<PAGE>
MARTIN CURRIE BUSINESS TRUST
ASIA PACIFIC EX JAPAN FUND
ANNUAL REPORT
APRIL 30, 2000
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
OBJECTIVE Long term capital appreciation through active management of a
diversified portfolio of equities in Asian countries with
emerging markets and developing economies.
LAUNCH DATE March 24, 1995
FUND SIZE $375.4m
PERFORMANCE Total return from May 1, 1999 through April 30, 2000
<TABLE>
<S> <C>
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) +2.8%
- The Morgan Stanley Capital International - All Countries Asia
Pacific Free (ex Japan and India) Index +4.5%
Annualized total return from March 24, 1995 through April 30, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) -22.7%
- MCBT - Asia Pacific Ex Japan Fund (including all transaction fees) -23.2%
The graph on the following page represents the annualized total return of the portfolio
including all transaction fees through September 30, 1998, versus the Morgan Stanley Capital
International Emerging Free Asia Index from April 1, 1995 through October 31, 1998 and the
total return for the period October 31, 1998 through April 30, 2000 versus the Morgan Stanley
Capital International All Countries Asia Pacific Free (ex Japan & India) Index, respectively.
Note as of November 1998, the Fund changed its' investment mandate and performance bench mark
from the Morgan Stanley Capital International Emerging Free Asia Index to the Morgan Stanley
Capital International All Countries Asia Pacific Free (ex Japan & India) Index.
Annualized total return from April 1, 1995 through April 30, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) -22.9%
- MCBT - Asia Pacific Ex Japan Fund (including all transaction fees) -23.5%
Total return from October 31, 1998 through April 30, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) +19.5%
- MCBT - Asia Pacific Ex Japan Fund (including all transaction fees) +16.7%
- Morgan Stanley Capital International - All Countries Asia
Pacific Free (ex Japan & India) Index +43.7%
</TABLE>
1
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/1/95(a) 4/30/95 4/30/96 4/30/97 4/30/98 10/31/98(b) 4/30/99 4/30/00
MCBT Asia Pacific Ex Japan Fund $10,000 $9,541 $11,957 $ 9,664 $2,598 $1,986 $2,523 $2,594
MSCI Emerging Free Asia Index $10,000 $9,850 $11,682 $10,246 $5,737 $4,045
MSCI AC AP Free (Ex Japan & India) Index $1,986 $2,730 $2,854
</TABLE>
(a) Performance for the benchmark is not available from March 24, 1995
(commencement of investment operations). For that reason, performance
is shown from April 1, 1995.
(b) Performance for the benchmark is not available from March 24, 1995
(commencement of investment operations). For that reason, performance
is shown from October 31, 1998.
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 prior to October 1,
1998 which reflects a transaction fee of 175 basis points on purchase and 175
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.
2
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
PORTFOLIO In the first full year since its restructure in November 1998,
COMMENTS the fund's performance was slightly behind that of the index.
The portfolio rose by 2.8%, against the MSCI AC Asia Pacific
(ex Japan and India) index return of 4.5%. But these numbers
mask a high degree of volatility in markets.
Our asset allocation was driven by our sector bet on
technology, media and telecoms. As such, we favoured the
markets with high technology exposure. This resulted in a bias
to the markets of South Korea, Taiwan and Singapore. We had no
holdings in the smaller markets of the Philippines and
Indonesia, and we were underweight to Australia. This proved
to be the right decision. Overall, asset allocation
contributed positively to fund performance.
Good stock selection in South Korea, Singapore, Australia and
Taiwan failed to offset poor investment decisions in Hong
Kong. In the latter, we were slow to back the technology theme
and remained overweight to property for too long. We addressed
this. But in the second half of the reporting period, we were
hit by the savage selling of technology stocks in Hong Kong
which followed Nasdaq's correction in March and April.
