HSBC FUNDS TRUST
HSBC Asset Management Americas Inc.
[LOGO OMITTED]
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, 1997
Managed by:
HSBC ASSET MANAGEMENT AMERICAS INC.
Sponsored and distributed by:
BISYS FUND SERVICES
<PAGE>
HSBC FUNDS TRUST
MONEY MARKET FUNDS
HSBC Asset Management Americas Inc.
[GRAPHIC OMITTED]
CASH MANAGEMENT FUND
GOVERNMENT MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
NEW YORK TAX-FREE MONEY MARKET FUND
July 11, 1997
Dear Shareholder:
Economic growth surged early in 1997 on strong gains in consumer and capital
spending as the first quarter's Gross Domestic Product reached 5.9%. However,
recent economic data has revealed that the country's growth is slowing down to
moderate levels, although it continues at above trend estimates. Inflation has
remained benign, despite tightness in the labor markets that has witnessed the
lowest level of unemployment in two decades. Any gains in labor costs have been
offset by benefit costs and when coupled with reasonable CPI and PPI numbers,
inflation appears under control for now.
On the monetary policy front, the Federal Reserve raised interest rates 25 basis
points to a 5.50% target on March 25. Afterward, market sentiment called for
several tightenings starting with the May 20th meeting but a series of below
trend economic numbers shifted sentiment to the market's present neutral
outlook. Looking ahead, we feel that the Federal Reserve will continue its
pre-emptive stance and will raise interest rates even before inflation numbers
start to appear in print.
As in the past, our primary goal is to ensure that the HSBC Money Market Funds
reflect the highest standards characterized by safety, stability, service and
performance. We value your relationship with the HSBC Family of Funds and
appreciate this opportunity to work on your behalf.
Sincerely,
[/S/ EDWARD J. MERKLE]
Edward J. Merkle
- -------------
An investment in the fund is neither insured nor guaranteed by the
U.S.Government.Yields will fluctuate, and there can be no assurance that the
fund will be able to maintain a stable NAV of $1.00 per share.
<PAGE>
BOARD OF TRUSTEES
JOHN P. PFANN* Chairman and President, JPP Equities, Inc.
WOLFE J. FRANKL* Former Director, North America, Berlin Economic
Development Corporation
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
MICHAEL J. KANE PRESIDENT
ERIC F. ALMQUIST VICE PRESIDENT
KAREN DOYLE VICE PRESIDENT
KEVIN MARTIN TREASURER
STEVEN R. HOWARD SECRETARY
CURTIS BARNES ASSISTANT SECRETARY
ALAINA V. METZ ASSISTANT SECRETARY
ROBERT L. TUCH ASSISTANT SECRETARY
2
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER (15.3%):
AUTOMOBILES (1.6%):
P1, A1 Mitsubishi Motors, Inc.
(Bank of Tokyo LOC) .......................... 5.43% 07/09/97 $ 2,949,000 $ 2,945,311
-----------
BANKING, INSURANCE & FINANCE (9.8%):
P1, A1 Banco Rio de la Plata
(Banharishe Banken LOC) ...................... 5.62 10/27/97 4,300,000 4,223,890
P1, A1 SRD Finance, Inc.
(IndustrialBank of Japan LOC) ................ 5.66 07/10/97 4,000,000 3,994,370
P1, A1 Sumitomo Bank, Ltd. ............................ 5.72 07/21/97 9,300,000 9,270,447
-----------
17,488,707
-----------
BUILDING PRODUCTS (3.9%):
P1, A1 Onoda US (Chase Securities, Inc. LOC) .......... 5.69 07/15/97 7,000,000 6,984,674
-----------
TOTAL COMMERCIAL PAPER (Cost - $27,418,692) ................................... 27,418,692
-----------
CORPORATE NOTES (22.7%):
BANKING, INSURANCE & FINANCE (22.7%):
P1, A1 American Express Centurion Bank* ............... 5.66 07/14/97 10,000,000 10,000,000
P1, A1 Avco Financial Services* ....................... 5.77 08/15/97 5,000,000 4,999,897
P1, A1 General Electric Capital Corp.* ................ 5.37 07/01/97 8,000,000 7,999,919
P1, A1 Merrill Lynch & Co., Inc.* ..................... 5.68 09/26/97 8,800,000 8,800,000
P1, A1 PNC Bank, Inc.* ................................ 5.65 07/24/97 8,800,000 8,797,923
-----------
TOTAL CORPORATE NOTES (Cost - $40,597,739) .................................... 40,597,739
-----------
MEDIUM TERM NOTES (5.2%):
FINANCIAL SERVICES (5.2%):
P1, A1 Bear Stearns & Co., Inc.* ...................... 5.76 07/08/97 6,000,000 6,000,000
Bear Stearns & Co., Inc.* ...................... 5.66 08/18/97 3,300,000 3,300,000
-----------
TOTAL MEDIUM TERM NOTES (Cost - $9,300,000) ................................... 9,300,000
-----------
PROMISSORY NOTE (5.6%):
P1, A1 Goldman Sachs Group, L.P. ...................... 5.69 07/21/97 10,000,000 10,000,000
-----------
TOTAL PROMISSORY NOTE (Cost - $10,000,000) .................................... 10,000,000
-----------
</TABLE>
3
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
TIME DEPOSITS (3.1%):
Aaa, NR Bank of Toyko/Mitsubishi ..................... 5.60% 07/22/97 $5,500,000 $ 5,482,033
------------
TOTAL TIME DEPOSITS (Cost - $5,482,033) ........................................ 5,482,033
------------
YANKEE CERTIFICATES OF DEPOSIT (36.7%):
BANKING (36.7%):
P1, A1 Bankers Trust NY Corp.* ...................... 5.40 07/01/97 9,000,000 8,999,174
P1, A1 Barclays Bank, PLC ........................... 5.94 06/25/98 8,000,000 7,996,615
P1, A1 Commerzbank AG ............................... 5.83 01/15/98 10,000,000 10,000,519
P1, A1 Dai-Ichi Bank ................................ 5.85 07/18/97 5,800,000 5,800,405
P1, A1 Deutsche Bank ................................ 6.12 07/08/97 10,000,000 10,000,031
P1, A1 Industrial Bank of Japan, Ltd. ............... 5.67 07/11/97 4,000,000 4,000,022
P1, A1 Royal Bank of Canada ......................... 5.73 08/13/97 10,000,000 9,999,681
P1, A1 Sanwa Bank ................................... 5.67 07/24/97 8,800,000 8,800,056
------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT (Cost - $65,596,503) ...................... 65,596,503
------------
CASH SWEEP ACCOUNT (0.0%):
Bank of New York** ........................... 4.60 299 299
------------
TOTAL CASH SWEEP ACCOUNT (Cost - $299) ........................................ 299
------------
REPURCHASE AGREEMENTS (10.5%):
Chase Securities, Inc. (Purchased on 6/30/97,
proceeds at maturity $18,780,103;
Collateralized by $19,600,000 FNMA,
7.00%, 5/1/27, market value $19,186,986) ... 5.95 07/01/97 18,777,000 18,777,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost - $18,777,000) ........................................................ 18,777,000
------------
TOTAL INVESTMENTS (99.1%)
(Cost - $177,172,266)(a) .................................................... 177,172,266
OTHER ASSETS IN EXCESS OF LIABILITIES (0.9%) .................................. 1,538,844
------------
NET ASSETS (100.0%) ........................................................... $178,711,110
============
<FN>
- ---------------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate presented represents rate in effect at June 30,
