<PAGE>
MARTIN CURRIE BUSINESS TRUST
ASIA PACIFIC EX JAPAN FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 2000
(Unaudited)
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C> <C>
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 $194.0m
PERFORMANCE Total return from May 1, 1999 through October 31, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) -12.9%
- The Morgan Stanley Capital International - All Countries Asia
Pacific Free (ex Japan and India) Index -21.0%
Annualized total return from March 24, 1995 through October 31, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) -22.8%
- MCBT - Asia Pacific Ex Japan Fund (including all transaction fees) -23.1%
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. Therefore, performance
for the Fund and new bench mark for the period since the change is noted below:
Total return from October 31, 1998 through October 31, 2000
- MCBT - Asia Pacific Ex Japan Fund (excluding all transaction fees) +17.8%
- Morgan Stanley Capital International - All Countries Asia
Pacific Free (ex Japan and India) Index +13.5%
</TABLE>
1
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
PORTFOLIO Over the six months ended October 31 2000, our fund fell by 12.9%. This compares to a 21.0%
COMMENTS fall in the MSCI AC Asia Pacific Free ex Japan and India index. As the benchmark's performance
indicates, it has been a difficult period for Asian markets with uncertainty in the outlook for
global growth and interest rates, and a steady contraction in the valuation of technology and
telecommunication stocks.
The reporting period started badly. As the correction in Nasdaq took its toll on our
technology, media and telecoms (TMT) holdings, the fund underperformed the index significantly
in May. Since June, it has been our asset allocation decisions within the region which have
contributed most of the outperformance. The main decisions were driven by the view from our
International Strategy Group that global growth would slow to a more sustainable rate. This led
us to underweight South Korea and Taiwan. Given their heavy reliance on manufacturing and
exporting, these countries are more sensitive to changes in external demand. At the sector level,
this translated into a large underweight position in technology hardware, with the fund selling
out of semiconductor maker Samsung Electronics in September.
We reinvested the proceeds from these sales in Hong Kong/China and Singapore, with a heavy
emphasis on the interest rate sensitive banking and property sectors. Both sectors had been
relative underperformers, offered good value in relation to improving fundamentals and were
beneficiaries of a moderating growth outlook and its associated implications for interest
rates. Significant purchases included Hong Kong Exchange & Clearing and Sun Hung Kai Properties.
OUTLOOK
The outlook for 2001 is encouraging. Valuations in Asia are now more attractive than they have
been since the Asian crisis of 1998. At current levels, markets already appear to be discounting
a significant slowdown in global growth. Recent economic data points to the possibility that
interest rates in the US and Europe are at their peak. As the global interest rate cycle changes
direction, Asia should benefit.
INVESTMENT Jason McCay manages the MCBT Asia Pacific Fund.
MANAGER PROFILE
Having spent three years with Alliance Trust, Jason joined Edinburgh Fund Managers in 1994. He
moved to Indonesia in 1996 where he worked for Deutsche Morgan Grenfell as head of research. He
joined Martin Currie's Asia team in 1998 and manages the Martin Currie Asia Pacific Fund and
the Martin Currie Far East Fund.
