-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lZNd58trcqW5Lb+1w8zPVKd9Ys7Oob/lNIFdCC/Zeq91F0TUI9WJa07iri75feYG 8tk2zJNtpUp6OJGNCB/5Xw== 0000935069-95-000035.txt : 19950907 0000935069-95-000035.hdr.sgml : 19950907 ACCESSION NUMBER: 0000935069-95-000035 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARINER MUTUAL FUNDS TRUST CENTRAL INDEX KEY: 0000861106 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06057 FILM NUMBER: 95568191 BUSINESS ADDRESS: STREET 1: 600 17TH STREET STREET 2: SUITE 1695 SOUTH CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036232577 MAIL ADDRESS: STREET 1: 600 17TH STREET STREET 2: SUITE 1605 SOUTH CITY: DENVER STATE: CO ZIP: 80202 N-30D 1 SEMI-ANNUAL REPORT FOR MARINER MUTUAL FUNDS TRUST MARINER MUTUAL FUNDS TRUST - - ------------------------------------------------------------------------------- TOTAL RETURN EQUITY FUND HSBC Asset Management [Logo] - - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT (UNAUDITED) June 30, 1995 Managed by: HSBC ASSET MANAGEMENT AMERICAS INC. Sponsored and distributed by: MARINER FUNDS SERVICES MARINER MUTUAL FUNDS TRUST TOTAL RETURN EQUITY FUND - - ------------------------------------------------------------------------------- HSBC Asset Management [Logo] - - ------------------------------------------------------------------------------- July 21, 1995 Dear Shareholder: U.S. equities posted another strong quarterly showing, up 9.6% for the period, as signs of economic slowing continued to be evidenced giving rise to speculation that the Federal Reserve's next move would be to cut rates, perhaps as early as July. In anticipation of this rate cut the bond market rallied sharply, most notably in the intermediate maturities, with the long bond yield rallying to below 7%. Further fueling market gains were strong first quarter earnings, up nearly 30% from prior year results and excellent supply/demand conditions for equities as inflows into equity mutual funds remained strong. As was the case in the first quarter, equities showed surprising resilience as market participants overlooked the potential impact of the economic slowdown on future earnings. Relatively few groups and sectors experienced estimate revisions, and those that did (e.g. the retailers) quickly rebounded from the initial earnings-related weakness. Even talk of a harder landing than originally anticipated and the recessionary environment being indicated by the shape of government yield curve was dismissed by investors. Further, the pick up in inflation, though modest, did nothing to dispel this complacency. Volatility increased during the period and market leadership changed, as the mid and smaller capitalization stocks gathered momentum toward quarter end. However, the Technology stocks continued their advance unchallenged, gaining more than 20% over the quarter - the best performing S&P sector. Financials, driven by an increase in M&A activity and lower rates, Healthcare and Capital Goods also posted above-market returns for the quarter. Transportation and Energy stocks posted the weakest sectoral performances, the latter impacted by weakening crude prices as oil dropped to 95 low of $17.40/barrel on the last day of the quarter. For the first half ended concurrently, the equity market rose over 20% on a total return basis, seemingly untouched by economic concerns surrounding a weak dollar, the Mexican economic collapse or raw materials price increases. This year has in fact witnessed a startling downshift in investor sentiment about the economy. Early in the year, a continued boom in economic growth was feared which led to a seventh and final, Fed Funds hike in February, 1995. In the wake of this move, the soft landing scenario gained wide acceptance as investors believed that the Federal Reserve had tightened sufficiently to slow growth and head off inflation without stalling the economy. Finally, concerns of a possible recession surfaced late in the second quarter, which led to speculation of a change in Fed policy to more accommodative stance via an easing move or moves during the summer of 1995. This sea change in economic expectations fueled a bond market rally, propelling equities as well. As noted above, both supply/demand dynamics and strong corporate earnings further drove market returns. While active equity managers managed to pick up some ground against the S&P 500 late in the first half, as the secondary and smaller stocks returned to favor, 1995 has proved to be a very difficult year to generate even Index-like returns, with less than 20% of managers actually outperforming. This weak relative performance has been a function of the market's fairly narrow advance as, through the end of June, the 100 largest companies in the S&P 500 accounted for 61% of the market's return. Diversification away from the largest capitalization, multi-national companies, has generally not added value. Further, sector weighting has been critical, with only four of the eleven economic sectors outpacing the market through the end of June--Technology (+38%), Financials (+26%), Healthcare (+22%) and Capital Goods (+21%). Managers that were underweighted in the top two sectors--Technology and Financials--suffered significantly on a relative basis. We are currently anticipating a slowdown in the economy with a potential resumption of modest growth by the fourth calendar quarter of 1995 aided by a more accommodative Federal Reserve policy. While an easier Fed policy certainly bodes well for equity valuation, the market appears to have already discounted much of the good