<PAGE>
HSBC Funds Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC Asset Management Americas Inc. [Logo]
- --------------------------------------------------------------------------------
Cash Management Fund
Government Money Market Fund
U.S. Treasury Money Market Fund
New York Tax-Free Money Market Fund
------------------------------------------------------------------
July 26, 1999
Dear Shareholders:
As the year began, the United States continued its second longest economic
expansion (into its ninth year), as growth forecasts continued on an up swing.
The economy caused GDP growth forecasts for 1999 to be revised upward to the
3.3% to 3.8% range and inflation remained subdued, a rarity in an extended
economic expansion. In particular, both retail and wholesale inflation remained
under control and wage pressures offered little concern. Lastly, the Federal
Reserve was quiet during the first quarter after lowering interest rates 75
basis points during the last hundred days of 1998.
But, all this changed as we entered the second quarter with market sentiment
driving yields higher. In particular, the May 13th release of the Consumer
Price Index and its Core component showed gains that were far in excess of
street estimates. The reaction of the markets was traumatic as the long bond
dropped over 2 points and its yield fell short of 6%. Additionally, in the
short end, one year LIBOR (London Interbank Offered Rate) rose from 5.35% to
5.49% and the yields on money market instruments rose 5-10 basis points.
With the Federal Reserve's preoccupation with inflation, Mr. Greenspan made
comments that a small rate hike was in the future. The markets listened and
were well prepared for the interest rate hike of 25 basis points to 5.00% after
the June 30th FOMC (Federal Open Market Committee) meeting.
As in the past, our main objective is to ensure that the HSBC Money Market
Funds reflect the highest standards characterized by safety, stability, service
and performance. HSBC Asset Management values our relationship and we
appreciate this chance to work on your behalf.
Sincerely,
/s/ Edward J. Merkle
Edward J. Merkle
Managing Director, Fixed Income
- ------
The views expressed in this report reflect those of the portfolio manager
through the end of the period covered by the report as stated on the cover. The
manager's views are subject to change at any time based on the market and other
conditions. Past performance is no guarantee of future results.
<PAGE>
Board of Trustees
WOLFE J. FRANKL Former Director, North America, Berlin Economic
Development Corporation
JEFFREY J. HASS
Professor of Law, New York Law School
RICHARD J. LOOS
Vice Chairman Emeritus
CLIFTON H.W. MALONEY
President, C.H.W. Maloney & Co. Incorporated
JOHN C. MEDITZ
President, Horizon Asset Management, Inc.
HARALD PAUMGARTEN
President, Paumgarten and Company
JOHN P. PFANN
Chairman and President, JPP Equities, Inc.
ROBERT A. ROBINSON
Trustee, Henrietta and B. Frederick H. Bugher
Foundation
- --------------------------------------------------------------------------------
Officers
WALTER B. GRIMM President
ERIC F. ALMQUIST Senior Vice President
ANTHONY J. FISCHER Vice President
CHARLES L. BOOTH Vice President
JOEL B. ENGLE Treasurer
STEVEN R. HOWARD Secretary
ALAINA V. METZ Assistant Secretary
ROBERT L. TUCH Assistant Secretary
2
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (16.9%):
Banking and Financial Services
(16.9%):
P-1, A-1+ Banco Itau SA,
(LOC-Bayerische Vereinsbank)... 5.62% 3/2/00 $ 5,000,000 $ 4,818,632
P-1, A-1+ Capital USA Funding II.......... 4.93 7/1/99 18,900,000 18,900,000
P-1, A-1+ Exxon Project................... 5.70 7/1/99 10,000,000 10,000,000
P-1, A-1+ Paccar Finance Corp............. 4.66 7/23/99 10,000,000 9,971,583
P-1, A-1 Yamaha Motor Finance Corp.,
(LOC-Chase Manhattan Bank)..... 4.91 7/9/99 10,000,000 9,989,111
------------
Total Commercial Paper (Amortized Cost - $53,679,326)......... 53,679,326
------------
MEDIUM TERM NOTES (58.4%):
Banking and Financial Services
(58.4%):
P-1, A-1 American Express Centurion
Bank*.......................... 4.95 7/1/99 18,000,000 18,000,000
P-1, A-1+ Associates Corp.*............... 4.90 7/20/99 18,000,000 17,991,043
P-1, A-1 Bear Stearns Co., Inc.*......... 4.93 7/14/99 6,400,000 6,400,000
P-1, A-1 Bear Stearns Co., Inc.*......... 5.16 7/14/99 9,600,000 9,600,000
P-1, A-1+ Canadian Imperial Bank of
Commerce*...................... 4.88 7/1/99 19,100,000 19,089,516
P-1, A-1+ Deutsche Bank New York*......... 4.88 7/1/99 16,300,000 16,291,984
P-1, A-1 General Motors Acceptance
Corp.*......................... 5.02 7/1/99 15,000,000 15,002,167
P-1, A-1+ Goldman Sachs Group*............ 5.18 7/1/99 15,000,000 14,991,961
P-1, A-1 John Deere Capital Corp.*....... 4.90 7/1/99 19,000,000 18,997,311
P-1, A-1+ Merrill Lynch & Co.*............ 5.11 8/23/99 18,000,000 18,006,914
P-1, A-1+ Nationsbank Corp.*.............. 5.12 10/22/99 12,000,000 12,003,533
P-1, A-1+ Royal Bank of Canada*........... 4.88 7/1/99 19,100,000 19,089,515
------------
Total Medium Term Notes (Amortized Cost - $185,463,944)....... 185,463,944
------------
U.S. TREASURY BILLS (3.0%):
Aaa, AAA U.S. Treasury Bills............. 4.85 4/27/00 10,000,000 9,615,389
------------
Total U.S. Treasury Bills (Amortized Cost - $9,615,389)....... 9,615,389
------------
YANKEE CERTIFICATES OF DEPOSIT
(21.3%):
Banking and Financial Services
(21.3%):
P-1, A-1+ ABN-Amro Bank NV................ 5.23 3/10/00 10,000,000 9,998,230
P-1, A-1+ Bankers Trust Co................ 5.50 3/10/00 15,000,000 15,000,000
P-1, A-1+ Bayerische Hypotheken
Vereinsbank.................... 5.07 2/10/00 10,000,000 9,985,177
P-1, A-1+ Chase Manhattan Bank............ 5.37 5/22/00 8,000,000 7,995,881
P-1, A-1+ Commerzbank AG.................. 5.07 2/9/00 17,800,000 17,794,006
P-1, A-1 Svenska Handelsbanken........... 5.28 3/3/00 6,900,000 6,896,423
------------
Total Yankee Certificates of Deposit (Amortized Cost -
$67,669,717)................................................ 67,669,717
------------
</TABLE>
3
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited) (continued)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Security
Description Shares Value
----------- ------ -----
<C> <S> <C> <C>
OPEN END INVESTMENT COMPANIES (0.1%):
Provident Institutional Temporary
Investment Fund.......................... 423,000 $ 423,000
------------
Total Open End Investment Companies (Amortized
Cost - $423,000).................................. 423,000
------------
TOTAL INVESTMENTS (99.7%)
(Amortized Cost - $316,851,376)(a)................ 316,851,376
OTHER ASSETS IN EXCESS OF LIABILITIES (0.3%)....... 933,711
------------
TOTAL NET ASSETS (100.0%).......................... $317,785,087
============
</TABLE>
- --------
Percentages indicated are based on net assets of $317,785,087.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate represents rate in effect at June 30, 1999.
