Document/Exhibit Description Pages Size
1: 485APOS Post-Effective Amendment 69± 291K
As Filed with the Securities and Exchange Commission on November 13, 1995
Registration Nos. 33-33734
811-6057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. _____ / /
Post-Effective Amendment No. 15 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/ X /
Amendment No. 16 / X /
MARINER MUTUAL FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
370 17th Street, Suite 2700, Denver, Colorado 80202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 634-2536
Steven R. Howard, Secretary
Baker & McKenzie, 805 Third Avenue, 30th Floor
New York, New York 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 75 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
The Registrant has registered an indefinite number of shares of
beneficial interest, par value $0.001 per share, by filing a declaration pursuant
to Rule 24f-2 under the Investment Company Act of 1940. A Rule 24f-2 Notice for
the fiscal year ended December 31, 1994 was filed with the Commission on February
27, 1995.
MARINER MUTUAL FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
PAN ASIA FUND
N-1A Item No.
Location
Part A
Prospectus Caption
INTERNATIONAL EQUITY FUND
Item 1. Cover Page..................Cover Page
Item 2. Synopsis....................Summary of Annual Fund Operating Expenses
Item 3. Condensed Financial
Information...............Not Applicable
Item 4. General Description of
Registrant
Investment Objective,
Policies and Risk
Factors; Investment
Restrictions
Item 5. Management of the Fund...... Management of the Fund; Transactions
with Affiliates; Purchase of Shares;
Transfer and Dividend Disbursing
Agent and Custodian
Item 5A. Management's Discussion of
Fund Performance......... Information contained in Annual
Report
Item 6. Capital Stock and Other
Securities............... Dividends, Distributions and Taxes;
Account Services; Shares of
Beneficial Interest
Item 7. Purchase of Securities
Being Offered............ Determination of Net Asset Value;
Purchase of Shares; Exchange
Privilege
Item 8. Redemption or Repurchase... Redemption of Shares; Redemptions
(Part B)
Item 9. Legal Proceedings.......... Not Applicable
Part B
Statement of
Additional Information
Caption
PAN ASIA FUND
Item 10. Cover Page.................. Cover Page
Item 11. Table of Contents........... Table of Contents
Item 12. General Information and
History................... Not Applicable
Item 13. Investment Objective and
Policies.................. Investment Policies and Risk Factors;
Investment Restrictions
Item 14. Management of the Registrant Management
Item 15. Control Persons and Principal
Holders of Securities..... Management; Shares of Beneficial
Interest
Item l6. Investment Advisory and
Other Services............ Management; Custodian, Transfer Agent
and Dividend Disbursing Agent;
Independent Auditors
Item 17. Brokerage Allocation........ Portfolio Transactions
Item 18. Capital Stock and Other
Securities................ Shares of Beneficial Interest
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............. Purchase of Shares (Part A);
Redemptions; Redemption of Shares
(Part A); Determination of Net Asset
Value; Exchange Privilege
Item 20. Tax Status.................. Dividends, Distributions and Taxes
(Part A); Federal Income Taxes (Part
B);
Item 21. Underwriters................ Management
Item 22. Calculation of Performance
Data .................... Performance Information
Item 23. Financial Statements........ Not Applicable
NYCORP
HSBC Global Funds Trust
Pan Asian Fund 3435 Stelzer Road
Columbus, Ohio 43219
General Information:
(800) ________
Account Information:
(800) ________
HSBC ASSET MANAGEMENT AMERICAS
INC.
Investment Adviser and
Administrator
_________________________________________________________________________________________
____
HSBC Global Funds Trust (the "Trust") was organized in Massachusetts on November
1, 1989 as a Massachusetts business trust and is an open end, diversified management
investment company with multiple investment portfolios, including the International
Equity Fund (the "Fund").
The Fund seeks as its investment objective to provide investors with long-term
capital appreciation by investing under normal market conditions at least 65% of its
total assets in equity securities issued by companies based or conducting significant
busiess in the Pan Asian region, defined as the area including the Middle East and
eastwards to the International Date Line. Such region includes Asia, the Pacific
(excluding Australia and New Zealand), and the Middle East. The balance of the Fund's
assets may be invested in debt securities of such companies. [Dividend income is expected
to be incidental to the Fund's investment objective.] The Fund may also use other
investment practices to enhance return or to hedge against fluctuations in the value of
portfolio securities. See "Investment Objectives and Policies Other Investment
Practices".
The Fund's investment adviser is HSBC Asset Management Americas Inc. ("HSBC
Americas" or the "Adviser"), the North American investment affiliate of HSBC Holdings plc
(Hongkong and Shanghai Banking Corporation). See "Management of the Fund".
Prospective investors should be aware that shares of the Fund are not an
obligation of or guaranteed or endorsed by Hong Kong and Shanghai Banking Corporation or
its affiliates. In addition, such shares are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency and may involve
investment risks, including the possible loss of principal.
Shares of the Fund are offered for sale primarily through FundMark Investment
Company Services, Inc. ("FundMark") as exclusive sub-distributor as an investment vehicle
for institutions, corporations, fiduciaries and individuals. Certain banks, financial
institutions and corporations (the "Participating Organizations") have agreed to act as
shareholder servicing agents for investors who maintain accounts at these Participating
Organizations and to perform certain services for the Fund.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information, dated
November 14, 1995 containing additional detailed information about the Fund (the
"Statement of Additional Information"), has been filed with the Securities and Exchange
Commission and is hereby incorporated by reference into this Prospectus. A copy is
available without charge and can be obtained by writing the Trust at the above address,
or calling the General Information telephone number.
____________________________________
This Prospectus should be read and retained for ready reference to information
about the Fund.
________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______________________
TABLE OF CONTENTS
Page
Summary of Annual Fund Operating Expenses4
Investment Objective, Policies and Risk Factors5
Investment Restrictions11
Management of the Fund11
Transactions with Affiliates15
Determination of Net Asset Value15
Purchase of Shares15
Redemption of Shares18
Dividends, Distributions and Taxes20
Account Services21
Transfer and Dividend Disbursing Agent and Custodian22
Exchange Privilege22
Performance Information23
Shares of Beneficial Interest23
SUMMARY OF ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
The purpose of the following information is to assist an investor in
understanding the costs and expenses that an investor in the Fund would bear directly or
indirectly. The information provided is based on estimates.
Class A
Class C
Shares
Shares
_______
_______
Maximum sales charge imposed on purchases of shares of the Funds
(as a percentage of offering price) 4.50%
None
Certain investors will not be subject to the sales charge
(See "Purchase of Shares".)
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
None
Deferred Sales Charge (as a percentage of redemption proceeds)
For Purchases up to $999,999 None
1.00%(2)
For Purchases of $1,000,000 or more 1.00%(1)
1.00%(2)
Redemption Fees None
None
Exchange Fees None
None
Annual Operating Expenses
Management Fees (net of fees not imposed) 1.25%
1.25%
12b-1 Fees 0.35%
0.75%
Other Expenses
Administrative Service Fees 0.10%
0.10%
_____
_____
Co-Administrative/Shareholder Services Fee 0.07%
0.07%
Participating Organization Fee 0.00%
0.25%
Other Operating Expenses 0.57%
0.63%
____
____
Total Fund Operating Expenses 2.34%
3.05%
____
____
____
____
(1) Purchases of Class A shares of $1 million or more are not subject to a
sales charge (an "initial sales charge"). A contingent deferred sales
charge ("CDSC") of 1.00% will be imposed, however, on shares from any
such purchase that are redeemed [within one year following such
purchase]. (See "Purchase of Shares".)
(2) Purchases of Class C shares of the Fund are subject to a CDSC of 1.00%
for redemptions made within one year of purchase.
(3) Investors who purchase and redeem shares of the Fund through a customer
account maintained at a Participating Organization may be charged
additional fees by such Participating Organization related to services it
provides for such Investors. (See "Management of the Fund Servicing
Agreements" for additional information.)
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual shareholder's
own investment in the Fund. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and expenses.
For a more detailed discussion of these matters, investors should refer to the
appropriate sections of this Prospectus.
The following example should not be considered a representation of past or future
expenses. The expenses set forth above and example set forth below reflect the
non-imposition of certain fees and expenses. The actual expenses may be greater
or lesser than those shown.