news. Further, forward earnings expectations are very optimistic and Wall Street analysts will need to temper their forecasts for the remainder of 1995. However, given the market's neutral valuation and the current level of interest rates, we do not expect a major sell-off in the wake of earnings releases. Conversely, given the market's year-to-date rally, low mutual fund cash levels (liquidity), increasing volatility and the lack of any catalyst to drive equities from these levels,neither do we envision a continuation of the market's phenomenal gains. Rotation into lagging sectors, particularly early cycle stocks as well as mid-and small-cap issues is likely. Sectorally, we are maintaining an overweighted position in Capital Goods, emphasizing export-oriented companies and growth-oriented cyclicals. We are also overweighting the Energy and Utilities (telephone) sectors, due to their attractive yields and defensive characteristics. We are underweighting the deeper cyclical (papers, metals), due to their sensitivity to an economic slowdown, as well as Technology, given the spectacular move the sector has experienced thus far in 1995. At quarter end, reflective of our relative value approach, the Fund's valuation characteristics including price/earnings multiples, both on a historical and prospective basis, and price/book were below the market, as was the debt/capital ratio. However, both historical and projected earnings growth as well as return on equity were above that of the market in general. We believe that this attractive relative valuation will bode well for the Fund in the slowing growth environment we envision. MANAGER'S DISCUSSION OF FUND PERFORMANCE - - ---------------------------------------- The Mariner Total Return Equity Fund posted a strong absolute performance of 8.07% in the second quarter of 1995. Results were in line with competitive medians but lagged the 9.54% return posted by S&P 500 Index, as active money managers generally underperformed the market for the period. For the first half ended concurrently, the Fund rose 17.85%, well outpacing the Lipper Growth & Income average return of 16.75% but behind the S&P 500 Index return of 20.21%. 2 During the second quarter, the Fund was overweighted in the Capital Goods, Energy Healthcare, and Utilities sectors of the market, while maintaining underweighted positions in the Basic Materials, Consumer Staples, Consumer Cyclicals and Technology stocks. The Fund was approximately market-weighted in the other three sectors. For the Fund, the best relative performance was generated by the Capital Goods and Financial sectors while Technology and Consumer Staples negatively impacted results due to a significant underweight, despite superior stock selection. Sector weighting decisions were positive in five of the eleven sectors but in aggregate detracted 80 basis points from relative performance. Stock selection superior in six of the eleven sectors and augmented relative results by approximately 60 basis points. The remainder of the Fund's shortfall versus Index was caused by cash holdings as cash equivalents generated a 1.4% return for the quarter. During the second quarter, strong individual performances were generated by Intel (+49%), IBP (+33%), and Chase Manhattan (+32%). Conversely, Home Depot, Maytag and RJR Nabisco all fell more than 5% during the period. As always, our goal is to ensure that The Mariner Total Return Equity Fund and all Mariner Funds are characterized by quality, competitive performance and outstanding service. We value your participation and appreciate the opportunity to work on your behalf. Sincerely, [GRAPHIC OMITTED] /s/W. Robert Alexander W. Robert Alexander PRESIDENT 3 COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN TOTAL RETURN EQUITY FUND VS. S&P 500 Average Annual Total Return --------------------------------------------------- 1 Year 5 Years Inception --------------------------------------------------- Offering Price(1) 13.47% 10.25% 10.38% NAV(2) 19.46% 11.38% 11.01% FUND(1) S&P 500 FUND(2) JUN 1986 10000 10000 10000 DEC 1986 9860 10049 10320 DEC 1987 9780 10578 10300 DEC 1988 11300 12334 11900 DEC 1989 14190 16241 14940 DEC 1990 13560 15737 14280 DEC 1991 17890 20532 18840 DEC 1992 19280 22097 20300 DEC 1993 21440 24322 22580 DEC 1994 20439 24643 21523 JUNE 1995 24521 29623 25822 Past performance is not predictive of future performance (1) Includes the maximum sales charge (2) Excludes the maximum sales charge The above illustration compares a $10,000 investment in the Total Return Equity Fund on June 2, 1986, to a $10,000 investment in the Standard & Poor's 500 Composite Stock Price Index on that date. All dividends and capital gain distributions are reinvested. The performance takes into account all applicable fees and expenses. The Standard & Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of overall government/mortgage bond market performance and does not take into account charges, fees and other expenses. 4 BOARD OF TRUSTEES JOHN P. PFANN* CHAIRMAN OF THE BOARD; Chairman and President, JPP Equities, Inc. WOLFE J. FRANKL* Former Director, North America, Berlin Economic Development Corporation WILLIAM L. KUFTA Chief Investment Officer, Beacon Trust Company ROBERT A. ROBINSON* Trustee, Henrietta and B. Frederick H. Bugher Foundation *Member of the Audit and Nominating Committees - - ------------------------------------------------------------------------------ OFFICERS W. ROBERT ALEXANDER PRESIDENT STEVEN R. HOWARD SECRETARY MARK A. POUGNET VICE PRESIDENT AND TREASURER 5 [This page intentionally left blank.]