Date presented represents the next rate change date.
AG -- Aktiengesellschaft (German stock company).
LOC -- Letter of Credit.
SA -- Societe Anonyme (French corporation).
See Notes to Financial Statements.
4
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited)
GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
Shares or
Moody's/S&P Maturity Principal
Ratings Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
U.S. Government Agency
Obligations (97.4%):
Aaa, N/R Federal Home Loan
Mortgage Corp.*......... 5.35% 7/7/99 $ 3,000,000 $ 2,998,861
Aaa, N/R Federal Home Loan Bank... 5.05 3/1/00 5,000,000 5,000,000
Aaa, N/R Federal Home Loan Bank... 4.98 3/29/00 4,000,000 3,996,017
Aaa, N/R Federal Home Loan Bank*.. 4.82 7/1/99 15,000,000 15,000,000
Aaa, N/R Student Loan Marketing
Association*............ 4.81 7/1/99 17,000,000 16,996,772
Aaa, N/R Student Loan Marketing
Association............. 5.17 7/12/99 10,400,000 10,397,333
-----------
Total U.S. Government Agency Obligations (Amortized
Cost - $54,388,983)................................ 54,388,983
-----------
Open End Investment
Companies (1.9%):
Fedfund Money Market.................... 1,088,000 1,088,000
-----------
Total Open End Investment Companies (Amortized
Cost - $1,088,000)................................. 1,088,000
-----------
TOTAL INVESTMENTS (99.3%)
(Amortized Cost - $55,476,983)(a).................. 55,476,983
OTHER ASSETS IN EXCESS OF LIABILITIES (0.7%)........ 371,280
-----------
TOTAL NET ASSETS (100.0%)........................... $55,848,263
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $55,848,263.
(a) Cost and value for federal income tax and financial reporting purposes
are the same.
* Variable rate security. Rate represents rate in effect at June 30, 1999.
Date presented represents the next rate change date.
N/R -- Not rated.
See Notes to Financial Statements.
5
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited)
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
Shares or
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS (16.4%):
Aaa, AAA U.S. Treasury Notes...... 6.38% 7/15/99 $2,500,000 $ 2,500,843
Aaa, AAA U.S. Treasury Notes...... 5.88 8/31/99 2,500,000 2,501,564
-----------
Total U.S. Government Obligations
(Amortized Cost - $5,002,407)..................... 5,002,407
-----------
U.S. TREASURY BILLS
(37.4%):
Aaa, AAA U.S. Treasury Bills...... 4.36 8/19/99 2,500,000 2,485,556
Aaa, AAA U.S. Treasury Bills...... 4.94 11/26/99 2,200,000 2,156,496
Aaa, AAA U.S. Treasury Bills...... 4.72 3/2/00 2,000,000 1,938,682
Aaa, AAA U.S. Treasury Bills...... 4.66 3/30/00 2,500,000 2,415,825
Aaa, AAA U.S. Treasury Bills...... 4.76 4/27/00 2,500,000 2,405,518
-----------
Total U.S. Treasury Bills
(Amortized Cost - $11,402,078).................... 11,402,077
-----------
REPURCHASE AGREEMENTS
(46.0%):
N/R, N/R Bear Stearns Co., Inc.,
(Purchased 6/1/99,
collateralized by
$7,610,000 U.S. Treasury
Strips, 8/15/00, market
value $7,160,000)....... 4.75 7/1/99 7,000,000 7,000,000
N/R, N/R Donaldson, Lufkin &
Jenrette Securities
Corp., (Purchased
6/15/99, collateralized
by $13,827,000 U.S.
Treasury Strips,
11/15/09, market value
$7,165,000)............. 4.70 7/1/99 7,000,000 7,000,000
-----------
Total Repurchase Agreements
(Amortized Cost - $14,000,000).................... 14,000,000
-----------
OPEN END INVESTMENT
COMPANIES (0.2%):
Provident Institutional Temporary
Investment Fund........................ 64,000 64,000
-----------
Total Open End Investment Companies
(Amortized Cost - $64,000)........................ 64,000
-----------
TOTAL INVESTMENTS (100.0%)
(Amortized Cost - $30,468,485)(a)................. 30,468,484
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0%)....... (2,641)
-----------
TOTAL NET ASSETS (100.0%).......................... $30,465,843
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $30,465,843.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See Notes to Financial Statements.