1997. Date presented represents the next reset date.
** Variable rate account. Rate presented represents rate in effect at June 30,
1997.
FNMA - Federal National Mortgage Association
LOC - Letter of credit
NR - Not rated
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED)
GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (94.1%):
Aaa, NR Federal Home Loan Bank* ...................... 5.79% 08/16/97 $ 5,500,000 $ 5,514,391
Aaa, NR Federal Home Loan Bank ....................... 5.65 01/07/98 10,000,000 10,000,000
Aaa, NR Federal National Mortgage Assoc.* ............ 5.52 07/10/97 15,000,000 14,989,500
Aaa, NR Federal National Mortgage Assoc.* ............ 5.59 08/01/97 20,000,000 20,000,227
Aaa, NR Federal National Mortgage Assoc. ............. 5.56 12/18/97 5,000,000 4,875,570
Aaa, NR Federal National Mortgage Assoc. ............. 5.71 03/18/98 3,000,000 2,997,756
Aaa, NR Student Loan Marketing Assoc. ................ 5.80 10/01/97 5,000,000 4,998,549
------------
TOTAL U.S. GOVERNMENT AGENCIES (Cost - $63,375,993) .......................... 63,375,993
------------
CASH SWEEP ACCOUNT (0.0%):
Bank of New York** ........................... 4.60 822 822
------------
TOTAL CASH SWEEP ACCOUNT (Cost - $822) ....................................... 822
------------
REPURCHASE AGREEMENTS (27.7%):
Chase Securities, Inc. (Purchased on 6/30/97,
proceeds at maturity $9,333,542;
Collateralized by $9,740,000 FNMA,
7.00%, 5/1/27, market value $9,534,707) .... 5.95 07/01/97 9,332,000 9,332,000
Donaldson Lufkin & Jenrette Securities Corp.
(Purchased on 6/30/97, proceeds at maturity
$9,332,529; Collateralized by $48,890,000
U.S. Treasury strips, 5/15/21,
market value $9,568,151) ................... 5.90 07/01/97 9,331,000 9,331,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost - $18,663,000) ....................................................... 18,663,000
------------
TOTAL INVESTMENTS (121.8%)
(Cost - $82,039,815)(a) .................................................... 82,039,815
LIABILITIES IN EXCESS OF OTHER ASSETS (-21.8%) ............................... (14,686,360)
------------
NET ASSETS (100.0%) .......................................................... $ 67,353,455
============
<FN>
- ---------------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate note. Rate presented represents rate in effect at June 30,
1997. Date presented represents the next reset date.
** Variable rate account. Rate presented represents rate in effect at June 30,
1997.
FNMA - Federal National Mortgage Association
NR - Not rated
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Schedule of Portfolio Investments as of June 30, 1997 (Unaudited)
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
U.S. TREASURY BILLS (35.8%):
Aaa, AAA U.S. Treasury Bills ............................ N/A 07/03/97 $5,000,000 $ 4,998,730
Aaa, AAA U.S. Treasury Bills ............................ N/A 02/05/98 4,000,000 3,872,737
-----------
Total U.S. Treasury Bills (Cost - $8,871,467) 8,871,467
-----------
OPEN-END INVESTMENT COMPANIES (0.6%):
Provident Institutional T-Fund ................. 140,000 140,000
-----------
Total Open-End Investment Companies (Cost - $140,000) ......................... 140,000
-----------
CASH SWEEP ACCOUNT (0.0%):
Bank of New York** ............................. 4.60% 6 6
-----------
Total Cash Sweep Account (Cost - $6) .......................................... 6
-----------
REPURCHASE AGREEMENTS (64.1%):
Chase Securities, Inc. (Purchased on 6/12/97,
proceeds at maturity $4,512,934;
Collateralized by $4,451,000 U.S.
Treasury Notes, 7.50%, 2/15/05,
market value $4,732,050)* .................... 5.95 07/01/97 4,500,000 4,500,000
C.S. First Boston, Inc. (Purchased on 6/5/97,
proceeds at maturity $2,009,618;
Collateralized by $3,590,000 U.S. Treasury
Strips, 2/15/06, market value $2,043,407) .... 5.41 07/07/97 2,000,000 2,000,000
Donaldson Lufkin & Jenrette Securities Corp.
