<PAGE>
MARINER MUTUAL FUNDS TRUST
- - -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
HSBC Asset Management [Logo]
- - -------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
June 30, 1995
MANAGED BY:
HSBC Asset Management Americas Inc.
SPONSORED AND DISTRIBUTED BY:
Mariner Funds Services
<PAGE>
MARINER MUTUAL FUNDS TRUST
INTERNATIONAL EQUITY FUND
- - -------------------------------------------------------------------------------
HSBC Asset Management [Logo]
- - -------------------------------------------------------------------------------
July 21, 1995
Dear Shareholder:
The Mariner International Equity Fund rose 0.86% in the second quarter ahead of
the MSCI-EAFE return of 0.72%, but falling short of the benchmark 90% EAFE/10%
IFC return of 1.52%. During the quarter, the Fund benefitted from its exposure
to the emerging markets which rallied back strongly in the wake of a very weak
first quarter performance. For the first half the Fund declined 1.36%, lagging
the MSCI-EAFE return of 2.60% and the benchmark return of 1.62%.
JAPAN
- - -----
After a brief rally following the weakness of the first quarter, the Japanese
equity market (TOPIX) again declined in the second quarter, falling 6.86% in US
dollars on a price basis. Year-to-date the market has declined 9.78%. The
combination of the Kobe earthquake, strength of the yen and signs that global
growth is moderating, have combined to undermine confidence in the durability of
Japan's economic recovery. In particular, currency issue has led to profit
erosion overseas for Japanese companies as well import growth of foreign
products. In turn, this has resulted in significant deflationary pressure within
the domestic economy with falling prices making it impossible for companies to
achieve any top-line revenue growth. In fact for the financial year ended March
1995, all industries with the exception of financials have recorded their third
consecutive year of declining sales.
However, on several valuation measures the Japanese market is reasonably valued
and would actually be cheap if greater confidence in the economy, and hence
earnings, could be forthcoming. Several sectors of the market, such as
technology already appear attractive and it is in these areas that the Fund is
concentrating. At present, however, the market is hostage to macroeconomic
policy initiatives from a weak government.
UNITED KINGDOM
- - --------------
The second quarter saw the equity market continue the progress than began in
March, prompted by strong corporate results. The FTSE 100 rose 3.20% in U.S.
dollars on a price basis and was up 10% for the first half. As well as
better-than-expected earnings, stocks were fueled by a high level of corporate
(M&A) activity, both actual and speculative. In addition, smaller companies
staged a recovery from their long period of underperformance. Macroeconomic
forces were also at work during the period, as investors experienced a shift in
sentiment on interest rates, inflation and the rate of economic growth. First
signs of a shift came in early May when the Chancellor did not increase interest
rates by the expected half point.
<PAGE>
At this juncture the market looks soundly based from a fundamental perspective
but the economic and political background suggests that further upside could be
limited.
CONTINENTAL EUROPE
- - ------------------
The second quarter in Europe was dominated by a continuation of the bond market
rally. Growth, while still respectable, appears to be slowing and the consumer
is still sluggish, amid concerns of job security. Short term interest rates in
some countries are also high, keeping deposit levels high. The slowdown in
economic momentum was confirmed by the Bundesbank, which eased monetary policy
in March and which may well ease again before the end of the year. The weakest
markets were those whose currencies weakened the most - Spain and Italy.
However, on a dollar basis Spain actually did quite well. France was also a poor
performer, as short term interest rates are still very high keeping financial
assets tied up in deposits. The Scandinavian markets were strong on a dollar
basis, up double-digits in U.S. dollars, with the notable exception of Denmark,
which rose 6% in the quarter.
Overall in Europe, we believe that a further bond rally will sustain equity
prices. However, until there is a clearer picture on economic growth, equities
may be more subdued.
ASIA
- - ----
The Asian markets (ex Japan) rallied in the second quarter, primarily due to
optimism over lower interest rates in the U.S. A cash infusion from overseas
snapped up liquid Asian blue chips across the region. The rally began with
aggressive buying of the larger Hong Kong, Singaporean, Malaysian and Thai
markets. The Philippine and Indonesian markets caught up quickly and benefitted
the most during the quarter due to strong inflows. Conversely, Northern Asian
markets performed poorly as they are not considered beneficiaries of lower U.S.
rates. The Australian market rose modestly over the quarter, with industrial
sectors marginally outperforming resources.
While U.S. rates will likely continue to be a factor in the Pacific Basin, the
performance of Asian markets has begun to decouple from the U.S. as growth in
Asian continues at a fast pace. Helped by corporate profit growth, we believe
Asian markets are undervalued. However, it may well be only after the
traditionally quiet summer period that some of the value is realized.
EMERGING MARKETS
- - ----------------
The second quarter was quite strong for emerging markets as the IFC Investable
Composite returned 8.72% on a U.S. dollar total return basis. During the second
quarter Latin American markets continued a rebound which began in mid-March with
nearly all markets posting double-digit returns led by a 26% return in Mexico.
As noted above, markets in the Far East performed strongly as well, though
Taiwan, India and Pakistan actually posted declines on a U.S. dollar basis.
European emerging markets posted mixed returns with Turkey up 13.3%, Greece up
9.7% and Portugal down slightly.
2
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE
As noted above, the Mariner International Equity Fund rose 0.86% in the second
quarter ahead of the MSCI-EAFE return of 0.72%, but somewhat behind the
benchmark 90% EAFE/10% IFC return of 1.52%. The shortfall relative to benchmark
can be primarily attributed to below benchmark weightings in Mexico, which rose
26.2% in the quarter; Switzerland, which rose 9.3%; and Malaysia, which gained
7.9% In addition, a slight overweighting in Japan, which declined 6.9% for the
period, detracted from performance.
As always, our goal is to ensure that The Mariner International Equity Fund and
all Mariner Funds are characterized by quality, competitive performance and
outstanding service. We value your participation and appreciate the opportunity
to work on your behalf.
Sincerely,
[GRAPHIC OMITTED]
/s/W. Robert Alexander
W. Robert Alexander
President
3
<PAGE>
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL EQUITY FUND VS. EAFE
Average Annual Total Return
-----------------------------------------
1 Year Inception
-----------------------------------------
Offering Price(1) (10.96)% (10.54)%
NAV(2) (6.27)% (5.80)%
[Graphic omitted]
FUND(1) MSCI EAFE FUND(2)
APR 1994 10000 10000 10000
JUN 1994 9544 10088 10050
DEC 1994 9069 9991 9550
JUNE 1995 8946 9420 10251
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 International Equity
Fund on April 25, 1994, to a $10,000 investment in the Morgan Stanley Capital
International Europe, Africa and Far East Index on that date. All dividends and
capital gain distributions are reinvested.
