MARINER FUND GROUP
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MONEY MARKET FUNDS
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HSBC Asset Management (LOGO)
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Tax-Free Money Market Fund
New York Tax-Free Money Market Fund
ANNUAL REPORT
December 31, 1995
Managed by:
HSBC ASSET MANAGEMENT AMERICAS INC.
Sponsored and distributed by:
MARINER FUNDS SERVICES
<PAGE>
MARINER FUND GROUP
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MONEY MARKET FUNDS
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HSBC Asset Management (LOGO)
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Tax-Free Money Market Fund
New York Tax-Free Money Market Fund
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February 12, 1996
Dear Shareholder:
The Tax-Exempt sector continued to bid aggressively for new quality municipal
issues as cash easily outpaced supply during the year. As annual municipal
issuance decreased once again, the funds sought out AAA/Aaa rated pre-refunded
bonds backed by U.S. Government securities and/or high quality floaters to
balance the portfolios.
Looking ahead, we feel that a weak economy and soft inflation numbers will lead
to a number of additional interest rate cuts over the next several months. As in
the years' past, our primary goal is to ensure that all Mariner Money Market
Funds continue to maintain the highest standards in the areas of safety,
stability, quality, and service. We value your relationship and appreciate this
opportunity to work on your behalf.
Sincerely,
/s/ EDWARD J. MERKLE
Edward J. Merkle
<PAGE>
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
2
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
--------------- ---------- ----------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-94.9%
ALASKA-1.3%
P-1/A-1+ Valdez Marine Terminal Revenue Bond VRDN
5.95%*, 01/01/96 $ 200,000 $ 200,000
----------
COLORADO-10.6%
VMIG-1/A-1+ Colorado Health Facilities Authority Hospital Revenue VRDN
Bond (MBIA Insurance) 5.00%*, 01/07/96 680,000 680,000
SP1+ Colorado State TRAN 4.50%, 06/27/96 900,000 903,375
----------
1,583,375
----------
DISTRICT OF COLUMBIA-4.7%
VMIG-1/A-1+ District of Columbia GO VRDN (National Westminister LOC)
6.00%*, 01/01/96 300,000 300,000
VMIG-1/A-1+ District of Columbia GO VRDN (Toronto Dominion Bank LOC)
6.00%*, 01/01/96 400,000 400,000
----------
700,000
----------
KENTUCKY-2.7%
AA1/AA- Davies County Solid Waste Disposal Facilities-Scott Paper
Company Project Series 1993 B VRDN, AMT, 6.15%*, 01/01/96 400,000 400,000
----------
LOUISIANA-8.7%
VMIG-1/A-1+ DeSoto Parish LA Pollution Control-Central LA Electric Co.
VRDN 5.05%*, 01/07/96 (Swiss Bank Corp. LOC) 700,000 700,000
VMIG-1/A-1+ St Charles Parish LA Pollution Control-Shell Oil Co. VRDN
(Shell Obligor LOC) 5.95%*, 01/01/96 300,000 300,000
AAA/A-1+ St Charles Parish LA Pollution Control-Shell Oil Co. VRDN
(Shell Obligor LOC) 4.8%*, 01/07/96 300,000 300,000
----------
1,300,000
----------
MARYLAND-4.7%
VMIG-1/A-1 Maryland Health & Higher Education Facilities Pooled
Loan-Series A VRDN (First National Bank LOC)
5.00%*, 01/07/96 700,000 700,000
----------
MICHIGAN-6.1%
SP1+ Michigan Municipal Bond Authority-Series A 5.00%, 05/03/96 900,000 902,175
----------
</TABLE>
3
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
--------------- ----------- -----------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-(CONTINUED)
