<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[x] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
HSBC FUNDS TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PRELIMINARY COPIES FOR USE OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY
HSBC FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 19, 1999
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the HSBC
Funds Trust (the "Trust"), and each series of the Trust, 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 (each a "Fund" and collectively
the "Funds") will be held at the offices of the Trust at 3435 Stelzer Road,
Columbus, Ohio 43219 at 10:00 a.m. Eastern Standard Time, on April 19, 1999,
for the following purposes:
1. To ratify the election of four existing members of the Board of
Trustees of the Trust and elect four new members to the Board of Trustees
of the Trust to serve until their successors are duly elected and
qualified.
2. To approve the existing investment advisory agreement between the
Trust and HSBC Asset Management Americas Inc., the investment adviser to
the Funds.
3. To ratify the selection of Ernst & Young LLP as independent
accountants for the Trust for the fiscal year ending December 31, 1999.
4. To approve 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 its total
assets.
5. To approve a change in the investment policies of each 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.
6. To approve a change in the investment policies of all of the Funds to
remove the restriction on the Funds investing in restricted securities.
7. To approve a change in the investment policy of the Cash Management
Fund to eliminate the requirement that the fund invest at least 25% of its
total assets in bank obligations.
8. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Trustees of the Trust has fixed the close of business on March
, 1999 as the record date for the determination of Shareholders entitled to
notice of and to vote at the meeting.
By Order of the Board of Trustees
Alaina V. Metz
Assistant Secretary
, 1999
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD
IN THE ENCLOSED ENVELOPE.
<PAGE>
PRELIMINARY COPIES FOR USE OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY
HSBC FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
SPECIAL MEETING OF SHAREHOLDERS
April 19, 1999
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees ("Trustees") of the HSBC Funds Trust (the
"Trust") to be voted at a Special Meeting of the Shareholders of the Trust
("Shareholders") to be held on April 19, 1999 at 10:00 a.m. Eastern Standard
Time at the offices of the Trust at 3435 Stelzer Road, Columbus, Ohio 43219,
and at any adjournments thereof (collectively, the "Meeting"). A Notice of
Special Meeting of Shareholders and proxy card accompany this Proxy Statement.
This Proxy Statement is being mailed to the Shareholders of each series of the
Trust, 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 (each a
"Fund" and collectively the "Funds") on or about March 19, 1999.
At the Meeting, Shareholders of all the Funds will be asked to consider and
vote upon the following proposals affecting the management and administration
of the Trust:
1. To ratify the election of four existing members of the Board of
Trustees of the Trust and elect four new members to the Board of Trustees
of the Trust to serve until their successors are duly elected and
qualified.
2. To approve the existing investment advisory agreement between the
Trust and HSBC Asset Management Americas Inc., the investment adviser to
the Funds.
3. To ratify the selection of Ernst & Young LLP as independent
accountants for the Trust for the fiscal year ending December 31, 1999.
Proposals 4 through 7 relate to amending and updating certain fundamental
investment policies of certain of the Funds. Pursuant to the Investment
Company Act of 1940, as amended, (the "1940 Act") approval of a change to a
Fund's fundamental investment policy requires Shareholder approval. The
specifics of Proposals 4 through 7 are as follows:
4. To approve a change in the investment policies of each 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 its total
assets.
5. To approve a change in the investment policies of each 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.
6. To approve a change in the investment policies of all of the Funds to
remove the restriction on the Funds investing in restricted securities.
7. To approve a change in the investment policy of the Cash Management
fund to eliminate the requirement that the fund invest at least 25% of its
total assets in bank obligations.
<PAGE>
8. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Proxy solicitations will be made, beginning on or about March 19, 1999,
primarily by mail, but proxy solicitations also may be made by telephone,
facsimile or personal interviews conducted by officers and employees of the
Funds as well as by BISYS Fund Services ("BISYS"). BISYS acts as the
distributor, administrator and transfer agent of the Funds. BISYS is located
at 3435 Stelzer Road, Columbus, Ohio 43219. The costs of proxy solicitation
and expenses incurred in connection with the preparation of this Proxy
Statement and its enclosures will be paid by the Funds.
The Trust's Annual Report to Shareholders for the fiscal year ended December
31, 1998, containing audited financial statements, may be obtained, without
charge, by calling 1-800-634-2536 or mailing your request to: HSBC Funds
Trust, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219.
Outstanding Shares
Each Fund has one class of shares. The following table sets forth the net
assets and approximate number of shares issued and outstanding for each Fund
as of the close of business on March 1, 1999.
<TABLE>
<CAPTION>
Outstanding
Fund Shares
---- -------------
<S> <C>
HSBC Funds Trust
Cash Management Fund 33,173,570.78
Government Money Market Fund 62,933,457.19
U.S. Treasury Money Market Fund 33,826,258.28
New York Tax-Free Money Market Fund 97,882,605.39
</TABLE>
Each Fund has an unlimited number of shares of beneficial interest (the
"Shares"), each Share having a par value of $.001. Each Share outstanding on
the record date is entitled to one vote on all matters submitted to
Shareholders at the Meeting, with pro rata voting rights for any fractional
shares.
The Funds' trustees and officers beneficially own (individually and as a
group) less than 1% of the outstanding shares of each Fund as of March 1,
1999.
The following table shows each party known to the Trust to be the beneficial
owner of more than five percent of any class of the Trust's voting securities:
<TABLE>
<CAPTION>
Percentage of
Title of Fund Name and Address Total Shares Fund Owned
------------- ---------------- ------------ -------------
<S> <C> <C> <C>
Cash Management BISYS Fund Services Inc. 193,366,909.59 57.01%
Fund Pittsburgh
Marine Midland Sweep Customers
3435 Stelzer Road
Columbus, OH 43219
Cash Management Marine Midland Bank 40,734,642.84 12.01%
Fund 1 Marine Midland Ctr., 17th Fl.
Buffalo, NY 14240
Government Chase Manhattan Bank 6,483,677.22 10.30%
Money 1 Chase Manhattan Plaza, 16th Fl.
Market Fund New York, NY 10017
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Title of Fund Name and Address Total Shares Fund Owned
------------- ---------------- ------------ -------------
<S> <C> <C> <C>
Government Money BISYS Fund Services Inc. 4,653,686.54 7.39%
Market Fund Pittsburgh
Marine Midland Sweep Customers
3435 Stelzer Road
Columbus, OH 43219
Government Money Marine Midland Bank 37,787,768.36 60.04%
Market Fund 1 Marine Midland Ctr., 17th Fl.
Buffalo, NY 14240
U.S. Treasury BISYS Fund Services Inc. 9,977,707.85 29.50%
Money Market Fund Pittsburgh
Marine Midland Sweep Customers
3435 Stelzer Road
Columbus, OH 43219
U.S. Treasury Marine Midland Bank 1,917,488.84 5.69%
Money Market Fund Premier Farnell
P.O. Box 1329
Buffalo, NY 14240
U.S. Treasury Marine Midland Bank 11,354,753.93 33.57%
Money Market Fund 1 Marine Midland Ctr., 17th Fl.
Buffalo, NY 14240
New York Tax-Free BISYS Fund Services Inc. 41,531,822.11 42.43%
Money Market Fund Pittsburgh
Marine Midland Sweep Customers
3435 Stelzer Road
Columbus, OH 43219
New York Tax-Free Marine Midland Bank 24,299,690.10 24.83%
Money Market Fund 1 Marine Midland Ctr., 17th Fl.
Buffalo, NY 14240
</TABLE>
Voting
The following table summarizes each proposal to be presented at the Meeting
and the Funds solicited with respect to such proposal:
<TABLE>
<CAPTION>
Proposal Affected Funds
-------- --------------
<S> <C>
1. Ratify the election of four existing members and elect four All Funds
new members of the Board of Trustees.