The performance takes into account all applicable fees and expenses. The Morgan
Stanley Capital International Europe, Africa and Far East Index is a widely
accepted unmanaged index of over 900 securities listed on the stock exchanges of
the following countries in Europe, Australia, and the Far East: Australia,
Austria, Belgium, Denmark, Finland, France, Hong Kong, Ireland, Italy, Japan,
Malaysia, Netherlands and New Zealand. This index is a widely accepted unmanaged
index of overall stock market performance and does not take into account
charges, fees and other expenses.
4
<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
W. ROBERT ALEXANDER President
STEVEN R. HOWARD Secretary
MARK A. POUGNET Vice President and Treasurer
5
<PAGE>
[This page intentionally left blank.]
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (UNAUDITED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARGENTINA
- - ---------
BEVERAGE 200 *Buenos Aires Embotelladora ADR "B" ... $ 5,025 0.0 %
-------- ---
OIL 600 YPF Sociedad Nonina .................. 11,325 0.1
-------- ---
REAL ESTATE 250 *IRSA Inversiones y Representaciones ADR 5,813 0.0
-------- ---
UTILITIES 500 Metrogas SA ADR "B" .................. 4,313 0.0
300 Telefonicas de Argentina ADR "B" ..... 7,425 0.0
-------- ---
TOTAL UTILITIES ...................... 11,738 0.1
-------- ---
TOTAL INVESTMENTS IN ARGENTINA ....... 33,900 0.2
-------- ---
(COST $ 38,851)
AUSTRALIA
- - ---------
BANKS 20,852 Aust & NZ Bank GRP ................... 74,101 0.4
-------- ---
BROADCASTING 19,490 News Corporation ..................... 108,878 0.7
-------- ---
CONGLOMERATES 12,475 CSR Limited .......................... 39,012 0.2
-------- ---
FOOD & BEVERAGES 25,081 SouthCorp Holdings Ltd ............... 50,091 0.3
-------- ---
NON-FERROUS METALS 7,600 Western Mining Corp. ................. 41,862 0.3
-------- ---
PETROLEUM SERVICES 13,642 Broken Hill Property ................. 167,931 1.0
-------- ---
TRUCKING & FREIGHT
FORWARDING 28,760 *TNT .................................. 37,815 0.2
-------- ---
TOTAL INVESTMENTS IN AUSTRALIA ....... 519,690 3.1
-------- ---
(COST $ 522,431)
BELGIUM
- - -------
COMMERCIAL BANK 120 Generale De Banaue ................... 38,557 0.2
-------- ---
IRON / STEEL 480 *Arbed ................................ 70,027 0.4
-------- ---
NON-FERROUS METALS 325 *Union Miniere ........................ 21,251 0.1
-------- ---
TOTAL INVESTMENTS IN BELGIUM ......... 129,835 0.8
-------- ---
(COST $ 139,548)
BRAZIL
- - ------
ENERGY 1,500 Centrais Eletricas Brasileira ........ 19,688 0.1
-------- ---
HOME APPLIANCES 2,600 Refrigeracao Parana .................. 25,350 0.2
-------- ---
MINING 1,500 Compania Vale Do Rio Doce ADR ........ 56,625 0.3
-------- ---
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BRAZIL (continued)
- - ------
STEEL 2,300 Usinas Siderurgicas De Minas ......... $ 26,163 0.2%
-------- ---
TELECOMMUNICATIONS 2,500 Telecomunicacoes Brasileras ADR ...... 82,813 0.5
-------- ---
TOTAL INVESTMENTS IN BRAZIL .......... 210,638 1.3
-------- ---
(COST $ 279,115)
CHILE
- - -----
CONSTRUCTION 2,000 Maderas y Sinteticos SA ADR .......... 37,500 0.2
-------- ---
INDUSTRIAL 1,300 Madeco SA ADR ........................ 37,375 0.2
-------- ---
NON-OIL ENERGY 1,200 Chilgener SA ADR ..................... 37,950 0.2
-------- ---
TOTAL INVESTMENTS IN CHILE ........... 112,825 0.7
-------- ---
(COST $ 122,767)
CHINA
- - -----
FOOD & BEVERAGE 50,000 *Shanghai New Asia Group Co. ......... 20,000 0.1
-------- ---
TOTAL INVESTMENTS IN CHINA .......... 20,000 0.1
-------- ---
(COST $ 15,496)
COLUMBIA
- - --------
RETAIL 300 Gran Cadena De Almacenes ............. 6,413 0.0
-------- ---
TOTAL INVESTMENTS IN COLUMBIA ........ 6,413 0.0
-------- ---
(COST $ 5,100)
DENMARK
- - -------
TELECOMMUNICATIONS 1,000 Tele Danmark AS ...................... 55,643 0.3
-------- ---
TOTAL INVESTMENT IN DENMARK .......... 55,643 0.3
-------- ---
(COST $ 52,905)
ECUADOR
- - -------
BUILDING MATERIAL 30 Cemento Nacional ..................... 7,200 0.0
-------- ---
TOTAL INVESTMENT IN ECUADOR .......... 7,200 0.0
-------- ---
(COST $7,320)
FINLAND
- - -------
ELECTRONICS 2,100 Nokia Oy ............................. 122,922 0.7
-------- ---
TOTAL INVESTMENTS IN FINLAND ........ 122,922 0.7
-------- ---
(COST $ 79,579)
FRANCE
- - ------
AUTOMOBILES 700 Peugeot SA ........................... 97,108 0.6
-------- ---
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANCE (continued)
- - ------
AUTO PARTS 1,700 Valeo .......................... $ 82,664 0.5%
-------- ---
BANKS 950 Cie Fin Paribas ................ 57,102 0.3
650 Societe Generale ............... 75,969 0.5
-------- ---
TOTAL BANKS .................... 133,072 0.8
-------- ---
BUILDING MATERIAL 1,100 Lafarge Coppee SA .............. 85,528 0.5
-------- ---
BUSINESS SERVICES 2,500 *Cap Gemini Sogeti .............. 77,299 0.5
750 Eaux (Cie Generale) ............ 83,483 0.5
-------- ---
TOTAL BUSINESS SERVICES ........ 160,782 1.0
-------- ---
GAS EXPLORATION 900 Soc Elf Aquitaine .............. 66,508 0.4
-------- ---
INSURANCE 2,100 Union Assur Paris .............. 55,062 0.3
-------- ---
LIQUOR 350 LVMH Moet Hennessy ............. 62,983 0.4
-------- ---
RETAIL-SPECIALITY 180 Carrefour ...................... 92,202 0.6
-------- ---
TOTAL INVESTMENTS IN FRANCE .... 835,908 5.1
-------- ---
