<PAGE>
MARTIN CURRIE BUSINESS TRUST
EMEA FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 2000
(Unaudited)
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
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 $101.7m
PERFORMANCE Total return from May 1, 1999 through October 31, 2000
- MCBT - EMEA Fund (excluding all transaction fees) -20.0%
- Morgan Stanley Capital International - EMEA -11.2%
Annualized total return from June 25, 1997 through October 31, 2000
- MCBT - EMEA Fund (excluding all transaction fees) -1.7%
- MCBT - EMEA Fund (including all transaction fees) -2.2%
- Morgan Stanley Capital International - EMEA +0.6%
</TABLE>
1
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
PORTFOLIO COMMENTS
Over the six months ended October 31, 2000, the
fund fell by 20.0%.(1) The MSCI benchmark index
fell by 11.2%. The underperformance was due to
poor stock selection in Israel and South Africa.
Two stocks which we did not own - the internet
security company Check Point (+76%) and generic
pharmaceutical manufacturer Teva (+66%) -
accounted for all of the 17.7% rise in the MSCI
Israel index. Check Point's consistent ability to
beat earnings forecasts protected the stock from
negative sentiment towards Nasdaq. Teva benefited
from a rotation of funds out of technology into
pharmaceuticals and from a succession of FDA
approvals. In both cases, the stocks' large index
weights became self-sustaining as fund managers
scrambled to reduce their tracking error relative
to benchmark. At the end of October, Check Point
and Teva accounted for 53% of the MSCI Israel
index.
Index buying also propelled the largest South
African IT stock, Dimension Data (10% of MSCI
South Africa). Helped by its London listing and
inclusion in FTSE, it rose by 31%. Our holding in
the sector, Softline, lost 60% - its fall
exacerbated by problems in its US subsidiary.
Otherwise, South Africa was a relative safe haven.
Lower expectations of growth had little impact on
foreign investors who are structurally
underweight. Despite fears for the global economy,
parts of the materials sector performed well. The
favourable supply/demand balance in platinum group
metals supported Anglo American Platinum. De Beers
rose on hopes that it would unwind its cross
shareholding in Anglo American plc.
Markets in emerging Europe were down between 17%
(Greece) and 37% (Turkey). The most important
themes were the global de-rating of telecom shares
and current account concerns in Poland and Turkey.
OUTLOOK
Our positive bets are Israeli technology, Poland
and Russia. Orbotech and Nice Systems are global
leaders in high growth sectors trading at 18x 2001
earnings. In Poland, we believe that moderating
domestic demand will allow interest rates to fall.
For the first time, there are signs in Russia of
onshore investment replacing capital flight.
We are underweight to Greece, Turkey and South
Africa. We expect European investors will largely
ignore the Greek market. But as interest rates
fall ahead of Greece joining the euro, we expect
Europeans will hold bank stocks to capture any
final rally. Stubborn inflation is delaying much
needed rate cuts in South Africa. We have
concentrated on resource stocks where we can
identify supply side discipline. We have not lost
faith in Turkey's reform programme. But the short
term medicine of tight fiscal and monetary policy
is not good for equities.
--------------
(1) All index and share price changes are expressed in US dollars.
2
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
INVESTMENT
MANAGER PROFILE Chris Butler joined Martin Currie in 1989. He was a fund
manager in the continental European and UK teams before
moving to cover emerging markets in 1995. In April 1998,
Chris was promoted to head the Emerging Europe, Middle East
and Africa team. He is an adviser to the Egypt Fund, managed
by EFG-Hermes and a member of the Institute of Investment
Management and Research. Dariusz Sliwinski assists Chris
in managing the fund. He worked in a number of different
industries before becoming an investment manager with Bank
Gospodarczy Investment Fund Ltd in Poland in 1994. He moved
to Warsaw-based Consortium Raiffeisen Atkins in 1995 as a
senior investment manager. Dariusz joined Martin Currie's
emerging markets team in 1997.
