As Filed with the Securities and Exchange Commission on November 13, 1995
Registration Nos. 33-33734
811-6057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. _____ / /
Post-Effective Amendment No. 15 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/ X /
Amendment No. 16 / X /
MARINER MUTUAL FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
370 17th Street, Suite 2700, Denver, Colorado 80202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 634-2536
Steven R. Howard, Secretary
Baker & McKenzie, 805 Third Avenue, 30th Floor
New York, New York 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 75 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
The Registrant has registered an indefinite number of shares of
beneficial interest, par value $0.001 per share, by filing a declaration pursuant
to Rule 24f-2 under the Investment Company Act of 1940. A Rule 24f-2 Notice for
the fiscal year ended December 31, 1994 was filed with the Commission on February
27, 1995.
MARINER MUTUAL FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
PAN ASIA FUND
N-1A Item No.
Location
Part A
Prospectus Caption
INTERNATIONAL EQUITY FUND
Item 1. Cover Page..................Cover Page
Item 2. Synopsis....................Summary of Annual Fund Operating Expenses
Item 3. Condensed Financial
Information...............Not Applicable
Item 4. General Description of
Registrant
Investment Objective,
Policies and Risk
Factors; Investment
Restrictions
Item 5. Management of the Fund...... Management of the Fund; Transactions
with Affiliates; Purchase of Shares;
Transfer and Dividend Disbursing
Agent and Custodian
Item 5A. Management's Discussion of
Fund Performance......... Information contained in Annual
Report
Item 6. Capital Stock and Other
Securities............... Dividends, Distributions and Taxes;
Account Services; Shares of
Beneficial Interest
Item 7. Purchase of Securities
Being Offered............ Determination of Net Asset Value;
Purchase of Shares; Exchange
Privilege
Item 8. Redemption or Repurchase... Redemption of Shares; Redemptions
(Part B)
Item 9. Legal Proceedings.......... Not Applicable
Part B
Statement of
Additional Information
Caption
PAN ASIA FUND
Item 10. Cover Page.................. Cover Page
Item 11. Table of Contents........... Table of Contents
Item 12. General Information and
History................... Not Applicable
Item 13. Investment Objective and
Policies.................. Investment Policies and Risk Factors;
Investment Restrictions
Item 14. Management of the Registrant Management
Item 15. Control Persons and Principal
Holders of Securities..... Management; Shares of Beneficial
Interest
Item l6. Investment Advisory and
Other Services............ Management; Custodian, Transfer Agent
and Dividend Disbursing Agent;
Independent Auditors
Item 17. Brokerage Allocation........ Portfolio Transactions
Item 18. Capital Stock and Other
Securities................ Shares of Beneficial Interest
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............. Purchase of Shares (Part A);
Redemptions; Redemption of Shares
(Part A); Determination of Net Asset
Value; Exchange Privilege
Item 20. Tax Status.................. Dividends, Distributions and Taxes
(Part A); Federal Income Taxes (Part
B);
Item 21. Underwriters................ Management
Item 22. Calculation of Performance
Data .................... Performance Information
Item 23. Financial Statements........ Not Applicable
NYCORP
HSBC Global Funds Trust
Pan Asian Fund 3435 Stelzer Road
Columbus, Ohio 43219
General Information:
(800) ________
Account Information:
(800) ________
HSBC ASSET MANAGEMENT AMERICAS
INC.
Investment Adviser and
Administrator
_________________________________________________________________________________________
____
HSBC Global Funds Trust (the "Trust") was organized in Massachusetts on November
1, 1989 as a Massachusetts business trust and is an open end, diversified management
investment company with multiple investment portfolios, including the International
Equity Fund (the "Fund").
The Fund seeks as its investment objective to provide investors with long-term
capital appreciation by investing under normal market conditions at least 65% of its
total assets in equity securities issued by companies based or conducting significant
busiess in the Pan Asian region, defined as the area including the Middle East and
eastwards to the International Date Line. Such region includes Asia, the Pacific
(excluding Australia and New Zealand), and the Middle East. The balance of the Fund's
assets may be invested in debt securities of such companies. [Dividend income is expected
to be incidental to the Fund's investment objective.] The Fund may also use other
investment practices to enhance return or to hedge against fluctuations in the value of
portfolio securities. See "Investment Objectives and Policies Other Investment
Practices".
The Fund's investment adviser is HSBC Asset Management Americas Inc. ("HSBC
Americas" or the "Adviser"), the North American investment affiliate of HSBC Holdings plc
(Hongkong and Shanghai Banking Corporation). See "Management of the Fund".
Prospective investors should be aware that shares of the Fund are not an
obligation of or guaranteed or endorsed by Hong Kong and Shanghai Banking Corporation or
its affiliates. In addition, such shares are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency and may involve
investment risks, including the possible loss of principal.
Shares of the Fund are offered for sale primarily through FundMark Investment
Company Services, Inc. ("FundMark") as exclusive sub-distributor as an investment vehicle
for institutions, corporations, fiduciaries and individuals. Certain banks, financial
institutions and corporations (the "Participating Organizations") have agreed to act as
shareholder servicing agents for investors who maintain accounts at these Participating
Organizations and to perform certain services for the Fund.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information, dated
November 14, 1995 containing additional detailed information about the Fund (the
"Statement of Additional Information"), has been filed with the Securities and Exchange
Commission and is hereby incorporated by reference into this Prospectus. A copy is
available without charge and can be obtained by writing the Trust at the above address,
or calling the General Information telephone number.
____________________________________
This Prospectus should be read and retained for ready reference to information
about the Fund.
________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______________________
TABLE OF CONTENTS
Page
Summary of Annual Fund Operating Expenses4
Investment Objective, Policies and Risk Factors5
Investment Restrictions11
Management of the Fund11
Transactions with Affiliates15
Determination of Net Asset Value15
Purchase of Shares15
Redemption of Shares18
Dividends, Distributions and Taxes20
Account Services21
Transfer and Dividend Disbursing Agent and Custodian22
Exchange Privilege22
Performance Information23
Shares of Beneficial Interest23
SUMMARY OF ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
The purpose of the following information is to assist an investor in
understanding the costs and expenses that an investor in the Fund would bear directly or
indirectly. The information provided is based on estimates.
Class A
Class C
Shares
Shares
_______
_______
Maximum sales charge imposed on purchases of shares of the Funds
(as a percentage of offering price) 4.50%
None
Certain investors will not be subject to the sales charge
(See "Purchase of Shares".)
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
None
Deferred Sales Charge (as a percentage of redemption proceeds)
For Purchases up to $999,999 None
1.00%(2)
For Purchases of $1,000,000 or more 1.00%(1)
1.00%(2)
Redemption Fees None
None
Exchange Fees None
None
Annual Operating Expenses
Management Fees (net of fees not imposed) 1.25%
1.25%
12b-1 Fees 0.35%
0.75%
Other Expenses
Administrative Service Fees 0.10%
0.10%
_____
_____
Co-Administrative/Shareholder Services Fee 0.07%
0.07%
Participating Organization Fee 0.00%
0.25%
Other Operating Expenses 0.57%
0.63%
____
____
Total Fund Operating Expenses 2.34%
3.05%
____
____
____
____
(1) Purchases of Class A shares of $1 million or more are not subject to a
sales charge (an "initial sales charge"). A contingent deferred sales
charge ("CDSC") of 1.00% will be imposed, however, on shares from any
such purchase that are redeemed [within one year following such
purchase]. (See "Purchase of Shares".)
(2) Purchases of Class C shares of the Fund are subject to a CDSC of 1.00%
for redemptions made within one year of purchase.
(3) Investors who purchase and redeem shares of the Fund through a customer
account maintained at a Participating Organization may be charged
additional fees by such Participating Organization related to services it
provides for such Investors. (See "Management of the Fund Servicing
Agreements" for additional information.)
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual shareholder's
own investment in the Fund. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and expenses.
For a more detailed discussion of these matters, investors should refer to the
appropriate sections of this Prospectus.
The following example should not be considered a representation of past or future
expenses. The expenses set forth above and example set forth below reflect the
non-imposition of certain fees and expenses. The actual expenses may be greater
or lesser than those shown.
Example:
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return and the reinvestment of all dividends and distributions:+
Class A Class C
Shares Shares
1 year $___ $___
3 years $___ $___
+ Includes a maximum sales charge for the Class A shares from which certain
shareholders may be exempt. (See "Purchase of Shares"). Reduced sales
charges apply to purchases of $50,000 or more. Generally, for Class A
shares, purchases of $1 million or more may be accomplished at net asset
value without an initial sales charge, but may be subject to a 1.00% CDSC
[if liquidated within one year of purchase]. If Class C shares of the
Fund are redeemed within one year of purchase, the expense figure in the
first year increases to _________.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
Investment Objective
The investment objective of the Fund is to provide investors with long-term
capital appreciation by investing at least 65% of its total assets in equity
securities issued by companies based or doing significant business in the Pan
Asian region defined to include Asia, the Pacific (excluding Australia and New
Zealand), the Middle East, Turkey and [ex-CIS states]. The Fund expects to
benefit from the local presence of the [Hong Kong Bank Group] ("HSBC") in these
areas of the world. Hence the Fund will have a tendency, but will not be
required, to focus its investments in those countries where the Hong Kong Bank
Group has a local presence. The Fund expects to initially invest only in those
countries where Hong Kong Bank Group has a presence as well as Israel and Russia.
This list may change as HSBC adds and deletes locations from its network and as
local markets develop, but currently contains:
Bangladesh
Brunei Darussalam
China
Cook Islands
Korea (Republic of)
Hong Kong
India
Indonesia
Japan
Macau
Malaysia
Myanmar
New Zealand
Pakistan
Philippines
Singapore
Sri Lanka
Taiwan, China
Thailand
Viet Nam
Mauritius
Laos
Mongolia
Other Middle East and Asia Minor
Bahrain
Jordan
Lebanon
Oman
Palestinian Autonomous Area
Qatar
Saudi Arabia
United Arab Emirates
Turkey
A company will be considered a Pan Asian issuer based on meeting any one of
the following criteria:
* the country in which the company was organized
* country in which the principal securities market for the company
is located
* country in which the company derives at least 50% of its revenues
or profits from goods procured or sold, investments made or
services performed
* country in which at least 50% of the company's assets are
located.
The balance of the Fund's assets may be invested in debt securities of Pan
Asian issuers including bonds and money market instruments. [Dividend income is
expected to be incidental to the Fund's investment objective.] There is no
assurance that this objective will be attained. For temporary defensive purposes,
the Fund may invest up to 100% of its total assets in equity and debt securities
of companies not Pan Asian issuers.
Investment Policies
The Fund seeks to achieve its investment objective by investing in a
portfolio of equity investments in a variety of Pan Asian markets with a focus on
equity investments that have the potential for favorable price appreciation and
currency movements. The types of equity securities in which the Fund may invest
include common stocks, convertible securities, preferred stock, warrants or other
securities that are exchangeable for shares of common stock, American Depositary
Receipts, European Depositary Receipts, and other depositary receipts. The Fund
may invest without limit in "emerging markets". The Adviser believes that both
the selection of individual stocks and the allocation of the Fund's assets across
foreign stock markets are important in managing an international equity portfolio.
Within each country, criteria for selecting particular securities are expected to
include the issuer's managerial strength, competitive market position, prospects
for profits and earnings growth, underlying asset value and relative valuation.
The Fund does not plan on investing in debt securities to any significant extent.
Therefore, it has not established rating criteria for the debt securities in which
it may invest. Such securities may not be rated at all for creditworthiness. In
purchasing junk bonds, the Adviser will take into consideration, among other
things, the issuer's financial resources, its sensitivity to economic conditions
and trends, its operating history, the quality of the issuer's management and
regulatory matters. The Fund does not intend to purchase debt securities that are
in default or which the Adviser believes will be in default.
Risk Factors
Investment in securities of foreign issuers may subject the Fund to risks
of foreign political, economic and legal conditions and developments. Such
conditions or developments might include favorable or unfavorable changes in
currency exchange rates, exchange control regulations (including currency
blockage), expropriation of assets of companies in which the Fund invests,
nationalization of such companies, imposition of withholding taxes on dividend or
interest payments, and possible difficulty in obtaining and enforcing judgments
against a foreign issuer. Also, foreign securities may not be as liquid as, and
may be more volatile than, comparable domestic common stocks. In addition,
foreign securities markets are generally not as developed or efficient as those in
the United States. There is generally less government supervision and regulation
of foreign securities exchanges, brokers and companies than in the United States.
Furthermore, issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers. The Fund, in connection with its purchases and sales of foreign
securities, other than securities denominated in United States dollars, is
influenced by the returns on the currencies in which the securities are
denominated. Currency risk is the risk that changes in foreign exchange rates
will affect, favorably or unfavorably, the value of foreign securities held by the
Fund. In a period when the U.S. dollar generally rises against foreign
currencies, the returns on foreign stocks for a U.S. investor will be diminished.
By contrast, in a period when the U.S. dollar generally declines, the returns on
foreign securities will be enhanced. Further, brokerage costs in purchasing and
selling securities in foreign securities markets generally are higher than such
costs in comparable transactions in domestic securities markets, and foreign
custodial costs relating to the Fund's portfolio securities are higher than
domestic custodial costs.
Investment in emerging market countries presents risks in greater degree
than, and in addition to, those presented by investment in foreign issuers in
general. A number of emerging market countries restrict, to varying degrees,
foreign investment in stocks. Repatriation of investment income, capital, and the
proceeds of sales of foreign investors may require governmental registration
and/or approval in some emerging market countries. A member of the currencies of
developing countries have experienced significant declines against the U.S. dollar
in recent years, and devaluation may occur subsequent to investments in these
currencies by the Fund. Inflation and rapid fluctuations in inflation rates have
had and may continue to have negative effect on the economies and securities
markets of certain emerging market countries. In addition to the risks of
investing in emerging market securities, there are additional risks associated
with investing in developing Pan Asian countries including: (1) certain markets,
such as those of China, being in the earliest stages of development; (2) high
concentration of market capitalization and trading volume in a small number of
issuers representing a limited number of industries, as well as a high
concentration of investors and financial intermediaries; (3) political and social
uncertainties; (4) over-dependence on exports, especially with respect to primary
commodities, making these economies vulnerable to changes in commodity prices; (5)
overburdened infrastructure and obsolete financial systems; (6) environmental
problems; (7) less well developed legal systems than many other industrialized
nations; and (8) unsatisfactory custodial services. Because the Fund will be
highly concentrated in particular types of securities, the Fund will not be
diversified. Investment in a non-diversified fund could, therefore, enter greater
risks than investment in a "diversified" fund, including a risk of greater
fluctuations in yield and share price.
Other Investment Practices
Investment Company Securities. The Fund may invest in securities issued by
other investment companies. Such securities will be acquired by the Fund within
the limits prescribed by the 1940 Act, as amended, which include a prohibition
against the Fund investing more than 10% of the value of its total assets in such
securities. Investors should recognize that the purchase of securities of other
investment companies results in duplication of expenses such that investors
indirectly bear a proportionate share of the expenses of such companies including
operating costs, and investment advisory and administrative services fees.
Long-Term and Short-Term Corporate Debt Obligations. The Fund may invest
in U.S. dollar-denominated debt obligations issued or guaranteed by U.S.
corporations or U.S. commercial banks, U.S. dollar-denominated obligations of
foreign issuers and debt obligations of foreign issuers denominated in foreign
currencies. Such debt obligations include, among others, bonds, notes,
debentures, commercial paper and variable rate demand notes. The bank obligations
in which the Fund may invest are certificates of deposit, bankers' acceptances,
and fixed time deposits. The Adviser, in choosing corporate debt securities on
behalf of the Fund will evaluate each issuer based on (i) general economic and
financial conditions; (ii) the specific issuer's (a) business and management, (b)
cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate
under adverse economic conditions, (e) fair market value of assets, and (f) in the
case of foreign issuers, unique political, economic or social conditions
applicable to such issuer's country; and (iii) other considerations the Adviser
deems appropriate.
Certain debt securities in which the Fund invests are subject to a greater
degree of market fluctuation and credit risk than higher quality securities and
may be regarded as having predominantly speculative characteristics.
Convertible Securities. The Fund may invest in convertible securities
which have characteristics similar to both fixed income and equity securities.
Because of the conversion feature, the market value of convertible securities
tends to move together with the market value of the underlying stock. As a
result, the Fund's selection of convertible securities is based, to a great
extent, on the potential for capital appreciation that may exist in the underlying
stock. The value of convertible securities is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
American and European Depositary Receipts. The Fund may invest in the
securities of foreign issuers in the form of American Depositary Receipts ("ADRs")
and European Depositary Receipts ("EDRs"). These securities may not necessarily
be denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are receipts issued in Europe typically by non-United States
banks and trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the United
States securities markets and EDRs and CDRs in bearer form are designed for use in
Europe. The Fund may invest in ADRs, EDRs and CDRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts generally bear all
the costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Repurchase Agreements. As discussed above, the Fund may invest in
securities pursuant to repurchase agreements, whereby the seller agrees to
repurchase such securities at the Fund's cost plus interest within a specified
time (generally one day). While repurchase agreements involve certain risks not
associated with direct investments in the underlying securities, the Fund will
follow procedures designed to minimize such risks. These procedures include
effecting repurchase transactions only with large, well-capitalized banks and
registered broker-dealers having creditworthiness determined by the Adviser to be
substantially equivalent to that of issuers of debt securities rated investment
grade. In addition, the Fund's repurchase agreements will provide that the value
of the collateral underlying the repurchase agreement will always be at least
equal to the repurchase price, including any accrued interest earned on the
repurchase agreement, and that the Fund's custodian will take possession of such
collateral. In the event of a default or bankruptcy by the seller, the Fund will
seek to liquidate such collateral. However, the exercise of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the extent
that proceeds from any sale upon a default of the obligation to repurchase were
less than the repurchase price, the Fund could suffer a loss. Repurchase
agreements are considered to be loans by an investment company under the
Investment Company Act of 1940 (the "1940 Act"). It is the current policy of the
Fund not to enter into repurchase agreements exceeding in the aggregate 10% of the
market value of the Fund's assets.