(COST $ 798,604)
GERMANY
- - -------
AUTOMOBILES 360 Volkswagen ..................... 103,999 0.6
-------- ---
BANKS 3,100 Deutsche Bank AG ............... 150,640 0.9
-------- ---
CHEMICALS 500 Bayer AG ....................... 124,376 0.8
-------- ---
ELECTRIC UTILITIES 230 Veba AG ........................ 90,393 0.5
-------- ---
INDUSTRIAL MACHINERY 400 Mannesmann AG .................. 122,207 0.7
-------- ---
INSURANCE 80 Allianz AG Holding (S/R 7 July 95) 5,958 0.0
80 Allianz AG Holding ............. 142,772 0.9
-------- ---
TOTAL INSURANCE ................ 148,680 0.9
-------- ---
RETAIL - DEPT STORE 125 Karstadt AG .................... 54,867 0.3
-------- ---
TRANSPORTATION - AIR 500 Lufthansa AG ................... 72,312 0.4
-------- ---
TOTAL INVESTMENTS IN GERMANY ... 867,525 5.3
-------- ---
(COST $ 799,873)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HONG KONG
- - ---------
BANKS 14,600 Bank of East Asia ............ $ 43,963 0.3%
10,000 Hang Seng Bank ............... 76,249 0.5
-------- ---
TOTAL BANKS .................. 120,212 0.7
-------- ---
BUSINESS SERVICES 15,000 Wharf (HLDGS) ................ 48,948 0.3
-------- ---
CONGLOMERATES 19,000 Hutchison Whampoa ............ 91,835 0.6
8,000 Swire Pacific ................ 60,999 0.4
-------- ---
TOTAL CONGLOMERATES .......... 152,834 0.9
-------- ---
ELECTRIC UTILITIES 12,000 China Light & Power .......... 61,723 0.4
14,000 Hong Kong Electric ........... 47,585 0.3
-------- ---
TOTAL ELECTRIC UTILITIES ..... 109,308 0.7
-------- ---
PUBLISHING 16,000 Citic Pacific LTD ............ 40,218 0.2
-------- ---
REAL ESTATE 8,000 Cheung Kong (HLDGS) .......... 39,598 0.2
50,000 Guangdong Investment ......... 27,301 0.2
12,000 Hong Kong Land (HLDGS) ....... 21,840 0.1
13,000 New World Development Co. .... 43,262 0.3
7,000 Sun Hung Kai Properties ...... 51,791 0.3
-------- ---
TOTAL REAL ESTATE ............ 183,792 1.1
-------- ---
TELEPHONE 23,600 Hong Kong Telecommunications LTD 46,664 0.3
-------- ---
TIRE & RUBBER 54,000 China Resources .............. 17,796 0.1
-------- ---
TOTAL INVESTMENTS IN HONG KONG 719,772 4.4
-------- ---
(COST $ 698,076)
INDIA
- - -----
AUTOMOBILES 1,000 Tata Engineering & Locom Co. . 19,870 0.1
-------- ---
ENGINEERING & CONSTRUCTION 1,000 Larsen & Toubro .............. 19,750 0.1
-------- ---
HOTELS 1,000 East India Hotels ............ 15,625 0.1
-------- ---
TEXTILES 1,000 JCT Limited .................. 17,750 0.1
-------- ---
TOTAL INVESTMENTS IN INDIA ... 72,995 0.4
-------- ---
(Cost $ 71,688)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDONESIA
- - ---------
AUTO PARTS 6,000 Astra International ........ $ 10,642 0.1%
-------- ---
FOOD & BEVERAGE 4,000 *Mayora Indah ............... 18,321 0.1
-------- ---
PHARMACEUTICALS 4,000 *Darya Varia Lab ............ 17,961 0.1
-------- ---
TELECOMMUNICATIONS 500 Perusahaan Per Per Ind ..... 19,125 0.1
-------- ---
TEXTILES 6,000 *Indorayon Utama ............ 12,393 0.1
-------- ---
TOBACCO 2,000 Gudang Garum (Perus) ....... 15,357 0.1
-------- ---
MISC. DIST - WHOLESALE 3,000 Modern Photo Film .......... 16,300 0.1
-------- ---
TOTAL INVESTMENTS IN INDONESIA 110,099 0.7
-------- ---
(COST $ 108,164)
ITALY
- - -----
AUTOMOBILES 23,000 Fiat Spa ................... 50,041 0.3
-------- ---
BANKS 40,500 Credito Italiano ........... 46,954 0.3
-------- ---
INSURANCE 3,700 Assicurazioni Generali ..... 86,946 0.5
-------- ---
TELECOMMUNICATIONS 30,000 Telecom Italia ............. 81,314 0.5
-------- ---
TOTAL INVESTMENTS IN ITALY . 265,255 1.6
-------- ---
(COST $ 281,945)
JAPAN
- - -----
APPAREL & TEXTILES 20,000 Itochu Corp ................ 116,807 0.7
-------- ---
BANKS 14,000 Asahi Bank ................. 149,490 0.9
10,000 Mitsubishi Trust and Bank .. 141,585 0.9
8,000 Sanwa Bank ................. 151,024 0.9
8,000 Sumitomo Bank .............. 138,753 0.8
11,000 Sumitomo Trust & Bank ...... 133,679 0.8
10,000 Bank of Tokyo .............. 160,463 1.0
-------- ---
TOTAL BANKS ................ 874,993 5.3
-------- ---
BUILDING MATERIALS 7,000 Tostem Corp. ............... 215,563 1.3
-------- ---
BUSINESS SERVICES 6,000 Kurita Water Industries .... 154,327 0.9
-------- ---
CHEMICALS 20,000 Asahi Chemical Industry .... 131,438 0.8
35,000 Teijin ..................... 167,660 1.0
-------- ---
TOTAL CHEMICALS ............ 299,097 1.8
-------- ---
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JAPAN (continued)
- - -----
CONSTRUCTION 28,000 Obayashi Corp. ................. $ 215,397 1.3%
9,000 JGC Corp. ...................... 87,605 0.5
12,000 National House Industrial ...... 222,288 1.3
---------- ---
TOTAL CONSTRUCTION ............. 525,291 3.2
---------- ---
COSMETICS--HEALTH CARE 25,000 KAO Corp. ...................... 300,867 1.8
---------- ---
ELECTRICAL EQUIPMENT 9,000 Omron Corp ..................... 172,025 1.0
14,000 Mitsumi Electric ............... 241,166 1.5
---------- ---
TOTAL ELECTRICAL EQUIPMENT ..... 413,191 2.5
---------- ---
ELECTRONICS 3,000 Aiwa ........................... 72,562 0.4
2,000 Keyence Corp ................... 224,176 1.4
3,000 Kyocera Corp ................... 247,065 1.5
4,000 Rohm Co ........................ 206,713 1.3
4,000 Secom Co ....................... 251,549 1.5
---------- ---
TOTAL ELECTRONICS .............. 1,002,065 6.1
---------- ---
FINANCIAL SERVICES 4,000 Orix Corp ...................... 133,089 0.8