2. Approve the existing investment advisory agreement. All Funds
3. Ratify the selection of independent accountants. All Funds
4. Change the Funds' investment policies regarding their All Funds Except
ability to make loans. U.S. Treasury
Money Market Fund
5. Change the Funds' investment policies regarding borrowing All Funds
and pledging up to 33 1/3% of their net assets and making
purchases when borrowing exists.
6. Change the Funds' investment policies regarding their All Funds
ability to invest in restricted securities.
7. Change the Fund's investment policy regarding concentration Cash Management Fund
in bank obligations.
</TABLE>
3
<PAGE>
The record date for determining Shareholders entitled to vote at the meeting
is March , 1999.
Proposals 1 and 3 require the affirmative vote of a plurality of all
outstanding shares of the Trust represented in person or by proxy and entitled
to vote. Proposals 2 and 4 through 7 require a vote of the "majority of the
outstanding voting securities," which is defined in the Investment Company Act
of 1940 as the affirmative vote of the lesser of (i) 67% or more of the voting
shares of the Fund entitled to vote thereon present in person or represented
by proxy, or (ii) more than 50% of the outstanding voting securities of the
Fund entitled to vote thereon. Any Shareholder giving a proxy has the power to
revoke it prior to its exercise by submission of a later dated proxy, by
voting in person or by letter to the Secretary of the Fund.
The Shareholders of all of the series of the Trust will vote together as a
single class on Proposals 1 through 3. All shares of each Fund will vote
together as a single class on Proposals 2 and 4 through 7. An unfavorable vote
on a proposal by the shareholders of one Fund will not affect the
implementation of such a proposal by another Fund, if the proposal is approved
by the shareholders of the other Fund. There is no cumulative voting with
respect to the election of Trustees.
Shares represented by proxies that reflect abstentions and "broker non-
votes" (i.e., shares held by brokers or nominees as to which (i) instructions
have not been received from the beneficial owners or the persons entitled to
vote and (ii) the broker or nominee does not have the discretionary voting
power on a particular matter) will be counted as shares that are present and
entitled to vote on the matter for purposes of determining the presence of a
quorum. Votes cast by proxy or in person at the Meeting will be counted by
persons appointed as tellers for the Meeting. The tellers will count the total
number of votes cast "for" approval of the proposal or proposals for purposes
of determining whether sufficient affirmative votes have been cast.
Abstentions and broker non-votes have the effect of a negative vote with
respect to Proposals 2 and 4 through 7.
In the event that a quorum is not present at the Meeting or in the event
that a quorum is present but sufficient votes to approve any of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
Shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies which they are entitled to vote FOR any such
proposal in favor of such an adjournment and will vote those proxies required
to be voted AGAINST any such proposal against any such adjournment. A
Shareholder vote may be taken on one of the proposals in this Proxy Statement
prior to any such adjournment if sufficient votes have been received for
approval. Under the by-laws of the Funds, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of each Fund entitled to vote at the Special Meeting.
PROPOSAL 1. (All Funds)
To ratify the election of four existing members of the Board of Trustees of
the Trust and elect four new members to the Board of Trustees of the Trust to
serve until their successors are duly elected and qualified.
The first proposal to be considered at the Meeting is the ratification of
four existing members of the Board of Trustees and the election of four new
members to the Board of Trustees. Messrs. Frankl, Pfann and Robinson were last
approved by a vote of the Shareholders of the Trust on January 22, 1990. Mr.
Paumgarten is being presented to Shareholders for their approval for the first
time, although he has served on the Board since January 26, 1996. Although not
required by the 1940 Act, the Trustees are asking that Shareholders ratify the
election of each of the four existing Trustees.
Messrs. Hass, Loos, Maloney and Meditz were approved by the Board of
Trustees on January 26, 1999 and will become Trustees upon Shareholder
approval. The Trustees are to be elected to hold office until their successors
are duly elected and qualified, whichever occurs first. All shares represented
by valid proxies will be
4
<PAGE>
voted in the election of Trustees for each nominee named below, unless
authority to vote for a particular nominee is withheld. All of the nominees
have consented to serve as Trustees of the Trust, if elected.
The following table sets forth the names, addresses, ages, principal
occupations and other information regarding the Trustee nominees.
<TABLE>
<CAPTION>
Current Position Principal Occupation
Name and Age With Trust For Past 5 Years
------------ ---------------- --------------------
<S> <C> <C>
Wolfe J. Frankl, Age 78 Trustee since 1988. Trustee, Excelsior Funds, Inc. and
Excelsior Tax-Exempt Funds, Inc. And
Excelsior Institutional Funds, Inc.;
Director Deutsche Bank Financial,
Inc.; Director, The Harbus
Corporation; Trustee, HSBC Funds
Trust.
Jeffrey J. Hass, Age 37 None 1996-Present: Associate Professor of
Law, New York Law School; 1995-1996:
Partner, Hass & Hass; 1993-1995:
Associate, Latham & Watkins.
Richard J. Loos, Age 65 Vice Chairman Emeritus Retired since 1996. 1995-1996:
since May 5, 1998. President, Aspen Capital Management;
1972-1994: Managing Director, HSBC
Asset Management Americas, Inc.
Clifton H.W. Maloney, None 1981-Present: President, C.H.W.
Age 61 Maloney & Co., Inc.
John C. Meditz, Age 50 None 1994-Present: Portfolio Manager/Vice
Chairman, Horizon Asset Management;
1978-1994: Portfolio Manager/Vice
President, Bankers Trust Company.
Harald Paumgarten, Age Chairman of the Board 1997-present: Managing Director,
60 of Trustees. Adirondack Capital; 1991-present:
Trustee since 1996. President, Paumgarten and Company,
1991-1997.
John P. Pfann, Age 69 Trustee since 1982. 1982-1995: Chairman and President, JPP
Equities, Inc.; Trustee, HSBC Funds
Trust.
Robert A. Robinson, Age Trustee since 1982. Trustee, Henrietta and E. Frederick H.
73 Bugher Foundation; Trustee, U.S.T.
Master Funds, Inc. and U.S.T. Master
Tax-Exempt Funds, Inc.; Trustee, HSBC
Funds Trust.
</TABLE>
The table on page 17 shows the compensation paid to the Trustees for the
fiscal year ended December 31, 1998.
Required Vote and Recommendation
The election of the nominees to the Board of Trustees of the Trusts requires
the affirmative vote of a plurality of all the shares of such Trust present at
the Meeting either in person or by proxy. The Shareholders of all of the
series of the Trust will vote together as a single class to ratify and elect
the Trustees. In the event a Trustee is not approved, the Board will consider
alternatives consistent with the 1940 Act. It is the intention of the persons
named in the enclosed proxy to vote the Shares represented by them for the
election of each nominee listed above unless the proxy is marked otherwise.
The Trustees have approved Proposal 1 and recommend that Shareholders vote
to approve Proposal 1.
5
<PAGE>
PROPOSAL 2. (All Funds)
To approve the existing investment advisory agreement between the Trust and
HSBC Asset Management Americas Inc., the Investment Adviser to the Funds.
At the Meeting, Shareholders will be asked to approve the existing
investment advisory agreement ("Advisory Agreement") between the Trust and
HSBC Asset Management Americas Inc. (the "Adviser"). The Adviser has provided
investment advisory services to the Trust since the Trust's commencement of
operations on October 31, 1985. The Advisory Agreement was initially a two-
year agreement and annual continuances have been approved every year since by
the Trustees. Although not required to do so by the 1940 Act, the Trustees are
requesting that Shareholders approve the Advisory Agreement which was last
submitted to Shareholders for approval on January 22, 1990.
Trustees' Evaluation
At a meeting on January 26, 1999, the Trustees considered information with
respect to whether the Advisory Agreement with the Adviser was in the best
interests of the Trust and the Shareholders. The Board considered, as they
have in the past, the nature and quality of services expected to be provided
by the Adviser and information regarding fees, expense ratios and performance.
