HSBC FUNDS TRUST
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HSBC FUND GROUP
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HSBC Asset Management (LOGO) [GRAPHIC OMITTED]
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Cash Management Fund
Government Money Market Fund
U.S. Treasury Money Market Fund
New York Tax-Free Money Market Fund
SEMI-ANNUAL REPORT (UNAUDITED)
June 30, 1996
Managed by:
HSBC ASSET MANAGEMENT AMERICAS INC.
Sponsored and distributed by:
BISYS FUND SERVICES
<PAGE>
HSBC FUNDS TRUST
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MONEY MARKET FUNDS
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HSBC Asset Management (LOGO) [GRAPHIC OMITTED]
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CASH MANAGEMENT FUND
GOVERNMENT MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
NEW YORK TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
July 22, 1996
Dear Shareholder:
Despite accelerated economic activity and a strong growth rate, the Federal
Reserve remained on the sidelines during the second quarter letting the market
take care of interest rates. As such, the short end of the market repriced
itself to reflect a 25 basis point tightening by the FOMC as one month deposits
traded at 5.45% versus the Federal Funds target of 5.25%. Economic activity was
led by strong employment data that reflected the creation of 220,000 new jobs
per month and an unemployment rate of only 5.6%. Additionally, strong consumer
purchases in the housing and automobile sectors and a solid string of retail
sales numbers have resulted in stronger than expected forecasts for second
quarter GDP growth with most economists now calling for numbers in the 4% range.
While economic activity remained strong, inflation pressures have remained
subdued outside of monthly average hourly earnings and energy prices. Commodity
prices especially in copper and wheat grabbed the headlines for a few weeks but
those inflations threats have all but diminished for now.
In summary, we expect the economy to continue to advance on a steady course. But
faster than expected growth in the second half of the year could bring about the
risk of accelerating inflation and higher interest rates.
Sincerely,
(/S/ Edward J. Merkle)
Edward J. Merkle
<PAGE>
BOARD OF TRUSTEES
JOHN P. PFANN* CHAIRMAN OF THE BOARD; Chairman and President,
JPP Equities, Inc.
WOLFE J. FRANKL* Former Director, North America, Berlin Economic
Development Corporation
WILLIAM L. KUFTA Chief Investment Officer, Beacon Trust Company
HARALD PAUMGARTEN President, Paumgarten and Company
ROBERT A. ROBINSON* Trustee, Henrietta and B. Frederick H. Bugher
Foundation
*Member of the Audit and Nominating Committees
- --------------------------------------------------------------------------------
OFFICERS
WILLIAM B. BLUNDIN CHIEF EXECUTIVE OFFICER
ANN E. BERGIN PRESIDENT
WILLIAM J. TOMKO VICE PRESIDENT
MARK E. NAGLE TREASURER
MARTIN R. DEAN ASSISTANT TREASURER
STEVEN R. HOWARD SECRETARY
ROBERT L. TUCH ASSISTANT SECRETARY
ALAINA V. METZ ASSISTANT SECRETARY
2
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION RATE DATE AMOUNT COST
------------- ----------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER (38.8%):
AUTOMOTIVE (4.6%):
A1+/P1 Mitsubishi Motors Credit America,
(Bank of Tokyo - Mitsubishi LOC) .............. 5.40% 7/8/96 $ 9,600,000 $ 9,589,920
------------
BANKING (16.4%):
A1+/P1 Banco National de Mexico, Nassau,
(Barclays Bank PLC, NY LOC) ................... 5.11 7/22/96 9,000,000 8,973,173
A1+/P1 Banco Mercantil del Norte, S.A.,
(Bayerische Vereinsbank, NY LOC) .............. 5.36 8/12/96 9,000,000 8,943,720
A1+/P1 Bancomer, S.A., (Bank of Montreal LOC) .......... 5.41 7/11/96 9,000,000 8,986,475
A1+/P1 National Bank of Pakistan, NY,
(Credit Suisse, NY LOC) ....................... 5.40 10/25/96 7,100,000 6,976,460
------------
33,879,828
------------
FINANCIAL SERVICES (13.5%):
A1/P1 Embarcadero Center Assoc. A,
(Dai-Ichi Kangyo Bank Ltd. LOC) ............... 5.42 7/15/96 10,000,000 9,978,922
A1+/P1 Goldman Sachs Group, L.P. ....................... 5.43 7/16/96 9,000,000 9,000,000
A1/P1 SRD Finance Inc.,
(Sumitomo Bank, Ltd., NY LOC) ................. 5.45 7/18/96 9,000,000 8,976,838
------------
27,955,760
------------
RAILROADS (4.3%):
A1/P1 Somerset Railroad Corp., (Chemical Bank LOC) .... 5.34 7/9/96 6,100,000 6,092,761
A1/P1 Somerset Railroad Corp., (Chemical Bank LOC) .... 5.45 7/23/96 2,800,000 2,790,674
------------
8,883,435
------------
TOTAL COMMERCIAL PAPER (Cost - $80,308,943) .......................................... 80,308,943
------------
CORPORATE NOTES (13.5%):
BANKING, INSURANCE & FINANCE (13.5%):
A1/P1 American Express Centurion Bank ................. 5.40* 4/30/97 9,000,000 9,000,000
A1/P1 Bank of America, Illinois Bank Note ............. 5.70 5/28/97 9,000,000 8,992,880
A1/P1 Merrill Lynch & Co., Inc. ....................... 5.45* 6/2/971 0,000,000 9,998,200
------------
TOTAL CORPORATE NOTES (Cost - $27,991,080) ........................................... 27,991,080
------------
MEDIUM TERM NOTES (1.9%):
FINANCIAL SERVICES (1.9%):
AI/PI Bear Stearns Companies, Inc. .................... 5.41* 11/7/96 4,000,000 4,000,000
------------
TOTAL MEDIUM TERM NOTES
(Cost - $4,000,000) ................................................................ 4,000,000
------------
</TABLE>
3
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION RATE DATE AMOUNT COST
------------- ----------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (18.6%):