3
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
[PIE CHART OMITTED, GRAPHIC REPRESENTATION FOLLOWS:]
ASSET ALLOCATION
(% of net assets)
// EUROPE - 43%
// AFRICA - 23%
// MIDDLE EAST - 28%
// NORTH AMERICA - 1%
// ST INVESTMENT - 5%
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
BY REGION/COUNTRY % of net assets
<S> <C> <C>
AFRICA
DE BEERS (South Africa) 4.1
Anglo American Platinum (South Africa) 3.2
Sasol (South Africa) 3.0
EUROPE
Surgutneftegaz, ADR (Russia) 4.2
OAO LUKoil Holding, ADR (Russia) 3.9
Turkiye Garanti Bankasi AS (Turkey) 3.6
Vestel Elektronik Sanayi ve Ticaret AS (Turkey) 3.0
MIDDLE EAST
Near East Opportunities Fund (Investment Company) 7.7
Orbotech (Israel) 5.6
NICE-Systems, ADR (Israel) 3.4
</TABLE>
4
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
COMMON STOCKS - 95.0%
AFRICA - 22.8%
KENYA - 0.1%
KENYA COMMERCIAL BANK # 250,739 $ 85,318
--------------
TOTAL KENYA - (COST $289,077) 85,318
--------------
SOUTH AFRICA - 22.7%
ANGLO AMERICAN PLATINUM 84,108 3,281,254
BARLOWORLD # 520,000 2,716,321
BOE 3,737,000 1,902,674
COMPAREX HOLDING 610,000 777,656
DE BEERS 152,000 4,181,070
MGX HOLDINGS* # 525,000 881,746
PROFURN 2,400,000 1,174,339
SANLAM 1,749,500 1,816,202
SAPPI 240,000 1,644,075
SASOL 392,000 3,001,547
SOFTLINE* # 4,200,000 1,744,052
--------------
TOTAL SOUTH AFRICA - (COST $31,553,594) 23,120,936
--------------
TOTAL AFRICA - (COST $31,842,671) 23,206,254
--------------
EUROPE - 42.8%
CROATIA - 1.1%
PLIVA D.D., GDR 102,500 1,081,375
--------------
TOTAL CROATIA - (COST $1,609,063) 1,081,375
--------------
CZECH REPUBLIC - 1.8
CESKE RADIOKOMUNIKACE* 47,860 1,800,732
--------------
TOTAL CZECH REPUBLIC - (COST $1,638,258) 1,800,732
--------------
GREECE - 10.3%
ALPHA BANK 70,240 2,596,086
BERENBERG HELLAS OLYMPIA FUND 4,177 357,261
COMMERCIAL BANK OF GREECE 45,000 2,012,382
NATIONAL BANK OF GREECE 64,980 2,469,876
PANAFON HELLENIC TELECOM 180,000 1,495,652
STET HELLAS TELECOMMUNICATIONS, ADR * 107,000 1,551,500
--------------
TOTAL GREECE - (COST $12,484,462) 10,482,757
--------------
HUNGARY - 1.5%
MATAV RT., ADR 67,600 1,588,600
--------------
TOTAL HUNGARY - (COST $1,892,813) 1,588,600
--------------
</TABLE>
See notes to financial statements. 5
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
POLAND - 4.4%
DEBICA 110,000 $ 840,418
NETIA HOLDINGS, ADR* 31,800 572,400
POLSKI KONCERN NAFTOWY ORLEN, GDR, 144A 295,000 2,286,250
POWSZECHNY BANK KREDYTOWY, GDR, 144A 43,000 757,875
--------------
TOTAL POLAND - (COST $5,283,286) 4,456,943
--------------
RUSSIA - 11.8%
AO MOSENERGO, ADR 350,000 1,093,750
MOBILE TELESYSTEMS, ADR* 99,500 2,748,687
OAO LUKOIL HOLDING, ADR 73,300 3,958,200
SURGUTNEFTEGAZ, ADR* 321,300 4,257,225
--------------
TOTAL RUSSIA - (COST $11,455,304) 12,057,862
--------------
TURKEY - 11.9%
HURRIYET GAZETECILIK VE MATBAACILIK 202,838,900 2,437,092
TURKIYE GARANTI BANKASI 355,510,000 3,646,337
VESTEL ELEKTRONIK SANAYI VE TICARET 14,737,000 3,023,041
YAPI VE KREDI BANKASI 235,719,000 2,037,762
YAZICILAR 17,465,000 972,432
--------------
TOTAL TURKEY - (COST $12,399,585) 12,116,664
--------------
TOTAL EUROPE - (COST $46,762,771) 43,584,933
--------------
MIDDLE EAST - 29.4%
EGYPT - 1.3%
AL-AHRAM BEVERAGES, GDR * # 42,000 537,600
EFG HERMES HOLDING, GDR, 144A # 355,455 702,023
INTERNATIONAL FOODS* # 14,800 39,599
--------------
TOTAL EGYPT - (COST $2,131,747) 1,279,222
--------------
ISRAEL - 20.4%
AUDIOCODES* 39,000 1,542,937
BANK LEUMI LE-ISRAEL 483,000 948,729
CHECK POINT SOFTWARE TECHNOLOGIES* 12,000 1,900,500
ECI TELECOMMUNICATIONS 40,500 956,813
ECTEL* 1,300 20,800
IDB DEVELOPMENT 36,743 1,275,663
NICE-SYSTEMS, ADR * 74,200 3,468,850
ORBOTECH* 107,725 5,702,692
RADVISION* 61,000 1,349,625
TEVA PHARMACEUTICAL INDUSTRIES, ADR 33,000 1,951,125
ZORAN* 32,500 1,629,063
--------------
TOTAL ISRAEL - (COST $19,956,884) 20,746,797
--------------
</TABLE>
See notes to financial statements. 6
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------
<S> <C> <C>
INVESTMENT COMPANIES - 7.7%
NEAR EAST OPPORTUNITIES FUND (A) 500,000 $ 7,850,000
--------------
TOTAL INVESTMENT COMPANIES -
(COST $8,767,679) 7,850,000
--------------
TOTAL MIDDLE EAST - (COST $30,856,310) 29,876,019
--------------
TOTAL COMMON STOCKS - (COST $109,461,752) + 96,667,206
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT TERM INVESTMENT - 5.2%
STATE STREET BANK AND TRUST, 5.500%,
