-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PA3mujl2vOQ+gdpgWZk2Vk26DeEz0RbmE0b72QuQfRkeqGZXzZIyglok2AOZs8Wh aXAPrHqp+9EvFG3itCUeIw== 0000935069-96-000033.txt : 19960312 0000935069-96-000033.hdr.sgml : 19960312 ACCESSION NUMBER: 0000935069-96-000033 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960311 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARINER MUTUAL FUNDS TRUST CENTRAL INDEX KEY: 0000861106 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 96533208 BUSINESS ADDRESS: STREET 1: 370 17TH STREET STREET 2: SUITE 2700 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036232577 MAIL ADDRESS: STREET 1: 370 17TH STREET STREET 2: SUITE 2700 CITY: DENVER STATE: CO ZIP: 80202 N-30D 1 MARINER MUTUAL US GOV SECURITIES FUND MARINER MUTUAL FUNDS TRUST - ------------------------------------------------------------------------------- U.S. GOVERNMENT SECURITIES FUND HSBC Asset Management (LOGO) - ------------------------------------------------------------------------------- ANNUAL REPORT December 31, 1995 Managed by: HSBC ASSET MANAGEMENT AMERICAS INC. Sponsored and distributed by: MARINER FUNDS SERVICES MARINER MUTUAL FUNDS TRUST - ------------------------------------------------------------------------------- U.S. GOVERNMENT SECURITIES FUND HSBC Asset Management (LOGO) - ------------------------------------------------------------------------------- February 8, 1996 Dear Shareholder: This was a record year in the fixed income markets.The total return of the market, as measured by the Lehman Aggregate Index was 18.47%, the highest in over a decade and third highest in history. The forces driving the market were low inflation, slowing economic activity and the prospect of a balanced budget. This combination has been potent and we have finished the year with a strong rally. MANAGER'S DISCUSSION OF PERFORMANCE - ----------------------------------- The Fund returned 17.19% versus 17.81% for the benchmark, the Lehman Mutual Fund Government/ Mortgage Index.Our underperformance relative to the benchmark is mainly due to incorrect duration positioning. Our sector positioning has generally been a positive contribution but not enough to overcome the drag of the duration. Sincerely, /s/ JAMES LARK James Lark COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN U.S. GOVERNMENT SECURITIES FUND VS. LEHMAN MUTUAL FUND GOVERNMENT/MORTGAGE INDEX
Total Return - -------------------------------------------------- 1 Year Inception - -------------------------------------------------- Offering Price(1) 11.65% 4.04% NAV(2) 17.19% 6.14% - --------------------------------------------------
CHART {GRAPHIC OMITTED] Plot Points: FUND (1) LEHMAN MF FUND (2) JULY 1993 $10,000 $10,000 $10,000 SEPTEMBER 1993 9,793 10,189 10,282 DECEMBER 1993 9,770 10,199 10,259 MARCH 1994 9,566 9,917 10,044 JUNE 1994 9,468 9,823 9,942 SEPTEMBER 1994 9,469 9,880 9,943 DECEMBER 1994 9,395 9,918 9,864 MARCH 1995 9,892 10,403 10,387 JUNE 1995 10,463 10,904 10,986 SEPTEMBER 1995 10,595 11,109 11,125 DECEMBER 1995 11,010 11,568 11,561 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 U.S. Government Securities Fund on July 27, 1993, to a $10,000 investment in the Lehman Mutual Fund Gov't/Mortgage Index on that date. All dividends and capital gain distributions are reinvested. The Fund's performance takes into account all applicable fees and expenses. The Lehman Mutual Fund Gov't Mortgage 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. 2 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 WILLIAM B. BLUNDIN CHIEF EXECUTIVE OFFICER ANN E. BERGIN PRESIDENT WILLIAM J. TOMKO VICE PRESIDENT MARK E. NAGLE TREASURER MARTIN R. DEAN ASSISTANT TREASURER ROBERT L. TUCH ASSISTANT SECRETARY ALAINA V. METZ ASSISTANT SECRETARY 3 STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995
U.S. GOVERNMENT SECURITIES FUND INTEREST MATURITY PRINCIPAL RATE DATE AMOUNT VALUE -------- -------- ----------- ----------- U.S. TREASURY OBLIGATIONS-63.8% U.S. Treasury Notes 6.500% 08/15/97 $ 1,000,000 $ 1,020,000 5.625 08/31/97 1,750,000 1,760,938 7.500 05/15/02 1,300,000 1,442,188 7.500 02/15/05 2,900,000 3,291,500 6.500 08/15/05 1,000,000 1,065,312 ----------- 8,579,938 ----------- U.S. Treasury Bond 7.125 02/15/23 250,000 285,547 ----------- Total U.S. Treasury Obligations (Cost-$8,491,829) 8,865,485 ----------- AGENCY OBLIGATIONS-28.7% Federal Home Loan Mortgage Corp. (Cost-$3,906,830) 7.500 09/01/25 3,882,366 3,980,668 ----------- SHORT-TERM INVESTMENTS-5.5% Provident Institutional Temporary Investment Fund 5.590 On Demand 648,000 648,000 Provident Institutional Fund - Trust for Federal Securities 5.460 On Demand 122,000 122,000 ----------- Total Short-Term Investments (Cost-$770,000) 770,000 ----------- TOTAL INVESTMENTS-98.0% (Cost-$13,168,659)* 13,616,153 ----------- OTHER ASSETS (LIABILITIES)-2.0% Cash 526 Interest and dividends receivable 211,399 Organizational costs, net 35,416 Receivable from investment adviser 70,378 Prepaid expenses 1,473 Dividends payable (4,278) Accrued expenses (27,490) Due to affiliates (12,396) ----------- Other assets in excess of liabilities-net 275,028 ----------- NET ASSETS-100% $13,891,181 =========== NET ASSET VALUE PER SHARE-applicable to 1,383,377 shares ($0.001 par value) outstanding $10.04 ====== * Also cost for Federal income tax purposes. As of December 31, 1995, net unrealized appreciation for Federal income tax purposes aggregated $447,494, of which $453,181 related to appreciated securities and $5,687 related to depreciated securities. See Notes to Financial Statements.
