<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMEA FUND
ANNUAL REPORT
APRIL 30, 2000
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
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 $107.2m
PERFORMANCE Total return from May 1, 1999 through April 30, 2000
<TABLE>
<S> <C>
- MCBT - EMEA Fund (excluding all transaction fees) +27.4%
- Morgan Stanley Capital International - EMEA +29.8%
Annualized total return from June 25, 1997 through April 30, 1999
- MCBT - EMEA Fund (excluding all transaction fees) +6.0%
- MCBT - EMEA Fund (including all transaction fees) +5.1%
The graph below represents the annualized total return of the portfolio
including all transaction fees through September 30, 1998, versus the
Morgan Stanley Capital International Emerging Markets Free Index from
July 1, 1997 through April 30, 2000.
- MCBT - EMEA Fund (excluding all transaction fees) +5.8%
- MCBT - EMEA Fund (including all transaction fees) +4.9%
- Morgan Stanley Capital International - EMEA +5.0%
</TABLE>
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<S> <C> <C> <C> <C>
7/1/97(a) 4/30/98 4/30/99 4/30/00
MCBT EMEA Fund $10,000 $10,774 $8,983 $11,447
MSCI EMEA Index $10,000 $11,061 $8,847 $11,481
</TABLE>
(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.
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 prior to
October 1, 1998, reflects a transaction fee of 125 basis points on purchase and
125 basis points on redemption. Transaction fees are paid to the Fund to cover
trading costs. Transaction fees were eliminated effective October 1, 1998. Past
performance is not indicative of future performance.
1
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
PORTFOLIO Over the twelve months to April 30, 2000, the fund rose by
COMMENTS 27.4%. By comparison, the MSCI EMEA index rose by 29.8%. In
the second half of the financial year, the fund recovered
almost all of its underperformance from the first six months.
Turkey (+144% over 12 months) was the best performer. As we
had hoped, investors are gaining confidence in the
government's commitment to inflation and budget targets. At
30%, treasury bill yields are a quarter of their peak last
year. Two stocks - glass producer SISE CAM (+408%) and
consumer electronics company VESTEL (+214%) - added 5.4% to
total fund performance during the year.
Israel was up 54% over the year. Technology stocks such as
ORBOTECH (+170%) enjoyed a long overdue re-rating. At the same
time, thanks to negligible inflation and strong exports and
against the global trend, interest rates fell. Conversely, the
speculative bubble in Greece, where we are underweight,
deflated. The market fell 28% over six months to finish the
financial year down 6%.
We did not take full benefit from the 123% rebound in Russia
since October. The market had fallen precipitously ahead of
Duma and presidential elections. But massive current account
surpluses compensated for the continuing flight of Russian
capital, and signs of economic growth helped to restore some
confidence.
Returns from South Africa disappointed again (+1.8% over 12
months). After a bullish start to 2000, global investors began
moving out of mining stocks and resource linked currencies.
The crisis in Zimbabwe further depressed sentiment towards and
within South Africa. The sliding rand and sticky inflation
brought rate cuts to a halt.
OUTLOOK
We think outperformance will come from those markets which are
insulated best from rising US interest rates and increased
volatility in global share prices. Accelerating exports and
low inflation should allow Israel's risk premium to contract.
Gyrations on Nasdaq have left high growth technology stocks,
such as NICE SYSTEMS and TECNOMATIX, at subdued valuations.
Low levels of foreign ownership mean that Russia too can
follow its own course. Convergence between telecom valuations
in central and western Europe offers potential (eg OTE in
Greece).
We believe that much of the good news is now priced into
Turkish equities. South Africa's current account and fiscal
performance argue for a re-rating, but the market lacks both a
catalyst to rekindle foreign confidence and sufficient
domestic institutional cash flow.
INVESTMENT Assisted by Dariusz Sliwinski, Chris Butler manages the fund.