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (UNAUDITED) TOTAL RETURN EQUITY FUND NUMBER OF SHARES VALUE - - ------------ ------------ STOCKS-93.3% AEROSPACE/DEFENSE-4.6% 20,818 Boeing Co. ........................................... $1,303,727 45,208 * Coltec Industries, Inc ............................... 779,838 12,522 Raytheon Co. ......................................... 972,020 ---------- 3,055,585 ---------- AUTO & RELATED-1.2% 19,769 Goodyear Tire & Rubber Co. ........................... 815,471 ---------- BANKS-4.9% 22,410 Chase Manhattan Corp. ................................ 1,053,270 32,261 Meridian Bancorp Inc. ................................ 1,108,972 20,776 Nations Bank Corp. ................................... 1,114,113 ---------- 3,276,355 ---------- BROADCASTING-1.5% 42,841 * Tele-Communications, Inc. ............................ 1,004,087 ---------- CHEMICALS-5.2% 19,375 Allied-Signal Inc. ................................... 862,187 11,194 Dow Chemical Corp. ................................... 804,569 14,592 Du Pont de Nemours & Co., E.I......................... 1,003,200 21,441 Lubrizol Corp. ....................................... 758,475 ---------- 3,428,431 ---------- CONGLOMERATES-0.9% 12,646 Tenneco, Inc. ........................................ 581,717 ---------- CONSUMER DURABLES-1.1% 46,655 MAYTAG CORP .......................................... 746,481 ---------- DRUGS-4.8% 25,921 Bristol-Meyers Squibb Co. ............................ 1,765,868 16,156 Warner Lambert Co. ................................... 1,395,474 ---------- 3,161,342 ----------
7
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED) TOTAL RETURN EQUITY FUND NUMBER OF SHARES VALUE - - ------------ ------------ STOCKS-(continued) ELECTRICAL EQUIPMENT-3.8% 15,382 Emerson Electric Co. .............................. $1,099,813 25,489 General Electric Co. .............................. 1,436,942 ---------- 2,536,755 ---------- ELECTRONICS-SEMICONDUCTORS-3.8% 17,034 Intel Corp. ....................................... 1,078,465 21,939 Motorola, Inc. .................................... 1,472,655 ---------- 2,551,120 ---------- ELECTRONICS-INSTRUMENTATION-1.6% 14,224 Hewlett Packard Co. ............................... 1,059,688 ---------- ENVIRONMENTAL CONTROL-3.2% 50,567 * Wheelabrator Technologies, Inc. ................... 777,468 47,931 WMX Technologies, Inc. ............................ 1,360,042 ---------- 2,137,510 ---------- FINANCIAL SERVICES-3.4% 14,826 Federal National Mortgage Association ............. 1,399,204 19,031 Travelers, Inc. ................................... 832,606 ---------- 2,231,810 ---------- FOOD PROCESSING-4.6% 65,800 * Archer-Daniels Midland Co. ........................ 1,225,525 24,100 IBP, Inc. ......................................... 1,048,350 27,936 Sara Lee Corp. .................................... 796,176 ---------- 3,070,051 ---------- HOSPITAL MANAGEMENT & SUPPLIES-4.4% 32,526 Columbia / HCA Healthcare Corp .................... 1,406,750 22,901 Johnson & Johnson ................................. 1,548,680 ---------- 2,955,430 ---------- INSURANCE-1.2% 17,200 UNUM Corp. ........................................ 806,250 ----------
8