---------- ---
FOREST PRODUCTS & PAPER 20,000 Nippon Paper Ind ............... 129,786 0.8
---------- ---
INDUSTRIAL MACHINERY 6,000 Bandai Co. ..................... 179,812 1.1
20,000 Mitsubishi Heavy Industrial LTD 135,921 0.8
---------- ---
TOTAL INDUSTRIAL MACHINERY ..... 315,734 1.9
---------- ---
INSURANCE 20,000 Mitsui Marine & Fire ........... 131,202 0.8
---------- ---
INVESTMENT COMPANIES 7,000 Nomura Securities .............. 122,235 0.7
---------- ---
LAND TRANSPORT 12,000 Suzuki Motor Corp. ............. 133,797 0.8
30,000 Hitachi Zosen Corp. ............ 121,055 0.7
2,000 Seino Transportation ........... 33,744 0.2
---------- ---
TOTAL LAND TRANSPORT ........... 288,597 1.7
---------- ---
LONG DISTANCE TELEPHONE 15 DDI Corp ....................... 120,347 0.7
---------- ---
MACHINE 3,000 Smc Corp ....................... 172,379 1.0
5,000 Tokyo Electron ................. 171,081 1.0
---------- ---
TOTAL MACHINE .................. 343,461 2.1
---------- ---
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JAPAN (continued)
- - -----
NON-FERROUS METALS 32,000 Nisshin Steel Co. ............... $ 117,421 0.7%
---------- ----
OIL / GAS - DOMESTIC 15,000 Mitsubishi Oil Co ............... 144,062 0.9
---------- ----
PHARMACEUTICALS 2,000 Kissei Pharm Co ................. 63,477 0.4
6,000 Sankyo Co ....................... 139,461 0.8
---------- ----
TOTAL PHARMACEUTICALS ........... 202,938 1.2
---------- ----
PHOTOGRAPHY 10,000 Canon Inc ....................... 162,822 1.0
---------- ----
PRINTING COMPANY 16,000 Toppan Printing Co. ............. 209,545 1.3
---------- ----
RETAIL-SPECIALITY 2,000 Autobacs Seven Co ............... 194,679 1.2
---------- ----
SOFTWARE 5,000 Hitachi Software ................ 104,419 0.6
---------- ----
STEEL 42,000 Nippon Steel Corp. .............. 136,771 0.8
---------- ----
TOTAL INVESTMENTS IN JAPAN ...... 6,759,306 40.9
---------- ----
(COST $ 7,266,319)
MALAYSIA
- - --------
AGRICULTURE 14,000 *Malakoff Berhad ................. 41,345 0.3
---------- ----
BANKS 3,000 DCB Holdings Berhad ............. 3,445 0.0
4,000 Malayan Bk Bhd .................. 31,665 0.2
15,000 Public Bank Bhd ................. 33,532 0.2
---------- ----
TOTAL BANKS ..................... 68,642 0.4
---------- ----
ELECTRICAL EQUIPMENT 4,000 Leader Univ Holdings ............ 14,274 0.1
2,666 Leader Univ Holdings (A shares) . 9,514 0.1
---------- ----
TOTAL ELECTRICAL EQUIPMENT ...... 23,788 0.1
---------- ----
FOREST PRODUCTS 6,000 Land & General BHD .............. 20,057 0.1
---------- ----
HOLDING COMPANIES 13,000 Road Builder .................... 43,191 0.3
8,000 *Renong Berhad ................... 14,897 0.1
5,000 Sime Darby Bhd .................. 13,946 0.1
---------- ----
TOTAL HOLDING COMPANIES ......... 72,034 0.4
---------- ----
LEISURE TIME 4,000 Genting Berhad .................. 39,541 0.2
---------- ----
MANUFACTURING 18,000 *Ind Oxygen Inc. ................. 23,626 0.1
---------- ----
TOTAL INVESTMENTS IN MALAYSIA ... 289,034 1.8
---------- ----
(COST $ 255,669)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NETHERLANDS
- - -----------
CHEMICALS 500 Akzo Nobel NV ..................... $ 59,761 0.4 %
-------- ---
INSURANCE 1,540 Int'l Nederlanden ................. 85,175 0.5
-------- ---
PACKAGING 1,950 KNP BT ............................ 58,645 0.4
-------- ---
PETROLEUM SERVICES 1,100 Royal Dutch Petroleum ............. 134,314 0.8
-------- ---
TELECOMMUNICATION
SERVICES 7,500 Elsevier NV ....................... 88,577 0.5
-------- ---
TOTAL INVESTMENTS IN NETHERLANDS .. 426,472 2.6
-------- ---
(COST $ 374,839)
NORWAY
- - ------
CHEMICALS 1,250 Norsk Hydro AS .................... 52,443 0.3
-------- ---
TELECOMMUNICATIONS 1,500 Nera AS ........................... 42,603 0.3
-------- ---
TOTAL INVESTMENTS IN NORWAY ....... 95,046 0.6
-------- ---
(COST $ 82,146)
PERU
- - ----
BANKS 8,788 Banco DeCredito ................... 15,407 0.1
-------- ---
MINING 1,637 Compania De Minas ................. 9,346 0.1
1,600 Southern Peru Copper .............. 7,193 0.0
-------- ---
TOTAL MINING ...................... 16,539 0.1
-------- ---
TELECOMMUNICATIONS 8,950 CPT Telefonica Del Peru ........... 15,289 0.1
-------- ---
TOTAL INVESTMENT IN PERU .......... 47,234 0.3
-------- ---
(COST $ 42,573)
PHILIPPINES
- - -----------
BREWERY 3,000 San Miguel ........................ 12,518 0.1
-------- ---
BUILDING MATERIAL 1,000 Bacnotan Consolidated Industry .... 6,578 0.0
60,000 Aboitiz Equity Ven ................ 12,216 0.1
-------- ---
TOTAL BUILDING MATERIALS .......... 18,794 0.1
-------- ---
CONSTRUCTION 60,000 Belle Corporation ................. 10,219 0.1
65,000 *Southeast Asia Cement ............. 6,617 0.0
-------- ---
TOTAL CONSTRUCTION ................ 16,836 0.1
-------- ---
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PHILIPPINES (continued)
- - -----------
UTILITIES 2,000 Manila Electric Co. ................... $ 16,053 0.1%
-------- ---
TOTAL INVESTMENT IN PHILIPPINES ....... 64,202 0.4
-------- ---
(COST $ 63,967)
SINGAPORE
- - ---------
BANKS 2,000 Overseas Chinese Banks ................ 22,182 0.1
5,000 Overseas Union Bank ................... 31,485 0.2
4,000 United Overseas Bank .................. 37,782 0.2
-------- ---
TOTAL BANKS ........................... 91,449 0.6
-------- ---
BEVERAGES 2,000 Fraser & Neave ........................ 23,041 0.1