When-Issued and Delayed-Delivery Securities. The Fund may purchase
securities on a when-issued or delayed-delivery basis. For example, delivery of
and payment for these securities can take place a month or more after the date of
the transaction. The securities so purchased are subject to market fluctuation
during this period and no income is credited to the Fund until settlement takes
place. To facilitate such acquisitions, the Fund will maintain with the custodian
a separate account with a segregated portfolio of securities in an amount at least
equal to such commitments. On the delivery dates for such transactions, the Fund
will meet its obligations from maturities or sales of the securities held in the
separate account and/or from cash flow. It is the current policy of the Fund not
to enter into when-issued commitments exceeding in the aggregate 15% of the market
value of the Fund's total assets, less liabilities other than the obligations
created by when-issued commitments.
Forward Currency Contracts. The Fund may conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis as the spot rate prevailing in
the foreign currency exchange market or through entering into forward currency
contracts to protect against uncertainty in the level of future exchange rates
between a particular foreign currency and the U.S. Dollar or between foreign
currencies in which the Fund's securities are or may be denominated. A forward
contract involves an obligation to purchase or sell a specific currency amount at
a future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. Under
normal circumstances, consideration of the prospect for changes in currency
exchange rates will be incorporated into the Fund's long-term investment
strategies. However, the Adviser believes that it is important to have the
flexibility to enter into forward currency contracts when it determines that the
best interests of the Fund will be served. The Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.
When the Adviser believes that the currency of a particular country may
suffer a significant decline against the U.S. Dollar or against another currency,
the Fund may enter into a currency contract to sell, for a fixed amount of U.S.
Dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of the Fund's securities denominated in
such foreign currency.
At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the security
and terminate its contractual obligation to deliver the foreign currency by
purchasing an "offsetting" contract with the same currency trader, obligating it
to purchase, on the same maturity date, the same amount of the foreign currency.
The Fund may realize a gain or loss from currency transactions.
Generally, the Fund will enter into forward currency contracts only as a
hedge against foreign currency exposure affecting the Fund. If the Fund enters
into forward currency contracts to cover activities which are essentially
speculative, the Fund will segregate cash or readily marketable securities with
its custodian, or a designated sub-custodian, in an amount at all times equal to
or exceeding the Fund's commitment with respect to such contracts.
Options on Currencies. The Fund may purchase and write put and call
options on foreign currencies (traded on U.S. and foreign exchange or over-the-
counter markets) to manage the Fund's exposure to changes in dollar exchange
rates. Call options on foreign currency written by the Fund will be "covered",
which means that the Fund will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency written by the Fund,
the Fund will establish a segregated account with its custodian bank consisting of
cash, U.S. government securities or other high grade liquid debt securities in an
amount equal to the amount the Fund would be required to pay upon exercise of the
put.
Options on Securities. The fund may write (sell) covered put and call
options and purchase put and call options with a value of up to 25% of the
securities in its portfolio. The Fund will engage in options trading principally
for hedging purposes. The Fund may write call options on a covered basis only,
and will not engage in option writing strategies for speculative purposes.
The Fund may purchase call options, but only to effect a "closing
transaction" i.e., to offset an obligation pursuant to a previously written call
option to prevent an underlying security from being called, or to permit the sale
of the underlying security or the writing of a new option on the security prior to
the outstanding option's expiration. The Fund may also purchase securities with
put options, sometimes referred to as stand-by commitments, which are otherwise
eligible for investment in amounts not exceeding 10% of its assets, when the Fund
anticipates a decline in the market value of securities in the Fund's portfolio.
The Fund will incur costs, in the form of premiums, on options it purchases and
may incur transaction costs on options that it exercises. The Fund will
ordinarily realize a gain from a put option it has purchased if the value of the
securities subject to the option decreases sufficiently below the exercise price
to cover both the premium and the transaction costs.
Interest Rate Futures Contracts. The Fund may, to a limited extent, enter
into interest rate futures contracts i.e., contracts for the future delivery of
securities or index-based futures contracts that are, in the opinion of the
Fund, sufficiently correlated with the Fund's portfolio. These investments will
be made primarily in an attempt to protect the Fund against the effects of adverse
changes in interest rates (i.e., "hedging"). When interest rates are increasing
and portfolio values are falling, the sale of futures contracts can offset a
decline in the value of the Fund's current portfolio securities. The Fund will
engage in such transactions solely for bona fide hedging purposes and not for the
purpose of engaging in speculative trading practices. The Statement of Additional
Information describes these investments in greater detail.
Options on Interest Rate Futures Contracts. The Fund may purchase put and
call options on interest rate futures contracts, which give the Fund the right to
sell or purchase the underlying futures contract for a specified price upon
exercise of the option at any time during the option period. The Fund may also
write (sell) put and call options on such futures contracts. For options on
interest rate futures that the Fund writes, the Fund will receive a premium in
return for granting to the buyer the right to sell to the Fund or to buy from the
Fund the underlying futures contract for a specified price at any time during the
option period. As with futures contracts, the Fund will purchase or sell options
on interest rate futures contracts solely for bona fide hedging purposes and not
as a means of speculative trading.
Futures, Related Options and Options on Stock Indices. The Fund may
attempt to reduce the risk of investment in equity securities by hedging a portion
of its portfolio through the use of certain futures transactions, options on
futures traded on a board of trade and options on stock indices traded on
national securities exchanges. In addition, the Fund may hedge a portion of its
portfolio by purchasing such instruments during a market advance or when the
Adviser anticipates an advance. In attempting to hedge its portfolio, the Fund
may enter into contracts for the future delivery of securities and futures
contracts based on a specific security, class of securities or an index, purchase
or sell options or any such futures contracts, and engage in related closing
transactions. The Fund will not engage in transactions in futures contracts or
options for speculation. The Fund will use these instruments only as a hedge
against changes resulting from market conditions in the values of securities held
in its portfolio or which it intends to purchase.
A stock index assigns relative weightings to the common stocks in the
index, and the index generally fluctuates with changes in the market values of
these stocks. A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is made.
The Fund will sell stock index futures only if the amount resulting from the
multiplication of the then current level of the indices upon which such futures
contracts are based, and the number of futures contracts which would be
outstanding, do not exceed one-third of the value of the Fund's net assets.
When a futures contract is executed, each party deposits with a broker of
in a segregated custodial account up to 5% of the contract amount, called the
"initial margin", and during the term of the contract, the amount of the deposit
is adjusted based on the current value of the futures contract by payments of
variation margin to or from the broker or segregated account.
In the case of options on stock index futures, the holder of the option
pays a premium and receives the right, upon exercise of the option at a specified
price during the option period, to assume the option writer's position in a stock
index futures contract. If the option is exercised by the holder before the last
trading day during the option period, the option writer delivers the futures
position, as well as any balance in the writer's futures margin account. If it is
exercised on the last trading day, the option writer delivers to the option holder
cash in an amount equal to the difference between the option exercise price and
the closing level of the relevant index on the date the option expires. In the
case of options on stock indexes, the holder of the option pays a premium and
receives the right, upon exercise of the option at a specified price during the
option period, to receive cash equal to the dollar amount of the difference
between the closing price of the relevant index and the option exercise price
times a specified multiple, call the "multiplier".
During a market decline or when the Adviser anticipates a decline, the Fund
may hedge a portion of its portfolio by selling futures contracts or purchasing
puts on such contracts or on a stock index in order to limit exposure to the
decline. This provides an alternative to liquidation of securities positions and
the corresponding costs of such liquidation. Conversely, during a market advance
or when the Adviser anticipates an advance, the Fund may hedge a portion of its
portfolio by purchasing futures, options on these futures or options on stock
indices. This affords a hedge against the Fund not participating in a market
advance at a time when it is not fully invested and serves as a temporary
substitute for the purchase of individual securities which may later be purchased
in a more advantageous manner. The Fund will sell options on futures and on stock
indices only to close out existing hedge positions.
The Fund's successful use of stock index futures contracts, options on such
contracts and options on indices depends upon the Adviser's ability to predict the
direction of the market and is subject to various additional risks. The
correlation between movements in the price of the futures contract and the price
of the securities being hedged is imperfect and the risk from imperfect
correlation increases in the case of stock index futures as the composition of the
Fund's portfolio diverges from the composition of the relevant index. Such
imperfect correlation may prevent the Fund from achieving the intended hedge or
may expose the Fund to risk of loss. In addition, if the Fund purchases futures
to hedge against market advances before it can invest in common stock in an
advantageous manner and the market declines, the Fund might create a loss on the
futures contract. Particularly in the case of options on stock index futures and
on stock indices, the Fund's ability to establish and maintain positions will
depend on market liquidity. The successful utilization of hedging and risk
management transactions requires skills different from those needed in the
selection of the Fund's portfolio securities. The Fund believes that the Adviser
possesses the skills necessary for the successful utilization of hedging and risk
management transactions.
Positions in options, futures and options on futures may be closed out only
on an exchange which provides a secondary market for such purposes. There can be
no assurance that a liquid secondary market will exist for any particular option,
futures contract or related option at any specific time. Thus, it may not be
possible to close such an option or futures position which could have an adverse
impact on the Fund's ability to effectively hedge its securities. The Fund will
enter into an option or futures position only if there appears to be a liquid
secondary market for such options or futures.
Except as otherwise provided in this Prospectus, the Fund is permitted to
engage in bona fide hedging transactions (as defined in the rules and regulations
of the Commodity Futures Trading Commission) without any quantitative limitations.
Futures and related option transactions which are not for bona fide hedging
purposes may be used provided the total amount of the initial margin and any
option premiums attributable to such positions does not exceed 5% of the Fund's
liquidating value after taking into account unrealized profits and unrealized
losses, and excluding any in-the-money option premiums paid. The Fund will not
market, and is not marketing, itself as a commodity pool or otherwise as a vehicle
for trading in futures and related options. The Fund will segregate assets to
cover the futures and options.
Portfolio Turnover. The Fund generally will not engage in the trading of
securities for the purpose of realizing short-term profits, but will adjust its
portfolio as it deems advisable in view of prevailing or anticipated market
conditions to accomplish its investment objective. For example, the Fund may sell
portfolio securities in anticipation of an adverse market movement. Other than
for tax purposes, frequency of portfolio turnover will not be a limiting factor if
the Fund considers it advantageous to purchase of sell securities. The Fund does
not anticipate that its annual portfolio turnover rate will exceed [200%].
Illiquid Securities. The Fund will not invest in illiquid securities if
immediately after such investment more than 15% of the Fund's net assets (taken at
market value) would be invested in such securities. For this purpose, illiquid
securities include (a) securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available market,
(b) participation interests in loans that are not subject to puts; and (c)
repurchase agreements not terminable within seven days. See "Repurchase
Agreements" above. Securities that have legal or contractual restrictions on
resale but have a readily available market are not deemed illiquid for purposes of
this limitation.
INVESTMENT RESTRICTIONS
The Statement of Additional Information contains more information on the
Fund's Investment Policies, and also identifies the restrictions on the Fund's
investment activities, which provide among other things that the Fund may not:
(1) with respect to 75% of its total assets, invest more than 5% of its
total assets taken at market value in the securities of any one
issuer (excluding U.S. Government securities but including
securities subject to repurchase agreements) or purchase more than
10% of the outstanding voting securities of any single issuer.
(2) purchase the securities of issuers conducting their principal
business activity in the same industry immediately after the
purchase and as a result thereof, the value of the investments of
the Fund in that industry would exceed 25% of the current value of
the total assets of the Fund, except that there is no limitation
with respect to investments in obligations of the United States
Government, its agencies or instrumentalities which are backed by
the full faith and credit of the United States.
(3) borrow money, except that it may borrow from banks as a temporary
measure for emergency purposes where such borrowing would not
exceed 5% of the total assets (including amounts borrowed) taken at
market value. The Fund shall not purchase securities while such
borrowings are outstanding.
********
The investment restrictions referred to above are fundamental and may be
changed only when permitted by law and approved by a majority of the outstanding
voting securities of the Fund. As used in this Prospectus, such approval means
approval by the lesser of (i) the holders of 67% or more of the shares represented
in a meeting if the holders of more than 50% of the outstanding shares are present
in person or by proxy or (ii) the holders of more than 50% of the outstanding
shares.
MANAGEMENT OF THE FUND
The property, affairs and business of the Fund are managed by the Board of
Trustees. The Trustees elect officers who are charged with the responsibility for
the day-to-day operations of the Fund and the execution of policies formulated by
the Trustees.
Investment Adviser
The Trust retains HSBC Asset Management Americas Inc. to act as the
investment adviser for the Fund. HSBC Asset Management Americas Inc. is the North
American investment affiliate of HSBC Holdings plc (Hongkong and Shanghai Banking
Corporation) and Marine Midland Bank and is located at 250 Park Avenue, New York,
New York 10177. At December 31, 1995, the Adviser managed over $___ billion of
assets of individuals, pension plans, corporations and institutions.
Mr. Stanley D. Vyner, Chief Executive Officer of HSBC Americas, is
responsible for the day-to-day management of the Fund's portfolio. Prior to his
present position, Mr. Vyner was Chief Operating and then Chief Executive Officer
of HSBC Life, Hong Kong from 1990 until 1993.
Pursuant to the Advisory Contract, the Adviser furnishes continuous
investment guidance to the Trust consistent with the Fund's investment objective
and policies and provides administrative assistance in connection with the
operation of the Fund. Information regarding the investment performance of the
Fund will be contained in the Fund's Annual Report and may be obtained, without
charge, from the Trust.
Sub-Advisers
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"), HSBC Singapore 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, HSBC Singapore and HSBC Australia along with
the Adviser are all investment advisory affiliates of HSBC Holdings plc (Hongkong
and Shanghai Banking Corporation).
HSBC Europe is the European investment arm of HSBC Asset Management and
manages equity and balanced portfolios with an emphasis on the markets of the
United Kingdom and other major European securities markets. HSBC Europe also
manages global fixed income portfolios, HSBC Europe manages separate accounts for
pension plans, corporations, bank trust divisions, endowments and foundations and
provides continuous supervision for the entire James Capel family of Unit
Investment Trusts. Total assets managed by HSBC Europe amount to approximately
U.S. $16.3 billion. Its principal offices are located at 6 Beview Marks, London,
EC3A, 7QP, England.
HSBC Hong Kong is the Asia Pacific investment arm of HSBC Asset Management.
HSBC Hong Kong manages approximately U.S. $9.2 billion of equity portfolios
dedicated to the Pacific Rim, Pacific Basin and the emerging markets of Southeast
Asia. HSBC Hong Kong was founded in 1973 and has its principal business address
at 10/F Citibank Tower, 3 Garden Road, Hong Kong. It is one of the largest
investment managers in the Asia Pacific region, managing accounts for
corporations, pension plans and the full-line of Wardley Unit Investment Trusts.
Mr. Terence F. Mahony, Chief Investment Officer of Global Emerging Markets, HSBC
Hong Kong, will play a significant role in management of the emerging markets
component of the Fund's portfolio.
HSBC Japan provides a full range of investment services to clients
investing in Japanese securities and Japanese investors investing domestically or
internationally. HSBC Japan has its principal office at 6/F No. 2 Tomoecho Annex,
3-8-27 Toranomon Minato-ku, Tokyo, Japan.
[DESCRIBE HSBC SINGAPORE]
HSBC Australia is one of the largest fund managers in Australia offering a
full range of investment services to superannuation funds, public bodies,
corporations, trusts, charities, high-net-worth individuals and unit trusts for
smaller investors. HSBC Australia has its principal address at P.O. Box 291,
Market Street, Melbourne, Victoria 3000, Australia.
Under its Sub-Advisory Contract with the Adviser, each Sub-Adviser will
undertake at its own expense to furnish the Fund and the Adviser 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 the
Adviser and the Board of Trustees.
Banking Laws
Messrs. Baker & McKenzie, counsel to the Trust and special counsel to the
Adviser, have advised HSBC Americas that HSBC Americas may perform the services
for the Fund contemplated by the Advisory Contract without violation of the Glass-
Steagall Act or other applicable banking laws or regulations. Such counsel has
pointed out, however, that this question has not be authoritatively determined and
that judicial or administrative decisions or interpretations of present Federal or
state statutes and regulations relating to the permissible activities of banks or
trust companies and their subsidiaries or affiliates, as well as future changes in
Federal or state statutes and regulations and judicial or administrative decisions
or interpretations thereof, could prevent HSBC Americas from continuing to perform
such services for the Fund.
If HSBC Americas were prohibited from performing any of its services for
the Trust, it is expected that the Board of Trustees would recommend to the Fund's
shareholders that they approve new agreements with another entity or entities
qualified to perform such services and selected by the Board.
Sponsor and Distributor
BISYS Fund Services, the Sponsor and Distributor, has its principal office
at 3435 Stelzer Road, Columbus, Ohio 43219. As Distributor, BISYS Fund Services
will receive orders for, sell, and distribute shares of the Fund. FundMark
Investment Company Services, Inc. ("FundMark"), having its principal office at
1225 Seventeenth Street, Denver, Colorado 80202 will act as exclusive Sub-
Distributor.
Shareholder Servicing Agent
The Trust retains HSBC Americas to act as shareholder servicing Agent of
the Fund in accordance with the terms of the Shareholder Servicing Agreement.
Pursuant to the Shareholder Servicing Agreement, HSBC Americas (i) assists and
trains third parties who deliver prospectuses and Fund applications, (ii) assists
and trains third parties who assist customers with completing Fund applications,
(iii) conducts customer education, reviews Fund written communications and assists
third parties who answer customer questions, (iv) organizes and conducts
investment seminars to enhance understanding of the Fund and its objectives, (v)
assists third parties who effect customer purchases and redemptions and (vi)
assists and supervises the activities of Participating Organizations.