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED) TOTAL RETURN EQUITY FUND NUMBER OF SHARES VALUE - - ------------ ------------ STOCKS-(continued) LODGINGS AND RESTAURANTS-1.8% 29,785 McDonald's Corp. ............................ $1,165,338 ---------- MACHINERY-2.6% 45,208 Giddings & Lewis Inc ........................ 808,093 23,300 Ingersol-Rand Co. ........................... 891,225 ---------- 1,699,318 ---------- OIL-DOMESTIC-1.5% 9,334 Atlantic Richfield Co. ...................... 1,024,406 ---------- OIL-INTERNATIONAL-8.3% 28,581 Chevron Corp. ............................... 1,332,589 28,438 Exxon Corp. ................................. 2,008,434 11,410 Mobil Corp. ................................. 1,095,360 8,926 Royal Dutch Petroleum Co. ................... 1,087,856 ---------- 5,524,239 ---------- OIL-WELL SERVICE-1.3% 13,781 Schlumberger Ltd. ........................... 856,145 ---------- PAPER & RELATED-1.3% 18,930 Weyerhaeuser Co. ............................ 892,076 ---------- PRINTING & PUBLISHING-1.8% 36,648 Deluxe Corp. ................................ 1,213,965 ---------- PUBLISHING-2.0% 32,988 Time Warner Inc. ............................ 1,356,632 ---------- RAILROADS-1.5% 18,190 Union Pacific Corp. ......................... 1,007,271 ---------- RETAIL-DRUG STORES-1.7% 43,574 Rite Aid Corp. .............................. 1,116,584 ----------
9
Statement of Net Assets as of June 30, 1995 (continued) TOTAL RETURN EQUITY FUND Number of Shares Value - - ------------ ------------ STOCKS-(continued) RETAIL-SPECIALTY-1.7% 23,553 Home Depot, Inc. ............................... $ 956,841 4,000 * May Best Stores Co. ............................ 166,500 ----------- 1,123,341 ----------- TOBACCO-3.7% 25,905 Philip Morris Cos., Inc. ....................... 1,926,684 19,279 RJR Nabisco Holdings Co. ....................... 537,402 ----------- 2,464,086 ----------- UTILITIES-COMMUNICATIONS-7.8% 37,148 American Telephone & Telegraph Co. ............. 1,973,487 18,965 Bell South Corp. ............................... 1,204,277 34,272 GTE Corp. ...................................... 1,169,532 36,678 MCI Communications ............................. 806,916 ----------- 5,154,212 ----------- UTILITIES-ELECTRIC-5.0% 46,599 Central & South West Corp. ..................... 1,223,224 38,036 Public Service Enterprise Group ................ 1,055,499 36,606 Wisconsin Energy Corp. ......................... 1,024,968 ----------- 3,303,691 ----------- UTILITIES-GAS PIPELINES-1.1% 19,972 Consolidated Natural Gas ....................... 753,943 ----------- Total Stocks (Cost--$54,105,783) ............... 62,073,330 ----------- PAR - - ------------ CORPORATE BOND-1.2% $800,000 Time Warner Inc., 8.75%, 01/10/15 (Cost--$819,250) 828,000 -----------
10
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED) TOTAL RETURN EQUITY FUND PRINCIPAL AMOUNT VALUE - - ------------ ------------ SHORT-TERM INVESTMENT-6.4% $4,215,000 Merrill Lynch & Co., 6.04%, On Demand (Cost-$4,215,000) .. $ 4,215,000 ------------ TOTAL INVESTMENTS-100.9% (Cost-$59,140,033)** .................................. 67,116,330 ------------ OTHER ASSETS ( LIABILITIES)-(0.9%) Cash ..................................................... 94 Dividends and interest receivable ........................ 172,382 Receivable for fund share sold ........................... 4,776 Other assets ............................................. 7,930 Liability for securities purchased ....................... (161,940) Payable for fund share redeemed .......................... (550,567) Accrued Expenses ......................................... (35,283) Due to affiliates ........................................ (35,010) ------------ Liabilities in excess of other assets--net ............... (597,618) ------------ NET ASSETS-100% .......................................... $ 66,518,712 ============ NET ASSET VALUE PER SHARE-applicable to 4,731,085 shares ($0.001 par value) outstanding ......................... $14.06 ====== * Non-income producing security. ** As of June 30, 1995, unrealized appreciation for Federal income tax purposes aggregated $7,960,996 of which $9,367,023 related to appreciated securities and $1,406,027 related to depreciated securities. The aggregate cost of investments for Federal Income Tax purposes was $59,155,334.