OUTLOOK
The outlook for Asia remains promising. Economies in the
region are expected to grow on average 6.3% this year, after
growing 5.9% in 1999. Asia's economic crisis has proved
short-lived. The pace at which many consumers and companies
are adopting new technologies is impressive. Taiwan, South
Korea and Singapore are major manufacturing centres for key
high-tech products. The combination of some of the world's
fastest growing economies, plus these exciting new industries,
will continue to provide rewarding investment opportunities.
The positive medium to long-term picture is tempered by rising
US interest rates. The increasing correlation between Asian
and US stockmarkets, and in particular Nasdaq, increases the
risk of further correction in the region.
INVESTMENT Adrian Mowat manages the MCBT Asia Pacific Fund. Adrian
MANAGER PROFILE graduated from Edinburgh University in 1988 with a degree in
electronic and electrical engineering. He joined Martin Currie
in 1988 and has worked in our Far East and American investment
teams. Adrian became a director of Martin Currie in 1994 and
was appointed head of the Asia team in September 1998.
3
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT APRIL 30, 2000
ASSET ALLOCATION
(% of net assets)
[PIE CHART]
<TABLE>
<CAPTION>
LARGEST HOLDINGS
BY COUNTRY % OF NET ASSETS
<S> <C>
AUSTRALIA
Brambles Industries Limited 2.3
AMP Limited 2.0
HONG KONG
Hutchinson Whampoa 5.5
China Telecom (Hong Kong) Limited 4.4
Li & Fung Limited 3.0
MALAYSIA
Malayan Banking Berhad 3.8
SINGAPORE
Natsteel Electronics Limited 5.1
Singapore Telecommunications Limited 3.1
SOUTH KOREA
Samsung Electronics Company 7.9
SK Telecom Company Limited 2.9
</TABLE>
4
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 94.6%
AUSTRALIA - 11.6%
AMP LIMITED 850,000 $ 7,445,999
ARISTOCRAT LEISURE LIMITED 660,000 5,885,668
BRAMBLES INDUSTRIES LIMITED 301,000 8,472,788
FUTURIS CORPORATION LIMITED 4,345,000 4,288,341
NEWS CORPORATION LIMITED 490,000 6,222,835
NORTH LIMITED 4,147,100 7,132,513
TELSTRA CORPORATION LIMITED 930,000 3,986,500
-----------------
TOTAL AUSTRALIA - (COST $44,830,184) 43,434,644
-----------------
HONG KONG - 22.0%
BANK OF EAST ASIA LIMITED 3,376,200 7,303,570
CHINA TELECOM (HONG KONG) LIMITED * 2,333,000 16,698,088
CITIC PACIFIC LIMITED 1,045,000 4,802,932
e-KONG GROUP LIMITED 22,000,000 4,038,926
HUTCHISON WHAMPOA 1,430,000 20,745,391
i-CABLE COMMUNICATIONS LIMITED * 8,900,000 3,884,866
LI & FUNG LIMITED 2,901,000 11,322,138
SUNDAY COMMUNICATIONS LIMITED * 1,500,000 319,674
TCL INTERNATIONAL HOLDINGS LIMITED 12,500,000 7,542,495
TELEVISION BROADCASTS LIMITED 900,000 6,152,750
-----------------
TOTAL HONG KONG - (COST $87,523,784) 82,810,830
-----------------
MALAYSIA - 3.9%
MALAYAN BANKING BERHAD 3,414,000 14,195,052
MALAYSIAN AIRLINE SYSTEM BERHAD 340,000 297,053
-----------------
TOTAL MALAYSIA - (COST $15,795,215) 14,492,105
-----------------
SINGAPORE - 13.4%
CHARTERED SEMICONDUCTOR MANUFACTURING, ADR * 80,000 6,990,000