For its services as Shareholder Servicing Agent, HSBC Americas is paid an
annual fee equal to 0.04% of average daily net assets.
Administrator
The Trust retains BISYS Fund Services ("BISYS") to act as the Administrator
of the Fund in accordance with the terms of the Management and Administration
Agreements. Pursuant to the Management and Administration Agreements, BISYS, at
its expense, generally supervises the operation of the Trust and the Fund by
reviewing the expenses of the Fund monthly to ensure timing and accuracy of the
Fund's operating expense budget and by providing administrative personnel, office
space and administrative services reasonably necessary for the operation of the
Trust and the Fund, other than those services which are provided by HSBC Americas
pursuant to the Advisory Contract. BISYS also maintains the books and records of
the Fund's portfolio transactions.
The Trust also retains HSBC as Co-Administrator. Pursuant to the Co-
Administration Services Contract, HSBC Americas (i) manages the Fund's
relationship with BISYS, FundMark and State Street Bank and Trust, (ii) assists
with negotiation of contracts with service providers and supervises the activities
of those service providers, (iii) serves as a liaison with Fund trustees, and (iv)
assists with general product management and oversight. For its services as a Co-
Administrator, HSBC Americas is paid an annual fee equal to 0.03% of the Fund's
average daily net assets.
Servicing Agreements
The Fund may enter into agreements (the "Servicing Agreement") with certain
banks, financial institutions and corporations (the "Participating Organizations")
so that each Participating Organization handles recordkeeping and provides certain
administrative services for its customers who invest in the Fund through accounts
maintained at that Participating Organization. In such cases the Participating
Organization or one of its nominees will be the shareholder of record as nominee
for its customers and will maintain subaccounts for its customers. In addition,
the Participating Organization will credit cash distributions to each customer
account, process purchase and redemption requests, mail statements of all
transactions with respect to each customer and, if required by law, distribute the
Trust's shareholder reports and proxy statements. However, any customer of a
Participating Organization may become the shareholder of record upon written
requests to its Participating Organization or BISYS, as transfer agent. Each
Participating Organization will receive monthly payments which in some cases may
be based upon expenses that the Participating Organization has incurred in the
performance of its services under the Servicing Agreement. The payments will not
exceed, on an annualized basis, an amount equal to 0.25% of the average daily
value during the month of Fund shares in the subaccount of which the Participating
Organization is record owner as nominee for its customers. Such payments will be
separately negotiated with each Participating Organization and will vary depending
upon such factors as the services provided and the costs incurred by each
Participating Organization.
The payments will be made by the Fund to the Participating Organizations
pursuant to the Servicing Agreements. The Board of Trustees will review, at least
quarterly, the amounts paid and the purposes for which such expenditures were made
pursuant to the Servicing Agreements.
Under separate agreements, HSBC Americas (not the funds) may make
supplementary payments from its own revenues to a Participating Organization that
agrees to perform services such as advising customers about the status of their
subaccounts, the current yield and dividends declared to date and providing
related services a shareholder may request. Such payments will vary depending
upon such factors as the services provided and the cost incurred by each
Participating Organization.
Distribution Plan and Agreement
The Board of Trustees of the Trust has adopted a Distribution Plan and
Agreement (the "Plan") for the shares pursuant to Rule 12b-1 of the Investment
Company Act of 1940, as amended, after having concluded that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. The Plan
provides for a monthly payment by the Fund to reimburse FundMark in such amounts
that they may request for expenses such as the printing and distribution of
prospectuses sent to prospective investors, the preparation, printing and
distribution of sales literature and expenses associated with media advertisements
and telephone services and other direct and indirect distribution-related
expenses, including the payment of a monthly fee to FundMark for rendering
distribution-related asset introduction and asset retention services. FundMark
may also make payments to other broker-dealers or financial institutions for their
assistance in distributing shares of the Fund and otherwise promoting the sale of
the Fund's shares. The total monthly payment is based on the Fund's shares
average daily net asset value during the preceding month and is calculated at an
annual rate not to exceed 0.35% for Class A shares and 0.75% for Class C shares.
The Plan provides for FundMark to prepare and submit to the Board of
Trustees on a quarterly basis written reports of all amounts expended pursuant to
the Plan and the purpose for which such expenditures were made. The Plan may not
be amended to increase materially the amount spent for distribution expenses
without approval by a majority of the Fund's outstanding shares subject to the
Plan and approval of a majority of the non-interested Trustees. Distribution
expenses incurred in one year will not be carried forward into and reimbursed in
the next year for actual expenses incurred in the previous year.
Fees and Expenses
The Fund pays HSBC Americas as compensation for its advisory services a
monthly fee equal to an annual rate of ____% of average daily net assets. As
compensation for its administrative services, BISYS receives from the Fund a
monthly fee equal to an annual rate of ____% of the average daily net assets. As
Distributor, BISYS/FundMark is paid a fee of ____% by the Fund, and is reimbursed
for certain distribution expenses described above under "Distribution Plan and
Agreement". As compensation for their services, the Sub-Advisers receive fees
from HSBC Americas at an annual rate not to exceed ____% of the average net assets
of the Fund. HSBC Americas and the Sub-Advisers may agree in advance not to
impose a portion of their fees in the future.
Investors who purchase and redeem shares of the Fund through a customer
account maintained at a Participating Organization may be charged one or more of
the following types of fees by Participating Organizations, as agreed upon by the
Participating Organization and the investor, with respect to the customer services
provided by the Participating Organization: account fees (a fixed amount per month
or per year); transaction fees (a fixed amount per transaction processed);
compensating balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or account maintenance fees (a
periodic charge based upon a percentage of the assets in the account or of the
dividends paid on those assets).
TRANSACTIONS WITH AFFILIATES
Broker-dealers which are affiliates of HSBC Americas may act as brokers for
the Fund. At all times, however, their commissions, fees or other charges must be
reasonable and fair in comparison with those that would be paid to unaffiliated
firms for comparable transactions. The Fund will not do business with nor pay
commissions to affiliates of HSBC Americas in any portfolio transactions where
they act as principal. In placing orders for the purchase and sale of portfolio
securities, the Fund seeks the best execution at the most favorable price,
considering all of the circumstances.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share for the purpose of pricing purchase
and redemption orders is determined at 4:15 p.m. (Eastern time) on each day the
Fund's transfer agent is open for business. The net asset value will not be
computed on the following holidays: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving and Christmas. The net asset value per
share of the Fund is computed by dividing the value of the net assets of the Fund
(i.e., the value of the assets less the liabilities) by the total number of shares
outstanding. All expenses, including the management, advisory, sub-advisory and
administrative fees, are accrued daily and taken into account for the purpose of
determining the net asset value.
Portfolio securities are valued at the last quoted sales 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 security is primarily traded. The value for
each unlisted security is based on the last trade price for that security on a day
in which the security is traded. The value of each security for which readily
available market quotations exist will be based on a decision as to the broadest
and most representative market for such security. Options on stock indices traded
on national securities exchanges are valued at the close of options trading on
such exchanges (which is currently 4:10 p.m., Eastern time). Stock index futures
and related options, which are traded on commodities exchanges, are valued at
their last sale price as of the close of such exchanges (which is currently 4:15
p.m., Eastern time). Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by the
Trustees. Securities may be valued on the basis of prices provided by a pricing
service when such prices are believed to reflect the fair market value of such
securities. Short-term investments are valued at amortized cost, which
approximates market value. The Board of Trustees has determined in good faith
that amortized cost equals fair 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.
PURCHASE OF SHARES
Shares of the Fund are offered on a continuous basis at net asset value,
plus any applicable sales charge, by BISYS and FundMark as an investment vehicle
for institutions, corporations, fiduciaries and individuals. Prospectuses and
sales material can be obtained from BISYS or FundMark.
The minimum initial investment requirement for the Fund is $1,000. The
minimum subsequent investment requirement is $50. There are no minimum investment
requirements with respect to investments effected through certain automatic
purchase and redemption arrangements on behalf of customer accounts maintained at
Participating Organizations. The minimum investment requirements may be waived or
lowered for investments effected on a group basis by certain other institutions
and their employees, such as pursuant to a payroll deduction plan. All funds will
be invested in full and fractional shares. The Trust reserves the right to reject
any purchase order. Compensation to salespersons may vary depending upon whether
Class A or Class C shares are sold.
Orders for Class A shares of the Fund will be executed at the net asset
value per share next determined after receipt of an order by the dealer, plus a
sales charge varying with the amount invested in accordance with the following
schedule:
Reallowance to
Service
Total Sales Load Organizations
____________________________________ _______________
As a % of Net As a % of
As a % of Offering Asset Value Per Offering Price
Price Per Share Share Per Share**
__________________ __________________ _______________
Less than $50,000 4.50% ____%
4.00%
$50,000 but less than $100,000 4.00% ____%
3.50%
$100,000 but less than $250,000 3.50% ____%
3.00%
$250,000 but less than $500,000 3.00% ____%
2.50%
$500,000 but less than $1 million 2.50% ____%
2.00%
$750,000 but less than $1 million 2.00% ____%
1.50%
$1 million and above 0.00%* 0.00%*
0.00%*+
* Purchases of $1 million or more are subject to a CDSC. (See below.) FundMark
may make payments to Participating Dealers in amounts up to 1.00% of the Offering
Price.
** The Distributor may, in its discretion, permit Participating Dealers to retain
the full amount of the sales charge in connection with certain sales.
+ Commission is payable by FundMark as discussed below.
The sales charge applicable to the purchase of Class A shares will be
waived on the following purchases: (1) purchases by Trustees and officers of the
Trust and of Mariner Funds Trust, and members of their immediate families
(parents, spouses, children, brothers and sisters), (2) purchases by directors,
employees and retirees of Marine Midland Bank and its affiliates, and members of
their immediate families, (3) purchases by 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, (4)
purchases by directors and employees of BISYS or FundMark and its affiliates and
members of their immediate families, (5) purchases by charitable organizations as
defined in Section 501(c)(3) of the Internal Revenue Code ("Charitable
Organizations") or for charitable remainder trusts or life income pools
established for the benefit of Charitable Organizations, (6) purchases by
registered representatives of selling brokers and members of their immediate
families, (7) purchases by individuals who have terminated their Employee Benefit
Trust ("EBT") Plan or have retired and are purchasing shares in the Fund with the
proceeds of their benefits checks (the EBT Plan must currently own shares of the
Fund at the time of the individual's purchase), (8) purchases by corporations,
their officers or directors, partnerships, and their partners which are customers
or prospective customers of Marine Midland Bank when authorized by an officer of
Marine Midland Bank, (9) purchases through registered investment advisors, or
mutual fund "wrap" or asset allocation programs, and (10) purchases by individuals
who, as determined by an officer of the Fund in accordance with guidelines
established by the Fund's Trustees, have purchased shares under special
circumstances not involving sales expenses to dealers or the Distributor.
Eligible investors should contact HSBC Americas for details.
The sales loads do not apply in any instance to reinvested dividends.
BISYS or FundMark, at its expense, may provide additional promotional
incentives to dealers. In some instances, these incentives may be limited to
certain dealers who have sold or may sell significant numbers of shares of any of
the Funds of Mariner Mutual Funds Trust or Mariner Funds Trust.
Although must shareholders elect not to receive stock certificates,
certificates for full shares can be obtained on specific written request to the
transfer agent. No certificates are issued for fractional shares. It is
considerably more complicated to redeem shares held in certificate form, and the
Expedited Redemption Service described below is not available with respect to
those shares.
Right of Accumulation
The Fund offers to all shareholders a right of accumulation under which
any shareholder may purchase shares of the Fund at the offering price applicable
to the total of (a) the dollar amount then being purchased plus (b) an amount
equal to the offering price of the shareholder's combined holdings of the shares
of the Fund. For the right of accumulation to be exercised, a shareholder must
provide at the time of purchase confirmation of the total number of shares of the
Fund owned by such shareholder. Acceptance of the purchase order is subject to
such confirmation. The right of accumulation may be amended or terminated at any
time on sixty days notice to shareholders. Shares held in the name of a nominee
or custodian under pension, profit-sharing, or other employee benefit plans may
not be combined with other shares held in the name of such nominee or custodian
for other plans to qualify for the right of accumulation.
Letter of Intent
By initially investing at least $1,000 and submitting a Letter of Intent
to the transfer agent, a "single purchaser" may purchase shares of the Fund and
other eligible Mariner Funds (other than Money Market Funds) during a 13-month
period at the reduced sales charge rates applying to the aggregate amount of the
intended purchases stated in the Letter. The Letter may apply to purchases made
up to 90 days before the date of submission of the Letter. Dividends and
distributions of capital gains paid in shares of the Fund at net asset value will
not apply towards the completion of the Letter of Intent. For further details,
including escrow provisions, see the Letter of Intent. The Fund reserves the
right to amend, suspend or cease offering this program at any time.
As disclosed above, no sales charge will be payable at the time of
purchase of Class A shares on investments of $1 million or more. However, a CDSC
will be imposed on such investments in the event of a redemption of such Class A
shares within 12 months following the purchase, at the rate of 1.00% of the lesser
of the current market value of the shares redeemed or the total cost of such
shares. In determining whether a CDSC is payable, and, if so, the amount of the
fee or charge, it is assumed that shares not subject to such fee or charge are the
first redeemed, followed by other shares held for the longest period of time.
Purchase of Class C Shares
Class C shares may be purchased at the net asset value per share and such
shares are subject to a 1.00% CDSC for shares that are redeemed within one year of
purchase. FundMark will make payments to the Participating Dealers that handle
the purchases of such shares at the rate of 1.00% of the purchase price of such
shares at the time of purchase and expects to reallocate a portion of its
distribution fee, with respect to such shares, under the Rule 12b-1 Plan for such
class of shares.
A shareholder who has redeemed Class A shares may reinvest up to the full
amount redeemed (less any CDSC) at net asset value at the time of the reinvestment
in Class A shares without payment of a sales charge. A shareholder who has
redeemed Class C shares and paid a CDSC upon such redemption, may reinvest up to
the full amount redeemed (less the CDSC) and the Class C shares obtained through
such reinvestment are not subject to any sales charge. Purchases through the
reinvestment privilege are subject to the minimum investment requirements
applicable to the Class A or Class C shares being purchased. The reinvestment
privilege as to any specific Class A or Class C shares must be effected within 60
days of the redemption. The Transfer Agent must receive from the shareholder or
the shareholder's Participating Dealer both a written request for reinvestment and
a check or wire which does not exceed the redemption proceeds. The written
request must state that the reinvestment is made pursuant to this reinvestment
privilege. If a loss is realized on the redemption of Class A shares, the
reinvestment may be subject to the "wash sale" rules if made within 30 days of the
redemption, resulting in a postponement of the recognition of such loss for
federal income tax purposes. The reinvestment privilege may be terminated or
modified at any time.
Prospective investors who wish to obtain additional information
concerning investment procedures should contact BISYS or FundMark at: (800) ___-
____.
Purchase By Wire
1. Telephone: BISYS at (800) ___-____. Give the name(s) in which the
Fund shares are to be registered, address, social security or tax identification
number (where applicable), dividend payment election, amount to be wired, name
of the wiring bank and name and telephone number of the person to be contacted in
connection with the order. An account number will be assigned. Please note your
bank will normally charge you a fee for handling this transaction.
2.
Instruct the wiring bank to transmit the
specified amount in Federal funds ($1,000
or more) to:
BISYS
____________________
ABA Routing No. 031000053
Credit: Mariner Purchase Account
DDA No. ____________
Fund Name and Account Number
Shareholder(s) Names(s) and account
number
3.
Fill in a Purchase Application and mail
to:
Mariner Mutual Funds Trust
c/o BISYS
P.O. Box ____
[ADDRESS]
A COMPLETED PURCHASE APPLICATION MUST BE RECEIVED BY THE TRANSFER AGENT BEFORE THE
EXPEDITED REDEMPTION SERVICE CAN BE USED.
Purchase By Mail
1.
Complete a Purchase Application.
Indicate the services to be used.
2.
Mail the Purchase Application and a
check for $1,000 or more, payable to the Fund
to BISYS at the
address
set forth above.
Additional Purchases By Wire and Mail
Additional purchases of shares may be made by wire by telephoning BISYS
(see "Purchase by Wire") and then instructing the wiring bank to transmit the
amount ($50 or more) of any additional purchase in Federal funds to [BANK] as set
forth above along with your account name and number. Additional purchases may
also be made by mail by making a check ($50 or more) payable to the Fund
indicating your fund account number on the check and mailing it to BISYS at the
address set forth above.
Purchase through Customer Accounts
Purchases of shares also may be made through customer accounts
maintained at Participating Organizations, including qualified Individual
Retirement and Keogh Plan accounts. Purchases will be made through a customer's
account only as directed by or on behalf of the customer on a direction form
executed prior to the customer's first purchase of shares of the Fund. For
example, a customer with an account at a Participating Organization may instruct
the Participating Organization to invest money in excess of a level agreed upon
between the customer and the Participating Organization in shares of the Fund
periodically or give other instructions to the Participating Organization within
limits prescribed by that Participating Organization.
Automatic Investment Plan
Investors may make regular monthly investments of $50 or more in
shares automatically from a checking or savings account if their bank is a member
of automated clearing house (ACH). Upon written authorization, BISYS will
electronically debit the investor's checking or savings account each month and use
the proceeds to 'II electronically debit the investor's checking or savings
account each month and use the proceeds to purchase shares for the investor's
account.
Approval by the investor's bank is required, so that establishment
of a program may require at least 30 days. The authorized amount and/or bank
information may be changed or the program terminated at any time by writing to
BISYS. A reasonable period (usually up to 15 days) may be required after receipt
of such instructions to implement them. The purchase application contains the
requirements applicable to this plan. The Trust reserves the right to amend,
suspend or cease offering this program at any time without prior notice.
