<PAGE>
MARTIN CURRIE BUSINESS TRUST
GLOBAL EMERGING MARKETS FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1998
(UNAUDITED)
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
OBJECTIVE Long-term capital appreciation through active management of
a diversified portfolio of equities in countries with
emerging markets and developing economies.
LAUNCH DATE February 14, 1997
FUND SIZE $98.9m
PERFORMANCE Total return from May 1, 1998 through October 31, 1998
<TABLE>
<S> <C>
- MCBT - Global Emerging Markets Fund (excluding all transaction fees) -32.5%
- MCBT - Global Emerging Markets Fund (including all transaction fees) -33.8%
- Morgan Stanley Capital International - Emerging Markets Free Index -33.4%
Annualized total return from February 14, 1997 through October 31, 1998
- MCBT - Global Emerging Markets Fund (excluding all transaction fees) -24.3%
- MCBT - Global Emerging Markets Fund (including all transaction fees) -25.2%
- Morgan Stanley Capital International - Emerging Markets Free Index -29.8%
(from March 1, 1997 through October 31, 1998)
</TABLE>
PORTFOLIO A selective approach remains our core discipline. The
COMMENTS identification of countries and companies that are well
financed and vulnerable only by association with emerging
markets is a guiding principle. The volatility of all
emerging markets this year emphasises the need to
concentrate on the fundamental investment case. Our
benchmark fell by 33.4% over the period, and the fund by
32.5%.
We have moved from favouring LATIN AMERICA to underweight.
The uncertainty surrounding the Brazilian fiscal position
and the inevitability of an economic downturn casts a shadow
over the region. This is compounded by a slowing US economy
and increasing levels of competition from cheap ASEAN
product in Latin America's export markets.
We remain positive on the outlook for the EMEA markets
(emerging Europe, Middle East and Africa). The markets
most closely associated with western Europe, and
particularly those with ambitions of joining European
Monetary Union, have proved outperformers. Tight fiscal
and monetary discipline, currency stability and a high
level of domestic savings characterise the area. AFRICA
is another matter. SOUTH AFRICA has deep-seated economic
problems although falling interest rates and a highly
developed financial community is supportive. Falling
commodity prices and an uncertain political backdrop leave
us still well underweight.
We have recently increased ASIA to a neutral weighting.
Although the problems remain substantial, a weaker dollar
has helped improve matters. We are concentrating our
portfolio in areas that have weathered the storm best -
INDIA and TAIWAN. Recognising the extent of government
action in both countries, THAILAND and SOUTH KOREA are
newer investments.
1
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
OUTLOOK
-------
Against a background of slowing world growth and low
inflation, the opportunities in emerging markets seem
limited. It is our belief that the global policy response
that has taken place since early September provides a
degree of support: the worst is probably past. It is
possible to identify value in a number of areas and we
have committed the majority of our cash balances to
participate in undervalued situations across the globe. A
turn in the dollar is positive for the asset class and any
future recovery in Japan would lead to a sharp market
recovery.
INVESTMENT All funds are managed on a team basis with a named director
MANAGER PROFILE heading each team.
James Fairweather, Chief Investment Officer, oversees the
management of the MCBT Global Emerging Markets Fund.
James spent three years with Montague Loebl Stanley & Co
as an institutional sales and economics 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 European team in 1992. Chairman
of the international strategy group, 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 international strategy group works with the emerging
markets committee to set limits for regional allocation. The
managers of the fund are responsible for the selection of
countries within those regions, sectors and stocks.