11/01/2000 (b) $ 5,276,000 5,276,000
--------------
TOTAL SHORT TERM INVESTMENT -
(COST $5,276,000) 5,276,000
--------------
TOTAL INVESTMENTS - (COST $114,737,752) - 100.2%
101,943,206
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - (0.2)% (210,124)
--------------
NET ASSETS - 100.0% $ 101,733,082
--------------
--------------
</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 10/31/2000, $5,276,000 par due 11/1/2000,
is collateralized by United States Treasury Bonds, 10.375%, due
11/15/2012 with a market value of $5,387,807.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Banks 16.2%, Breweries 0.5%, Broadcasting 1.8%, Computer Services 4.3%,
Conglomerates 4.1%, Diversified 5.7%, Drugs & Health Care 3.0%, Electric
Utilities 1.1%, Electronics 10.2%, Financial Services 0.7%, Food &
Beverages (less than 0.1%), Insurance 1.8%, Investment Companies 8.1%,
Mining 3.2%, Newspapers 2.4%, Oil & Gas 13.3%, Paper 1.6%, Retail 1.2%,
Software 1.3%, Telecommunications 13.7%, Tires & Rubber 0.8%.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
See notes to financial statements. 7
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $109,461,752) (Note B) $ 96,667,206
Investments in repurchase agreements, at value (Note B) 5,276,000
-----------------
Total Investments 101,943,206
Foreign currency, at value (cost $1,462,475) (Note B) 1,474,089
Receivable for investments sold 1,905,527
Dividend and interest receivable 49,797
-----------------
TOTAL ASSETS 105,372,619
-----------------
LIABILITIES
Payable to Custodian Bank 6,394
Payable for investments purchased 3,183,378
Management fee payable (Note C) 392,241
Administration fee payable (Note C) 6,702
Trustees fees payable (Note C) 221
Accrued expenses and other liabilities 50,601
-----------------
TOTAL LIABILITIES 3,639,537
-----------------
TOTAL NET ASSETS $ 101,733,082
-----------------
-----------------
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 112,459,099
Distributions in excess of net investment income (1,010,528)
Accumulated net realized gain on investment and foreign currency transactions 3,068,782
Net unrealized depreciation on investments and foreign currency translations (12,784,271)
------------------
TOTAL NET ASSETS $ 101,733,082
-----------------
-----------------
NET ASSET VALUE PER SHARE $ 8.60
($101,733,082 / 11,825,125 shares of beneficial interest outstanding) -----------------
-----------------
</TABLE>
See notes to financial statements. 8
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 178,752
Dividend income 607,841
Foreign taxes withheld (42,287)
------------------
TOTAL INVESTMENT INCOME 744,306
-----------------
EXPENSES
Management fee (Note C) 760,076
Custodian fee 87,235
Administration fee (Note C) 43,028
Audit fee 12,602
Legal fees 3,025
Transfer agent fee 2,456
Trustees fees (Note C) 756
Miscellaneous expenses 10,779
-----------------
TOTAL EXPENSES 919,957
-----------------
NET INVESTMENT LOSS (175,651)
------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (6,571,941)
Net realized loss on foreign currency transactions (83,621)
Net unrealized appreciation (depreciation) on:
Investments (16,781,378)
Foreign currency translations 7,236
-----------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (23,429,704)
------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (23,605,355)
------------------
------------------
</TABLE>
See notes to financial statements. 9
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
October 31, 2000 Ended
(Unaudited) April 30, 2000
----------------- --------------
<S> <C> <C>
NET ASSETS, beginning of period $ 107,248,151 $ 29,149,329
----------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) (175,651) 51,192
Net realized gain (loss) on investment transactions (6,571,941) 18,565,358
Net realized loss on foreign currency transactions (83,621) (306,531)
Net unrealized appreciation (depreciation) on:
Investments (16,781,378) 2,076,939
Foreign currency translations 7,236 24,040
----------------- ----------------
Net increase (decrease) in net assets from operations (23,605,355) 20,410,998
------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
In excess of net investment income -- --
Net realized gains -- (522,471)
------------------ ----------------
Total distributions -- (522,471)
------------------ ----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 18,532,286 63,382,001