MANAGER PROFILE
Chris graduated from Edinburgh University in 1989, with a
degree in French and 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, became asset controller in the emerging
markets team in 1995 and was promoted to assistant director in
1997. In 1999 he was appointed director responsible for
Emerging Europe, Middle East and Africa. He is a member of the
Institute of Investment Management and Research.
2
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
<TABLE>
<S> <C>
LARGEST HOLDINGS
BY REGION/COUNTRY % OF NET ASSETS
AFRICA
Softline (South Africa) 4.0
Sasol Limited (South Africa) 2.5
Standard Bank Investment Corporation (South Africa) 2.4
EUROPE
Lukoil, ADR (Russia) 4.1
Ceske Radiokomunikace (Czech Republic) 3.8
Vestel (Turkey) 3.7
Turkiye Garanti Banksai AS (Turkey) 3.5
Telekomunikacja Polska SA (Poland) 3.0
Elektrim Spolka Akcyjna SA (Poland) 2.7
MIDDLE EAST
Near East Opportunities Fund (Investment Company) 4.5
</TABLE>
3
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 94.3%
AFRICA - 24.4%
KENYA - 0.1%
KENYA COMMERCIAL BANK # 250,738 $ 88,950
-----------------
TOTAL KENYA - (COST $289,077) 88,950
-----------------
SOUTH AFRICA - 24.3%
ANGLO AMERICAN CORPORATION 49,658 2,104,817
BARLOW LIMITED 380,000 2,381,830
COMPAREX HOLDING COMPANY 610,000 913,133
DE BEERS 105,000 2,152,496
GENBEL SECURITIES LIMITED 350,000 1,703,414
LIBERTY LIFE ASSOCIATION OF SOUTH AFRICA 114,000 1,067,620
MGX HOLDINGS LIMITED * 525,000 1,854,399
PRIMEDIA LIMITED 1,050,000 1,285,304
SAPPI LIMITED 240,000 1,681,292
SASOL LIMITED 462,000 2,711,835
SOFTLINE LIMITED * 4,200,000 4,317,381
SOUTH AFRICAN BREWERIES LIMITED 176,000 1,297,839
STANDARD BANK INVESTMENT CORPORATION 700,000 2,580,931
-----------------
TOTAL SOUTH AFRICA - (COST $33,959,288) 26,052,291
-----------------
TOTAL AFRICA - (COST $34,248,365) 26,141,241
-----------------
EUROPE - 46.8%
CROATIA - 1.8%
PLIVA D.D., GDR 152,500 1,913,875
-----------------
TOTAL CROATIA - (COST $2,486,163) 1,913,875
-----------------
CZECH REPUBLIC - 3.8%
CESKE RADIOKOMUNIKACE * 89,860 4,072,905
-----------------
TOTAL CZECH REPUBLIC - (COST $3,141,258) 4,072,905
-----------------
GREECE - 5.0%
BERENBERG HELLAS OLYMPIA FUND 4,177 436,235
HELLENIC TELECOMMUNICATION ORGANIZATION SA (OTE) 112,100 2,523,560
STET HELLAS TELECOMMUNICATIONS SA, ADR * 107,000 2,447,625
-----------------
TOTAL GREECE - (COST $5,045,385) 5,407,420
-----------------
HUNGARY - 6.4%
BORSODCHEM RT. 144A, GDR 40,000 1,474,000
MATAV RT., ADR 67,600 2,353,325
OTP BANK RT., GDR 32,300 1,436,542
SYNERGON INFORMATION SYSTEMS 153,797 1,638,670
-----------------
TOTAL HUNGARY - (COST $6,469,254) 6,902,537
-----------------
</TABLE>
See notes to financial statements
4
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
POLAND - 7.9%
ELEKTRIM SPOLKA AKCYJNA SA * 235,000 $ 2,944,072
NETIA HOLDINGS SA, ADR * 49,000 1,350,562
POWSZECHNY BANK KREDYTOWY SA 144A, GDR 43,000 964,275