2
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 1998 (Unaudited)
ASSET ALLOCATION
(% of net assets)
[GRAPHIC]
[RAW DATA FOR PIE CHART]
Africa 1%
Europe 19%
Latin America 19%
Middle East 8%
Pacific Basin 22%
Other Areas 9%
ST Investment 26%
Other Net Assets (4%)
TOTAL: 100%
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
<S> <C> <C> <C>
LATIN AMERICA
Telefonos de Mexico, ADR (Mexico) 1.8
Telebras, ADR (Brazil) 1.7
OTHER AREAS
Indian Opportunities Fund (Investment Companies) 2.5
Near East Opportunities Fund (Investment Companies) 1.0
PACIFIC BASIN
Korea Electric Power (Korea) 2.5
President Enterprises Corporation (Taiwan) 1.9
MIDDLE EAST
Orbotech Limited (Israel) 1.9
Suez Cement (Egypt) 1.8
EUROPE
Magyar Olaj-es Gazipari Rt., (GDR) (Hungary) 2.7
AFRICA
Mauritius Commercial Bank (Mauritius) 1.0
</TABLE>
3
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON AND PREFERRED STOCKS - 77.5%
AFRICA - 1.3%
KENYA - 0.1%
FIRESTONE EAST AFRICA 175,788 $ 44,942
KENYA COMMERCIAL BANK 1 1
----------
TOTAL KENYA - (COST $68,319) 44,943
----------
MAURITIUS - 1.0%
MAURITIUS COMMERCIAL BANK 224,401 996,331
----------
TOTAL MAURITIUS - (COST $1,001,103) 996,331
----------
SOUTH AFRICA - 0.2%
BILLITON, PLC 83,000 203,144
----------
TOTAL SOUTH AFRICA - (COST $199,742) 203,144
----------
TOTAL AFRICA - (COST $1,269,164) 1,244,418
----------
EUROPE - 18.6%
CROATIA - 2.2%
PLIVA D.D., GDR 145,500 2,141,760
----------
TOTAL CROATIA - (COST $2,241,166) 2,141,760
----------
CZECH REPUBLIC - 2.2%
CESKE RADIOKOMUNIKACE * 71,400 2,177,700
----------
TOTAL CZECH REPUBLIC - (COST $1,683,792) 2,177,700
----------
GREECE - 5.0%
ALPHA CREDIT BANK, GDR 21,100 1,684,511
HELLENIC TECHNODOMIKI S.A. 20 131
NATIONAL BANK OF GREECE 11,180 1,587,110
NATIONAL BANK OF GREECE SA, GDR (b) 23,440 661,711
STET HELLAS TELECOMMUNICATIONS SA, ADR * 38,700 1,015,875
----------
TOTAL GREECE - (COST $5,049,903) 4,949,338
----------
HUNGARY - 2.7%
MAGYAR OLAJ-ES GAZIPARI RT., GDR 116,500 2,652,705
----------
TOTAL HUNGARY - (COST $2,464,833) 2,652,705
----------
LUXEMBOURG - 2.5%
MINORCO SA 90,000 1,543,546
QUILMES INDUSTRIAL SA, PREFERRED, ADR 109,000 1,001,437
----------
TOTAL LUXEMBOURG - (COST $2,688,696) 2,544,983
----------
POLAND - 3.9%
BIG BANK GDANSKI SA 97,000 1,561,700
ELEKTRIM SPOLKA AKCYJNA SA 190,000 2,260,920
----------
TOTAL POLAND - (COST $3,797,137) 3,822,620
----------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
EUROPE - CONTINUED
RUSSIA - 0.1%
BRUNSWICK RUSSIAN GROWTH FUND * 2,279 $ 115,312
----------
TOTAL RUSSIA - (COST $1,000,000) 115,312
----------
TOTAL EUROPE - (COST $18,925,527) 18,404,418
----------
LATIN AMERICA - 18.7%
ARGENTINA - 3.2%
BANCO RIO DE LA PLATA SA, ADR. 75,000 675,000
PEREZ COMPANC, ADR 111,500 1,069,703
YPF SOCIEDAD ANONIMA, ADR 48,500 1,403,469
----------
TOTAL ARGENTINA - (COST $3,681,339) 3,148,172
----------
BRAZIL - 7.7%
CENTRAIS ELETRICAS DE SANTA CATARINA SA, PREFERRED, CL B 1,619,329 909,507
COMPANHIA BRASILEIRA DE DISTRIBUICAO, GDR 43,000 693,375