See Notes to Financial Statements. 11
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) TOTAL RETURN EQUITY FUND INVESTMENT INCOME: Income: Dividends ...................................... $ 1,036,087 Interest ....................................... 8,433 ------------ 1,044,520 ------------ Expenses: Advisory fees .................................. 178,488 Administrative services fee .................... 32,452 Co-administrative and shareholder servicing fees 22,717 Distribution expenses .......................... 18,318 Transfer agent fee ............................. 16,150 Audit fee ...................................... 11,828 Legal fees ..................................... 7,076 Printing ....................................... 4,501 Trustees' fees and expenses .................... 4,275 Custodian fee .................................. 3,241 Miscellaneous expenses ......................... 16,294 ------------ Total expenses ............................. 315,340 Less expense waivers/reimbursements ............ (10,434) ------------ Net expenses ............................... 304,906 ------------ Net investment income .......................... 739,614 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments ................... 1,971,793 Net change in unrealized appreciation on investments 8,023,979 ------------ Net gain on investments ............................ 9,995,772 ------------ Net increase in net assets resulting from operations $ 10,735,386 ============
See Notes to Financial Statements. 12
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) TOTAL RETURN EQUITY FUND For the Six Months ended For the June 30, 1995 Year ended (Unaudited) December 31, 1994 -------------- ----------------- OPERATIONS: Net investment income ............................................. $ 739,614 $ 1,691,542 Net realized gain on investments .................................. 1,971,793 840,993 Net change in unrealized appreciation (depreciation) on investments 8,023,979 (4,840,469) ------------ ------------ Net increase (decrease) in net assets resulting from operations . 10,735,386 (2,307,934) ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................................. -- (1,691,542) Net realized gain on investments .................................. -- (840,993) Excess of current year net realized gain on investments ........... -- (704,753) ------------ ------------ Total distributions ............................................. -- (3,237,288) ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from sales of 181,220 and 469,035 shares, respectively ... 2,277,371 5,911,845 Net asset value of -0- and 18,274 shares, issued on reinvestment of distributions, respectively .................................... -- 224,259 Payments for redemptions of 896,454 and 1,078,661 shares, respectively ...................................................... (11,492,910) (13,310,513) ------------ ------------ Net decrease in net assets from capital share transactions ...... (9,215,539) (7,174,409) ------------ ------------ Total increase (decrease) in net assets ............................. 1,519,847 (12,719,631) ------------ ------------ NET ASSETS: Beginning of period ............................................... 64,998,865 77,718,496 ------------ ------------ End of period (including undistributed net investment income of $740,753 and $1,139, respectively) ...................... $ 66,518,712 $ 64,998,865 ============ ============
See Notes to Financial Statements. 13 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) TOTAL RETURN EQUITY FUND 1. SIGNIFICANT ACCOUNTING POLICIES Mariner Total Return Equity Fund (the "Fund") is an investment portfolio of Mariner Mutual Funds Trust (the "Trust"). The Trust is a Massachusetts business trust and is an open-end, diversified investment company which has multiple investment portfolios, including the Fund. SECURITIES VALUATION: Investments in securities traded on an exchange are valued at the last quoted sales price on for a given day, or if a sale is not reported for that day, at the mean between the most recent bid and asked prices. The bid price is used when no asked price is available. Securities for which no quotations are readily available are valued at fair value under procedures established by the Board of Trustees. Short-term obligations having a maturity of 60 days or less are valued at amortized cost which approximates market value. TAXES: It is the Fund's policy to comply with the provisions of the Internal Revenue Code, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income and net realized gains to its shareholders for each taxable year. Therefore, no provision is required for Federal income tax. DIVIDENDS AND DISTRIBUTIONS: The Fund intends to pay, as a semi-annual dividend, substantially all of its net investment income. Net capital gains, if any, will be distributed at least annually. Distributions to shareholders from excess of net realized gain on investments in a given year result primarily from losses on security transactions during that year which are treated for Federal income tax purposes as arising in the following year. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded on the trade date. Identified cost of investments sold is used for both financial statement and Federal income tax purposes. Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned. EXPENSE ALLOCATION: Expenses directly attributed to each Fund in the Trust are charged to that Fund's operations; expenses which are applicable to all Funds are allocated among them. 2. CAPITAL The Trust is authorized to issue an unlimited number of shares of beneficial interest each with a par value of $0.001. At June 30, 1995, the composition of net assets of the Fund was as follows: Paid-in capital .......................... $56,249,674 Undistributed net investment income ...... 740,753 Undistributed net realized gain .......... 1,551,988 Net unrealized appreciation on investments 7,976,297 ----------- Total net assets ....................... $66,518,712 =========== 14 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. PORTFOLIO SECURITIES The cost of securities purchased and proceeds from securities sold (excluding short-term securities) for the six months ended June 30, 1995 were approximately $19,306,000 and $23,030,000, respectively. 4. Agreements The Trust retains HSBC Asset Management Americas Inc. ("HSBC Americas") to act as Investment Adviser for the Fund. HSBC Americas is the North American investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai Banking Corporation). As Investment Adviser, HSBC Americas furnishes investment guidance and policy direction in connection with the management of the portfolio of the Fund, subject to policies established by the Board of Trustees. As compensation for its services, HSBC Americas is paid monthly advisory fees at the following annual rates: Advisory Portion of the Fund's average daily net assets Fee Rate -------------------------------------------------------- -------- Not exceeding $400 million ............................. 0.550% In excess of $400 million but not exceeding $800 million 0.505% In excess of $800 million but not exceeding $1.2 billion 0.460% In excess of $1.2 billion but not exceeding $1.6 billion 0.415% In excess of $1.6 billion but not exceeding $2 billion . 0.370% In excess of $2 billion ................................ 0.315% For the six months ended June 30, 1995, HSBC Americas earned approximately $178,000 in advisory fees. As Administrator, PFPC Inc. ("PFPC") is paid a monthly asset based fee of 0.10% of the Fund's first $200 million of average net assets; 0.075% of the Fund's next $200 million of average net assets; 0.05% of the Fund's next $200 million of average net assets; and 0.03% of the Fund's average net assets in excess of $600 million; exclusive of out-of-pocket expenses. PFPC has agreed to waive 10% and 5% of its fee during the first and second year of its administration, respectively. For the six months ended June 30, 1995, PFPC earned approximately $29,200, net of fee waivers of approximately $3,300, in administrative services fees. HSBC Americas may enter into agreements (the "Service Agreements") with certain banks, financial institutions and corporations ("Service Organizations") whereby each Service Organization handles recordkeeping and provides certain administrative services for its customers who invest in the Fund through accounts maintained at that Service Organization. Each Service Organization will receive monthly payments, which are based upon expenses that the Service Organization has incurred in the performance of its services under the Service Agreement. The payments from the Fund on an annual basis will not exceed 0.25% of the average value of Fund shares held in the subaccounts of the Service Organizations. Marine Midland Bank, N.A. ("Marine Midland"), an affiliate of the Adviser, serves as custodian for the Fund. For furnishing custodian services, Marine Midland is paid a monthly fee with respect to the Fund for safekeeping its assets plus certain transaction charges and out-of-pocket expenses. For the six months ended June 30, 1995, HSBC Americas paid the Fund's entire custodian fee of approximately $3,200. 