AAA Federal Home Loan Bank .......................... 5.83%* 1/31/97 $20,000,000 $ 20,006,524
AAA Federal Home Loan Bank .......................... 5.52 7/1/96 18,400,000 18,400,000
------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost - $38,406,524) ............................................................... 38,406,524
------------
U.S. TREASURY BILLS (9.4%):
............................................... 4.93 2/6/97 10,000,000 9,698,722
............................................... 5.07 2/6/97 10,000,000 9,689,861
------------
TOTAL U.S. TREASURY BILLS (Cost - $19,388,583) ....................................... 19,388,583
------------
YANKEE CERTIFICATES OF DEPOSIT (9.2%):
BANKING (9.2%):
A1+/P1 Industrial Bank of Japan Ltd., NY ............... 5.43 7/12/96 10,000,000 10,000,031
A1/P1 Sanwa Bank Ltd., N.Y. ........................... 5.41 7/3/96 9,000,000 9,000,005
------------
TOTAL YANKEE CERTIFICATE OF DEPOSIT
(Cost - $19,000,036) ............................................................... 19,000,036
------------
TOTAL INVESTMENTS, AT VALUE
(Cost - $189,095,166) .............................................................. 189,095,166
------------
REPURCHASE AGREEMENTS (8.3%):
Chase Securities, Inc. (Collateralized by
20,040,000 FNMA, 6.00%, 7/1/24, market value
$17,352,000) .................................. 5.45 7/1/96 17,093,000 17,093,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost - $17,093,000) ............................................................... 17,093,000
------------
TOTAL (Cost-$206,188,166)(a) ............................................................ $206,188,166
============
<FN>
- --------------
Percentages indicated are based on net assets of $206,937,464.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based on bank prime rates or an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1996.
LOC Letter of Credit
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION RATE DATE AMOUNT COST
------------- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (88.6%):
AAA Federal Home Loan Bank .......................... 5.82%* 1/31/97 $10,000,000 $10,000,000
AAA Federal National Mortgage Assoc. ................ 5.18* 11/20/96 15,000,000 14,999,381
AAA Federal National Mortgage Assoc. ................ 5.30 12/26/96 10,490,000 10,509,726
AAA Federal National Mortgage Assoc. ................ 5.33* 8/1/97 20,000,000 20,002,896
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost - $55,512,003) ............................................................... 55,512,003
-----------
U.S. TREASURY BILLS (10.7%):
AAA ............................................... 5.38 5/1/97 7,000,000 6,681,982
-----------
TOTAL U.S. TREASURY BILLS (Cost - $6,681,982) ........................................ 6,681,982
-----------
TOTAL INVESTMENTS, AT VALUE
(Cost - $62,193,985) ............................................................... 62,193,985
-----------
REPURCHASE AGREEMENTS (0.7%):
Chase Securities, Inc. (Collateralized by 485,000
FNMA, 6.00%, 7/1/24, market value
$420,000) ..................................... 5.45 7/1/96 414,000 414,000
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost - $414,000) .................................................................. 414,000
-----------
TOTAL (Cost - $62,607,985)(a) ........................................................ $62,607,985
===========
<FN>
- --------------
Percentages indicated are based on net assets of $62,667,165.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based on bank prime rates or an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investments
is the rate in effect at June 30, 1996.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION RATE DATE AMOUNT COST
------------- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY BILLS (29.1%):
AAA ................................................... 5.08% 10/3/96 $2,000,000 $ 1,973,471
AAA ................................................... 4.93 2/6/97 2,000,000 1,939,744
AAA ................................................... 5.24 4/3/97 1,000,000 959,827
AAA ................................................... 5.38 5/1/97 3,000,000 2,863,707
-----------
TOTAL U.S.TREASURY BILLS
(Cost - $7,736,749) .................................................................. 7,736,749
-----------
TOTAL INVESTMENTS, AT VALUE
(Cost - $7,736,749) .................................................................. 7,736,749
-----------
REPURCHASE AGREEMENTS (71.4%):
AAA Bear Stearns & Co., Inc. (Collateralized by
1,320,000 U.S. Treasury Notes, 5.75%, 10/31/97,
market value $1,329,000) .......................... 5.20 7/1/96 1,300,000 1,300,000
AAA Chase Securities, Inc. (Collateralized by
4,595,000 U.S. Treasury Notes, 6.15%, 5/31/97,
market value $4,620,000) .......................... 5.45 7/1/96 4,500,000 4,500,000
AAA C.S. First Boston Corp. (Collateralized by 465,000
U.S. Treasury Bills, 9/5/96,
market value $460,000) 5.15 7/1/96 451,000 451,000
AAA C.S. First Boston Corp. (Collateralized by 5,750,000
U.S. Treasury Strips, 5/15/05,
market value $3,170,000) .......................... 5.23 7/24/96 3,000,000 3,000,000
AAA Donaldson Lufkin & Jenerette Securities Corp.
(Collateralized by 6,103,000 U.S. Treasury Strip
Coupons, 11/15/17, market value $1,332,000) ....... 5.45 7/1/96 1,300,000 1,300,000
AAA Lehman Government Securities, Inc.
(Collateralized by 1,300,000 U.S. Treasury Notes,
7.75%, 1/31/00, market value $1,327,000) .......... 5.43 7/1/96 1,300,000 1,300,000
AAA Merrill Lynch Government Securities, Inc.