Example:
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return and the reinvestment of all dividends and distributions:+
Class A Class C
Shares Shares
1 year $___ $___
3 years $___ $___
+ Includes a maximum sales charge for the Class A shares from which certain
shareholders may be exempt. (See "Purchase of Shares"). Reduced sales
charges apply to purchases of $50,000 or more. Generally, for Class A
shares, purchases of $1 million or more may be accomplished at net asset
value without an initial sales charge, but may be subject to a 1.00% CDSC
[if liquidated within one year of purchase]. If Class C shares of the
Fund are redeemed within one year of purchase, the expense figure in the
first year increases to _________.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
Investment Objective
The investment objective of the Fund is to provide investors with long-term
capital appreciation by investing at least 65% of its total assets in equity
securities issued by companies based or doing significant business in the Pan
Asian region defined to include Asia, the Pacific (excluding Australia and New
Zealand), the Middle East, Turkey and [ex-CIS states]. The Fund expects to
benefit from the local presence of the [Hong Kong Bank Group] ("HSBC") in these
areas of the world. Hence the Fund will have a tendency, but will not be
required, to focus its investments in those countries where the Hong Kong Bank
Group has a local presence. The Fund expects to initially invest only in those
countries where Hong Kong Bank Group has a presence as well as Israel and Russia.
This list may change as HSBC adds and deletes locations from its network and as
local markets develop, but currently contains:
Bangladesh
Brunei Darussalam
China
Cook Islands
Korea (Republic of)
Hong Kong
India
Indonesia
Japan
Macau
Malaysia
Myanmar
New Zealand
Pakistan
Philippines
Singapore
Sri Lanka
Taiwan, China
Thailand
Viet Nam
Mauritius
Laos
Mongolia
Other Middle East and Asia Minor
Bahrain
Jordan
Lebanon
Oman
Palestinian Autonomous Area
Qatar
Saudi Arabia
United Arab Emirates
Turkey
A company will be considered a Pan Asian issuer based on meeting any one of
the following criteria:
* the country in which the company was organized
* country in which the principal securities market for the company
is located
* country in which the company derives at least 50% of its revenues
or profits from goods procured or sold, investments made or
services performed
* country in which at least 50% of the company's assets are
located.
The balance of the Fund's assets may be invested in debt securities of Pan
Asian issuers including bonds and money market instruments. [Dividend income is
expected to be incidental to the Fund's investment objective.] There is no
assurance that this objective will be attained. For temporary defensive purposes,
the Fund may invest up to 100% of its total assets in equity and debt securities
of companies not Pan Asian issuers.
Investment Policies
The Fund seeks to achieve its investment objective by investing in a
portfolio of equity investments in a variety of Pan Asian markets with a focus on
equity investments that have the potential for favorable price appreciation and
currency movements. The types of equity securities in which the Fund may invest
include common stocks, convertible securities, preferred stock, warrants or other
securities that are exchangeable for shares of common stock, American Depositary
Receipts, European Depositary Receipts, and other depositary receipts. The Fund
may invest without limit in "emerging markets". The Adviser believes that both
the selection of individual stocks and the allocation of the Fund's assets across
foreign stock markets are important in managing an international equity portfolio.
Within each country, criteria for selecting particular securities are expected to
include the issuer's managerial strength, competitive market position, prospects
for profits and earnings growth, underlying asset value and relative valuation.
The Fund does not plan on investing in debt securities to any significant extent.
Therefore, it has not established rating criteria for the debt securities in which
it may invest. Such securities may not be rated at all for creditworthiness. In
purchasing junk bonds, the Adviser will take into consideration, among other
things, the issuer's financial resources, its sensitivity to economic conditions
and trends, its operating history, the quality of the issuer's management and
regulatory matters. The Fund does not intend to purchase debt securities that are
in default or which the Adviser believes will be in default.
Risk Factors
Investment in securities of foreign issuers may subject the Fund to risks
of foreign political, economic and legal conditions and developments. Such
conditions or developments might include favorable or unfavorable changes in
currency exchange rates, exchange control regulations (including currency
blockage), expropriation of assets of companies in which the Fund invests,
nationalization of such companies, imposition of withholding taxes on dividend or
interest payments, and possible difficulty in obtaining and enforcing judgments
against a foreign issuer. Also, foreign securities may not be as liquid as, and
may be more volatile than, comparable domestic common stocks. In addition,
foreign securities markets are generally not as developed or efficient as those in
the United States. There is generally less government supervision and regulation
of foreign securities exchanges, brokers and companies than in the United States.
Furthermore, issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers. The Fund, in connection with its purchases and sales of foreign
securities, other than securities denominated in United States dollars, is
influenced by the returns on the currencies in which the securities are
denominated. Currency risk is the risk that changes in foreign exchange rates
will affect, favorably or unfavorably, the value of foreign securities held by the
Fund. In a period when the U.S. dollar generally rises against foreign
currencies, the returns on foreign stocks for a U.S. investor will be diminished.
By contrast, in a period when the U.S. dollar generally declines, the returns on
foreign securities will be enhanced. Further, brokerage costs in purchasing and
selling securities in foreign securities markets generally are higher than such
costs in comparable transactions in domestic securities markets, and foreign
custodial costs relating to the Fund's portfolio securities are higher than
domestic custodial costs.
Investment in emerging market countries presents risks in greater degree
than, and in addition to, those presented by investment in foreign issuers in
general. A number of emerging market countries restrict, to varying degrees,
foreign investment in stocks. Repatriation of investment income, capital, and the
proceeds of sales of foreign investors may require governmental registration
and/or approval in some emerging market countries. A member of the currencies of
developing countries have experienced significant declines against the U.S. dollar
in recent years, and devaluation may occur subsequent to investments in these
currencies by the Fund. Inflation and rapid fluctuations in inflation rates have
had and may continue to have negative effect on the economies and securities
markets of certain emerging market countries. In addition to the risks of
investing in emerging market securities, there are additional risks associated
with investing in developing Pan Asian countries including: (1) certain markets,
such as those of China, being in the earliest stages of development; (2) high
concentration of market capitalization and trading volume in a small number of
issuers representing a limited number of industries, as well as a high
concentration of investors and financial intermediaries; (3) political and social
uncertainties; (4) over-dependence on exports, especially with respect to primary
commodities, making these economies vulnerable to changes in commodity prices; (5)
overburdened infrastructure and obsolete financial systems; (6) environmental
problems; (7) less well developed legal systems than many other industrialized
nations; and (8) unsatisfactory custodial services. Because the Fund will be
highly concentrated in particular types of securities, the Fund will not be
diversified. Investment in a non-diversified fund could, therefore, enter greater
risks than investment in a "diversified" fund, including a risk of greater
fluctuations in yield and share price.
Other Investment Practices
Investment Company Securities. The Fund may invest in securities issued by
other investment companies. Such securities will be acquired by the Fund within
the limits prescribed by the 1940 Act, as amended, which include a prohibition
against the Fund investing more than 10% of the value of its total assets in such
securities. Investors should recognize that the purchase of securities of other
investment companies results in duplication of expenses such that investors
indirectly bear a proportionate share of the expenses of such companies including
operating costs, and investment advisory and administrative services fees.
Long-Term and Short-Term Corporate Debt Obligations. The Fund may invest
in U.S. dollar-denominated debt obligations issued or guaranteed by U.S.
corporations or U.S. commercial banks, U.S. dollar-denominated obligations of
foreign issuers and debt obligations of foreign issuers denominated in foreign
currencies. Such debt obligations include, among others, bonds, notes,
debentures, commercial paper and variable rate demand notes. The bank obligations
in which the Fund may invest are certificates of deposit, bankers' acceptances,
and fixed time deposits. The Adviser, in choosing corporate debt securities on
behalf of the Fund will evaluate each issuer based on (i) general economic and
financial conditions; (ii) the specific issuer's (a) business and management, (b)
cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate
under adverse economic conditions, (e) fair market value of assets, and (f) in the
case of foreign issuers, unique political, economic or social conditions
applicable to such issuer's country; and (iii) other considerations the Adviser
deems appropriate.
Certain debt securities in which the Fund invests are subject to a greater
degree of market fluctuation and credit risk than higher quality securities and
may be regarded as having predominantly speculative characteristics.
Convertible Securities. The Fund may invest in convertible securities
which have characteristics similar to both fixed income and equity securities.