6
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- ------
<C> <S> <C> <C> <C> <C>
MUNICIPAL SHORT TERM
PAPER (15.8%):
P-1, A-1+ Long Island Power
Authority
(LOC - Westdeutsche
Landesbank, Bayerische
Vereinsbank)............ 3.05% 7/21/99 $5,000,000 $ 5,000,000
P-1, A-1+ New York City, GO (MBIA
Insured)................ 3.15 7/14/99 1,500,000 1,500,000
P-1, A-1 New York City, Municipal
Water Authority (LOC -
Westdeutsche
Landesbank)............. 3.30 7/19/99 3,600,000 3,600,000
P-1, A-1+ New York City, Municipal
Water Authority
(LOC - Commerzbank,
Toronto Dominion Bank,
Bank of Nova Scotia).... 3.50 7/15/99 1,000,000 1,000,000
P-1, A-1 New York State,
Environmental Facilities
Corp. (LOC - Landesbank
Hessen, Bayerische
Vereinsbank)............ 3.00 7/13/99 2,500,000 2,500,000
P-1, A-1 New York State, Power
Authority (LOC - Bank of
Nova Scotia, Commerz
Bank, Toronto Dominion,
Morgan Guaranty,
Landesbank-Hessen,
Credit Local de
France)................. 3.05 7/8/99 3,000,000 3,000,000
------------
Total Municipal Short Term Paper (Amortized
Cost - $16,600,000)............................... 16,600,000
------------
MANDATORY PUT MUNICIPAL
BONDS (1.9%):
P-1, A-1 Puerto Rico Industrial,
Medical & Environmental
Financing Authority,
Pollution Control
Revenue, Reynolds Metals
Co. Project (LOC - ABN
AMRO Bank NV) Putable
9/1/99 @ 100*........... 3.60 9/1/13 2,000,000 2,000,000
------------
Total Mandatory Put Municipal Bonds (Amortized
Cost - $2,000,000)................................ 2,000,000
------------
NON-VARIABLE MUNICIPAL
BONDS (20.8%):
Aaa, AAA City University of New
York, John Jay College,
Certificate
Participation (MBIA
Insured)................ 4.10 8/15/99 500,000 500,331
A3, A- New York City, GO, Series
L....................... 5.25 8/1/99 1,630,000 1,632,042
A3, A- New York City, GO, Sub-
Series H1............... 5.30 8/1/99 1,900,000 1,902,770
Aaa, AAA New York City,
Metropolitan Transit
Authority, Service
Contract, Prerefunded
7/1/00 @ 101.50......... 7.50 7/1/19 1,000,000 1,054,273
Aaa, AAA New York City, Transit
Authority, Series A
(AMBAC Insured)*........ 4.40 1/1/00 2,340,000 2,350,600
A3, A New York Metropolitan
Transit Authority
Revenue, Series A....... 4.00 4/1/00 4,000,000 4,022,799
Aaa, AAA New York State, Dormitory
Authority, City
University Revenue,
Series F (FGIC Insured),
Prerefunded 7/1/00
@ 102................... 7.50 7/1/20 500,000 530,144
</TABLE>
7
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- ------
<C> <S> <C> <C> <C> <C>
NON-VARIABLE MUNICIPAL BONDS
(continued)
AA1, N/R New York State, Dormitory
Authority, Grace Manor
Health Care Facility
Revenue.................. 4.80 7/1/99 $1,000,000 $ 1,000,000
Aaa, N/R New York State, Dormitory
Authority, Revenue,
Prerefunded 7/1/00
@ 102.................... 7.88 7/1/17 500,000 531,720
Aaa, AAA New York State, Dormitory
Authority, Rochester
Institute of Technology
Revenue (AMBAC Insured).. 4.00 7/1/00 480,000 483,043
A3, A+ New York State, Local
Government Assistance
Corp. Revenue, Series A.. 6.70 4/1/00 1,930,000 1,978,000
Aaa, AAA New York State, Urban
Development Corp. Revenue
(FSA Insured),
Prerefunded 1/1/00
@ 102.................... 7.50 1/1/20 1,800,000 1,872,591
Aaa, N/R North Hampstead, New York,
GO, Series A (FGIC
Insured)................. 4.50 1/15/00 1,000,000 1,006,841
VMIG1, A-1+ Puerto Rico Commonwealth,
Highway & Transportation
Authority Revenue
(LOC - Bank of Nova
Scotia)*................. 3.10 7/7/99 2,500,000 2,500,000
Aaa, AAA Westchester County, New
York, GO ................ 4.60 11/15/99 500,000 502,174
------------
Total Non-Variable Municipal Bonds (Amortized
Cost - $21,867,328)................................ 21,867,328
------------
VARIABLE MUNICIPAL BONDS
(65.5%):
VMIG1, N/R Albany, New York,
Institute of History,
Civic Facility Revenue,
(LOC - Keybank N.A.)*.... 3.30 7/7/99 2,000,000 2,000,000
VMIG1, A-1+ New York City, GO, Series
B (FGIC insured)*........ 4.00 7/1/99 1,000,000 1,000,000
VMIG1, A-1+ New York City, GO, Series
B (FGIC Insured)*........ 4.00 7/1/99 1,500,000 1,500,000
VMIG1, A-1 New York City, GO, Series
B, Sub-Series B3 (MBIA
Insured, SPA Bank of Nova
Scotia)*................. 3.70 7/1/99 1,700,000 1,700,000
VMIG1, A-1+ New York City, GO, Series
D (FGIC insured)*........ 3.30 7/7/99 1,100,000 1,100,000
VMIG1, A-1+ New York City, GO, Series
F-4, (LOC - Landesbank
Hessen)*................. 3.35 7/7/99 1,225,000 1,225,000
VMIG1, N/R New York City, GO, Sub-
Series A-4
(LOC - Landesbank
Hessen)*................. 3.35 7/7/99 1,000,000 1,000,000
VMIG1, N/R New York City, GO, Sub-
Series A-4, (LOC - Chase
Manhattan Bank)*......... 3.50 7/1/99 200,000 200,000
VMIG1, A-1+ New York City, GO, Sub-
Series B-3, (LOC - Morgan
Guaranty Trust)*......... 4.00 7/1/99 150,000 150,000
</TABLE>
8
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- ------
<C> <S> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS (65.5%)
(continued)
VMIG1, A-1+ New York City, GO, Sub-
Series J2
(LOC - Commerzbank AG)*.. 3.50 7/7/99 $3,300,000 $ 3,300,000
VMIG1, A-1+ New York City, Health &
Hospital Corp., Health
Systems Revenue, Series A
(LOC - Morgan Guaranty
Trust)*.................. 3.30 7/7/99 3,500,000 3,500,000
VMIG1, A-1+ New York City, Housing
Development Corp., Multi-