In evaluating the Adviser's ability to provide services to the Trust, the
Trustees considered information as to the Adviser's business organization,
financial resources and personnel and other matters. Based upon its review,
the Trustees unanimously concluded that the Advisory Agreement with the
Adviser is reasonable, fair and in the best interests of the Trust and the
Shareholders, and that the fees provided in the Advisory Agreement are fair
and reasonable in light of the usual and customary charges made by others for
services of similar nature and quality.
Adviser
The Adviser is the North American investment affiliate of HSBC Holdings plc
(Hong Kong and Shanghai Banking Corporation) and Marine Midland Bank. HSBC
Asset Management Americas Inc. is located at 140 Broadway, New York, New York
10005. The Adviser currently manages over $4.3 billion of assets of
individuals, pension plans, corporations and institutions.
Advisory Agreement
The current Advisory Agreement between the Adviser and the Trust was first
executed on October 31, 1985. The Advisory Agreement was initially a two-year
agreement and annual continuances have been approved by the Board of Trustees
of the Trust. As required by the 1940 Act, the Advisory Agreement is
terminable without penalty on 60 days written notice by the Board of Trustees
or by vote of the majority of shareholders of the Funds. The Advisory
Agreement is attached to this Proxy Statement as Exhibit I, and the
description of the Advisory Agreement set forth in this Proxy Statement is
qualified in its entirety by reference to Exhibit I.
The Adviser, in return for its fees, and subject to the control and
supervision of the Board of Trustees and in conformance with the investment
objective and policies of the Funds set forth in the Trust's current
registration statement and any other policies established by the Board of
Trustees, manages the investment and reinvestment of assets of the Funds. In
this regard, it is the responsibility of the Adviser to make investment
decisions for the Funds and to place the Funds' purchase and sale orders for
investment securities. In addition to making investment decisions, the Adviser
exercises voting rights in respect of portfolio securities for the Funds. The
Adviser provides at its expense all necessary investment, management and
administrative facilities, including salaries of personnel and equipment
needed to carry out their duties under the Advisory Agreement. The Adviser
also provides the Funds with investment research and whatever statistical
information the Funds may reasonably request with respect to securities the
Funds hold or contemplate purchasing.
6
<PAGE>
Advisory Fees
Under the Advisory Agreement, the Adviser earns a monthly fee based upon the
average daily value of the net assets of each of the Funds in the Trust during
the preceding month, at the following annual rates:
<TABLE>
<CAPTION>
Portion of average daily value Fee
of net assets of the Fund Rate
------------------------------ ------
<S> <C>
Not exceeding $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>
For the fiscal year ended December 31, 1998, pursuant to the Advisory
Agreement, HSBC Asset Management Americas Inc. earned $850,781 from the Cash
Management Fund, $103,714 from the U.S. Treasury Money Market Fund, $324,264
from the Government Money Fund and $300,720 from the New York Tax-Free Money
Market Fund in investment advisory fees net of voluntary fee waivers of
$610,119, $52,242, $261,302 and $246,732 respectively.
Adviser's Principal Executive Officers and Directors
The name, address and principal occupation of the Adviser's principal
executive officer and each director or general partner is set forth below.
<TABLE>
<CAPTION>
Name Current Position with Adviser Principal Occupation
---- ----------------------------- --------------------
<S> <C> <C>
Paul Guidone Chairman of the Board
Frederic Lutcher Director Co-President, Co-Chief Executive
Officer and Managing Director of
HSBC Asset Management Americas Inc.
Nigel Wood Director Co-President, Co-Chief Executive
Officer and Treasurer of HSBC Asset
Management Americas Inc.
Susie Babani Director
Ed Merkle Director Managing Director--Fixed Income of
HSBC Asset Management Americas Inc.
Jonathan Reynolds Director Investment Officer of Marine Midland
Bank
Simon Moules Director Investment Officer of Marine Midland
Bank
Joseph DeMarco Managing Director-- Managing Director--US Equity Trading
US Equity Trading of HSBC Asset Management Americas
Inc.
Stella Yiu Managing Director-- Managing Director--Head of Global
Head of Global Emerging Markets Emerging Markets of HSBC Asset
Management Americas Inc.
Joseph DiBartolo Corporate Secretary-- Corporate Secretary--Local
Local Compliance Officer Compliance Officer of HSBC Asset
Management Americas Inc.
Andrea Shaw Resnick Vice President Vice President, HSBC Asset
Management Americas Inc.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Current Position with
Name Adviser Principal Occupation
---- --------------------- --------------------
<S> <C> <C>
Thomas D'Auria Vice President Vice President, HSBC Asset
Management Americas Inc.
Thomas Lanza Vice President Vice President, HSBC Asset
Management Americas Inc.
Petra Kettler-Rein Vice President Vice President, HSBC Asset
Management Americas Inc.
</TABLE>
The address for the principal executive officers and directors of the
Adviser are set forth below:
HSBC Asset Management Americas, Inc.
140 Broadway
New York, NY 10005
No officers or directors of the Adviser are also a director, officer,
general partner or shareholder of the Trust.
Required Vote and Recommendation
As provided in the 1940 Act, approval of the Advisory Agreement requires the
affirmative vote of a majority of the outstanding voting securities of the
Fund. Abstentions have the effect of a negative vote on this Proposal. In the
event the Advisory Agreement is not approved, the Board will consider
alternatives consistent with the 1940 Act.
The Board of Trustees has approved Proposal 2 and recommends that
shareholders vote to approve Proposal 2.
PROPOSAL 3. (All Funds)
To ratify the selection of Ernst & Young LLP as independent accountants for
the Trust for the fiscal year ending May 31, 1999.
Ernst & Young LLP has been selected by a unanimous vote of the Board of
Trustees, including a majority of the independent trustees, as the independent
accountants to audit the accounts of the Trust and each Fund for and during
the fiscal year ending December 31, 1999. The ratification of the selection of
the accountants is to be voted on at the Meeting.
Ernst & Young LLP currently serves as independent accountant to the Trust.
Ernst & Young LLP has no material direct or indirect financial interest in the
Trust or Adviser.
Required Vote and Recommendation
The ratification of the independent accountants requires the affirmative
vote of a plurality of all the shares of such Trust present at the Meeting
either in person or by proxy. The Shareholders of all of the series of the
Trust will vote together as a single class to ratify the accountants. It is
the intention of the persons named in the enclosed proxy to vote the Shares
represented by them for the ratification of the accountants unless the proxy
is marked otherwise.
The Board of Trustees has approved Proposal 3 and recommends that
shareholders vote to approve Proposal 3.
8
<PAGE>
PROPOSALS 4 THROUGH 7: APPROVAL OF CHANGES
TO THE FUNDS' INVESTMENT POLICIES
Proposals 4 through 7 relate to certain changes to the fundamental policies
of the Funds. The Board of Trustees approved these changes in order to update
the Funds' investment policies to reflect changes in the law and other
regulatory developments and provide the Funds with flexibility to adapt to
developments in the securities markets. The Board of Trustees has approved
each of Proposals 4 through 7. The changes to the Funds' fundamental
investment policies will become effective immediately upon Shareholder
approval. If a Proposal is not approved by a vote of the Shareholders, the
current policy as applied to the Funds will remain unchanged.
PROPOSAL 4. (Cash Management Fund, Government Money Market Fund, New York Tax-
Free Money Market Fund)
To approve 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 its total assets.
At the Meeting, Shareholders of all of the Funds will vote on changing each
Fund's investment policy 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 its total assets. Currently, each Fund in the
Trust is permitted to lend its portfolio securities, but not make other loans.
This Proposal will permit the Funds to make other loans in addition to
lending portfolio securities. While currently it is not expected that the
Funds will engage in such activity to a significant extent, this change in
investment policy will provide the Funds increased flexibility.