COMPANHIA DE SANEAMENTO DO ESTADO DE SAO PAULO 4,885,000 393,126
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG), ADR 19,580 376,915
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG), PREFERRED, ADR 26,678 518,844
COMPANHIA PARANAENSE DE ENERGIA-COPEL 104,000 806,000
COMPANIA VALE DO RIO DOCE, ADR 24,500 384,344
ELECTROBRAS, ADR 55,000 577,500
PETROBRAS PETROLEO BRASILEIRO SA, PREFERRED 7,574,293 952,422
TELEBRAS, ADR 21,840 1,658,475
TELECOMUNICACOES DE SAO PAULO SA, PREFERRED 1,212,426 203,274
TELESP CELULAR SA, PREFERRED,CL B* 3,168,294 156,701
----------
TOTAL BRAZIL - (COST $11,180,581) 7,630,483
----------
CHILE - 1.9%
COMPANIA DE TELEFONOS DE CHILE, ADR 29,783 653,365
DISTRIBUCION Y SERVICIO D & S SA, ADR 42,000 546,000
SOCIEDAD QUIMICA Y MINERA DE CHILI SA, ADR 18,700 621,775
----------
TOTAL CHILE - (COST $2,127,016) 1,821,140
----------
MEXICO - 5.9%
APASCO SA DE CV 86,000 314,800
CEMEX SA DE CV 87,000 242,719
CIFRA SA DE CV, SERIES V * 680,653 922,531
CORPORACION GEO, SERIES B * 150,000 259,695
FOMENTO ECONOMICO MEXICANO SA DE C.V. 28,000 729,750
GRUPO CARSO 230,000 796,399
GRUPO TELEVISA, ADR * 29,000 786,625
TELEFONOS DE MEXICO, ADR 34,000 1,795,625
----------
TOTAL MEXICO - (COST $8,374,069) 5,848,144
----------
TOTAL LATIN AMERICA - (COST $25,363,005) 18,447,939
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MIDDLE EAST - 8.1%
EGYPT - 2.9%
EFG HERMES HOLDING SAE, GDR (b)* 98,000 $1,127,000
SUEZ CEMENT 115,000 1,776,968
----------
TOTAL EGYPT - (COST $3,051,027) 2,903,968
----------
ISRAEL - 3.6%
BANK HAPOALIM LIMITED 540,000 976,667
BANK LEUMI LE-ISRAEL 590,000 751,382
ORBOTECH LIMITED * 53,000 1,855,000
----------
TOTAL ISRAEL - (COST $4,042,094) 3,583,049
----------
TURKEY - 1.6%
AKSIGORTA A.S. 13,001,600 279,891
CARSI BUYUK MAGAZACILIK 4,753,000 181,535
DOGAN YAYIN HOLDING * 169,500,000 1,059,357
----------
TOTAL TURKEY - (COST $2,980,334) 1,520,783
----------
TOTAL MIDDLE EAST - (COST $10,073,456) 8,007,800
----------
OTHER AREAS - 9.2%
INDIA - 5.8%
MAHANAGAR TELEPHONE NIGAM, GDR 167,300 1,798,475
RELIANCE INDUSTRIES LIMITED 393,000 1,996,440
TATA ELECTRIC COMPANIES, GDR 1,010 181,800
VIDESH SANCHAR NIGAM LIMITED, GDR (b) 171,000 1,795,500
----------
TOTAL INDIA - (COST $6,886,016) 5,772,215
----------
INVESTMENT COMPANIES - 3.4%
INDIAN OPPORTUNITIES FUND (a)* 315,000 2,425,500
NEAR EAST OPPORTUNITIES FUND (a)* 70,000 965,300
----------
TOTAL INVESTMENT COMPANIES - (COST $3,761,850) 3,390,800
----------
TOTAL OTHER AREAS - (COST $10,647,866) 9,163,015
----------
PACIFIC BASIN - 21.6%
HONG KONG - 3.6%
CHINA TELECOM (HONG KONG) LIMITED * 980,000 1,841,059
HUANENG POWER INTERNATIONAL INCORPORATED * 1,900,000 662,363
LI & FUNG LIMITED 680,000 1,062,363
----------
TOTAL HONG KONG - (COST $3,517,726) 3,565,785
----------
INDONESIA - 1.1%
PT INDOSAT 1,000,418 1,079,398
----------
TOTAL INDONESIA - (COST $1,084,472) 1,079,398
----------
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACIFIC BASIN - CONTINUED
KOREA - 4.8%