Family Rental Housing
Revenue, TriBeCa Tower,
Series A, AMT (FNMA
Collateral)*............. 3.25 7/7/99 2,000,000 2,000,000
N/R, A-1+ New York City, Housing
Development Corp.,
Special Obligation,
Montefiore Medical Center
Revenue, Series A
(LOC - Chase Manhattan
Bank)*................... 3.20 7/7/99 2,500,000 2,500,000
N/R, A-1 New York City, Industrial
Development Agency, Civic
Facilities Revenue,
Columbia Grammar School
Project, (LOC - Chase
Manhattan Bank)*......... 3.45 7/7/99 900,000 900,000
VMIG1, A-1+ New York City, Industrial
Development Agency,
Korean Airlines Special
Facilities Revenue,
Series C, AMT
(LOC - Bankers Trust
Company)*................ 3.45 7/7/99 2,800,000 2,800,000
VMIG1, A-1+ New York City, Municipal
Water Finance Authority,
Water & Sewer System
Revenue, Series A (FGIC
Insured)*................ 3.55 7/1/99 1,900,000 1,900,000
P-1, A-1+ New York City, Trust for
Cultural Resources
Revenue, Carnegie Hall
(LOC - Westdeutsche
Landesbank)*............. 3.45 7/7/99 400,000 400,000
VMIG1, A-1+ New York City, Trust for
Cultural Resources
Revenue, Carnegie Hall
(LOC - Westdeutsche
Landesbank)*............. 3.45 7/7/99 2,200,000 2,200,000
VMIG1, A-1 New York City, Trust for
Cultural Resources
Revenue, Museum of
Broadcasting
(LOC - Kredietbank NV)*.. 3.25 7/7/99 800,000 800,000
N/R, A-1+ New York State Energy
Research & Development
Authority Pollution
Control Revenue, Niagara
Mohawk Power, Series A
(LOC - Toronto Dominion
Bank)*................... 3.50 7/1/99 2,500,000 2,500,000
</TABLE>
9
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS (65.5%)
(continued)
VMIG1, A-1+ New York State Local
Government Assistance Corp.,
Revenue, Series B
(LOC - Credit Suisse First
Boston)*..................... 3.20 7/7/99 4,800,000 4,800,000
VMIG1, A-1+ New York State, Dormitory
Authority Revenue, Municipal
Securities Trust Receipts*... 3.70 7/7/99 4,300,000 4,300,000
VMIG1, A-1+ New York State, Dormitory
Authority, Cornell University
Revenue, Series-B (SPA Morgan
Guaranty Trust)*............. 3.40 7/1/99 2,800,000 2,800,000
MIG1, SP1+ New York State, Energy
Research & Development
Authority, Brooklyn Union Gas
Co. Project, Series A-1,
(MBIA Insured, SPA Union Bank
of Switzerland)*............. 3.35 7/7/99 4,805,000 4,805,000
P-1, N/R New York State, Energy,
Research & Development
Authority, Pollution Control
Revenue, Hudson Gas &
Electric, Series B
(LOC - Deutsche Bank A.G.)*.. 3.40 7/7/99 2,200,000 2,200,000
VMIG1, A-1+ New York State, Energy,
Research & Development
Authority, Pollution Control
Revenue, Orange & Rockland
Utilities Project, Series A
(LOC - Societe Generale)*.... 3.10 7/7/99 2,000,000 2,000,000
VMIG1, N/R New York State, Housing
Finance Agency Revenue,
Tribeca Pack Housing, Series
A (LOC - Bayerische
Hypotheken)*................. 3.30 7/7/99 2,000,000 2,000,000
VMIG1, N/R New York State, Housing
Finance Agency, Saxony
Housing Revenue, Series A
(LOC - Chase Manhattan
Bank)*....................... 3.30 7/7/99 3,300,000 3,300,000
VMIG1, N/R New York State, Housing
Finance Agency, Special
Surgery Staff Revenue
(LOC - Chase Manhattan
Bank)*....................... 3.20 7/7/99 1,494,000 1,494,000
P-1, A-1+ New York State, Niagara
County, Industrial
Development Agency, Solid
Waste Disposal Revenue,
Series A*.................... 3.40 7/7/99 590,000 590,000
VMIG1, A-1+ New York State, Township
Authority General Revenue
(FGIC Insured)*.............. 3.40 7/1/99 2,300,000 2,300,000
P-1, N/R Saint Lawrence County,
Industrial Development
Authority, Pollution Control
Revenue, Reynolds Metals Co.
Project (LOC - Bank of Nova
Scotia)*..................... 3.70 7/1/99 1,200,000 1,200,000
MIG1, N/R Syracuse, New York, GO, AMT... 3.75 5/19/00 3,000,000 3,001,047
</TABLE>
10
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Shares or
Moody's/S&P Security Maturity Principal
Ratings Description Rate Date Amount Value
----------- ----------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS (65.5%)
(continued)
VMIG1, N/R Wallkill, Industrial
Development Agency,
Pollution Control
Revenue, Reynolds
Metals Co. Project
Revenue (LOC - Dresdner
Bank AG)*.............. 3.75 7/7/99 $ 500,000 $ 500,000
VMIG1, N/R Yonkers, Industrial
Development Agency,
Civic Facilities
Revenue, Consumers
Union Facility
(LOC - Credit Local de
France)*............... 3.40 7/7/99 900,000 900,000
------------
Total Variable Municipal Bonds (Amortized
Cost - $68,865,047).............................. 68,865,047
------------
OPEN-END INVESTMENT
COMPANIES--0.3%
New York Money Fund.................... 349,139 349,139
------------
Total Open-End Investment Companies (Amortized
Cost - $349,139)................................. 349,139
------------
TOTAL INVESTMENTS
(Amortized Cost - $109,681,514)(a)--(104.3%)..... 109,681,514
LIABILITIES IN EXCESS OF OTHER ASSETS--(-4.3%).... (4,499,510)
------------
TOTAL NET ASSETS--(100.0%)........................ $105,182,004
============
</TABLE>
- --------
Percentages indicated are based on net assets of $105,182,004.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Date presented represents next put date.
AG - Aktiengesellschaft (German stock company)
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Tax Paper
FGIC - Financial Guaranty Insurance Corp.