(Collateralized by 1,325,000 U.S. Treasury Notes,
6.13%, 9/30/00, market value $1,330,000) .......... 5.20 7/1/96 1,300,000 1,300,000
AAA UBS Securities (Collateralized by 4,579,000
U.S. Treasury Notes, market value $4,600,000)
market value $4,600,000) .......................... 5.35 7/1/96 4,500,000 4,500,000
</TABLE>
6
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION RATE DATE AMOUNT COST
------------- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
AAA Union Bank of California (Collateralized by
1,320,000 U.S. Treasury Notes, 5.25%, 7/31/98,
market value $1,325,000) .......................... 5.25 7/1/96 $1,300,000 $ 1,300,000
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost - $18,951,000) ................................................................. 18,951,000
-----------
TOTAL (Cost - $26,687,749(a) ........................................................... $26,687,749
===========
<FN>
- --------------
Percentages indicated are based on net assets of $26,559,181.
(a) Cost and value for federal income tax and financial reporting purposes are the same.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING SECURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION AMOUNT COST
------------- ----------- ---------- -----------
<S> <C> <C> <C>
ANTICIPATION NOTES (1.5%):
MIG1/NR County of Erie, GO, (Union Bank of Switzerland LOC)
4.25%, 4/17/97 .................................................... $1,000,000 $ 1,004,979
-----------
Total Anticipation Notes (Cost - $1,004,979) ...................... 1,004,979
-----------
MUNICIPAL BONDS (17.0%):
Elmira City, 4.38%, 7/10/97 ......................................... 1,000,000 1,005,040
Aa/AA- Municipal Assistance Corp., City of N.Y., Series 66, 6.90%, 7/1/96 .. 2,000,000 2,000,000
MIG-1/SP-1 Nassau County, 4.25%, 3/14/97 ....................................... 2,500,000 2,508,525
VMIG1/NR New York State Energy Research & Development Authority,
PCR, Lilco Project, Series A, (Deutsche Bank LOC) 3.25%,
3/1/16, Putable 3/1/97 @100 ....................................... 2,000,000 2,000,000
Aaa/AAA New York State Environmental Facilities Corp.,
PCR, Westchester County State Water Revolving,
Series C, 5.30%, 9/15/96 .......................................... 1,000,000 1,003,752
Aaa/AAA Rockland County (MBIA), 7.75%, 9/1/96 ............................... 750,000 755,623
Aaa/AAA United Nations Development Corp., 7.88%, 7/1/26,
Prerefunded 7/1/96 @ 102 .......................................... 1,500,000 1,530,000
Aaa/AAA Westchester County, 7.00%, 12/1/96 .................................. 400,000 405,789
-----------
Total Municipal Bonds (Cost - $11,208,730) ........................ 11,208,730
-----------
OTHER MUNICIPAL BONDS (6.6%):
VMIG1/A-1 New York State Power Authority Revenue & General Purpose,
3.25%, 3/1/07, Putable 9/1/96 ..................................... 2,360,000 2,360,000
P-1/A-1+ Puerto Rico Individual Medical & Environmental Financing
Authority, PCR, Reynolds Metals Co. Project, 3.75%, 9/1/13,
Putable 9/1/96, (ABN AMRO Bank LOC) ............................... 2,000,000 1,999,194
-----------
Total Puerto Rico Bonds (Cost - $1,999,194) ....................... 4,359,194
-----------
TAX-FREE COMMERCIAL PAPER (21.4%):
P-1/A-1+ New York City Municipal Assistance Corp.,
(National Westminster/Bank of Nova Scotia LOC)
3.70%, 8/13/96 .................................................... 5,000,000 5,000,000
P-1/A-1+ New York State, Series G, (Westdeutsche Landesbanke LOC)
3.40%, 7/12/96 .................................................... 1,000,000 1,000,000
P-1/A-1+ New York State, GO, Series Q, (Westdeutsche Landesbanke LOC)
3.25%, 7/25/96 .................................................... 1,000,000 1,000,000
P-1/A-1+ New York State, Series Q, (Westdeutsche Landesbanke LOC)
3.45%, 7/22/96 .................................................... 2,500,000 2,500,000
</TABLE>
8
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING SECURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION AMOUNT COST
------------- ----------- ---------- -----------
<S> <C> <C> <C>
TAX-FREE COMMERCIAL PAPER (CONTINUED)
P-1/A-1 New York City Municipal Water, (Canadian Imperial Bank LOC)
3.35%, 7/16/96 .................................................... $3,000,000 $ 3,000,000
NR/A-1+ Puerto Rico Government Development Bank, 3.45%, 9/4/96 .............. 1,600,000 1,600,000
-----------
Total Tax-Free Commercial Paper (Cost - $14,100,000) .............. 14,100,000
-----------
TIME DEPOSITS (3.7%):
A1/P1 Bank of New York, Cayman, 5.13%, 7/1/96 ............................. 2,428,000 2,428,000
-----------
Total Time Deposits (Cost - $2,428,000) ........................... 2,428,000
-----------
VARIABLE RATE MUNICIPAL BONDS* (54.9%):
VMIG1/A-1+ Babylon, GO, (Bank of Nova Scotia LOC) 3.10%, 1/15/04 ............... 1,700,000 1,700,000
MIG1/A-1+ Metropolitan Transportation Authority, Commuter Facilities,
(JP Morgan Syndicate LOC) 3.15%, 7/1/21 ........................... 900,000 900,000
NR/A-1 Montgomery Industrial Development Authority, Service
Merchandise, (Industrial Bank of Japan LOC) 3.60%, 12/31/24 ....... 100,000 100,000
VMIG1/A-1 New York City, Series B, Subseries B-8, (Mitsubishi Bank LOC)
3.25%, 8/15/24 .................................................... 800,000 800,000
VMIG1/A-1 New York City, Series B, Subseries B-10,
(Union Bank of Switzerland LOC) 3.15%, 8/15/24 .................... 100,000 100,000
VMIG1/SP1+ New York City Housing Development Corp., East 96th Street
Project, Series A, (Bank of Tokyo/Mitsubishi LOC)
3.30%, 8/1/15 ..................................................... 2,000,000 2,000,000
VMIG1/A-1+ New York City Housing Development Corp., Mortgage Revenue,
Parkgate Tower 1, (Citibank LOC) 3.15%, 12/1/07 ................... 685,000 685,000