REDEMPTION OF SHARES
Upon receipt by the Transfer Agent of a redemption request in
proper form ($50 minimum), shares of the Fund will be redeemed at their next
determined net asset value. See "Determination of Net Asset Value". A CDSC of
1.00% will be imposed on certain Class A shares that were purchased without
payment of the initial sales charge due to the size of the purchase and are
redeemed within one year of purchase and will be imposed on Class C shares that
are redeemed within one year of purchase. See "Purchase of Shares". The CDSC
will be imposed on the lesser of the current market value or the total cost of the
shares being redeemed. In determining whether either of such CDSCs is payable,
and, if so, the amount of the charge, it is assumed that shares not subject to
such charge are the first redeemed followed by other shares held for the longest
period of time. For the shareholder's convenience, the Trust has established
several different direct redemption procedures. Redemptions of shares purchased
by check will be effected immediately upon clearance of the purchase check, which
may take up to 15 days after those shares have been credited to the shareholder's
account. A redemption of shares is a taxable transaction on which gain or loss
may be recognized for tax purposes.
The Fund reserves the night to redeem (on 30 days' notice) accounts
whose values shareholders have reduced to $50 or less.
Redemption By Mail
1. Complete a letter of instruction indicating the Fund, the
account number and either the dollar amount or number of shares to be redeemed.
Refer to the shareholder's Fund account number.
2. Sign the letter in exactly the same way the account is
registered. If there is more than one owner of the shares, all must sign.
3. If shares to be redeemed have a value of $5,000 or more, the
signature(s) must be guaranteed by a bank, trust company, broker, dealer, credit
union, securities exchange or, association, clearing agency or savings associ
ation. Signature guarantees by notaries public are not acceptable. Further
documentation, such as copies of corporate resolution and instruments of
authority, may be requested from corporations, administrators, executors, personal
representatives, trustees or custodians to evidence the authority of the person or
entity making the redemption request.
4. If shares to be redeemed are held in certificate form,
enclose the certificates with the letter. Do not sign the certificates and for
protection use registered mail.
5. Mail the letter to BISYS at the address set forth under
"Purchase of Shares".
Checks for redemption proceeds will normally be mailed
within seven days to the shareholder's address of record.
Upon request, the proceeds of a redemption amounting to $1,000 or
more will be sent by wire to the shareholder's predesignated bank account. When
proceeds of a redemption are to be paid to someone other than the shareholder,
either by wire or check, the signature(s) on the letter of instruction must be
guaranteed regardless of the amount of the redemption.
Redemption By Expedited Redemption Service
If shares are held in book credit form and the Expedited Redemption
Service has been elected on the Purchase Application on file with the Trust's
transfer agent, redemption of shares may be requested on any day the transfer
agent is open for business by telephone or letter. A signature guarantee is not
required.
1. Telephone the request to BISYS at (800) ___-____; or
2. Mail the request to BISYS at the address set forth under
"Purchase of Shares".
Proceeds of Expedited Redemptions of $1,000 or more will be wired
to the shareholder's bank indicated in the Purchase Application. If an Expedited
Redemption request is received by the Trust's transfer agent by 4:00 p.m. (New
York City time) on a day the transfer agent is open for business, the redemption
proceeds will be transmitted to the shareholder's bank on the next business day.
A check for proceeds of less than $1,000 will be mailed to the shareholder's
address of record.
The Fund's transfer agent, BISYS, employs reasonable procedures to
confirm that instructions communicated by telephone are genuine. If the transfer
agent fails to employ such reasonable procedures, the transfer agent may be liable
for any loss, damage or expense arising out of any telephone transactions
purporting to be on a shareholder's behalf. In order to assure the accuracy of
instructions received by telephone, the transfer agent requires some form of
personal identification prior to acting upon instructions received by telephone,
records telephone instructions and provides written confirmation to investors of
such transactions.
Systematic Withdrawal Plan
An owner of $ 10,000 or more of shares of the Fund may elect to
have periodic redemptions from his account to be paid on a monthly basis. The
minimum periodic payment is $50. A sufficient number of shares to make the
scheduled redemption will be redeemed on the first or the fifteenth day of the
month. Redemptions for the purpose of making such payments may reduce or even
exhaust the account if your monthly checks exceed the dividend, interest and
capital appreciation, if any, on your shares. A shareholder may request that
these payments be sent to a predesignated bank or other designated party.
Shareholders holding share certificates are not eligible to establish a Systematic
Withdrawal Plan because share certificates must accompany all withdrawal requests.
Amounts paid to you pursuant to the Systematic Withdrawal Plan are
not a return on your investment. Payments to you pursuant to the Systematic
Withdrawal Plan are derived from the redemption of shares in your account and is a
taxable transaction on which gain or loss may be recognized for Federal, state and
city income tax purposes.
Reinstatement Privilege
A shareholder in the Fund who has redeemed shares may reinvest,
without a sales charge, up to the full amount of such redemption at the net asset
value determined at the time of the reinvestment within 60 days of the original
redemption. This privilege must be effected within 60 days of the redemption and
the investor at the time of purchase must provide the number of shares redeemed
within the 60 day period. The shareholder must reinvest in the same Fund and
account from which the shares were redeemed.
Redemption through Customer Accounts
Investors who purchase shares through customer accounts maintained
at Participating Organizations may redeem those shares only through the
Participating Organization. In some cases, a customer may instruct the
Participating Organization which maintains the account through which the customer
purchases shares to redeem shares periodically as required to bring the customer's
account balance up to a level agreed upon between the customer and the
Participating Organization. If a redemption request with respect to such an
automatic redemption arrangement is received by the transfer agent by 4:00 p.m.
(Eastern time) on a day the transfer agent is open for business, the redemption
proceeds will be transmitted on the next business day to the investor's customer
account (unless otherwise specified by the Participating Organization).
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to distribute annually substantially all of its
net investment income in the form of dividends. The Fund pays dividends and
distributes net capital gains, if any, at least once annually. The Fund's
dividend and capital gains distributions may be reinvested in additional shares or
received in cash.
In order to satisfy certain annual distribution requirements of the
Internal Revenue Code (the "Code"), the Fund may declare special dividend and
capital gains distributions during October, November or December as of a record
date in such a month. Such distributions, if paid to shareholders in the
following January, are deemed for Federal income tax purposes to have been paid by
the Fund and received by shareholders on December 31 of the prior year.
The Fund will be treated as a separate entity for Federal income
tax purposes, notwithstanding that it is one of multiple series of the Trust. The
Fund has elected to be treated and intends to qualify, as a regulated investment
company for each taxable year by complying with the provisions of the Code
applicable to regulated investment companies so that it will not be liable for
Federal income tax with respect to its net investment income and net realized
capital gains distributed to shareholders in accordance with the timing
requirements of the Code. The Fund intends to distribute substantially all of its
net investment income and net realized capital gains to its shareholders for each
taxable year.
Dividends derived from the Fund's taxable net investment income (if
any) and the excess of net short-term capital gain over net long-term capital loss
will be taxable to the Fund's shareholders as ordinary income, whether such
dividends are invested in additional shares or received in cash.
Distributions of the excess of net long-term capital gain over net
short-term capital loss designated by the Fund as capital gain dividends will be
taxable as long-term capital gains, regardless of how long a shareholder has held
his Fund shares, whether they are invested in additional shares or received in
cash. Dividends and distributions will generally not qualify for the dividends-
received deduction for corporations.
Any gain or loss realized on the redemption or exchange of Fund
shares by a shareholder who is not a dealer in securities will be treated as long-
term capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the redemption or exchange of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
long-term capital gain distributions received by the shareholder with respect to
such shares.
Foreign exchange gains and losses realized by the Fund in
connection with certain transactions involving foreign currency denominated debt
securities or payables or receivables denominated in a foreign currency are
subject to Section 988 of the Code which causes such gains and losses to be
treated as ordinary income and losses rather than capital gains and losses and may
affect the amount, timing and character of distributions to shareholders.
If the Fund invests in certain "passive foreign investment
companies" ("PFICs") which do not distribute their income on a regular basis, it
could be subject to Federal income tax (and possibly additional interest charges)
on a portion of any "excess distribution" or gain from the disposition of such
shares even if it distributes such income to its shareholders. If the Fund elects
to treat the PFIC as a "qualified electing fund" ("QEF") and the PFIC furnishes
the Fund certain financial information in the required form, the Fund would
instead be required to include in income each year a portion of the ordinary
earnings and net capital gains of the QEF, regardless of whether received, and
such amounts would be subject to the various distribution requirements described
above.
It is expected that dividends and interest from non-U.S. sources
received by the Fund will be subject to non-U.S. withholding taxes. Such
withholding taxes may be reduced or eliminated under the terms of applicable
United States income tax treaties, and the Fund intends to undertake any
procedural steps required to claim the benefits of such treaties. With respect to
any non-U.S. taxes (including withholding taxes) actually paid by the Fund, if
more than 50% in value of the Fund's total assets at the close of any taxable year
consists of stocks or securities of any non-U.S. corporations, the Fund may elect
to treat any non-U.S. taxes paid by it as paid by its shareholders. If the Fund
does not make the election permitted under Section 853, any foreign taxes paid or
accrued will represent an expense to the Fund which will reduce its investment
company taxable income. Absent this election, shareholders will not be able to
claim either a credit or a deduction for their pro rata portion of such taxes paid
by the Fund, nor will shareholders be required to treat as part of the amounts
distributed to them their pro rata portion of such taxes paid.
In the event the Fund makes the election described above to pass
through non-U.S. taxes to shareholders, shareholders will be required to include
in income (in addition to any distributions received) their proportionate portion
of the amount of non-U.S. taxes paid by the Fund and will be entitled to claim
either a credit or deduction for their portion of such taxes in computing their
U.S. Federal income tax liability. Availability of such a credit or deduction is
subject to certain limitations. Shareholders will be informed each year in which
the Fund makes the election regarding the amount and nature of foreign taxes to be
included in their income for U.S. Federal income tax purposes.
Each year the Fund will notify shareholders of the Federal income
tax status of its dividends and distributions. Depending on the residence of the
shareholder for tax purposes, such dividends and distributions may also be subject
to state, local or foreign tax consequences of ownership of Fund shares in their
particular circumstances.
Shareholders who are not U.S. persons under the Code should also
consult their tax advisers as to the possible application of U.S. taxes, including
a 30% U.S. withholding tax (or lower treaty rate) on dividends.
The Fund is required to report to the IRS all distributions of
taxable dividends and of capital gains, as well as the gross proceeds of share
redemptions. The Fund may be required to withhold Federal income tax at a rate of
31 % ("backup withholding") from taxable dividends (including capital gain
dividends) and the proceeds of redemptions of shares paid to non-corporate
shareholders who have not furnished the Fund with a correct taxpayer
identification number and made certain required certifications or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. In addition, the Fund may be required to withhold Federal income tax
at a rate of 31 % if it is notified by the IRS or a broker that the taxpayer
identification number is incorrect or that backup withholding applies because of
underreporting of interest or dividend income.
All or a portion of a loss realized upon the redemption of shares
may be disallowed to the extent shares are purchased (including shares acquired by
means of reinvested dividends) within 30 days before or after such redemption.
Exchanges are treated as redemptions for Federal tax purposes.
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the exchange
will be reduced (or the gain increased) to the extent any sales charge paid to the
Fund on the exchanged shares reduces any sales charge the shareholder would have
owed upon purchase of the new shares in the absence of the exchange privilege.
Instead, such sales charge will be treated as an amount paid for the new shares.
ACCOUNT SERVICES
All transactions in shares of the Fund will be reflected in
confirmations for each shareholder and a quarterly shareholder statement. In
those cases where a Participating Organization or its nominee is shareholder of
record of shares purchased for its customer, the Trust has been advised that the
statement may be transmitted to the customer in the discretion of the
Participating Organization. Shareholders can write or call the Trust's transfer
agent at P.O. Box ____, [ADDRESS], telephone: (800) _______ with any questions
relating to their investments in Fund shares.
Participating Organizations or their nominees may be the
shareholders of record as nominees for their customers, and may maintain
subaccounts for those customers. Any such customer may become the shareholder of
record upon written request to the Participating Organization, or BISYS, as
transfer agent.
As transfer agent, BISYS will transmit promptly to each of its
customers for whom it processes purchases and redemptions of shares and to each
Participating Organization copies of all reports to shareholders, proxy statements
and other Trust communications. The Trust's arrangements with the transfer agent
and the subtransfer agent arrangements require Participating Organizations to
grant investors who purchase shares through customer accounts the opportunity to
vote their shares by proxy at all shareholder meetings of the Trust. In certain
cases, a customer of a Participating Organization may have given his Participating
Organization the power to vote shares on his behalf. Customers with accounts at
Participating Organizations should consult their Participating Organization for
information concerning their rights to vote shares.
TRANSFER AND DIVIDEND
DISBURSING AGENT AND CUSTODIAN
Pursuant to an Agency Agreement, BISYS Fund Services Ohio, Inc.
("BISYS") acts as the Fund's transfer and dividend disbursing agent and is
responsible for maintaining account records detailing ownership of Fund shares and
for crediting income, capital gains and other changes in share ownership to
investors' accounts. For its services, BISYS receives from the Fund an annual
base fee of $16,000 plus certain per account fees and additional transaction
costs. State Street Bank and Trust Company ("State Street") is the Fund's
custodian. Pursuant to the Custodian Agreement, State Street is responsible for
holding the Fund's cash and portfolio securities. State Street may enter into
sub-custodian agreements with certain qualified banks.
EXCHANGE PRIVILEGE
Shareholders who have held all or part of their shares in a Fund
for at least seven days may exchange shares of one Fund for shares of any of the
other portfolios of the Trust and the Mariner Funds Trust which are available for
sale in their state. A shareholder who has paid a sales load in connection with
the purchase of shares of any of the Funds will be subject only to that portion of
the sales load of the Fund into which the shareholder is exchanging which exceeds
the sales load originally paid by the shareholder. The Transfer Agent, BISYS must
be advised of the applicability of the sales charge differential when the exchange
order is placed. Shareholders of any of the Mariner Money Market Funds who
exchange shares of any such Money Market Funds for shares of any of the Funds of
Mariner Mutual Funds Trust are charged the sales load applicable to such Funds as
stated in the Prospectus. Before effecting an exchange, shareholders should
review the prospectuses. Exercise of the exchange privilege is treated as a
redemption for Federal and New York State and City income tax purposes and,
depending on the circumstances, a gain or loss may be recognized. Shareholders
will be charged $5.00 for each exchange.
PERFORMANCE INFORMATION
The Fund's total return may be included in advertisements or
mailings to prospective investors. The Fund may occasionally cite statistical
reports concerning its performance. The Fund may also from time to time compare
its performance to various unmanaged indices, such as [DESCRIBE INDEX]. (See the
Statement of Additional Information for more details concerning the various
indices which might be used.) The Fund's "total return" refers to the average
annual compounded rates of return over one, five and ten year periods or for the
life of the Fund (which periods will be stated in the advertisement) that would
equate an initial amount invested at the beginning of a stated period to the
ending redeemable value of the investment, assuming the deduction of the maximum
sales charge and the reinvestment of all dividend and capital gains distributions.
The Fund calculates its total return by adding the total dividends paid for the
period to the Fund's ending net asset value per share for that period and dividing
that sum by the net asset value per share of the Fund at the beginning of the
period. The Fund may also furnish total return calculations based on investments
at various sales charge levels or at net asset value. Any performance data which
is based on the Fund's net asset value per share would be reduced if a sales
charge were taken into account. Total return figures are based on historical
earnings and are not intended to indicate future performance. Shareholders of the
Class C shares will generally experience a lower net return on their investment
than shareholders of the Class A shares because of the higher Rule 12b-1 fee and
shareholder servicing charge to which Class C shareholders will be subject.
Investors who purchase and redeem shares of the Fund through a
customer account maintained at a Participating Organization may be charged by such
Participating Organization certain fees, as agreed upon by the Participating
Organization and the investor, with respect to the customer services provided by
the Participating Organization. Such fees will have the effect of reducing the
return for those investors.
SHARES OF BENEFICIAL INTEREST
The authorized capital stock of the Trust consists of an unlimited
number of shares of beneficial interest having a par value of $0.001 per share.
The Trust's Board of Trustees has authorized the issuance of multiple series
representing shares in corresponding investment portfolios of the Trust. All
shares of the Trust have equal voting rights and will be voted in the aggregate,
and not by class, except where voting by class is required by law or where the
matter involved affects only one class. The Fund offers and this Prospectus
relates to two classes of shares. The Class A and Class C shares are identical in
all respects, with the exception that Class A shares are generally subject to an
initial sales load and lower Rule 12b-1 fees. Class C shares are subject to a
contingent deferred sales charge, higher Rule 12b-1 fees and higher shareholder
servicing fees. All shares of the Trust issued and outstanding are fully paid and
nonassessable. The Trust is not required by law to hold annual shareholder
meetings and does not intend to hold such meetings; however, the Trustees are
required to call a meeting for the purpose of considering the removal of persons
serving as Trustee if requested to do so in writing by the holders of not less
than 10% of the outstanding shares of the Trust. The Fund will be treated as a
separate entity for Federal income tax purposes. For more details concerning the
voting rights of shareholders, see the Statement of Additional Information.
Vacancies on the Board of Trustees are filled by the Board of
Trustees if immediately after filling any such vacancy at least two-thirds of the
Trustees then holding office have been elected to such office by shareholders at
an annual or special meeting. In the event that at any time less than a majority
of Trustees holding office were elected by shareholders, the Board of Trustees
will cause to be held within 60 days a shareholders' meeting for the purpose of
electing Trustees to fill any existing vacancies. Trustees are subject to removal
with cause by two-thirds of the remaining Trustees or by a vote of a majority of
the outstanding shares of the Trust. The Trustees are required to promptly call a
shareholders' meeting for voting on the question of removal of any Trustee when
requested to do so in writing by not less than 10% of the outstanding shares of
the Trust. In connection with the calling of such shareholders' meetings,
shareholders will be provided with communication assistance.