(Purchased on 6/30/97, proceeds at maturity
$1,238,203; Collateralized by $5,203,000
U.S. Treasury Strips, 2/15/18,
market value $1,271,249) ..................... 5.90 07/01/97 1,238,000 1,238,000
Lehman Government Securitites, Inc.
(Purchased on 6/30/97, proceeds at maturity
$1,238,189; Collateralized by $1,280,000
U.S. Treasury Notes, 6.13%, 12/31/01,
market value $1,266,800) ..................... 5.50 07/01/97 1,238,000 1,238,000
Merrill Lynch Government Securities, Inc.
Purchased on 6/30/97, proceeds at maturity
$1,200,183; Collateralized by $1,200,000
U.S. Treasury Notes, 6.00%, 8/31/97,
market value $1,254,458) ..................... 5.50 07/01/97 1,200,000 1,200,000
</TABLE>
6
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
SECURITY DISCOUNT MATURITY PRINCIPAL
DESCRIPTION RATE DATE AMOUNT VALUE
----------- -------- -------- --------- -----
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Union Bank, L.A. (Purchased on 6/30/97,
proceeds at maturity $1,200,192;
Collateralized by $1,210,000 U.S.
Treasury Notes, 6.50%, 5/31/01,
market value $1,227,714) ................... 5.75% 07/01/97 $1,200,000 $ 1,200,000
Union Bank of Switzerland (Purchased on
6/12/97, proceeds at maturity $4,512,874;
Collateralized by $4,250,000 U.S.
Treasury Notes, 6.63%, 7/31/01,
market value $4,728,657)* .................. 5.90 07/01/97 4,500,000 4,500,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost - $15,876,000) ....................................................... 15,876,000
------------
TOTAL INVESTMENTS (100.5%)
(Cost - $24,887,473)(a) .................................................... 24,887,473
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.5%) ................................ (112,454)
------------
NET ASSETS (100.0%) .......................................................... $ 24,775,019
============
<FN>
- ------------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate presented represents rate in effect at June 30,
1997. Date presented represents the next reset date, or for repurchase
agreements, the maturity date.
** Variable rate account. Rate presented represents rate in effect at June 30,
1997.
N/A - Not applicable
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
MUNICIPAL NOTES (6.7%)
MIG1, NR Brentwood, New York, GO, School District ...... 4.25% 06/30/98 $2,000,000 $ 2,006,540
MIG1, NR Elmira City, GO, BANS ......................... 4.38 07/10/97 1,000,000 1,000,125
MIG1, SP1+ Puerto Rico Commonwealth, Series A ............ 4.00 07/30/97 2,000,000 2,000,889
------------
TOTAL MUNICIPAL NOTES (Cost - $5,007,554) ..................................... 5,007,554
------------
MUNICIPAL COMMERCIAL PAPER (6.6%)
P-1, A-1+ New York City, Municipal Water
(Canadian Imperial Bank LOC) ................ 3.40 07/31/97 2,000,000 2,000,000
P-1, A-1 Government Development Bank of
Puerto Rico ................................. 3.75 07/18/97 3,000,000 3,000,000
------------
TOTAL MUNICIPAL COMMERCIAL PAPER (Cost - $5,000,000) .......................... 5,000,000
------------
MANDATORY PUT MUNICIPAL BONDS (8.1%)
MIG1, NR New York State Energy, Research &
Development Authority, PCR, Lilco Project,
Series A, (Deutsche Bank LOC) ............... 3.60 03/01/98 2,000,000 2,000,000
MIG1, A-1 New York State Power Authority Revenue &
General Purpose (Morgan Guaranty
Trust Co. LOC)* ............................. 3.50 03/01/98 2,220,000 2,220,000
P-1, A-1+ Puerto Rico Industrial, Medical &
Environmental Financing Authority, PCR,
Reynolds Metals Co. Project, (ABN AMRO
Bank LOC) Callable 9/1/97 @ 100* ............ 3.80 09/01/97 2,000,000 2,000,000
------------
TOTAL MANDATORY PUT MUNICIPAL BONDS (Cost - $6,220,000) ....................... 6,220,000
------------
NON-VARIABLE MUNICIPAL BONDS (9.5%)
Aaa, AAA New York State Environmental Facilities
Corp., PCR, State Water, Revolving Fund,
Series B .................................... 3.50 12/15/97 1,625,000 1,625,000
Aaa, AAA New York State Medical Care Facilities
Financial Agency, Prerefunded
2/15/98 @ 102 ............................... 7.70 02/15/98 3,000,000 3,133,124
A-3, A- New York State Thruway Authority, Highway
and Bridge Trust Fund, Series A ............. 4.50 04/01/98 2,500,000 2,513,609
------------
TOTAL NON-VARIABLE MUNICIPAL BONDS (Cost - $7,271,733) ........................ 7,271,733
------------
</TABLE>
8
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS* (61.0%)
MIG1, A-1+ Metropolitan Transportation Authority,
Commuter Facilities (JP Morgan
Syndicate LOC) ............................... 4.15% 07/02/97 $ 900,000 $ 900,000
NR, A-1 Montgomery Industrial Development
Authority, Service Merchandise (Industrial
Bank of Japan LOC) ........................... 3.85 07/15/97 100,000 100,000
MIG1, A-1+ New York City, GO, Series B
(FGIC Insured) ............................... 5.50 07/01/97 1,000,000 1,000,000
MIG1, A-1+ New York City, GO, Series B, Subseries B-4
(Union Bank of Switzerland LOC) .............. 5.50 07/01/97 800,000 800,000
MGI1, A-1+ New York City, GO, Series B, Subseries B-4
(MBIA Insured) ............................... 4.15 07/01/97 600,000 600,000
VMI1, SP1+ New York City, Housing Development Corp.,
Special Obligation, East 96th Street Project,
Series A, (Mitsubishi Bank Ltd. LOC),
Callable 7/28/97 @ 100 ....................... 4.15 07/10/97 2,000,000 2,000,000
P-1, A-1 New York City, Housing Development Corp.,
Multifamily Mortgage Revenue,
Queenswood, Series A, (Sumitomo
Bank LOC) .................................... 4.20 07/02/97 2,615,000 2,615,000
NR, A-1+ New York City, Housing Development Corp.,
Multifamily Mortgage Revenue, Tribeca
Towers, Series A, AMT, (FNMA LOC) ............ 4.05 07/02/97 300,000 300,000
NR, A-1 New York City, Housing Development Corp.,
Special Obligation, Residential Montefiore,
Series A (Chase Manhattan Bank LOC) .......... 4.05 07/02/97 2,500,000 2,500,000
MIG1, NR New York City, Industrial Development
Authority, Civic Facilities Revenue,