5 STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 U.S. GOVERNMENT SECURITIES FUND INVESTMENT INCOME: Income: Interest $ 846,488 ---------- Expenses: Advisory fees 52,549 Audit fee 25,653 Distribution expenses 21,805 Legal fees 18,512 Amortization of organizational costs 13,450 Administrative services fee 13,137 Trustees' fees and expenses 12,409 Printing 10,965 Co-administrative and shareholder servicing fees 9,212 Transfer agent fees 8,622 Custodian fee 3,725 Miscellaneous expenses 4,254 ---------- Total expenses 194,293 Less expense waivers / reimbursements (102,084) ---------- Net expenses 92,209 ---------- Net investment income 754,279 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investments (151,246) Net change in unrealized appreciation on investments 1,477,385 ---------- Net gain on investments 1,326,139 ---------- Net increase in net assets resulting from operations $2,080,418 ========== See Notes to Financial Statements. 6 STATEMENT OF CHANGES IN NET ASSETS
U.S. GOVERNMENT SECURITIES FUND FOR THE FOR THE YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 ----------------- ----------------- OPERATIONS: Net investment income $ 754,279 $ 739,218 Net realized loss on investments (151,246) (191,680) Net change in unrealized appreciation (depreciation) on investments 1,477,385 (1,078,849) ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,080,418 (531,311) ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (754,279) (739,218) ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from sales of 52,673 and 215,718 shares, respectively 504,216 2,069,306 Net asset value of 72,081 and 79,239 shares issued in reinvestment of distributions, respectively 697,045 751,558 Payments for redemptions of 80,253 and 173,394 shares, respectively (779,496) (1,642,290) ----------- ----------- Net increase in net assets from capital share transactions 421,765 1,178,574 ----------- ----------- Total increase (decrease) in net assets 1,747,904 (91,955) ----------- ----------- NET ASSETS: Beginning of year 12,143,277 12,235,232 ----------- ----------- End of year $13,891,181 $12,143,277 =========== ===========
See Notes to Financial Statements. 7 NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Mariner U.S. Government Securities 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 with multiple investment portfolios, including the Fund. SECURITIES VALUATION: Portfolio securities for which market quotations are readily available are valued at the quoted bid price. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in accordance with guidelines which have been adopted by the Board of Trustees. Such procedures include the use of independent pricing services which use prices based on yields or prices of securities of comparable quality, coupon, maturity and type, indicators as to value from dealers and general market conditions. Short-term obligations having maturities 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 capital gains to its shareholders for each taxable year. Therefore, no provision is required for Federal income tax. The Fund has available a $326,769 capital loss carryforward which, if not utilized, $208,278 and $118,491 will expire in year 2002 and 2003, respectively. DIVIDENDS AND DISTRIBUTIONS: The Fund intends to declare as a dividend substantially all of its net investment income at the end of each business day and pay within five business days after the end of each month. Net capital gains, if any, will be distributed annually. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded on trade date. Identified cost of investments sold is used for both financial statement and Federal income tax purposes. 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. ORGANIZATIONAL COSTS: Costs incurred in connection with the organization of the Fund are being amortized on a straight-line basis over a five year period from the date operations commenced. 2. CAPITAL The Trust is authorized to issue an unlimited number of shares of beneficial interest each with a par value of $0.001 per share. At December 31, 1995, the composition of net assets of the Fund was as follows: Paid-in capital $13,803,188 Accumulated net realized loss on investments (359,501) Net unrealized depreciation on investments 447,494 ----------- Total net assets $13,891,181 =========== 8 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. PORTFOLIO SECURITIES The cost of securities purchased and proceeds from securities sold (excluding short-term securities) for the year ended December 31, 1995 were approximately $11,788,000 and $6,987,000, respectively. 