The primary purpose of this Proposal is to provide the Funds more
flexibility in their investment strategies and decisions as they strive to
meet their investment objectives. This Proposal will bring the Funds' policies
in line with the limits allowed by federal and state law, thereby providing
the Funds with maximum flexibility. This flexibility may provide more
opportunities to enhance the Funds' performance, with the corresponding risks
which accompany making loans, including loans of portfolio securities.
This change in investment policy is not expected to materially affect, in
the foreseeable future, the manner in which the Funds are managed, the
investment performance of the Funds, or the instruments in which they invest.
Required Vote and Recommendation
As provided in the 1940 Act, approval of a change to a Fund's fundamental
investment policies requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. If the Shareholders of a Fund fail
to approve this Proposal, the current investment policy will be retained for
that Fund.
The Board of Trustees has approved Proposal 4 and recommends that
Shareholders vote to approve Proposal 4.
PROPOSAL 5.(All Funds)
To approve a change in the investment policies of each 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.
At the Meeting, the Shareholders of each of the Funds will vote on approving
a change in the investment policies of the Funds regarding borrowing.
9
<PAGE>
Currently each Fund is restricted from borrowing money, except that each
Fund may borrow from banks as a temporary measure for emergency purposes or to
meet redemptions where such borrowings would not exceed 10% of its net assets
taken at market value. This Proposal will permit each Fund to borrow up to 33
1/3% of total assets, and will allow each Fund to borrow for purposes other
than for emergency purposes or to meet redemptions.
Currently each Fund may pledge only 10% of the current value of its total
net assets to secure borrowings. This Proposal will permit each Fund to pledge
up to 33 1/3% of its total assets to secure borrowings up to 33 1/3% of its
total assets.
Currently each Fund is restricted from purchasing any investments if
borrowings exceed 5% of the Fund's net assets. This Proposal will eliminate
this restriction and will permit each Fund to purchase investments even when
the Fund's borrowings exceed 5% of the Fund's net assets.
The primary purpose of this Proposal is to update each Fund's limitation on
borrowing to provide the Funds with more flexibility. The Proposal allows each
Fund to borrow up to the legal limit, whereas the current policy significantly
restricts the Fund's borrowing abilities. As amended, the limitation will
afford each Fund increased flexibility in making investment decisions, and may
enable the Funds to take advantage of changing market conditions. Under
positions established by the SEC staff, investment strategies which obligate a
Fund to purchase securities at a future date or otherwise require that a Fund
segregate assets, may be considered to be "borrowings." However, by
segregating assets equal to the amount of such "borrowings" as required by
Section 18 of the 1940 Act, these investment strategies will not result in the
issuance of "senior securities" by the Fund.
Borrowing will involve the use of "leverage" when cash made available to a
Fund through the borrowing is used to make additional portfolio investments.
Use of leverage involves special risks and may involve speculative investment
techniques. The Funds will use leverage only when the investment adviser to
the Funds believes that the leveraging and the returns available to a Fund
from investing the cash will provide shareholders a potentially higher return.
Leverage exists when a Fund achieves the right to a return on a capital base
that exceeds the investment the Fund has invested. Leverage creates the risk
of magnified capital losses which occur when losses affect an asset base,
enlarged by borrowings or the creation of liabilities, that exceeds the equity
base of the Fund.
The risks of leverage include a higher volatility of the net asset value of
a Fund's shares and the relatively greater effect on the net asset value of
the shares caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield obtained from investing the
cash. So long as a Fund is able to realize a net return on its investment
portfolio that is higher than interest expense incurred, if any, leverage will
result in a higher current net investment income being realized by such Fund
than if the Fund were not leveraged. On the other hand, interest rates change
from time to time as does their relationship to each other depending upon such
factors as supply and demand, monetary and tax policies and investor
expectations. Changes in such factors could cause the relationship between the
cost of leveraging and the yield to change so that rates involved in the
leveraging arrangement may substantially increase relative to the yield on the
obligations in which the proceeds of the leveraging have been invested. To the
extent that the interest expense involved in leveraging approaches the net
return on a Fund's investment portfolio, the benefit of leveraging will be
reduced, and, if the interest expense on borrowings were to exceed the net
return to shareholders, such Fund's use of leverage would result in a lower
rate of return than if the Fund were not leveraged. Similarly, the effect of
leverage in a declining market could be a greater decrease in net asset value
per share than if a Fund were not leveraged. In an extreme case, if a Fund's
current investment income were not sufficient to meet the interest expense of
leveraging, it could be necessary for such Fund to liquidate certain of its
investments at an inappropriate time. The use of leverage may be considered
speculative.
10
<PAGE>
Changing this policy will provide increased investment flexibility and may
provide opportunities to enhance the Fund's performance, with the
corresponding risk which accompanies increased borrowing. While changing the
investment policy will permit the Fund to borrow up to 33 1/3% of its assets,
the investment adviser will exercise care, consistent with the Fund's
investment objective and policies, before entering into any borrowing
arrangements.
This change in investment policy is not expected to materially affect, in
the foreseeable future, the manner in which the Funds are managed, the
investment performance of the Fund, or the instruments in which they invest.
Required Vote and Recommendation
As provided in the 1940 Act, approval of a change to a Fund's fundamental
investment policies requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. Abstentions have the effect of a
negative vote on this Proposal. If the Shareholders of a Fund fail to approve
this Proposal, the current investment policy will be retained for that Fund.
The Board of Trustees has approved Proposal 5 and recommends that
Shareholders vote to approve Proposal 5.
PROPOSAL 6.(All Funds)
To approve a change in the investment policies of all of the Funds to remove
the restriction on the Funds investing in restricted securities.
At the Meeting, the Shareholders of all of the Funds will vote on changing
the Funds' investment policy regarding restricted securities.
The Funds' current investment restrictions prohibit them from investing
their assets in securities restricted as to resale under the federal
securities laws ("restricted securities"). The proposed amendment would remove
this restriction, thereby permitting the Funds to invest in restricted
securities.
The SEC historically took the position that an open-end investment company
should limit its investments in restricted securities because such securities
may present problems of accurate valuation and because it is possible that the
investment company would have difficulty satisfying redemptions within seven
days. However, within the past decade Rule 144A offerings, which are
restricted securities, have become more prevalent in the marketplace and are
generally accepted as liquid securities. With the advent of Rule 144A
offerings and other similar securities, the fact that a security is restricted
does not necessarily impair the Fund's ability to determine an accurate
valuation or to satisfy redemptions within seven days.
Fund Management has recommended the proposed change to the Trustees because
it believes that the increased flexibility will assist the Funds in achieving
their investment objectives. Fund Management believes that the Funds' present
restriction is over broad and unnecessarily restrictive. The Funds are
constrained by their current investment restriction even when the restricted
securities markets provide both readily ascertainable values for restricted
securities and the ability to reduce an investment to cash in order to satisfy
Fund share redemption orders on a timely basis. The Trustees have adopted
policies regarding determining and monitoring the liquidity of restricted
securities.
Although each Fund will no longer have a policy regarding restricted
securities if this proposal is approved, the amount of restricted securities
each Fund may purchase may in fact be limited by the 1940 Act requirement
which prevents any money market fund from investing more than 10% of its
assets in illiquid securities. The effect is that while each Fund will be able
to invest an unlimited amount of its assets in restricted securities that it
determines are liquid, it may only invest up to 10% of its assets in
restricted securities or other instruments that are determined to be illiquid.
11
<PAGE>
Changing this policy will provide increased investment flexibility and may
provide opportunities to enhance the Funds' performance, with the
corresponding risk which accompanies investing in restricted securities. While
changing the investment policy will permit the Fund to invest up to 10% of its
assets in restricted securities, the investment adviser will exercise care,
consistent with the Fund's investment objective and policies, in all
investments in such securities.
The Trustees recommend that the Funds' fundamental policy regarding
restricted securities be removed to permit each Fund to invest more than 10%
of its assets in restricted securities.
