MARINER FUND GROUP
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------
HSBC Asset Management (LOGO)
- -------------------------------------------------------------------------------
Cash Management Fund
Government Money Market Fund
U.S. Treasury 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
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------
HSBC Asset Management (LOGO)
- -------------------------------------------------------------------------------
Cash Management Fund
Government Money Market Fund
U.S. Treasury Money Market Fund
- -------------------------------------------------------------------------------
February 12, 1996
Dear Shareholder:
The Federal Reserve eased or lowered interest rates by 25 basis points on July
6th and again on December 19th to decrease the Federal Funds rate from 6.00% to
5.50%. These actions reflected the Federal Reserve's viewpoint that the recent
economic expansion was moderate at best and that potential inflationary
pressures had diminished significantly.
Given the continuing weak economic data and the benign inflation numbers, the
main focus on short term interest rates will not be a question of direction but
of magnitude. Additional interest rate cuts will be forthcoming over the next
several months until economic growth becomes stimulated by easier policy and
shows signs of sustained expansion.
Once again, our primary goal is to ensure that the Mariner Money Market Funds
reflect the highest standards characterized by safety, performance, stability
and service. We value your relationship and appreciate this chance 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>
CASH MANAGEMENT FUND
INTEREST/
DISCOUNT MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
BANKERS ACCEPTANCES-1.7%
Fuji Bank 6.070% 02/05/96 $ 3,000,000 $ 2,982,296
------------
Total Bankers Acceptance (Cost-$2,982,296)
COMMERCIAL PAPER*-28.8%
Banco Mercantil del Norte SA
(Bayer Veriens bank LOC) 5.360 08/12/96 9,000,000 8,699,840
Bancomer SA (Bank of Montreal LOC) 5.410 07/11/96 9,000,000 8,740,320
DIC Americas (Mitsubishi Bank LOC) 6.020 01/16/96 9,000,000 8,977,425
Onada USA Inc. (Industrial Bank of Japan Ltd. LOC) 5.970 02/01/96 6,000,000 5,969,155
Tsumura International Inc (Sumitomo Bank Ltd. LOC) 6.050 02/09/96 9,000,000 8,941,012
Unibanco-Uncao de Banc, G.C. (Westdeutsche
Landesbanken LOC) 5.700 04/12/96 8,000,000 7,870,800
------------
Total Commercial Paper (Cost-$49,198,552) 49,198,552
------------
CERTIFICATES OF DEPOSIT-29.3%
Commerzbank AG 6.940 01/09/96 10,000,000 10,001,170
Dai Ichi Kangyo Bank Ltd. 6.210 01/19/96 10,000,000 10,000,049
Fuji Bank Ltd. 6.100 01/08/96 6,000,000 6,000,046
Industrial Bank of Japan Ltd. 6.120 02/05/96 4,000,000 4,000,036
PNC Bank, N.A. 6.240 02/02/96 10,000,000 10,000,984
Sanwa Bank Ltd. 6.180 01/18/96 10,000,000 10,000,047
------------
Total Certificates of Deposit (Cost-$50,002,332) 50,002,332
------------
MEDIUM-TERM NOTES**-34.0%
AT & T Capital Corp 5.700 01/02/96 9,000,000 8,995,007
Bear, Stearns Co., Inc. 5.660 01/02/96 4,000,000 4,000,000
5.850 01/02/96 5,000,000 5,000,000
Federal Home Loan Bank 6.080 01/02/96 20,000,000 20,012,073
Merrill Lynch & Co., Inc. 5.860 01/02/96 3,000,000 2,999,724
5.820 01/02/96 7,000,000 7,000,000
PHH Corp. 5.950 01/02/96 10,000,000 9,999,859
------------
Total Medium-Term Notes (Cost-$58,006,663) 58,006,663
------------
</TABLE>
3
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
INTEREST/
DISCOUNT MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT-5.6%
Chase Securities Inc., purchased on 12/29/95 5.850% 01/02/96 $ 9,606,000 $ 9,606,000
(Proceeds at maturity $9,612,244)
collateralized by Federal Home Loan
Mortgage Corporation: $10,790,000,
8.00%, 10/01/09 (Cost-$9,606,000)
------------
TOTAL INVESTMENTS-99.4% (Cost-$169,795,843)*** 169,795,843
------------
OTHER ASSETS (LIABILITIES)-0.6%
Cash 447
Interest receivable 2,080,403
Prepaid expenses 15,862
Dividends payable (826,138)
Accrued expenses (102,873)
Due to affiliates (94,696)
------------
Other assets in excess of liabilities-net 1,073,005
------------
NET ASSETS-100% $170,868,848
============
NET ASSET VALUE PER SHARE-applicable to 170,871,076 shares
($0.001 par value) outstanding $1.00
=====
<FN>
* Institutions shown in parentheses have entered into credit support
agreements with issuers.