MISSOURI-4.7%
AA/A-1+ Missouri Health & Education Facility Authority Christian
Health Services-Series A VRDN (JP Morgan LOC)
5.05%*, 01/07/96 $ 400,000 $ 400,000
AA-/A-1+ Missouri Health & Education Facility VRDN (Morgan
Guaranty Trust LOC) 5.05%*, 01/07/96 300,000 300,000
----------
700,000
----------
NEW YORK-18.6%
SP1+ Nassau County NYTAN4.50%, 03/15/96 800,000 800,955
VMIG-1/A-1+ New York City GO VRDN (FGIC Insured) 5.00%*, 01/01/96 100,000 100,000
VMIG-1/A-1 New York City GO VRDN (Chemical Bank LOC)
5.95%*, 01/02/96 100,000 100,000
VMIG-1/A-1+ New York City GO Series B VRDN(FGIC Insured)
5.00%*, 01/02/96 200,000 200,000
VMIG-1 New York City Municipal Water Finance Authority Water
and Sewer Systems VRDN (FGIC Insured) 5.90%*, 01/02/96 200,000 200,000
MIG-1/SP1+ New York City TAN4.50%, 02/15/96 100,000 100,083
MIG-1/SP1+ New York City RAN4.50%, 04/11/96 60,000 60,092
A-1+ New York State ERDA-Niagara Mohawk Power Project
VRDN (Morgan Guaranty Trust LOC), AMT, 5.60%*, 01/01/96 100,000 100,000
A-1+ New York State ERDA-Niagara Mohawk VRDN
(Morgan Guaranty Trust LOC), AMT, 5.60%*, 01/01/96 300,000 300,000
VMIG-1/Aa2 New York State Dormitory Authority (Oxford University Press)
VRDN (Wachovia Bank LOC) 6.40%*, 01/01/96 400,000 400,000
Aaa/Aaa Westchester County NY GO7.00%, 12/01/96 400,000 411,378
----------
2,772,508
----------
OKLAHOMA-4.7%
VMIG-1 Tulsa, Oklahoma University of Oklahoma Series 85A
VRDN (Fuji LOC) 5.25%*, 01/07/96 700,000 700,000
----------
OHIO-2.0%
VMIG-1/A-1+ Akron Sanitation & Sewer System Revenue Bond Series 1994
VRDN (Credit Suisse LOC) 5.15%*, 01/07/96 300,000 300,000
----------
</TABLE>
4
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
-------------- ---------- ----------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES-(CONTINUED)
SOUTH DAKOTA-4.7%
P-1/A-1+ Lawrence County, South Dakota Pollution Control VRDN
(Homestake Mining Co.) (Bank of Nova Scotia LOC)
5.20%*, 01/07/96 $ 700,000 $ 700,000
-----------
TEXAS-20.7%
VMIG-1/A-1+ Brazos River TXPollution Control Revenue Bond-
Collective Utilities Electric Co.-Series B VRDN
(Union Bank of Switzerland LOC), AMT, 5.60%*, 01/01/96 700,000 700,000
AAA Lufkin Texas Health Facilities VRDN (Texas Commerce
LOC) 5.10%*, 01/07/96 700,000 700,000
MIG1/SP1+ Texas State TRAN - Series A 4.75%, 08/30/96 875,000 879,818
P-1/A-1 Tyler Health Facilities CP (Banque Paribas LOC)
3.60%, 02/16/96 800,000 800,000
-----------
3,079,818
-----------
UTAH-0.7%
VMIG-1/A-1+ Emery County Utah Pollution Control Pacific Corp Project -
Series 1994 VRDN (AMBACInsured) 5.95%*, 01/01/96 100,000 100,000
-----------
TOTAL INVESTMENTS-94.9%
(Cost--$14,137,876)*** 14,137,876
-----------
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
<S> <C>
OTHER ASSETS (LIABILITIES)-5.1%
Receivable for securities sold $ 700,643
Interest receivable 124,093
Prepaid expenses 1,877
Due to affiliates (17,514)
Dividends payable (43,114)
Accrued expenses (12,330)
----------
Other assets in excess of liabilities-net 753,655
----------
NET ASSETS-100.0% $14,891,531
===========
NET ASSET VALUE PER SHARE-applicable to 14,896,739 shares
($0.001 par value) outstanding; 1,000,000,000 shares authorized $1.00
=====
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
--------------- ---------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES-96.0%
BONDS-20.6%
Aa/AA- New York City Municipal Assistance Corp.