TELEKOMUNIKACJA POLSKA SA 144A, GDR * 418,000 3,208,150
-----------------
TOTAL POLAND - (COST $7,428,635) 8,467,059
-----------------
RUSSIA - 6.5%
AO MOSENERGO, ADR 350,000 2,143,750
BRUNSWICK RUSSIAN GROWTH FUND * 2,465 426,434
OAO LUKOIL HOLDING, ADR 73,000 4,380,000
-----------------
TOTAL RUSSIA - (COST $5,210,670) 6,950,184
-----------------
TURKEY - 15.4%
HURRIYET GAZETECILIK VE MATBAACILIK AS 119,317,000 3,024,685
TURKIYE GARANTI BANKASI AS 225,510,000 3,798,824
VESTEL ELEKTRONIK SANAYI VE TICARET AS * 10,537,000 3,963,611
YAPI VE KREDI BANKASI AS 100,370,000 3,200,993
YAZICILAR AS * 26,465,000 2,553,701
-----------------
TOTAL TURKEY - (COST $11,449,738) 16,541,814
-----------------
TOTAL EUROPE - (COST $41,231,103) 50,255,794
-----------------
MIDDLE EAST - 23.1%
EGYPT - 4.7%
AL-AHRAM BEVERAGES COMPANY SAE, GDR * 77,000 1,360,975
COMMERCIAL INTERNATIONAL BANK 125,000 1,345,944
EASTERN COMPANY FOR TOBACCO & CIGARETTES 28,500 687,566
EFG HERMES HOLDING SAE 144A, GDR 355,455 1,412,934
INTERNATIONAL FOODS COMPANY *, # 14,800 174,219
THE EGYPT FUND 8,912 106,944
-----------------
TOTAL EGYPT - (COST $4,695,108) 5,088,582
-----------------
ISRAEL - 13.8%
BANK HAPOALIM LIMITED 644,000 1,978,056
BANK LEUMI LE-ISRAEL 700,000 1,521,155
ECI TELECOMMUNICATIONS 42,500 1,182,031
IDB DEVELOPMENT CORPORATION LIMITED 58,417 2,206,352
NICE-SYSTEMS LIMITED, ADR * 53,600 3,507,450
ORBOTECH LIMITED * 37,500 3,196,875
SAPIENS INTERNATIONAL CORPORATION NV * 147,000 1,166,813
-----------------
TOTAL ISRAEL - (COST $12,813,041) 14,758,732
-----------------
</TABLE>
See notes to financial statements
5
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
INVESTMENT COMPANIES - 4.6%
NEAR EAST OPPORTUNITIES FUND (a) 260,000 $ 4,869,800
-----------------
TOTAL INVESTMENT COMPANIES - (COST $4,139,700) 4,869,800
-----------------
TOTAL MIDDLE EAST - (COST $21,647,849) 24,717,114
-----------------
TOTAL COMMON STOCKS - (COST $97,127,317) + 101,114,149
-----------------
PRINCIPAL
AMOUNT
SHORT TERM INVESTMENT - 6.1%
STATE STREET BANK AND TRUST COMPANY, 5.250%, 05/01/2000 (b) $ 6,527,000 6,527,000
-----------------
TOTAL SHORT TERM INVESTMENT - (COST $6,527,000) 6,527,000
-----------------
TOTAL INVESTMENTS - (COST $103,654,317) - 100.4% 107,641,149
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (0.4)% (392,998)
-----------------
NET ASSETS - 100.0% $ 107,248,151
=================
</TABLE>
# Illiquid security. Some restrictions may apply to the resale of this
security due to limited trading volume.
* Non-income producing security.
144A Securities 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.
(a) Martin Currie Investment Management Ltd., which is affiliated to Martin
Currie Inc., provides investment management services to the Near East
Opportunities Fund. Martin Currie Inc. does not receive advisory fees on
the portion of net assets represented by affiliated investment companies.