</TABLE>
2
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
PROFILE AT OCTOBER 31, 2000 (Unaudited)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ASSET ALLOCATION
(% of net assets)
/ / Hong Kong - 45%
/ / Australia - 14%
/ / South Korea - 3%
/ / Singapore - 16%
/ / Taiwan - 4%
/ / China - 6%
/ / ST Investment - 10%
/ / Other Net Asets - 2%
TOP TEN HOLDINGS
BY COUNTRY
<TABLE>
<CAPTION>
CHINA % OF NET ASSETS
<S> <C>
PetroChina 3.9
HONG KONG
Hutchinson Whampoa 7.8
Cheung Kong (Holdings) 5.8
Wharf (Holdings) 5.0
China Unicom, ADR 4.9
Bank of East Asia 4.4
Hong Kong Exchanges & Clearing 4.3
Sun Hung Kai Properties 3.7
SINGAPORE
Overseas Chinese Bank 3.6
DBS Group Holdings 3.6
</TABLE>
3
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
COMMON STOCKS AND WARRANTS - 88.7%
AUSTRALIA - 13.8%
AMP 420,000 $ 3,785,925
ARISTOCRAT LEISURE 1,230,000 3,844,551
BRAMBLES INDUSTRIES 101,000 2,618,663
COMMONWEALTH BANK OF AUSTRALIA 270,000 4,017,955
COMPUTERSHARE 457,000 1,977,998
CREDIT SUISSE, WARRANTS 07/26/01* 103,000 57,661
FOSTER'S BREWING GROUP 1,700,000 3,850,823
NEWS 624,700 6,534,553
-----------------
TOTAL AUSTRALIA - (Cost $24,544,684) 26,688,129
-----------------
CHINA - 6.5%
CHINA PETROLEUM AND CHEMICAL (SINOPEC), CLASS H* 25,530,000 5,008,450
PETROCHINA 36,000,000 7,570,201
-----------------
TOTAL CHINA - (Cost $11,518,331) 12,578,651
-----------------
HONG KONG - 45.1%
BANK OF EAST ASIA 3,776,200 8,521,749
CHEUNG KONG (HOLDINGS) 1,025,000 11,335,588
CHINA TELECOM (HONG KONG)* 913,000 5,853,315
CHINA UNICOM, ADR* 464,853 9,529,486
CITIC PACIFIC 1,045,000 4,193,935
E-KONG GROUP* 16,000,000 1,128,350
HONG KONG EXCHANGES & CLEARING 4,770,000 8,317,989
HUTCHISON WHAMPOA 1,213,000 15,086,678
LI & FUNG* 3,602,000 6,696,884
SUN HUNG KAI PROPERTIES 864,400 7,093,422
WHARF (HOLDINGS) 4,780,000 9,745,096
-----------------
TOTAL HONG KONG - (Cost $85,724,343) 87,502,492
-----------------
SINGAPORE - 16.1%
CHARTERED SEMICONDUCTOR MANUFACTURING, ADR * 67,100 3,120,150
CITY DEVELOPMENTS 1,426,000 6,576,667
DATACRAFT ASIA 279,680 1,915,808
DBS GROUP HOLDINGS 585,000 6,894,893
OVERSEAS CHINESE BANK 1,095,700 6,987,325
OVERSEAS UNION BANK 1,200,000 5,807,664
-----------------
TOTAL SINGAPORE - (Cost $29,725,596) 31,302,507
-----------------
SOUTH KOREA - 3.3%
KOOKMIN CREDIT CARD* 48,163 1,050,059
LOCUS 90,872 2,045,119
SK TELECOM 15,740 3,355,561
-----------------
TOTAL SOUTH KOREA - (Cost $7,067,074) 6,450,739
-----------------
</TABLE>
See notes to financial statements.
4
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C>
TAIWAN - 3.9%
Cathay Life Insurance 1,573,000 $ 2,824,582
President Chain Store 384 1,094
Synnex Technology International 697,109 1,467,598
Taiwan Semiconductor Manufacturing 931,996 2,827,728
United World Chinese Commercial Bank 651,067 423,294
------------------------------------------------------------------------------------------------------------------------
TOTAL TAIWAN - (Cost $8,144,266) 7,544,296
------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS AND WARRANTS - (Cost $166,724,294) + 172,066,814
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal
Amount
<S> <C> <C>
SHORT TERM INVESTMENT - 9.7%
State Street Bank and Trust, 5.500%, 11/01/2000 $ 18,834,000 18,834,000
------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT TERM INVESTMENT - (Cost $18,834,000) 18,834,000
------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - (Cost $185,558,294) - 98.4% 190,900,814
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES - 1.6% 3,066,415
------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 193,967,229
========================================================================================================================
</TABLE>
* Non-income producing security.
(a) The repurchase agreement, dated 10/31/2000, $18,834,000 par due
11/1/2000, is collateralized by United States Treasury Bonds, 8.125%, due
8/15/2021 with a market value of $19,215,206.