DATACRAFT ASIA LIMITED * 942,000 7,065,000
NATSTEEL ELECTRONICS LIMITED 3,330,000 19,123,352
OVERSEAS CHINESE BANK 810,700 5,558,272
SINGAPORE TELECOMMUNICATIONS LIMITED 8,000,000 11,532,376
-----------------
TOTAL SINGAPORE - (COST $37,073,323) 50,269,000
-----------------
SOUTH KOREA - 19.7%
HAANSOFT INCORPORATED 183,424 3,239,568
HOUSING & COMMERCIAL BANK, GDR 29,611 506,969
HYUNDAI ELECTRONICS INDUSTRIES COMPANY * 398,997 6,327,864
KOREA TELECOM CORPORATION, ADR 180,070 6,212,415
LOCUS CORPORATION * 24,516 2,982,347
MIRAE COMPANY 670,000 3,465,465
POHANG IRON & STEEL COMPANY LIMITED 46,247 3,617,247
SAMSUNG ELECTRO-MECHANICS COMPANY 106,793 7,265,484
SAMSUNG ELECTRONICS COMPANY 110,068 29,754,810
SK TELECOM COMPANY LIMITED 40,360 10,728,723
-----------------
TOTAL SOUTH KOREA - (COST $64,854,666) 74,100,892
-----------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
TAIWAN - 20.2%
COMPAL ELECTRONICS INCORPORATED 2,562,119 $ 6,573,830
COMPEQ MANUFACTURING COMPANY LIMITED 1,368,000 7,556,529
EVERGREEN MARINE CORPORATION 4,491,000 3,522,928
PACIFIC ELECTRIC WIRE & CABLE COMPANY LIMITED 6,622,517 6,537,016
POWERCHIP SEMICONDUCTOR CORPORATION, GDR * 321,000 7,423,125
SYNNEX TECHNOLOGY INTERNATIONAL CORPORATION 1,067,000 7,219,121
TAIWAN SEMICONDUCTOR MANUFACTURING 2,285,075 14,713,507
UNITED WORLD CHINESE COMMERCIAL BANK 4,780,560 4,718,840
VIA TECHNOLOGIES INCORPORATED 708,000 11,801,928
WYSE TECHNOLOGY TAIWAN LIMITED 2,661,000 5,740,350
-----------------
TOTAL TAIWAN - (COST $62,264,799) 75,807,174
-----------------
THAILAND - 3.8%
TELECOMASIA CORPORATION PUBLIC COMPANY LIMITED * 8,032,800 10,762,453
THAI PETROCHEMICAL INDUSTRY PUBLIC COMPANY LIMITED * 15,149,700 3,701,358
-----------------
TOTAL THAILAND - (COST $19,539,132) 14,463,811
-----------------
TOTAL COMMON STOCKS - (COST $331,881,103) + 355,378,456
-----------------
PRINCIPAL
AMOUNT
---------
SHORT TERM INVESTMENT - 1.8%
STATE STREET BANK AND TRUST COMPANY, 5.250%, 05/01/2000 (a) $ 6,595,000 6,595,000
-----------------
TOTAL SHORT TERM INVESTMENT - (COST $6,595,000) 6,595,000
-----------------
TOTAL INVESTMENTS - (COST $338,476,103) - 96.4% 361,973,456
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 3.6% 13,471,259
-----------------
NET ASSETS - 100.0% $ 375,444,715
=================
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 4/28/2000, $6,595,000 par due 5/1/2000,
is collateralized by United States Treasury Bonds, 10.750%, due
5/15/2003with a market value of $6,727,678.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Air Travel 0.1%, Banks 8.6%, Broadcasting 1.6%, Commercial Services 3.3%,
Communication Services 0.1%, Computer Services 1.7%, Computers 1.5%,
Conglomerates 5.5%, Distribution/Wholesale 3.0%, Diversified 3.3%,
Electrical Equipment 1.7%, Electronics 24.3%, Financial Services 2.0%,
Leisure 1.6%, Mining 1.9%, Petroleum Services 1.0%, Publishing 1.7%,
Semi-Conductor Manufacturing Equipment 10.9%, Steel
1.0%,Telecommunications 18.9%, Transportation 0.9%.