15 NOTES TO FINANCIAL STATEMENTS (CONTINUED) HSBC Americas earned co-administration and shareholder servicing fees of 0.03% and 0.04% of the Fund's average net assets, respectively, totaling approximately $22,700. Of that total, HSBC Americas waived approximately $3,900 of these fees for the month of January 1995. The Fund has adopted a Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended. The Plan provides for a monthly payment by the Fund to Mariner Funds Services for expenses incurred in connection with distribution services provided to the Fund not to exceed an annual rate of 0.35% of the average daily value of the Fund's net assets during the preceding month. One state in which the shares of the Fund are qualified for sale imposes limitations on the expenses of the Fund. The Advisory Contract and the Administrative Services Contract with HSBC Americas provide that if, in any fiscal year, the total expenses of the Fund (excluding taxes, interest, distribution expenses, brokerage commissions and other portfolio transaction expenses, other expenditures which are capitalized in accordance with generally accepted accounting principles and extraordinary expenses, but including the advisory and administrative services fees) exceed the expense limitation applicable to the Fund imposed by the securities regulations of such state, HSBC Americas will pay or reimburse the Fund in amounts equal to the excess. Although there is no certainty that this limitation will be in effect in the future, the effective limitation on an annual basis with respect to the Fund is currently 2.5% per annum of the first $30 million of average net assets, 2.0% of the next $70 million of average net assets and 1.5% of average net assets in excess of $100 million. For the six months ended June 30, 1995, there were no payments or reimbursements required as a result of this expense limitation. A partner of Baker & McKenzie, legal counsel to the Trust, serves as Secretary of the Trust. For the six months ended June 30, 1995, the Fund paid legal fees of approximately $9,300 to Fund counsel. 16
FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD TOTAL RETURN EQUITY FUND FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31, JUNE 30, 1995 ------------------------------------------------------------- (UNAUDITED) 1994 1993 1992 1991 1990 ---------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period ....... $ 11.93 $ 12.87 $ 12.02 $ 13.12 $ 10.77 $ 11.59 ------- ---------- ---------- ---------- ---------- ---------- Income From Investment Operations Net investment income ..... 0.15 0.29 0.330.15 0.21 0.32 Net realized and unrealized gain (loss) on investments ........ 1.98 (0.67) 1.00 0.80 3.21 (0.82) ------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 2.13 (0.38) 1.33 0.95 3.42 (0.50) ------- ---------- ---------- ---------- ---------- ---------- Less Distributions from: Net investment income ... -- (0.29) (0.33) (0.15) (0.21) (0.32) Net realized gain ....... -- (0.15) (0.15) (1.90) (0.86) (0.00) Excess of current year realized gain on investments ........... -- (0.12) -- -- -- -- ------- ---------- ---------- ---------- ---------- ---------- Total distributions ..... -- (0.56) (0.48) (2.05) (1.07) (0.32) ------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ............. $ 14.06 $ 11.93 $ 12.87 $ 12.02 $ 13.12 $ 10.77 ======= ========== ========== ========== ========== ========== Total return (a) ............. 17.85%(b) (2.97%) 11.23% 7.74% 31.92% (4.41%) Ratios/Supplemental Data Net assets (000), end of period ......... $66,519 $ 64,999 $ 77,718 $ 3,609 $ 4,798 $ 4,041 Ratio of expenses (net of fee waivers) to average net assets* ........... 0.95%(c) 0.78% 0.23% 1.68% 1.40% 1.19% Ratio of net investment income (net of fee waivers) to average net assets* ........... 2.28%(c) 2.25% 2.95% 1.12% 1.69% 2.90% Portfolio turnover rate . 31.74%(b) 23.31% 14.25% 54.99% 77.11% 45.21% - - ---------- (a) Exclusive of sales charge. (b) Not annualized. (c) Annualized. * The ratios of net investment income and expenses to average net assets for the six months ended June 30, 1995 reflect a decrease of 0.03% or $0.002 per share (1994-0.08% or $0.01) (1993-0.65% or $0.09) (1992-0.61% or $0.08) (1991-0.78% or $0.10) and (1990-1.67% or $0.18) due to fee waivers.
See Notes to Financial Statements. 17 =============================================================================== MARINERSM MUTUAL FUNDS TRUST 370 17th Street, Suite 2700 Denver, Colorado 80202 GENERAL INFORMATION: (800) 753-4462 INVESTMENT ADVISER AND CO-ADMINISTRATOR HSBC Asset Management Americas Inc. 250 Park Avenue New York, New York 10177 SPONSOR AND DISTRIBUTOR MarinerSM Funds Services 370 17th Street, Suite 2700 Denver, Colorado 80202 ADMINISTRATOR, TRANSFER AND DIVIDEND DISBURSING AGENT PFPC, Inc. 400 Bellevue Parkway Wilmington, Delaware 19809 CUSTODIAN Marine Midland Bank, N.A. 140 Broadway New York, New York 10015 LEGAL COUNSEL Baker & McKenzie 805 Third Avenue New York, New York 10022 INDEPENDENT AUDITORS Ernst & Young LLP 787 Seventh Avenue New York, New York 10019 This report is for the information of the shareholders of Mariner Mutual Funds Trust. Its use in connection with any offering of the Trust's shares is authorized only in the case of a concurrent or prior delivery of the Trust's current prospectus. =============================================================================== -----END PRIVACY-ENHANCED MESSAGE-----