+ Percentages of long term investments are presented in the portfolio by
country. Percentages of long term investments by industry are as follows:
Banks 13.3%, Breweries 2.0%, Commercial Services 2.9%, Conglomerates
7.8%, Diversified 7.2%, Electronics 0.7%, Financial Services 10.4%,
Insurance 1.4%, Leisure 2.0%, Oil & Gas 6.5%, Publishing 3.4%, Real
Estate 12.9%, Retail Trade 3.4%, Semi-Conductor Manufacturing Equipment
3.1%, Telecommunications 11.7%.
ADR American Depositary Receipts.
See notes to financial statements.
5
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $166,724,294) (Note B) $ 172,066,814
Investments in repurchase agreements, at value (Note B) 18,834,000
-----------------
Total Investments 190,900,814
Cash 337
Foreign currency, at value (cost $6,950,131) (Note B) 6,871,568
Dividend and interest receivable 195,954
-----------------
TOTAL ASSETS 197,968,673
-----------------
LIABILITIES
Payable for investments purchased 3,034,823
Payable for currency purchased 864
Management fee payable (Note C) 837,319
Administration fee payable (Note C) 14,717
Trustees fees payable (Note C) 1,371
Accrued expenses and other liabilities 112,350
-----------------
TOTAL LIABILITIES 4,001,444
-----------------
TOTAL NET ASSETS $ 193,967,229
=================
COMPOSITION OF NET ASSETS:
Paid-in-capital $ 247,791,889
Distributions in excess of net investment income (342,075)
Accumulated net realized loss on investment and foreign currency transactions (58,745,891)
Net unrealized appreciation on investments and foreign currency translations 5,263,306
-----------------
TOTAL NET ASSETS $ 193,967,229
=================
NET ASSET VALUE PER SHARE $ 2.23
=================
($193,967,229 / 86,948,544 shares of beneficial interest outstanding)
</TABLE>
See notes to financial statements.
6
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income $ 483,237
Dividend income 1,834,193
Foreign taxes withheld (239,448)
-----------------
TOTAL INVESTMENT INCOME 2,077,982
-----------------
EXPENSES
Management fee (Note C) 2,038,768
Custodian fee 243,148
Administration fee (Note C) 90,585
Audit fee 13,071
Legal fees 7,540
Transfer agent fee 4,109
Trustees fees (Note C) 3,520
Miscellaneous expenses 19,316
-----------------
TOTAL EXPENSES 2,420,057
-----------------
NET INVESTMENT LOSS (342,075)
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (13,418,943)
Net realized loss on foreign currency transactions (887,520)
Net unrealized appreciation (depreciation) on:
Investments (18,154,833)
Foreign currency translations 31,935
-----------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (32,429,361)
-----------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (32,771,436)
=================
</TABLE>
See notes to financial statements.
7
<PAGE>
MCBT ASIA PACIFIC EX JAPAN 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 $ 375,444,715 $ 199,723,978
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss (342,075) (458,356)
Net realized gain (loss) on investment transactions (13,418,943) 10,528,328
Net realized gain (loss) on foreign currency transactions (887,520) 131,357
Net unrealized appreciation (depreciation) on:
Investments (18,154,833) (11,994,613)
Foreign currency translations 31,935 (136,517)
--------------- ----------------
Net decrease in net assets from operations (32,771,436) (1,929,801)
--------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 37,896,150 211,776,424
Cost of shares repurchased (186,602,200) (34,125,886)
---------------- ----------------
Total increase (decrease) in net assets from capital share transactions (148,706,050) 177,650,538
---------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS (181,477,486) 175,720,737
---------------- ---------------
NET ASSETS, end of period (includes distributions in excess of net $ 193,967,229 $ 375,444,715
=============== ===============
investment income of ($342,075) and $0, respectively)
OTHER INFORMATION:
Capital Share transactions:
Shares sold 14,882,035 78,479,043
Less shares repurchased (74,619,906) (11,981,245)
--------------- ---------------
Net share transactions (59,737,871) 66,497,798
================ ===============
</TABLE>
See notes to financial statements.