Berkeley Carroll School Project
(Chase Manhattan Bank LOC) ................... 4.00 07/02/97 1,126,000 1,126,000
NR, A-1 New York City, Industrial Development
Authority, Civic Facilities Revenue,
Columbia Grammar School Project,
(Chase Manhattan Bank LOC) ................... 4.00 07/02/97 1,850,000 1,850,000
MIG1, A-1+ New York City, Municipal Water Finance
Authority, Water & Sewer System Revenue,
Series A (FGIC Insured) ...................... 5.50 07/01/97 3,100,000 3,100,000
</TABLE>
9
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS* (CONTINUED)
MIG1, A-1+ New York City, Municipal Water Finance
Authority, Water & Sewer System Revenue,
Series C (FGIC Insured) ...................... 4.15% 07/01/97 $ 200,000 $ 200,000
MIG1, A-1+ New York City, Trust for Cultural Resources,
American Museum of Natural History,
Series A (MBIA Insured) ...................... 4.05 07/02/97 400,000 400,000
MIG1, A-1 New York City, Trust for Cultural Resources,
Carnegie Hall (Dai-Ichi Kangyo
Bank LOC) .................................... 3.90 07/02/97 400,000 400,000
P-1, A-1+ New York City, Trust for Cultural Resources,
Carnegie Hall (Dai-Ichi Kangyo
Bank LOC) .................................... 3.90 07/02/97 2,200,000 2,200,000
MIN1, A-1 New York City, Trust for Cultural Resources,
Museum of Broadcasting (Kredietbank
N.V. LOC) .................................... 4.10 07/02/97 800,000 800,000
MIG1, NR New York State Dormitory Authority
(AMBAC Insured) .............................. 4.25 07/02/97 4,300,000 4,300,000
MIG1, SP1+ New York State Energy, Research &
Development Authority, Brooklyn Union
Gas Co. Project, Series A-1,
(MBIA Insured) ............................... 4.05 07/02/97 2,000,000 2,000,000
P-1, NR New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, Series A
(Toronto Dominion Bank LOC) .................. 4.15 07/01/97 1,000,000 1,000,000
NR, A-1+ New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, Series A
(Toronto Dominion Bank LOC) .................. 5.45 07/01/97 1,000,000 1,000,000
NR, A-1+ New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, Series B,
AMT (Morgan Guaranty Trust LOC) .............. 5.50 07/01/97 1,800,000 1,800,000
P1-, NR New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, Series B
(Toronto Dominion Bank LOC) .................. 4.10 07/01/97 1,300,000 1,300,000
</TABLE>
10
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS* (CONTINUED)
P-1, NR New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, Series C
(Canadian Imperial Bank LOC) ................. 4.10% 07/01/97 $1,200,000 $ 1,200,000
NR, A-1+ New York State Energy, Research &
Development Authority, PCR, Niagara
Mohawk Power Corp. Project, AMT
(Morgan Guaranty Trust LOC) .................. 5.50 07/01/97 1,800,000 1,800,000
MIG1, A-1+ New York State Energy, Research &
Development Authority, PCR, Orange &
Rockland Utilities Project, Series A
(Societe Generale, NY LOC) ................... 4.05 07/02/97 2,000,000 2,000,000
VMIG, A1+ New York State Housing Financial Agency,
Multifamily Housing Revenue, Series A,
(AMBAC Insured) .............................. 4.10 07/02/97 1,100,000 1,100,000
MIG1, A-1+ New York State Local Government Assistance
Corp., Series A (Union Bank of Switzerland,
Suisse Bank, Credit Suisse LOC) .............. 4.00 07/02/97 1,400,000 1,400,000
MIG1, A-1+ New York State Local Government Assistance
Corp., Series B (Credit Suisse, Suisse
Bank LOC) .................................... 4.05 07/02/97 400,000 400,000
MIG1, A-1+ New York State Local Government Assistance
Corp., Series F (Toronto Dominion
Bank LOC) .................................... 4.05 07/02/97 800,000 800,000
A, A New York State Urban Development Corp. ........ 5.00 07/01/97 1,715,000 1,715,000
MIG1, A-1 Niagara Falls Bridge Commission, Toll
Revenue, Series A (FGIC Insured) ............. 4.05 07/02/97 1,300,000 1,300,000
MIG1, A-1+ Triborough Bridge & Tunnel Authority,
Special Obligation (FGIC Insured) ............ 4.15 07/02/97 400,000 400,000
VMI1, Aa1 Wallkill Industrial Development Agency, PCR,
Reynolds Metal Co. Project (Dresdner Bank
A.G. NY LOC) ................................. 4.00 07/02/97 500,000 500,000
MIG1, NR Yonkers Industrial Development Agency, Civic
Facilities Revenue, Consumer Union Facility
(Industrial Bank of Japan LOC) ............... 3.95 07/02/97 900,000 900,000
------------
TOTAL VARIABLE MUNICIPAL BONDS (Cost - $45,806,000) ........................... 45,806,000
------------
</TABLE>
11
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
INTEREST/
CREDIT RATING SECURITY DISCOUNT MATURITY PRINCIPAL
MOODY'S/S&P DESCRIPTION RATE DATE AMOUNT VALUE
- ------------- ----------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
TIME DEPOSITS (1.1%)
P1, A1 Bank of New York ............................. 5.25% 07/01/97 $ 822,000 $ 822,000
-----------
TOTAL TIME DEPOSITS (Cost - $822,000) ......................................... 822,000
-----------
OPEN-END INVESTMENT COMPANIES (8.9%)
Dreyfus New York Municipal Cash
Management Fund ............................ 3,000,000 3,000,000
Provident Institutional New York
Money Fund ................................. 3,700,000 3,700,000
-----------
TOTAL OPEN-END INVESTMENT COMPANIES (Cost - $6,700,000) ....................... 6,700,000
-----------
CASH SWEEP ACCOUNT (0.0%)
Bank of New York** ........................... 4.60 538 538
-----------
TOTAL CASH SWEEP ACCOUNT (Cost - $538) ........................................ 538
-----------
TOTAL INVESTMENTS (102.2%)
(Cost - $76,827,825)(a) ..................................................... 76,827,825
LIABILITIES IN EXCESS OF OTHER ASSETS (-2.2%) ................................. (1,686,045)
-----------
NET ASSETS (100.0%) ........................................................... $75,141,780
-----------
<FN>
- -----------------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate presented represents rate in effect at June 30,