KOREA ELECTRIC POWER CORPORATION 140,000 $ 2,493,369
POHANG IRON & STEEL COMPANY 11,110 488,352
SAMSUNG ELECTRONICS AMERICA INCORPORATED 43,693 1,788,118
-----------
TOTAL KOREA - (COST $4,375,725) 4,769,839
-----------
TAIWAN - 6.9%
BANK SINO PAC 1,113,838 475,764
CATHAY LIFE INSURANCE COMPANY 489,000 1,726,769
FAR EASTERN TEXTILE LIMITED 2,566,880 1,789,098
PACIFIC CONSTRUCTION 1,468,040 574,992
PRESIDENT ENTERPRISES CORPORATION * 2,254,000 1,925,545
TAIWAN SEMICONDUCTOR MANUFACTURING 186,550 376,840
-----------
TOTAL TAIWAN - (COST $7,770,529) 6,869,008
-----------
THAILAND - 2.8%
BANGKOK EXPRESSWAY * 1,033,600 815,741
BANGKOK EXPRESSWAY PUBLIC COMPANY LIMITED * 516,400 470,796
PTT EXPLORATION AND PRODUCTION * 149,900 1,444,131
-----------
TOTAL THAILAND - (COST $2,568,564) 2,730,668
-----------
INVESTMENT COMPANIES - 2.4%
TAIWAN OPPORTUNITIES FUND (a)* 106,600 1,355,952
THE CHINA HEARTLAND FUND (a)* 100,000 989,000
-----------
TOTAL INVESTMENT COMPANIES - (COST $2,339,950) 2,344,952
-----------
TOTAL PACIFIC BASIN - (COST $21,656,966) 21,359,650
-----------
TOTAL COMMON AND PREFERRED STOCKS - (COST $87,935,984)+ 76,627,240
-----------
<CAPTION>
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENT - 26.2%
STATE STREET BANK AND TRUST REPURCHASE AGREEMENT,
4.250%, 11/02/1998 (c) $6,000,000 6,000,000
UNITED STATES TREASURY BILLS, 3.500%, 11/12/1998 20,000,000 19,978,611
-----------
TOTAL SHORT TERM INVESTMENT - (COST $25,978,611) 25,978,611
-----------
TOTAL INVESTMENTS - (COST $113,914,595) - 103.7% 102,605,851
CASH, RECEIVABLES AND OTHER ASSETS, LESS
LIABILITIES - (3.7)% (3,693,465)
-----------
NET ASSETS - 100.0% $98,912,386
-----------
-----------
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
* Non-income producing security.
(a) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the China
Heartland, Indian Opportunities, Near East Opportunities, and Taiwan
Opportunities Funds. Martin Currie Inc. does not receive advisory fees
on the portion of net assets represented by affiliated investment
companies.
(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 $3,584,211 or 3.6% of net
assets.
(c) The repurchase agreement, dated 10/30/98, $6,000,000 par, due 11/2/98, is
collateralized by United States Treasury Notes, 7.250%, due 5/15/04, with
a market value of $6,124,950.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as
follows: Banks 10.6%, Brewery 1.0%, Broadcasting 3.0%, Building &
Construction 1.3%, Cement 2.4%, Diversified 4.5%, Drugs & Health Care
2.2%, Electric Utilities 5.7%, Electrical Equipment 2.3%, Electronics
3.7%, Food & Beverages 3.2%, Insurance 2.0%, Investment Companies 7.0%,
Manufacturing 0.3%, Mining 2.1%, Miscellaneous 0.9%, Oil & Gas 7.6%,
Real Estate 0.6%, Retail 0.2%, Retail Trade 0.9%, Semi-Conductor
Manufacturing Equipment 0.4%, Steel 0.5%, Telecommunications 3.9%,
Telecommunications Services 7.1%, Telephone 1.8%, Textiles 1.8%, Tires &
Rubber 0.1%, Water Utilities 0.4%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements.