FNMA - Federal National Mortgage Association
GO - General Obligation
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
N/R - Not Rated
NV - Naamloze Vennootschap (Dutch Corporation)
SPA - Standby Purchase Agreement
See Notes to Financial Statements.
11
<PAGE>
Statement of Assets and Liabilities
As of June 30, 1999 (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:
Investments in securities, at value
(amortized cost $316,851,376,
$55,476,983, $16,468,484,
and $109,681,514, respectively).... $316,851,376 $55,476,983 $16,468,484 $109,681,514
Repurchase agreements (cost $0, $0,
$14,000,000, and $0, respectively).. -- -- 14,000,000 --
------------ ----------- ----------- ------------
Total Investments................. 316,851,376 55,476,983 30,468,484 109,681,514
Cash................................ -- 963 -- --
Interest and dividends receivable... 2,272,566 611,728 164,011 604,414
Prepaid expenses.................... 10,538 4,060 3,068 2,788
------------ ----------- ----------- ------------
Total Assets......................... 319,134,480 56,093,734 30,635,563 110,288,716
------------ ----------- ----------- ------------
LIABILITIES:
Payable to custodian................ 130 -- 13,753 --
Dividends payable................... 1,226,284 204,156 115,617 214,148
Payable to brokers for investments
purchased.......................... -- -- -- 4,833,643
Accrued expenses and other payables:
Investment advisory fee............ 44,500 11,242 4,621 18,226
Administration fee................. 24,993 4,676 2,830 8,295
Distribution fees.................. 44,291 13,318 2,267 6,557
Accounting and transfer agent
fees.............................. 4,111 819 4,723 1,023
Other.............................. 5,084 11,260 25,909 24,820
------------ ----------- ----------- ------------
Total Liabilities.................... 1,349,393 245,471 169,720 5,106,712
------------ ----------- ----------- ------------
Net Assets........................... $317,785,087 $55,848,263 $30,465,843 $105,182,004
============ =========== =========== ============
COMPUTATION OF NET ASSET VALUE:
Net assets.......................... $317,785,087 $55,848,263 $30,465,843 $105,182,004
Shares of beneficial interest issued
and outstanding (par value $0.001
per share, unlimited number of
shares authorized)................. 317,787,168 55,850,696 30,464,516 105,190,796
------------ ----------- ----------- ------------
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..................... $317,790,302 $55,849,829 $30,466,142 $105,195,711
Accumulated net realized losses from
investment transactions............ (5,215) (1,566) (299) (13,707)
------------ ----------- ----------- ------------
Net Assets........................... $317,785,087 $55,848,263 $30,465,843 $105,182,004
============ =========== =========== ============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Statements of Operations
For the period ended June 30, 1999 (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:
Interest.................. $8,838,004 $1,567,234 $809,318 $1,432,943
Dividends................. 201,699 30,886 9,208 78,227
---------- ---------- -------- ----------
Total Income.............. 9,039,703 1,598,120 818,526 1,511,170
---------- ---------- -------- ----------
EXPENSES:
Investment advisory fees.. 619,108 111,386 59,092 169,661
Administration fees....... 245,907 47,737 25,325 72,712
Co-administration and
shareholder servicing
assistance fees.......... 123,822 22,277 11,818 33,932
Distribution fees......... 267,625 25,503 11,786 50,477
Audit fees................ 7,696 6,508 6,982 7,281
Custodian fees............ 17,443 9,671 10,368 6,776
Accounting and transfer
agent fees............... 125,484 24,762 11,218 31,567
Legal fees................ 72,881 12,126 7,157 19,875
Other expenses............ 105,631 31,450 8,589 26,962
---------- ---------- -------- ----------
Gross Expenses............. 1,585,597 291,420 152,335 419,243
Less: Fee waivers......... (212,269) (38,190) (20,260) (58,170)
Less: Reimbursements...... (223,552) (46,369) (22,332) (45,988)
---------- ---------- -------- ----------
Net Expenses............... 1,149,776 206,861 109,743 315,085
---------- ---------- -------- ----------
Net Investment Income...... 7,889,927 1,391,259 708,783 1,196,085
---------- ---------- -------- ----------
NET REALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains
(losses) from investment
transactions............. 571 (498) 77 --
---------- ---------- -------- ----------
Net Realized Gains
(Losses) from
Investments.............. 571 (498) 77 --
---------- ---------- -------- ----------
Change in Net Assets
Resulting from
Operations................ $7,890,498 $1,390,761 $708,860 $1,196,085
========== ========== ======== ==========
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Cash Management Fund
-----------------------------------------
For the period ended For the period ended
June 30, 1999 December 31, 1998
-------------------- --------------------
<S> <C> <C>
From Investment Activities:
OPERATIONS:
Net investment income............... $ 7,889,927 $ 12,187,455
Net realized gains (losses) from
investment transactions............ 571 (45)
------------- ---------------
Change in net assets resulting from
operations......................... 7,890,498 12,187,410
------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.......... (7,889,927) (12,187,455)
------------- ---------------
Change in net assets from
shareholder distributions.......... (7,889,927) (12,187,455)
------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued......... 734,618,323 1,341,762,133
Dividends reinvested................ 6,364,650 9,085,388
Cost of shares redeemed............. (740,750,578) (1,217,500,619)
------------- ---------------
Change in net assets from capital
share transactions................. 232,395 133,346,902
------------- ---------------
Change in Net Assets................. 232,966 133,346,857
------------- ---------------
NET ASSETS:
Beginning of period................. 317,552,121 184,205,264
------------- ---------------
End of period....................... $ 317,785,087 $ 317,552,121
============= ===============
SHARE TRANSACTIONS:
Issued.............................. 734,618,323 1,341,762,133
Reinvested.......................... 6,364,650 9,085,388
Redeemed............................ (740,750,578) (1,217,500,619)
------------- ---------------
Change in shares..................... 232,395 133,346,902
============= ===============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
<CAPTION>
Government U.S. Treasury
Money Market Fund Money Market Fund New York Tax-Free Money Market Fund
- ---------------------------------------- --------------------------------------- ---------------------------------------
For the period ended For the year ended For the period ended For the year ended For the period ended For the year ended
June 30, 1999 December 31, 1998 June 30, 1999 December 31, 1998 June 30, 1999 December 31, 1998
- -------------------- ------------------ -------------------- ------------------ -------------------- ------------------