1997. Date presented represents next rate change date.
** Variable rate account. Rate presented represents rate in effect at June 30,
1997.
AMBAC - AMBAC Indemnity Corp.
AMT - Alternative Minimum Tax Paper
BANS - Bankers Acceptance Notes
FGIC - Financial Guaranty Insurance Corporation
FNMA - Federal National Mortgage Association
GO - General Obligation
LOC - Letter of Credit
MBIA - Municipal Bond Investors Assurance
NR - Not rated
PCR - Pollution Control Revenue
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
[This page intentionally left blank.]
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
CASH GOVERNMENT U.S. TREASURY TAX-FREE
MANAGEMENT MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
--------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(cost $158,395,266, $63,376,815, $9,011,473
and $76,827,825, respectively) .................... $158,395,266 $63,376,815 $ 9,011,473 $76,827,825
Repurchase Agreements, at value
(cost $18,777,000, $18,663,000, $15,876,000
and $0, respectively) ............................. 18,777,000 18,663,000 15,876,000 --
------------ ----------- ----------- -----------
....................................................... 177,172,266 82,039,815 24,887,473 76,827,825
Interest and dividends receivable ................... 2,307,341 625,401 35,022 561,202
Prepaid expenses and other assets ................... 68,827 19,788 8,364 22,065
------------ ----------- ----------- -----------
Total Assets ........................................... 179,548,434 82,685,004 24,930,859 77,411,092
------------ ----------- ----------- -----------
LIABILITIES:
Dividends payable ................................... 711,892 282,612 111,104 213,561
Payable for investments purchased ................... -- 14,989,500 -- 2,006,540
Accrued expenses and other payables:
Investment advisory fees .......................... 49,650 20,338 5,747 7,182
Administration fees ............................... 14,512 5,902 2,312 11,864
Distribution fees ................................. 965 -- 570 --
Transfer agent fees ............................... -- -- 4,648 --
Legal and audit fees .............................. 18,216 6,091 3,944 7,328
Deferred trustee fees ............................. 30,594 22,491 19,817 20,969
Other ............................................. 11,495 4,615 7,698 1,868
------------ ----------- ----------- -----------
Total Liabilities ...................................... 837,324 15,331,549 155,840 2,269,312
------------ ----------- ----------- -----------
Net Assets ............................................. $178,711,110 $67,353,455 $24,775,019 $75,141,780
============ =========== =========== ===========
COMPUTATION OF NET ASSET VALUE:
Net assets .......................................... $178,711,110 $67,353,455 $24,775,019 $75,141,780
Shares of beneficial interest issued and outstanding
($.001 par value per share, unlimited number
of shares authorized) ............................. 178,716,327 67,354,899 24,773,227 75,149,541
------------ ----------- ----------- -----------
Net asset value, offering price and redemption
price per share ................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ =========== =========== ===========
COMPOSITION OF NET ASSETS:
Paid-in capital ..................................... $178,716,851 $67,354,898 $24,773,571 $75,206,052
Distributions in excess of net investment income -- (867) -- --
Accumulated undistributed net realized gains
(losses) from investment transactions ............. (5,741) (576) 1,448 (64,272)
------------ ----------- ----------- -----------
Net Assets, June 30, 1997 .............................. $178,711,110 $67,353,455 $24,775,019 $75,141,780
============ =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
CASH GOVERNMENT U.S. TREASURY TAX-FREE
MANAGEMENT MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
--------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 4,818 $ 3,552 $ 14,479 $ 45,486
Interest ............................................ 5,498,425 1,917,760 737,867 1,355,260
---------- ---------- -------- ----------
Total Income ........................................ 5,503,243 1,921,312 752,346 1,400,746
---------- ---------- -------- ----------
EXPENSES:
Advisory fees ....................................... 342,945 121,769 48,455 136,843
Administration fees ................................. 146,978 52,187 20,766 58,648
Co-administration fees .............................. 68,589 24,354 9,691 27,369
Distribution fees ................................... 11,984 2,462 1,743 6,182
Audit fees .......................................... 17,908 6,268 3,245 6,852
Transfer agent fees ................................. 50,719 16,131 21,152 17,719
Custodian fees ...................................... 11,198 5,995 5,852 5,246
Printing costs ...................................... 14,009 5,850 2,717 4,888
Registration fees ................................... 6,233 1,727 1,177 1,276
Legal fees .......................................... 28,154 8,107 2,706 10,043
Trustees fees ....................................... 11,312 4,169 1,716 3,678
Other expenses ...................................... 13,959 4,867 1,653 4,530
---------- ---------- -------- ----------
Gross Expenses ......................................... 723,988 253,886 120,873 283,274
Less: Fee waivers ................................... (117,842) (41,784) (16,613) (105,760)
Less: Reimbursements ................................ -- -- (14,371) --
---------- ---------- -------- ----------
Net Expenses ........................................... 606,146 212,102 89,889 177,514
---------- ---------- -------- ----------
Net Investment Income .................................. 4,897,097 1,709,210 662,457 1,223,232
---------- ---------- -------- ----------
REALIZED AND UNREALIZED
GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions ...................................... 5 18 1,448 (7,385)
---------- ---------- -------- ----------
Net Increase in Net Assets
Resulting from Operations ......................... $4,897,102 $1,709,228 $663,905 $1,215,847