Because of the conversion feature, the market value of convertible securities
tends to move together with the market value of the underlying stock. As a
result, the Fund's selection of convertible securities is based, to a great
extent, on the potential for capital appreciation that may exist in the underlying
stock. The value of convertible securities is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
American and European Depositary Receipts. The Fund may invest in the
securities of foreign issuers in the form of American Depositary Receipts ("ADRs")
and European Depositary Receipts ("EDRs"). These securities may not necessarily
be denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are receipts issued in Europe typically by non-United States
banks and trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the United
States securities markets and EDRs and CDRs in bearer form are designed for use in
Europe. The Fund may invest in ADRs, EDRs and CDRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts generally bear all
the costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Repurchase Agreements. As discussed above, the Fund may invest in
securities pursuant to repurchase agreements, whereby the seller agrees to
repurchase such securities at the Fund's cost plus interest within a specified
time (generally one day). While repurchase agreements involve certain risks not
associated with direct investments in the underlying securities, the Fund will
follow procedures designed to minimize such risks. These procedures include
effecting repurchase transactions only with large, well-capitalized banks and
registered broker-dealers having creditworthiness determined by the Adviser to be
substantially equivalent to that of issuers of debt securities rated investment
grade. In addition, the Fund's repurchase agreements will provide that the value
of the collateral underlying the repurchase agreement will always be at least
equal to the repurchase price, including any accrued interest earned on the
repurchase agreement, and that the Fund's custodian will take possession of such
collateral. In the event of a default or bankruptcy by the seller, the Fund will
seek to liquidate such collateral. However, the exercise of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the extent
that proceeds from any sale upon a default of the obligation to repurchase were
less than the repurchase price, the Fund could suffer a loss. Repurchase
agreements are considered to be loans by an investment company under the
Investment Company Act of 1940 (the "1940 Act"). It is the current policy of the
Fund not to enter into repurchase agreements exceeding in the aggregate 10% of the
market value of the Fund's assets.
When-Issued and Delayed-Delivery Securities. The Fund may purchase
securities on a when-issued or delayed-delivery basis. For example, delivery of
and payment for these securities can take place a month or more after the date of
the transaction. The securities so purchased are subject to market fluctuation
during this period and no income is credited to the Fund until settlement takes
place. To facilitate such acquisitions, the Fund will maintain with the custodian
a separate account with a segregated portfolio of securities in an amount at least
equal to such commitments. On the delivery dates for such transactions, the Fund
will meet its obligations from maturities or sales of the securities held in the
separate account and/or from cash flow. It is the current policy of the Fund not
to enter into when-issued commitments exceeding in the aggregate 15% of the market
value of the Fund's total assets, less liabilities other than the obligations
created by when-issued commitments.
Forward Currency Contracts. The Fund may conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis as the spot rate prevailing in
the foreign currency exchange market or through entering into forward currency
contracts to protect against uncertainty in the level of future exchange rates
between a particular foreign currency and the U.S. Dollar or between foreign
currencies in which the Fund's securities are or may be denominated. A forward
contract involves an obligation to purchase or sell a specific currency amount at
a future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. Under
normal circumstances, consideration of the prospect for changes in currency
exchange rates will be incorporated into the Fund's long-term investment
strategies. However, the Adviser believes that it is important to have the
flexibility to enter into forward currency contracts when it determines that the
best interests of the Fund will be served. The Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.
When the Adviser believes that the currency of a particular country may
suffer a significant decline against the U.S. Dollar or against another currency,
the Fund may enter into a currency contract to sell, for a fixed amount of U.S.
Dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of the Fund's securities denominated in
such foreign currency.
At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the security
and terminate its contractual obligation to deliver the foreign currency by
purchasing an "offsetting" contract with the same currency trader, obligating it
to purchase, on the same maturity date, the same amount of the foreign currency.
The Fund may realize a gain or loss from currency transactions.
Generally, the Fund will enter into forward currency contracts only as a
hedge against foreign currency exposure affecting the Fund. If the Fund enters
into forward currency contracts to cover activities which are essentially
speculative, the Fund will segregate cash or readily marketable securities with
its custodian, or a designated sub-custodian, in an amount at all times equal to
or exceeding the Fund's commitment with respect to such contracts.
Options on Currencies. The Fund may purchase and write put and call
options on foreign currencies (traded on U.S. and foreign exchange or over-the-
counter markets) to manage the Fund's exposure to changes in dollar exchange
rates. Call options on foreign currency written by the Fund will be "covered",
which means that the Fund will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency written by the Fund,
the Fund will establish a segregated account with its custodian bank consisting of
cash, U.S. government securities or other high grade liquid debt securities in an
amount equal to the amount the Fund would be required to pay upon exercise of the
put.
Options on Securities. The fund may write (sell) covered put and call
options and purchase put and call options with a value of up to 25% of the
securities in its portfolio. The Fund will engage in options trading principally
for hedging purposes. The Fund may write call options on a covered basis only,
and will not engage in option writing strategies for speculative purposes.
The Fund may purchase call options, but only to effect a "closing
transaction" i.e., to offset an obligation pursuant to a previously written call
option to prevent an underlying security from being called, or to permit the sale
of the underlying security or the writing of a new option on the security prior to
the outstanding option's expiration. The Fund may also purchase securities with
put options, sometimes referred to as stand-by commitments, which are otherwise
eligible for investment in amounts not exceeding 10% of its assets, when the Fund
anticipates a decline in the market value of securities in the Fund's portfolio.
The Fund will incur costs, in the form of premiums, on options it purchases and
may incur transaction costs on options that it exercises. The Fund will
ordinarily realize a gain from a put option it has purchased if the value of the
securities subject to the option decreases sufficiently below the exercise price
to cover both the premium and the transaction costs.
Interest Rate Futures Contracts. The Fund may, to a limited extent, enter
into interest rate futures contracts i.e., contracts for the future delivery of
securities or index-based futures contracts that are, in the opinion of the
Fund, sufficiently correlated with the Fund's portfolio. These investments will
be made primarily in an attempt to protect the Fund against the effects of adverse
changes in interest rates (i.e., "hedging"). When interest rates are increasing
and portfolio values are falling, the sale of futures contracts can offset a
decline in the value of the Fund's current portfolio securities. The Fund will
engage in such transactions solely for bona fide hedging purposes and not for the
purpose of engaging in speculative trading practices. The Statement of Additional
Information describes these investments in greater detail.
Options on Interest Rate Futures Contracts. The Fund may purchase put and
call options on interest rate futures contracts, which give the Fund the right to
sell or purchase the underlying futures contract for a specified price upon
exercise of the option at any time during the option period. The Fund may also
write (sell) put and call options on such futures contracts. For options on
interest rate futures that the Fund writes, the Fund will receive a premium in
return for granting to the buyer the right to sell to the Fund or to buy from the
Fund the underlying futures contract for a specified price at any time during the
option period. As with futures contracts, the Fund will purchase or sell options
on interest rate futures contracts solely for bona fide hedging purposes and not
as a means of speculative trading.
Futures, Related Options and Options on Stock Indices. The Fund may
attempt to reduce the risk of investment in equity securities by hedging a portion
of its portfolio through the use of certain futures transactions, options on
futures traded on a board of trade and options on stock indices traded on
national securities exchanges. In addition, the Fund may hedge a portion of its
portfolio by purchasing such instruments during a market advance or when the
Adviser anticipates an advance. In attempting to hedge its portfolio, the Fund
may enter into contracts for the future delivery of securities and futures
contracts based on a specific security, class of securities or an index, purchase
or sell options or any such futures contracts, and engage in related closing
transactions. The Fund will not engage in transactions in futures contracts or
options for speculation. The Fund will use these instruments only as a hedge
against changes resulting from market conditions in the values of securities held
in its portfolio or which it intends to purchase.
A stock index assigns relative weightings to the common stocks in the
index, and the index generally fluctuates with changes in the market values of
these stocks. A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is made.
The Fund will sell stock index futures only if the amount resulting from the
multiplication of the then current level of the indices upon which such futures
contracts are based, and the number of futures contracts which would be
outstanding, do not exceed one-third of the value of the Fund's net assets.
When a futures contract is executed, each party deposits with a broker of
in a segregated custodial account up to 5% of the contract amount, called the
"initial margin", and during the term of the contract, the amount of the deposit
is adjusted based on the current value of the futures contract by payments of
variation margin to or from the broker or segregated account.