P-1/A-1 New York City Housing Development Corp., Multifamily Mortgage
Revenue, Queenswood A, (Sumitomo LOC) 3.40%, 2/1/17 ............... 2,800,000 2,800,000
NR/A-1+ New York City Housing Development Corp., Multifamily Mortgage
Revenue, Tribeca Towers A, AMT, (FNMA LOC)
3.20%, 12/15/24 ................................................... 300,000 300,000
NR/A-1 New York City Industrial Development Authority, Civic
Facilities Revenue, Columbia Grammar, (Chemical Bank LOC)
3.10%, 6/30/14 .................................................... 2,000,000 2,000,000
VMIG1/A-1+ New York City, Municipal Water Finance Authority, Water
& Sewer System, Series C, 3.60%, 6/15/22,(FGIC SPI) ............... 100,000 100,000
VMIG1/A-1+ New York City Municipal Water & Sewer, Systems
Revenue, Series G, 3.55%, 6/15/24, (FGIC SPI) ..................... 1,400,000 1,400,000
VMIG1/NR New York City Trust for Cultural Resources, (Credit Suisse LOC)
3.10%, 4/1/21, Museum of Natural History .......................... 400,000 400,000
</TABLE>
9
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING SECURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION AMOUNT COST
------------- ----------- ---------- -----------
<S> <C> <C> <C>
VARIABLE RATE MUNICIPAL BONDS* (CONTINUED)
VMIG1/A-1 New York City Trust for Cultural Resources,
Carnegie Hall, (Dai Ichi Kangyo LOC) 3.45%, 12/1/10 ............... $ 400,000 $ 400,000
P-1/A-1 New York City Trust for Cultural Resources,
Carnegie Hall, (Dai Ichi Kangyo LOC) 3.45%, 12/1/15 ............... 2,200,000 2,200,000
MIG1/A-1 New York City Trust for Cultural Resources, Museum of
Broadcasting, (Sumitomo LOC) 3.40%, 5/1/14 ........................ 1,000,000 1,000,000
NR/A-1+ New York State Energy, Research & Development Authority, PCR,
Niagara Mohawk Power, Series A, (Toronto Dominion LOC)
3.70%, 7/1/15 ..................................................... 1,000,000 1,000,000
NR/A-1+ New York State Energy, Research & Development Authority, PCR,
Niagara Mohawk Power Project, AMT, (Morgan Guaranty LOC)
3.80%, 12/1/23 .................................................... 700,000 700,000
P1-/NR New York State Energy, Research & Development Authority, PCR,
Niagara Mohawk Power, Series B, (Toronto Dominion LOC)
3.60%, 12/1/25 .................................................... 300,000 300,000
VMIG1/A-1+ New York State Energy, Research & Development Authority, PCR,
Orange & Rockland Project, (Societe Generale LOC)
3.10%, 10/1/14 .................................................... 2,000,000 2,000,000
VMIG/A1+ New York State Housing Financial Agency, Multifamily Housing,
Series A, (Bank of Tokyo LOC) 3.20%, 11/1/28 ...................... 1,100,000 1,100,000
VMIG1/A-1 New York State Housing Financial Agency, Liberty View
Apartments Housing, (Chemical Bank LOC) 3.35%, 11/1/05 ............ 3,000,000 3,000,000
NR/A-1+ New York State Housing Finance Agency, Sloan-Kettering,
(Morgan Guaranty LOC) 3.25%, 11/1/15 .............................. 1,000,000 1,000,000
MIG1/A-1 New York State Job Development Authority, 1984,
Series C-1 to C-30, (Sumitomo LOC) 3.67%, 3/1/99 .................. 235,000 235,000
MIG1/A-1 New York State Job Development Authority, 1984,
Series D-1 to D-9, (Sumitomo LOC) 3.67%, 3/1/99 ................... 475,000 475,000
MIG1/A-1 New York State Job Development Authority, 1984,
Series E-1 to E-55, (Sumitomo LOC) 3.67%, 3/1/99 .................. 480,000 480,000
VMIG1/A-1 New York State Job Development Authority, 1984,
Series H-1 to H-11, (Sumitomo LOC) 3.67%, 3/1/99 .................. 695,000 695,000
VMIG1/NR New York State Job Development Authority,
Series A-1, (Sumitomo LOC) 3.60%, 3/1/07, AMT ..................... 100,000 100,000
VMIG1/NR New York State Job Development Authority, (Sumitomo LOC)
3.65%, 3/1/07 ..................................................... 180,000 180,000
VMIG1/A-1+ New York State Local Government Assistance Corp.,
Series A, (Credit Suisse/Swiss Bank LOC) 3.10%, 4/1/22, ........... 1,400,000 1,400,000
</TABLE>
10
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
CREDIT RATING SECURITY PRINCIPAL AMORTIZED
MDY/S&P DESCRIPTION AMOUNT COST
------------- ----------- ---------- -----------
<S> <C> <C> <C>
VARIABLE RATE MUNICIPAL BONDS* (CONTINUED)
VMIG1/A-1+ New York State Local Government Assistance Corp.,
Series B, (Credit Suisse/Swiss Bank LOC) 3.00%, 4/1/23, ........... $ 400,000 $ 400,000
VMIG1/A-1 Niagara Falls Bridge Commission, (Industrial Bank of Japan LOC)
3.10%, 10/1/19 .................................................... 1,300,000 1,300,000
NR/A-1 Onondaga County Individual Development Agency, Pass
& Seymur Project, (Banque Nationalde Paris LOC)
3.40%, 6/15/97 .................................................... 1,200,000 1,200,000
VMIG1/A-1+ Port Authority of New York and New Jersey, (Helaba LOC)
3.60%, 4/1/24 ..................................................... 2,000,000 2,000,000
MIG1/A-1+ Triborough Bridge & Tunnel Authority, Special Obligation,
(FGIC SPI) 3.05%, 1/1/24 ......................................... 400,000 400,000
VMIG1/NR Wallkill Industrial Development Authority, PCR, Reynolds Metal
Co. Project, (Nat West LOC) 3.55%, 12/1/15 ........................ 500,000 500,000
MIG1/NR Yonkers Industrial Development Authority, Civic Facilities Revenue,
Consumer Union Facility, (Industrial Bank of Japan LOC)
3.55%, 7/1/19 ..................................................... 900,000 900,000
-----------
Total Variable Rate Municipal Bonds (Cost - $38,610,000) ......... 36,250,000
-----------
Total (Cost - $69,350,903)(a) ..................................... $69,350,903
===========
<FN>
- --------------
Percentage is based on net assets of $66,020,440.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market interest rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at June 30, 1996.