(b) The repurchase agreement, dated 4/28/2000, $6,527,000 par due 5/1/2000,
is collateralized by United States Treasury Bonds, 12.000%, due 8/15/2013
with a market value of $6,657,787.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Banks 15.8%, Brewery 2.5%, Broadcasting 5.0%, Building & Construction
2.2%, Chemicals 1.4%, Computer Services 7.5%, Conglomerates 2.0%,
Diversified 6.2%, Drugs & Health Care 1.8%, Electric Utilities 2.0%,
Electrical Equipment 2.7%, Electronics 6.7%, Financial Services 2.9%,
Food & Beverages 0.2%, Insurance 1.0%, Investment Companies 5.4%, Mining
2.0%, Newspapers 2.8%, Oil & Gas 6.6%, Paper 1.6%, Telecommunications
15.4%, Tobacco 0.6%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements
6
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $97,127,317) (Note B) $ 101,114,149
Investments in repurchase agreements, at value (Note B) 6,527,000
-----------------
Total Investments 107,641,149
Cash 62,374
Foreign currency, at value (cost $127,218) (Note B) 127,031
Dividend and interest receivable 209,194
-----------------
TOTAL ASSETS 108,039,748
-----------------
LIABILITIES
Payable for investments purchased 306,745
Management fee payable (Note C) 413,907
Administration fee payable (Note C) 6,763
Trustees fees payable (Note C) 394
Accrued expenses and other liabilities 63,788
-----------------
TOTAL LIABILITIES 791,597
-----------------
TOTAL NET ASSETS $ 107,248,151
=================
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 94,368,813
Undistributed net investment loss (834,877)
Accumulated net realized gain on investment and foreign currency transactions 9,724,344
Net unrealized appreciation on investment and foreign currency transactions 3,989,871
-----------------
TOTAL NET ASSETS $ 107,248,151
=================
NET ASSET VALUE PER SHARE $ 10.75
($107,248,151 / 9,979,698 shares of beneficial interest outstanding) =================
</TABLE>
See notes to financial statements
7
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 235,266
Dividend income 1,379,350
Foreign taxes withheld (57,896)
-----------------
TOTAL INVESTMENT INCOME 1,556,720
-----------------
EXPENSES
Management fee (Note C) 1,211,447
Custodian fee 179,019
Administration fee (Note C) 71,101
Audit fee 23,863
Legal fees 5,547
Transfer agent fee 4,892
Trustees fees (Note C) 789
-----------------
Miscellaneous expenses 8,870
-----------------
TOTAL EXPENSES 1,505,528
-----------------
NET INVESTMENT INCOME 51,192
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 18,565,358
Net realized loss on foreign currency transactions (306,531)
Net unrealized appreciation on:
Investments 2,076,939
Foreign currency transactions 24,040
-----------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 20,359,806
-----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 20,410,998
=================
</TABLE>
See notes to financial statements
8
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, 2000 April 30, 1999
----------------- ----------------
<S> <C> <C>
NET ASSETS at beginning of period $ 29,149,329 $ 78,938,181
----------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income 51,192 431,300
Net realized gain (loss) on investment transactions 18,565,358 (8,264,440)
Net realized loss on foreign currency transactions (306,531) (372,629)
Net unrealized appreciation (depreciation) on:
Investments 2,076,939 (2,430,849)
Foreign currency transactions 24,040 3,157
----------------- ----------------
Net increase (decrease) in net assets from operations 20,410,998 (10,633,461)
----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (587,624)
In excess of net investment income 0 (241,285)
Net realized gains (522,471) (1,950,436)
------------------ ----------------
Total distributions (522,471) (2,779,345)
----------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 63,382,001 1,691,242
Reinvestment of dividends and distributions to shareholders 518,812 2,754,167
Cost of shares repurchased (5,690,518) (41,098,987)
Paid in capital from subscription and redemption fees 0 277,532
----------------- ----------------
Total increase (decrease) in net assets from capital share transactions 58,210,295 (36,376,046)
----------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS 78,098,822 (49,788,852)
----------------- ----------------
NET ASSETS at end of period (includes undistributed net investment $ 107,248,151 $ 29,149,329
losses of $(834,877) and $(58,942) respectively) ================= ================
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 7,089,140 220,107
Shares issued in reinvestment of distributions to shareholders 45,831 375,739
Less shares repurchased (593,481) (4,430,285)
----------------- ----------------
Net share transactions 6,541,490 (3,834,439)
================= ================
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT EMEA FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year(4) Year June 25, 1997*
