
affiliate of Martin Currie Fund Inc. Martin Currie Inc. does not
receive advisory fees on the portion of net assets represented by
affiliated investment companies.
(b) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Taiwan
American Fund. Martin Currie Inc. does not receive advisory fees on the
portion of net assets represented by affiliated investment companies.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $355,306 or 0.2% of net
assets.
(d) Reflected at par value and denominated in U.S. dollars.
(e) The repurchase agreement, dated 4/30/98, $7,166,000 par due 5/1/98, is
collateralized by United States Treasury Notes, 5. 75%, due 9/30/99 with a
market value of $7,311,728.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Aerospace 0.8%, Apparel & Textiles 0.7%, Automobiles 2.7%, Banks 21.2%,
Chemicals 3.7%, Commercial Services 0.5%, Conglomerates 0.5%, Diversified
5.3%, Drugs & Health Care 7.5%, Electric Utilities 3.6%, Electrical
Equipment 1.8%, Electronics 3.3%, Engineering 0.8%, Financial Services
1.8%, Food & Beverages 1.2%, Hotels & Restaurants 1.1%, Household Products
1.9%, Industrial Machinery 3.8%, Insurance 6.3%, Investment Companies 1.4%,
Manufacturing 0.4%, Miscellaneous 1.3%, Oil & Gas 6.0%, Photography 1.4%,
Publishing 0.8%, Real Estate 1.2%, Retail Trade 3.5%, Steel 1.1%,
Telecommunications 2.9%, Telecommunications Equipment 2.2%,
Telecommunications Services 1.1%, Telephone 0.4%, Transportation 0.7%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
10
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $117,549,167) (Note B) $148,087,748
Investments in repurchase agreements, at value (Note B) 7,166,000
------------
Total Investments 155,253,748
Cash 630
Foreign currency, at value (cost $3,024,964) (Note B) 3,024,162
Receivable for investments sold 3,932,126
Receivable for currency sold 1,203,978
Dividend and interest receivable 539,427
Foreign tax reclaims receivable 114,535
Prepaid insurance expense 16,690
Deferred organization expenses (Note B) 2,987
------------
TOTAL ASSETS 164,088,283
------------
LIABILITIES
Payable for investments purchased 3,033,163
Payable for currency purchased 1,208,279
Payable for forward foreign currency contracts 194,813
Management fee payable (Note C) 245,929
Administration fee payable (Note C) 11,408
Trustees fees payable (Note C) 2,248
Accrued expenses and other liabilities 30,159
------------
TOTAL LIABILITIES 4,725,999
------------
TOTAL NET ASSETS $159,362,284
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $124,403,321
Undistributed net investment loss (173,999)
Accumulated net realized gain on investment and foreign currency transactions 4,796,823
Net unrealized appreciation on investment and foreign currency transactions 30,336,139
------------
TOTAL NET ASSETS $159,362,284
------------
NET ASSET VALUE PER SHARE
($159,362,284 / 11,972,709 shares of beneficial interest outstanding) $13.31
------------
------------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income $ 362,276
Dividend income 2,684,289
Foreign taxes withheld (298,326)
------------
TOTAL INVESTMENT INCOME 2,748,239
------------
EXPENSES
Management fee (Note C) 934,444
Custodian fee 181,014
Administration fee (Note C) 107,314
Audit fee 25,807
Legal fees 10,236
Transfer agent fee 6,673
Trustees fees (Note C) 4,604
Amortization of deferred organization expenses 2,541
Miscellaneous expenses 26,248
------------
TOTAL EXPENSES 1,298,881
------------
NET INVESTMENT INCOME 1,449,358
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 11,993,175
Net realized loss on foreign currency transactions (465,273)
Net unrealized appreciation (depreciation) on:
Investments 15,312,088
Foreign currency transactions (190,193)
------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 26,649,797
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $28,099,155
------------
------------
</TABLE>
See notes to financial statements.