In the case of options on stock index futures, the holder of the option
pays a premium and receives the right, upon exercise of the option at a specified
price during the option period, to assume the option writer's position in a stock
index futures contract. If the option is exercised by the holder before the last
trading day during the option period, the option writer delivers the futures
position, as well as any balance in the writer's futures margin account. If it is
exercised on the last trading day, the option writer delivers to the option holder
cash in an amount equal to the difference between the option exercise price and
the closing level of the relevant index on the date the option expires. In the
case of options on stock indexes, the holder of the option pays a premium and
receives the right, upon exercise of the option at a specified price during the
option period, to receive cash equal to the dollar amount of the difference
between the closing price of the relevant index and the option exercise price
times a specified multiple, call the "multiplier".
During a market decline or when the Adviser anticipates a decline, the Fund
may hedge a portion of its portfolio by selling futures contracts or purchasing
puts on such contracts or on a stock index in order to limit exposure to the
decline. This provides an alternative to liquidation of securities positions and
the corresponding costs of such liquidation. Conversely, during a market advance
or when the Adviser anticipates an advance, the Fund may hedge a portion of its
portfolio by purchasing futures, options on these futures or options on stock
indices. This affords a hedge against the Fund not participating in a market
advance at a time when it is not fully invested and serves as a temporary
substitute for the purchase of individual securities which may later be purchased
in a more advantageous manner. The Fund will sell options on futures and on stock
indices only to close out existing hedge positions.
The Fund's successful use of stock index futures contracts, options on such
contracts and options on indices depends upon the Adviser's ability to predict the
direction of the market and is subject to various additional risks. The
correlation between movements in the price of the futures contract and the price
of the securities being hedged is imperfect and the risk from imperfect
correlation increases in the case of stock index futures as the composition of the
Fund's portfolio diverges from the composition of the relevant index. Such
imperfect correlation may prevent the Fund from achieving the intended hedge or
may expose the Fund to risk of loss. In addition, if the Fund purchases futures
to hedge against market advances before it can invest in common stock in an
advantageous manner and the market declines, the Fund might create a loss on the
futures contract. Particularly in the case of options on stock index futures and
on stock indices, the Fund's ability to establish and maintain positions will
depend on market liquidity. The successful utilization of hedging and risk
management transactions requires skills different from those needed in the
selection of the Fund's portfolio securities. The Fund believes that the Adviser
possesses the skills necessary for the successful utilization of hedging and risk
management transactions.
Positions in options, futures and options on futures may be closed out only
on an exchange which provides a secondary market for such purposes. There can be
no assurance that a liquid secondary market will exist for any particular option,
futures contract or related option at any specific time. Thus, it may not be
possible to close such an option or futures position which could have an adverse
impact on the Fund's ability to effectively hedge its securities. The Fund will
enter into an option or futures position only if there appears to be a liquid
secondary market for such options or futures.
Except as otherwise provided in this Prospectus, the Fund is permitted to
engage in bona fide hedging transactions (as defined in the rules and regulations
of the Commodity Futures Trading Commission) without any quantitative limitations.
Futures and related option transactions which are not for bona fide hedging
purposes may be used provided the total amount of the initial margin and any
option premiums attributable to such positions does not exceed 5% of the Fund's
liquidating value after taking into account unrealized profits and unrealized
losses, and excluding any in-the-money option premiums paid. The Fund will not
market, and is not marketing, itself as a commodity pool or otherwise as a vehicle
for trading in futures and related options. The Fund will segregate assets to
cover the futures and options.
Portfolio Turnover. The Fund generally will not engage in the trading of
securities for the purpose of realizing short-term profits, but will adjust its
portfolio as it deems advisable in view of prevailing or anticipated market
conditions to accomplish its investment objective. For example, the Fund may sell
portfolio securities in anticipation of an adverse market movement. Other than
for tax purposes, frequency of portfolio turnover will not be a limiting factor if
the Fund considers it advantageous to purchase of sell securities. The Fund does
not anticipate that its annual portfolio turnover rate will exceed [200%].
Illiquid Securities. The Fund will not invest in illiquid securities if
immediately after such investment more than 15% of the Fund's net assets (taken at
market value) would be invested in such securities. For this purpose, illiquid
securities include (a) securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available market,
(b) participation interests in loans that are not subject to puts; and (c)
repurchase agreements not terminable within seven days. See "Repurchase
Agreements" above. Securities that have legal or contractual restrictions on
resale but have a readily available market are not deemed illiquid for purposes of
this limitation.
INVESTMENT RESTRICTIONS
The Statement of Additional Information contains more information on the
Fund's Investment Policies, and also identifies the restrictions on the Fund's
investment activities, which provide among other things that the Fund may not:
(1) with respect to 75% of its total assets, invest more than 5% of its
total assets taken at market value in the securities of any one
issuer (excluding U.S. Government securities but including
securities subject to repurchase agreements) or purchase more than
10% of the outstanding voting securities of any single issuer.
(2) purchase the securities of issuers conducting their principal
business activity in the same industry immediately after the
purchase and as a result thereof, the value of the investments of
the Fund in that industry would exceed 25% of the current value of
the total assets of the Fund, except that there is no limitation
with respect to investments in obligations of the United States
Government, its agencies or instrumentalities which are backed by
the full faith and credit of the United States.
(3) borrow money, except that it may borrow from banks as a temporary
measure for emergency purposes where such borrowing would not
exceed 5% of the total assets (including amounts borrowed) taken at
market value. The Fund shall not purchase securities while such
borrowings are outstanding.
********
The investment restrictions referred to above are fundamental and may be
changed only when permitted by law and approved by a majority of the outstanding
voting securities of the Fund. As used in this Prospectus, such approval means
approval by the lesser of (i) the holders of 67% or more of the shares represented
in a meeting if the holders of more than 50% of the outstanding shares are present
in person or by proxy or (ii) the holders of more than 50% of the outstanding
shares.
MANAGEMENT OF THE FUND
The property, affairs and business of the Fund are managed by the Board of
Trustees. The Trustees elect officers who are charged with the responsibility for
the day-to-day operations of the Fund and the execution of policies formulated by
the Trustees.
Investment Adviser
The Trust retains HSBC Asset Management Americas Inc. to act as the
investment adviser for the Fund. HSBC Asset Management Americas Inc. is the North
American investment affiliate of HSBC Holdings plc (Hongkong and Shanghai Banking
Corporation) and Marine Midland Bank and is located at 250 Park Avenue, New York,
New York 10177. At December 31, 1995, the Adviser managed over $___ billion of
assets of individuals, pension plans, corporations and institutions.
Mr. Stanley D. Vyner, Chief Executive Officer of HSBC Americas, is
responsible for the day-to-day management of the Fund's portfolio. Prior to his
present position, Mr. Vyner was Chief Operating and then Chief Executive Officer
of HSBC Life, Hong Kong from 1990 until 1993.
Pursuant to the Advisory Contract, the Adviser furnishes continuous
investment guidance to the Trust consistent with the Fund's investment objective
and policies and provides administrative assistance in connection with the
operation of the Fund. Information regarding the investment performance of the
Fund will be contained in the Fund's Annual Report and may be obtained, without
charge, from the Trust.
Sub-Advisers
The Adviser retains HSBC Asset Management Europe Ltd. ("HSBC Europe"), HSBC
Asset Management Hong Kong Ltd. ("HSBC Hong Kong"), HSBC Asset Management (Japan)
KK ("HSBC Japan"), HSBC Singapore and HSBC Asset Management Australia Limited
("HSBC Australia") to act as sub-advisers (the "Sub-Advisers") to the Fund. HSBC
Europe, HSBC Hong Kong, HSBC Japan, HSBC Singapore and HSBC Australia along with
the Adviser are all investment advisory affiliates of HSBC Holdings plc (Hongkong
and Shanghai Banking Corporation).
HSBC Europe is the European investment arm of HSBC Asset Management and
manages equity and balanced portfolios with an emphasis on the markets of the
United Kingdom and other major European securities markets. HSBC Europe also
manages global fixed income portfolios, HSBC Europe manages separate accounts for
pension plans, corporations, bank trust divisions, endowments and foundations and
provides continuous supervision for the entire James Capel family of Unit
Investment Trusts. Total assets managed by HSBC Europe amount to approximately
U.S. $16.3 billion. Its principal offices are located at 6 Beview Marks, London,
EC3A, 7QP, England.
HSBC Hong Kong is the Asia Pacific investment arm of HSBC Asset Management.
HSBC Hong Kong manages approximately U.S. $9.2 billion of equity portfolios
dedicated to the Pacific Rim, Pacific Basin and the emerging markets of Southeast
Asia. HSBC Hong Kong was founded in 1973 and has its principal business address
at 10/F Citibank Tower, 3 Garden Road, Hong Kong. It is one of the largest
investment managers in the Asia Pacific region, managing accounts for
corporations, pension plans and the full-line of Wardley Unit Investment Trusts.