Series 66, 6.90%, 07/01/96 $ 2,000,000 $ 2,029,911
Aaa/AAA New York City Municipal Water & Sewer System Pre-Refunded
Revenue Bond-Series A (MBIA Insurance)
(Collateral in U.S. Government Securities)
6.75%, 06/15/96 @ 102 1,850,000 1,911,084
Aaa/AAA New York State Environmental Facilities Pollution Control-
Pooled Loan B, 3.50%, 05/15/96 900,000 899,508
Aaa/AAA New York State Environmental Facilities Corp. 5.30%, 09/15/96 1,000,000 1,012,701
Aaa/AAA New York State Medical Care Facility Finance Agency-
Mt. Sinai Hospital Pre-Refunded Bond (FHA LOC)
(Collateral in U.S. Government Securities)
8.875%, 01/15/96 @ 102 3,400,000 3,474,412
MIG-1/A-1 New York State Power Authority Mandatory Put Bond
3.85%, 03/01/96 2,500,000 2,500,000
Aaa/AAA Triborough Bridge & Tunnel Authority Series H Pre-Refunded
Bond (Collateral in U.S. Government Securities)
8.375%, 01/01/96 @ 102 1,500,000 1,530,126
-----------
TOTAL BONDS (Cost-$13,357,742) 13,357,742
-----------
SHORT-TERM NOTES-13.2%
SP-1 Nassau, New York County RAN 4.25%, 03/15/96 2,000,000 2,001,971
SP-1 Nassau, New York County TAN 4.50%, 03/15/96 1,000,000 1,001,194
MIG-1/SP1+ New York City TAN 4.50%, 02/15/96 270,000 270,223
VMIG-1/SP1+ New York City RAN 4.50%, 04/11/96 4,390,000 4,398,797
MIG-1 Schenectady New York BAN 4.25%, 06/27/96 900,000 902,094
-----------
TOTAL SHORT-TERM NOTES (Cost-$8,574,279) 8,574,279
-----------
VARIABLE RATE DEMAND NOTES*-62.2%
VMIG-1/A-1+ New York City GO (Mitsubishi Bank LOC) 5.35%, 01/07/96 800,000 800,000
VMIG-1/AAA New York City GO (Union Bank of Switzerland LOC)
5.00%, 01/07/96 100,000 100,000
VMIG-1/A-1+ New York City GO (Sanwa Bank LOC) 5.95%, 01/01/96 100,000 100,000
VMIG-1/A-1+ New York City GO (MBIA Insured) 5.90%, 01/01/96 100,000 100,000
VMIG-1/Aa3 New York City HDC-East 96th Street Project
(Mitsubishi LOC) 5.10%, 01/07/96 2,000,000 2,000,000
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
-------------- ---------- ----------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES*-(CONTINUED)
VMIG-1/A-1 New York City HDC-Park Gate Towers (Citibank LOC)
5.10%, 01/07/96 $2,485,000 $2,485,000
VMIG-1/A-1 New York City HDC-Queenswood Apartments
(Sumitomo Bank LOC) 5.25%, 01/07/96 2,800,000 2,800,000
VMIG-1/Aa2 New York City HDC-Tribecca Towers-A
(FNMA Insured), AMT, 5.10%, 01/07/96 100,000 100,000
A+/A-1 New York City IDA-Columbia Grammar School
Project (Chemical Bank LOC) 4.90%, 01/07/96 2,000,000 2,000,000
VMIG-1/A-1+ New York City Municipal Water & Sewer System
Revenue Bond-Series 1994 Series C (FGIC Insurance)
5.90%, 01/01/96 1,000,000 1,000,000
VMIG-1/A-1+ New York City Municipal Water Financial Authority
(FGIC Insurance) 5.90%, 01/01/96 1,450,000 1,450,000
VMIG-1/A-1 New York City Trust For Cultural Resources-Carnegie
Hall (Dai-Ichi Kangyo LOC) 5.55%, 01/07/96 2,600,000 2,600,000
VMIG-1/A-1 New York City Trust For Cultural Resources-Museum
of Broadcasting (Sumitomo Bank Ltd. LOC)
5.25%, 01/07/96 1,000,000 1,000,000
VMIG-1/A-1+ New York State Local Government Assistance Corporation
Series A (Suisse Bank, UBS, Credit Suisse LOC)
4.95%, 01/07/96 1,400,000 1,400,000
VMIG-1/A-1 New York Metropolitan Transportation Authority
Commuter Facilities-Series 1991 (Morgan Guarantee
Trust LOC) 5.00%, 01/07/96 900,000 900,000
VMIG-1/A-1 New York State Dormitory Authority-Mirian Osborne
Memorial Home Series A (Banque Paribas LOC)
5.05%, 01/07/96 2,000,000 2,000,000
VMIG-1/Aa2 New York State Dormitory Authority-Oxford University
Press (Wachovia Bank LOC) 6.40%, 01/01/96 1,800,000 1,800,000
VMIG-1/A1 New York State Dormitory Authority-Beverwyck Inc.