-------- ---
INDUSTRIAL MACHINERY 4,000 Keppel Corp. .......................... 32,630 0.2
-------- ---
PUBLISHING 2,400 Singapore Press HD .................... 35,893 0.2
-------- ---
REAL ESTATE 5,000 City Developments ..................... 30,590 0.2
4,000 Singapore Land ........................ 26,190 0.2
-------- ---
TOTAL REAL ESTATE ..................... 56,780 0.3
-------- ---
TRANSPORTATION - AIR 3,000 Singapore Airlines .................... 27,692 0.2
-------- ---
TOTAL INVESTMENTS IN SINGAPORE ........ 267,485 1.6
-------- ---
(COST $ 271,914)
SOUTH AFRICA
- - ------------
BANKS 2,900 Investec Bank ......................... 57,421 0.3
3,900 Nedcor Ltd. GDR ....................... 47,307 0.3
-------- ---
TOTAL BANKS ........................... 104,728 0.6
-------- ---
ENGINEERING & CONSTRUCTION 3,500 Murray and Roberts Ltd (private placement) 18,760 0.1
3,500 Murray and Roberts Ltd ................ 20,213 0.1
-------- ---
TOTAL ENGINEERING & CONSTRUCTION ...... 38,973 0.2
-------- ---
FINANCIAL SERVICES 22,150 Bid Corporation Ltd. .................. 59,391 0.4
5,160 Smith (CG) ............................ 27,316 0.2
-------- ---
TOTAL FINANCIAL SERVICES .............. 86,707 0.5
-------- ---
FOOD & BEVERAGE 900 Cadbury Schwps (SA) ................... 13,613 0.1
700 South Africa Brews .................... 19,972 0.1
-------- ---
TOTAL FOOD & BEVERAGE ................. 33,585 0.2
-------- ---
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH AFRICA (continued)
- - ------------
HOLDING COMPANY 2,100 Barlow ............................. $ 21,512 0.1%
-------- ---
INDUSTRIAL 400 Anglo American Industries .......... 19,580 0.1
49,400 Iscor .............................. 56,107 0.3
-------- ---
TOTAL INDUSTRIAL 75,687 0.5
-------- ---
MINING 3,380 Ingwe Coal Corp .................... 26,491 0.2
2,400 Sasol Ltd. ......................... 23,001 0.1
-------- ---
TOTAL MINING 49,493 0.3
-------- ---
PAPER & PACKAGING 2,100 Nampak ............................. 23,835 0.1
-------- ---
TOTAL INVESTMENTS IN SOUTH AFRICA 434,520 2.6
-------- ---
(COST $ 404,094)
SOUTH KOREA
- - -----------
PAPER 1,000 Hansol Paper Co. ADR ............... 19,750 0.1
-------- ---
INVESTMENT TRUST 10,000 *Korea Europe Fund IDR .............. 73,800 0.4
-------- ---
TOTAL INVESTMENTS IN SOUTH KOREA ... 93,550 0.6
-------- ---
(COST $ 108,402)
SPAIN
- - -----
BANKS 550 BCO Popular ESP .................... 81,734 0.5
-------- ---
PETROLEUM SERVICES 2,300 Repsol SA .......................... 72,347 0.4
-------- ---
REAL ESTATE 3,000 Vallehermoso SA .................... 51,393 0.3
-------- ---
TOTAL INVESTMENTS IN SPAIN ......... 205,474 1.2
-------- ---
(COST $ 184,265)
SWEDEN
- - ------
AUTO PARTS MANUFACTURING 1,600 Autoliv AB ......................... 85,599 0.5
-------- ---
FOREST PRODUCTS 5,250 Stora Kopparbergs .................. 71,121 0.4
-------- ---
TELECOMMUNICATIONS 5,000 Ericsson(LM)TEL .................... 99,710 0.6
-------- ---
TOTAL INVESTMENT IN SWEDEN ......... 256,430 1.6
-------- ---
(COST $ 167,557)
SWITZERLAND
- - -----------
BANKS 1,000 CS Holding ......................... 91,620 0.6
-------- ---
ELECTRONICS 90 BBC Brown Boveri ................... 93,165 0.6
-------- ---
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
International Equity Fund
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SWITZERLAND (continued)
- - -----------
FOOD & BEVERAGES 90 Nestle SA ..................... $ 93,713 0.6%
-------- ---
INSURANCE 35 Baloise Holdings .............. 79,787 0.5
-------- ---
PHARMACEUTICALS 16 Roche Holdings AG ............. 103,100 0.6
100 Sandoz AG ..................... 68,954 0.4
-------- ---
TOTAL PHARMACEUTICALS ......... 172,054 1.0
-------- ---
TOTAL INVESTMENTS IN SWITZERLAND 530,339 3.2
-------- ---
(COST $ 462,210)
TAIWAN
- - ------
STEEL 3,500 Tung Ho Steel Enterprise Corp. ADR 48,125 0.3
-------- ---
TOTAL INVESTMENTS IN TAIWAN ... 48,125 0.3
-------- ---
(COST $ 50,313)
THAILAND
- - --------
BANKS 15,000 Siam City Bank PLC ............ 20,660 0.1
2,000 Thai Farmers Bank ............. 19,121 0.1
4,500 Thai Military Bank PLC ........ 18,230 0.1
-------- ---
TOTAL BANKS ................... 58,011 0.4
-------- ---
ELECTRICAL EQUIPMENT 1,000 Alphatec Electro .............. 18,230 0.1
-------- ---
FINANCIAL SERVICES 3,000 Phatra Thanakit Co ............ 25,035 0.2
-------- ---
MINING 1,000 Banpu Co ...................... 23,658 0.1
-------- ---
OIL & GAS EXPLORATION 1,500 Pit Explortn & prd ............ 16,164 0.1
-------- ---
REAL ESTATE 500 Land & House .................. 10,533 0.1
-------- ---
TELECOMMUNICATIONS 1,000 Advanced Info Service ......... 14,260 0.1
-------- ---
WHOLESALE PRODUCTS 2,000 Srithai Superware PLC ......... 15,110 0.1
-------- ---
TOTAL INVESTMENTS IN THAILAND . 181,001 1.1
-------- ---
(COST $ 149,282)
TURKEY
- - ------
FOOD & BEVERAGE 20,600 Migros Turk TAS ............... 23,062 0.1
10,300 Migros Turk TAS Rights ........ 11,298 0.1
-------- ---
TOTAL FOOD & BEVERAGE ......... 34,361 0.2
-------- ---
TOTAL INVESTMENTS IN TURKEY ... 34,361 0.2
-------- ---
(COST $ 35,031)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED KINGDOM
- - -----------------
AIR TRAVEL 16,000 British Airways .................... $ 104,851 0.6%
---------- ----
BANKS 18,440 Standard Chartered ................. 97,963 0.6
