-----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, M5yylvfnI8wrVgBxLFRbgx4R90g9dnBWHycHVDYyba6Qe2IUTaM0YQ+I2b/cZDH/ 7zolrNm7NvJsxAitmGo/xw== 0000935069-96-000035.txt : 19960312 0000935069-96-000035.hdr.sgml : 19960312 ACCESSION NUMBER: 0000935069-96-000035 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: 96533213 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 SHORT-TERM FIXED INCOME FUND MARINER MUTUAL FUNDS TRUST - ------------------------------------------------------------------------------- SHORT-TERM FIXED INCOME 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 - ------------------------------------------------------------------------------- SHORT-TERM FIXED INCOME FUND HSBC Asset Management (LOGO) - ------------------------------------------------------------------------------- February 12, 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 10.99% versus 12.88% for the Lehman Mutual Fund 1-5 year Government/Corporate Index.Our returns were below the index because of a higher average quality, incorrect duration positioning in the first quarter, and underweighting in Corporates which were the best performing sector in 1995. The combination of these factors caused the funds to lag the index in what was a terrific rally. Sincerely, /s/ JAMES LARK James Lark COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN SHORT-TERM FIXED INCOME FUND VS. LEHMAN MUTUAL FUND 1-5 YEAR GOVERNMENT/CORPORATE INDEX
- ------------------------------------------------- Average Annual Total Return - ------------------------------------------------- 1 Year Inception - ------------------------------------------------- Offering Price(1) 8.82% 4.50% NAV(2) 10.99% 5.23% - -------------------------------------------------
CHART {GRAPHIC OMITTED] Plot Points: FUND (1) LEHMAN MF FUND (2) MARCH 1993 $10,000 $10,000 $10,000 JUNE 1993 9,930 10,157 10,125 SEPTEMBER 1993 10,048 10,334 10,250 DECEMBER 1993 10,121 10,382 10,324 MARCH 1994 10,104 10,262 10,306 JUNE 1994 10,108 10,231 10,310 SEPTEMBER 1994 10,194 10,324 10,398 DECEMBER 1994 10,207 10,308 10,411 MARCH 1995 10,529 10,707 10,739 JUNE 1995 10,928 11,136 11,146 SEPTEMBER 1995 11,059 11,306 11,280 DECEMBER 1995 11,330 11,405 11,556 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 Short-Term Fixed Income Fund on March 1, 1993, to a $10,000 investment in the Lehman Mutual Fund 1-5 Year Government/Corporate Index on that date. All dividends and capital gains distributions are reinvested. The Fund's performance takes into account all applicable fees and expenses. The Lehman Mutual Fund 1-5 Year Government/Corporate Index is a widely accepted unmanaged index of overall treasury, government agency and corporate 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
SHORT-TERM FIXED INCOME FUND INTEREST MATURITY PRINCIPAL RATE DATE AMOUNT VALUE -------- -------- --------- ---------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS-82.3% U.S. GOVERNMENT AGENCY OBLIGATIONS-12.3% Federal Home Loan Bank 7.944% 02/21/00 $ 500,000 $ 523,543 Federal National Mortgage Association 5.550 02/12/99 500,000 497,013 State of Israel Agency for International Development 4.375 03/15/96 325,000 324,343 ----------- Total U.S. Government Agency Obligations (Cost-$1,343,811) 1,344,899 ----------- U.S. GOVERNMENT OBLIGATIONS-59.0% U.S. Treasury Notes: 8.875 02/15/96 400,000 401,750 6.500 08/15/97 2,000,000 2,040,000 7.750 01/31/00 1,500,000 1,629,843 7.125 02/29/00 1,500,000 1,597,500 5.750 10/31/00 750,000 761,484 ----------- Total U.S. Government Obligations (Cost-$6,232,227) 6,430,577 ----------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES-11.0% Federal National Mortgage Association 6.000 09/01/00 935,430 933,969 ----------- Federal National Mortgage Association Real Estate Mortgage Investment Conduits: 1991-G24K 8.500 04/25/96 24,897 24,890 G34D 7.250 10/25/96 109,561 109,848 1992-2OC 7.500 01/25/97 132,199 132,971 ----------- 267,709 ----------- Total U.S. Government Agency Mortgage-Backed Securities (Cost-$1,202,957) 1,201,678 ----------- Total U.S. Government and Agency Obligations (Cost-$8,778,995) 8,977,154 ----------- ASSET BACKED SECURITIES-0.2% General Motors Acceptance Corp. 1992-F Grantor Trust (Cost-$27,226) 4.500 09/15/97 27,199 27,090 ----------- CORPORATE BONDS-9.5% BANKS-2.6% International Bank R&D 8.300 11/01/96 275,000 281,492 -----------
5 STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
SHORT-TERM FIXED INCOME FUND INTEREST MATURITY PRINCIPAL RATE DATE AMOUNT VALUE -------- -------- ---------- ---------- CORPORATE BONDS-(CONTINUED) FINANCIAL SERVICES-2.2% Associates Corp. of North America 6.875% 01/15/97 $ 240,000 $ 243,417 ----------- TOBACCO-4.7% Phillip Morris Cos., Inc. 8.875 07/01/96 500,000 507,641 ----------- Total Corporate Bonds (Cost-$1,106,752) 1,032,550 ----------- MEDIUM-TERM NOTE-3.7% General Motors Acceptance Corp. (Cost-$424,160) 7.400 01/14/97 400,000 407,304 ----------- SHORT-TERM INVESTMENT-2.8% Provident Institutional Temporary Investment Fund (Cost-$301,000) 5.590 On Demand 301,000 301,000 ----------- TOTAL INVESTMENTS-98.5% (Cost-$10,638,133)* 10,745,098 ----------- OTHER ASSETS (LIABILITIES)-1.5% Cash 24 Interest and dividends receivable 235,516 Prepaid expenses 1,386 Organizational costs, net 22,037 Accrued expenses (11,465) Dividends payable (42,041) Payable for fund shares redeemed (34,735) Due to affiliates (8,011) ----------- Other assets in excess of liabilities-net 162,711 ----------- NET ASSETS-100% $10,907,809 =========== NET ASSET VALUE PER SHARE-applicable to 1,094,435 shares ($0.001 par value) outstanding $9.97 ===== * As of December 31, 1995, net unrealized appreciation for Federal income tax purposes aggregated $106,251, of which $211,326 related to appreciated and $105,075 related to depreciated securities. The aggregate cost of investments for Federal income tax purposes was $10,638,847.