(Banque Paribas LOC) 5.05%, 01/07/96 1,300,000 1,300,000
AAA/A-1+ New York State ERDA Pollution Control (Toronto
Dominion Bank LOC) 5.50%, 01/01/96 1,000,000 1,000,000
P-1 New York State ERDA Pollution Control (Toronto
Dominion Bank LOC) 6.05%, 01/01/96 1,000,000 1,000,000
VMIG-1/A-1+ New York State ERDA Pollution Control-Orange and
Rockland Project (Societe Generale LOC) 4.90%, 01/07/96 2,000,000 2,000,000
P-1 New York State ERDA Pollution Control Niagara Mohawk
Power Corp. (Toronto Dominum Bank LOC) 5.95%, 01/01/96 400,000 400,000
</TABLE>
8
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING** PRINCIPAL
MDY/S&P AMOUNT VALUE
--------------- ---------- ----------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES*-(CONTINUED)
AA/A-1+ New York State ERDA Pollution Control Niagara Mohawk
Power (Morgan Guaranty Trust LOC), AMT,
5.60%, 01/01/96 $1,700,000 $1,700,000
Aa/A-1+ New York State ERDAPollution Control Niagara Mohawk
Power-Series C (Canadian Imperial Bank LOC)
5.95%, 01/01/96 200,000 200,000
VMIG-/A-1 New York State HFA-Liberty View Apartments
(Chemical Bank LOC) 4.70%, 01/07/96 2,600,000 2,600,000
VMIG-1/A-1+ New York State HFA-Pleasant Creek Meadows
(AMBAC Insurance) 5.20%, 01/07/96 1,100,000 1,100,000
A-1+ New York State HFA-Series A-Sloane Kettering
5.10%, 01/07/96 1,000,000 1,000,000
VMIG-1/A-1 New York State Job Development Authority Series C
(Sumitomo LOC) 4.30%, 01/07/96 235,000 235,000
VMIG-1/A-1 New York State Job Development Authority Series D
(Sumitomo LOC) 4.30%, 01/07/96 535,000 535,000
VMIG-1/A-1 New York State Job Development Authority Series E
(Sumitomo LOC) 4.30%, 01/07/96 545,000 545,000
VMIG-1/A-1 New York State Job Development Authority Series H
(Sumitomo LOC) 4.30%, 01/07/96 750,000 750,000
VMIG-1/A-1+ New York State Local Government Assistance Corp.
(Swiss Bank Credit Suisse LOC) 4.95%, 01/07/96 400,000 400,000
AA-/A-1+ Onondaga County, New York IDA-Pass & Seymore
Project (Banque National de Paris LOC) 3.95%, 01/07/96 1,200,000 1,200,000
VMIG-1/A-1+ Triborough Bridge &Tunnel Authority (FGIC Insured)
4.90%, 01/07/96 400,000 400,000
VMIG-1/Aa2 Wallkill New York Pollution Control IDA-Reynolds Metal
Project (National Westminster LOC) 5.25%, 01/07/96 500,000 500,000
VMIG-1/A1 Yonkers New York IDA-Consumers Union Facility (Industrial
Bank of Japan LOC) 5.30%, 01/07/96 900,000 900,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES (Cost-$40,400,000) 40,400,000
-----------
TOTAL NEW YORK MUNICIPAL SECURITIES (Cost-$62,332,021) 62,332,021
-----------
OTHER MUNICIPAL SECURITIES-3.1%
Aa1/AA- Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities-Reynolds Metals Co. Project Mandatory
Put Bond (ABN-AMROBank LOC) 3.75,%, 09/01/96
(Cost-$1,995,204) 2,000,000 1,995,204
-----------
TOTAL INVESTMENTS-99.1%
(Cost-$64,327,225)*** 64,327,225
------------
</TABLE>
9
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
<S> <C>
OTHER ASSETS (LIABILITIES)-0.9%
Cash $ 84,439
Interest receivable 667,503
Other assets 4,342
Dividends payable (160,234)
Due to affiliates (32,046)
Accrued expenses (7,700)
-----------
Other assets in excess of liabilities-net 556,304
-----------
NET ASSETS-100% $64,883,529
===========
NET ASSET VALUE PER SHARE-applicable to 64,883,665 shares
($0.001 par value) outstanding; 1,000,000,000 shares authorized $1.00
=====
</TABLE>
ABBREVIATIONS AND NOTES USED IN THESE STATEMENTS:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative MinimumTax Paper
BAN Bank Anticipation Note
CP Commercial Paper
ERDA Energy Research Development Authority
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Authority
GO General Obligations
HDC Housing Development Corporation
HFA Housing Finance Agency
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance
RAN Revenue Anticipation Note
TAN Tax Anticipation Note
TRAN Tax and Revenue Anticipation Note
VRDN Variable Rate Demand Note
* Variable Rate Demand Note: Stated rate as of December 31, 1995; Dates shown
represent the later of the demand date or next interest rate change date,
which is considered the maturity date for financial reporting purposes.