18,000 Natl Westminster ................... 156,466 0.9
---------- ----
TOTAL BANKS ........................ 254,429 1.5
---------- ----
CONGLOMERATES 30,000 BTR ................................ 152,457 0.9
---------- ----
DRUGS & HEALTHCARE 14,500 Smithkline Beecham ................. 131,231 0.8
---------- ----
ELECTRICAL UTILITIES 27,500 National Power ..................... 194,866 1.2
---------- ----
HOLDING COMPANY 17,000 General Electric ................... 83,013 0.5
---------- ----
FINANCIAL SERVICES 1,183 Smith New Court .................... 15,374 0.1
---------- ----
FOOD & BEVERAGES 18,285 Cadbury Schweppes .................. 133,495 0.8
---------- ----
INTERNATIONAL OIL 31,000 British Petroleum .................. 222,133 1.3
---------- ----
LEISURE TIME 18,000 Granada Group ...................... 174,646 1.1
---------- ----
MANUFACTURING 12,500 GKN ................................ 127,446 0.8
---------- ----
MINERAL EXTRACT 10,000 RTZ Corp. .......................... 130,348 0.8
---------- ----
PACKAGING 17,000 Rexam .............................. 130,468 0.8
10,800 Smurfit (Jefferson) ................ 32,700 0.2
---------- ----
TOTAL PACKAGING .................... 163,168 1.0
---------- ----
RETAIL TRADE 20,000 Marks & Spencer .................... 128,519 0.8
---------- ----
TELEPHONE 32,500 British Telecom .................... 202,640 1.2
---------- ----
TOBACCO 12,000 BAT Industries ..................... 91,999 0.6
---------- ----
TOTAL INVESTMENTS IN UNITED KINGDOM 2,310,617 14.0
---------- ----
(COST $ 2,172,642)
UNITED STATES
- - -------------
INVESTMENT COMPANY 1,500 *Templeton Russia Fd Inc ............ 21,930 0.1
---------- ----
TOTAL INVESTMENTS IN UNITED STATES 21,930 0.1
---------- ----
(COST $ 21,825)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ZIMBABWE
- - --------
BUILDING MATERIALS 14,000 Delta Corp ................................. $ 20,468 0.1%
---------- -----
TOTAL INVESTMENTS IN ZIMBABWE .............. 20,468 0.1
---------- -----
(COST $ 20,908)
TOTAL INVESTMENTS IN STOCKS ................ 16,176,211 97.9
---------- -----
(COST $ 16,155,417)
PAR FIXED INCOME INVESTMENTS
- - ------------------------------------------------------------------------------------------------------------
TAIWAN
- - ------
ELECTRONICS 30,000 United Micro Elect ......................... 51,225 0.3
---------- -----
1.25% conv bds due 6/8/04
(COST $ 39,000)
WIRE & CABLE 100,000 Walsin Lihwa Corp .......................... 130,750 0.8
---------- -----
3.25% conv bd due 6/16/04
(COST $ 106,000)
TOTAL FIXED INCOME INVESTMENTS ............. 181,975 1.1
---------- -----
(COST $ 145,000)
TOTAL LONG TERM INVESTMENTS ................ 16,358,186 99.0
---------- -----
(COST $ 16,300,417)
PAR SHORT-TERM INVESTMENTS
- - ------------------------------------------------------------------------------------------------------------
UNITED STATES
- - -------------
REPURCHASE AGREEMENT 165,000 State Street Bank and Trust Company ........... 165,000 1.0
---------- ----
3.00% due 07/03/95, purchased on 6/30/95,
(Proceeds at maturity-$165,041), collateralized
by $155,000 U.S. Treasury Bond 7.25%
due 5/15/16
(COST $ 165,000)
TOTAL SHORT-TERM INVESTMENTS .................. 165,000 1.0
----------- -----
TOTAL INVESTMENTS ............................. $16,523,186 100.0%
----------- -----
(COST $ 16,465,417)**
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AS OF JUNE 30, 1995 (CONTINUED)
INTERNATIONAL EQUITY FUND
COUNTRY/ SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS (NOTE 1A) NET ASSETS
- - --------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
OTHER ASSETS (LIABILITIES) :
Cash ........................................... $ 768
Foreign currency ( Cost $ 187,488) ............. 192,237
Deferred organizational expenses ............... 48,138
Dividend receivable ............................ 76,511
Interest receivable ............................ 548
Foreign tax receivable ......................... 18,271
Receivable for investments sold ................ 208,266
Receivable for fund shares sold ................ 800
Receivable from investment advisor ............. 18,970
Payable for securities purchased ............... (35,517)
Payable for fund shares repurchased ............ (445,740)
Audit fees payable ............................. (10,000)
Payable to investment advisor .................. (7,127)
Administrative fees payable .................... (3,827)
Foreign withholding tax payable ................ (10,737)
Accrued expenses payable ....................... (53,651)
-----
Other assets in excess of liabilities-net ...... (2,090) 0.0 %
------------ -----
Net Assets-100% ................................ $ 16,521,096 100.0 %
============ =====
Net Assets Value Per Share-
Class A Shares
Applicable to net assets of $916,499 and
97,289 shares ($0.001 par value,
10,000,000 shares authorized) outstanding . $ 9.42
=======
Class B Shares
Applicable to net assets of $15,604,597 and
1,655,744 shares ($0.001 par value,
10,000,000 shares authorized) outstanding . $ 9.42
=======
<FN>
* Non-income producing securities
** The cost of investments for Federal income tax purposes is $ 16,465,417. As
of June 30, 1995, unrealized appreciation for Federal income tax purposes
aggregated $ 57,769 of which $ 1,011,316 related to appreciated securities and
($ 953,547) related to depreciated securities.