AMT Alternative Minimum Tax Paper
GO General Obligation
FGIC Insured by Financial Guaranty Insurance Corporation
LOC Letter of Credit
MBIA Insured by Municipal BondInsurance Association
PCR Pollution Control Revenue
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
GOVERNMENT U.S. TREASURY TAX-FREE
CASH MANAGEMENT MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
--------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at amortized cost ...... $189,095,166 $62,193,985 $ 7,736,749 $69,350,903
Repurchase agreements, at cost ................... 17,093,000 414,000 18,951,000 --
------------ ----------- ----------- -----------
206,188,166 62,607,985 26,687,749 69,350,903
Cash ............................................. 279 634 192 907
Interest receivable .............................. 643,325 379,854 36,113 402,063
Deferred organization costs and other assets ..... 31,222 7,221 6,354 3,210
------------ ----------- ----------- -----------
Total Assets ........................................ 206,862,992 62,995,694 26,730,408 69,757,083
------------ ----------- ----------- -----------
LIABILITIES:
Dividends payable ................................ 788,004 247,363 103,058 150,496
Payable to brokers for investments purchased ..... -- -- -- 3,513,565
Accurred expenses and other payable:
Investment advisory fees ....................... 46,320 15,119 3,316 10,629
Administration fees ............................ 16,371 5,219 2,221 5,313
Distribution fees .............................. 1,759 514 197 848
Fund accounting and transfer agent fees ........ 3,588 5,269 5,841 87
Legal and audit fees ........................... 38,898 31,067 34,014 30,543
Other .......................................... 30,588 23,978 22,580 25,162
------------ ----------- ----------- -----------
Total Liabilities ................................... 925,528 328,529 171,227 3,736,643
------------ ----------- ----------- -----------
Net Assets .......................................... $205,937,464 $62,667,165 $26,559,181 $66,020,440
============ =========== =========== ===========
Net Asset Value, Offering Price and Redemption
Price per Share: ($.001 par value per share,
unlimited number of shares authorized)
SHARES:
Net assets ....................................... $205,937,464 $62,667,165 $26,559,181 $66,020,440
Shares of beneficial interest issued and
outstanding .................................... 205,943,130 62,668,627 26,560,091 66,020,816
Net asset value .................................. $1.00 $1.00 $1.00 $1.00
============ =========== =========== ===========
COMPOSITION OF NET ASSETS:
Paid-in capital .................................. $205,943,129 $62,668,626 $26,560,092 $66,020,816
Distributions in excess of net investment income . -- (867) -- --
Accumulated undistributed net realized losses
from investment transactions ................... (5,665) (594) (911) (376)
------------ ----------- ----------- -----------
Net Assets .......................................... $205,937,464 $62,667,165 $26,559,181 $66,020,440
============ =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
GOVERNMENT U.S. TREASURY TAX-FREE
CASH MANAGEMENT MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
--------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ......................................... $5,386,437 $2,079,658 $786,490 $1,112,026
---------- ---------- -------- ----------
EXPENSES:
Advisory fees .................................... 338,722 131,760 51,498 111,978
Administration fees .............................. 145,167 56,469 22,070 47,991
Co-administration fees ........................... 67,744 26,352 10,300 22,396
Distribution expenses ............................ 18,370 7,411 -- 8,583
Shareholder servicing expenses ................... 6,507 2,318 861 1,881
Audit fees ....................................... 38,758 16,609 9,807 14,585
Accounting and transfer agent fees ............... 82,973 28,834 18,824 24,505
Custodian fees and expenses ...................... 9,180 5,016 8,071 3,936
Printing Expenses ................................ 8,190 3,256 2,112 5,368
Registration fees ................................ 7,667 5,031 -- 2,729
Legal fees ....................................... 63,123 31,965 25,919 29,063
Trustees' fees and expenses ...................... 13,277 8,613 7,205 8,173
Other expenses ................................... 8,454 40,724 11,392 54,665
---------- ---------- -------- ----------
Total Expenses ...................................... 808,132 364,358 168,059 335,853
---------- ---------- -------- ----------
Less: Fee waivers by advisor, administrator,
and distributor ................................ (107,403) (39,627) (25,138) (92,641)
---------- ---------- -------- ----------
Net Expenses ..................................... 700,729 324,731 142,921 243,212
---------- ---------- -------- ----------
Net Investment Income ............................ 4,685,708 1,754,927 643,569 868,814
---------- ---------- -------- ----------
REALIZED LOSSES FROM INVESTMENTS:
Net realized losses from investment transactions . (3,437) (342) (911) (240)
---------- ---------- -------- ----------
Net Increase in Net Assets
Resulting from Operations ...................... $4,682,271 $1,754,585 $642,658 $ 868,574
========== ========== ======== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
GOVERNMENT
CASH MANAGEMENT FUND MONEY MARKET FUND
-------------------------------- ------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- ------------ ------------
From Investment Activities: (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................................ $ 4,685,708 $ 11,262,195 $ 1,754,927 $ 6,379,134
Net realized losses from investment transactions ..... (3,437) (2,228) (342) (252)
------------ -------------- ------------ ------------
Change in net assets resulting from operations ....... 4,682,271 11,259,967 1,754,585 6,378,882
------------ -------------- ------------ ------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income ........................... (4,685,708) (11,262,195) (1,755,794) (6,379,134)