This change in investment policy is not expected to materially affect, in
the foreseeable future, the manner in which the Funds are managed, the
investment performance of the Funds, or the instruments in which they invest.
Required Vote and Recommendation
As provided in the 1940 Act, approval of a change to a Fund's fundamental
investment policies requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. Abstentions have the effect of a
negative vote on this Proposal. If the Shareholders of a Fund fail to approve
this Proposal, the current investment policy will be retained for that Fund.
The Board of Trustees has approved Proposal 6 and recommends that
Shareholders vote to approve Proposal 6.
PROPOSAL 7.(Cash Management Fund)
To approve a change in the investment policies of the Cash Management Fund to
eliminate the requirement that the Fund must invest at least 25% of its total
assets in banks.
Currently, the Cash Management Fund must maintain a minimum of 25% of its
total assets in obligations issued by the banking industry. This Proposal
would grant the Fund the ability to invest either more or less than 25% of its
total assets in domestic bank obligations.
The banking industry has experienced, and is expected to continue to
experience, significant consolidation which further limits the investment
opportunities for the Cash Management Fund. The proposed change would permit
the Cash Management Fund to maintain a minimum of 25% of its total assets in
obligations issued by the domestic banking industry, but would not require it
to do so.
The proposed change to the investment restriction regarding concentration in
the banking industry is designed to give the Cash Management Fund the
flexibility to concentrate in the domestic banking industry but would not
require it to do so.
The proposed restriction would not change the credit quality parameters
governing the Fund's investments but would provide the Adviser with additional
flexibility in managing the Fund's investments while maintaining a high
quality, diversified portfolio of dollar-denominated securities. Changing this
policy will provide increased investment flexibility and may provide
opportunities to enhance the Fund's performance, with the corresponding risk
which accompanies investing in issuers other than banks. While changing the
investment policy will permit the Fund to invest an unlimited amount of its
assets in non-bank issuers, the investment adviser will exercise care,
consistent with the Fund's investment objective and policies, in all
investments in such securities.
This change in investment policy is not expected to materially affect, in
the foreseeable future, the manner in which the Fund is managed, the
investment performance of the Fund, or the instruments in which it invests.
12
<PAGE>
Required Vote and Recommendation
As provided in the 1940 Act, approval of a change to a Fund's fundamental
investment policies requires the affirmative vote of a majority of the
outstanding voting securities of the Fund. Abstentions have the effect of a
negative vote on this Proposal. If the Shareholders of a Fund fail to approve
this Proposal, the current investment policy will be retained for that Fund.
The Board of Trustees has approved Proposal 7 and recommends that
Shareholders vote to approve Proposal 7.
13
<PAGE>
MANAGEMENT OF THE FUNDS
During the year ended December 31, 1998, the Board of Trustees held 7
meetings. The Trust's Audit Committee held one meeting, the Foreign Custody
Committee held one meeting and the Nominating Committee held two meetings. All
of the Trustees attended at least 75% of the meetings of the Board of Trustees
and all committee meetings thereof of which such trustee was a member during
the year ended December 31, 1998. Each of the Trustees hold the same position
with each of the Funds in the Trust.
Trustees of the Trust who are not affiliated with the Distributor or the
Adviser received from the Trust an annual fee of $5,000 and a fee for each
Board of Trustees and Board committee meeting attended of $1,000. Trustees who
are affiliated with the Distributor or the Adviser do not receive compensation
from the Trust. The following table lists the compensation paid to each of the
Trustees by the Trust during the year ended December 31, 1998. No executive
officer or person affiliated with the Trust received compensation from the
Trust for the year ended December 31, 1998 in excess of $60,000.
<TABLE>
<CAPTION>
Total Compensation
Trustee from Trust
------- ------------------
<S> <C>
Harald Paumgarten, Chairman of the Board $17,040
Wolfe J. Frankl, Trustee $15,710
John P. Pfann, Trustee $ 9,501
Robert A. Robinson, Trustee $16,362
Richard J. Loos, Vice Chairman Emeritus* $12,973
</TABLE>
The Trustees did not and have not accrued pension or retirement benefits
from the Funds for their service to the Trust.
- --------
* Mr. Loos was elected Vice Chairman Emeritus of the Trust on May 5, 1998. Mr.
Loos is not a member of the Board.
The following table lists the executive officers of the Trust.
<TABLE>
<CAPTION>
Principal Occupations and Other Affiliations
Name Position During the Past Five Years
---- -------- --------------------------------------------
<C> <C> <S>
Walter Grimm President Executive Vice President Fund Services Division
of BISYS Fund Services, Inc.--June 1992 to
present
Eric F. Almquist Senior Vice President Senior Marketing Strategist--Fund Services
Division of BISYS Fund Services, Inc.--August
1996 to Present; Director of Process
Management, Coopers & Lybrand L.L.P. 1988 to
1994
Charles Booth Vice President and Chief Compliance Officer and Vice President of
Assistant Secretary Fund Administration, Fund Services Division of
BISYS Fund Services, Inc.--1988 to present
Anthony J. Fischer Vice President Vice President, Client Services, Fund Services
Division of the BISYS Fund Services, Inc.--1998
to present; SEI--1997-1998
Paul T. Kane Assistant Treasurer Vice President, Fund Services of BISYS Fund
Services, Inc.--December 1997 to present;
Director Shareholder Reporting, Fidelity
Accounting and Custody Services--1995-1997
Steven R. Howard Secretary Partner--Paul, Weiss, Rifkind, Wharton &
Garrison--April 1998 to present; Partner--Baker
& McKenzie--1991-1998
Alaina V. Metz Assistant Secretary Chief Administrator, Administration and
Regulatory Services of BISYS Fund Services,
Inc.--June 1995 to present; Supervisor of
Mutual Fund Legal Department; Alliance Capital
Management--May 1989 to June 1995
</TABLE>
14
<PAGE>
As of the date of this proxy statement, the trustees and officers of the
Trust as a group beneficially owned less than 1% of the outstanding shares of
the Trust.
During the fiscal year ended December 31, 1998, no commissions were paid to
brokers affiliated with HSBC Americas.
15
<PAGE>
HSBC FUNDS TRUST
CASH MANAGEMENT FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints ____________ or ___________, and each
of them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of the HSBC Funds Trust (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the office of the Fund, 3435 Stelzer Road, Columbus, Ohio
43219, on April 19, 1999 at 10:00 a.m., and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN
PROMPTLY
IN THE ENVELOPE PROVIDED
NOTE: Please sign exactly as your name
appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your
full title.
Date
------------------------------
- ----------------------------------
- ----------------------------------
Signature(s), (Title(s), if applicable)
Please indicate your vote by an "X" in the appropriate boxes below.
This Proxy, if properly executed, will be voted in the manner directed by the
undersigned Shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1. Please refer to the Proxy Statement for a discussion of the
Proposals.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all
contrary below) [_] nominees listed below [_]
WOLFE J. FRANKL JEFFREY J. HASS RICHARD J. LOOS CLIFTON H. W. MALONEY
JOHN C. MEDITZ HARALD PAUMGARTEN JOHN P. PFANN ROBERT A. ROBINSON
(INSTRUCTION: To withhold authority for any individual, write his or her
name on the line provided below.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Ernst & Young [_] [_] [_]
LLP as independent accountants for the APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
<PAGE>
3. To approve the existing investment [_] [_] [_]
advisory agreement between the Trust and APPROVE DISAPPROVE ABSTAIN
HSBC Asset Management Americas Inc., the
investment adviser to the Funds.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans or lend its portfolio
securities if, as a result, the aggregate
of such loans does not exceed 33 1/3% of
the value of the Fund's total assets.
5. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
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.
6. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund investing in
restricted securities.
7. To approve a change in the investment [_] [_] [_]
policy of the Fund to eliminate the APPROVE DISAPPROVE ABSTAIN
requirement that the Fund must invest at
least 25% of its total assets in domestic
bank obligations.
