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Rule 497(e)
Reg. Nos. 33-1312
811-4453
HSBC FUNDS TRUST
GOVERNMENT MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
CASH MANAGEMENT FUND
NEW YORK TAX-FREE MONEY MARKET FUND
(the "Funds")
SUPPLEMENT DATED DECEMBER 3, 1996
TO PROSPECTUS DATED APRIL 24, 1996
The following is a Supplement to the Funds' prospectus dated April 24, 1996
(the "Prospectus"). This Supplement should be read in conjunction with the
Prospectus.
Commercial paper purchased by the Fund will be, at the time of purchase,
rated (or issued by an issuer with a similar security rated) in the highest
short-term rating category by two or more NRSROs, or the only NRSRO rating the
security, or if unrated, determined to be of comparable credit quality by the
Adviser.
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The Cash Management may invest in Corporate Debt Securities and the New
York Tax-Free Fund may invest in Municipal Bonds which are rated "A" or better
by S & P or Moody's or receive comparable ratings from other NRSRO'S, or if not
rated are determined to be of comparable credit quality by the Adviser.
Bonds rated A by Moody's are judged to possess many favorable investment
attributes and are to be considered as "upper medium grade obligations".
Bonds rated A by S&P are regarded as upper medium grade, having a strong
capacity to pay interest and repay principal, although they are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Municipal bonds which are rated "A" by Moody's are judged to possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Municipal bonds rate "A" by S&P are regarded as upper medium grade. They
have considerable investment strength but are not entirely free from adverse
effects of changes in economic and trade conditions. Interest and principal are
regarded as safe.
In the event a security is downgraded after purchase by a Fund, the Adviser
will not consult the Fund's Board of Trustees unless the security is downgraded
to a level below that permitted for money market funds under Rule 2a-7 of the
1940 Act.
Each Fund may invest in shares of other open-end, management investment
companies that are money market funds reasonably believed to comply with Rule
2a-7 under the 1940 Act, subject to the limitations of the 1940 Act and subject
to such investments being consistent with the overall objective and policies of
the Fund making such investment, provided that any such purchases will be
limited to shares of unaffiliated investment companies. The purchase of
securities of other mutual funds results in duplications of expenses such that
investors indirectly bear a proportionate share of the expenses of such mutual
funds
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including operating costs, and investment advisory and administrative fees.
The Funds' diversification tests are measured at the time of initial
purchase, and calculated as specified in Rule 2a-7 of the 1940 Act, which may
allow the Funds to exceed the limits specified in the prospectus for certain
securities subject to guarantees or demand features.