<S> <C> <C> <C> <C> <C>
$ 1,391,259 $ 4,507,202 $ 708,783 $ 1,407,739 $ 1,196,085 $ 2,392,306
(498) (144) 77 722 -- (1,031)
------------ ------------- ------------ ------------- ------------ -------------
1,390,761 4,507,058 708,860 1,408,461 1,196,085 2,391,275
------------ ------------- ------------ ------------- ------------ -------------
(1,391,259) (4,507,202) (708,783) (1,407,739) (1,196,085) (2,392,306)
------------ ------------- ------------ ------------- ------------ -------------
(1,391,259) (4,507,202) (708,783) (1,407,739) (1,196,085) (2,392,306)
------------ ------------- ------------ ------------- ------------ -------------
75,048,431 245,113,875 96,281,052 175,531,472 86,282,233 169,582,662
617,342 2,003,878 464,161 758,783 902,386 1,732,131
(97,170,785) (270,625,447) (92,155,187) (175,922,504) (76,261,955) (163,783,249)
------------ ------------- ------------ ------------- ------------ -------------
(21,505,012) (23,507,694) 4,590,026 367,751 10,922,664 7,531,544
------------ ------------- ------------ ------------- ------------ -------------
(21,505,510) (23,507,838) 4,590,103 368,473 10,922,664 7,530,513
------------ ------------- ------------ ------------- ------------ -------------
77,353,773 100,861,611 25,875,740 25,507,267 94,259,340 86,728,827
------------ ------------- ------------ ------------- ------------ -------------
$ 55,848,263 $ 77,353,773 $ 30,465,843 $ 25,875,740 $105,182,004 $ 94,259,340
============ ============= ============ ============= ============ =============
75,048,431 245,113,875 96,281,052 175,531,472 86,282,233 169,582,662
617,342 2,003,878 464,1261 758,783 902,386 1,732,131
(97,170,785) (270,625,447) (92,155,187) (175,922,504) (76,261,955) (163,783,249)
------------ ------------- ------------ ------------- ------------ -------------
(21,505,012) (23,507,694) 4,590,026 367,751 10,922,664 7,531,544
============ ============= ============ ============= ============ =============
</TABLE>
15
<PAGE>
Notes to Financial Statements
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 each Fund (except the New York Tax-Free Money
Market Fund) is to provide as high a level of current income as is
consistent with preservation of capital and liquidity. The New York Tax-
Free Money Market Fund seeks to provide as high a level of current income
that is exempt from Federal, New York State and New York City income taxes
as is consistent with preservation of capital and liquidity.
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 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. Restricted securities
and securities for which market quotations are not readily available, if
any, are valued at fair value using methods approved by the Board of
Directors. Investments in investment companies are valued at their net
asset values as reported by such companies. In addition, the 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 each Funds' policy to continue 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.
Repurchase Agreements: The Funds may purchase instruments from financial
institutions, such as banks and broker-dealers, subject to the seller's
agreement to repurchase them at an agreed upon time and price ("repurchase
agreements"). The seller, under a repurchase agreement, is required to
maintain the value of the securities subject to the agreement at not less
than the 102% of the repurchase price. Default by the seller would,
however, expose the relevant Funds to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations. Risks may arise from the potential inability of counter
parties to honor the terms of the repurchase agreements. Accordingly, the
Funds could receive less than the carrying value upon the sale of the
underlying collateral securities.
16
<PAGE>
Notes to Financial Statements (continued)
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 that 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
is recorded on the accrual basis and includes, where applicable, the
amortization of premium or accretion of discount.
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.
3.Related Party Transactions
The Trust retains HSBC Asset Management Americas Inc. to act as Investment
Adviser for the Funds. HSBC Asset Management Americas Inc. is the North
American investment management 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>
Portion of each Fund's Average Daily Net Assets Advisory Fee Rate
----------------------------------------------- -----------------
<S> <C>
Up to $500 million........................................ 0.350%
In excess of $500 million but not exceeding $1 billion.... 0.315%
In excess of $1 billion but not exceeding $1.5 billion.... 0.280%
In excess of $1.5 billion................................. 0.245%
</TABLE>
HSBC Asset Management Americas Inc. has voluntarily agreed to reimburse
Fund expenses to the extent each Fund's ordinary operating expenses net of
other fee waivers exceed 0.65% of each Fund's average daily net assets.
17
<PAGE>
Notes to Financial Statements (continued)
The Fund may enter into agreements (the "Service Agreements") with certain
banks, financial institutions and corporations ("Service Organizations")
whereby each Service Organization provides record keeping and 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 sub-
accounts of the Service Organizations. During the period ended June 30,
1999, the Funds did not participate in any service 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 Management and
Administration Agreement and the Fund Accounting Agreement, BISYS is paid a
monthly asset-based fee as follows:
<TABLE>
<CAPTION>
Portion of each Fund's Average Daily Net Assets Administration Fee Rate
----------------------------------------------- -----------------------
<S> <C>
Up to $200 million................................. 0.150%
In excess of $200 million but not exceeding $400
million........................................... 0.125%
In excess of $400 million but not exceeding $600
million........................................... 0.100%
In excess of $600 million.......................... 0.080%
</TABLE>
HSBC Asset Management Inc. earned co-administration and shareholder
services assistance fees of 0.07% of each Fund's average net assets, all of
which were waived.
Information regarding these transactions is as follows for the period ended
June 30, 1999:
<TABLE>
<CAPTION>
Co-Administration
Investment and Shareholder
Advisory Fees Administration Servicer Assistance
voluntarily Fees voluntarily Fees voluntarily
reimbursed reduced reduced
------------- ---------------- --------------------
<S> <C> <C> <C>
Cash Management Fund.... $223,552 $88,447 $123,822
Government Money Market
Fund................... 46,369 15,913 22,277
U.S. Treasury Money
Market Fund............ 22,332 8,442 11,818
New York Tax-Free Money
Market Fund............ 45,988 24,238 33,932
</TABLE>
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.
A partner of the Trust's legal counsel served as Secretary of the Trust.