---------- ---------- -------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
GOVERNMENT
CASH MANAGEMENT FUND MONEY MARKET FUND
----------------------------------- ---------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
JUNE 30, 1997 YEAR ENDED JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996 (UNAUDITED) DECEMBER 31, 1996
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
From Investment Activities:
OPERATIONS:
Net investment income ................................ $ 4,897,097 $ 9,593,928 $ 1,709,210 $ 3,440,009
Net realized gains (losses) from investment
transactions ....................................... 5 (2,993) 18 (342)
------------- --------------- ------------- -------------
Change in net assets resulting from operations ....... 4,897,102 9,590,935 1,709,228 3,439,667
------------- --------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ........................... (4,897,097) (9,593,928) (1,709,210) (3,440,009)
In excess of net investment income ................... -- -- -- (867)
------------- --------------- ------------- -------------
Change in net assets from shareholder
distributions ..................................... (4,897,097) (9,593,928) (1,709,210) (3,440,876)
------------- --------------- ------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .......................... 695,467,563 1,165,750,259 106,782,160 222,091,173
Dividends reinvested ................................. 2,037,458 3,331,841 608,646 1,134,318
Cost of shares redeemed .............................. (739,753,712) (1,118,988,159) (127,429,005) (222,682,793)
------------- --------------- ------------- -------------
Change in net assets from share transactions ......... (42,248,691) 50,093,941 (20,038,199) 542,698
------------- --------------- ------------- -------------
Change in net assets .................................... (42,248,686) 50,090,948 (20,038,181) 541,489
NET ASSETS:
Beginning of period ..................................... 220,959,796 170,868,848 87,391,636 86,850,147
------------- --------------- ------------- -------------
End of period ........................................... $ 178,711,110 $ 220,959,796 $ 67,353,455 $ 87,391,636
------------- --------------- ------------- -------------
SHARE TRANSACTIONS:
Issued ............................................... 695,467,563 1,165,750,259 106,782,160 222,091,173
Reinvested ........................................... 2,037,458 3,331,841 608,646 1,134,318
Redeemed ............................................. (739,753,712) (1,118,988,159) (127,429,005) (222,682,793)
------------- --------------- ------------- -------------
Change in shares ........................................ (42,248,691) 50,093,941 (20,038,199) 542,698
============= =============== ============= =============
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND
---------------------------------- ----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
JUNE 30, 1997 YEAR ENDED JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996 (UNAUDITED) DECEMBER 31, 1996
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
From Investment Activities:
OPERATIONS:
Net investment income ................................ $ 662,457 $ 1,376,970 $ 1,223,232 $ 1,911,584
Net realized gains (losses) from investment
transactions ....................................... 1,448 343 (7,385) (240)
------------- ------------- ------------ ------------
Change in net assets resulting from operations ....... 663,905 1,377,313 1,215,847 1,911,344
------------- ------------- ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ........................... (662,457) (1,376,970) (1,223,232) (1,911,584)
In excess of net investment income ................... -- -- -- --
------------- ------------- ------------ ------------
Change in net assets from shareholder
distributions ..................................... (662,457) (1,376,970) (1,223,232) (1,911,584)
------------- ------------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .......................... 132,282,324 144,331,089 89,527,238 98,191,108
Dividends reinvested ................................. 263,588 567,034 753,491 1,135,887
Cost of shares redeemed .............................. (136,734,817) (148,436,061) (85,470,258) (93,871,590)
------------- ------------- ------------ ------------
Change in net assets from share transactions ......... (4,188,905) (3,537,938) 4,810,471 5,455,405
------------- ------------- ------------ ------------
Change in net assets .................................... (4,187,457) (3,537,595) 4,803,086 5,455,165
NET ASSETS:
Beginning of period ..................................... 28,962,476 32,500,071 70,338,694 64,883,529
------------- ------------- ------------ ------------
End of period ........................................... $ 24,775,019 $ 28,962,476 $ 75,141,780 $ 70,338,694
------------- ------------- ------------ ------------
SHARE TRANSACTIONS:
Issued ............................................... 132,282,324 144,331,089 89,527,238 98,191,108
Reinvested ........................................... 263,588 567,034 753,491 1,135,887
Redeemed ............................................. (136,734,817) (148,436,061) (85,470,258) (93,871,590)
------------- ------------- ------------ ------------
Change in shares ........................................ (4,188,905) (3,537,938) 4,810,471 5,455,405
============= ============= ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16-17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
HSBC Funds Trust, (the "Trust") was organized in Massachusetts on October
31, 1985 as a Massachusetts business trust, and is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as a diversified,
open-end 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 the Cash Management Fund, the Government Money
Market Fund and the U.S. Treasury 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 Money Market
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. The Cash
Management Fund invests in a variety of high quality, short-term money
market instruments, with remaining maturities of thirteen months or less.