Mr. Terence F. Mahony, Chief Investment Officer of Global Emerging Markets, HSBC
Hong Kong, will play a significant role in management of the emerging markets
component of the Fund's portfolio.
HSBC Japan provides a full range of investment services to clients
investing in Japanese securities and Japanese investors investing domestically or
internationally. HSBC Japan has its principal office at 6/F No. 2 Tomoecho Annex,
3-8-27 Toranomon Minato-ku, Tokyo, Japan.
[DESCRIBE HSBC SINGAPORE]
HSBC Australia is one of the largest fund managers in Australia offering a
full range of investment services to superannuation funds, public bodies,
corporations, trusts, charities, high-net-worth individuals and unit trusts for
smaller investors. HSBC Australia has its principal address at P.O. Box 291,
Market Street, Melbourne, Victoria 3000, Australia.
Under its Sub-Advisory Contract with the Adviser, each Sub-Adviser will
undertake at its own expense to furnish the Fund and the Adviser with micro- and
macroeconomic research, advice and recommendations, and economic and statistical
data, with respect to the Fund's investments, subject to the overall review by the
Adviser and the Board of Trustees.
Banking Laws
Messrs. Baker & McKenzie, counsel to the Trust and special counsel to the
Adviser, have advised HSBC Americas that HSBC Americas may perform the services
for the Fund contemplated by the Advisory Contract without violation of the Glass-
Steagall Act or other applicable banking laws or regulations. Such counsel has
pointed out, however, that this question has not be authoritatively determined and
that judicial or administrative decisions or interpretations of present Federal or
state statutes and regulations relating to the permissible activities of banks or
trust companies and their subsidiaries or affiliates, as well as future changes in
Federal or state statutes and regulations and judicial or administrative decisions
or interpretations thereof, could prevent HSBC Americas from continuing to perform
such services for the Fund.
If HSBC Americas were prohibited from performing any of its services for
the Trust, it is expected that the Board of Trustees would recommend to the Fund's
shareholders that they approve new agreements with another entity or entities
qualified to perform such services and selected by the Board.
Sponsor and Distributor
BISYS Fund Services, the Sponsor and Distributor, has its principal office
at 3435 Stelzer Road, Columbus, Ohio 43219. As Distributor, BISYS Fund Services
will receive orders for, sell, and distribute shares of the Fund. FundMark
Investment Company Services, Inc. ("FundMark"), having its principal office at
1225 Seventeenth Street, Denver, Colorado 80202 will act as exclusive Sub-
Distributor.
Shareholder Servicing Agent
The Trust retains HSBC Americas to act as shareholder servicing Agent of
the Fund in accordance with the terms of the Shareholder Servicing Agreement.
Pursuant to the Shareholder Servicing Agreement, HSBC Americas (i) assists and
trains third parties who deliver prospectuses and Fund applications, (ii) assists
and trains third parties who assist customers with completing Fund applications,
(iii) conducts customer education, reviews Fund written communications and assists
third parties who answer customer questions, (iv) organizes and conducts
investment seminars to enhance understanding of the Fund and its objectives, (v)
assists third parties who effect customer purchases and redemptions and (vi)
assists and supervises the activities of Participating Organizations.
For its services as Shareholder Servicing Agent, HSBC Americas is paid an
annual fee equal to 0.04% of average daily net assets.
Administrator
The Trust retains BISYS Fund Services ("BISYS") to act as the Administrator
of the Fund in accordance with the terms of the Management and Administration
Agreements. Pursuant to the Management and Administration Agreements, BISYS, at
its expense, generally supervises the operation of the Trust and the Fund by
reviewing the expenses of the Fund monthly to ensure timing and accuracy of the
Fund's operating expense budget and by providing administrative personnel, office
space and administrative services reasonably necessary for the operation of the
Trust and the Fund, other than those services which are provided by HSBC Americas
pursuant to the Advisory Contract. BISYS also maintains the books and records of
the Fund's portfolio transactions.
The Trust also retains HSBC as Co-Administrator. Pursuant to the Co-
Administration Services Contract, HSBC Americas (i) manages the Fund's
relationship with BISYS, FundMark and State Street Bank and Trust, (ii) assists
with negotiation of contracts with service providers and supervises the activities
of those service providers, (iii) serves as a liaison with Fund trustees, and (iv)
assists with general product management and oversight. For its services as a Co-
Administrator, HSBC Americas is paid an annual fee equal to 0.03% of the Fund's
average daily net assets.
Servicing Agreements
The Fund may enter into agreements (the "Servicing Agreement") with certain
banks, financial institutions and corporations (the "Participating Organizations")
so that each Participating Organization handles recordkeeping and provides certain
administrative services for its customers who invest in the Fund through accounts
maintained at that Participating Organization. In such cases the Participating
Organization or one of its nominees will be the shareholder of record as nominee
for its customers and will maintain subaccounts for its customers. In addition,
the Participating Organization will credit cash distributions to each customer
account, process purchase and redemption requests, mail statements of all
transactions with respect to each customer and, if required by law, distribute the
Trust's shareholder reports and proxy statements. However, any customer of a
Participating Organization may become the shareholder of record upon written
requests to its Participating Organization or BISYS, as transfer agent. Each
Participating Organization will receive monthly payments which in some cases may
be based upon expenses that the Participating Organization has incurred in the
performance of its services under the Servicing Agreement. The payments will not
exceed, on an annualized basis, an amount equal to 0.25% of the average daily
value during the month of Fund shares in the subaccount of which the Participating
Organization is record owner as nominee for its customers. Such payments will be
separately negotiated with each Participating Organization and will vary depending
upon such factors as the services provided and the costs incurred by each
Participating Organization.
The payments will be made by the Fund to the Participating Organizations
pursuant to the Servicing Agreements. The Board of Trustees will review, at least
quarterly, the amounts paid and the purposes for which such expenditures were made
pursuant to the Servicing Agreements.
Under separate agreements, HSBC Americas (not the funds) may make
supplementary payments from its own revenues to a Participating Organization that
agrees to perform services such as advising customers about the status of their
subaccounts, the current yield and dividends declared to date and providing
related services a shareholder may request. Such payments will vary depending
upon such factors as the services provided and the cost incurred by each
Participating Organization.
Distribution Plan and Agreement
The Board of Trustees of the Trust has adopted a Distribution Plan and
Agreement (the "Plan") for the shares pursuant to Rule 12b-1 of the Investment
Company Act of 1940, as amended, after having concluded that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. The Plan
provides for a monthly payment by the Fund to reimburse FundMark in such amounts
that they may request for expenses such as the printing and distribution of
prospectuses sent to prospective investors, the preparation, printing and
distribution of sales literature and expenses associated with media advertisements
and telephone services and other direct and indirect distribution-related
expenses, including the payment of a monthly fee to FundMark for rendering
distribution-related asset introduction and asset retention services. FundMark
may also make payments to other broker-dealers or financial institutions for their
assistance in distributing shares of the Fund and otherwise promoting the sale of
the Fund's shares. The total monthly payment is based on the Fund's shares
average daily net asset value during the preceding month and is calculated at an
annual rate not to exceed 0.35% for Class A shares and 0.75% for Class C shares.
The Plan provides for FundMark to prepare and submit to the Board of
Trustees on a quarterly basis written reports of all amounts expended pursuant to
the Plan and the purpose for which such expenditures were made. The Plan may not
be amended to increase materially the amount spent for distribution expenses
without approval by a majority of the Fund's outstanding shares subject to the
Plan and approval of a majority of the non-interested Trustees. Distribution
expenses incurred in one year will not be carried forward into and reimbursed in
the next year for actual expenses incurred in the previous year.
Fees and Expenses
The Fund pays HSBC Americas as compensation for its advisory services a
monthly fee equal to an annual rate of ____% of average daily net assets. As
compensation for its administrative services, BISYS receives from the Fund a
monthly fee equal to an annual rate of ____% of the average daily net assets. As
Distributor, BISYS/FundMark is paid a fee of ____% by the Fund, and is reimbursed
for certain distribution expenses described above under "Distribution Plan and
Agreement". As compensation for their services, the Sub-Advisers receive fees
from HSBC Americas at an annual rate not to exceed ____% of the average net assets
of the Fund. HSBC Americas and the Sub-Advisers may agree in advance not to
impose a portion of their fees in the future.