Paul, Weiss, Rifkind, Wharton and Garrison serves as the Trust's legal
counsel for the period ended June 30, 1999.
4.Concentration of Credit Risk
The New York Tax-Free Money Market Fund invests primarily in debt
obligations issued by the State of New York and its respective political
subdivisions, agencies and public authorities to obtain funds for various
public
18
<PAGE>
Notes to Financial Statements (continued)
purposes. The Fund is more susceptible to economic and political factors
adversely affecting issuers of New York specific municipal securities than
is a municipal money market fund that is not concentrated in these issuers
to the same extent.
5.Voting Results of Special Meeting of Shareholders
At a special meeting of the shareholders of HSBC Funds Trust (the "Trust"),
held on May 10, 1999, and on May 18, 1999, the following actions were
taken. The Government Money Market Fund nor the U.S. Treasury Money Market
Fund had reached quorum so matters submitted to shareholders for each Fund
were adjourned until Tuesday, May 18, 1999 at 10:30 a.m. ET; at which time
a quorum was present.
(1) The approval of the election of four existing members of the Board of
Trustees of the Trust and the election of four new members to the Board
of Trustees of the Trust to serve until their successors are duly
elected and qualified as presented in the proxy materials:
<TABLE>
<CAPTION>
Number of Number of Votes
Name of Trustee Votes For Withheld
--------------- ----------- ---------------
<S> <C> <C>
Wolfe J. Frankl................................ 313,000,553 8,987,288
Jeffery J. Hass................................ 313,088,279 8,899,562
Richard J. Loos................................ 313,121,371 8,866,470
Clifton H. W. Maloney.......................... 313,237,735 8,750,106
John C. Meditz................................. 313,146,893 8,840,948
Harald Paumgarten.............................. 313,122,846 8,864,995
John P. Pfann.................................. 313,009,671 8,978,170
Robert A. Robinson............................. 313,240,914 8,746,927
</TABLE>
(2) The approval of the existing Investment Advisory agreement between the
Trust and HSBC Asset Management Americas Inc. is as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- --------- ---------
<S> <C> <C> <C>
Cash Management Fund...................... 202,255,119 1,491,306 1,904,547
Government Money Markt Fund............... 35,217,377 4,219 961,295
U.S. Treasury Money Market Fund........... 14,721,421 -- 6,166,404
New York Tax-Free Money Market Fund....... 57,866,245 691,357 708,549
</TABLE>
(3) The approval that Ernst & Young, LLP has been selected as independent
accountants for the Trust for the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- --------- ---------
<S> <C> <C> <C>
HSBC Funds Trust........................... 313,026,644 1,122,889 7,838,303
</TABLE>
19
<PAGE>
Notes to Financial Statements (continued)
(4) The approval that a change in the investment policies of all of the
Funds, except the U.S. Treasury Money Market Fund, to permit each Fund
to make loans, including loans of its portfolio securities if, as a
result, the aggregate of such loans does not exceed 33 1/3% of the
value of a Fund's total assets:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- ---------- ---------
<S> <C> <C> <C>
Cash Management Fund..................... 186,406,510 16,587,276 2,657,187
Government Money Market Fund............. 30,820,125 3,742,195 1,620,570
New York Tax-Free Money Market Fund...... 49,970,523 8,932,082 363,544
</TABLE>
(5) The approval that a change in the investment policies of all of the
Funds to permit each Fund to: (I) borrow from banks, for any purpose,
up to 33 1/3% of the current value of its total assets; (II) pledge up
to 33 1/3% of its total assets to secure such borrowings; and (III) to
eliminate any limits on purchasing securities when borrowings exist:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- ---------- ---------
<S> <C> <C> <C>
Cash Management Fund..................... 182,401,596 18,266,913 4,982,464
Government Money Market Fund............. 30,849,241 3,427,813 1,905,836
U.S. Treasury Money Market Fund.......... 14,243,886 925,028 5,718,908
New York Tax-Free Money Market Fund...... 49,490,583 9,299,375 476,191
</TABLE>
(6) The approval that a change in the investment policies of each of the
Funds to remove the restriction on each Fund investing in restricted
securities:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- ---------- ---------
<S> <C> <C> <C>
Cash Management Fund..................... 188,893,599 14,629,897 2,127,478
Government Money Market Fund............. 26,137,630 8,152,060 1,893,200
U.S. Treasury Money Market Fund.......... 14,133,233 963,532 5,791,057
New York Tax-Free Money Market Fund...... 50,119,959 8,542,515 603,675
</TABLE>
(7) The approval that a change in the investment policies of the Cash
Management Fund to eliminate the requirement that the Cash Management
Fund must invest at least 25% of its total assets in bank obligations:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- --------- ---------
<S> <C> <C> <C>
Cash Management Fund....................... 193,206,989 9,944,646 2,499,340
</TABLE>
6.Subsequent Events
Effectively July 1, 1999, the Cash Management Fund began offering two
additional classes of shares as an exchange option: Class B and Class C
shares. Also effective July 1, 1999, the existing share class is designated
as Class A shares. Each class of shares in a Fund has substantially
identical rights and privileges except with respect to sales charges, fees
paid under service organization or distribution plans, expenses allocable
exclusively to each class of shares, voting rights on matters affecting a
single class of shares, and the exchange privileges of each class of
shares.
20
<PAGE>
Notes to Financial Statements (continued)
The following is a summary of the maximum annual fund operating expenses
(fees paid from Fund assets) for Class A, Class B and Class C shares
effective July 1, 1999:
<TABLE>
<CAPTION>
Cash Management Government Money U.S. Treasury Money New York Tax-Free
Fund Market Fund Market Fund Money Market Fund
----------------------- ----------------------- ----------------------- -----------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management
fee/1/ .......... 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Administrative
Services
fee/2/ .......... 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Distribution (12b-
1) fee........... 0.20% 0.75% 0.75% 0.20% 0.75% 0.75% 0.20% 0.75% 0.75% 0.20% 0.75% 0.75%
Service
Organization
fee/3/ .......... 0.35% 0.50% 0.50% 0.35% 0.50% 0.50% 0.35% 0.50% 0.50% 0.35% 0.50% 0.50%
Fee Waivers &
Expense
Reimbursements... 0.30% 0.30% 0.30% 0.50% 0.20% 0.20% 0.67% 0.37% 0.37% 0.52% 0.22% 0.22%
Net Expenses/4/ .. 0.93% 1.63% 1.63% 0.70% 1.70% 1.70% 0.70% 1.70% 1.70% 0.70% 1.70% 1.70%
</TABLE>
--------
/1/The Advisor has contractually agreed to waive or reimburse its
Management fee to the extent the Fund's ordinary operating expenses
exceed .70% for Class A shares and 1.70% for Class B and Class C shares
of the Fund's average daily net assets.