8
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
-------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING FOR THE PERIOD
<TABLE>
<CAPTION>
Six Months
Ended Year (3) Year (3) Year Year (3) Year (3)
October 31, 2000 Ended Ended Ended Ended Ended
(Unaudited) April 30, 2000 April 30, 1999 April 30, 1998 April 30, 1997 April 30, 1996
----------- -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period $ 2.560 $ 2.490 $ 2.590 $ 9.630 $ 12.360 $ 9.980
------------ ----------- ----------- ----------- ----------- ------------
Net investment loss (0.004) (0.003) (0.005) (0.227) (0.101) (0.029)
Net realized and unrealized
gain (loss) on
investment and foreign
currency transactions (0.326) 0.073 * (0.095) (6.871) (2.503) 2.446
------------ ----------- ----------- ----------- ----------- ------------
Total from investment
operations (0.330) 0.070 (0.100) (7.098) (2.604) 2.417
------------ ----------- ----------- ----------- ----------- ------------
Less distributions:
In excess of net
investment income 0.000 0.000 0.000 0.000 (0.009) 0.000
Net realized gains 0.000 0.000 0.000 0.000 0.000 (0.209)
In excess of net
realized gains 0.000 0.000 0.000 0.000 (0.305) 0.000
------------ ----------- ----------- ----------- ----------- ------------
Total distributions 0.000 0.000 0.000 0.000 (0.314) (0.209)
------------ ----------- ----------- ----------- ----------- ------------
Paid-in-capital from
subscription and
redemption fees (Note B) 0.000 0.000 0.000 0.058 0.188 0.172
------------ ----------- ----------- ----------- ----------- ------------
Net asset value, end of
period $ 2.230 $ 2.560 $ 2.490 $ 2.590 $ 9.630 $ 12.360
============ =========== =========== =========== =========== ============
TOTAL INVESTMENT
RETURN (1) (2) (12.89)% 2.81% (3.86)% (73.10)% (19.82)% 26.30%
----------------------- ============ =========== =========== =========== =========== ============
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $193,967,229 $375,444,715 $199,723,978 $21,072,974 $84,384,554 $129,326,397
Operating expenses, net, to
average net assets
(Note C) 1.78%(4) 1.72% 1.83% 2.00% 1.89% 1.93%
Operating expenses, gross,
to average net assets
(Note C) 1.78%(4) 1.72% 1.83% 2.23% 1.98% 2.18%
Net investment loss to
average net assets (0.25)%(4) (0.12)% (0.26)% (0.09)% (0.89)% (0.27)%
Portfolio turnover rate (2) 69% 114% 158% 162% 118% 65%
Per share amount of fees
waived (Note C) $ 0.000 $ 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 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) Periods less than one year are not annualized.
(3) The per share amounts were computed using an average number of shares
outstanding during the period.
(4) Annualized.
See notes to financial statements.
9
<PAGE>
MCBT ASIA PACIFIC EX JAPAN 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 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.
10
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
FOREIGN CURRENCY TRANSLATIONS (CONTINUED) - Reported net realized gains and
losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amount of net investment income accrued and the U.S. dollar amount actually
received. The effects of changes in foreign currency exchange rates on
investments in securities are not segregated in the Statement of Operations
from the effects of changes in market prices of those securities, and are
included with the net realized and unrealized gain or loss on investment
securities.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at
a set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by the Fund as an unrealized gain
or loss. When the Forward is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund may enter into Forwards in
connection with planned purchases and sales of securities, to hedge specific
receivables or payables against changes in future exchange rates or to hedge
the U.S. dollar value of portfolio securities denominated in a foreign
currency. There were no open forward foreign currency contracts at October
31, 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.
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.
11
<PAGE>
MCBT ASIA PACIFIC EX JAPAN FUND
----------------------------------------------------------------------------
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.
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 six months ended October 31, 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 six months ended October 31, 2000 were
$168,683,903 and $320,714,451, 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:
<TABLE>
<CAPTION>
Identified Gross Unrealized Net Unrealized
Cost Appreciation (Depreciation) Appreciation
----------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
$185,558,294 $16,779,911 ($11,437,391) $5,342,520
</TABLE>
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 63% of the Fund.
12
<PAGE>
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.
13
<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
011-44-131-229-5252
Regulated by IMRO
Registered Investment Adviser with the SEC
--------------------
The information contained in this report is intended for general
informational purposes only. This report is not authorized for distribution
to prospective investors unless preceded or accompanied by a current Private
Placement Memorandum which contains important information concerning the Fund
and its current offering of shares.