See Notes to Financial Statements. 6 STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 SHORT-TERM FIXED INCOME FUND INVESTMENT INCOME: Income: Interest $ 836,356 ---------- Expenses: Advisory fees 69,957 Audit fee 25,653 Legal fees 18,471 Distribution expenses 16,537 Administrative services fee 12,719 Amortization of organizational costs 12,552 Trustees' fees and expenses 9,164 Co-administrative and shareholder servicing fees 8,904 Custodian fee 4,513 Miscellaneous expenses 4,828 ---------- Total expenses 183,298 Less expense waivers (50,694) ---------- Net expenses 132,604 ---------- Net investment income 703,752 ---------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments 10,304 Net change in unrealized appreciation on investments 619,944 ---------- Net gain on investments 630,248 ---------- Net increase in net assets resulting from operations $1,334,000 ========== See Notes to Financial Statements. 7 STATEMENT OF CHANGES IN NET ASSETS
SHORT-TERM FIXED INCOME FUND FOR THE FOR THE YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 ----------------- ----------------- OPERATIONS: Net investment income $ 703,752 $ 926,567 Net realized gain(loss) on investments 10,304 (383,911) Net change in unrealized appreciation(depreciation) on investments 619,944 (389,230) ----------- ----------- Net increase in net assets resulting from operations 1,334,000 153,426 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (703,752) (926,567) ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from sales of 300,917 and 407,880 shares, respectively 2,948,477 3,977,439 Net asset value of 2,522 and 6,674 shares issued in reinvestment of distributions, respectively 24,680 64,701 Payments for redemptions of 751,431 and 638,947 shares, respectively (7,337,356) (6,138,444) ----------- ----------- Net decrease in net assets from capital share transactions (4,364,199) (2,096,304) ----------- ----------- Net decrease in net assets (3,733,951) (2,869,445) NET ASSETS: Beginning of year 14,641,760 17,511,205 ----------- ----------- End of year $10,907,809 $14,641,760 =========== ===========
See Notes to Financial Statements. 8 NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Mariner Short-Term Fixed Income 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 $392,439 capital loss carryforward which, if not utilized, $29,220, $278,476 and $84,743 will expire in year 2000, 2001 and 2002, 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 to 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 $11,213,541 Accumulated net realized loss on investments (412,697) Net unrealized appreciation on investments 106,965 ----------- Total net assets $10,907,809 =========== 9 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. PORTFOLIO SECURITIES The cost of securities purchased and proceeds from securities sold (excluding short-term securities and principal paydowns) for the year ended December 31, 1995 were approximately $10,880,000 and $5,328,000, 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 year ended December 31, 1995, HSBC Americas earned approximately $25,500 in advisory fees, net of fee waivers of approximately $44,500. 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 $11,600, net of fee waivers of approximately $1,000, in administrative 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 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 the Fund's shares held in the subaccounts of the Service Organizations. 10 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. AGREEMENTS (CONTINUED) Effective September 25, 1995, Bank of New York replaced Marine Midland Bank, N.A. ("Marine Midland"), an affiliate of the Adviser, 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. From the period January 1, 1995 through September 25, 1995, HSBC Americas paid the Fund's entire custodian fees totaling approximately $4,300. 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 $8,900. Of that total, HSBC Americas waived approximately $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 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. 11 FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
SHORT-TERM FIXED INCOME FUND FOR THE PERIOD MARCH 1, 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 $ 9.49 $ 9.91 $10.00 ------ ------ ------ Income From Investment Operations: Net investment income 0.54 0.50 0.41 Net realized and unrealized gain(loss) on investments 0.48 (0.42) (0.09) ------ ------ ------ Total from investment operations 1.02 0.08 0.32 ------ ------ ------ Less Distributions from: Net investment income (0.54) (0.50) (0.41) ------ ------ ------ Net asset value, end of period $ 9.97 $ 9.49 $ 9.91 ====== ====== ====== Total Return (a) 10.99% 0.86% 3.24%(b) Ratios/Supplemental Data Net assets (000), end of period $10,908 $14,642 $17,511 Ratio of expenses (without fee waivers) to average net assets 1.44% 1.21% 1.29%(c) Ratio of expenses (with fee waivers) to average net assets 1.04% 0.78% 0.60%(c) Ratio of net investment income (without fee waivers) to average net assets 5.13% 4.75% 4.22%(c) Ratio of net investment income (with fee waivers) to average net assets 5.53% 5.18% 4.91%(c) Portfolio turnover rate 53.28% 68.13% 32.02%(b) - ------------------- (a) Excludes sales charge. (b) Not annualized. (c) Annualized.
See Notes to Financial Statements. 12 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 Short-Term Fixed Income 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 Short-Term Fixed Income Fund at December 31, 1995, the results of its operations for the year then ended, the changes in 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 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) BISYSFund 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-----