Investors who purchase and redeem shares of the Fund through a customer
account maintained at a Participating Organization may be charged one or more of
the following types of fees by Participating Organizations, as agreed upon by the
Participating Organization and the investor, with respect to the customer services
provided by the Participating Organization: account fees (a fixed amount per month
or per year); transaction fees (a fixed amount per transaction processed);
compensating balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or account maintenance fees (a
periodic charge based upon a percentage of the assets in the account or of the
dividends paid on those assets).
TRANSACTIONS WITH AFFILIATES
Broker-dealers which are affiliates of HSBC Americas may act as brokers for
the Fund. At all times, however, their commissions, fees or other charges must be
reasonable and fair in comparison with those that would be paid to unaffiliated
firms for comparable transactions. The Fund will not do business with nor pay
commissions to affiliates of HSBC Americas in any portfolio transactions where
they act as principal. In placing orders for the purchase and sale of portfolio
securities, the Fund seeks the best execution at the most favorable price,
considering all of the circumstances.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share for the purpose of pricing purchase
and redemption orders is determined at 4:15 p.m. (Eastern time) on each day the
Fund's transfer agent is open for business. The net asset value will not be
computed on the following holidays: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving and Christmas. The net asset value per
share of the Fund is computed by dividing the value of the net assets of the Fund
(i.e., the value of the assets less the liabilities) by the total number of shares
outstanding. All expenses, including the management, advisory, sub-advisory and
administrative fees, are accrued daily and taken into account for the purpose of
determining the net asset value.
Portfolio securities are valued at the last quoted sales price as of the
close of business on the day the valuation is made, or lacking any sales, at the
mean between closing bid and asked prices. Price information on listed securities
is taken from the exchange where the security is primarily traded. The value for
each unlisted security is based on the last trade price for that security on a day
in which the security is traded. The value of each security for which readily
available market quotations exist will be based on a decision as to the broadest
and most representative market for such security. Options on stock indices traded
on national securities exchanges are valued at the close of options trading on
such exchanges (which is currently 4:10 p.m., Eastern time). Stock index futures
and related options, which are traded on commodities exchanges, are valued at
their last sale price as of the close of such exchanges (which is currently 4:15
p.m., Eastern time). Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by the
Trustees. Securities may be valued on the basis of prices provided by a pricing
service when such prices are believed to reflect the fair market value of such
securities. Short-term investments are valued at amortized cost, which
approximates market value. The Board of Trustees has determined in good faith
that amortized cost equals fair market value. All assets and liabilities
initially expressed in foreign currencies will be translated into U.S. dollars at
the bid price of such currencies against U.S. dollars last quoted by a major bank
or broker. If such quotations are not available as of the close of the New York
Stock Exchange, the rate of exchange will be determined in accordance with
policies established in good faith by the Board of Trustees.
PURCHASE OF SHARES
Shares of the Fund are offered on a continuous basis at net asset value,
plus any applicable sales charge, by BISYS and FundMark as an investment vehicle
for institutions, corporations, fiduciaries and individuals. Prospectuses and
sales material can be obtained from BISYS or FundMark.
The minimum initial investment requirement for the Fund is $1,000. The
minimum subsequent investment requirement is $50. There are no minimum investment
requirements with respect to investments effected through certain automatic
purchase and redemption arrangements on behalf of customer accounts maintained at
Participating Organizations. The minimum investment requirements may be waived or
lowered for investments effected on a group basis by certain other institutions
and their employees, such as pursuant to a payroll deduction plan. All funds will
be invested in full and fractional shares. The Trust reserves the right to reject
any purchase order. Compensation to salespersons may vary depending upon whether
Class A or Class C shares are sold.
Orders for Class A shares of the Fund will be executed at the net asset
value per share next determined after receipt of an order by the dealer, plus a
sales charge varying with the amount invested in accordance with the following
schedule:
Reallowance to
Service
Total Sales Load Organizations
____________________________________ _______________
As a % of Net As a % of
As a % of Offering Asset Value Per Offering Price
Price Per Share Share Per Share**
__________________ __________________ _______________
Less than $50,000 4.50% ____%
4.00%
$50,000 but less than $100,000 4.00% ____%
3.50%
$100,000 but less than $250,000 3.50% ____%
3.00%
$250,000 but less than $500,000 3.00% ____%
2.50%
$500,000 but less than $1 million 2.50% ____%
2.00%
$750,000 but less than $1 million 2.00% ____%
1.50%
$1 million and above 0.00%* 0.00%*
0.00%*+
* Purchases of $1 million or more are subject to a CDSC. (See below.) FundMark
may make payments to Participating Dealers in amounts up to 1.00% of the Offering
Price.
** The Distributor may, in its discretion, permit Participating Dealers to retain
the full amount of the sales charge in connection with certain sales.
+ Commission is payable by FundMark as discussed below.
The sales charge applicable to the purchase of Class A shares will be
waived on the following purchases: (1) purchases by Trustees and officers of the
Trust and of Mariner Funds Trust, and members of their immediate families
(parents, spouses, children, brothers and sisters), (2) purchases by directors,
employees and retirees of Marine Midland Bank and its affiliates, and members of
their immediate families, (3) purchases by financial institutions or corporations
on behalf of their customers or employees, or on behalf of any trust, pension,
profit-sharing or other benefit plan for such customers or employees, (4)
purchases by directors and employees of BISYS or FundMark and its affiliates and
members of their immediate families, (5) purchases by charitable organizations as
defined in Section 501(c)(3) of the Internal Revenue Code ("Charitable
Organizations") or for charitable remainder trusts or life income pools
established for the benefit of Charitable Organizations, (6) purchases by
registered representatives of selling brokers and members of their immediate
families, (7) purchases by individuals who have terminated their Employee Benefit
Trust ("EBT") Plan or have retired and are purchasing shares in the Fund with the
proceeds of their benefits checks (the EBT Plan must currently own shares of the
Fund at the time of the individual's purchase), (8) purchases by corporations,
their officers or directors, partnerships, and their partners which are customers
or prospective customers of Marine Midland Bank when authorized by an officer of
Marine Midland Bank, (9) purchases through registered investment advisors, or
mutual fund "wrap" or asset allocation programs, and (10) purchases by individuals
who, as determined by an officer of the Fund in accordance with guidelines
established by the Fund's Trustees, have purchased shares under special
circumstances not involving sales expenses to dealers or the Distributor.
Eligible investors should contact HSBC Americas for details.
The sales loads do not apply in any instance to reinvested dividends.
BISYS or FundMark, at its expense, may provide additional promotional
incentives to dealers. In some instances, these incentives may be limited to
certain dealers who have sold or may sell significant numbers of shares of any of
the Funds of Mariner Mutual Funds Trust or Mariner Funds Trust.
Although must shareholders elect not to receive stock certificates,
certificates for full shares can be obtained on specific written request to the
transfer agent. No certificates are issued for fractional shares. It is
considerably more complicated to redeem shares held in certificate form, and the
Expedited Redemption Service described below is not available with respect to
those shares.
Right of Accumulation
The Fund offers to all shareholders a right of accumulation under which
any shareholder may purchase shares of the Fund at the offering price applicable
to the total of (a) the dollar amount then being purchased plus (b) an amount
equal to the offering price of the shareholder's combined holdings of the shares
of the Fund. For the right of accumulation to be exercised, a shareholder must
provide at the time of purchase confirmation of the total number of shares of the
Fund owned by such shareholder. Acceptance of the purchase order is subject to
such confirmation. The right of accumulation may be amended or terminated at any
time on sixty days notice to shareholders. Shares held in the name of a nominee
or custodian under pension, profit-sharing, or other employee benefit plans may
not be combined with other shares held in the name of such nominee or custodian
for other plans to qualify for the right of accumulation.
Letter of Intent
By initially investing at least $1,000 and submitting a Letter of Intent
to the transfer agent, a "single purchaser" may purchase shares of the Fund and
other eligible Mariner Funds (other than Money Market Funds) during a 13-month
period at the reduced sales charge rates applying to the aggregate amount of the
intended purchases stated in the Letter. The Letter may apply to purchases made
up to 90 days before the date of submission of the Letter. Dividends and
distributions of capital gains paid in shares of the Fund at net asset value will
not apply towards the completion of the Letter of Intent. For further details,
including escrow provisions, see the Letter of Intent. The Fund reserves the
right to amend, suspend or cease offering this program at any time.