Ended Ended through
April 30, 2000 April 30, 1999 April 30, 1998
-------------- --------------- --------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.480 $ 10.850 $ 10.000
-------------- -------------- --------------
Net investment income 0.006 0.119 0.041
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 2.319 (2.041) 0.887
-------------- -------------- --------------
Total from investment operations 2.325 (1.922) 0.928
-------------- -------------- --------------
Less distributions:
Net investment income 0.000 (0.112) (0.020)
In excess of net investment income 0.000 (0.046) 0.00
Net realized gains (0.055) (0.371) (0.175)
-------------- -------------- --------------
Total distributions (0.055) (0.529) (0.195)
-------------- -------------- --------------
Paid in capital from subscription and
redemption fees (Note B) 0.000 0.081 0.117
-------------- -------------- --------------
Net asset value, end of period $ 10.750 $ 8.480 $ 10.850
============== ============== ==============
TOTAL INVESTMENT RETURN (1) (2) 27.44% (16.20)% 10.71%
----------------------- ============== ============== ==============
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 107,248,151 $29,149,329 $78,938,181
Operating expenses, net, to average net assets (Note C) 1.79% 2.13% 1.93%(3)
Operating expenses, gross, to average net assets (Note C) 1.79% 2.13% 1.93%(3)
Net investment income to average net assets 0.06% 0.95% 0.84%(3)
Portfolio turnover rate 109% 117% 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.
(4) The per share amounts were computed using an average number of shares
outstanding during the year.
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 five funds which have differing investment objectives
and policies: Opportunistic EAFE Fund, Global Emerging Markets Fund, Japan Small
Companies Fund, Asia Pacific Ex Japan Fund (formerly "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.
11
<PAGE>
MCBT EMEA 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 could be exposed to risk if a counterparty is
unable to meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forwards in connection with planned
purchases and sales of securities, to hedge specific receivables or payables
against changes in future exchange rates or to hedge the U.S. dollar value of
portfolio securities denominated in a foreign currency.
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 Fund could be
exposed to additional risks if the counterparties to the contracts are unable to
meet the term of their contracts. There were no open forward foreign currency
contracts at April 30, 2000.
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 - Effective through September 30 1998,
there was 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 were paid to and retained by
the Fund and are recorded as paid-in-capital. These fees were intended to offset
brokerage and transaction costs arising in connection with the purchase and
redemption. The purchase and redemption fees could be waived by the Manager,
however, if these brokerage and transaction costs are minimal or in other
circumstances at the Manager's discretion. Effective October 1, 1998, the Fund
eliminated all such 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.
12
<PAGE>
MCBT EMEA FUND
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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, 2000 were $135,772,273 and
$84,316,128, 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, 2000 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) APPRECIATION
------------ ------------ -------------- ------------
$104,984,828 $15,375,348 $(12,719,027) $2,656,321
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 2000, there were three shareholders who owned greater than 10%
of the Fund's outstanding shares, representing 75% 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.
13
<PAGE>
MCBT EMEA 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.
--------------------------------------------------------------------------------
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, 2000, 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 $57,896 (of the total $57,896 taxes withheld) and
$1,118,305, 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, 2000, and the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States. 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 auditing
standards generally accepted in the United States, 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, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 23, 2000
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
--------------------
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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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