** Credit Ratings were obtained from Standard & Poor's Corporation ("S&P") and
Moody's Investors Service, Inc. ("MDY") and are unaudited.
*** Also represents cost for Federal income tax purposes.
Institutions shown in parenthesis have entered into credit support agreements
with the issuer.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NEW YORK
TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest $749,936 $2,385,327
-------- ----------
Expenses:
Advisory fees 67,250 218,828
Legal fees 54,734 54,734
Administrative services fee 19,216 62,522
Trustees' fees and expenses 17,697 17,697
Distribution expenses 17,462 64,287
Transfer agent fees 17,334 43,050
Co-administrative and shareholder servicing fees 13,450 43,766
Custodian fee 5,548 8,202
Miscellaneous expenses 9,197 18,224
-------- ----------
Total expenses 221,888 531,310
Less expense waivers (22,329) (102,076)
-------- ----------
Net expenses 199,559 429,234
-------- ----------
Net investment income 550,377 1,956,093
-------- ----------
NET REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (989) (136)
-------- ----------
Net increase in net assets resulting from operations $549,388 $1,955,957
======== ==========
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 550,377 $ 994,503
Net realized loss on investments (989) (54,219)
----------- -----------
Net increase in net assets resulting from operations 549,388 940,284
----------- -----------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (550,377) (994,503)
----------- -----------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS (16,887,123) (32,469,787)
----------- -----------
CONTRIBUTION BY AFFILIATE -- 50,000
----------- -----------
Net decrease in net assets (16,888,112) (32,474,006)
----------- -----------
NET ASSETS:
Beginning of year 31,779,643 64,253,649
----------- -----------
End of year $14,891,531 $31,779,643
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,956,093 $ 1,303,999
Net realized loss on investments (136) --
----------- -----------
Net increase in net assets resulting from operations 1,955,957 1,303,999
----------- -----------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (1,956,093) (1,303,999)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS 11,345,368 (5,855,702)
----------- -----------
Net increase (decrease) in net assets 11,345,232 (5,855,702)
----------- -----------
NET ASSETS:
Beginning of year 53,538,297 59,393,999
----------- -----------
End of year $64,883,529 $53,538,297
=========== ===========
See Notes to Financial Statements.
</TABLE>
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Mariner Funds Trust (the "Trust") was organized as a Massachusetts
business trust on October 31, 1985 and is a no-load, open-end,
diversified investment company which currently has five separate
investment portfolios, including Mariner Tax-Free Money Market Fund and
Mariner New York Tax-Free Money Fund (collectively, the "Funds").
The Mariner New York Tax-Free Money Market Fund follows an investment
policy of investing primarily in New York municipal obligations. The
Mariner Tax-Free Money Market Fund has invested over 10% of its net
assets in Colorado, New York and Texas municipal obligations. Economic
changes affecting the state and certain of its public bodies and
municipalities may affect the ability of issuers within the state to
pay interest on, or repay principal of, municipal obligations held by
the Funds.
SECURITIES VALUATION: Investment securities are valued at amortized
cost which approximates market value. In the event that a deviation of
1/2 of 1% or more exists between a Fund's $1.00 per share net asset
value, calculated at amortized cost, and the net asset value calculated
by reference to market-based values, or if there is any other deviation
which the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will
promptly consider what action should be taken.