</FN>
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
THE INTERNATIONAL EQUITY FUND
<S> <C>
INVESTMENT INCOME:
Income:
Interest .................................................................... $ 24,451
Dividends (Net of foreign withholding tax of $22,057) ....................... 147,288
---------
171,739
---------
Expenses:
Advisory .................................................................... 51,850
Custodian ................................................................... 93,981
Audit ....................................................................... 9,568
Administration .............................................................. 12,562
Co-Administration ........................................................... 2,558
Shareholder Service Fees (Class A - Note 4) ................................. 152
Legal ....................................................................... 7,150
Amortization of organizational costs ........................................ 13,065
Transfer Agent .............................................................. 6,223
Trustees' fees and expenses ................................................. 2,583
Distribution (Class A - Note 4) ............................................. 10,286
Printing .................................................................... 1,860
Miscellaneous ............................................................... 1,241
---------
Total expenses .......................................................... 213,079
Less expense waivers / reimbursements ....................................... (40,278)
---------
Net expenses ............................................................ 172,801
---------
Net investment loss ......................................................... (1,062)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investments ................................................ (832,699)
Net realized loss on foreign currency transactions .............................. (14,556)
Net unrealized appreciation on investments ...................................... 725,963
Net unrealized appreciation on foreign currency transactions .................... 3,165
---------
Net realized and unrealized loss on investments and foreign currency transactions (118,127)
---------
Net decrease in net assets resulting from operations ............................ $(119,189)
=========
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
THE INTERNATIONAL EQUITY FUND
APRIL 25, 1994
FOR THE (COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS)
JUNE 30, 1995 TO DECEMBER 31, 1994
--------------- --------------------
<S> <C> <C>
OPERATIONS:
Net investment loss ................................................... $ (1,062) $ (3,752)
Net realized loss on investments and foreign currency transactions .... (847,255) (256,676)
Net unrealized appreciation/(depreciation) on investments and foreign
currency transactions ................................................. 729,128 (666,611)
------------ ------------
Net decrease in net assets resulting from operations ................ (119,189) (927,039)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS :
In excess of current period net investment loss ....................... -- (27,437)
------------ ------------
Total distributions ................................................. -- (27,437)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
CLASS A
Proceeds from sales of 49,342 & 1,919,732 shares, respectively ........ 450,227 19,332,284
Payments for redemptions of 1,712,605 & 159,180 shares, respectively .. (15,182,254) (1,558,784)
CLASS B
Proceeds from sales of 1,979,374 shares ............................... 17,620,342 --
Payment for redemption of 323,631shares ............................... (3,067,054) --
------------ ------------
Net increase/(decrease) in net assets from capital share transactions (178,739) 17,773,500
------------ ------------
Total increase/(decrease) in net assets ................................. (297,928) 16,819,024
------------ ------------
NET ASSETS:
Beginning of period ................................................... 16,819,024 --
------------ ------------
End of period ......................................................... $ 16,521,096 $ 16,819,024
============ ============
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. International Equity Fund (the "Fund") is an investment portfolio of
Mariner Mutual Funds Trust (the "Trust"). The Trust is a Massachusetts
business trust and is an open-end diversified investment company which has
multiple investment portfolios, including the Fund. The Fund's commencement
date of operations was April 25, 1994. The Fund offers two classes of
shares. The Institutional Class (Class B), which commenced offering on
March 1, 1995, is available to customers of financial institutions or
corporations on behalf of their customers or employees, or on behalf of any
trust, pension, profit sharing or other benefit plan for such customers or
employees. The Service Class (Class A) are available to all other
investors. Class A and Class B shares are identical in all respects except
that Class B shares are not subject to a sales load and do not impose any
shareholder servicing fee or Rule 12b-1 fees. The following summarizes
significant accounting policies followed by the Fund in its financial
statements.
A. Investments in securities are valued at the last quoted sale
price as of the close of business on the day the valuation is
made, or lacking any sales, at the mean between closing bid and
asked prices. Price information on listed securities is taken
from the exchange where the securities are primarily traded.
Investments in futures and related options, which are traded on
commodities exchanges, are valued at their last sale price as of
the close of such exchanges. Other securities for which no
quotations are readily available are valued at fair value as
determined in good faith by or under the direction of the Board
of Trustees. Short-term investments are valued at amortized cost,
which approximates market value. All assets and liabilities
initially expressed in foreign currencies will be translated into
U.S. dollars at the bid price of such currencies against U.S.
dollars last quoted by a major bank or broker. If such quotations
are not available as of the close of the New York Stock Exchange,
the rate of exchange will be determined in accordance with
policies established in good faith by the Board of Trustees.
B. Transactions denominated in foreign currencies are recorded at
the prevailing rate as incurred or earned. Asset and liability
accounts are adjusted to reflect the current exchange rate at the
end of each period. Such adjustments are recorded in net
unrealized appreciation on foreign currency transactions. Net
realized foreign currency gains or losses include exchange rate
differences between trade date and settlement date for security
purchases and sales, and between the date the Fund records
income, expenses and other assets and liabilities and the date
such assets and liabilities are received or paid. The portion of
both realized and unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates is
not separately disclosed. The Fund may enter into forward foreign
currency contracts to hedge planned purchases or sales of
securities denominated in a particular currency. Fluctuations in
the value of forward foreign currency contracts are recorded for
book purposes in net unrealized appreciation on foreign currency
transactions by the Fund. When the forward contract is closed,
the Fund records a net realized foreign currency gain or loss
equal to the difference between the value of the foreign currency
forward contract at the time it was opened and the value at the
time it was closed.
C. 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.
D. It is the Fund's policy to comply with the requirements of the
Internal Revenue Code, as amended, applicable to regulated
investment companies and to distribute substantially all of its
taxable income, and net capital gains to its shareholders.
Therefore, no provision is required for Federal income tax. Under
the applicable foreign tax law, a withholding tax may be imposed
on interest, dividends, and capital gains at various rates. Where
available, the Fund will file for claims on foreign taxes
withheld.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For Federal income tax purposes, at December 31, 1994, the
Fund had a capital loss carry-forward available to offset future
realized gains, if any, of approximately $ 26,500 which expires
on December 31, 2002.
Additionally, net realized losses and foreign currency losses of
approximately $ 94,000 and $6,000, respectively, are attributable
to investments and foreign currency transactions that occurred
after October 31, 1994 and are recognized for Federal income tax
purposes as arising on January 1, 1995, the first day of the
Fund's next taxable year.
E. The Fund intends to distribute annually substantially all of its
net investment income and net realized capital gains, if any, in
the form of dividends.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis, and only distributions in excess of
tax basis earnings and profits are reported in the financial
statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and
tax earnings and profits which result in temporary
over-distributions for financial statements purposes, are
classified as distributions in excess of net investment income
(loss) or accumulated net realized gains (losses). The Fund's
1994 distributions of $ 27,437 which were payable as of December
31, 1994 will be recognized for tax purposes as having been made
in the Fund's next taxable year and are reflected as
distributions to shareholders in excess of net realized loss on
investments in the accompanying statement of changes in net
assets. For the year ended December 31, 1994, the net investement
loss $ 3,752 and losses totalling $ 61,792 from certain currency
transactions have been reclassified from accumulated net
investment loss and accumulated net realized loss on investments,
respectively, to paid in capital since such losses may may not be
carried forward for Federal income tax purposes. Net assets were
not affected by these these reclassifications.
F. Security transactions are recorded on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is
recorded as earned. Identified cost of investments sold is used
for both financial statement and Federal income tax purposes.