ADR American Depository Receipts
GDR Global Depositary Receipts.
See notes to financial statements.
6
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $331,881,103) (Note B) $ 355,378,456
Investments in repurchase agreements, at value (Note B) 6,595,000
-----------------
Total Investments 361,973,456
Cash 434
Foreign currency, at value (cost $10,640,508) (Note B) 10,532,020
Receivable for investments sold 4,414,598
Dividend and interest receivable 297,544
-----------------
TOTAL ASSETS 377,218,052
-----------------
LIABILITIES
Management fee payable (Note C) 1,614,075
Administration fee payable (Note C) 21,833
Trustees fees payable (Note C) 1,646
Accrued expenses and other liabilities 135,783
-----------------
TOTAL LIABILITIES 1,773,337
-----------------
TOTAL NET ASSETS $ 375,444,715
=================
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 396,497,939
Undistributed net investment income 0
Accumulated net realized loss on investment and foreign currency transactions (44,439,428)
Net unrealized appreciation on investment and foreign currency transactions 23,386,204
-----------------
TOTAL NET ASSETS $ 375,444,715
=================
NET ASSET VALUE PER SHARE $ 2.56
($375,444,715 / 146,686,415 shares of beneficial interest outstanding) =================
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 705,212
Dividend income 5,877,337
Foreign taxes withheld (490,898)
-----------------
TOTAL INVESTMENT INCOME 6,091,651
-----------------
EXPENSES
Management fee (Note C) 5,718,428
Custodian fee 527,546
Administration fee (Note C) 228,935
Audit fee 26,021
Legal fees 16,178
Transfer agent fee 8,110
Trustees fees (Note C) 7,022
Amortization of deferred organization expenses (Note B) 2,101
Miscellaneous expenses 15,666
-----------------
TOTAL EXPENSES 6,550,007
-----------------
NET INVESTMENT LOSS (458,356)
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments (net of foreign taxes paid of $630,270) 10,528,328
Net realized gain on foreign currency transactions 131,357
Net unrealized appreciation (depreciation) on:
Investments (11,994,613)
Foreign currency transactions (136,517)
-----------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (1,471,445)
-----------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (1,929,801)
=================
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, 2000 April 30, 1999
--------------- ---------------
<S>m <C> <C>
NET ASSETS at beginning of period $ 199,723,978 $ 21,072,974
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment (loss) (458,356) (231,321)
Net realized gain (loss) on investment transactions 10,528,328 (352,596)
Net realized gain (loss) on foreign currency transactions 131,357 (248,326)
Net unrealized appreciation (depreciation) on:
Investments (11,994,613) 39,205,615
Foreign currency transactions (136,517) 27,188
---------------- ---------------
Net increase (decrease) in net assets from operations (1,929,801) 38,400,560
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 211,776,424 173,143,913
Cost of shares repurchased (34,125,886) (32,922,754)
Paid in capital from subscription and redemption fees 0 29,285
--------------- ---------------
Total increase in net assets from capital share transactions 177,650,538 140,250,444
--------------- ---------------
NET INCREASE IN NET ASSETS 175,720,737 178,651,004
--------------- ---------------
NET ASSETS at end of period (includes undistributed net investment
losses of $0 and ($198,766), respectively) $ 375,444,715 $ 199,723,978
=============== ===============
OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Shares sold 78,479,043 88,316,616
Less shares repurchased (11,981,245) (16,253,026)
--------------- ----------------
Net share transactions 66,497,798 72,063,590
=============== ===============
</TABLE>
See notes to financial statements.