TAXES: It is the Funds' policy to comply with the provisions of the
Internal Revenue Code, as amended, applicable to regulated investment
companies, and to distribute substantially all of their taxable income
and net realized capital gains to their shareholders for each taxable
year. Therefore, no provision is required for Federal income tax.
Mariner Tax-Free Money Market has available a $20,999 capital loss
carryforward which, if not utilized, $3,204, $3,284 and $14,511 will
expire in year 2000, 2001 and 2003, respectively. Mariner New York
Tax-Free Money Market has available a $87,387 capital loss carryforward
which, if not utilized, $30,740, $22,404, $29,192, $3,591, $1,324 and
$136 will expire in year 1996, 1997, 1998, 2001, 2002 and 2003,
respectively.
DIVIDENDS AND DISTRIBUTIONS: The Funds intend to declare as a dividend
substantially all of their net investment income, which includes
realized gains and losses, if any, at the end of each business day and
to pay within five business days after the end of each month.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on trade date. Identified cost of investments sold is used
for both financial statement and Federal income tax purposes. Interest
income, including the amortization of discount or premium, is recorded
as earned.
EXPENSE ALLOCATION: Expenses directly attributable to each Fund in the
Trust are charged to that Fund's operations; expenses which are
applicable to all Funds are allocated among them.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL
The Trust has authorized capital of 1 billion shares of beneficial
interest for each fund with a par value of $0.001 per share.
Transactions in shares of beneficial interest at $1.00 per share were
as follows:
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
--------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Sold 37,336,013 121,600,626
Issued on reinvestment of dividends 119,586 124,734
----------- ------------
37,455,599 121,725,360
Redeemed (54,342,722) (154,195,147)
----------- ------------
Decrease in shares (16,887,123) (32,469,787)
=========== ============
</TABLE>
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
---------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Sold 91,135,964 96,106,539
Issued on reinvestment of dividends 1,204,763 713,846
----------- ------------
92,340,727 96,820,385
Redeemed (80,995,359) (102,676,087)
----------- ------------
Increase (decrease) in shares 11,345,368 (5,855,702)
=========== ============
</TABLE>
At December 31, 1995, each Fund's composition of net assets was as
follows:
<TABLE>
<CAPTION>
TAX-FREE NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND
----------------- -----------------
<S> <C> <C>
Paid-in capital $14,946,739 $64,883,665
Accumulated realized loss on investments (55,208) (136)
----------- ------------
TOTAL NET ASSETS $14,891,531 $64,883,529
=========== ============
</TABLE>
3. AGREEMENTS
The Trust retains HSBC Asset Management Americas Inc. ("HSBC Americas")
to act as Investment Adviser for the Funds. 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 Funds, subject to policy
established by the Board of Trustees.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. AGREEMENTS (CONTINUED)
As compensation for its services, HSBC Americas is paid monthly
advisory fees at the following annual rates:
<TABLE>
<CAPTION>
ADVISORY
PORTION OF EACH FUND'S AVERAGE DAILY NET ASSETS FEE RATE
-------------------------------------------------------------- --------
<S> <C>
Not exceeding $500 million 0.350%
In excess of $500 million but not exceeding $1 billion 0.315%
In excess of $1 billion but not exceeding $1.5 billion 0.280%
In excess of $1.5 billion 0.245%
</TABLE>
For the year ended December 31, 1995, HSBC Americas earned
approximately $48,000 and $125,000 in advisory fees, net of fee waivers
of approximately $19,200 and $93,800, for Tax-Free Money Market Fund
and New York Tax-Free Money Market Fund, respectively.
As administrator, PFPC Inc. ("PFPC") is paid a monthly asset based fee
of 0.10% of each Fund's first $200 million of average net assets;
0.075% of each Fund's next $200 million of average net assets; 0.05% of
each Fund's next $200 million of average net assets; and 0.03% of each
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 $17,700
and $57,900, net of fee waivers of approximately $1,500 and $4,700, for
Tax Free-Money Market Fund and New York Tax Free-Money Market Fund,
respectively. Effective March 1996, PFPC will be terminated as
administrator and transfer agent for the Funds.