Under Massachusetts law, it is possible that shareholders of a
Massachusetts business trust might, under certain circumstances, be held
personally liable for acts or obligations of the Trust. The Trust's Declaration
of Trust contains an express disclaimer of shareholder liability for acts,
obligations or affairs of the Trust. The Declaration of Trust also provides for
indemnification out of the Trust's assets for all loss and expense of any
shareholder held personally liable by reason of being or having been a shareholder
of the Trust. Thus, the risk that a shareholder of the Fund could incur financial
loss on account of shareholder liability is considered remote since it is limited
to circumstances in which the disclaimer is inoperative and the Fund itself would
be unable to meet its obligations.
HSBC GLOBAL FUNDS TRUST
Pan Asian Fund
[ADDRESS]
General
Information: (800) _________
Additional
Information: (212) 503-6826 (New York City)
or Toll Free (800) ________
STATEMENT OF ADDITIONAL INFORMATION
HSBC Global Funds Trust (the "Trust") is an open-end, diversified
management investment company with multiple portfolios, including the Pan Asian
Fund (the "Fund").
The investment objective of the Fund is to provide investors with
long-term capital appreciation by investing at least 65% of its total assets in
equity securities issued by companies based or conducting significant business in
the Pan Asian region including Asia, the Pacific (excluding Australia and New
Zealand) and the Middle East. Under normal market conditions, the balance of the
Fund's assets will be invested in other securities of such companies including
bonds and money market instruments.
Shares of the Fund are offered for sale by BISYS Fund Services, the
Sponsor and Distributor, and FundMark Investment Company Services, as exclusive
Sub-Distributor, as an investment vehicle for institutions, corporations,
fiduciaries and individuals. Certain banks, financial institutions and
corporations ("Participating Organizations") have agreed to act as shareholder
servicing agents for investors who maintain accounts at the Participating
Organizations and to perform certain services for the Fund.
NYCORP 6264.2
This Statement of Additional Information is not a prospectus and is
only authorized for distribution when preceded or accompanied by the Fund's
Prospectus dated January 25, 1996. This Statement of Additional Information
contains additional and more detailed information than that set forth in the
Prospectus and should be read in conjunction with the Prospectus, additional
copies of which may be obtained without charge from the Trust.
NYCORP 6264.2
November 14, 1995
TABLE OF CONTENTS
Page No.
INVESTMENT POLICIES AND RISK FACTORS4
INVESTMENT RESTRICTIONS13
MANAGEMENT16
PERFORMANCE INFORMATION21
DETERMINATION OF NET ASSET VALUE24
PORTFOLIO TRANSACTIONS25
PORTFOLIO TURNOVER26
EXPENSE LIMITATIONS27
EXCHANGE PRIVILEGE27
REDEMPTIONS28
FEDERAL INCOME TAXES29
SHARES OF BENEFICIAL INTEREST34
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT36
INDEPENDENT AUDITORS37
INVESTMENT POLICIES AND RISK FACTORS
The following information supplements the discussion of the
investment objective and policies of the Fund found under "Investment Objective,
Policies and Risk Factors" in the Prospectus.
Short-Term Trading. Although the Fund will not make a practice of
short-term trading, purchases and sales of securities will be made whenever
necessary in the management's view to achieve the investment objective of the
Fund. The management does not expect that in pursuing the Fund's investment
objective unusual portfolio turnover will be required and intends to keep turnover
to a minimum consistent with such investment objective. The management believes
unsettled market economic conditions during certain periods require greater
portfolio turnover in pursuing the Fund's investment objective than would
otherwise be the case. During periods of relatively stable market and economic
conditions, the management expects that the portfolio turnover of the Fund will
not exceed [__%] annually, so that normally no more than [__%] of the securities
held by the Fund would be replaced in any one year.
Loans of Portfolio Securities. The Fund may make loans of
portfolio securities to brokers, dealers and financial institutions if cash or
cash equivalent collateral, including letters of credit, equal to at least 100% of
the current market value of the securities loaned (including accrued dividends and
interest thereon) plus the interest payable with respect to the loan is maintained
by the borrower with the Fund in a segregated account. In determining whether to
lend a security to a particular broker, dealer or financial institution, the
Adviser will consider all relevant facts and circumstances, including the
creditworthiness of the broker, dealer or financial institution. The Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities which the Fund may receive as collateral
will not become part of the Fund's portfolio at the time of the loan and, in the
event of a default by the borrower, the Fund will, if permitted by law, dispose of
such collateral except for such part thereof which is a security in which the Fund
is permitted to invest. During the time securities are on loan, the borrower will
pay the Fund an amount equal to any accrued income on those securities, and the
Fund may invest the cash collateral and earn additional income or receive an
agreed upon fee from a borrower which has delivered cash equivalent collateral.
The Fund will not loan securities having a value which exceeds 10%
of the current value of such Fund's total assets. Loans of securities will be
subject to termination at the lender's or the borrower's option. The Fund may pay
reasonable administrative and custodial fees in connection with a securities loan
and may pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or the placing broker. Borrowers and placing brokers
may not be affiliated, directly or indirectly, with the Fund, or the Adviser.
American and European Depositary Receipts. The Fund may invest in
the securities of foreign issuers in the form of American Depositary Receipts
("ADRs") and European Depository Receipts ("EDRs"). These securities may not
necessarily be denominated in the same currency as the securities into which they
may be converted. ADRs are receipts typically issued by a United States bank or
trust company which evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are receipts issued in Europe typically by non-
United States banks and trust companies that evidence ownership of either foreign
or domestic securities. Generally, ADRs in registered form are designed for use
in the United States securities markets and EDRs and CDRs in bearer form are
designed for use in Europe. The Fund may invest in ADRs, EDRs and CDRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depositary, whereas a
depositary may establish an unsponsored facility without participation by the
issuer of the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the deposited
securities.
There are certain risks associated with investments in unsponsored
ADR and EDR programs. Because the non-U.S. company does not actively participate
in the creation of the ADR or EDR program, the underlying agreement for service
and payment will be between the depositary and the shareholder. The company
issuing the stock underlying the ADRs or EDRs pays nothing to establish the
unsponsored facility, as fees for ADR or EDR issuance and cancellation are paid by
brokers. Investors directly bear the expenses associated with certificate
transfer, custody and dividend payment.
In an unsponsored ADR or EDR program, there also may be several
depositaries with no defined legal obligations to the non-U.S. company. The
duplicate depositaries may lead to marketplace confusion because there would be no
central source of information to buyers, sellers and intermediaries. The
efficiency of centralization gained in a sponsored program can greatly reduce the
delays in delivery of dividends and annual reports.
In addition, with respect to all ADRs and EDRs there is always the
risk of loss due to currency fluctuations.
Writing Covered Calls. The Fund may engage in the writing of
covered call options (options on securities which the Fund owns) provided the
options are listed on a national securities exchange. The Fund, as the writer of
the option, forgoes the opportunity to profit from an increase in the market price
of the underlying security above the exercise price except insofar as the premium
represents such a profit. The Fund retains the risk of loss should the price of
the underlying security decline below the purchase price of the underlying
security minus the premium.
To the extent permitted in the Prospectus, the Fund may engage in
transactions for the purchase and sale of stock index options, stock index futures
contracts and options on stock index futures.
Stock Index Options. The Fund may purchase and write put and call
options on stock indexes listed on national securities exchanges in order to
realize its investment objectives or for the purpose of hedging its portfolio. A
stock index fluctuates with changes in the market values of the stocks included in
the index. Some stock index options are based on a broad market index such as the
New York Stock Exchange Composite Index, or a narrower market index such as the
Standard & Poor's 100. Indexes are also based on an industry or market segment
such as the American Stock Exchange Oil & Gas Index or the Computer and Business
Equipment Index.
Options on stock indexes are similar to options on stock, except
that (a) the expiration cycles of stock index options are monthly, while those of
stock options are currently quarterly, and (b) the delivery requirements are
different. Instead of giving the right to take or make delivery of stock at a
specified price, an option on a stock index gives the holder the right to receive
a cash "exercise settlement amount" equal to (i) the amount, if any, by which the
fixed exercise price of the option exceeds (in the case of a put) or is less than
(in the case of a call) the closing value of the underlying index on the date of
exercise, multiplied by (ii) a fixed "index multiplier". Receipt of this cash
amount will depend upon the difference between the closing level of the stock
index upon which the option is based and the exercise price of the option. The
amount of cash received will be equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars times
a specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
Stock Index Futures Contracts. The Fund may enter into stock index
futures contracts in order to protect the value of its common stock investments.
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. As the
aggregate market value of the stocks in the index changes, the value of the index
also will change. In the event that the index level rises above the level at
which the stock index futures contract was sold, the seller of the stock index
futures contract will realize a loss determined by the difference between the two
index levels at the time of expiration of the stock index futures contract, and
the purchaser will realize a gain in that amount. In the event the index level
falls below the level at which the stock index futures contract was sold, the
seller of the stock index futures contract will realize a loss determined by the
difference between the two index levels at the time of expiration of the stock
index futures contract, and the purchaser will realize a gain in that amount. In
the event the index level falls below the level at which the stock index futures
contract was sold, the seller will recognize a gain determined by the difference
between the two index levels at the expiration of the stock index futures
contract, and the purchaser will realize a loss. Stock index futures contracts
expire on a fixed date, currently one to seven months from the date of the
contract, and are settled upon expiration of the contract.
The Fund intends to utilize stock index futures contracts only for
the purpose of attempting to protect the value of its common stock portfolio in
the event of a decline in stock prices and, therefore, usually will be the seller
of stock index futures contracts. This risk management strategy is an alternative
to selling securities in a portfolio and investing in money market instruments.
Also, stock index futures contracts may be purchased to protect the Fund against
an increase in prices of stocks which the Fund intends to purchase. If the Fund
is unable to invest its cash (or cash equivalents) in stock in an orderly fashion,
the Fund could purchase a stock index futures contract which may be used to offset
any increase in the price of the stock. However, it is possible that the market
may decline instead, resulting in a loss on the stock index futures contract. If
the Fund then concludes not to invest in stock at that time, or if the price of
the securities to be purchased remains constant or increases, the Fund will
realize a loss on the stock index futures contract that is not offset by a
reduction in the price of securities purchased. The Fund also may buy or sell
stock index futures contracts to close out existing futures positions.
Options on Stock Index Futures. The Fund may purchase and write
call and put options on stock index futures contracts which are traded on a United
States or foreign exchange or board of trade. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time during
the option period. Upon exercise of the option, the writer of the option is
obligated to convey the appropriate futures position to the holder of the option.
If an option is exercised on the last trading day before the expiration date of
the option, a cash settlement will be made in an amount equal to the difference
between the closing price of the futures contract and the exercise price of the
option.
The Fund may use options on stock index futures contracts solely
for bona fide hedging or other appropriate risk management purposes. If the Fund
purchases a call (put) option on a futures contract, it benefits from any increase
(decrease) in the value of the futures contract, but is subject to the risk of
decrease (increase) in value of the futures contract. The benefits received are
reduced by the amount of the premium and transaction costs paid by the Fund for
the option. If market conditions do not favor the exercise of the option, the
Fund's loss is limited to the amount of such premium and transaction costs paid by
the Fund for the option.
If the Fund writes a call (put) option on a stock index futures
contract, the Fund receives a premium but assumes the risk of a rise (decline) in
value in the underlying futures contract. If the option is not exercised, the
Fund gains the amount of the premium, which may partially offset unfavorable
changes due to interest rate or currency exchange rate fluctuations in the value
of securities held or to be acquired for the Fund's portfolio. If the option is
exercised, the Fund will incur a loss, which will be reduced by the amount of the
premium it receives. However, depending on the degree of correlation between
changes in the value of its portfolio securities (or the currency in which they
are denominated) and changes in the value of futures positions, the Fund's losses
from writing options on futures may be partially offset by favorable changes in
the value of portfolio securities or in the cost of securities to be acquired.
The holder or writer of an option on a futures contract may
terminate its position by selling or purchasing an offsetting option of the same
series. There is no guarantee that such closing transactions can be effected.
The Fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.
Writing of options involves the risk that there will be no market
in which to effect a closing transaction. An exchange-traded option may be closed
out only on an exchange that provides a secondary market for an option of the same
series. OTC options are not generally terminable at the option of the writer and
may be closed out only by negotiation with the holder. There is also no
assurance that a liquid secondary market on an exchange will exist. In addition,
because OTC options are issued in privately negotiated transactions exempt from
registration under the Securities Act of 1933, there is no assurance that the Fund
will succeed in negotiating a closing out of a particular OTC option at any
particular time. If the Fund, as covered call option writer, is unable to effect
a closing purchase transaction in the secondary market or otherwise, it will not
be able to sell the underlying security until the option expires or it delivers
the underlying security upon exercise.
The staff of the SEC has taken the position that purchased options
not traded on registered domestic securities exchanges and the assets used as
cover for written options not traded on such exchanges are generally illiquid
securities. However, the staff has also opined that, to the extent a mutual fund
sells an OTC option to a primary dealer that it considers creditworthy and
contracts with such primary dealer to establish a formula price at which the fund
would have the absolute right to repurchase the option, the fund would only be
required to treat as illiquid the portion of the assets used to cover such option
equal to the formula price minus the amount by which the option is in-the-money.
Pending resolution of the issue, the Fund will treat such options and, except to
the extent permitted through the procedure described in the preceding sentence,
assets as subject to Fund's limitation on investments in securities that are not
readily marketable.
Forward Foreign Exchange Contracts. The Fund may enter into
forward foreign exchange contracts. A forward foreign exchange contract involves
an obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
in the interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
At the maturity of a forward contract, the Fund may either accept
or make delivery of the currency specified in the contract or, at or prior to
maturity, enter into a closing purchase transaction involving the purchase or sale
of an offsetting contract. Closing purchase transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract.
The Fund may enter into forward foreign exchange contracts in
several circumstances. First, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividend or interest payments on
such a security which it holds, the Fund may desire to "lock in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for the purchase
or sale, for a fixed amount of dollars, of the amount of foreign currency involved
in the underlying transactions, the Fund will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is purchased or
sold, or on which the dividend or interest payment is declared, and the date on
which such payments are made or received.
Additionally, when management of the Fund believes that the
currency of a particular foreign country may suffer a substantial decline against
the U.S. dollar, it may enter into a forward contract to sell, for a fixed amount
of dollars, the amount of foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. The
precise matching of the forward contract amounts and the value of the securities
involved will not generally be possible because the future value of such
securities in foreign currencies will change as a consequence of market movements
in the value of those securities between the date on which the contract is entered
into and date it matures. The precise projection of short-term currency market
movements is not possible, and short-term hedging provides a means of fixing the
dollar value of only a portion of the Fund's foreign assets.
The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the value of the
Fund's portfolio securities or other assets denominated in that currency. The
Fund's custodian will place cash or liquid high grade debt securities into a
segregated account of the Fund in an amount equal to the value of the Fund's total
assets committed to the consummation of forward foreign exchange contracts
requiring the Fund to purchase foreign currencies or forward contracts entered
into for non-hedging purposes. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount of
the Fund's commitments with respect to such contracts.
The Fund generally will not enter into forward contracts with a
term of greater than one year. Using forward contracts to protect the value of
the Fund's portfolio securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which the Fund can achieve at some future point in
time.
While the Fund will enter into forward contracts to reduce currency
exchange rate risks, transactions in such contracts involve certain other risks
and, while the Fund may benefit from such transactions, unanticipated changes in
currency prices may result in a poorer overall performance for a Fund than if it
had not engaged in any such transactions. Moreover, there may be imperfect
correlation between the Fund's portfolio holdings of securities denominated in a
particular currency and forward contracts entered into by the Fund. Such
imperfect correlation may prevent the Fund from achieving a complete hedge or may
expose the Fund to risk of foreign exchange loss.
Risks Involving Futures Transactions. Transactions by the Fund in
futures contracts and options thereon involve certain risks. One risk in
employing futures contracts and options thereon to protect against cash market
price volatility is the possibility that futures prices will correlate imperfectly
with the behavior of the prices of the securities in the Fund's portfolio (the
portfolio securities will not be identical to the securities underlying the
futures contracts). In addition, commodity exchanges generally limit the amount
of fluctuation permitted in futures contract and option prices during a single
trading day, and the existence of such limits may prevent the prompt liquidation
of futures and option positions in certain cases. Inability to liquidate
positions in a timely manner could result in the Fund's incurring larger losses
than would otherwise be the case.
Option Premiums. In order to comply with certain state securities
regulations, the Fund has agreed to limit maximum premiums paid on put and call
options on other than futures contracts to less than 2% of the Fund's net assets
at any one time.
Illiquid Securities. The Fund has adopted a fundamental policy
with respect to investments in illiquid securities. Historically, illiquid
securities have included securities subject to contractual or legal restrictions
on resale because they have not been registered under the Securities Act of 1933,
as amended ("Securities Act"), securities that are otherwise not readily
marketable and repurchase agreements having a maturity of longer than seven days.
Securities that have not been registered under the Securities Act are referred to
as private placements or restricted securities and are purchased directly from the
issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of the
potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities and
a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them resulting
in additional expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities Act,
including repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or to
certain institutions may not be indicative of the liquidity of such investments.
The Fund may also invest in restricted securities issued under
Section 4(2) of the Securities Act, which exempts from registration "transactions
by an issuer not involving any public offering." Section 4(2) instruments are
restricted in the sense that they can only be resold through the issuing dealer
and only to institutional investors; they cannot be resold to the general public
without registration. Restricted securities issued under Section 4(2) of the
Securities Act will be treated as illiquid and subject to the Fund's investment
restriction on illiquid securities.