/2/The Administrator is contractually limiting its Administrative Services
fee to .10% for each class of shares.
/3/The Cash Management Fund's Service Organization fee is being
contractually limited to .10% for Class A shares and contractually
limited to .25% for Class B and Class C shares.
/4/The contractual expense limitations and reimbursements are in effect
through December 31, 1999.
21
<PAGE>
FINANCIAL HIGHLIGHTS
(Unaudited)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
For the For the Year Ended December 31,
period ended ------------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.022 0.050 0.051 0.049 0.053 0.039
Distributions
From net investment
income................ (0.022) (0.050) (0.051) (0.049) (0.053) (0.039)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return............ 2.23%(a) 5.15% 5.18% 5.00% 5.41% 3.95%
Ratios/Supplemental
Data:
Net assets at end of
period (000).......... $317,785 $317,552 $184,205 $220,960 $170,869 $200,492
Ratio of expenses to
average net
assets (b)............ 0.65% 0.65% 0.63% 0.68% 0.79% 0.63%
Ratio of net investment
income to average
net assets (b)........ 4.46% 5.01% 5.06% 4.88% 5.29% 3.84%
Ratio of expenses to
average net
assets* (b)........... 0.90% 0.87% 0.83% 0.80% 0.80% 0.64%
</TABLE>
- --------
(a) Not annualized.
(b) Annualized.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
22
<PAGE>
FINANCIAL HIGHLIGHTS
(Unaudited)
GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
For the For the Year Ended December 31,
period ended ---------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- ------- ------- --------
Investment Activities
Net investment income.. 0.022 0.049 0.049 0.048 0.052 0.038
Distributions
From net investment
income................ (0.022) (0.049) (0.049) (0.048) (0.052) (0.038)
------- ------- -------- ------- ------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== ======= ======= ========
Total Return............ 2.19%(a) 5.01% 5.05% 4.87% 5.32% 3.83%
Ratios/Supplemental
Data:
Net assets at end of
period (000).......... $55,848 $77,354 $100,862 $87,392 $86,850 $166,796
Ratio of expenses to
average net
assets (b)........... 0.65% 0.62% 0.63% 0.72% 0.78% 0.63%
Ratio of net investment
income to average
net assets (b)........ 4.37% 4.86% 4.94% 4.75% 5.21% 3.76%
Ratio of expenses to
average net
assets* (b)........... 0.92% 0.80% 0.79% 0.84% 0.78% 0.64%
</TABLE>
- --------
(a) Not annualized.
(b) Annualized.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
23
<PAGE>
FINANCIAL HIGHLIGHTS
(Unaudited)
U. S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
For the For the Year Ended December 31,
period ended --------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- --------
Investment Activities
Net investment income.. 0.021 0.048 0.049 0.046 0.049 0.036
Distributions
From net investment
income................ (0.021) (0.048) (0.049) (0.046) (0.049) (0.036)
------- ------- ------- ------- ------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ========
Total Return............ 2.10%(a) 4.86% 4.98% 4.68% 5.04% 3.60%
Ratios/Supplemental
Data:
Net assets at end of
period (000).......... $30,466 $25,876 $25,507 $28,962 $32,500 $105,720
Ratio of expenses to
average net
assets (b)........... 0.65% 0.65% 0.65% 0.78% 0.82% 0.68%
Ratio of net investment
income to average
net assets (b)........ 4.20% 4.75% 4.86% 4.57% 4.94% 3.48%
Ratio of expenses to
average net
assets* (b)........... 0.90% 0.94% 0.94% 0.95% 0.84% 0.69%
</TABLE>
- --------
(a) Not annualized.
(b) Annualized.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
24
<PAGE>
FINANCIAL HIGHLIGHTS
(Unaudited)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
For the For the Year Ended December 31,
period ended -------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.012 0.028 0.031 0.029 0.031 0.022
Distributions
From net investment
income................ (0.012) (0.028) (0.031) (0.029) (0.031) (0.022)
-------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ======= =======
Total Return............ 1.23%(a) 2.83% 3.14% 2.92% 3.17% 2.23%
Ratios/Supplemental
Data:
Net assets at end of
period (000).......... $105,182 $94,259 $86,729 $70,339 $64,884 $53,538
Ratio of expenses to
average net
assets (b)........... 0.65% 0.64% 0.52% 0.59% 0.69% 0.57%
Ratio of net investment
income to average
net assets (b)........ 2.47% 2.78% 3.09% 2.88% 3.13% 2.20%
Ratio of expenses to
average net
assets* (b)........... 0.86% 0.82% 0.80% 0.87% 0.85% 0.73%
</TABLE>
- --------
(a) Not annualized.
(b) Annualized.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
25
<PAGE>
HSBC Funds Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC Asset Management Americas
Inc. [Logo]
- --------------------------------------------------------------------------------
Cash Management Fund
Government Money Market Fund
U.S. Treasury Money Market Fund
New York Tax-Free Money Market
Fund
HSBCSM Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
Information:
(800) 634-2536
Investment Adviser
HSBC Asset Management Americas Inc.
140 Broadway (6th Floor)
New York, New York 10005-1180
Distributor, Administrator, Transfer Agent
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
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of Americas
New York, New York 10019
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.
Shares of the Funds are not an obligation of or guaranteed or endorsed by HSBC
Holdings plc or its affiliates. An investment in the Funds is neither insured
nor guaranteed by the FDIC or any other government agency. Although the trust
attempts to maintain the value of your investment at $1.00 per share, it is
possible to lose money by investing in these funds.
8/99
Semi-Annual Report (Unaudited)
June 30, 1999
Managed by:
HSBC Asset Management Americas Inc.
Sponsored and distributed by:
BISYS Fund Services