<PAGE>
HSBC FUNDS TRUST
GOVERNMENT MONEY MARKET FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints ____________ or ___________, and each of them,
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of the HSBC Funds Trust (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the office of the Fund, 3435 Stelzer Road, Columbus, Ohio
43219, on April 19, 1999 at 10:00 a.m., and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENVELOPE PROVIDED
NOTE: Please sign exactly as your name
appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee,
guardian or corporate officer, please give
your full title.
Date
----------------------------------------
----------------------------------------
----------------------------------------
Signature(s), (Title(s), if applicable)
Please indicate your vote by an "X" in the appropriate boxes below.
This Proxy, if properly executed, will be voted in the manner directed by the
undersigned Shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. Please refer
to the Proxy Statement for a discussion of the Proposals.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all nominee
contrary below) [_] listed below [_]
WOLFE J. FRANKL JEFFREY J. HASS RICHARD J. LOOS CLIFTON H. W. MALONEY
JOHN C. MEDITZ HARALD PAUMGARTEN JOHN P. PFANN ROBERT A. ROBINSON
(INSTRUCTION: To withhold authority for any individual, write his or her name on
the line provided below.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Ernst & Young [_] [_] [_]
LLP as independent accountants for the APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
3. To approve the existing investment advisory [_] [_] [_]
agreement between the Trust and HSBC Asset APPROVE DISAPPROVE ABSTAIN
Management Americas Inc., the investment
adviser to the Funds.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans or lend its portfolio
securities if, as a result, the aggregate
of such loans does not exceed 33 1/3% of
the value of the Fund's total assets.
5. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
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.
6. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund investing in
restricted securities.
<PAGE>
HSBC FUNDS TRUST
U.S. TREASURY MONEY MARKET FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints ____________ or ___________, and each of
them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of the HSBC Funds Trust (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the office of the Fund, 3435 Stelzer Road, Columbus, Ohio
43219, on April 19, 1999 at 10:00 a.m., and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENVELOPE PROVIDED
NOTE: Please sign exactly as your name
appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee,
guardian or corporate officer, please give
your full title.
Date
---------------------------------------
-------------------------------------------
-------------------------------------------
Signature(s), (Title(s), if applicable)
Please indicate your vote by an "X" in the appropriate boxes below.
This Proxy, if properly executed, will be voted in the manner directed by the
undersigned Shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. Please refer
to the Proxy Statement for a discussion of the Proposals.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all nominees
contrary below) [_] listed below [_]
WOLFE J. FRANKL JEFFREY J. HASS RICHARD J. LOOS CLIFTON H. W. MALONEY
JOHN C. MEDITZ HARALD PAUMGARTEN JOHN P. PFANN ROBERT A. ROBINSON
(INSTRUCTION: To withhold authority for any individual, write his or her name on
the line provided below.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Ernst & Young [_] [_] [_]
LLP as independent accountants for the APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
3. To approve the existing investment [_] [_] [_]
advisory agreement between the Trust and APPROVE DISAPPROVE ABSTAIN
HSBC Asset Management Americas Inc., the
investment adviser to the Funds.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
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.
5. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund investing in
restricted securities.
<PAGE>
HSBC FUNDS TRUST
NEW YORK TAX-FREE MONEY MARKET FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints ____________ or ___________, and each of
them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of the HSBC Funds Trust (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at the office of the Fund, 3435 Stelzer Road, Columbus, Ohio
43219, on April 19, 1999 at 10:00 a.m., and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENVELOPE PROVIDED
NOTE: Please sign exactly as your name
appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee,
guardian or corporate officer, please give
your full title.
Date
---------------------------------------
-------------------------------------------
-------------------------------------------
Signature(s), (Title(s), if applicable)
Please indicate your vote by an "X" in the appropriate boxes below.
This Proxy, if properly executed, will be voted in the manner directed by the
undersigned Shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. Please refer
to the Proxy Statement for a discussion of the Proposals.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all nominees
contrary below) [_] listed below [_]
WOLFE J. FRANKL JEFFREY J. HASS RICHARD J. LOOS CLIFTON H. W. MALONEY
JOHN C. MEDITZ HARALD PAUMGARTEN JOHN P. PFANN ROBERT A. ROBINSON
(INSTRUCTION: To withhold authority for any individual, write his or her name on
the line provided below.)
- --------------------------------------------------------------------------------
2. To ratify the selection of Ernst & [_] [_] [_]
Young LLP as independent accountants for APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
3. To approve the existing investment [_] [_] [_]
advisory agreement between the Trust and APPROVE DISAPPROVE ABSTAIN
HSBC Asset Management Americas Inc., the
investment adviser to the Funds.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans or lend 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.
5. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
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.
6. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund investing in
restricted securities.
<PAGE>
[PASTE-UP LETTERHEAD HERE]
March 19, 1999
Dear Valued Shareholder:
The enclosed proxy materials relate to a Special Meeting of Shareholders of
the HSBC Funds Trust (the "Trust"), and each series of the Trust, the Cash
Management Fund, the Government Money Market Fund, the U.S. Treasury Money
Market Fund and the New York Money Market Fund (each a "Fund" and collectively
the "Funds") to be held on April 19, 1999 at 10:00 a.m., Eastern Standard
Time, at the Trust's offices at 3435 Stelzer Road, Columbus, Ohio 43219 (the
"Meeting").
At the Meeting, Shareholders will be asked to ratify the election of four
existing trustees and to elect four new trustees to the Board of Trustees of
the Trust. Shareholders will also be asked to approve the Trust's existing
investment advisory contract, to ratify the selection of the independent
accountants to the Trust and to approve changes to certain of the investment
policies and restrictions of the Funds. The Trustees are recommending that
Shareholders (i) ratify the four trustees and elect the four nominees to the
Board of Trustees, (ii) approve the Trust's advisory contract, (iii) ratify
the selection of independent accountant and (iv) approve each of the changes
to the Funds' investment policies.
Although the Trustees would like very much to have you attend the Meeting,
they realize that this is not always possible. Whether or not you plan to be
present at the Meeting, Your vote is needed. Please complete, sign and return
the enclosed Proxy Card promptly in the postage-paid envelope provided.
Your Trustees look forward to seeing you at the Meeting or receiving your
proxy so your shares may be voted at the Meeting.
Sincerely yours,
Wally Grimm
President
Shareholders are urged to sign and return the enclosed Proxy in the enclosed
envelope so as to be represented at the Meeting.
Thank you for your cooperation and prompt attention to this matter.
<PAGE>
EXHIBIT 99.1
AMENDED AND RESTATED
ADVISORY CONTRACT
HSBC Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
May 1, 1998
HSBC Asset Management Americas Inc.
140 Broadway
New York, New York 10005
Master Advisory Contract
Dear Sirs:
WHEREAS, the Master Investment Advisory Contract dated May 1, 1990 has been
amended and restated to reflect the name change of the Trust and the Trust's
Adviser, as well as a change in law that no longer limits expenses paid by the
Funds;
WITNESSETH
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between HSBC Funds Trust (the "Trust") and HSBC Asset
Management Americas, Inc. (the "Adviser") as follows:
1. Definitions and Delivery of Documents. The Trust has been
-------------------------------------
organized as a business trust under the laws of the Commonwealth of
Massachusetts and is an open-end management investment company. The Trust's
shares of beneficial interest may be classified into series in which each series
represents the entire undivided interests of a separate portfolio of assets. For
all purposes of this Contract,a "Fund" shall mean a separate portfolio of assets
of the Trust which has entered into an Advisory Contract Supplement, and a
"Series" shall mean the series of shares of beneficial interest representing
undivided interests in a Fund. All references herein to this Contract shall be
deemed to be references to this Contract as it may from time to
<PAGE>
time be supplemented by Advisory Contract Supplements. The Trust engages in the
business of investing and reinvesting the assets of each Fund in the manner and
in accordance with the investment objective and restrictions specified in the
Trust's Declaration of Trust, dated November 1, 1989 (the "Declaration of
Trust"), and the currently effective Prospectus (the "Prospectus") relating to
the Trust and the Funds included in the Trust's Registration Statement, as
amended from time to time (the "Registration Statement"), filed by the Trust
under the Investment Company Act of 1940 (the "1940 Act") and the Securities Act
of 1933 (the "1933 Act"). Copies of the documents referred to in the preceding
sentence have been furnished to the Adviser. Any amendments to those documents
shall be furnished to the Advisor promptly.