12
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
APRIL 30, 1998 APRIL 30, 1997
------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of period $120,649,807 $108,295,237
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income 1,449,358 1,023,218
Net realized gain (loss) on investment transactions 11,993,175 (1,528,624)
Net realized gain (loss) on foreign currency transactions (465,273) 1,413,982
Net unrealized appreciation (depreciation) on:
Investments 15,312,088 3,356,168
Foreign currency transactions (190,193) 246,156
------------ ------------
Net increase in net assets from operations 28,099,155 4,510,900
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,634,448) (2,359,811)
In excess of net investment income 0 (1,311,086)
Net realized gains (4,504,920) 0
------------ ------------
Total distributions (6,139,368) (3,670,897)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 14,186,364 9,813,416
Reinvestment of dividends and distributions to shareholders 5,801,630 3,268,114
Cost of shares repurchased (3,331,509) (1,637,958)
Paid in capital from subscription and redemption fees 96,205 70,995
------------ ------------
Total increase in net assets from capital share transactions 16,752,690 11,514,567
------------ ------------
NET INCREASE IN NET ASSETS 38,712,477 12,354,570
------------ ------------
NET ASSETS at end of period (includes undistributed net investment
income (loss) of ($173,999) and $464,481, respectively) $159,362,284 $120,649,807
------------ ------------
------------ ------------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,082,176 880,191
Shares issued in reinvestment of distributions to shareholders 492,917 294,425
Less shares repurchased (258,152) (146,937)
------------ ------------
Net share transactions 1,316,941 1,027,679
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
13
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
YEAR YEAR YEAR JULY 1, 1994 *
ENDED ENDED ENDED THROUGH
APRIL 30, 1998 APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1995
--------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $11.320 $11.250 $9.860 $10.000
------- ------- ------ -------
Net investment income 0.095 0.134 0.314 0.055
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 2.462 0.286 1.239 (0.323)
------- ------- ------ -------
Total from investment operations 2.557 0.420 1.553 (0.268)
------- ------- ------ -------
Less distributions:
Net investment income (0.153) (0.229) (0.167) 0.000
In excess of net investment income 0.000 (0.127) (0.023) 0.000
Net realized gains (0.422) 0.000 0.000 0.000
------- ------- ------ -------
Total distributions (0.575) (0.356) (0.190) 0.000
------- ------- ------ -------
Paid in capital from subscription and
redemption fees (Note B) 0.008 0.006 0.027 0.128
------- ------- ------ -------
Net asset value, end of period $13.310 $11.320 $11.250 $9.860
------- ------- ------ -------
------- ------- ------ -------
TOTAL INVESTMENT RETURN (1) 23.33% 3.85% 16.17% (1.40)% (2)
------- ------- ------ -------
------- ------- ------ -------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $159,362,284 $120,649,807 $108,295,237 $72,660,677
Operating expenses, net, to average
net assets (Note C) 0.96% 0.98% 1.00% 1.00%(3)
Operating expenses, gross, to average
net assets (Note C) 0.96% 0.98% 1.05% 1.37%(3)
Net investment income to average net assets 1.08% 0.90% 1.46% 1.32%(3)
Portfolio turnover rate 63% 49% 37% 39%
Per share amount of fees waived (Note C) $0.000 $0.000 $0.012 $0.015
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
Total return would have been lower had certain expenses not been waived.
(2) Periods less than one year are not annualized.
(3) Annualized.
See notes to financial statements.
14
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on
May 20, 1994. The Trust offers seven funds which have differing investment
objectives and policies: Global Growth Fund, Opportunistic EAFE Fund, Global
Emerging Markets Fund, Japan Small Companies Fund, Emerging Americas Fund,
Emerging Asia Fund and EMEA Fund, (the "Funds"). The MCBT Opportunistic EAFE
Fund (the "Fund") commenced investment operations on July 1, 1994. The
Fund's Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest,
without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF INVESTMENTS - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at
the mean of the most recent quoted bid and asked prices. Prices for
securities which are primarily traded in foreign markets are furnished by
quotation services expressed in the local currency's value and are translated
into U.S. dollars at the current rate of exchange. Short-term securities and
debt securities with a remaining maturity of 60 days or less are valued at
their amortized cost. Options and futures contracts are valued at the last
sale price on the market where such options or futures contract is
principally traded. Options traded over-the-counter are valued based upon
prices provided by market makers in such securities or dealers in such
currencies. Securities for which current market quotations are unavailable
or for which quotations are not deemed by the investment adviser to be
representative of market values are valued at fair value as determined in
good faith by the Trustees of the Fund, or by persons acting pursuant to
procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying
collateral securities, the value or market price of which is at least equal
to the principal amount, including interest, of the repurchase transaction.