The Commission has adopted Rule 144A, which allows a broader
institutional trading market for securities otherwise subject to restrictions on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act applicable to resales of certain
securities to qualified institutional buyers. The Investment Adviser anticipates
that the market for certain restricted securities such as institutional commercial
paper will expand further as a result of this new regulation and the development
of automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored by
the National Association of Securities Dealers, Inc. (the "NASD"). Consequently,
it is the intent of the Fund to invest, pursuant to procedures established by the
Board of Trustees and subject to applicable investment restrictions, in securities
eligible for resale under Rule 144A which are determined to be liquid based upon
the trading markets for the securities.
The Investment Adviser will monitor the liquidity of restricted
securities in the Fund's portfolio under the supervision of the Trustees. In
reaching liquidity decisions, the Investment Adviser will consider, inter alia,
the following factors: (1) the frequency of trades and quotes for the security
over the course of six months or as determined in the discretion of the Investment
Adviser; (2) the number of dealers wishing to purchase or sell the security and
the number of other potential purchasers over the course of six months or as
determined in the discretion of the Investment Adviser; (3) dealer undertakings to
make a market in the security; (4) the nature of the security and the nature of
the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of the transfer); and (5) other
factors, if any, which the Investment Adviser deems relevant. The Investment
Adviser will also monitor the purchase of Rule 144A securities to assure that the
total of all Rule 144A securities held by a Fund does not exceed 10% of the Fund's
average daily net assets. Rule 144A securities which are determined to be liquid
based upon their trading markets will not, however, be required to be included
among the securities considered to be illiquid for purposes of Investment
Restriction No. 8.
INVESTMENT RESTRICTIONS
The Fund observes the following fundamental investment restrictions
which can be changed only when permitted by law and approved by a majority of the
Fund's outstanding voting securities. A "majority of the Fund's outstanding
voting securities" means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented in person
or by proxies or (ii) more than 50% of the outstanding shares.
Except as otherwise noted, the Fund may not:
(1) purchase securities on margin (but may make margin
payments in connection with financial futures contracts and related
options) or purchase real estate or interests therein, commodities
or commodity contracts (except financial futures contracts and
related options), or make loans, except loans of portfolio
securities and except that the Fund may purchase or hold short-term
debt securities and enter into repurchase agreements with respect
to its portfolio securities described in each Prospectus. For this
purpose, repurchase agreements are considered loans;
(2) engage in the underwriting of securities of other
issuers, except to the extent that the Fund may be deemed to be an
underwriter in selling, as part of an offering registered under the
Securities Act of 1933, as amended, securities which it has
acquired; or participate on a joint or joint-and-several basis in
any securities trading account. The "bunching" of orders with
other accounts under the management of the Adviser to save
commissions or to average prices among them is not deemed to result
in a securities trading account;
(3) effect a short sale of any security (other than
index options or hedging strategies), or issue senior securities
except as permitted in paragraph (4). For purposes of this
restriction, the purchase and sale of financial futures contracts
and related options does not constitute the issuance of a senior
security;
(4) borrow money, except that the Fund may borrow from
banks as a temporary measure for emergency purposes where such
borrowings would not exceed 5% of its total assets (including the
amount borrowed) taken at market value; or pledge, mortgage or
hypothecate its assets, except to secure indebtedness permitted by
this paragraph and then only if such pledging, mortgaging or
hypothecating does not exceed 5% of each Fund's total assets taken
at market value. The Fund has no present intention of engaging in
transactions under this paragraph;
(5) purchase securities of any company with a record of
less than three years' continuous operation if such purchase would
cause the Fund's investments in all such companies taken at cost to
exceed 5% of such Fund's total assets taken at market value;
(6) invest for the purpose of exercising control over or
management of any company;
(7) invest more than 10% of its total assets in the
securities of other investment companies;
(8) invest in any security, including repurchase
agreements maturing in over seven days or other illiquid
investments which are subject to legal or contractual delays on
resale or which are not readily marketable, if as a result more
than 15% of the market value of the Fund's assets would be so
invested;
(9) purchase interests in oil, gas, or other mineral
exploration programs of real estate and real estate mortgage loans,
or oil, gas or other mineral leases, or in real estate limited
partnership interests; however, this policy will not prohibit the
acquisition of securities of companies engaged in the production or
transmission of oil, gas, other minerals or companies which
purchase or sell real estate or real estate mortgage loans;
(10) purchase or retain securities of any company if, to
the knowledge of the Fund, officers and Trustees of the Trust and
officers and directors of the Adviser who individually own more
than ^ of 1% of the securities of that company together own
beneficially more than 5% of such securities;
(11) have dealings on behalf of the Fund with Officers
and Trustees of the Fund, except for the purchase or sale of
securities on an agency or commission basis, or make loans to any
officers, directors or employees of the Fund;
(12) purchase a security if, as a result, with respect to
75% of its portfolio, (i) more than 5% of the value of its total
assets would be invested in any one issuer, or (ii) it would hold
more than 10% of any class of securities of such issuer or more
than 10% of the outstanding voting securities of the issuer. There
is no limit on the percentage of assets that may be invested in
U.S. Treasury bills, notes, or other obligations issued or
guaranteed by the U.S. Government or its agencies and
instrumentalities;
(13) purchase a security if, as a result, more than 25%
of the value of its total assets would be invested in securities of
one or more issuers conducting their principal business activities
in the same industry, provided that (a) this limitation shall not
apply to obligations issued or guaranteed by the U.S. Government or
its agencies and instrumentalities; (b) wholly owned finance
companies will be considered to be in the industries of their
parents; and (c) utilities will be divided according to their
services. For example, gas, gas transmission, electric and gas,
electric, and telephone will each be considered a separate
industry; or
(14) invest in warrants in excess of 5% of net assets,
provided that within that amount, investments in warrants which are
listed on the New York or American Stock Exchanges shall not exceed
2% of net assets.
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in the market value of an investment, in the net or
total assets of the Fund, in the securities rating of the investment, or any other
later change.
MANAGEMENT
TRUSTEES AND OFFICERS
The principal occupations of the Trustees and executive officers of
the Fund for the past five years are listed below. The address of each, unless
otherwise indicated, is 370 17th Street, Suite 2700, Denver, Colorado 80202. None
of the Trustees are deemed to be "interested persons" of the Fund for purposes of
the Investment Company Act of 1940, as amended.
JOHN P. PFANN, Chairman and Trustee - 43 Captains Walk, Marina Cove, Palm
Coast, Florida 32137. Chairman and President, JPP Equities, Inc. since
1982; Senior Vice President and Treasurer, ITT Corporation, from 1979 until
1986; Trustee, Mariner Funds Trust.
ROBERT A. ROBINSON, Trustee - 251 Laurel Road, New Canaan, Connecticut
06840. Trustee, Henrietta and E. Frederick H. Bugher Foundation; Trustee,
U.S.T. Master Funds, Inc. and U.S.T. Master Tax-Exempt Funds, Inc. (mutual
funds); Trustee, Mariner Funds Trust.
WOLFE J. FRANKL, Trustee - 40 Gooseneck Lane, Charlottesville, Virginia
22901. Former Trustee - North America, Berlin Economic Development Corp.
from 1980 to 1988. Trustee, U.S.T. Master Funds, Inc. and U.S.T. Master
Tax-Exempt Funds, Inc. (mutual funds); Trustee, IP Capital Fund II
(Deutsche Bank Capital Corp.); Trustee, Deutsche Bank Financial, Inc.;
Trustee, Mariner Funds Trust.
WILLIAM L. KUFTA, Trustee - 97 Main Street, Chatham, New Jersey 07928.
Chief Investment Officer, Beacon Trust Company. Formerly, Senior Vice
President, Rorer Asset Management. Senior Vice President, Pitcairn
Financial Management Group from 1987 to 1991. Executive Vice President,
United Jersey Bank from 1984 until 1987; Senior Vice President, Fidelity
Union Bank from 1981 to 1984; Trustee, Mariner Funds Trust.
Chief Executive Officer William B. Blundin
President Ann E. Bergin
Vice President William J. Tomko
Treasurer Mark E. Nagle
Assistant Treasurer Martin R. Dean
Assistant Secretary Robert L. Tuch
Assistant Secretary Alaina V. Metz
Trustees of the Fund receive from the Fund an annual fee and a fee
for attending each meeting of the Trustees and each committee meeting and are
reimbursed for all out-of-pocket expenses relating to attendance at meetings.
COMPENSATION TABLE
Pension or
Retirement
Benefits
Estimated
Aggregate Accrued as Annual
Total
Compensa- Part of
Benefits Compensa-
tion from Fund Upon
tion from
the Fund Expenses Retirement
the Fund
__________ ___________ ___________
___________
Wolfe J. Frankl, Trustee $ 0 N/A $
John P. Pfann, Trustee and
Principal Executive Officer $ 0 N/A $
Robert A. Robinson, Trustee $ 0 N/A $
William L. Kufta, Trustee $ 0 N/A $
______________________
* Represents the total compensation paid to such persons during the calendar
year ending December 31, 1995 (and with respect to the Fund, estimated to
be paid during a full calendar year).
As of the date of this Statement of Additional Information the
Trustees and officers of the Fund as a group owned less than 1% of the outstanding
shares of the Fund.
Investment Adviser. The Fund retains HSBC Asset Management
Americas, Inc. ("HSBC Americas" or the "Adviser") to act as the adviser for the
Fund. The Adviser is the North American investment affiliate of HSBC Holdings plc
(Hong Kong and Shanghai Banking Corporation) and Marine Midland Bank and is
located at 250 Park Avenue, New York, New York 10177.
The Advisory Contract for the Fund provides that the Adviser will
manage the portfolio of the Fund and will furnish to the Fund investment guidance
and policy direction in connection therewith. The Adviser has agreed to provide
to the Fund, among other things, information relating to portfolio composition.
Pursuant to the Advisory Contract, the Adviser also furnishes to the Trust's Board
of Trustees periodic reports on the investment performance of each Fund.
The Adviser has also agreed in the Advisory Contract to provide
administrative assistance in connection with the operation of the Fund.
Administrative services provided by the Adviser include, among other things, (i)
data processing, clerical and bookkeeping services required in connection with
maintaining the financial accounts and records for the Fund, (ii) compiling
statistical and research data required for the preparation of reports and
statements which are periodically distributed to the Fund's officers and Trustees,
(iii) handling general shareholder relations with Fund investors, such as advice
as to the status of their accounts, the dividends declared to date and assistance
with other questions related to their accounts, and (iv) compiling information
required in connection with the Fund's filings with the Securities and Exchange
Commission.
Sub-Advisers. 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"), HSBC Singapore 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, HSBC Singapore
and HSBC Australia along with the Adviser are all investment advisory affiliates
of HSBC Holdings plc (Hongkong and Shanghai Banking Corporation).
HSBC Europe is the European investment arm of HSBC Asset Management
and manages equity and balanced portfolios with an emphasis on the markets of the
United Kingdom and other major European securities markets. HSBC Europe also
manages global fixed income portfolios. HSBC Europe manages separate accounts for
pension plans, corporations, bank trust divisions, endowments and foundations and
provides continuous supervision for the entire James Capel family of Unit
Investment Trusts. Total assets managed by HSBC Europe amount to approximately
U.S.$16billion. Its principal offices are located at 7 Devonshire Square,
London, EC2M 4HU.
HSBC Hong Kong is the Asian Pacific investment arm of HSBC Asset
Management. HSBC Hong Kong manages approximately U.S.$9 billion of equity
portfolios dedicated to the Pacific Rim, Pacific Basin and the emerging markets of
Southeast Asia. HSBC Hong Kong was founded in 1973 and has its principal business
address at GPO Box 8983 Hong Kong, 12/F, Bank of America Tower, 12 Harcourt Road,
Hong Kong. It is one of the largest investment managers in the Asia Pacific
region, managing accounts for corporations, pension plans and the full-line of
Wardley Unit Investment Trusts.
HSBC Japan provides a full range of investment services to clients
investing in Japanese securities and Japanese investors investing domestically or
internationally. HSBC Japan has its principal office at 6/F No. 2 Tomoecho Annex.
3-8-27 Toranomon Minato-ku, Tokyo, Japan.
[DESCRIBE HSBC SINGAPORE]
HSBC Australia is one of the largest fund managers in Australia
offering a full range of investment services to superannuation funds, public
bodies, corporations, trusts, charities, high-net-worth individuals and unit
trusts for smaller investors. HSBC Australia has its principal address at P.O.
Box 291, Market Street, Melbourne, Victoria 3000, Australia.
Under its Sub-Advisory Contract with the Adviser, each Sub-Adviser
will undertake at its own expense to furnish the Fund and the Adviser 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 the Adviser and the Board of Trustees.
Shareholder Servicing Agent. The Trust retains HSBC Americas to
act as Shareholder Servicing Agent of the Fund in accordance with the terms of the
Shareholder Servicing Agreement. Pursuant to the Shareholder Servicing Agreement,
HSBC Americas (i) assists and trains third-parties who deliver prospectuses and
Fund applications, (ii) assists and trains third-parties who assist customers with
completing Fund applications, (iii) conducts customer education, reviews Fund
written communications and assists third-parties who answer customer questions,
(iv) organizes and conducts investment seminars to enhance understanding of the
Fund and its objectives, (v) assists personnel who effect customer purchases and
redemptions and (vi) assists and supervises the activities of Participating
Organizations. For its services as Shareholder Servicing Agent, HSBC Americas is
paid an annual fee equal to 0.04% of the Fund's daily average net assets.
Sponsor and Distributor. Shares of the Fund are offered on a
continuous basis through BISYS Fund Services, the Distributor, pursuant to the
Distribution Contract. The Distributor is not obligated to sell any specific
amount of shares.
Administrator. Pursuant to the Administrative Services Contract,
BISYS: (i) provides administrative services reasonably necessary for the operation
of the Fund, (other than those services which are provided by it pursuant to the
Advisory Contract) and Fund accounting services; (ii) provides the Fund with
office space and office facilities reasonably necessary for the operation of the
Fund; and (iii) employs or associates with itself such persons as it believes
appropriate to assist it in performing its obligations under the Administrative
Services Contract.
Pursuant to a Co-Administration Services Contract, HSBC Americas (i)
manages the Fund's relationship with BISYS and State Street Bank and Trust
Company, (ii) assists with negotiation of contracts with service providers and
supervises the activities of those service providers, (iii) serves as liaison with
the Board of Trustees, and (iv) assists with general product management and
oversight. HSBC is paid an annual fee equal to 0.03% of the Fund's average daily
net assets pursuant to the Co-Administration Services Contract.
Fees and Expenses
The Fund pays HSBC Americas as compensation for its advisory
services a monthly fee equal to an annual rate of 0.__% of average daily net
assets. As compensation for its administrative services, BISYS receives from the
Fund a monthly fee equal to an annual rate of 0.__% of the average daily net
assets. As compensation for their services, the Sub-Advisers receive fees from
HSBC Americas at an annual rate not to exceed 0.__% of the average net assets of
the Fund. HSBC Americas and the Sub-Adviser may agree in advance not to impose a
portion of their fees in the future.
Except for the expenses paid by the Adviser under the Advisory
Contract, the Fund bears all costs of its operations. Expenses attributable to
the Fund are charged against the assets of the Fund.
The Advisory Contract and Distribution Contract will continue in
effect with respect to the Fund from year to year provided such continuance is
approved annually (i) by the holders of a majority of the outstanding voting
securities of the Fund or by the Trust's Trustees and (ii) by a majority of the
Trustees who are not parties to such contracts or "interested persons" (as defined
in the Investment Company Act of 1940) of any such party. Each contract may be
terminated at any time, without payment of any penalty, by a vote of a majority of
the outstanding voting securities of the Fund (as defined in the Investment
Company Act of 1940) or by a vote of a majority of the Trustees. The Advisory
Contract, Administrative Services Contract and the Distribution Contract shall
terminate automatically in the event of their assignment (as defined in the
Investment Company Act of 1940).
Distribution Plans and Expenses
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Investment Company Act of 1940, after having
concluded that there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders. The Plan provides for a monthly payment by the Fund to
Mariner Funds Services for expenses incurred not to exceed an annual rate of 0.35
of 1% for Class A shares and 0.75% for Class C shares.
BISYS will use all amounts received under the Plan for payments to
broker-dealers or financial institutions for their assistance in distributing
shares of the Fund and otherwise promoting the sale of Fund shares. BISYS may
also use all or any portion of such fee to pay expenses such as the printing and
distribution of prospectuses sent to prospective investors, the preparation,
printing and distribution of sales literature and expenses associated with media
advertisements and telephone services.
The Plan provides for BISYS to prepare and submit to the Board of
Trustees on a quarterly basis written reports of all amounts expended pursuant to
the Plan and the purpose for which such expenditures were made. The Plan may not
be amended to increase materially the amount spent for distribution expenses
without approval by a majority of the Fund's outstanding shares and approval of a
majority of the non-interested Trustees.
The Plan will continue in effect with respect to the Fund from year
to year provided such continuance is approved annually by a vote of the Board of
Trustees of the Trust and of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan, cast in person at a meeting called
for the purpose of voting on such Plan. The Board of Trustees of the Trust
approved the continuance of the Plan at a meeting of the Board of Trustees on
January __, 1996.
SERVICE ORGANIZATIONS
The Trust also contracts with banks (including Marine Midland
Bank), trust companies, broker-dealers or other financial organizations ("Service
Organizations") to provide certain administrative services for the Funds at a fee
of up to an annual rate of 0.25%. Services provided by Service Organizations may
include among other things: providing necessary personnel and facilities to
establish and maintain certain shareholder accounts and records; assisting in
processing purchase and redemption transactions; arranging for the wiring of
funds; transmitting and receiving funds in connection with shareholders orders to
purchase or redeem shares; verifying and guaranteeing client signatures in
connection with redemption orders, transfers among and changes in shareholders
designating accounts; providing periodic statements showing a shareholder's
account balance and, to the extent practicable, integrating such information with
other client transactions; furnishing periodic and annual statements and
confirmations of all purchases and redemptions of shares in a shareholder's
account; transmitting proxy statements, annual reports, and updating prospectuses
and other communications from the Funds to shareholders; and providing such other
services as the Funds or a shareholder reasonably may request, to the extent
permitted by applicable statute, rule or regulation.
Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to invest more than
the minimum initial or subsequent investments specified by the Funds or charging a
direct fee for servicing. If imposed, these fees would be in addition to any
amounts which might be paid to the Service Organization by the Funds. Each
Service Organization has agreed to transmit to its clients a schedule of any such
fees. Shareholders using Service Organizations are urged to consult them
regarding any such fees or conditions.
The Glass-Steagall Act and other applicable laws, among other
things, prohibit banks from engaging in the business of underwriting, selling or
distributing securities. There currently is no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks and their subsidiaries
or affiliates, could prevent a bank from continuing to perform all or a part of
its servicing activities. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Trust and alternative means for
continuing the servicing of such shareholders would be sought. In that event,
changes in the operation of the Trust might occur and a shareholder serviced by
such a bank might no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.
PERFORMANCE INFORMATION
The Fund from time to time may advertise total return and
cumulative total return figures. Total return is the average annual compound rate
of return for the periods of one year and the life of the Fund, where applicable,
each ended on the last day of a recent calendar quarter. Total return quotations
reflect the change in the price of the Fund's shares and assume that all dividends
and capital gains distributions during the respective periods were reinvested in
shares of the Fund. Total return is calculated by finding the average annual
compound rates of return of a hypothetical investment over such periods, that
would compare the initial amount to the ending redeemable value of such investment
according to the following formula (total return is then expressed as a
percentage):
Where: P(1+T)n = ERV
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of
the applicable period, of a hypothetical $1,000
investment
made at the beginning of the applicable period.
Total return will generally be lower for Class C shares than Class
A shares due to the shareholder servicing and higher Rule 12b-1 fees on the Class
C shares.
Past performance is not predictive of future performance.
Cumulative total return is the rate of return on a hypothetical
initial investment of $1,000 for a specified period. Cumulative total return
quotations reflect the change in the price of the Fund's shares and assume that
all dividends and capital gains distributions during the period were reinvested in
shares of the Fund. Cumulative total return is calculated by finding the rate of
return of a hypothetical investment over such period, according to the following
formula (cumulative total return is then expressed as a percentage):
C = (ERV/P) - 1
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
From time to time, in marketing pieces and other Fund literature, the
Fund's total performance may be compared to the performance of broad groups of
comparable funds or unmanaged indices of comparable securities. Evaluations of
Fund performance made by independent sources may also be used in advertisements
concerning the Fund. Sources for Fund performance information may include, but
are not limited to, the following:
Barron's, a Dow Jones and Company, Inc. business and financial weekly
that periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports
the performance rankings and ratings of a variety of mutual funds
investing abroad.
Changing Times, The Kiplinger Magazine, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
Financial Times, Europe's business newspaper, which features from time
to time articles on international or country-specific funds.
Forbes, a national business publication that from time to time reports
the performance of specific investment companies in the mutual fund
industry.
Fortune, a national business publication that periodically rates the
performance of a variety of mutual funds.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a
weekly publication of industry-wide mutual fund averages by type of
fund.
Money, a monthly magazine that from time to time features both
specific funds and the mutual fund industry as a whole.
New York Times, a nationally distributed newspaper which regularly
covers financial news.
Personal Investor, a monthly investment advisory publication that
includes a "Mutual Funds Outlook" section reporting on mutual fund
performance measures, yields, indices and portfolio holdings.
Sylvia Porter's Personal Finance, a monthly magazine focusing on
personal money management that periodically rates and ranks mutual
funds by performance.
Wall Street Journal, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of
information about mutual funds and other investment companies,
including comparative data on funds' backgrounds, management policies,
salient features, management results, income and dividend records, and
price ranges.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share for the purpose of pricing and
redemption orders is determined at 4:15 p.m. (New York City time) on each day the
Fund's transfer agent is open for business. The net asset value will not be
computed on the following holidays: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving and Christmas. The net asset value per
share of the Fund is computed by dividing the value of the net assets of the Fund
(i.e. the value of the assets less the liabilities) by the total number of shares
outstanding. All expenses, including the advisory and administrative fees, are
accrued daily and taken into account for the purpose of determining the net asset
value.
Portfolio securities are valued at the last quoted sales 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 security is primarily traded. The
value for each unlisted security is based on the last trade price for that
security on a day in which the security is traded. The value for each unlisted
security on a day such security is not traded shall be based on the mean of the
bid and ask quotations for that day. The value of each security for which readily
available market quotations exist will be based on a decision as to the broadest
and most representative market for such security. Options on stock indices traded
on national securities exchanges are valued at the close of options trading on
such exchanges (which is currently 4:10 p.m., New York City time). Stock index
futures and related options, which are traded on commodities exchanges, are valued
at their last sale price as of the close of such exchanges (which is currently
4:15 p.m., New York City time). Other assets and securities for which no
quotations are readily available are valued at fair value as determined in good
faith by the Trustees. Securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities. Short-term investments are valued at amortized cost,
which approximates market value. The Board of Trustees has determined in good
faith that amortized cost equals fair market value.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policy established by the Trustees, the Adviser is primarily responsible for
portfolio decisions and the placing of portfolio transactions. In placing orders,
it is the policy of the Fund to obtain the best results taking into account the
dealer's general execution and operational facilities, the type of transaction
involved and other factors such as the dealer's risk in positioning the securities
involved. Brokerage may be allocated to the Distributor to the extent and in the
manner permitted by applicable law, provided that in the judgment of the
investment adviser the use of the Distributor is likely to result in an execution
at least as favorable as that of other qualified brokers. While the Adviser
generally seeks reasonably competitive spreads or commissions, the Fund will not
necessarily be paying the lowest spread or commission available.
Purchases and sales of securities will often be principal
transactions in the case of debt securities and equity securities traded otherwise
than on an exchange. The purchase or sale of equity securities will frequently
involve the payment of a commission to a broker-dealer who effects the transaction
on behalf of the Fund. Debt securities normally will be purchased or sold from or
to issuers directly or to dealers serving as market makers for the securities at a
net price. Generally, money market securities are traded on a net basis and do
not involve brokerage commissions. Under the Investment Company Act of 1940,
persons affiliated with Marine Midland, the Adviser, the Fund or Mariner Funds
Services, Inc. are prohibited from dealing with the Fund as a principal in the
purchase and sale of securities except in accordance with regulations adopted by
the Securities and Exchange Commission. The Fund may purchase Municipal
Obligations from underwriting syndicates of which the Distributor or other
affiliate is a member under certain conditions in accordance with the provisions
of a rule adopted under the Investment Company Act of 1940. Under the Investment
Company Act of 1940, persons affiliated with the Adviser, the Fund or Mariner
Funds Services may act as a broker for the Fund. In order for such persons to
effect any portfolio transactions for the Fund, the commissions, fees or other
remuneration received by such persons must be reasonable and fair compared to the
commissions, fees or other remunerations paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow the
affiliate to receive no more than the remuneration which would be expected to be
received by an unaffiliated broker in a commensurate arms-length transaction. The
Trustees of the Trust regularly review the commissions paid by the Fund to
affiliated brokers.
The Adviser may, in circumstances in which two or more dealers are
in a position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Adviser. By allocating
transactions in this manner, the Adviser is able to supplement its research and
analysis with the views and information of securities firms.
PORTFOLIO TURNOVER
A Fund's portfolio turnover rate measures the frequency with which a Fund's
portfolio of securities is traded. The Funds will attempt to purchase securities
with intent of holding them for investment but may purchase and sell portfolio
securities whenever the adviser believes it to be warranted (e.g., the Fund may
sell portfolio securities in anticipation of an adverse market movement). The
purchase and sale of portfolio securities may involve dealer mark-ups,
underwriting commissions or other transaction costs. Generally, the higher the
portfolio turnover rate, the higher the transaction costs to the Fund, which will
generally increase the Fund's total operating expenses. In order to qualify as a
regulated investment company, less than 30% of the Fund's gross income must be
derived from the sale or other disposition of stock, securities or certain other
investments held for less than 3 months. Although increased portfolio turnover
may increase the likelihood of additional capital gains for the Fund, the Fund
expects to satisfy the 30% income test.
EXPENSE LIMITATIONS
If expenses borne by the Fund in any fiscal year exceed limitations
imposed by applicable state securities regulations, HSBC Americas, in its capacity
as investment adviser to the Fund, will reimburse the Company for any such excess
to the extent required by such regulations up to the amount of the fees payable
them; provided, however, that to the extent required by such state regulations,
HSBC Americas has agreed to effect such reimbursement regardless of the fees
payable to it. Any such reimbursement would be made no less frequently than the
payment of fees to such organization. California is the only state which
currently imposes such an expense limitation. As of the date of this Statement of
Additional Information, the limitation is 2.5% of the first $30 million of the
average net assets, 2% of the next $70 million of the average net assets and 1.5%
of the remaining average net assets of funds which have registered their shares in
California. Such amount, if any, will be estimated, reconciled and paid on a
monthly basis.
EXCHANGE PRIVILEGE
Shareholders who have held all or part of their shares in the Fund
for at least seven days may exchange those shares for shares of the other
portfolios of the Trust and the Mariner Funds Trust which are available for sale
in their state. A shareholder who has paid a sales load in connection with the
purchase of shares of any of the Fund will be subject only to that portion of the
sales load of the Fund into which the shareholder is exchanging which exceeds the
sales load originally paid by the shareholder. Shareholders of any of the Mariner
Money Market Funds who exchange shares of any of such Money Market Funds for
shares of any of such Funds of HSBC Funds Trust are charged the sales loads
applicable to the Fund as stated in the Prospectus.
Before effecting an exchange, shareholders should review the
prospectuses. Exercise of the exchange privilege is treated as a redemption for
Federal and New York State and City income tax purposes and, depending on the
circumstances, a gain or loss may be recognized. See the Prospectus discussion of
the federal tax treatment of load reductions or eliminations in an exchange.
The exchange privilege may be modified or terminated upon sixty
(60) days' written notice to shareholders. Although initially there will be no
limit on the number of times a shareholder may exercise the exchange privilege,
the Fund reserves the right to impose such a limitation. Call or write the Fund
for further details.
REDEMPTIONS
The proceeds of a redemption may be more or less than the amount
invested and, therefore, a redemption may result in a gain or loss for Federal and
state and local income tax purposes. Any loss realized on the redemption of Fund
shares held, or treated as held, for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gain dividends
received on the redeemed shares.
A shareholder's account with the Fund remains open for at least one
year following complete redemption and all costs during the period will be borne
by the Fund. This permits an investor to resume investments in the Fund during
the period in an amount of $50 or more.
To be in a position to eliminate excessive shareholder expense
burdens, the Fund reserves the right to adopt a policy pursuant to which it may
redeem, upon not less than 30 days' notice, shares of the Fund in an account which
has a value below a designated amount. However, any shareholder affected by the
exercise of this right will be allowed to make additional investments prior to the
date fixed for redemption to avoid liquidation of the account.
The Fund may suspend the right of redemption during any period when
(i) trading on the New York Stock Exchange is restricted or that Exchange is
closed, other than customary weekend and holiday closings, (ii) the Securities and
Exchange Commission has by order permitted such suspension or (iii) an emergency
exists making disposal of portfolio securities or determination of the value of
the net assets of the Fund not reasonably practicable.
Although it would not normally do so, the Trust has the right to
pay the redemption price in whole or in part in securities of the Fund's portfolio
as prescribed by the Trustees. When a shareholder sells portfolio securities
received in this fashion he would incur a brokerage charge. The Trust has,
however, elected to be governed by Rule 18f-1 under the Investment Company Act of
1940, as amended. Under that rule, the Trust must redeem its shares for cash
except to the extent that the redemption payments to any shareholder during any
90-day period would exceed the lesser of $250,000 or 1% of the Fund's net asset
value at the beginning of such period.
FEDERAL INCOME TAXES
The Fund has elected to be treated as and intends to qualify as a
regulated investment company and qualified as such in 1994. The Fund intends to
so qualify by complying with the provisions of the Internal Revenue Code (the
"Code") applicable to regulated investment companies so that it will not be liable
for Federal income tax with respect to amounts distributed to shareholders in
accordance with the timing requirements of the Code.
In order to qualify as a regulated investment company for a taxable
year, the Fund must, among other things, (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to loans of stock or
securities and gains from the sale or other disposition of stock or securities or
foreign currency gains related to investments in stock or securities or other
income (including gains from options, futures or forward contracts) derived with
respect to the business of investing in stock, securities or currency; (b) derive
less than 30% of its gross income from the sale or other disposition of certain
investments held less than three months (including stocks and securities and
excluding some amounts included in income as a result of certain hedging
transactions); and (c) diversify its holdings so that, at the end of each quarter
of its taxable year, (i) at least 50% of the market value of the Fund's assets is
represented by cash, cash items, U.S. Government securities, securities of other
regulated investment companies and other stock and securities limited, in the case
of other securities for purposes of this calculation, in respect of any one
issuer, to an amount not greater than 5% of the Fund's assets or 10% of the voting
stocks or securities of the issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S. Government
securities or stocks or securities of other regulated investment companies). As
such, and by complying with the applicable provisions of the Code, the Fund will
not be subject to Federal income tax on taxable income (including realized capital
gains) which is distributed to shareholders in accordance with the timing
requirements of the Code. Compliance with the "30% test" described in clause (b)
above may, in particular, limit the Fund's ability to engage in some transactions
involving options, short-term trading and stock index futures.
The amount of capital gains, if any, realized in any given year
will result from sales of securities made with a view to the maintenance of a
portfolio believed by the Fund's management to be most likely to attain the Fund's
investment objective. Such sales and any resulting gains or losses, may
therefore vary considerably from year to year. Since at the time of an investor's
purchase of shares, a portion of the per share net asset value by which the
purchase price is determined may be represented by realized or unrealized
appreciation in the Fund's portfolio or undistributed income of the Fund,
subsequent distributions (or portions thereof) on such shares may be taxable to
such investor even if the net asset value of his shares is, as a result of the
distributions, reduced below his cost for such shares and the distributions (or
portions thereof) represent a return of a portion of his investment.
The Fund is required to report to the IRS all distributions of
taxable dividends and of capital gains, as well as the gross proceeds of share
redemptions. The Fund may be required to withhold Federal income tax at a rate of
31% ("backup withholding") from taxable dividends (including capital gain
dividends) and the proceeds of redemptions of shares paid to non-corporate
shareholders who have not furnished the Fund with a correct taxpayer
identification number and made certain required certifications or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. In addition, the Fund may be required to withhold Federal income tax
at a rate of 31% if it is notified by the IRS or a broker that the taxpayer
identification number is incorrect or that backup withholding applies because of
underreporting of interest or dividend income.
Distributions of taxable net investment income and net realized
capital gains will be taxable as described in the Prospectus whether made in
shares or in cash. In determining amounts of net realized capital gains to be
distributed, any capital loss carryovers from prior years will be applied against
capital gains. Shareholders receiving distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in each share so
received equal to the net asset value of a share of the Fund on the reinvestment
date. Fund distributions will also be included in individual and corporate
shareholders' income on which the alternative minimum tax may be imposed.
Any loss realized upon the redemption of shares held (or treated as
held) for six months or less will be treated as a long-term capital loss to the
extent of any long-term capital gain dividend received on the redeemed shares.
Any loss realized upon the redemption of shares within six months after receipt of
an exempt-interest dividend will be disallowed. All or a portion of a loss
realized upon the redemption of shares may be disallowed to the extent shares are
purchased (including shares acquired by means of reinvested dividends) within 30
days before or after such redemption. Exchanges are treated as redemptions for
Federal tax purposes.
Different tax treatment is accorded to accounts maintained as IRAs,
including a penalty on early distributions. Shareholders should consult their tax
advisers for more information.
Each portfolio within the Trust will be separate for investment and
accounting purposes and will be treated as a separate taxable entity for Federal
income tax purposes. Provided that each Fund qualifies as a regulated investment
company under the Code, it will not be required to pay Massachusetts income or
excise taxes.
Gains or losses on sales of stock or securities by the Fund will
ordinarily be long-term capital gains or losses if the stock or securities have
been held by it for more than one year. However, if the Fund writes a covered
call option which has an exercise price below the price of the underlying stock or
security at the time the call is written, or if it acquires a put option with
respect to stock or securities which have been held for less than the applicable
capital gain holding period, the holding period of such stock or securities will
be terminated or suspended for purposes of determining long-term capital gains
treatment and will start again only when the Fund enters into a closing
transaction with respect to such option or when such option expires.
The Fund will be required to treat stock index futures, options on
such futures and options on the stock indices held at the end of each taxable year
as having been sold at market value on the last business day of the year. For
purposes of computing gain or loss, 60% of any gain or loss recognized on these
deemed sales, on actual sales or on termination by closing transactions, delivery,
exercise, lapse or otherwise will be treated as long-term capital gain or loss,
and the remaining 40% will be treated as short-term capital gain or loss.
However, under certain circumstances the Fund may be able to make an election
under which these provisions would not apply to such futures and options.
Current federal income tax law requires that a holder of a zero
coupon security report as income each year the portion of the original issue
discount on such security that accrues that year, even though the holder receives
no cash payments of interest during the year.