As disclosed above, no sales charge will be payable at the time of
purchase of Class A shares on investments of $1 million or more. However, a CDSC
will be imposed on such investments in the event of a redemption of such Class A
shares within 12 months following the purchase, at the rate of 1.00% of the lesser
of the current market value of the shares redeemed or the total cost of such
shares. In determining whether a CDSC is payable, and, if so, the amount of the
fee or charge, it is assumed that shares not subject to such fee or charge are the
first redeemed, followed by other shares held for the longest period of time.
Purchase of Class C Shares
Class C shares may be purchased at the net asset value per share and such
shares are subject to a 1.00% CDSC for shares that are redeemed within one year of
purchase. FundMark will make payments to the Participating Dealers that handle
the purchases of such shares at the rate of 1.00% of the purchase price of such
shares at the time of purchase and expects to reallocate a portion of its
distribution fee, with respect to such shares, under the Rule 12b-1 Plan for such
class of shares.
A shareholder who has redeemed Class A shares may reinvest up to the full
amount redeemed (less any CDSC) at net asset value at the time of the reinvestment
in Class A shares without payment of a sales charge. A shareholder who has
redeemed Class C shares and paid a CDSC upon such redemption, may reinvest up to
the full amount redeemed (less the CDSC) and the Class C shares obtained through
such reinvestment are not subject to any sales charge. Purchases through the
reinvestment privilege are subject to the minimum investment requirements
applicable to the Class A or Class C shares being purchased. The reinvestment
privilege as to any specific Class A or Class C shares must be effected within 60
days of the redemption. The Transfer Agent must receive from the shareholder or
the shareholder's Participating Dealer both a written request for reinvestment and
a check or wire which does not exceed the redemption proceeds. The written
request must state that the reinvestment is made pursuant to this reinvestment
privilege. If a loss is realized on the redemption of Class A shares, the
reinvestment may be subject to the "wash sale" rules if made within 30 days of the
redemption, resulting in a postponement of the recognition of such loss for
federal income tax purposes. The reinvestment privilege may be terminated or
modified at any time.
Prospective investors who wish to obtain additional information
concerning investment procedures should contact BISYS or FundMark at: (800) ___-
____.
Purchase By Wire
1. Telephone: BISYS at (800) ___-____. Give the name(s) in which the
Fund shares are to be registered, address, social security or tax identification
number (where applicable), dividend payment election, amount to be wired, name
of the wiring bank and name and telephone number of the person to be contacted in
connection with the order. An account number will be assigned. Please note your
bank will normally charge you a fee for handling this transaction.
2.
Instruct the wiring bank to transmit the
specified amount in Federal funds ($1,000
or more) to:
BISYS
____________________
ABA Routing No. 031000053
Credit: Mariner Purchase Account
DDA No. ____________
Fund Name and Account Number
Shareholder(s) Names(s) and account
number
3.
Fill in a Purchase Application and mail
to:
Mariner Mutual Funds Trust
c/o BISYS
P.O. Box ____
[ADDRESS]
A COMPLETED PURCHASE APPLICATION MUST BE RECEIVED BY THE TRANSFER AGENT BEFORE THE
EXPEDITED REDEMPTION SERVICE CAN BE USED.
Purchase By Mail
1.
Complete a Purchase Application.
Indicate the services to be used.
2.
Mail the Purchase Application and a
check for $1,000 or more, payable to the Fund
to BISYS at the
address
set forth above.
Additional Purchases By Wire and Mail
Additional purchases of shares may be made by wire by telephoning BISYS
(see "Purchase by Wire") and then instructing the wiring bank to transmit the
amount ($50 or more) of any additional purchase in Federal funds to [BANK] as set
forth above along with your account name and number. Additional purchases may
also be made by mail by making a check ($50 or more) payable to the Fund
indicating your fund account number on the check and mailing it to BISYS at the
address set forth above.
Purchase through Customer Accounts
Purchases of shares also may be made through customer accounts
maintained at Participating Organizations, including qualified Individual
Retirement and Keogh Plan accounts. Purchases will be made through a customer's
account only as directed by or on behalf of the customer on a direction form
executed prior to the customer's first purchase of shares of the Fund. For
example, a customer with an account at a Participating Organization may instruct
the Participating Organization to invest money in excess of a level agreed upon
between the customer and the Participating Organization in shares of the Fund
periodically or give other instructions to the Participating Organization within
limits prescribed by that Participating Organization.
Automatic Investment Plan
Investors may make regular monthly investments of $50 or more in
shares automatically from a checking or savings account if their bank is a member
of automated clearing house (ACH). Upon written authorization, BISYS will
electronically debit the investor's checking or savings account each month and use
the proceeds to 'II electronically debit the investor's checking or savings
account each month and use the proceeds to purchase shares for the investor's
account.
Approval by the investor's bank is required, so that establishment
of a program may require at least 30 days. The authorized amount and/or bank
information may be changed or the program terminated at any time by writing to
BISYS. A reasonable period (usually up to 15 days) may be required after receipt
of such instructions to implement them. The purchase application contains the
requirements applicable to this plan. The Trust reserves the right to amend,
suspend or cease offering this program at any time without prior notice.
REDEMPTION OF SHARES
Upon receipt by the Transfer Agent of a redemption request in
proper form ($50 minimum), shares of the Fund will be redeemed at their next
determined net asset value. See "Determination of Net Asset Value". A CDSC of
1.00% will be imposed on certain Class A shares that were purchased without
payment of the initial sales charge due to the size of the purchase and are
redeemed within one year of purchase and will be imposed on Class C shares that
are redeemed within one year of purchase. See "Purchase of Shares". The CDSC
will be imposed on the lesser of the current market value or the total cost of the
shares being redeemed. In determining whether either of such CDSCs is payable,
and, if so, the amount of the charge, it is assumed that shares not subject to
such charge are the first redeemed followed by other shares held for the longest
period of time. For the shareholder's convenience, the Trust has established
several different direct redemption procedures. Redemptions of shares purchased
by check will be effected immediately upon clearance of the purchase check, which
may take up to 15 days after those shares have been credited to the shareholder's
account. A redemption of shares is a taxable transaction on which gain or loss
may be recognized for tax purposes.
The Fund reserves the night to redeem (on 30 days' notice) accounts
whose values shareholders have reduced to $50 or less.
Redemption By Mail
1. Complete a letter of instruction indicating the Fund, the
account number and either the dollar amount or number of shares to be redeemed.
Refer to the shareholder's Fund account number.
2. Sign the letter in exactly the same way the account is
registered. If there is more than one owner of the shares, all must sign.
3. If shares to be redeemed have a value of $5,000 or more, the
signature(s) must be guaranteed by a bank, trust company, broker, dealer, credit
union, securities exchange or, association, clearing agency or savings associ
ation. Signature guarantees by notaries public are not acceptable. Further
documentation, such as copies of corporate resolution and instruments of
authority, may be requested from corporations, administrators, executors, personal
representatives, trustees or custodians to evidence the authority of the person or
entity making the redemption request.
4. If shares to be redeemed are held in certificate form,
enclose the certificates with the letter. Do not sign the certificates and for
protection use registered mail.
5. Mail the letter to BISYS at the address set forth under
"Purchase of Shares".
Checks for redemption proceeds will normally be mailed
within seven days to the shareholder's address of record.
Upon request, the proceeds of a redemption amounting to $1,000 or
more will be sent by wire to the shareholder's predesignated bank account. When
proceeds of a redemption are to be paid to someone other than the shareholder,
either by wire or check, the signature(s) on the letter of instruction must be
guaranteed regardless of the amount of the redemption.
Redemption By Expedited Redemption Service
If shares are held in book credit form and the Expedited Redemption
Service has been elected on the Purchase Application on file with the Trust's
transfer agent, redemption of shares may be requested on any day the transfer
agent is open for business by telephone or letter. A signature guarantee is not
required.
1. Telephone the request to BISYS at (800) ___-____; or
2. Mail the request to BISYS at the address set forth under
"Purchase of Shares".
Proceeds of Expedited Redemptions of $1,000 or more will be wired
to the shareholder's bank indicated in the Purchase Application. If an Expedited
Redemption request is received by the Trust's transfer agent by 4:00 p.m. (New
York City time) on a day the transfer agent is open for business, the redemption
proceeds will be transmitted to the shareholder's bank on the next business day.
A check for proceeds of less than $1,000 will be mailed to the shareholder's
address of record.