** Variable rate notes; stated rate as of 12/31/95; maturity date reflects
date of next rate change.
*** Also represents cost for Federal income tax purposes.
</FN>
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
INTEREST/
DISCOUNT MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCYDISCOUNT
NOTE-23.0%
Federal Home Loan Bank
(Cost-$19,999,106) 5.730% 07/25/96 $20,000,000 $19,999,106
-----------
VARIABLE RATE U.S. GOVERNMENT &
AGENCIES*-57.2%
Federal Farm Credit Bank 5.800 01/02/96 29,700,000 29,697,345
5.700 01/02/96 10,000,000 10,000,000
Federal Home Loan Mortgage Corp. 6.080 01/02/96 10,000,000 10,000,000
-----------
Total Variable Rate U.S. Government & Agencies (Cost-$49,697,345) 49,697,345
-----------
REPURCHASE AGREEMENTS-19.5%
Chase Securities Inc., purchased on 12/29/95 5.850 01/02/96 14,913,000 14,913,000
(proceeds at maturity $14,922,693)
collateralized by Federal Home Loan Mortgage
Corporation: $17,592,000, 07/25/18, 11.0%;
$1,380,000, 01/01/99, 6.0%
Donaldson, Lufkin &Jenrette Securities, Corp., purchased 5.650 01/02/96 2,000,000 2,000,000
on 12/29/95 (proceeds at maturity $2,001,256)
collateralized by U.S. Treasury Strips
$9,005,000, 11/15/19
-----------
Total Repurchase Agreements (Cost-$16,913,000) 16,913,000
-----------
TOTAL INVESTMENTS-99.7% (Cost-$86,609,451)** 86,609,451
-----------
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
<S> <C>
OTHER ASSETS (LIABILITIES)-0.3%
Cash $ 947
Interest receivable 692,304
Prepaid expenses 7,768
Dividends payable (372,908)
Accrued expenses (39,355)
Due to affiliates (48,060)
----------
Other assets in excess of liabilities-net 240,696
----------
NET ASSETS-100% $86,850,147
===========
NET ASSET VALUE PER SHARE-applicable to 86,850,399 shares
( $0.001 par value) outstanding $1.00
=====
<FN>
* Stated rate as of 12/31/95; maturity date reflects next rate change.
** Also represents cost for Federal income tax purposes.
</FN>
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
INTEREST/
DISCOUNT MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS-35.8%
U.S. Treasury Bills 5.275% 01/04/96 $ 1,200,000 $ 1,199,473
4.250 02/15/96 800,000 795,750
5.040 08/22/96 5,000,000 4,836,200
5.030 10/17/96 5,000,000 4,797,402
-----------
Total U.S. Treasury Obligations (Cost-$11,628,825) 11,628,825
-----------
REPURCHASE AGREEMENTS-64.6%
Bear, Stearns & Co. Inc. 5.000 01/02/96 1,500,000 1,500,000
purchased on 12/29/95 (proceeds at maturity
$1,500,833) collateralized by U.S. Treasury
Note: $1,475,000, 6.875%, 02/28/97
Chase Securities, Inc. 5.850 **On demand 5,500,000 5,500,000
purchased on 12/22/95 collateralized by U.S.