8
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $107,914,595) (Note B) $ 96,605,851
Investments in repurchase agreements, at value (Note B) 6,000,000
------------
Total Investments 102,605,851
Cash 684
Foreign currency, at value (cost $7,160,662) (Note B) 7,230,327
Receivable for investments sold 1,639,569
Receivable for currency sold 1,955,537
Dividend and interest receivable 228,879
Foreign tax reclaims receivable 559
Prepaid insurance 5,251
Deferred organization expenses (Note B) 8,351
------------
TOTAL ASSETS 113,675,008
------------
LIABILITIES
Payable for investments purchased 12,605,331
Payable for currency purchased 1,948,193
Management fee payable (Note C) 138,055
Administration fee payable (Note C) 12,519
Trustees fees payable (Note C) 768
Accrued expenses and other liabilities 57,756
------------
TOTAL LIABILITIES 14,762,622
------------
TOTAL NET ASSETS $98,912,386
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $133,086,104
Undistributed net investment loss (247,782)
Accumulated net realized loss on investment and foreign currency transactions (22,667,135)
Net unrealized depreciation on investment and foreign currency transactions (11,258,801)
------------
TOTAL NET ASSETS $98,912,386
------------
------------
NET ASSET VALUE PER SHARE $6.07
($98,912,386 / 16,294,384 shares of beneficial interest outstanding) ------------
------------
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest income $ 179,489
Dividend income 1,016,689
Foreign taxes withheld (91,315)
------------
TOTAL INVESTMENT INCOME 1,104,863
------------
EXPENSES
Management fee (Note C) 308,471
Custodian fee 92,900
Administration fee (Note C) 42,690
Audit fee 12,602
Legal fees 3,085
Transfer agent fee 3,225
Trustees fees (Note C) 1,542
Amortization of deferred organization expenses 1,284
Miscellaneous expenses 8,793
------------
TOTAL EXPENSES 474,592
------------
NET INVESTMENT INCOME 630,271
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (16,693,478)
Net realized loss on foreign currency transactions (190,303)
Net unrealized appreciation (depreciation) on:
Investments (net of foreign taxes of ($7,950)) (15,509,142)
Foreign currency transactions 58,159
------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (32,334,764)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(31,704,493)
------------
------------
</TABLE>
See notes to financial statements.
10
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
October 31, 1998 Ended
(Unaudited) April 30, 1998
----------- --------------
<S> <C> <C>
NET ASSETS at beginning of period $ 99,831,879 $50,095,856
------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 630,271 658,555
Net realized loss on investment transactions (16,693,478) (5,347,587)
Net realized loss on foreign currency transactions (190,303) (118,131)
Net unrealized appreciation (depreciation) on:
Investments (15,509,142) 4,382,743
Foreign currency transactions 58,159 (4,958)
------------ -----------
Net increase (decrease) in net assets from operations (31,704,493) (429,378)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (934,330)
In excess of net investment income 0 (574,501)
Net realized gains 0 (626,872)
------------ -----------
Total distributions 0 (2,135,703)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 30,785,000 49,870,325
Reinvestment of dividends and distributions to shareholders 0 2,135,703
Cost of shares repurchased 0 (210,772)
Paid in capital from subscription and redemption fees 0 505,848
------------ -----------
Total increase in net assets from capital share transactions 30,785,000 52,301,104
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS (919,493) 49,736,023
------------ -----------
NET ASSETS at end of period (includes undistributed net investment $98,912,386 $99,831,879
income (loss) of $(247,782) and $(878,053), respectively) ------------ -----------
------------ -----------
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,191,400 5,876,028
Shares issued in reinvestment of distributions to shareholders 0 250,375
Less shares repurchased 0 (23,419)
------------ -----------
Net share transactions 5,191,400 6,102,984
------------ -----------
------------ -----------
</TABLE>
See notes to financial statements.
11
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Six Months
Ended Year February 14, 1997*
October 31, 1998 Ended Through
(Unaudited) April 30, 1998 April 30, 1997
----------- -------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------
Net asset value, beginning of period $ 8.990 $ 10.020 $ 10.000
----------- ----------- -----------
Net investment income 0.064 0.004 0.055
Net realized and unrealized loss on investment
and foreign currency transactions (2.984) (0.883) (0.035)
----------- ----------- -----------
Total from investment operations (2.920) (0.879) 0.020
----------- ----------- -----------
Less distributions:
Net investment income 0.000 (0.086) 0.000
In excess of net investment income 0.000 (0.053) 0.000
Net realized gains 0.000 (0.058) 0.000
----------- ----------- -----------
Total distributions 0.000 (0.197) 0.000
----------- ----------- -----------
Paid in capital from subscription and
redemption fees 0.000 0.046 0.000
----------- ----------- -----------
Net asset value, end of period $ 6.070 $ 8.990 $ 10.020
----------- ----------- -----------
----------- ----------- -----------
TOTAL INVESTMENT RETURN (1) (2) (32.48)% (8.21)% 0.20%
- ----------------------- ----------- ----------- -----------
----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period $98,912,386 $99,831,879 $50,095,856
Operating expenses, net, to average net assets (Note C) 1.15%(3) 1.14% 1.33%(3)
Operating expenses, gross, to average net assets (Note C) 1.15%(3) 1.14% 1.33%(3)
Net investment income to average net assets 1.53%(3) 0.98% 2.83%(3)
Portfolio turnover rate 66% 89% 0%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations.