HSBC Americas may enter into agreements (the "Service Agreements") with
certain banks, financial institutions and corporations ("Service
Organizations") so that each Service Organization handles recordkeeping
and provides certain administrative services for its customers who
invest in the Funds 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 each Fund on an annual basis will not
exceed 0.25% of the average value of each Fund's shares held in the
subaccounts of the Service Organizations.
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 Funds. For furnishing custodian services, Marine
Midland was paid a monthly fee with respect to the Funds for
safekeeping their assets plus certain transaction charges and
out-of-pocket expenses. For the period January 1, 1995 through
September 25, 1995, Marine Midland earned approximately $5,200 and
$7,000 for Tax-Free Money Market Fund and New York Tax-Free Money
Market Fund, respectively, 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 $13,400 and $43,800 for Tax-Free Money Market
Fund and New York Tax-Free Money Market Fund, respectively. Of that
total, HSBC Americas waived approximately $1,600 and $3,600 of these
fees for the month of January 1995 for Tax-Free Money Market Fund and
New York Tax-Free Money Market Fund, respectively.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. AGREEMENTS (CONTINUED)
The Funds have 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 each Fund to
Mariner Funds Services for expenses incurred in connection with
distribution services provided to each Fund not to exceed an annual
rate of 0.20% of the average daily value of each Fund's net assets
during the preceding month.
One state in which the shares of the Tax-Free Money Market 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. The New York Tax-Free Money Market Fund currently
is not subject to any state 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, each Fund
incurred legal fees of approximately $43,200 to Fund counsel.
4. OTHER RELATED PARTY TRANSACTIONS
During 1994, an affiliate of the Adviser purchased a security from the
Tax-Free Money Market Fund at an amount $50,000 in excess of the
security's fair value. The Tax-Free Money Market Fund recorded a
realized loss on the sale and an offsetting capital contribution from
the affiliate.
16
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.028 0.022 0.020 0.025 0.040
Net realized loss -- (0.002) -- -- --
------- ------- ------- ------- -------
Total from investment operations 0.028 0.020 0.20 0.025 0.040
Less Distributions from:
NET INVESTMENT INCOME (0.028) (0.022) (0.020) (0.025) (0.040)
------- ------- ------- ------- -------
Contribution by affiliate -- 0.002 -- -- --
------- ------- ------- ------- -------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Total Return 2.90% 2.25% 1.98% 2.55% 4.08%
Ratios/Supplemental Data
Net assets (000), end of year $14,892 $31,780 $64,254 $78,963 $89,101
Ratio of expenses (without fee waivers) to
average net assets 1.15% 0.77% 0.70% 0.74% 0.72%
Ratio of expenses (with fee waivers) to
average net assets 1.04% 0.66% 0.59% 0.62% 0.60%
Ratio of net investment income
(without fee waivers) to average
net assets 2.75% 2.01% 1.84% 2.40% 3.88%
Ratio of net investment income (with fee
waivers) to average net assets 2.86% 2.12% 1.95% 2.52% 4.00%
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.031 0.022 0.018 0.024 0.038
------- ------- ------- ------- -------
Less Distributions from:
Net investment income (0.031) (0.022) (0.018) (0.024) (0.038)
------- ------- ------- ------- -------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return 3.17% 2.23% 1.86% 2.44% 3.85%
Ratios/Supplemental Data
Net assets (000), end of year $64,884 $53,538 $59,394 $56,386 $75,850
Ratio of expenses (without fee waivers)
to average net assets 0.85% 0.73% 0.72% 0.73% 0.68%
Ratio of expenses (with fee waivers)
to average net assets 0.69% 0.57% 0.55% 0.56% 0.51%
Ratio of net investment income
(without fee waivers) to average
net assets 2.97% 2.04% 1.68% 2.24% 3.61%
Ratio of net investment income (with fee
waivers) to average net assets 3.13% 2.20% 1.85% 2.41% 3.78%
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
Mariner Funds Trust
We have audited the accompanying statements of net assets of the Mariner
Tax-Free Money Market Fund and Mariner New York Tax-Free Money Market Fund
(two of the portfolios comprising Mariner 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 years 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 and brokers. 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 Tax-Free Money Market Fund and Mariner New York Tax-Free
Money Market Fund at December 31, 1995, the results of their operations for
the year then ended, the changes in their net assets for each of the two
years in the period then ended and the financial highlights for each of the
indicated years, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
New York, New York
February 5, 1996
19
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MARINER 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 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.