The Government Money Market Fund invests exclusively in short-term
obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities with remaining maturities of thirteen months
or less, and repurchase agreements. The U.S. Treasury Money Market Fund
invests exclusively in short-term direct obligations of the United States
Treasury with remaining maturities of thirteen months or less, and
repurchase agreements. The New York Tax-Free Money Market Fund invests
primarily in high quality obligations issued by or on behalf of New York,
its cities, municipalities or other public authorities that are exempt from
regular federal, New York State and New York City income tax in the opinion
of bond counsel to the issuer with remaining maturities of thirteen months
or less.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their 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: The money market funds each value portfolio
securities at amortized cost, which approximates market value. The
amortized cost method involves valuing a security at cost on the date of
purchase and thereafter assuming a constant amortization to maturity of the
difference between the principal amount due at maturity and initial cost.
In addition, the money market funds may not (a) purchase any instrument
with a remaining maturity greater than thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
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, if any, to its shareholders for each taxable
year. Therefore, no provision is required for federal income tax.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At December 31, 1996, the Cash Management Fund had available $5,746 of
capital loss carryforwards which, if not utilized, $525, $2,228 and $2,993
will expire in the year 2002, 2003 and 2004, respectively.
At December 31, 1996, the Government Money Market Fund had available $594
of capital loss carryforwards which, if not utilized, $252 and $342 will
expire in the year 2003 and 2004, respectively.
At December 31, 1996, the New York Tax-Free Money Market Fund had available
$56,887 of capital loss carryforwards which, if not utilized, $22,404,
$29,192, $3,591, $1,324, $136 and $240 will expire in the year 1997, 1998,
2001, 2002, 2003 and 2004, respectively.
DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income are
declared daily to shareholders and are paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. However, to the
extent that net realized gains of a Fund can be reduced by any capital loss
carryovers of that Fund, such gains will not be distributed. Dividends and
distributions are recorded by the Funds on the ex-dividend date. The
amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent
in nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the composition of net assets based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions to shareholders which exceed
net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income or distributions in excess of net realized
gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distributions of capital.
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 on the basis of relative net assets or
another appropriate basis.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS
The Trust retains HSBC Asset Management Americas Inc. to act as Investment
Adviser for the Fund. HSBC Asset Management Americas Inc. is the North
American investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai
Banking Corporation). As Investment Adviser, HSBC Asset Management Americas
Inc. furnishes investment guidance and policy direction in connection with
the management of the investment portfolios of the Funds, subject to
policies established by the Board of Trustees.
As compensation for its services, HSBC Asset Management Americas Inc. is
paid monthly advisory fees at the following annual rates:
<TABLE>
<CAPTION>
ADVISORY FEE RATE
------------------------------------------------
U.S. NEW YORK
GOVERNMENT TREASURY TAX-FREE
CASH MONEY MONEY MONEY
MANAGEMENT MARKET MARKET MARKET
PORTIONS OF EACH FUND'S AVERAGE DAILY NET ASSETS FUND FUND FUND FUND
---------------------------------------------------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Up to $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%
</TABLE>
For the six months ended June 30,1997, HSBC Asset Management Americas Inc.
earned $342,945 from the Cash Management Fund, $121,769 from the Government
Money Market Fund, $48,455 from the U.S. Treasury Money Market Fund and
$78,040 (net of waivers) from the New York Tax-Free Money Market Fund.
HSBCAsset Management Americas Inc. waived $163 and $58,803 in advisory fees
for the Cash Management Fund and New York Tax-Free Money Market Fund,
respectively, for the six months ended June 30, 1997. HSBC Asset Management
Americas Inc. has voluntarily agreed to reimburse Fund expenses to the
extent a Fund's ordinary operating expenses exceed 0.65% of such Fund's
average daily net assets. For the six months ended June 30, 1997, HSBC
Asset Management Americas Inc. agreed to reimburse expenses totalling
$14,371 for the U.S.Treasury Money Market Fund pursuant to this voluntary
agreement.
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 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 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 a Fund's
first $200 million of average net assets; 0.125% of a Fund's next $200
million of average net assets; 0.10% of a Fund's next $200 million of
average net assets; and 0.08% of a Fund's average net assets in excess of
$600 million; exclusive of out-of-pocket expenses. For the six months ended
June 30, 1997, BISYS earned administrative services fees of $97,888 from
the Cash Management Fund, $34,757 from the Government Money Market Fund,
$13,830 from the U.S. Treasury Money Market Fund and $39,060 from the New
York Tax-Free Money Market Fund, net of fee waivers of $49,090, $17,430,
$6,922, and $19,588, respectively.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
HSBC Asset Management Americas Inc. earned co-administration/shareholder
servicing fees of 0.07% of each Fund's average net assets totaling $68,589
from the Cash Management Fund, $24,354 from the Government Money Market
Fund, $9,691 from the U.S. Treasury Money Market Fund and $27,369 from the
New York Tax-Free Money Market Fund for the six months ended June 30, 1997.
For the six months ended June 30, 1997, HSBC Asset Management Americas Inc.
waived all of their fees with respect to the co-administration/ shareholder
servicing agreement.
The Trust has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the 1940 Act. The Plan provides for a monthly
payment by a 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
$11,984 from the Cash Management Fund, $2,462 from the Government Money
Market Fund, $1,743 from the U.S. Treasury Money Market Fund, and $6,182
from the New York Tax-Free Money Market Fund for the six months ended June
30, 1997.
The Fund 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 administration services for its customers who invest in the Funds
through accounts maintained at that Service Organization. Each Service
Organization will receive monthly payments for the performance of its
service under the Service Agreement. The payments from the Funds on an
annual basis will not exceed 0.35% 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. For the six months ended June 30, 1997 legal fees
incurred by the Funds totalled $28,154 for the Cash Management Fund, $8,107
for the Government Money Market Fund, $2,706 for the U.S. Treasury Money
Market Fund and $10,043 for the New York Tax-Free Money Market Fund,
respectively.