2. Administrative Services and Distribution Contracts.
--------------------------------------------------
Pursuant to a Distribution Contract (the "Distribution Contract") and an
Administrative Services Contract (the "Administrative Services Contract")
between the Trust and the Distributor and Administrator (as that term is defined
in the Prospectus) the Trust has employed the Distributor and the Administrator
to act as principal underwriter for each Series and to provide management and
other services.
3. Expenses. (a) the Adviser shall, at its expense, (i)
--------
employ or associate with itself such persons as it believes appropriate to
assist in performing its obligations under this Contract and (ii) provide all
advisory, administrative, management services and shareholder services,
equipment, facilities and personnel necessary to perform its obligations under
this Contract. The Trust recognizes that in those cases where the Adviser makes
arrangements with its correspondent banks to maintain subaccounts for certain of
their customers who invest in shares of a Series, such correspondent banks may
also agree to provide services to subaccount holders of the type provided by the
Adviser to shareholders of record.
(b) Except as provided in subparagraph (a) and in the
Administrative Services Contract, the Trust shall be responsible for all of its
expenses and liabilities, including compensation of its directors who are not
affiliated with the Distributor or the Adviser or any of their affiliates; taxes
and governmental fees; interest charges; fees and expenses of the Trust's
independent accountants and legal counsel; trade association membership dues;
fees and expenses of any custodian (including for keeping books and accounts and
calculating the net asset value of shares of each Series), transfer agent,
registrar and dividend disbursing agent of the Trust; expenses of issuing,
selling, redeeming, registering and qualifying for sale the Trust's shares of
beneficial interest; expenses of preparing and printing share certificates,
prospectuses, shareholders' reports, notices, proxy statements and reports to
regulatory agencies; the cost of office supplies; travel expenses of all
officers, directors and employees; insurance premiums; brokerage and other
expenses of executing portfolio transactions; expenses of shareholders'
meetings; organizational expenses; and extraordinary expenses.
4. Investment Advisory and Management Services. (a) The
-------------------------------------------
Adviser shall provide to the Trust investment guidance and policy direction in
connection with the
-2-
<PAGE>
management of the portfolio of each Fund, including oral and written money
market research, analysis, advice, statistical and economic data and information
and judgments, of both a macroeconomic and microeconomic character, concerning,
among other things, interest rate trends, money market portfolio composition,
credit conditions of both a general and specific nature and the average maturity
of the portfolio of each Fund.
(b) The Adviser shall also provide to the Trust's officers
administrative assistance in connection with the operation of the Trust and each
of the Funds. Administrative services provided by the Adviser shall include (i)
data processing, clerical bookkeeping services required in connection with
maintaining the financial accounts and records for the Trust and each of the
Funds, (ii) the compilation of statistical and research data required for the
preparation of periodic reports and statements of each of the Funds which are
distributed to the Trust's officers and Board of Trustees, (iii) handling, or
causing to be handled, general shareholder relations with Fund investors, such
as advice as to the status of their accounts, the current yield and dividends
declared to date and assistance with other questions related to their accounts,
(iv) the compilation of information required in connection with the Trust's
filings with the Securities and Exchange Commission and (v) such other services
as the Adviser shall from time to time determine, upon consultation with the
Sponsor, to be necessary or useful to the administration of the Trust and each
of the Funds.
(c) As a manager of the assets of each Fund, the Adviser shall
make investments for the account of each Fund in accordance with the Adviser's
best judgment and within the investment objective and restrictions of each such
Fund set forth in the Trust's Declaration of Trust, the Prospectus of each such
Fund, the 1940 Act and the provisions of the Internal Revenue Code relating to
regulated investment companies, subject to policy decisions adopted by the
Trust's Board of Trustees. The Adviser shall advise the Trust's Officers and
Board of Trustees, at such times as the Board of Trustees may specify, of
investments made for each of the Funds and shall, when requested by the Trust's
Officers or Board of Trustees, supply the reasons for making particular
investments.
(d) The Adviser shall furnish to the Board of Trustees
periodic reports on the investment performance of each Fund and on the
performance of its obligations under this Contract and shall supply such
additional reports and information as the Trust's Officers or Board of Trustees
shall reasonably request.
5. Limitation of Liability of Adviser. The Adviser shall
----------------------------------
give the Trust the benefit of the Adviser's best judgment and efforts in
rendering services under this Contract. As an inducement to the Adviser's
undertaking to render these services, the Trust agrees that the Adviser shall
not be liable under this Contract for any mistake in judgment or in any other
event whatsoever except for lack of good faith, provided that nothing in this
--------
Contract shall be deemed to protect or purport to protect the Adviser against
any liability to the Trust or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or
-3-
<PAGE>
gross negligence in the performance of the Adviser's duties under this Contract
or by reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
6. Compensation of the Adviser. In consideration of the
---------------------------
services to be rendered, facilities furnished and expenses paid or assumed by
the Adviser under this Contract, the Trust shall pay the Adviser a fee with
respect to each Fund in accordance with the applicable Advisory Contract
Supplement.
If the fees payable to the Adviser pursuant to this paragraph 6
and the applicable Advisory Contract Supplement begin to accrue before the end
of any month or if this Contract terminates before the end of any month, the
fees for the period from that date to the end of that month or from the
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion which the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating the
monthly fees, the value of the net assets of each Fund shall be computed in the
manner specified in the Prospectus for the computation of net asset value. For
purposes of this Contract, a "business day" is any day the New York Stock
Exchange is open for trading.
7. Duration and Termination of this Contract. This Contract
-----------------------------------------
shall become effective upon May 1, 1998 and shall thereafter continue in the
effect; provided, that this Contract shall continue in effect for a period of
--------
more than one year with respect to a Fund only so long as the continuance is
specifically approved at least annually (a) by the vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by
the Trust's Board of Trustees and (b) by the vote, cast in person at a meeting
called for the purpose, of a majority of the Trust's Trustees who are not
parties to this Contract or "interested persons" (as defined in the 1940 Act) of
any such party. This Contract may be terminated with respect to a Fund at any
time, without the payment of any penalty, by a vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by a
vote of a majority of the Trust's Board of Trustees on 60 days' written notice
to the Adviser or by the Adviser on 60 days' written notice to the Trust. If
this Contract is terminated with respect to any Fund, it shall nonetheless
remain in effect with respect to any remaining Funds. This Contract shall
terminate automatically in the event of its assignment (as defined in the 1940
Act).
8. Amendment of this Contract. No provision of this Contract
--------------------------
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought and no amendment, transfer,
assignment, sale, hypothecation or pledge of this Contract shall be effective
until approved by (a) the vote, cast in person at a meeting called for the
purpose, of a majority of the Trustees who are not parties to this Contract or
"interested persons" (as defined in the 1940 Act) of any such party, and (b)
with respect to any Fund affected by such change, waiver, discharge or
termination, by the vote of a majority of the outstanding voting securities of
the Series relating to such Fund, provided that no approval shall be required
--------
pursuant to this
-4-
<PAGE>
clause (b) in respect of an Advisory Contract Supplement entered into to add a
Fund to those covered by this Contract (or any amendment or termination of such
Supplement) by the holders of the outstanding voting securities of any Series
other than that of such Fund.