4. AGREEMENTS The Trust retains Marine Midland Bank N.A. ( Marine Midland ), as advised by 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, Marine Midland 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, Marine Midland 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 0.400% In excess of $400 million but not exceeding $800 million 0.365% In excess of $800 million but not exceeding $1.2 billion 0.330% In excess of $1.2 billion but not exceeding $1.6 billion 0.295% In excess of $1.6 billion but not exceeding $2 billion 0.260% In excess of $2 billion 0.230%
For the year ended December 31, 1995, Marine Midland waived its entire advisory fee of approximately $52,600. In addition, HSBC Americas will reimburse approximately $47,800 of other operating expenses incurred by the Fund for the year ended December 31, 1995. 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 year ended December 31, 1995, PFPC earned approximately $12,100, net of fee waivers of approximately $1,000, in administrative services fees. Effective March 1996, PFPC will be terminated as administrator and transfer agent for the Fund. 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 on 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 the Fund's shares held in the subaccounts of the Service Organizations. 9 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. AGREEMENTS (CONTINUED) Effective September 25, 1995, Bank of New York replaced Marine Midland as custodian for the Fund. For furnishing custodian services, Marine Midland was paid a monthly fee with respect to the Fund for safekeeping its assets plus certain transaction charges and out-of-pocket expenses. For the period January 1, 1995 through September 25, 1995, Marine Midland earned approximately $2,500 in custodian fees. 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 $9,200. Of that total, HSBC Americas waived approximately $700 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 year ended December 31, 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 year ended December 31, 1995, the Fund incurred legal fees of approximately $16,200 to Fund counsel. 10 FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
U.S. GOVERNMENT SECURITIES FUND FOR THE PERIOD JULY 27, 1993 FOR THE FOR THE (COMMENCEMENT OF YEAR ENDED YEAR ENDED OPERATIONS) TO DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993 ----------------- ----------------- ----------------- Net asset value, beginning of period $ 9.07 $ 10.05 $ 10.00 ------- ------- ------- Income From Investment Operations Net investment income 0.55 0.56 0.25 Net realized and unrealized gain (loss) on investments 0.97 (0.98) 0.05 ------- ------- ------- Total from investment operations 1.52 (0.42) 0.30 ------- ------- ------- Less Distributions from: Net investment income (0.55) (0.56) (0.25) ------- ------- ------- Net asset value, end of period $ 10.04 $ 9.07 $ 10.05 ======= ======= ======= Total Return (a) 17.19% (4.22)% 2.59%(b) Ratios/Supplemental Data Net assets (000), end of period $13,891 $12,143 $12,235 Ratio of expenses (without fee waivers) to average net assets 1.48% 1.28% 1.41%(c) Ratio of expenses (with fee waivers) to average net assets 0.70% 0.55% 0.53%(c) Ratio of net investment income (without fee waivers) to average net assets 4.96% 5.21% 4.73%(c) Ratio of net investment income (with fee waivers) to average net assets 5.74% 5.94% 5.61%(c) Portfolio turnover rate 57.96% 38.73% 16.04%(b) - ------------------- (a) Excludes sales charge. (b) Not annualized. (c) Annualized.
See Notes to Financial Statements. 11 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Shareholders and Board of Trustees Mariner Mutual Funds Trust We have audited the accompanying statement of net assets of the Mariner U.S. Government Securities Fund (one of the portfolios comprising Mariner Mutual Funds Trust) as of December 31, 1995, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1995, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Mariner U.S. Government Securities Fund at December 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP New York, New York February 5, 1996 12 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- MARINER SM MUTUAL FUNDS TRUST 3435 Stelzer Road Columbus,Ohio 43219 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 (EFFECTIVE JANUARY 1, 1996) BISYS Fund Services 3435 Stelzer Road Columbus, Ohio 43219 ADMINISTRATOR, TRANSFER AND DIVIDEND DISBURSING AGENT PFPC, Inc. 400 Bellevue Parkway Wilmington, Delaware 19809 CUSTODIAN Bank of New York 90 Washington Street New York, New York 10286 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-----