9
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Year(2) Year(2) Year Year(2) Year(2)
Ended Ended Ended Ended Ended
April 30, 2000 April 30, 1999 April 30, 1998 April 30, 1997 April 30, 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of period $ 2.490 $ 2.590 $ 9.630 $ 12.360 $ 9.980
------------ ------------ ----------- ----------- ------------
Net investment (loss) (0.003) (0.005) (0.227) (0.101) (0.029)
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 0.073* (0.095) (6.871) (2.503) 2.446
------------ ------------ ----------- ----------- ------------
Total from investment operations 0.070 (0.100) (7.098) (2.604) 2.417
------------ ------------ ----------- ----------- ------------
Less distributions:
In excess of net investment income 0.000 0.000 0.000 (0.009) 0.000
Net realized gains 0.000 0.000 0.000 0.000 (0.209)
In excess of net realized gains 0.000 0.000 0.000 (0.305) 0.000
------------ ------------ ----------- ----------- ------------
Total distributions 0.000 0.000 0.000 (0.314) (0.209)
------------ ------------ ----------- ----------- ------------
Paid in capital from subscription and
redemption fees (Note B) 0.000 0.000 0.058 0.188 0.172
------------ ------------ ----------- ----------- ------------
Net asset value, end of period $ 2.560 $ 2.490 $ 2.590 $ 9.630 $ 12.360
============ ============ =========== =========== ============
TOTAL INVESTMENT RETURN (1) 2.81% (3.86)% (73.10)% (19.82)% 26.30%
----------------------- ============ ============ =========== =========== ============
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $375,444,715 $199,723,978 $21,072,974 $84,384,554 $129,326,397
Operating expenses, net, to average
net assets (Note C) 1.72% 1.83% 2.00% 1.89% 1.93%
Operating expenses, gross, to average
net assets (Note C) 1.72% 1.83% 2.23% 1.98% 2.18%
Net investment income (loss) to
average net assets (0.12)% (0.26)% (0.09)% (0.89)% (0.27)%
Portfolio turnover rate 114% 158% 162% 118% 65%
Per share amount of fees waived (Note C) $ 0.000 $ 0.000 $ 0.552 $ 0.011 $ 0.027
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The amount shown for a share outstanding does not correspond with the
aggregate net realized and unrealized gain (loss) on investments for the
period ended due to the timing of sales of Fund shares in relation to the
fluctuating market value of the investments.
(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) The per share amounts were computed using an average number of shares
outstanding during the year.
See notes to financial statements.
10
<PAGE>
MCBT ASIA PACIFIC EX JAPAN 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 Asia Pacific Ex Japan Fund (the "Fund")
commenced investment operations on March 24, 1995. The Fund's Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest, without par value.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF INVESTMENTS - The Fund's portfolio securities traded on a
securities exchange are valued at the last quoted sale price, or, if no sale
occurs, at the mean of the most recent quoted bid and asked prices. Unlisted
securities for which market quotations are readily available are valued at the
mean of the most recent quoted bid and asked prices. Prices for securities which
are primarily traded in foreign markets are furnished by quotation services
expressed in the local currency's value and are translated into U.S. dollars at
the current rate of exchange. Short-term securities and debt securities with a
remaining maturity of 60 days or less are valued at their amortized cost.
Options and futures contracts are valued at the last sale price on the market
where such options or futures contract is principally traded. Options traded
over-the-counter are valued based upon prices provided by market makers in such
securities or dealers in such currencies. Securities for which current market
quotations are unavailable or for which quotations are not deemed by the
investment adviser to be representative of market values are valued at fair
value as determined in good faith by the Trustees of the Fund, or by persons
acting pursuant to procedures established by the Trustees.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings that
could delay or increase the cost of such realization or retention.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on the
date of purchase or sale. Realized gains and losses from security transactions
are determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Fund are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities on the date of any determination of net asset value of
the Fund. Purchases and sales of securities and income and expenses are
converted at the prevailing rate of exchange on the respective dates of such
transactions.