Treasury Bond: $5,495,000, 6.50%, 5/15/97
Donaldson, Lufkin & Jenrette Securities Corp. 5.650 01/02/96 5,343,000 5,343,000
purchased on 12/29/95 (proceeds at maturity
$5,346,354) collateralized by U.S. Treasury
Strips: $15,170,000, 11/15/12
Lehman Government Securities, Inc. 5.700 01/02/96 1,625,000 1,625,000
purchased on 12/29/95 (proceeds at maturity
$1,626,029) collateralized by U.S. Treasury
Note: $1,425,000, 7.875%, 11/15/04
Merrill Lynch Government Securities Inc. 5.500 01/02/96 1,525,000 1,525,000
purchased on 12/29/95 (proceeds at maturity
$1,525,932) collateralized by U.S. Treasury
Note: $1,535,000, 5.625%, 10/31/97
UBS Securities 5.600% 01/02/96 5,500,000 5,500,000
purchased on 12/29/95 (proceeds at maturity
$5,503,422) collateralized by U.S. Treasury Note:
$5,160,000, 7.75%, 11/30/99
-----------
Total Repurchase Agreements (Cost-$20,993,000) 20,993,000
-----------
TOTAL INVESTMENTS-100.4% (COST-$32,621,825)* 32,621,825
-----------
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
<S> <C>
OTHER ASSETS (LIABILITIES)-(0.4%)
Cash $ 158
Interest receivable 14,183
Prepaid expenses 11,149
Dividends payable (134,087)
Accrued expenses (13,157)
-----------
Liabilities in excess of other assets-net (121,754)
-----------
NET ASSETS-100% $32,500,071
===========
NET ASSET VALUE PER SHARE-applicable to 32,500,071 shares
($0.001 par value) outstanding $1.00
=====
<FN>
* Also represents cost for Federal income tax purposes.
** Stated rate as of 12/31/95.
</FN>
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
CASH GOVERNMENT U.S. TREASURY
MANAGEMENT MONEY MARKET MONEY MARKET
FUND FUND FUND
----------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $12,936,179 $7,316,809 $4,050,593
----------- ---------- ----------
Expenses:
Advisory fees 744,839 428,878 245,894
Administrative services fee 209,098 122,214 70,255
Distribution expenses 194,423 103,184 73,756
Transfer agent fees 190,614 74,111 46,129
Co-administrative and shareholder servicing fees 148,968 85,725 49,180
Legal fees 53,742 54,733 54,734
Custodian fee 20,433 21,285 21,620
Trustees' fees and expenses 17,698 17,698 17,698
Miscellaneous expenses 122,670 47,916 10,804
----------- ---------- ----------
Total expenses 1,702,485 955,744 590,070
Less expense waivers (28,501) (18,069) (12,755)
----------- ---------- ----------
Net expenses 1,673,984 937,675 577,315
----------- ---------- ----------
Net investment income 11,262,195 6,379,134 3,473,278
----------- ---------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (2,228) (252) 16,264
----------- ---------- ----------
Net increase in net assets resulting from operations $11,259,967 $6,378,882 $3,489,542
=========== ========== ==========
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 11,262,195 $ 8,678,136
Net realized gain (loss) on investments (2,228) 194
------------ ------------
Net increase in net assets resulting from operations 11,259,967 8,678,330
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (11,262,195) (8,678,136)
Net realized gain on investments (194) --
------------ ------------
Total distributions (11,262,389) (8,678,136)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (29,620,305) 27,973,263
------------ ------------
Net increase (decrease) in net assets (29,622,727) 27,973,457
------------ ------------
NET ASSETS:
Beginning of year 200,491,575 172,518,118
------------ ------------
End of year $170,868,848 $200,491,575
============ ------------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,379,134 $ 5,359,159
Net realized gain (loss) on investments (252) 13,638
------------ ------------
Net increase in net assets resulting from operations 6,378,882 5,372,797
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (6,379,134) (5,359,159)
Net realized gain on investments -- (13,638)
------------ ------------
Total distributions (6,379,134) (5,372,797)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (79,945,289) 28,711,019
------------ ------------
Net increase (decrease) in net assets (79,945,541) 28,711,019
------------ ------------
NET ASSETS:
Beginning of year 166,795,688 138,084,669
------------ ------------
End of year $ 86,850,147 $166,795,688
============ ============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,473,278 $ 4,376,538
Net realized gain on investments 16,264 30,203
------------ ------------
Net increase in net assets resulting from operations 3,489,542 4,406,741
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,473,278) (4,376,538)
Net realized gain on investments (16,264) (30,203)
------------ ------------
Total distributions (3,489,542) (4,406,741)
------------ ------------
NET DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (73,220,310) (27,349,664)
------------ ------------
Net decrease in net assets (73,220,310) (27,349,664)
------------ ------------
NET ASSETS:
Beginning of year 105,720,381 133,070,045
------------ ------------
End of year $ 32,500,071 $105,720,381
============ ============
</TABLE>
See Notes to Financial Statements.