The Fund's transfer agent, BISYS, employs reasonable procedures to
confirm that instructions communicated by telephone are genuine. If the transfer
agent fails to employ such reasonable procedures, the transfer agent may be liable
for any loss, damage or expense arising out of any telephone transactions
purporting to be on a shareholder's behalf. In order to assure the accuracy of
instructions received by telephone, the transfer agent requires some form of
personal identification prior to acting upon instructions received by telephone,
records telephone instructions and provides written confirmation to investors of
such transactions.
Systematic Withdrawal Plan
An owner of $ 10,000 or more of shares of the Fund may elect to
have periodic redemptions from his account to be paid on a monthly basis. The
minimum periodic payment is $50. A sufficient number of shares to make the
scheduled redemption will be redeemed on the first or the fifteenth day of the
month. Redemptions for the purpose of making such payments may reduce or even
exhaust the account if your monthly checks exceed the dividend, interest and
capital appreciation, if any, on your shares. A shareholder may request that
these payments be sent to a predesignated bank or other designated party.
Shareholders holding share certificates are not eligible to establish a Systematic
Withdrawal Plan because share certificates must accompany all withdrawal requests.
Amounts paid to you pursuant to the Systematic Withdrawal Plan are
not a return on your investment. Payments to you pursuant to the Systematic
Withdrawal Plan are derived from the redemption of shares in your account and is a
taxable transaction on which gain or loss may be recognized for Federal, state and
city income tax purposes.
Reinstatement Privilege
A shareholder in the Fund who has redeemed shares may reinvest,
without a sales charge, up to the full amount of such redemption at the net asset
value determined at the time of the reinvestment within 60 days of the original
redemption. This privilege must be effected within 60 days of the redemption and
the investor at the time of purchase must provide the number of shares redeemed
within the 60 day period. The shareholder must reinvest in the same Fund and
account from which the shares were redeemed.
Redemption through Customer Accounts
Investors who purchase shares through customer accounts maintained
at Participating Organizations may redeem those shares only through the
Participating Organization. In some cases, a customer may instruct the
Participating Organization which maintains the account through which the customer
purchases shares to redeem shares periodically as required to bring the customer's
account balance up to a level agreed upon between the customer and the
Participating Organization. If a redemption request with respect to such an
automatic redemption arrangement is received by the transfer agent by 4:00 p.m.
(Eastern time) on a day the transfer agent is open for business, the redemption
proceeds will be transmitted on the next business day to the investor's customer
account (unless otherwise specified by the Participating Organization).
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to distribute annually substantially all of its
net investment income in the form of dividends. The Fund pays dividends and
distributes net capital gains, if any, at least once annually. The Fund's
dividend and capital gains distributions may be reinvested in additional shares or
received in cash.
In order to satisfy certain annual distribution requirements of the
Internal Revenue Code (the "Code"), the Fund may declare special dividend and
capital gains distributions during October, November or December as of a record
date in such a month. Such distributions, if paid to shareholders in the
following January, are deemed for Federal income tax purposes to have been paid by
the Fund and received by shareholders on December 31 of the prior year.
The Fund will be treated as a separate entity for Federal income
tax purposes, notwithstanding that it is one of multiple series of the Trust. The
Fund has elected to be treated and intends to qualify, as a regulated investment
company for each taxable year by complying with the provisions of the Code
applicable to regulated investment companies so that it will not be liable for
Federal income tax with respect to its net investment income and net realized
capital gains distributed to shareholders in accordance with the timing
requirements of the Code. The Fund intends to distribute substantially all of its
net investment income and net realized capital gains to its shareholders for each
taxable year.
Dividends derived from the Fund's taxable net investment income (if
any) and the excess of net short-term capital gain over net long-term capital loss
will be taxable to the Fund's shareholders as ordinary income, whether such
dividends are invested in additional shares or received in cash.
Distributions of the excess of net long-term capital gain over net
short-term capital loss designated by the Fund as capital gain dividends will be
taxable as long-term capital gains, regardless of how long a shareholder has held
his Fund shares, whether they are invested in additional shares or received in
cash. Dividends and distributions will generally not qualify for the dividends-
received deduction for corporations.
Any gain or loss realized on the redemption or exchange of Fund
shares by a shareholder who is not a dealer in securities will be treated as long-
term capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the redemption or exchange of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
long-term capital gain distributions received by the shareholder with respect to
such shares.
Foreign exchange gains and losses realized by the Fund in
connection with certain transactions involving foreign currency denominated debt
securities or payables or receivables denominated in a foreign currency are
subject to Section 988 of the Code which causes such gains and losses to be
treated as ordinary income and losses rather than capital gains and losses and may
affect the amount, timing and character of distributions to shareholders.
If the Fund invests in certain "passive foreign investment
companies" ("PFICs") which do not distribute their income on a regular basis, it
could be subject to Federal income tax (and possibly additional interest charges)
on a portion of any "excess distribution" or gain from the disposition of such
shares even if it distributes such income to its shareholders. If the Fund elects
to treat the PFIC as a "qualified electing fund" ("QEF") and the PFIC furnishes
the Fund certain financial information in the required form, the Fund would
instead be required to include in income each year a portion of the ordinary
earnings and net capital gains of the QEF, regardless of whether received, and
such amounts would be subject to the various distribution requirements described
above.
It is expected that dividends and interest from non-U.S. sources
received by the Fund will be subject to non-U.S. withholding taxes. Such
withholding taxes may be reduced or eliminated under the terms of applicable
United States income tax treaties, and the Fund intends to undertake any
procedural steps required to claim the benefits of such treaties. With respect to
any non-U.S. taxes (including withholding taxes) actually paid by the Fund, if
more than 50% in value of the Fund's total assets at the close of any taxable year
consists of stocks or securities of any non-U.S. corporations, the Fund may elect
to treat any non-U.S. taxes paid by it as paid by its shareholders. If the Fund
does not make the election permitted under Section 853, any foreign taxes paid or
accrued will represent an expense to the Fund which will reduce its investment
company taxable income. Absent this election, shareholders will not be able to
claim either a credit or a deduction for their pro rata portion of such taxes paid
by the Fund, nor will shareholders be required to treat as part of the amounts
distributed to them their pro rata portion of such taxes paid.
In the event the Fund makes the election described above to pass
through non-U.S. taxes to shareholders, shareholders will be required to include
in income (in addition to any distributions received) their proportionate portion
of the amount of non-U.S. taxes paid by the Fund and will be entitled to claim
either a credit or deduction for their portion of such taxes in computing their
U.S. Federal income tax liability. Availability of such a credit or deduction is
subject to certain limitations. Shareholders will be informed each year in which
the Fund makes the election regarding the amount and nature of foreign taxes to be
included in their income for U.S. Federal income tax purposes.
Each year the Fund will notify shareholders of the Federal income
tax status of its dividends and distributions. Depending on the residence of the
shareholder for tax purposes, such dividends and distributions may also be subject
to state, local or foreign tax consequences of ownership of Fund shares in their
particular circumstances.
Shareholders who are not U.S. persons under the Code should also
consult their tax advisers as to the possible application of U.S. taxes, including
a 30% U.S. withholding tax (or lower treaty rate) on dividends.
The Fund is required to report to the IRS all distributions of
taxable dividends and of capital gains, as well as the gross proceeds of share
redemptions. The Fund may be required to withhold Federal income tax at a rate of
31 % ("backup withholding") from taxable dividends (including capital gain
dividends) and the proceeds of redemptions of shares paid to non-corporate
shareholders who have not furnished the Fund with a correct taxpayer
identification number and made certain required certifications or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. In addition, the Fund may be required to withhold Federal income tax
at a rate of 31 % if it is notified by the IRS or a broker that the taxpayer
identification number is incorrect or that backup withholding applies because of
underreporting of interest or dividend income.
All or a portion of a loss realized upon the redemption of shares
may be disallowed to the extent shares are purchased (including shares acquired by
means of reinvested dividends) within 30 days before or after such redemption.
Exchanges are treated as redemptions for Federal tax purposes.
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the exchange
will be reduced (or the gain increased) to the extent any sales charge paid to the
Fund on the exchanged shares reduces any sales charge the shareholder would have
owed upon purchase of the new shares in the absence of the exchange privilege.
Instead, such sales charge will be treated as an amount paid for the new shares.
ACCOUNT SERVICES
All transactions in shares of the Fund will be reflected in
confirmations for each shareholder and a quarterly shareholder statement. In
those cases where a Participating Organization or its nominee is shareholder of
record of shares purchased for its customer, the Trust has been a