G. 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. The Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value $0.001 per share. At June 30, 1995, the
composition of net assets of the Fund is as follows:
Capital paid-in ........................................ $ 17,562,509
Accumulated net realized loss on investments and foreign
currency transactions ................................ (1,103,931)
Net unrealized appreciation on investments and foreign
currency transactions ................................ 62,518
------------
Total net assets ..................................... $ 16,521,096
============
3. The cost of securities purchased and proceeds from securities sold,
excluding short-term securities, for the period ended June 30, 1995
were $ 8,286,129 and $ 6,696,080, respectively.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. The Fund retains HSBC Asset Management Americas ("HSBC Americas"),
formerly Marinvest Inc., to act as Adviser and Administrator. HSBC
Americas is the North American investment affiliate of HSBC Holdings
plc (Hong Kong and Shanghai Banking Corporation). As Adviser, HSBC
Americas furnishes to the Fund investment guidance and policy direction
in connection with the management of the Fund, subject to policy
established by the Board of Trustees of the Trust. For such services,
HSBC Americas is paid a monthly fee at an annual rate of 0.90% of the
Fund's average daily net assets. As administrator, HSBC Americas,
provides personnel, office space and administrative services necessary
for the operation of the Fund. As compensation for its administrative
services, HSBC Americas receives from the Fund a monthly fee equal to
an annual rate of 0.15% of the average daily net assets.
The Adviser retains HSBC Asset Management Europe Ltd ("HSBC Europe"),
HSBC Asset Management Hong Kong Ltd. ("HSBC Hong Kong"), HSBC Asset
Management (Japan) KK ("HSBC Japan") and HSBC Asset Management
Australia Limited ("HSBC Australia") to act as sub-advisers (the
"Sub-Advisers") to the Fund. HSBC Europe, HSBC Hong Kong, HSBC Japan
and HSBC Australia are all investment advisory affiliates of the
Adviser.
Under its Sub-Advisory Contract with HSBC Americas, each Sub-Advisor
will undertake at its own expense to furnish the Fund and HSBC Americas
with micro- and macroeconomic research, advice and recommendations, and
economic and statistical data, with respect to the Fund's investments,
subject to the overall review by HSBC Americas and the Board of
Trustees. For its services, the Sub-Advisers receives a fee from HSBC
Americas at an annual rate not to exceed 0.45% of the Fund's average
daily net assets.
For the period ended June 30, 1995, as Adviser and Administrator, HSBC
Americas earned $ 51,850 (net of fee waivers of $ 33,494) and $ 12,562,
respectively. Effective February 1, 1995, HSBC Americas earned
co-administration fees of 0.03% for both share classes and shareholder
servicing fees 0.04% for the Service Class (Class A) of the Fund's
average net assets, respectively. For the period ended June 30, 1995,
the Fund paid co-administrative fees of $ 2,558 and shareholder
servicing fees of $ 152. HSBC Americas waived these fees for the month
of January totaling $ 944.
The Fund has adopted a Distribution Plan and Agreement (the "Plan") for
the Service Class (Class A) shares pursuant to Rule 12b-1 of the
Investment Company Act of 1940, as amended, with Mariner Fund Services
(The Distributor). The Plan provides for reimbursement to the
distributor of expenses incurred in connection with distribution
services provided to the Fund not to exceed an annual rate of 0.35% of
the Class A shares' average daily net assets.
PFPC Inc. acts as transfer agent and dividend disbursing agent for the
Fund effective August 29, 1994. For such services, PFPC Inc. earned
$ 6,223 for the six months ended June 30, 1995.
State Street Bank and Trust Company acts as custodian for the Fund. For
furnishing custodian services, State Street is paid a monthly fee with
respect to the Fund for safekeeping its assets plus certain transaction
charges and out-of-pocket expenses. For the six months ended June 30,
1995, the Fund paid custody related expenses of approximately $ 93,981.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
One state in which the shares of the Fund are qualified for sale
imposes limitations on the expenses of the Fund. 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 reimburse the Fund in an
amount 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 the average daily net assets, 2.0% of the
next $ 70 million of average daily net assets and 1.5% of average daily
net assets in excess of $ 100 million. For the six months ended June
30, 1995, HSBC Americas has reimbursed the Fund $ 40,278 of which none
was required, pursuant to this expense limitation.
A partner of Baker & McKenzie, legal counsel to the Trust, acts as
Secretary of the Trust. For the six months ended June 30, 1995, legal
fees incurred by the Fund paid to Fund counsel were approximately
$6,363.
26
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
THE INTERNATIONAL EQUITY FUND
CLASS A SHARES CLASS B SHARES
------------------------------------ ------------------
FOR THE PERIOD MARCH 1, 1995
FOR THE APRIL 25, 1994 (COMMENCEMENT
SIX MONTHS ENDED (COMMENCEMENT OF OPERATIONS) TO
JUNE 30, 1995 OF OPERATIONS) TO JUNE 30, 1995
(UNAUDITED) DECEMBER 31, 1994 (UNAUDITED)
---------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period .......................... $ 9.55 $ 10.00 $ 8.81
-------- ---------- -------
Income From Investment Operations:
Net investment income .................................... (0.02) -- 0.27
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .......................... (0.11) (0.43) 0.34
-------- ---------- -------
Total from investment operations ......................... (0.13) (0.43) 0.61
-------- ---------- -------
Less Distributions from:
Dividends from excess of net realized loss on investments -- (0.02) --
-------- ---------- -------
Total distributions ...................................... -- (0.02) --
-------- ---------- -------
Net asset value, end of period ................................ $ 9.42 $ 9.55 $ 9.42
======== ========== =======
Total return (a) .............................................. (1.36)%(b) (4.30)%(b) 6.92%(b)
Ratios/Supplemental Data:
Net assets (000), end of period .......................... $ 15,605 $ 16,819 $ 916
Ratio of expenses (net of reimbursements) to average
net assets** ........................................... 9.01%* 2.16%* 1.47%*
Ratio of net investment loss to average net assets ....... (1.17)%* (0.04)%* 0.33%*
Portfolio turnover rate .................................. 42.62%(b) 29.37%(b) 42.62%(b)
- - ---------------
<FN>
(a) Excludes sales charge.
(b) Not annualized.
* Annualized.
** The ratio of expenses to average net assets for the period ended June 30,
1995 reflects a decrease of 0.48% or $0.02 per share (1994 - 0.03% or $ 0.03 per
share) due to expense reimbursements on an annualized basis.
</FN>
</TABLE>
27
<PAGE>
===============================================================================
MARINERSM MUTUAL FUNDS TRUST
370 17th Street, Suite 2700
Denver, Colorado 80202
GENERAL INFORMATION:
(800) 753-4462
INVESTMENT ADVISER AND ADMINISTRATOR
HSBC Asset Management Americas Inc.
250 Park Avenue
New York, New York 10177
SPONSOR AND DISTRIBUTOR
MarinerSM Funds Services
370 17th Street, Suite 2700
Denver, Colorado 80202
TRANSFER AGENT
and Dividend Disbursing Agent
PFPC, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
CUSTODIAN
State Street Bank and and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
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.
===============================================================================