The Fund may realize currency gains or losses between the trade and settlement
dates on security transactions. To minimize such currency gains or losses, the
Fund may enter into forward foreign currency contracts.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payable amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
11
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities, and are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain or
loss. When the Forward is closed, the Fund records a realized gain or loss equal
to the difference between the value at the time it was opened and the value at
the time it was closed. The Fund may enter into Forwards in connection with
planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency. There were no
open forward foreign currency contracts at April 30, 2000.
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 were deferred and were 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 - Effective through September 30 1998,
there was a purchase premium for cash investments into the Fund of 1.75% of the
amount invested and a redemption fee on cash redemptions of 1.75% 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 ASIA PACIFIC EX JAPAN FUND
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NOTES TO FINANCIAL STATEMENTS (Continued)
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
unrealized appreciation as such income and/or gains are earned. As of April 30,
2000, the Fund has a realized capital loss carryforward, for Federal income tax
purposes, of $43,391,994 ($10,915,008 expires April 30, 2006 and $32,476,986
expires April 30, 2007), available to be used to offset future realized capital
gains.
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. Prior to
September 20, 1996 the Investment Manager had voluntarily agreed to limit its
fee to 1.25% of the Fund's average net assets.
The Investment Manager has also 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 2.00% of the Fund's average net assets on
an annualized basis. For the year ended April 30, 2000, it was not necessary for
the Investment Manager to waive any of its fees.
State Street Bank and Trust Company (the "Administrator") serves as
administrator of the Fund. The Administrator performs certain administrative
services for the Fund. The Fund pays the Administrator a fee at the rate of
0.08% of the Fund's average net assets up to $125 million, 0.06% of the next
$125 million, and 0.04% of those assets in excess of $250 million, subject to
certain minimum requirements, plus certain out of pocket costs. State Street
Bank and Trust Company also receives fees and compensation of expenses for
certain custodian and transfer agent services.
Trustees of the Trust who are not interested persons receive aggregate annual
fees of $20,000 ($10,000 per Trustee).
NOTE D - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for the year ended April 30, 2000 were $571,414,075 and
$401,122,304, 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
------------ ------------ -------------- ------------
$339,523,537 $70,911,189 $(48,461,270) $22,449,919
NOTE E - PRINCIPAL SHAREHOLDERS
As of April 30, 2000, there were two shareholders who owned greater than 10% of
the Fund's outstanding shares, representing 52% of the Fund.
13
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE F - CONCENTRATION OF RISK
The Fund will invest extensively in foreign securities (i.e., those which are
not listed on a United States securities exchange) in emerging markets.
Investing in foreign securities involves risks not typically found in investing
in U.S. markets. These include risks of adverse change in foreign economic,
political, regulatory and other conditions, and changes in currency exchange
rates, exchange control regulations (including currency blockage), expropriation
of assets or nationalization, imposition of withholding taxes on dividend or
interest payments and capital gains, and possible difficulty in obtaining and
enforcing judgments against foreign entities. Furthermore, issuers of foreign
securities are subject to different, and often less comprehensive, accounting,
reporting and disclosure requirements than domestic issuers. The securities of
some foreign companies and foreign securities markets are less liquid and at
times more volatile than securities of comparable U.S. companies and U.S.
securities markets.
The risks of investing in foreign securities may be heightened in the case of
investments in emerging markets or countries with limited or developing capital
markets. Security prices in emerging markets can be significantly more volatile
than in the more developed nations of the world, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization, restrictions on foreign
ownership, imposition of withholding taxes on dividend or interest payments and
capital gains, or prohibitions on repatriation of assets, and may have less
protection for property rights than more developed countries. Political change
or instability may adversely affect the economies and securities markets of such
countries. The economies of individual countries may differ favorably or
unfavorably and significantly from the U. S. economy in such respects as growth
of gross domestic product or gross national product, diversification, rate of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency, dependence on foreign assistance, vulnerability to change in
trade conditions, structural unemployment and balance of payments position.
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14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Martin Currie Business Trust - Asia Pacific Ex Japan 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 Asia Pacific Ex Japan 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, 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
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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