(1) Total return at net asset value assuming all distributions reinvested and
no purchase premiums or redemption fees.
(2) Periods less than one year are not annualized.
(3) Annualized.
See notes to financial statements.
12
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Martin Currie Business Trust ("MCBT") (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust on
May 20, 1994. The Trust offers seven funds which have differing investment
objectives and policies: Global Growth Fund, Opportunistic EAFE Fund, Global
Emerging Markets Fund, Japan Small Companies Fund, Emerging Americas Fund,
Asia Pacific ex Japan Fund (formerly "Emerging Asia Fund") and EMEA Fund,
(the "Funds"). The MCBT Global Emerging Markets Fund (the "Fund") commenced
investment operations on February 14, 1997. The Fund's Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF INVESTMENTS - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at
the mean of the most recent quoted bid and asked prices. Prices for
securities which are primarily traded in foreign markets are furnished by
quotation services expressed in the local currency's value and are translated
into U.S. dollars at the current rate of exchange. Short-term securities and
debt securities with a remaining maturity of 60 days or less are valued at
their amortized cost. Options and futures contracts are valued at the last
sale price on the market where such options or futures contract is
principally traded. Options traded over-the-counter are valued based upon
prices provided by market makers in such securities or dealers in such
currencies. Securities for which current market quotations are unavailable
or for which quotations are not deemed by the investment adviser to be
representative of market values are valued at fair value as determined in
good faith by the Trustees of the Fund, or by persons acting pursuant to
procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying
collateral securities, the value or market price of which is at least equal
to the principal amount, including interest, of the repurchase transaction.
To the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to ensure the
adequacy of the collateral. In the event of default of the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. Under certain circumstances, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject to
legal proceedings that could delay or increase the cost of such realization
or retention.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on
the date of purchase or sale. Realized gains and losses from security
transactions are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at a
current rate of exchange of such currency to determine the value of
investments, other assets and liabilities on the date of any determination of
net asset value of the Fund. Purchases and sales of securities and income
and expenses are converted at the prevailing rate of exchange on the
respective dates of such transactions.
The Fund may realize currency gains or losses between the trade and
settlement dates on security transactions. To minimize such currency gains
or losses, the Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
13
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amount of net investment income accrued and the U.S. dollar amount actually
received. The effects of changes in foreign currency exchange rates on
investments in securities are not segregated in the Statement of Operations
from the effects of changes in market prices of those securities, and are
included with the net realized and unrealized gain or loss on investment
securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at
a set price on a future date. The market value of the Forward fluctuates
with changes in currency exchange rates. The Forward is marked-to-market
daily and the change in the market value is recorded by the Fund as an
unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time
it was opened and the value at the time it was closed. The Fund may enter
into Forwards in connection with planned purchases and sales of securities,
to hedge specific receivables or payables against changes in future exchange
rates or to hedge the U.S. dollar value of portfolio securities denominated
in a foreign currency. There were no open forward foreign currency contracts
at October 31, 1998.
Although forward currency contracts limit the risk of loss due to a decline
in the value of hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the
Funds could be exposed to additional risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
EXPENSES - Expenses directly attributable to the Fund are charged to the
Fund. Expenses not directly attributable to a particular Fund are either
split evenly among the affected Funds, allocated on the basis of relative
average net assets, or otherwise allocated among the Funds as the Board of
Trustees may direct or approve. Certain costs incurred in connection with
the organization of the Trust and each Fund have been deferred and are being
amortized on a straight line basis over a five year period starting on each
Fund's commencement of operations.