From net realized gains from investment transactions . -- (194) -- --
------------ -------------- ------------ ------------
Change in net assets from shareholder distributions ..... (4,685,708) (11,262,389) (1,755,794) (6,379,134)
------------ -------------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .......................... 607,204,730 1,530,377,381 110,784,396 586,320,449
Dividends reinvested ................................. 1,548,287 2,817,269 670,191 1,573,721
Cost of shares redeemed .............................. (573,680,964) (1,562,814,955) (135,636,360) (667,839,459)
------------ -------------- ------------ ------------
Change in net assets from share transactions ......... 35,072,053 (29,620,305) (24,181,773) (79,945,289)
------------ -------------- ------------ ------------
Change in net assets .................................... 35,068,616 (29,622,727) (24,182,982) (79,945,541)
------------ -------------- ------------ ------------
NET ASSETS:
Beginning of period .................................. 170,868,848 200,491,575 86,850,147 166,795,688
------------ -------------- ------------ ------------
End of period ........................................ $205,937,464 $ 170,868,848 $ 62,667,165 $ 86,850,147
============ ============== ============ ============
SHARE TRANSACTIONS:
Issued ............................................... 607,204,730 1,530,377,381 110,784,396 586,320,449
Reinvested ........................................... 1,548,287 2,817,269 670,191 1,573,721
Redeemed ............................................. (573,680,964) (1,562,814,955) (135,636,360) (667,839,459)
------------ -------------- ------------ ------------
Change in shares ........................................ 35,072,053 (29,620,305) (24,181,773) (79,945,289)
============ ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
U.S TREASURY NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND
----------------------------- ------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 1995 1996 1995
------------ ------------ ------------- -------------
From Investment Activities: (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ................................ $ 643,569 $ 3,473,278 $ 868,814 $ 1,956,093
Net realized losses from investment transactions ..... (911) 16,264 (240) (136)
----------- ------------ ----------- ------------
Change in net assets resulting from operations ....... 642,658 3,489,542 868,574 1,955,957
----------- ------------ ----------- ------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income ........................... (643,569) (3,473,278) (868,814) (1,956,093)
From net realized gains from investment transactions . -- (16,264) -- --
----------- ------------ ----------- ------------
Change in net assets from shareholder distributions ..... (643,569) (3,489,542) (868,814) (1,956,093)
----------- ------------ ----------- ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .......................... 71,095,121 386,608,352 48,670,118 91,135,964
Dividends reinvested ................................. 277,194 708,250 534,820 1,204,763
Cost of shares redeemed .............................. (77,312,294) (460,536,912) (48,067,787) (80,995,359)
----------- ------------ ----------- ------------
Change in net assets from share transactions ......... (5,939,979) (73,220,310) 1,137,151 11,345,368
----------- ------------ ----------- ------------
Change in net assets .................................... (5,940,890) (73,220,310) 1,136,911 11,345,232
----------- ------------ ----------- ------------
NET ASSETS:
Beginning of period .................................. 32,500,071 105,720,381 64,883,529 53,538,297
----------- ------------ ----------- ------------
End of period ........................................ $26,559,181 $ 32,500,071 $66,020,440 $ 64,883,529
=========== ============ =========== ============
SHARE TRANSACTIONS:
Issued ............................................... 71,095,121 386,608,352 48,670,118 91,135,964
Reinvested ........................................... 277,194 708,250 534,820 1,204,763
Redeemed ............................................. (77,312,294) (460,536,912) (48,067,787) (80,995,359)
----------- ------------ ----------- ------------
Change in shares ........................................ (5,939,979) (73,220,310) 1,137,151 11,345,368
=========== ============ =========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
HSBC Funds Trust, formerly known as Mariner Funds Trust, (the "Trust") was
organized in Massachusetts on October 31, 1985 as a Massachusetts business
trust and is an open-end, diversified management investment company with
multiple investment portfolios, including the Cash Management Fund, the
Government Money Market Fund, the U.S. Treasury Money Market Fund and the
New York Tax-Free Money Market Fund (herein referred to individually as a
"Fund" and collectively as the "Funds").
The investment objective of each Money Market Fund is to achieve as high a
level of current income as is consistent with preservation of capital and
liquidity. The investment objective of the New York Tax-Free Fund is to
provide its shareholders with as high a level of current income exempt from
regular Federal, New York State and New York City income taxes as is
consistent with preservation of capital and liquidity. Each Fund is
required to maintain a dollar-weighted average portfolio maturity of 90
days or less.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of income
and expenses for the period. Actual results could differ from those
estimates.
SECURITIES VALUATION: Investments in securities are valued at amortized
cost which approximates market value. In the event that deviation of 1/2 of
1% or more exists between a Fund's $1.00 per share net asset value,
calculated at amortized cost, and the net asset value calculated by
reference to market-based values, or if there is any other deviation which
the Board of Trustees believes would result in a material dilution to
shareholders or purchasers, the Board of Trustees will promptly consider
what action should be taken.