Reinvestment of dividends and distributions to shareholders -- 518,812
Cost of shares repurchased (442,000) (5,690,518)
----------------- ----------------
Total increase in net assets from capital share transactions 18,090,286 58,210,295
----------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS (5,515,069) 78,098,822
------------------ ----------------
NET ASSETS, end of period (includes distributions in excess of net $ 101,733,082 $ 107,248,151
investment income of ($1,010,528) and ($834,877), respectively) ------------------ ----------------
------------------ ----------------
OTHER INFORMATION:
Capital Share transactions:
Shares sold 1,893,056 7,089,140
Shares issued in reinvestment of distributions to shareholders -- 45,831
Less shares repurchased (47,629) (593,481)
----------------- ----------------
Net share transactions 1,845,427 6,541,490
----------------- ----------------
----------------- ----------------
</TABLE>
See notes to financials statements. 10
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Six Months
Ended Year Year June 25, 1997*
October 31, 2000 Ended Ended Through
(Unaudited) April 30, 2000 (4) April 30, 1999 April 30, 1998
----------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of period $ 10.750 $ 8.480 $ 10.850 $ 10.000
------------- ------------- ------------- --------
Net investment income (loss) (0.002) 0.006 0.119 0.041
Net realized and unrealized gain (loss) on investment
and foreign currency transactions (2.148) 2.319 (2.041) 0.887
-------------- ------------- ------------- ------------------
Total from investment operations (2.150) 2.325 (1.922) 0.928
-------------- ------------- ------------- ------------------
Less distributions:
Net investment income 0.000 0.000 (0.112) (0.020)
In excess of net investment income 0.000 0.000 (0.046) 0.000
Net realized gains 0.000 (0.055) (0.371) (0.175)
------------- -------------- ------------- -----------------
Total distributions 0.000 (0.055) (0.529) (0.195)
------------- ------------- ------------- -----------------
Paid-in-capital from subscription and
redemption fees (Note B) 0.000 0.000 0.081 0.117
------------- ------------- ------------- ------------------
Net asset value, end of period $ 8.600 $ 10.750 $ 8.480 $ 10.850
------------- ------------- ------------- ------------------
------------- ------------- ------------- ------------------
TOTAL INVESTMENT RETURN (1) (2) (20.00)% 27.44% (16.20)% 10.71%
------------- ------------- ------------- ------------------
------------- ------------- ------------- ------------------
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $101,733,082 $107,248,151 $ 29,149,329 $ 78,938,181
Operating expenses, net, to
average net assets (Note C) 1.70%(3) 1.79% 2.13% 1.93%(3)
Operating expenses, gross, to
average net assets (Note C) 1.70%(3) 1.79% 2.13% 1.93%(3)
Net investment income (loss) to average net assets (0.33)%(3) 0.06% 0.95% 0.84%(3)
Portfolio turnover rate (2) 49% 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 financials statements. 11
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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.
12
<PAGE>
MCBT EMEA FUND
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 October 31, 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.
13
<PAGE>
MCBT EMEA FUND
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 six months ended October 31, 2000 were $68,389,082
and $49,366,331, 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, 2000 were as follows:
IDENTIFIED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION (DEPRECIATION) DEPRECIATION
--------------- ------------ -------------- ---------------
$114,737,752 $6,041,865 ($18,836,411) ($12,794,546)
NOTE E - PRINCIPAL SHAREHOLDERS
As of October 31, 2000, there were three shareholders who owned greater than 10%
of the Fund's outstanding shares, representing 65% 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.
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
14
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MCBT EMEA FUND
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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.
15
<PAGE>
MARTIN CURRIE BUSINESS TRUST
--------------------
TRUSTEES AND OFFICERS
Timothy J.D. Hall, 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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