4. CONCENTRATION OF CREDIT
The New York Tax-Free Money Market Fund invests primarily in debt
obligations issued by the State ofNew York and its respective political
subdivisions, agencies and public authorities to obtain funds for various
public purposes. TheFund is more susceptible to economic and political
factors adversely affecting issuers of New York specific municipal
securities than is a municipal bond fund that is not concentrated in these
issuers to the same extent.
21
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
<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 .................. 0.025 0.049 0.053 0.039 0.027 0.037
Net realized and unrealized gains
from investments .................... -- -- -- -- 0.002 --
-------- -------- -------- -------- -------- --------
Total from Investment Activities ....... 0.025 0.049 0.053 0.039 0.029 0.037
-------- -------- -------- -------- -------- --------
Distributions
From net investment income ............. (0.025) (0.049) (0.053) (0.039) (0.027) (0.037)
From net realized gains ................ -- -- -- -- (0.002) --
-------- -------- -------- -------- -------- --------
Total distributions .................... (0.025) (0.049) (0.053) (0.039) (0.029) (0.037)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return ................................ 2.51%(b) 5.00% 5.41% 3.95% 3.11% 3.77%
Ratios/Supplemental Data:
Net assets at end of period (000) ...... $178,711 $220,960 $170,869 $200,492 $172,518 $246,543
Ratio of expenses to average
net assets .......................... 0.62%(c) 0.68% 0.79% 0.63% 0.58% 0.62%
Ratio of net investment income to
average net assets .................. 5.00%(c) 4.88% 5.29% 3.84% 2.88% 3.75%
Ratio of expenses to average
net assets* ......................... 0.74%(c) 0.80% 0.80% 0.64% 0.58% 0.62%
Ratio of net investment income to
average net assets* ................. 4.88%(c) 4.76% 5.28% 3.83% 2.88% 3.75%
<FN>
- ------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
(b) Not annualized.
(c) Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
<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 0.048 0.052 0.038 0.028 0.037
Net realized and unrealized gains
from investments .................... -- -- -- -- 0.001 --
------- ------- ------- -------- -------- --------
Total from Investment Activities ....... 0.024 0.048 0.052 0.038 0.029 0.037
------- ------- ------- -------- -------- --------
Distributions
From net investment income ............. (0.024) (0.048) (0.052) (0.038) (0.028) (0.037)
From net realized gains ................ -- -- -- -- 0.001) --
------- ------- ------- -------- -------- --------
Total distributions .................... (0.024) (0.048) (0.052) (0.038) (0.029) (0.037 )
------- ------- ------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======== ======== ========
Total Return ................................ 2.46%(b) 4.87% 5.32% 3.83% 2.99% 3.80%
Ratios/Supplemental Data:
Net assets at end of period (000) ...... $67,353 $87,392 $86,850 $166,796 $138,085 $246,327
Ratio of expenses to average
net assets .......................... 0.61%(c) 0.72% 0.76% 0.63% 0.61% 0.62%
Ratio of net investment income to
average net assets .................. 4.91%(c) 4.75% 5.21% 3.76% 2.89% 3.72%
Ratio of expenses to average
net assets* ......................... 0.73%(c) 0.84% 0.78% 0.64% 0.61% 0.62%
Ratio of net investment income to
average net assets* ................. 4.79%(c) 4.63% 5.19% 3.75% 2.89% 3.72%
<FN>
- ------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
(b) Not annualized.
(c) Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
<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 0.046 0.049 0.036 0.026 0.032
------- ------- ------- -------- -------- --------
Distributions
From net investment income ............. (0.024) (0.046) (0.049) (0.036) (0.026) (0.032)
------- ------- ------- -------- -------- --------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======== ======== ========
Total Return ................................ 2.40%(b) 4.68% 5.04% 3.60% 2.65% 3.27%
Ratios/Supplemental Data:
Net assets at end of period (000) ...... $24,775 $28,962 $32,500 $105,720 $133,070 $257,898
Ratio of expenses to average
net assets .......................... 0.65%(c) 0.78% 0.82% 0.68% 0.59% 0.67%
Ratio of net investment income to
average net assets .................. 4.78%(c) 4.57% 4.94% 3.48% 2.62% 3.22%
Ratio of expenses to average
net assets* ......................... 0.87%(c) 0.95% 0.84% 0.69% 0.59% 0.67%
Ratio of net investment income to
average net assets* ................. 4.56%(c) 4.40% 4.92% 3.47% 2.62% 3.22%
<FN>
- ------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
(b) Not annualized.
(c) Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- -------- -------- -------- -------- --------
<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 .................. 0.016 0.029 0.031 0.022 0.018 0.024
------- ------- ------- ------- ------- -------
Distributions
From net investment income ............. (0.016) (0.029) (0.031) (0.022) (0.018) (0.024)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return ................................ 1.57%(b) 2.92% 3.17% 2.23% 1.86% 2.44%
Ratios/Supplemental Data:
Net assets at end of period (000) ...... $75,142 $70,339 $64,884 $53,538 $59,394 $56,386
Ratio of expenses to average
net assets .......................... 0.45%(c) 0.59% 0.69% 0.57% 0.55% 0.56%
Ratio of net investment income to
average net assets .................. 3.13%(c) 2.88% 3.13% 2.20% 1.85% 2.41%
Ratio of expenses to average
net assets* ......................... 0.72%(c) 0.87% 0.85% 0.73% 0.72% 0.73%
Ratio of net investment income to
average net assets* ................. 2.86%(c) 2.60% 2.97% 2.04% 1.68% 2.24%
<FN>
- ------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
(b) Not annualized.
(c) Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
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<PAGE>
HSBC(SERVICE MARK) FUNDS TRUST
3435 Stelzer Road
Columbus,Ohio 43219
INFORMATION:
(800) 634-2536
INVESTMENT ADVISER
HSBC Asset Management Americas Inc.
250 Park Avenue
New York, New York 10177
DISTRIBUTOR, ADMINISTRATOR, TRANSFER
AND DIVIDEND DISBURSING AGENT
BISYSFund 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.
8/97