9. Other Activities of the Adviser. Except to the
-------------------------------
extent necessary to perform the Adviser's obligations under this Contract,
nothing herein shall be deemed to limit or restrict the right of the Adviser, or
any affiliate of the Adviser, or any employee of the Adviser, to engage in any
other business or to devote time and attention to the management of other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association.
10. Miscellaneous. The captions in this Contract are included
-------------
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Contract may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The Declaration of Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Trust are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Trust, but only the Trust's property shall be bound.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
HSBC FUNDS TRUST
By:
----------------------------
Title: President
ACCEPTED:
HSBC Asset Management Americas Inc.
By:
-----------------------------------
Title:
-5-
<PAGE>
NEW YORK TAX-FREE MONEY MARKET FUND
A Fund of HSBC Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
May 1, 1998
HSBC Asset Management Americas Inc.
140 Broadway
New York, New York 10005
Amended and Restated Advisory Contract Supplement
-------------------------------------------------
Dear Sirs:
This will confirm the agreement between HSBC Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The New York Tax-Free Money Market Fund (the "Fund") is a series
portfolio of the Trust which has been organized as a business trust under the
laws of the Commonwealth of Massachusetts and is an open-end management
investment company. The Trust and the Adviser have entered into an Amended and
Restated Master Advisory Contract, dated May 1, 1998 (as from time to time
amended and supplemented, the "Master Advisory Contract"), pursuant to which the
Adviser has undertaken to provide or make provision for the Trust for the
certain investment advisory and management services identified therein and to
provide certain other services, as more fully set forth therein. Certain
capitalized terms used without definition in this Advisory Contract Supplement
have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master Advisory
------------------------------------
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract; and its shares shall be a "Series"
of shares as referred to therein.
2. Payment of Fees. For all services to be rendered,
---------------
facilities furnished and expenses paid or assumed by the Adviser as provided in
the Master Advisory Contract and
-6-
<PAGE>
herein, the Fund shall pay a monthly fee on the first business day of each
month, based upon the average daily value (as determined on each business day at
the time set forth in the Prospectus for determining net asset value per share)
of the net assets of the Fund during the preceding month, at the following
annual rates:
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
Not exceeding $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%
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
NEW YORK TAX-FREE MONEY MARKET FUND,
A FUND OF HSBC FUNDS TRUST
By:
----------------------------
Title:
----------------------
The foregoing Contract is hereby
agreed to as of the date hereof:
HSBC ASSET MANAGEMENT AMERICAS INC.
By:
----------------------------
Title:
------------------
--7-
<PAGE>
CASH MANAGEMENT FUND
A Fund of HSBC Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
May 1, 1998
HSBC Asset Management Americas Inc.
140 Broadway
New York, New York 10005
Amended and Restated Advisory Contract Supplement
-------------------------------------------------
Dear Sirs:
This will confirm the agreement between HSBC Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The Cash Management Fund (the "Fund") is a series portfolio of the
Trust which has been organized as a business trust under the laws of the
Commonwealth of Massachusetts and is an open-end management investment company.
The Trust and the Adviser have entered into an Amended and Restated Master
Advisory Contract, dated May 1, 1998 (as from time to time amended and
supplemented, the "Master Advisory Contract"), pursuant to which the Adviser has
undertaken to provide or make provision for the Trust for the certain investment
advisory and management services identified therein and to provide certain other
services, as more fully set forth therein. Certain capitalized terms used
without definition in this Advisory Contract Supplement have the meaning
specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master Advisory
------------------------------------
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract; and its shares shall be a "Series"
of shares as referred to therein.
2. Payment of Fees. For all services to be rendered,
---------------
facilities furnished and expenses paid or assumed by the Adviser as provided in
the Master Advisory Contract and herein, the Fund shall pay a monthly fee on the
first business day of each month, based upon the
-8-
<PAGE>
average daily value (as determined on each business day at the time set forth in
the Prospectus for determining net asset value per share) of the net assets of
the Fund during the preceding month, at the following annual rates:
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
Not exceeding $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%
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
CASH MANAGEMENT FUND,
A FUND OF HSBC FUNDS TRUST
By:
------------------------------
Title:
----------------------
The foregoing Contract is hereby
agreed to as of the date hereof:
HSBC ASSET MANAGEMENT AMERICAS INC.
By:
----------------------------
Title:
---------------
-9-
<PAGE>
GOVERNMENT MONEY MARKET FUND
A Fund of HSBC Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
May 1, 1998
HSBC Asset Management Americas Inc.
140 Broadway
New York, New York 10005
Amended and Restated Advisory Contract Supplement
-------------------------------------------------
Dear Sirs:
This will confirm the agreement between HSBC Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The Government Money Market Fund (the "Fund") is a series
portfolio of the Trust which has been organized as a business trust under the
laws of the Commonwealth of Massachusetts and is an open-end management
investment company. The Trust and the Adviser have entered into an Amended and
Restated Master Advisory Contract, dated May 1, 1998 (as from time to time
amended and supplemented, the "Master Advisory Contract"), pursuant to which the
Adviser has undertaken to provide or make provision for the Trust for the
certain investment advisory and management services identified therein and to
provide certain other services, as more fully set forth therein. Certain
capitalized terms used without definition in this Advisory Contract Supplement
have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master Advisory
------------------------------------
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract; and its shares shall be a "Series"
of shares as referred to therein.
2. Payment of Fees. For all services to be rendered,
---------------
facilities furnished and expenses paid or assumed by the Adviser as provided in
the Master Advisory Contract and herein, the Fund shall pay a monthly fee on the
first business day of each month, based upon the
-10-
<PAGE>
average daily value (as determined on each business day at the time set forth in
the Prospectus for determining net asset value per share) of the net assets of
the Fund during the preceding month, at the following annual rates:
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
Not exceeding $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%
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
GOVERNMENT MONEY MARKET FUND,
A FUND OF HSBC FUNDS TRUST
By:
---------------------------------
Title:
----------------------
The foregoing Contract is hereby
agreed to as of the date hereof:
HSBC ASSET MANAGEMENT AMERICAS INC.
By:
----------------------------
Title:
---------------
-11-
<PAGE>
U.S. TREASURY MONEY MARKET FUND
A Fund of HSBC Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
May 1, 1998
HSBC Asset Management Americas Inc.
11140 Broadway
New York, New York 10005
Amended and Restated Advisory Contract Supplement
-------------------------------------------------
Dear Sirs:
This will confirm the agreement between HSBC Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The U.S. Treasury Money Market Fund (the "Fund") is a series
portfolio of the Trust which has been organized as a business trust under the
laws of the Commonwealth of Massachusetts and is an open-end management
investment company. The Trust and the Adviser have entered into an Amended and
Restated Master Advisory Contract, dated May 1, 1998 (as from time to time
amended and supplemented, the "Master Advisory Contract"), pursuant to which the
Adviser has undertaken to provide or make provision for the Trust for the
certain investment advisory and management services identified therein and to
provide certain other services, as more fully set forth therein. Certain
capitalized terms used without definition in this Advisory Contract Supplement
have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master Advisory
------------------------------------
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract; and its shares shall be a "Series"
of shares as referred to therein.
2. Payment of Fees. For all services to be rendered,
---------------
facilities furnished and expenses paid or assumed by the Adviser as provided in
the Master Advisory Contract and herein, the Fund shall pay a monthly fee on the
first business day of each month, based upon the average daily value (as
determined on each business day at the time set forth in the Prospectus
-12-
<PAGE>
for determining net asset value per share) of the net assets of the Fund during
the preceding month, at the following annual rates:
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
Not exceeding $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%
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
U.S. TREASURY MONEY MARKET FUND,
A FUND OF HSBC FUNDS TRUST
By:
--------------------------------
Title:
----------------------
The foregoing Contract is hereby
agreed to as of the date hereof:
HSBC ASSET MANAGEMENT AMERICAS INC.
By:
----------------------------
Title:
----------------
-13-