To the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to ensure the
adequacy of the collateral. In the event of default of the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. Under certain circumstances, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject to
legal proceedings that could delay or increase the cost of such realization
or retention.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on
the date of purchase or sale. Realized gains and losses from security
transactions are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at a
current rate of exchange of such currency to determine the value of
investments, other assets and liabilities on the date of any determination of
net asset value of the Fund. Purchases and sales of securities and income
and expenses are converted at the prevailing rate of exchange on the
respective dates of such transactions.
The Fund may realize currency gains or losses between the trade and
settlement dates on security transactions. To minimize such currency gains
or losses, the Fund may enter into forward foreign currency contracts.
15
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the Fund on
each day and the resulting net unrealized appreciation, depreciation and
related net receivable or payable amounts are determined by using forward
currency exchange rates supplied by a quotation service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on security transactions, and
the difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are not segregated in
the Statement of Operations from the effects of changes in market prices of
those securities, and are included with the net realized and unrealized gain
or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at
a set price on a future date. The market value of the Forward fluctuates
with changes in currency exchange rates. The Forward is marked-to-market
daily and the change in the market value is recorded by the Fund as an
unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time
it was opened and the value at the time it was closed. The Fund may enter
into Forwards in connection with planned purchases and sales of securities,
to hedge specific receivables or payables against changes in future exchange
rates or to hedge the U.S. dollar value of portfolio securities denominated
in a foreign currency.
Although forward currency contracts limit the risk of loss due to a decline
in the value of hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the
Funds could be exposed to additional risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
The Fund had the following open forward foreign currency contract at April
30, 1998:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY DATE LOCAL CURRENCY FACE AMOUNT VALUE (DEPRECIATION)
------------- -------------- ------------ ------ -------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (sell) July 8, 1998 1,678,671,120 $12,614,000 $12,808,81 3 $ (194,813)
</TABLE>
EXPENSES - Expenses directly attributable to the Fund are charged to the
Fund. Expenses not directly attributable to a particular Fund are either
split evenly among the affected Funds, allocated on the basis of relative
average net assets, or otherwise allocated among the Funds as the Board of
Trustees may direct or approve. Certain costs incurred in connection with
the organization of the Trust and each Fund have been deferred and are being
amortized on a straight line basis over a five year period starting on each
Fund's commencement of operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends
from net investment income, if any, and distributes its net realized capital
gains, if any, at least annually. All distributions will be reinvested in
shares of the Fund at the net asset value unless the shareholder elects in
the subscription agreement either to receive cash in respect of all
distributions or to receive cash with respect to distributions of income and
to reinvest in shares of the Fund with respect to distributions of realized
capital gains. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post
October 31 losses and excise tax regulations. Permanent book and tax
differences relating to shareholder distributions will result in
reclassifications to paid-in-capital. Distributions are recorded on the
ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for
cash investments into the Fund of 0.75% of the amount invested and a
redemption fee on cash redemptions of 0.75% of the amount redeemed. All
purchase premiums and redemption fees are paid to and retained by the Fund
and are recorded as paid-in-capital by the Fund. These fees are intended to
offset brokerage and transaction costs arising in connection with the
purchase and redemption. The purchase and redemption fees may be waived by
the Manager, however, if these brokerage and transaction costs are minimal or
in other circumstances at the Manager's discretion. For the year ended April
30, 1998, $87,424 was collected in purchase premiums and $8,781 was collected
in redemption fees.