TAXES: It is the Funds' policy to comply with the provisions of the
Internal Revenue Code, as amended, applicable to regulated investment
companies, and to distribute substantially all of its taxable income and
net realized capital gains to its shareholders for each taxable year.
Therefore, no provision is required for Federal income tax.
DIVIDENDS AND DISTRIBUTIONS: The Funds intend to declare as a dividend
substantially all of their net investment income, which includes realized
gains and losses, if any, at the end of each business day and to pay within
five business days after the end of each month.
Distributions to shareholders in excess of net realized gains on
investments in a given year result primarily from losses on security
transactions during that year which are treated for Federal income tax
purposes as arising in the following year. The Fund distinguishes between
distributions on a tax basis and a financial reporting basis and requires
that only distributions in excess of tax basis earnings and profits are
reported in the financial statements as a tax return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated
undistributed net realized gains.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SECURITY TRANSACTIONS AND RELATED INCOME: Security transactions are
recorded on trade date. Identified cost of investments sold is used for
both financial statement and Federal income tax purposes. Interest income,
including the amortization of discount or premium, is recorded as earned.
EXPENSE ALLOCATION: Expenses directly attributed to each Fund in the Trust
are charged to that Fund's operations; expenses which are applicable to all
Funds are allocated among them.
3. RELATED PARTY TRANSACTIONS
The Trust retains HSBC Asset Management Americas Inc. ("HSBC Americas") to
act as Investment Adviser for the Fund. HSBC Americas is the North American
investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai Banking
Corporation). As Investment Adviser, HSBC Americas furnishes investment
guidance and policy direction in connection with the management of the
portfolio of the Funds, subject to policies established by the Board of
Trustees.
As compensation for its services, HSBC Americas is paid monthly advisory
fees at the following annual rates:
ADVISORY FEE RATE
------------------------------------------
U.S. NEW YORK
GOVERNMENT TREASURY TAX-FREE
CASH MONEY MONEY MONEY
PORTIONS OF THE FUNDS' AVERAGE MANAGEMENT MARKET MARKET MARKET
DAILY NET ASSETS FUND FUND FUND FUND
------------------------------ ---------- ---------- -------- --------
Not exceeding $500 million ... 0.350% 0.350% 0.350% 0.350%
In excess of $500 million but
not exceeding $1 billion ... 0.315% 0.315% 0.315% 0.315%
In excess of $1 billion but
not exceeding $1.5 billion . 0.280% 0.280% 0.280% 0.280%
In excess of $1.5 billion .... 0.245% 0.245% 0.245% 0.245%
At June 30, 1996, HSBC Americas earned approximately $321,930 from the Cash
Management Fund, $125,562 from the Government Money Market Fund, $38,878
from the U.S. Treasury Money Market Fund, and $48,791 from the New York
Tax-Free Money Market Fund in advisory fees, net of fee waivers of
approximately $16,792, $6,198, $12,620, and $63,187, respectively.
BISYS Fund Services Limited Partnership d/b/a/ BISYS Fund Services
("BISYS"), an Ohio limited partnership is a subsidiary of The BISYS Group,
Inc. BISYS, with whom certain officers of the Trust are affiliated, serves
the Trust as distributor, administrator, transfer agent and fund
accountant. Such officers are not paid any fees directly by the Funds for
serving as officers and trustee of the Trust.
In accordance with the terms of the Administration and Accounting Servicing
agreements, BISYS is paid a monthly asset based fee of 0.15% of the Fund's
first $200 million of average net assets; 0.125% of the Fund's next $200
million of average net assets; 0.10% of the Fund's next $200 million of
average net assets; and 0.08% of the Fund's average net assets in excess of
$600 million; exclusive of out-of-pocket expenses. At June 30, 1996, BISYS
earned approximately $94,497 from the Cash Management Fund, $37,473 from
the Government Money Market Fund, $16,045 from the U.S. Treasury Money
Market Fund, and $31,282 from the New York Tax-Free Money Market Fund, net
of fee waivers of approximately $50,670, $18,996, $6,025, and $16,709,
respectively, in administrative services fees.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
HSBC Americas earned co-administration fees of 0.07% of the Fund's average
net assets totaling approximately $27,803 from the Cash Management Fund,
$11,919 from the Government Money Market Fund, $3,807 from the U.S.
Treasury Money Market Fund, and $9,651 from the New York Tax-Free Money
Market Fund. Of that total, HSBC Americas waived approximately $39,941,
$14,433, $6,493, and $12,745, respectively, of these fees.
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended.
The Plan provides for a monthly payment by the Fund to BISYS Fund Services
for expenses incurred in connection with distribution services provided to
the Fund not to exceed an annual rate of 0.20% of the Fund's average net
assets during the preceding month. The expenses incurred as a result of
these agreements totaled approximately $18,370 from the Cash Management
Fund, $7,411 from the Government Money Market Fund, $0 from the U.S.
Treasury Money Market Fund, and $8,583 from the New York Tax-Free Money
Market Fund.
HSBC Americas may enter into agreements (the "Service Agreements") with
certain banks, financial institutions and corporations ("Service
Organizations") whereby each Service Organization handles record keeping
and provides certain administrative services for its customers who invest
in the Funds through accounts maintained at that Service Organization. Each
Service Organization will receive monthly payments, which are based upon
expenses that the Service Organization has incurred in the performance of
its service under the Service Agreement. The payments from the Funds on an
annual basis will not exceed 0.25% of the average value of the Funds'
shares held in the subaccounts of the Service Organizations.
A partner of Baker & McKenzie, legal counsel to the Trust, serves as
Secretary of the Trust. At June 30, 1996 the Funds incurred legal fees of
approximately $77,739 for the Cash Management Fund, $26,528 for the
Government Money Market Fund, $9,518 for the U.S. Treasury Money Market
Fund, and $21,787 for the New York Tax-Free Money Market Fund to Fund
counsel.