DISTRIBUTIONS TO SHAREHOLDERS - The Fund declares and distributes dividends
from net investment income, if any, and distributes its net realized capital
gains, if any, at least annually. All distributions will be reinvested in
shares of the Fund at the net asset value unless the shareholder elects in
the subscription agreement either to receive cash in respect of all
distributions or to receive cash with respect to distributions of income and
to reinvest in shares of the Fund with respect to distributions of realized
capital gains. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for passive foreign investment companies (PFIC's),
foreign currency transactions, losses deferred due to wash sales, post
October 31 losses and excise tax regulations. Permanent book and tax
differences relating to shareholder distributions will result in
reclassifications to paid-in-capital. Distributions are recorded on the
ex-dividend date.
PURCHASES AND REDEMPTIONS OF FUND SHARES - There is a purchase premium for
cash investments into the Fund of 1.00% of the amount invested and a
redemption fee on cash redemptions of 1.00% of the amount redeemed. All
purchase premiums and redemption fees are paid to and retained by the Fund
and are recorded as paid-in-capital by the Fund. These fees are intended to
offset brokerage and transaction costs arising in connection with the
purchase and redemption. The purchase and redemption fees may be waived by
the Manager, however, if these brokerage and transaction costs are minimal or
in other circumstances at the Manager's discretion. For the six months ended
October 31, 1998, there were no collections of purchase premiums or
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
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
INCOME TAXES (CONTINUED) - The Fund may be subject to taxes imposed by
countries in which it invests. Such taxes are generally based on income
and/or capital gains earned or repatriated. Taxes are accrued and applied to
net investment income, net realized gains and unrealized appreciation as such
income and/or gains are earned.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and income and expenses at the date of the financial statements.
Actual results could differ from these estimates.
NOTE C - AGREEMENTS AND FEES
The Fund has entered into a Management Contract with Martin Currie Inc. (the
"Investment Manager"), a wholly owned subsidiary of Martin Currie Ltd. Under
the Management Contract, the Fund pays the Investment Manager a quarterly
management fee at the annual rate of 0.80% of the Fund's average net assets.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000 ($10,000 per Trustee).
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the six months ended October 31, 1998 were
$65,731,105 and $47,168,043 respectively.
The identified cost of investments in securities and repurchase agreements
owned for federal income tax purposes and their respective gross unrealized
appreciation and depreciation at October 31, 1998 were as follows:
<TABLE>
<CAPTION>
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ ------------ -------------- ---------------
<S> <C> <C> <C>
$113,914,595 $2,430,697 $(13,739,441) $(11,308,744)
</TABLE>
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 1998 there was one shareholder who owned greater than 10%
of the Fund's outstanding shares, representing 99% of the Fund.
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange) in emerging markets.
Investing in foreign securities involves risks not typically found in
investing in U.S. markets. These include risks of adverse change in foreign
economic, political, regulatory and other conditions, and changes in currency
exchange rates, exchange control regulations (including currency blockage),
expropriation of assets or nationalization, imposition of withholding taxes
on dividend or interest payments and capital gains, and possible difficulty
in obtaining and enforcing judgments against foreign entities. Furthermore,
issuers of foreign securities are subject to different, and often less
comprehensive, accounting, reporting and disclosure requirements than
domestic issuers. The securities of some foreign companies and foreign
securities markets are less liquid and at times more volatile than securities
of comparable U.S. companies and U.S. securities markets.
15
<PAGE>
MCBT GLOBAL EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
CONCENTRATION OF RISK (CONTINUED) - The risks of investing in foreign
securities may be heightened in the case of investments in emerging markets
or countries with limited or developing capital markets. Security prices in
emerging markets can be significantly more volatile than in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less established markets and economies. In particular,
countries with emerging markets may have relatively unstable governments,
present the risk of nationalization, restrictions on foreign ownership,
imposition of withholding taxes on dividend or interest payments and capital
gains, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political
change or instability may adversely affect the economies and securities
markets of such countries. The economies of individual countries may differ
favorably or unfavorably and significantly from the U. S. economy in such
respects as growth of gross domestic product or gross national product,
diversification, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, dependence on foreign assistance,
vulnerability to change in trade conditions, structural unemployment and
balance of payments position.
- -------------------------------------------------------------------------------
16
<PAGE>
MARTIN CURRIE BUSINESS TRUST
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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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