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
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
association. 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.