18
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED -------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income .................. 0.024 0.053 0.039 0.027 0.037 0.058
Net realized and unrealized gains
from investments .................... -- -- -- 0.002 -- --
-------- -------- -------- -------- -------- --------
Total from Investment Activities ....... 0.024 0.053 0.039 0.029 0.037 0.058
-------- -------- -------- -------- -------- --------
Distributions
From net investment income ............. (0.024) (0.053) (0.039) (0.027) (0.037) (0.058)
From net realized gains ................ -- -- -- (0.002) -- --
-------- -------- -------- -------- -------- --------
Total distributions .................... (0.024) (0.053) (0.039) (0.029) (0.037) (0.058)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return ................................ 2.43%(b) 5.41% 3.95% 3.11% 3.77% 5.92%
Ratios/Supplemental Data:
Net Assets at end of period (000) ...... $205,937 $170,869 $200,492 $172,518 $246,543 $373,694
Ratio of expenses to average
net assets .......................... 0.72%(a) 0.79% 0.63% 0.58% 0.62% 0.66%
Ratio of net investment income
to average net assets ............... 4.84%(a) 5.29% 3.84% 2.88% 3.75% 5.80%
Ratio of expenses to average
net assets* ......................... 0.83%(a) 0.80% 0.64% 0.58% 0.62% 0.66%
Ratio of net investment income
to average net assets* .............. 4.73%(a) 5.28% 3.83% 2.88% 3.75% 5.80%
<FN>
- ------------
* During the period certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and
expense reimbursements had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- -------- -------- -------- --------
Investment Activities
Net investment income .................. 0.023 0.052 0.038 0.028 0.037 0.056
Net realized and unrealized
gains from investments .............. -- -- -- 0.001 -- --
------- ------- -------- -------- -------- --------
Total from Investment Activities ....... 0.023 0.052 0.038 0.029 0.037 0.056
------- ------- -------- -------- -------- --------
Distributions
From net investment income ............. (0.023) (0.052) (0.038) (0.028) (0.037) (0.056)
From net realized gains ................ -- -- -- (0.001) -- --
------- ------- -------- -------- -------- --------
Total distributions .................... (0.023) (0.052) (0.038) (0.029) (0.037) (0.056)
------- ------- -------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======== ======== ======== ========
Total Return ................................ 2.35%(b) 5.32% 3.83% 2.99% 3.80% 5.79%
Ratios/Supplemental Data:
Net Assets at end of period (000) ...... $62,667 $86,850 $166,796 $138,085 $246,327 $201,232
Ratio of expenses to average
net assets .......................... 0.86%(a) 0.76% 0.63% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets .................. 4.66%(a) 5.21% 3.76% 2.89% 3.72% 5.70%
Ratio of expenses to average
net assets* ......................... 0.97%(a) 0.78% 0.64% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets* ................. 4.55%(a) 5.19% 3.75% 2.89% 3.72% 5.70%
<FN>
- ------------
* During the period certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and
expense reimbursements had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- -------- -------- -------- --------
Investment Activities
Net investment income .................. 0.022 0.049 0.036 0.026 0.032 0.055
------- ------- -------- -------- -------- --------
Distributions
From net investment income ............. (0.022) (0.049) (0.036) (0.026) (0.032) (0.055)
------- ------- -------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======== ======== ======== ========
Total Return ................................ 2.20%(b) 5.04% 3.60% 2.65% 3.27% 5.60%
Ratios/Supplemental Data:
Net Assets at end of period (000) ...... $26,559 $32,500 $105,720 $133,070 $257,898 $220,371
Ratio of expenses to average
net assets .......................... 0.97%(a) 0.82% 0.68% 0.59% 0.67% 0.68%
Ratio of net investment income to
average net assets .................. 4.37%(a) 4.94% 3.48% 2.62% 3.22% 5.45%
Ratio of expenses to average
net assets* ......................... 1.14%(a) 0.84% 0.69% 0.59% 0.67% 0.68%
Ratio of net investment income to
average net assets* ................. 4.20%(a) 4.92% 3.47% 2.62% 3.22% 5.45%
<FN>
- ------------
* During the period certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and
expense reimbursements had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ------------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income 0.014 0.031 0.022 0.018 0.024 0.038
------- ------- ------- ------- ------- -------
Distributions
From net investment income (0.014) (0.031) (0.022) (0.018) (0.024) (0.038)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return 1.37%(b) 3.17% 2.23% 1.86% 2.44% 3.85%
Ratios/Supplemental Data:
Net Assets at end of period (000) $66,020 $64,884 $53,538 $59,394 $56,386 $75,850
Ratio of expenses to
average net assets 0.76%(a) 0.69% 0.57% 0.55% 0.56% 0.51%
Ratio of net investment income to
average net assets 2.71%(a) 3.13% 2.20% 1.85% 2.41% 3.78%
Ratio of expenses to average
net assets* 1.05%(a) 0.85% 0.73% 0.72% 0.73% 0.68%
Ratio of net investment income to
average net assets* 2.42%(a) 2.97% 2.04% 1.68% 2.24% 3.61%
<FN>
- ------------
* During the period certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and
expense reimbursements had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
HSBC (SM) FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
INFORMATION:
(800) 634-2536
INVESTMENT ADVISER AND CO-ADMINISTRATOR
HSBC Asset Management Americas Inc.
250 Park Avenue
New York, New York 10177
DISTRIBUTOR, ADMINISTRATOR, TRANSFER
AND DIVIDEND DISBURSING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
LEGAL COUNSEL
Baker & McKenzie
805 Third Avenue
New York, New York 10022
This report is for the information of the shareholders of HSBC Funds Trust. Its
use in connection with any offering of the Trust's shares is authorized only in
the case of a concurrent or prior delivery of the Trust's current prospectus.