11
<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 Cash Management Fund, Government Money
Market Fund and U.S. Treasury Money Market Fund (collectively, 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 capital gains to their shareholders for each taxable year.
Therefore, no provision is required for Federal income tax.
Cash Management Fund has available a $2,753 capital loss carryforward
which, if not utilized, $525 and $2,228 will expire in year 2002 and
2003, respectively. Government Money Market has available a $252
capital loss carryforward which, if not utilized, will expire in year
2003. U.S. Treasury Money Market has no capital loss carryforward.
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
pay within five business days after the end of each month.
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, including amortization of discount or premium, 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 has authorized an unlimited number of shares of beneficial
interest 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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------------------------- ---------------------------------------------
CASH GOVERNMENT U.S. TREASURY CASH GOVERNMENT U.S. TREASURY
MANAGEMENT MONEY MARKET MONEY MARKET MANAGEMENT MONEY MARKET MONEY MARKET
FUND FUND FUND FUND FUND FUND
-------------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sold 1,530,377,381 586,320,449 386,608,352 1,175,468,838 473,248,129 474,086,968
Issued in reinvestment
of distributions 2,817,269 1,573,721 708,250 1,332,865 1,061,717 506,254
-------------- ------------ ------------ -------------- ------------ ------------
1,533,194,650 587,894,170 387,316,602 1,176,801,703 474,309,846 474,593,222
Redeemed (1,562,814,955) (667,839,459) (460,536,912) (1,148,828,440) (445,598,827) (501,942,886)
-------------- ------------ ------------ -------------- ------------ ------------
Increase (decrease) in shares (29,620,305) (79,945,289) (73,220,310) 27,973,263 28,711,019 (27,349,664)
============== ============ ============ ============== ============ ============
</TABLE>
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL (CONTINUED)
At December 31, 1995, each Fund's composition of net assets was as
follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT U.S. TREASURY
MANAGEMENT MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ -------------
<S> <C> <C> <C>
Paid-in capital $170,871,076 $ 86,850,399 $32,500,071
Accumulated realized loss
on investments (2,228) (252) --
------------ ------------ ------------
$170,868,848 $ 86,850,147 $32,500,071
============ ============ ===========
</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 portfolios of the Funds, 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:
<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 $744,800, $428,900, and $245,900 in advisory fees for
Cash Management Fund, Government Money Market Fund, and U.S. Treasury
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
$193,100, $112,900, and $64,400, net of fee waivers of approximately
$16,000, $9,400, and $5,900 for Cash Management Fund, Government Money
Market Fund, and U.S. Treasury Money Market Fund, respectively, in
administrative services fees. 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 (the "Service
Organizations") whereby 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
Agreements. 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.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. 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 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 $18,800,
$19,000, and $18,000 for Cash Management Fund, Government Money Market
Fund, and U.S.
Treasury Money Market Fund, respectively, in custodian fees.
HSBC Americas earned co-administration and shareholder servicing fees
of 0.03% and 0.04% of each Fund's average net assets, respectively,
totaling approximately $149,000, $85,700, and $49,200, for Cash
Management Fund, Government Money Market Fund, and U.S. Treasury Money
Market Fund, net of fee waivers, respectively. Of that total, HSBC
Americas waived approximately $12,500, $8,700, and $6,900 of these fees
for the month of January 1995 for Cash Management Fund, Government
Money Market Fund, and U.S. Treasury Money Market, respectively. 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 each Fund
are qualified for sale imposes limitations on the expenses of the
Funds. The Advisory Contract and the Administrative Services Contract
with HSBC Americas provide that if, in any fiscal year, the total
expenses of each 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 each Fund imposed by the securities
regulations of such state, HSBC Americas will pay or reimburse the
Funds 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 each 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, each Fund incurred legal fees to Fund counsel of
approximately $43,200.
4. REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with government
securities dealers recognized by the Federal Reserve Board, with member
banks of the Federal Reserve System or with such other brokers or
dealers that meet the credit guidelines established by the Funds'
Trustees. The Funds receive securities as collateral whose market value
(including accrued interest), throughout the period of the agreement is
at least equal to 100% of the dollar amount invested by that Fund in
each agreement, and the Fund makes payment for such securities only
upon physical delivery or upon evidence of book entry transfer to the
account of the Custodian. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by
the next business day. If the request for additional collateral is not
met, or the seller defaults on its repurchase obligation, each Fund
maintains the right to sell the underlying securities at market value
and may claim any resulting loss against the seller.
14
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
CASH MANAGEMENT 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 0.053 0.039 0.027 0.037 0.058
Net realized gain -- -- 0.002 -- --
------- ------- ------- ------- -------
Total from investment
operations 0.053 0.039 0.029 0.037 0.058
------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income (0.053) (0.039) (0.027) (0.037) (0.058)
Net realized gain -- -- (0.002) -- --
------- ------- ------- ------- -------
Total distributions (0.053) (0.039) (0.029) (0.037) (0.058)
------- ------- ------- ------- -------
Net asset value,
end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return 5.41% 3.95% 3.11% 3.77% 5.92%
Ratios/Supplemental Data
NET ASSETS (000), END OF YEAR $170,869 $200,492 $172,518 $246,543 $373,694
Ratio of expenses (without fee waivers)
to average net assets 0.80% 0.64% 0.58% 0.62% 0.66%
Ratio of expenses (with fee waivers)
to average net assets 0.79% 0.63% 0.58% 0.62% 0.66%
Ratio of net investment income (without fee
waivers) to average net assets 5.28% 3.83% 2.88% 3.75% 5.80%
Ratio of net investment income (with fee
waivers) to average net assets 5.29% 3.84% 2.88% 3.75% 5.80%
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
GOVERNMENT 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 0.052 0.038 0.028 0.037 0.056
Net realized gain -- -- 0.001 -- --
------- ------- ------- ------- -------
Total from investment operations 0.052 0.038 0.029 0.037 0.056
------- ------- ------- ------- -------
Less Distributions from:
Net investment income (0.052) (0.038) (0.028) (0.037) (0.056)
Net capital gain -- -- (0.001) -- --
------- ------- ------- ------- -------
Total distributions (0.052) (0.038) (0.029) (0.037) (0.056)
------- ------- ------- ------- -------
Net asset value,
end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return 5.32% 3.83% 2.99% 3.80% 5.79%
Ratios/Supplemental Data
Net assets (000), end of year $ 86,850 $166,796 $138,085 $246,327 $201,232
Ratio of expenses (without fee waivers)
to average net assets 0.78% 0.64% 0.61% 0.62% 0.63%
Ratio of expenses (with fee waivers)
to average net assets 0.76% 0.63% 0.61% 0.62% 0.63%
Ratio of net investment income (without fee
waivers) to average net assets 5.19% 3.75% 2.89% 3.72% 5.70%
Ratio of net investment income (with fee
waivers) to average net assets 5.21% 3.76% 2.89% 3.72% 5.70%
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
U.S. TREASURY 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 0.049 0.036 0.026 0.032 0.055
------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income (0.049) (0.036) (0.026) (0.032) (0.055)
------- ------- ------- ------- -------
Net asset value,
end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return 5.04% 3.60% 2.65% 3.27% 5.60%
Ratios/Supplemental Data
Net assets (000), end of year $32,500 $105,720 $133,070 $257,898 $220,371
Ratios of expenses (without fee waivers)
to average net assets 0.84% 0.69% 0.59% 0.67% 0.68%
Ratios of expenses (with fee waivers)
to average net assets 0.82% 0.68% 0.59% 0.67% 0.68%
Ratio of net investment income (without fee
waivers) to average net assets 4.92% 3.47% 2.62% 3.22% 5.45%
Ratio of net investment income (with fee
waivers) to average net assets 4.94% 3.48% 2.62% 3.22% 5.45%
</TABLE>
See Notes to Financial Statements.
17
<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
Cash Management Fund, Mariner Government Money Market Fund and Mariner U.S.
Treasury Money Market Fund (three 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 the 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 others. 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 Cash Management Fund, Mariner Government Money Market Fund
and Mariner U.S. Treasury 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
<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.