16
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES - Each Fund of the Trust is treated as a separate entity for
U.S. federal income tax purposes. Each Fund intends to qualify each year as
a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. By so qualifying, the Funds will not be subject to
federal income taxes to the extent that they distribute substantially all of
their taxable income, including realized capital gains, if any, for the
fiscal year. In addition, by distributing substantially all of their net
investment income, realized capital gains and certain other amounts, if any,
during the calendar year, the Funds will not be subject to a federal excise
tax. On December 30, 1997, the Fund declared a long term capital gain
distribution of $3,264,849, representing $0.306 per share. As of April 30,
1998, the Fund has a realized capital loss carryforward, for Federal income
tax purposes, of $1,249,504 ($31,328 expires April 30, 2003, $588,988 expires
April 30, 2004, $629,188 expires April 30, 2005), available to be used to
offset future realized capital gains. As of April 30, 1998, the Fund has
elected for Federal income tax purposes to defer a $614,505 current year post
October 31 currency loss as though the loss was incurred on the first day of
the next fiscal year.
The Fund may be subject to taxes imposed by countries in which it invests.
Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and unrealized appreciation as such income and/or gains are
earned.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and income and expenses at the date of the financial statements.
Actual results could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 0.70% of the Fund's average net assets.
The Investment Manager has voluntarily undertaken to reduce its fee until
further notice to the extent necessary to limit the Fund's annual expenses
(including the management fee but excluding brokerage commissions, transfer
taxes, and extraordinary expenses) to 1.00% of the Fund's average net assets
on an annualized basis. For the year ended April 30, 1998, it was not
necessary for the Investment Manager to waive any of its fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000 ($10,000 per Trustee).
17
<PAGE>
MCBT OPPORTUNISTIC EAFE FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 1998 were $86,254,690 and
$80,627,238, respectively.
The identified cost of investments in securities and repurchase agreements
owned for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at April 30, 1998 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
----------- ------------- ------------- --------------
$125,096,888 $34,384,577 $(4,227,717) $30,156,860
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 1998 there was one shareholder who owned greater than 10% of
the Fund's outstanding shares, representing 10% of the Fund.
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange). Investing in foreign
securities involves risks not typically found in investing in U.S. markets.
These include risks of adverse change in foreign economic, political,
regulatory and other conditions, and changes in currency exchange rates,
exchange control regulations (including currency blockage), expropriation of
assets or nationalization, imposition of withholding taxes on dividend or
interest payments and capital gains, and possible difficulty in obtaining and
enforcing judgments against foreign entities. Furthermore, issuers of
foreign securities are subject to different, and often less comprehensive,
accounting, reporting and disclosure requirements than domestic issuers. The
securities of some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable U.S.
companies and U.S. securities markets.
- ------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION-(UNAUDITED)
The Fund intends to make an election under Internal Revenue Code 853 to pass
through foreign taxes paid by the Fund to its shareholders. During the year
ended April 30, 1998, the total amount of foreign taxes that will be passed
through to the shareholders and the foreign source income for information
reporting purposes will be $292,567 (of the total $298,326 taxes withheld)
and $2,746,669, respectively.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Opportunistic EAFE Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Opportunistic
EAFE Fund (the "Fund") at April 30, 1998, and the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits,
which included confirmation of securities at April 30, 1998 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 16, 1998
19
<PAGE>
MARTIN CURRIE BUSINESS TRUST
____________________
TRUSTEES AND OFFICERS
C. James P. Dawnay, TRUSTEE AND PRESIDENT *
Simon D. Eccles, TRUSTEE
Patrick R. Wilmerding, TRUSTEE
Colin Winchester, VICE PRESIDENT AND TREASURER
J. Grant Wilson, VICE PRESIDENT
Julian M.C. Livingston, CLERK
* INTERESTED TRUSTEE
____________________
INVESTMENT MANAGER
Martin Currie, Inc.
Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Scotland
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
____________________
The information contained in this report is intended for general
informational purposes only. This report is not authorized for
distribution to prospective investors unless preceded or accompanied
by a current Private Placement Memorandum which contains important
information concerning the Fund and its current offering of shares.