The "straddle" rules of Section 1092 of the Code may require the
Fund to defer the recognition of certain losses incurred on its transactions
involving certain stock or securities, futures contracts or options. Section 1092
defines a "straddle" to include "offsetting positions" with respect to publicly
traded stock or securities. A "position" is defined to include a futures contract
and an option. In general, the Fund will be considered to hold offsetting
positions if there is a substantial diminution of its risk of loss from holding
one position by reason of its holding one or more other positions. Section 1092
generally provides that in the case of a straddle, any loss from the disposition
of a position (the "loss position") in the straddle shall be recognized for any
taxable year only to the extent that the amount of such loss exceeds the
unrealized gains on any offsetting straddle position (the "gain position") and the
unrealized gain on any successor position (which is a position that is itself
offsetting to the gain position and is acquired during a period commencing 30 days
prior to, and ending 30 days after, the disposition of the loss position).
These special tax rules applicable to options and futures
transactions could affect the amount, timing and character of capital gain
distributions to shareholders by causing holding period adjustments, converting
short-term capital losses into long-term capital losses, and accelerating the
Fund's income or deferring its losses.
For purposes of the dividends-received deduction available to
corporations, dividends received by the Fund from taxable domestic corporations in
respect of any share of stock treated as debt-financed under the Code or held by
the Fund for 45 days or less (90 days or less in the case of certain preferred
stock) will not be treated as qualifying dividends. To the extent applicable, for
purposes of the dividends-received deduction, the holding period of any share of
stock will not include any period during which the Fund has an option or a
contractual obligation to sell, or has granted certain call options with respect
to, substantially identical stock or securities or, under Treasury regulations to
be promulgated, the Funds may diminish their risk of loss by holding one or more
other positions with respect to substantially similar or related property. It is
anticipated that these rules will operate so as to reduce the portion of
distributions paid by the Fund that will be eligible for the dividends-received
deduction available to corporate shareholders of such Fund. The
dividends-received deduction is reduced to the extent the shares of the Funds with
respect to which the dividends are received are treated as debt-financed under the
Code and is eliminated if the shares are deemed to have been held for less than 46
days.
Corporate shareholders should also note that their basis in shares
of the Fund may be reduced by the untaxed portion (i.e., the portion qualifying
for the dividends-received deduction) of an "extraordinary dividend" if the shares
have not been held for at least two years prior to declaration of the dividend.
Extraordinary dividends are dividends paid during a prescribed period which equal
or exceed 10% of a corporate shareholder's basis in its Fund shares or which
satisfy an alternative test based on the fair market value of the shares. To the
extent dividend payments received by corporate shareholders of the Fund constitute
extraordinary dividends, such shareholders' basis in their Fund shares will be
reduced and any gain realized upon a subsequent disposition of such shares will
therefore be increased.
The untaxed portion of dividends received by such shareholders is
also included in adjusted alternative minimum taxable income in determining
shareholders' liability under the alternative minimum tax.
The Fund is subject to a 4% nondeductible excise tax to the extent
that it fails to distribute to its shareholders during each calendar year an
amount equal to (a) at least 98% of its taxable ordinary investment income
(excluding long-term and short-term capital gain income) for the calendar year;
plus (b) at least 98% of its capital gain net income for the one year period
ending on October 31 of such calendar year; plus (c) any ordinary investment
income or capital gain net income from the preceding calendar year which was
neither distributed to shareholders nor taxed to the Fund during such year. The
Fund intends to distribute to shareholders each year an amount sufficient to avoid
the imposition of such excise tax.
The Fund's use of equalization accounting, if such method of tax
accounting is used for any taxable year, may affect the amount, timing and
character of its distributions to shareholders.
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the exchange
will be reduced (or the gain increased) to the extent any sales charge paid to the
Fund on the exchanged shares reduces any sales charge the shareholder would have
owed upon purchase of the new shares in the absence of the exchange privilege.
Instead, such sales charge will be treated as an amount paid for the new shares.
Special Tax Considerations. Certain foreign governments levy
withholding taxes against dividend and interest income. Although in some
countries a portion of these taxes are recoverable, the non-recovered portion of
foreign withholding taxes will reduce the income received from the companies
comprising the International Equity Fund. See the Prospectus for more information
on foreign withholding taxes and foreign tax credits.
Shareholders should consult their own tax advisers with respect to
the tax status of distributions from the Fund, and redemptions of shares of the
Fund, in their own states and localities. Shareholders who are not United States
persons should also consult their tax advisers as to the potential application of
foreign and U.S. taxes, including a 30% U.S. withholding tax (or lower treaty
rate) on dividends representing ordinary income to them.
SHARES OF BENEFICIAL INTEREST
The authorized capitalization of the Trust consists of an unlimited
number of shares of beneficial interest having a par value of $0.001 per share.
The Trust's Board of Trustees has authorized the issuance of multiple series
representing shares in corresponding investment portfolios of the Trust. All
shares of the Trust have equal voting rights and will be voted in the aggregate,
and not by class, except where voting by class is required by law or where the
matter involved affects only one class.
The Fund offers and the Prospectus relates to two classes of
shares. Class A shares are subject to a sales charge and a 0.35% Rule 12b-1 fee.
Class C shares are subject to a 1.0% contingent deferred sales charge and a 0.75%
Rule 12b-1 fee and a 0.25% service organization fee. All shares of the Trust
issued and outstanding are fully paid and nonassessable. The Trust is not
required by law to hold annual shareholder meetings and does not intend to hold
such meetings; however, the Trustees are required to call a meeting for the
purpose of considering the removal of persons serving as Trustee if requested to
do so in writing by the holders of not less than 10% of the outstanding shares of
the Trust. The Fund will be treated as a separate entity for Federal income tax
purposes.
As used in the Prospectus and in this Statement of Additional
Information, the term "majority", when referring to the approvals to be obtained
from shareholders in connection with general matters affecting all of the Funds
(e.g., election of Trustees and ratification of independent auditors), means the
vote of a majority of each Fund's outstanding shares represented at a meeting.
The term "majority", when referring to the approvals to be obtained from
shareholders in connection with approval of the Advisory Contract or changing the
fundamental policies of the Fund, means the vote of the lesser of (i) 67% of the
shares of the Fund represented at a meeting if the holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy, or (ii) more
than 50% of the outstanding shares of the Fund. Shareholders are entitled to one
vote for each full share held, and fractional votes for fractional shares held.
Vacancies on the Board of Trustees are filled by the Board of
Trustees if immediately after filling any such vacancy at least two-thirds of the
Trustees then holding office have been elected to such office by shareholders at
an annual or special meeting. In the event that at any time less than a majority
of Trustees holding office were elected by shareholders, the Board of Trustees
will cause to be held within 60 days a shareholders' meeting for the purpose of
electing Trustees to fill any existing vacancies. Trustees are subject to removal
with cause by two-thirds of the remaining Trustees or by a vote of a majority of
the outstanding shares of the Trust. The Trustees are required to promptly call a
shareholders' meeting for voting on the question of removal of any Trustee when
requested to do so in writing by not less than 10% of the outstanding shares of
the Trust. In connection with the calling of such shareholders' meetings,
shareholders will be provided with communication assistance.
Each share of the Fund represents an equal proportionate interest
in the Fund with each other share of the Fund and is entitled to such dividends
and distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of the Trustees. In the event of liquidation or
dissolution, shares of the Fund are entitled to receive the assets belonging to
the Fund which are available for distribution, and of any general assets not
belonging to the Fund which are available for distribution.
Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Fund.
As of October 31, 1995, no person owned of record or, to the
knowledge of management, beneficially owned more than 5% of the outstanding shares
of the fund.
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company ("State Street") has been
retained to act as custodian for the Fund pursuant to a Custodian Contract. State
Street's address is 225 Franklin Street, Boston, Massachusetts 02110. Under the
Custodian Contract, State Street maintains a custody account or accounts in the
name of the Fund; receives and delivers all assets upon purchase and upon sale or
maturity; collects and receives all income and other payments and distributions;
receives and pays out cash for purchases and redemptions of shares of the Fund and
pays out cash if requested for dividends on shares of the Fund; determines the
daily net asset value per share, net investment income and daily dividend rates
for the Fund and maintains records for the foregoing services.
Under the Custodian Contract, the Trust has agreed to pay State
Street for furnishing Custodian Services to the Fund, certain transaction charges
and out-of-pocket expenses.
The Board of Trustees has also authorized State Street Bank in its
capacity as Custodian for the Fund to enter into Subcustodian Agreements with
certain foreign banking institutions and foreign securities depositaries pursuant
to rule 17f-5 of the Investment Company Act of 1940.
BISYS has been retained by the Trust to act as transfer agent and
dividend agent for the Fund. Under the Agency Agreement, BISYS performs general
transfer agency and dividend disbursing services. It maintains an account in the
name of each shareholder of record in the Fund reflecting purchases, redemptions,
daily dividend accruals and monthly dividend disbursements, processes purchase and
redemption requests, issues and redeems shares of the Fund, addresses and mails
all communications by the Fund to its shareholders, including financial reports,
other reports to shareholders, dividend and distribution notices, tax notices and
proxy material for its shareholder meetings, and maintains records for the
foregoing services. Under the Agency Agreement, the Fund has agreed to pay BISYS
$ 16,000 per annum. In addition, the Fund has agreed to pay BISYS certain account
based fees and out-of-pocket expenses incurred by BISYS.
INDEPENDENT AUDITORS
Ernst & Young LLP serves as the independent auditors for the Fund.
Ernst & Young LLP provides audit services, tax return preparation and assistance
and consultation in connection with review of Securities and Exchange Commission
filings. Ernst & Young LLP's address is 787 Seventh Avenue, New York, New York
10019.
PART C. OTHER INFORMATION
Item 24. Financial Statements
(a) Financial Statements:
Financial Statements included in Part A:
Not Applicable
Financial Information included in Part B:
Not Applicable
Exhibit
Number Description
*1 -- Declaration of Trust.
*2 -- By-Laws of Registrant.
3 -- None.
*4 -- Form of Specimen Certificates of Shares.
5(a) -- Advisory Contract between Registrant and HSBC Asset
Management Americas Inc. (Also Previously filed
with Post-Effective Amendment No. 1 to Registration
Statement on March 4, 1991.)
***5(b) -- Administrative Services Contract between
Registrant and HSBC Asset Management
Americas
Inc. (Also Previously filed with
Post-Effective Amendment No. 1 to
Registration Statement on March 4,
1991.)
**5(c) -- Sub-Advisory Contract between HSBC Asset
Management Americas Inc. and James
Capel Fund
Managers, Ltd. with respect to the
European
and European and Pacific Rim Equity
Index
Funds.
++5(d) -- Administrative Services Contract between Registrant
and HSBC Asset Management Americas Inc. dated April
21, 1992
****5(e) -- Form of Advisory Contract between
Mariner
U.S. Government Securities Fund and
Marine
Midland Bank, N.A.
++++5(f) -- Administration and Accounting Services
Agreement between Registrant and PFPC,
Inc.
dated July 1, 1994
++++5(g) -- Co-Administration Services Contract
between
HSBC Asset Management Americas Inc. and
Registrant dated July 1, 1994
+++++5(h) -- Sub-Advisory Contract between HSBC Asset Management
Americas, Inc. and HSBC Asset Management Europe Ltd.
with respect to the Mariner International Equity
Fund dated April 25, 1995
+++++5(i) -- Sub-Advisory Contract between HSBC Asset Management
Americas, Inc. and HSBC Asset Management Australia
Limited with respect to the Mariner International
Equity Fund dated April 25, 1995
+++++5(j) -- Sub-Advisory Contract between HSBC Asset Management
Americas, Inc. and HSBC Asset Management Japan (KK)
with respect to the Mariner International Equity
Fund dated April 25, 1995
+++++5(k) -- Sub-Advisory Contract between HSBC Asset Management
Americas, Inc. and HSBC Asset Management Hong Kong
Ltd. with respect to the Mariner International
Equity Fund dated April 25, 1995
+++++5(l) -- Sub-Advisory Contract between Marinvest Inc. and
Investment Concepts, Inc. with respect to the
Mariner Small Cap Fund dated September 22, 1992
***6 -- Distribution Contract between
Registrant and
Mariner Funds Services. (Also
Previously
filed with Post-Effective Amendment No.
1 to
Registration Statement on March 4,
1991.)
6(a) -- Distribution Contract between Registrant and Mariner
Funds Services, Inc. dated August 1, 1992. (Also
Previously filed with Post Effective Amendment No. 5
on July 31, 1992)
*7 -- None.
*8(a) -- Custodian Agreement between Registrant
and
Marine Midland Bank, N.A.
**8(b) -- Custodian Agreement between Registrant and State
Street Bank and Trust Company with respect to the
European and European and Pacific Rim Equity Index
Funds.
8(c) -- Custodian Agreement between Registrant and State
Street Bank and Trust Company with respect to the
Mariner European Equity Index Fund.
++9(a) -- Agency Agreement between Registrant and HSBC Asset
Management Americas Inc. (Also previously filed
with Post-Effective Amendment No. 1 to Registration
Statement on March 4, 1991.)
***9(b) -- Agreement concerning the name "Mariner."
++++9(c) -- Transfer Agency Services Agreement
between
Registrant and PFPC, Inc. dated August
29,
1994
++++9(d) -- Shareholder Servicing Agreement between
Registrant and HSBC Asset Management
Americas
Inc. dated November 1, 1994
+++++9(e) -- Service Organization Agreement between Bank of
Oklahoma and Registrant, dated October 25, 1994
10(a) -- Not Applicable.
11 -- Not Applicable.
12 -- None.
*13 -- Subscription Agreement.
14 -- None.
++++15(a) -- Rule 12b-1 Distribution Plan and Agreement between
Registrant and Mariner Funds Services.
15(b) -- Selected Dealer Agreement. (Also Previously
filed with Post-Effective Amendment No. 5 to
Registration Statement on July 4, 1992.)
15(c) -- Rule 12b-1 Distribution Plan and Agreement
between Registrant and Mariner Funds
Services, Inc. dated August 1, 1992.
15(d) -- Distributor's Selected Dealer Agreement dated
August 1, 1992.
*16 -- Powers of Attorney for S.J. Cozzolino, John P.
Pfann, Alan F. Blanchard, Robert A. Robinson, Wolfe
J. Frankl and William L. Kufta.
16(a) -- Schedule for Computation of Performance
Quotations.
16(b) -- Powers of Attorney for S.J. Cozzolino, John
P. Pfann, Alan F. Blanchard, Robert A.
Robinson, Wolfe J. Frankl and William L.
Kufta.
* Filed with the Trust's Registration Statement dated March 2, 1990.
** Filed with Post-Effective Amendment No. 2 to the Trust's Registration
Statement on January 22, 1992.
*** Filed with Post-Effective Amendment No. 1 and 3 to the Trust's
Registration Statement on March 4, 1991 and January 23, 1992,
respectively.
**** Filed with Post-Effective Amendment No. 9 on July 12, 1993.
Filed with Post-Effective Amendment No. 4 to the Trust's Registration
Statement on May 1, 1992.
Filed with Post-Effective Amendment No. 6 to the Trust's Registration
Statement on November 6, 1992.
Filed with Post-Effective Amendment No. 8 on March 2, 1993.
++++ Filed with Post-Effective Amendment No. 13 on November 7, 1994.
+++++ Filed with Post-Effective Amendment No. 14 on April 28, 1995.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Not Applicable
Item 27. Indemnification.
Reference is made to Article IV of Registrant's By-Laws and
paragraphs 9 and 10 of the Distribution Contract.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
Mariner Funds Services, the Distributor of the Registrant, has in
force a National Union Fire Insurance Company Directors and Officers Liability
Policy (No. 4392339) which covers all present and future directors and officers of
Registrant against loss arising from any civil claim or claims by reason of "any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done or wrongfully attempted" while acting as trustees or officers of the
Registrant. The period of insurance under the present policy is for the period
ending August 1, 1995. The policy covers 100% of the excess of $100,000 up to an
annual aggregate limit of $10,000,000 of any losses including legal and other
expenses in connection with any claim.
Item 28. Business and Other Connections
of Investment Adviser
HSBC Asset Management Americas Inc. also serves as investment
adviser to Mariner Funds Trust.
Item 29. Principal Underwriter
(a) Mariner Funds
Services is also Distributor for Mariner
Funds Trust.
(b) Officers and
Directors
Positions and
Name and Principal Offices with
Positions and
Offices
Business Address* Registrant
with Underwriter
W. Robert Alexander President
Chairman
Arthur J.L. Lucey None
Vice President
Mark A. Pougnet Vice-President
and Treasurer Vice President
Ned Burke None Vice President
(c) Not applicable.
* All addresses are 370 17th Street, Suite 2700, Denver, Colorado 80202.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
rules thereunder are maintained at the offices of HSBC Asset
Management Americas Inc., the Registrant's Investment Adviser and
Co-Administrator, and at the offices of PFPC Inc., the Registrant's
Administrator, Transfer Agent and Dividend Disbursing Agent, at 400
Bellevue Parkway, Wilmington, Delaware 19809, and at the offices of
Mariner Funds Services, the Registrant's Distributor, at 370 17th
Street, Suite 2700, Denver, Colorado 80202.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the removal of a Trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant undertakes to provide the support to shareholders
specified in Section 16(c) of the 1940 Act as though that
Section applied to the Registrant.
(c) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective date
of the Registrant's 1933 Act Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant hereby certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(a) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, on November
13, 1995.
MARINER MUTUAL FUNDS TRUST
(Registrant)
By: W. Robert Alexander, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
W. ROBERT ALEXANDER
President November 13, 1995
MARK A. POUGNET
Vice President November 13, 1995
and Treasurer
(Principal Financial
and Accounting Officer)
*WOLFE J. FRANKL
Trustee November 13, 1995
*WILLIAM L. KUFTA
Trustee November 13, 1995
*JOHN P. PFANN
Trustee November 13, 1995
*ROBERT A. ROBINSON
Trustee November 13, 1995
*Pursuant to Power of Attorney filed with Post-Effective Amendment No. 8 on March
2, 1993 to Registration Statement Nos. 33-33734 and 811-6057.
